[Federal Register Volume 59, Number 131 (Monday, July 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16632]


  Federal Register / Vol. 59, No. 131 / Monday, July 11, 1994 /
  
[[Page Unknown]]

[Federal Register: July 11, 1994]


                                                   VOL. 59, NO. 131

                                              Monday, July 11, 1994

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 179

RIN 3206-AF28

 

Claims Collection Standards; Debt Collection Act of 1982: 
Administrative Offset

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing final 
regulations to govern the collection of debts owed to the United States 
which arose from transactions involving OPM's administrative accounts. 
These regulations implement the debt collection procedures provided 
under the Debt Collection Act of 1982 (Act). The Act authorizes the 
Federal Government to collect debts by means of administrative offset 
from other payments due the debtor from the United States, without the 
debtor's consent, provided that the debtor is properly notified and 
given the opportunity to exercise certain administrative rights. OPM's 
collection of debts due the Retirement and Insurance Group for payment 
to the Civil Service Retirement and Disability Fund, Employees' Life 
Insurance Fund, the Retired Federal Employees Health Benefits Fund, or 
the Employees' Health Benefits Fund is governed by other regulatory 
provisions.

DATES: These regulations are effective July 11, 1994.

FOR FURTHER INFORMATION CONTACT:
Anna Wilson, Chief, Financial Policy Division, Office of the Chief 
Financial Officer, (CFO) (202) 606-5075.

SUPPLEMENTARY INFORMATION: Section 10 of the Debt Collection Act of 
1982 (Act) (Pub. L. 97-365) codified at 31 U.S.C. 3701 et seq., makes 
several changes in the way Executive and Legislative agencies collect 
debts owed the Government. The purpose of the Act is to improve the 
ability of the Government to collect monies owed it.
    Under the Act, administrative offset may be initiated when the head 
of an agency determines that an individual or entity is indebted to the 
United States, or is notified by the head of another agency that a 
person or entity is indebted to the United States and that the debtor 
is owed monies by the United States as a result of transactions with a 
Federal agency. After the debtor has received certain due process 
rights, the debt may be collected by administratively offsetting the 
debt against the amount due.
    Under the Act, before the Government may collect a debt by 
administrative offset, a debtor must be provided with notice that a 
debt is owed, the opportunity to inspect and copy Government records 
relating to the debt, the option to enter into a written repayment 
agreement, and an opportunity for review of the agency's determination 
concerning the existence of the amount of the debt, or the repayment 
terms. The debtor must notify the agency of his or her intent to 
exercise these rights within time periods prescribed in these 
regulations.
    The Act permits the agency to initiate an administrative offset 
prior to the completion of the due process requirements if failure to 
do so would substantially jeopardize the agency's ability to collect 
the debt and if the time remaining before payment is to be made does 
not reasonably permit completion of the due process procedures. Such 
prior offset must be followed by completion of the due process 
procedures.
    The Act requires agencies to issue regulations for administrative 
offset. This final rule establishes the procedures the Office of 
Personnel Management (OPM) will follow in making an administrative 
offset from funds paid to a debtor from OPM's administrative accounts. 
These regulations apply to the collection of debts owed to the United 
States arising from transactions with OPM other than those involving 
payments made from the Civil Service Retirement and Disability Fund 
(the Fund) or where a request for an offset from OPM's administrative 
accounts--other than the Fund--is received by OPM from another Federal 
Agency. Regulations for other agencies to request OPM's Retirement and 
Insurance Group to recover a debt from the Fund are provided at subpart 
R of part 831 and subpart D of part 845 of title 5, Code of Federal 
Regulations. These regulations are consistent with the Federal Claims 
Collection Standards on administrative offset issued jointly by the 
Department of Justice and the General Accounting Office as set forth in 
4 CFR 102.3.
    OPM has determined that this document is interpretative because it 
implements a definitive statutory scheme and the requirements contained 
in regulations promulgated by the Department of Justice and the General 
Accounting Office. Accordingly, no Notice of Proposed Rulemaking is 
required pursuant to 5 U.S.C. 553(b)(A). In addition, because this rule 
relates to agency management and personnel, no Notice of Proposed 
Rulemaking is required pursuant to 5 U.S.C. 553(a)(2). For these 
reasons, a delayed effective date is not required pursuant to 5 U.S.C. 
553(d)(2).

