[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: 94-16633]


[[Page Unknown]]

[Federal Register: July 11, 1994]


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OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 179

RIN 3206-AF29

 

Claims Collection Standards; Debt Collection Act of 1982: Salary 
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 OPM's 
administrative accounts by Federal employees. 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 offset from the salaries of Federal 
employees without the employee's consent, provided that the employee 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 5 of the Debt Collection Act of 1982 
(Act) Pub. L. 97-365) codified at 5 U.S.C. 5514, 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, when the head of an agency determines that an 
employee of any agency is indebted to the United States, or is notified 
by the head of another agency that an agency employee is indebted to 
the United States, the employee's debt may be offset against his/her 
pay. Before agencies may use the salary offset recovery procedure, 
certain due process rights must be extended to the debtor.
    Before the Government may collect a debt by salary offset, an 
employee-debtor must be provided with notice of the debt and the 
opportunity to inspect and copy Government records relating to the 
debt, enter into a written repayment agreement, and request an 
impartial hearing on the determination of the agency concerning the 
existence or the amount of the debt. The employee must notify the 
agency of his/her intent to exercise these rights within the time 
period prescribed in the regulations.
    The Act requires agencies to issue regulations for salary offset. 
This final rule establishes the procedures the Office of Personnel 
Management (OPM) will follow in making a salary offset. OPM has 
determined that this document is interpretative; it implements a 
definitive statutory scheme and the requirements contained in 
regulations promulgated by OPM, codified in 5 CFR part 550, subpart K. 
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 60993). The comment period closed on January 18, 1994. 
Two labor organizations responded with comments. OPM has fully 
considered all of their comments.

Section 179.201  Purpose

    One commentor requested that we change the 10 years in the second 
sentence (i.e., the time allowed for commencing actions brought by the 
United States) to 6 years. They cited no basis for the request. Section 
179.201 is based on 31 U.S.C. 3716 which 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 179.202  Scope

    In response to a commenter, we corrected the reference ``Section 
179.207, Notice Requirement'' to ``Section 179.207, Hearing.''

Section 179.206  Notice Requirements Before Offset

    (a)(16) One commenter wished to insert ``with interest'' after the 
word ``employee'' in this sentence. While 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, 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. This 
reasoning applies also to the same comment regarding section 179.215 
Refunds.

Section 179.207  Hearing

    Both commenters objected to the perceived inequity in treatment of 
parties who fail to appear (Sec. 179.207(j)). We have inserted the 
following language:

    * * * proceed with the hearing as scheduled and make his/her 
determination based upon the oral testimony presented and the 
documentary evidence submitted by both parties. With the agreement 
of both parties, the hearing official shall schedule a new hearing 
date.

    One commenter suggested several other changes to this section, 
Secs. 179.208 and 179.209 but provided no bases for the changes. Since 
the regulation as published complies with requirements of the Debt 
Collection Act of 1982, the suggested changes were not made.

Executive Order (E.O.) 12291, Federal Regulation

    OPM has determined that this is not a major rule as defined under 
section 1(b) of E.O. 12291, Federal Regulation.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
are regulations that will affect only employees of the Federal 
Government.

List of Subjects in 5 CFR Part 179

    Claims.

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

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

PART 179--CLAIMS COLLECTION STANDARDS

    1. The authority citation for 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. Section 179.102 of subpart A is revised to read as follows:


Sec. 179.102  Delegation of authority.

