Can we limit the interest on CDs 12 months or less to have the interest paid via deposit into an account or do we have to offer the option for a check to be mailed?

There's no restriction. If the depositor doesn't want it deposited to an account, you can require that it remain on deposit until maturity.

Thanks John!

If we still offer the mailed checks for CDs greater than 12 months would there be an issue, discrimination, etc.?

No discrimination on a prohibited basis...banks discriminate on other bases all the time; e.g. how many checks you write, when you pay a fee, etc. Your willingness to issue a check is just a function of product design.