Analysis and Comments

    The Interim Rule was published in the Federal Register on November 
19, 1993 (58 FR 60991). The comment period closed on January 18, 1994. 
Two labor organizations responded with comments. OPM has fully 
considered all of their comments.

Section 179.303  General

    One commenter cited 28 U.S.C. 2415 to question the validity of the 
time allowed for commencing actions brought by the United States (6 
years rather than 10 years). Section (i) of 28 U.S.C. 2415 states: 
``The provisions of this section shall not prevent the United States or 
an officer or agency thereof from collecting any claim of the United 
States by means of administrative offset, in accordance with section 
3716 of title 31.'' That provision precludes agencies from initiating 
offset to collect a debt more than 10 years after the Government's 
right to collect the debt first accrued, with certain exceptions 
explained in that section.

Section 179.305  Agency Review

    A commenter expressed concern that the discretion allowed to 
suspend transactions in an alleged debtor's account pending resolution 
of an appeal (179.305(c)) would have a ``chilling effect on such 
appeals by depriving appellants of funds that would otherwise be 
available to them.'' The intent of the regulations is to suspend 
transactions in the account(s) to the extent of the debt owed unless 
there is evidence of fraud. The language has been modified to clarify 
that intent.
    Another commenter requested that we add to the same section: ``Upon 
lifting the suspension * * * any payments, removals, or transfers, as 
well as lost interest or discounts due to the debtor that had been 
precluded due to temporary suspension of transactions in any of the 
debtor's accounts shall be applied retroactively to cover the period of 
suspension.'' This authority is not stated in the Debt Collection Act, 
and without specific authority, OPM is not authorized to take this 
action.
Section 179.306  Written Agreement for Repayment
    A commenter requested an increase in the amount of time allowed for 
submission of a financial statement from 10 business days to 30 
business days (i.e., from 2 weeks to 6 weeks) ``to allow the debtor 
sufficient time to accurately prepare the financial statement.'' OPM 
feels that 10 business days is adequate for the average debtor to 
present a statement of his or her finances. An audited financial 
statement is not required. Exceptions will have to be considered on a 
case-by-case basis.
Section 179.308  Accelerated Procedure
    A commenter wished to add ``with interest'' at the end of the 
paragraph. The Debt Collection Act of 1982 requires the assessment of 
interest, penalty fees, and administrative costs on delinquent debts as 
a means of strengthening enforcement of collections; however, it makes 
no provision to pay interest to the debtor for erroneous collections. 
OPM is not authorized to make such payments in the absence of a 
specific statute or authority permitting such payments.
Regulatory Flexibility Act
    No notice of proposed rulemaking is required for these regulations, 
and the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) do not apply.
List of Subjects in 5 CFR Part 179

    Claims.

Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM is amending part 179 of title 5 of the Code of 
Federal Regulations as follows:

PART 179--CLAIMS COLLECTION STANDARDS

    1. The authority citation in part 179 is revised to read as 
follows:

    Authority: 31 U.S.C. 952; 5 U.S.C. 1103; Reorganization Plan No. 
2 of 1978; 5 U.S.C. 5514; 5 CFR part 550 subpart K; 31 U.S.C. 3701; 
31 U.S.C. 3711; 31 U.S.C. 3716; 31 U.S.C. 3720A.

    2. Subpart C, consisting of Secs. 179.301 through 179.309, is 
revised to read as follows:

Subpart C--Administrative Offset

Sec.
179.301  Scope of regulations.
179.302  Definitions.
179.303  General.
179.304  Notification procedures.
179.305  Agency review.
179.306  Written agreement for repayment.
179.307  Administrative offset.
179.308  Accelerated procedures.
179.309  Additional administrative procedures.