    (a) The Chief Financial Officer and his or her delegates are 
designated by the Director and authorized to perform all the duties for 
which the Director is responsible under the Debt Collection Act of 1982 
and Office of Personnel Management regulations with the exception of 
debts arising from the Civil Service Retirement and Disability Fund, 
the Employees' Life Insurance Fund, the Retired Federal Employees 
Health Benefits Act (74 Stat. 849), and the Employees Health Benefits 
Fund. However, the Chief Financial Officer and his or her delegates 
will request a review by the General Counsel or his or her designee for 
all claims processed (in amounts of $2500 or more) for compromise, 
suspension, and termination of collection action.
    (b) The Associate Director for Retirement and Insurance and his or 
her delegates are designated by the Director and authorized to perform 
all the duties for which the Director is responsible under the Debt 
Collection Act of 1982 and Office of Personnel Management regulations 
on debts caused by payments from the Civil Service Retirement and 
Disability Fund (subchapter III of chapter 83 or chapter 84), claims 
under the provisions of the Federal Employees' Life Insurance Fund 
(chapter 87), the Retired Federal Employees Health Benefits Act (74 
Stat. 849), the Employees Health Benefits Fund (chapter 89), the Panama 
Canal Construction Annuity Act (58 Stat. 257), and, the Lighthouse 
Service Widows' Annuity Act (64 Stat. 465).

    3. Subpart B, consisting of Secs. 179.201 through 179.218, is 
revised to read as follows:

Subpart B--Salary Offset

Sec.
179.201  Purpose.
179.202  Scope.
179.203  Definitions.
179.204  Applicability of regulations.
179.205  Waiver requests and claims to the General Accounting 
Office.
179.206  Notice requirements before offset.
179.207  Hearing.
179.208  Certification.
179.209  Voluntary repayment agreement as alternative to salary 
offset.
179.210  Special review.
179.211  Notice of salary offset.
179.212  Procedures for salary offset.
179.213  Coordinating salary offset with other agencies.
179.214  Interest, penalties and administrative costs.
179.215  Refunds.
179.216  Request for the services of a hearing official when the 
creditor agency is not OPM.
179.217  Non-waiver of rights by payments.
179.218  Additional administrative collection action.

Subpart B--Salary Offset


Sec. 179.201  Purpose.

    The purpose of the Debt Collection Act of 1982 (Pub. L. 97-365), is 
to provide a comprehensive statutory approach to the collection of 
debts due the Federal Government. These regulations implement section 5 
of the Act which authorizes the collection of debts owed by Federal 
employees to the Federal Government by means of salary offset, except 
that no claim may be collected by such means if outstanding for more 
than 10 years after the agency's right to collect the debt first 
accrued, unless facts material to the Government's right to collect 
were not known, and could not reasonably have been known, by the 
official or officials who were charged with the responsibility for 
discovery and collection of such debts. These regulations are 
consistent with the regulations on salary offset published by the 
Office of Personnel Management (OPM) on July 3, 1984 (49 FR 27470) in 5 
CFR part 550, subpart K.


Sec. 179.202  Scope.

    (a) These regulations provide procedures for the collection of 
monies from a Federal employee's pay by salary offset to satisfy 
certain debts owed the Government.
    (b) These regulations apply to all collections by the Director of 
OPM (except collections involving debts because of payments made from 
the Civil Service Retirement and Disability Fund, payments made under 
the Retired Federal Employees Health Benefits Act (74 Stat. 849), the 
Panama Canal Construction Annuity Act and the Lighthouse Service 
Widows' Annuity Act and payments or premiums relating to the Federal 
Employees' Life Insurance Fund or the Federal Employees Health Benefits 
Fund) from:
    (1) Federal employees who owe debts to OPM; and
    (2) OPM employees who owe debts to other agencies.
    (c) These regulations do not apply to debts or claims arising under 
the Internal Revenue Code of 1954, as amended (26 U.S.C. 1 et seq.); 
the Social Security Act (42 U.S.C. 301 et seq.); the tariff laws of the 
United States; or to any case where collection of a debt by salary 
offset is explicitly provided for or prohibited by another statute 
(e.g., travel advances in 5 U.S.C. 5705 and employee training expenses 
in 5 U.S.C. 4108).
    (d) Section 179.207 does not apply to any adjustment to pay arising 
from an employee's election of coverage or a change in coverage under a 
Federal benefits program requiring periodic deductions from pay, if the 
amount to be recovered was accumulated over four pay periods or less.
    (e) Nothing in these regulations precludes the compromise, 
suspension, or termination of collection actions, where appropriate, 
under the standards implementing the Federal Claims Collection Act (31 
U.S.C. 3711 et seq., 4 CFR parts 101-105, 38 CFR 1.900 et seq.).
    (f) Nothing in these regulations precludes an employee from 
requesting a waiver of the debt under applicable statute; under the 
standards and procedures specified by the Federal Claims Collection 
Standards (FCCS); or waiver of salary overpayment under 5 U.S.C. 5584, 
10 U.S.C. 2774, or 32 U.S.C. 716, by submitting a subsequent claim to 
the General Accounting Office in accordance with procedures established 
by the General Accounting Office.


Sec. 179.203  Definitions.

    As used in this subpart the following definitions shall apply:
    Agency means:
    (1) An Executive Agency as defined by section 105 of title 5, 
United States Code;
    (2) A military department as defined by section 102 of title 5, 
United States Code;
    (3) An agency or court of the judicial branch including a court as 
defined in section 610 of title 28, United States Code, the District 
Court for the Northern Mariana Islands and the Judicial Panel and 
Multidistrict Litigation;
    (4) An agency of the legislative branch, including the U.S. Senate 
and the U.S. House of Representatives; and
    (5) Other independent establishments that are entities of the 
Federal Government.
    Certification means a written debt claim, as prescribed by 
Sec. 179.209, that is received from a creditor agency and which 
requests the paying agency to offset the salary of an employee.
    Claim See debt.
    Creditor agency means an agency of the Federal Government to which 
the debt is owed. For purposes of this part creditor agency includes 
OPM, unless otherwise noted.
    Debt means money owed by an employee of the Federal Government to 
an agency of the Federal Government, from sources which include loans 
insured or guaranteed by the United States and all other amounts due 
the Government from fees, leases, rents, royalties, services, sales of 
real or personal property, overpayments, penalties, damages, interests, 
fines and forfeitures (except those arising under the Uniform Code of 
Military Justice) and all other similar sources.
    Delinquent means the failure to pay an obligation or debt by the 
date specified in the initial notification or applicable contractual 
agreement, unless other payment arrangements have been agreed to by OPM 
and the debtor by that date, or if, at any time thereafter, the debtor 
fails to satisfy the obligations under a payment agreement with the 
creditor agency.
    Director means the Director of OPM or his or her designee.
    Disposable pay means that part of current basic pay, special pay, 
incentive pay, retired pay, retainer pay, or, in the case of an 
employee not entitled to basic pay, other authorized pay remaining 
after the deduction of any amount required by law to be withheld. OPM 
shall allow the following deductions, and any others required by law to 
be withheld, in determining disposable pay subject to salary offset;
    (1) Federal employment taxes;
    (2) Amounts mandatorily withheld for the U.S. Soldiers' and 
Airmen's Home;
    (3) Fines and forfeitures ordered by a court martial or by a 
commanding officer;
    (4) Federal, state or local income taxes no greater than would be 
the case if the employee claimed all dependents to which he or she is 
entitled and such additional amounts for which the employee presents 
evidence of a tax obligation supporting the additional withholding;
    (5) Amounts withheld from benefits payable under title II of the 
Social Security Act where the withholding is required by law;
    (6) Amounts deducted for Medicare;
    (7) Health insurance premiums;
    (8) Normal retirement contributions as explained in 5 CFR 
581.105(e) (e.g., Civil Service Retirement deductions, Survivor Benefit 
Plan or Retired Serviceman's Family Protection Plan); and
    (9) Normal life insurance premiums (e.g., Serviceman's Group Life 
Insurance and basic Federal Employee's Group Life Insurance premiums) 
exclusive of optional life insurance premiums.
    Employee means a current employee of OPM or other agency, including 
a current member of the Armed Forces or Reserve of the Armed Forces of 
the United States.
    FCCS means the Federal Claims Collection Standards jointly 
published by the Department of Justice and the General Accounting 
Office of 4 CFR 101.1 et seq.
    Hearing official means an individual (including an administrative 
law judge) responsible for conducting any hearing with respect to the 
existence or amount of a debt claimed, and rendering a decision on the 
basis of such hearing. A hearing official may not be under the 
supervision or control of the Director of OPM when OPM is the creditor 
agency.
    Notice of intent to offset or notice of intent means a written 
notice from a creditor agency to an employee that states the creditor 
agency's determination that the employee owes a debt to the creditor 
agency and apprises the employee of certain administrative rights.
    Notice of salary offset means a written notice from the paying 
agency to an employee after a certification has been issued by the 
creditor agency, informing the employee that salary offset will begin 
at the next officially established pay interval.
    Office means the central and regional offices of the Office of 
Personnel Management.
    Paying agency means the agency of the Federal Government which 
employs the individual who owes a debt to an agency of the Federal 
Government. In some cases, OPM may be both the creditor agency and the 
paying agency.
    Payroll office means the payroll office in the paying agency which 
is primarily responsible for the payroll records and the coordination 
of pay matters with the appropriate personnel office with respect to an 
employee. Payroll office, with respect to OPM, means the central 
payroll office.
    Salary offset means an administrative offset to collect a debt 
under 5 U.S.C. 5514 by deduction(s) at one or more officially 
established pay intervals from the current pay account of an employee, 
without his or her consent.
    Salary Offset Coordinator means an official, designated by the 
Director of OPM, who is responsible for coordinating debt collection 
activities for OPM.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by an employee to OPM or another 
agency as permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 
U.S.C. 716, or any other law.