Subpart C--Administrative Offset


Sec. 179.301  Scope of regulations.

    These regulations apply to the collection of debts owed to the 
United States arising from transactions with OPM other than those 
involving payments made from the Civil Service Retirement and 
Disability Fund (the Fund), or where a request for an offset from OPM's 
administrative accounts--other than the Fund--is received by OPM from 
another Federal agency. Regulations for other agencies to request OPM's 
Retirement and Insurance Group to recover a debt from the Fund are 
provided at subpart R of part 831 and subpart D of part 845 of title 5, 
Code of Federal Regulations. These regulations are consistent with the 
Federal Claims Collection Standards on Administrative Offset issued 
jointly by the Department of Justice and the General Accounting Office 
as set forth in 4 CFR 102.3.


Sec. 179.302  Definitions.

    Administrative offset, as defined in 31 U.S.C. 3701(a)(1), means 
withholding money payable by the United States Government to, or held 
by the Government for, a person to satisfy a debt the person owes the 
Government.
    Person, includes a natural person or persons, profit or non-profit 
corporation, partnership, association, trust, estate, consortium, or 
other entity which is capable of owing a debt to the United States 
Government except that agencies of the United States, or of any State 
or local government, shall be excluded.


Sec. 179.303  General.

    (a) The Director or his or her designee, after attempting to 
collect a debt from a person under section 3(a) of the Federal Claims 
Collection Act of 1966, as amended (31 U.S.C. 3711(a)), may collect the 
debt by administrative offset subject to the following:
    (1) The debt is certain in amount; and
    (2) It is in the best interest of the United States to collect the 
debt by administrative offset because it is less costly and speeds 
payment of the debt;
    (b) The Director, or his or her designee, may initiate 
administrative offset with regard to debts owed by a person to another 
agency of the United States Government, upon receipt of a request from 
the head of another agency, or his or her designee, and a certification 
that the debt exists and that the person has been afforded the 
necessary due process rights.
    (c) The Director, or his or her designee, may request another 
agency that holds funds payable to an OPM debtor to offset the debt 
against the funds held and will provide certification that:
    (1) The debt exists; and
    (2) The person has been afforded the necessary due process rights.
    (d) If the 6-year period for bringing action on a debt provided in 
28 U.S.C. 2415 has expired, then administrative offset may be used to 
collect the debt only if the costs of bringing such action are likely 
to be less than the amount of the debt.
    (e) No collection by administrative offset shall be made on any 
debt that has been outstanding for more than 10 years unless facts 
material to the Government's right to collect the debt were not known, 
and reasonably could not have been known, by the official or officials 
responsible for discovering and collecting such debt.
    (f) These regulations do not apply to:
    (1) A case in which administrative offset of the type of debt 
involved is explicitly provided for or prohibited by another statute.
    (2) Debts owed to OPM by other agencies of the United States or by 
any State or local government.


Sec. 179.304  Notification procedures.

    Before collecting any debt through administrative offset, a notice 
of intent to offset shall be sent to the debtor by certified mail, 
return receipt requested, at the most current address that is available 
to OPM. The notice shall provide:
    (a) A description of the nature and amount of the debt and the 
intention of OPM to collect the debt through administrative offset;
    (b) An opportunity to inspect and copy the records of OPM with 
respect to the debt;

    (c) An opportunity for review within OPM concerning OPM's 
determinations with respect to the debt; and

    (d) An opportunity to enter into a written agreement for the 
repayment of the amount of the debt.


Sec. 179.305  Agency review.

    (a) A debtor may dispute the existence of the debt, the amount of 
the debt, or the terms of repayment. The request to review a disputed 
debt must be received by the OPM official identified in the 
notification within 30 calendar days of the debtor's receipt of the 
written notice described in Sec. 179.304.