Sec. 179.204  Applicability of regulations.

    These regulations are to be followed for all OPM collections 
(except those involving retirement, life, and health insurance debts 
for recovery by the Associate Director for Retirement and Insurance) in 
instances where:
    (a) OPM is owed a debt by an individual currently employed by 
another agency;
    (b) OPM is owed a debt by an individual who is a current employee 
of OPM; or
    (c) OPM currently employs an individual who owes a debt to another 
Federal agency. Upon receipt of proper certification from the creditor 
agency, OPM will offset the debtor-employee's salary in accordance with 
these regulations.


Sec. 179.205  Waiver requests and claims to the General Accounting 
Office.

    These regulations do not preclude an employee from requesting 
waiver of an overpayment under 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 
716, or in any way questioning the amount or validity of a debt by 
submitting a subsequent claim to the General Accounting Office in 
accordance with the procedures prescribed by the General Accounting 
Office. These regulations do not preclude an employee from requesting a 
waiver pursuant to other statutory provisions pertaining to the 
particular debt being collected.


Sec. 179.206  Notice requirements before offset.

    (a) Deductions under the authority of 5 U.S.C. 5514 shall not be 
made unless the creditor agency provides the employee with written 
notice that he/she owes a debt to the Federal government a minimum of 
30 calendar days before salary offset is initiated. When OPM is the 
creditor agency, this notice of intent to offset an employee's salary 
shall be hand-delivered at work, or sent by registered mail, return 
receipt requested, to the employee's most current address that is 
available to the Office and will state:
    (1) That the creditor agency has reviewed the records relating to 
the claim and has determined that a debt is owed, the amount of the 
debt, and the facts giving rise to the debt;
    (2) The creditor agency's intention to collect the debt by means of 
deduction from the employee's current disposable pay account until the 
debt and all accumulated interest are paid in full;
    (3) The amount, frequency, beginning date, and duration of the 
intended deductions;
    (4) An explanation of OPM's policy concerning interest, penalties 
and administrative costs including a statement that such assessments 
must be made unless excused in accordance with the FCCS, 4 CFR 101.1 et 
seq. (Sec. 179.214);
    (5) The employee's right to inspect and copy all records of the 
office pertaining to the debt claimed, or to request and to receive 
copies of such records if personal inspection is impractical;
    (6) If not previously provided, the opportunity to establish a 
schedule for the voluntary repayment of the debt through offset or to 
enter into an agreement to establish a schedule for repayment of the 
debt in lieu of offset (4 CFR 102.2(e)). The agreement must contain 
terms agreeable to the Office and must be in such form that it is 
legally enforceable. The agreement must:
    (i) Be in writing;
    (ii) Be signed by both the employee and the creditor agency;
    (iii) Specify all the terms of the arrangement for payment; and
    (iv) Contain a provision accelerating the debt in the event of a 
default by the debtor, but such an increase may not result in a 
deduction that exceeds 15 percent of the employee's disposable pay 
unless the employee has agreed in writing to the deduction of a greater 
amount (5 CFR 550.1104(i)).
    (7) The right to a hearing conducted by an impartial hearing 
official (an administrative law judge, or alternatively, a hearing 
official not under the supervision or control of the Director) with 
respect to the existence and amount of the debt claimed, or the 
repayment schedule (i.e., the percentage of disposable pay to be 
deducted each pay period), so long as a petition is filed by the 
employee as prescribed in Sec. 179.207;
    (8) The method and time period for requesting a hearing;
    (9) The name, address and phone number of an official or employee 
of the Office who may be contacted concerning procedures for requesting 
a hearing;
    (10) The name and address of the office to which the petition for a 
hearing should be sent;
    (11) That a timely and properly filed petition for hearing will 
stay the commencement of collection proceedings (a timely filing must 
be received in the office specified under paragraph (a)(10) of this 
section within 15 calendar days after receipt of such notice of intent 
to offset);
    (12) That the Office will initiate certification procedures to 
implement a salary offset (which may not exceed 15 percent of the 
employee's disposable pay) not less than 30 days from the date of 
receipt of the notice of debt, unless the employee files a timely 
petition for a hearing;
    (13) That a final decision on the hearing (if a hearing is 
requested) will be issued at the earliest practical date, but not later 
than 60 days after the filing of the petition requesting the hearing, 
unless the employee requests and the hearing official grants a delay in 
the proceedings;
    (14) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to;
    (i) Disciplinary procedures appropriate under chapter 75 of title 
5, United States code; part 752 of title 5, Code of Federal 
Regulations; or any other applicable statute or regulations;
    (ii) Penalties under the False Claims Act, sections 3729 through 
3731 of title 31, United States Code, or any other applicable statutory 
authority; and
    (iii) Criminal penalties under sections 286, 287, 1001, and 1002 of 
title 18, United States code, or any other applicable statutory 
authority;
    (15) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (16) That unless there are applicable contractual or statutory 
provisions to the contrary, amounts paid on or deducted for the debt, 
which are later waived or found not owed to the United States, will be 
promptly refunded to the employee; and
    (17) That proceedings with respect to such debt are governed by 
section 5 of the Debt Collection Act of 1982 (5 U.S.C. 5514).
    (b) The Office is not required to comply with paragraph (a) of this 
section for any adjustment to pay arising from:
    (1) An employee's selection of coverage or a change in coverage 
under a Federal benefits program requiring periodic deductions from 
pay, if the amount to be recovered was accumulated over four pay 
periods or less; or
    (2) An employee's consent to make voluntary withholdings from his 
or her current pay account.


Sec. 179.207  Hearing.

    (a) Request for hearing. Except as provided in paragraph (b) of 
this section, an employee who desires a hearing concerning the 
existence or amount of the debt or the proposed offset schedule must 
send such a request to the office designated in the notice of intent 
(Sec. 179.207(a)(10)). The request (or petition) for hearing must be 
received by the designated office not later than 15 calendar days 
following the employee's receipt of the notice. The employee's request 
(or petition) must:
    (1) Be signed by the employee;
    (2) Fully identify and explain with reasonable specificity all the 
facts, evidence and witnesses, if any, that the employee believes 
support his or her position; and
    (3) Specify whether an oral or paper hearing is requested. If an 
oral hearing is desired, the request should explain why the matter 
cannot be resolved by review of the documentary evidence alone (4 CFR 
102.3(c)).
    (b) Failure to timely submit. (1) If the employee files a petition 
for a hearing after the expiration of the 15 calendar day period 
provided for in paragraph (a) of this section, the Office may accept 
the request if the employee can show that the delay was the result of 
circumstances beyond his of her control or failure to receive actual 
notice of the filing deadline (unless the employee had actual notice of 
the filing deadline).
    (2) An employee waives the right to a hearing, and will have his or 
her disposable pay offset in accordance with the Office offset 
schedule, if the employee:
    (i) Fails to file a timely request for a hearing unless such 
failure is excused; or
    (ii) Fails to appear at an oral hearing of which he or she was 
notified unless the hearing official determines that failure to appear 
was due to circumstances beyond the employee's control.
    (c) Representation at the hearing. The creditor agency may be 
represented by legal counsel. The employee may represent himself or 
herself or may be represented by an individual of his or her choice and 
at his or her expense.
    (d) Review of Office records related to the debt. (1) An employee 
who intends to inspect or copy creditor agency records related to the 
debt, as provided by Sec. 179.207(a)(5), must send a letter to the 
official designated in the notice of intent to offset stating his or 
her intention. The letter must be received within 15 calendar days 
after the employee's receipt of the notice.
    (2) In response to a timely request submitted by the debtor, the 
designated official will notify the employee of the location and time 
when the employee may inspect and copy records related to the debt.
    (3) If personal inspection is impractical, arrangements shall be 
made to end copies of such records to the employee.
    (e) Hearing official. The Office may request an administrative law 
judge to conduct the hearing, or the Office may obtain a hearing 
official who is not under the supervision or control of the Director of 
OPM.
    (f) Obtaining the services of a hearing official when OPM is the 
creditor agency. (1) When the debtor is not an OPM employee and the 
Office cannot provide a prompt and appropriate hearing before a hearing 
official furnished pursuant to another lawful arrangement, the Office 
may contact an agent of the paying agency designated in 5 CFR part 581, 
appendix A, or other individual designated by the paying agency, and 
request a hearing official.
    (2) When the debtor is an OPM employee, the Office may contact any 
agent of another agency designated in 5 CFR part 581, appendix A, or 