    (b) If the debtor requests an opportunity to inspect or copy OPM's 
records concerning the disputed claim, 10 business days will be granted 
for the review. The time period will be measured from the time the 
request for inspection is granted or from the time the copy of the 
records is received by the debtor.

    (c) Pending the resolution of a dispute initiated by the debtor, 
transactions in any of the debtor's account(s) maintained in OPM may be 
temporarily suspended to the extent of the debt that is owed. Depending 
on the type of transaction, the suspension could preclude payment, 
removal, or transfer, as well as prevent the payment of interest or 
discount due thereon. Should the dispute be resolved in the debtor's 
favor, the suspension will be lifted immediately.

    (d) During the review period, interest, penalties, and 
administrative costs authorized under the Federal Claims Collection Act 
of 1966, as amended, will continue to accrue.

Sec. 179.306  Written agreement for repayment.

    A debtor who admits liability but elects not to have the debt 
collected by administrative offset will be afforded an opportunity to 
negotiate a written agreement for the repayment of the debt. If the 
financial condition of the debtor does not support the ability to pay 
in one lump-sum, reasonable installments may be considered. No 
installment arrangement will be considered unless the debtor submits a 
financial statement, executed under penalty of perjury, reflecting the 
debtor's assets, liabilities, income, and expenses. The financial 
statement must be submitted within 10 business days of OPM's request 
for the statement. At OPM's option, a confess-judgment note or bond of 
indemnity with surety may be required for the installment agreement. 
Notwithstanding the provisions of this section, any reduction or 
compromise of a claim will be governed by 4 CFR part 103 and 31 U.S.C. 
3711.

Sec. 179.307  Administrative offset.

    (a) If the debtor does not exercise the right to request a review 
within the time specified in Sec. 179.305 or, if as a result of the 
review, it is determined that the debt is due and no written agreement 
is executed, then administrative offset shall be ordered in accordance 
with these regulations without further notice.

    (b) Request for offset to a Federal agency: The Director or his or 
her designee may request that funds due and payable to a debtor by a 
Federal agency be administratively offset in order to collect a debt 
owned to OPM by that debtor. In requesting administrative offset OPM, 
as creditor, will certify in writing to the Federal agency holding 
funds of the debtor:

    (1) That the debtor owes the debt;

    (2) The amount and basis of the debt; and

    (3) That OPM has complied with the requirements of 31 U.S.C. 3716, 
its own administrative offset regulations, and the applicable 
provisions of 4 CFR part 102 with respect to providing the debtor with 
due process.

    (c) Request for offset from a Federal agency: When administrative 
offset is authorized, any Federal creditor agency may request OPM to 
make an administrative offset from any OPM funds that are due and 
payable to a creditor agency's debtor. OPM shall initiate the requested 
administrative offset only upon:

    (1) Receipt of written certification from the creditor agency:

    (i) That the debtor owes the debt;

    (ii) The amount and basis of the debt;

    (iii) That the agency has prescribed regulations for the exercise 
of administrative offset; and

    (iv) That the agency has complied with its own administrative 
offset regulations and with the applicable provisions of 4 CFR part 
102, including providing any required hearing or review.

    (2) A determination by OPM that collection by offset against funds 
payable by OPM would not otherwise be contrary to law.

Sec. 179.308  Accelerated procedures.

    OPM may make an administrative offset against a payment to be made 
to the debtor prior to the completion of the procedures required by 
Sec. 179.304 and Sec. 179.305 if failure to take the offset would 
substantially jeopardize OPM's ability to collect the debt, and the 
time before the payment is to be made does not reasonably permit the 
completion of those procedures. Such prior offset shall be promptly 
followed by the completion of those procedures. Amounts recovered by 
offset but later found not to be owed to OPM shall be promptly 
refunded.

Sec. 179.309  Additional administrative procedures.

    Nothing contained in this chapter is intended to preclude the use 
of any other administrative remedy which may be available.


[FR Doc. 94-16632 Filed 7-8-94; 8:45 am]

BILLING CODE 6325-01-M