otherwise designated by that agency, to request a hearing official.
    (g) Procedure.--(1) General. After the employee requests a hearing, 
the hearing official shall notify the employee of the form of the 
hearing to be provided. If the hearing will be oral, the notice shall 
set forth the date, time and location of the hearing. If the hearing 
will be paper, the employee shall be notified that he or she should 
submit arguments in writing to the hearing official by a specified date 
after which the record shall be closed. This date shall give the 
employee reasonable time to submit documentation.
    (2) Oral hearing. An employee who requests an oral hearing shall be 
provided an oral hearing if the hearing official determines that the 
matter cannot be resolved by review of documentary evidence alone 
(e.g., when an issue of credibility or veracity is involved). The 
hearing is not an adversarial adjudication and need not take the form 
of an evidentiary hearing. Oral hearings may take the form of, but are 
not limited to:
    (i) Informal conferences with the hearing official, in which the 
employee and agency representative will be given full opportunity to 
present evidence, witnesses, and argument;
    (ii) Informal meetings with an interview of the employee; or
    (iii) Formal written submissions with an opportunity for oral 
presentation.
    (3) Paper hearing. If the hearing official determines that an oral 
hearing is not necessary, he or she will make a determination based 
upon a review of the available written record (4 CFR 102.3(c) (2) and 
(3)).
    (4) Record. The hearing official must maintain a summary record of 
any hearing provided by this subpart (4 CFR 102.3(c)(1)(ii)). Witnesses 
who testify in oral hearings will do so under oath or affirmation.
    (h) Date of decision. The hearing official shall issue a written 
opinion stating his or her decision, based upon documentary evidence 
and information developed at the hearing, as soon as practicable after 
the hearing, but not later than 60 days after the date on which the 
petition was received by the creditor agency, unless the employee 
requests a delay in the proceedings. In such case the 60-day decision 
period shall be extended by the number of days by which the hearing was 
postponed.
    (i) Content of decision. The written decision shall include:
    (1) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (2) The hearing official's findings, analysis, and conclusions 
including a determination whether the debtor's petition for hearing was 
baseless and resulted from an intent to delay creditor agency 
collection activity and whether the Office should pursue other actions 
against the debtor as provided by 5 CFR 550.1104(d)(11); and
    (3) The terms of any repayment schedules, if applicable.
    (j) Failure to appear. In the absence of good cause shown (e.g., 
illness), an employee who fails to appear at a hearing shall be deemed, 
for the purpose of this subpart, to admit the existence and amount of 
the debt as described in the notice of intent. If the representative of 
the creditor agency fails to appear, the hearing official shall proceed 
with the hearing as scheduled and make his/her determination based upon 
the oral testimony presented and the documentary evidence submitted by 
both parties. With the agreement of both parties, the hearing official 
shall schedule a new hearing date. Both parties shall be given 
reasonable notice of the time and place of the new hearing.


Sec. 179.208  Certification.

    (a) OPM salary offset coordinator shall provide a certification to 
the paying agency in all cases where:
    (1) The hearing official determines that a debt exists;
    (2) The employee fails to contest the existence and amount of the 
debt by failing to request a hearing; or
    (3) The employee fails to contest the existence of the debt by 
failing to appear at a hearing.
    (b) The certification must be in writing and must state:
    (1) That the employee owes the debt;
    (2) The amount and basis of the debt;
    (3) The date the Government's right to collect the debt first 
accrued;
    (4) That the Office's regulations have been approved by OPM 
pursuant to 5 CFR part 550, subpart K;
    (5) The date on which payment(s) is due;
    (6) If the collection is to be made in installments, the number of 
installments to be collected, the amount of each installment or 
percentage of disposable pay, and the commencement date of the first 
installment, if a date other than the next officially established pay 
period is required; and
    (7) The date(s) of any action(s) taken under 5 U.S.C. 5514(b).


Sec. 179.209  Voluntary repayment agreement as alternative to salary 
offset.

    (a)(1) In response to a notice of intent, an employee may propose 
to repay the debt by making voluntary installment payments as an 
alternative to salary offset. An employee who wishes to repay a debt 
without salary offset shall submit in writing a proposed agreement to 
repay the debt. The proposal shall admit the existence of the debt, and 
the agreement must be in such form that it is legally enforceable. The 
agreement must:
    (i) Be in writing;
    (ii) Be signed by both the employee and the creditor agency;
    (iii) Specify all the terms of the arrangement for payment; and
    (iv) Contain a provision accelerating the debt in the event of 
default by the debtor, but such an increase may not result in a 
deduction that exceeds 15 percent of the employee's disposable pay 
unless the employee has agreed in writing to deduction of a greater 
amount (5 CFR 550.1104(i)).
    (2) Any proposal under paragraph (a) of this section must be 
received by the official designated in the notice of intent within 30 
calendar days after receipt of the notice.
    (b) The creditor agency will review a timely and properly submitted 
repayment proposal by the employee debtor and notify the employee 
whether the proposed written agreement for repayment is acceptable. It 
is within the creditor agency's discretion to accept a repayment 
agreement instead of proceeding by offset.
    (c) If the creditor agency decides that the proposed repayment 
agreement is unacceptable, the employee will have 15 days from the date 
he or she received notice of that decision to file a petition for a 
hearing or a special review as provided by Sec. 179.210.
    (d) If the creditor agency decides that the proposed repayment 
agreement is acceptable, the alternative arrangement must be in 
writing, signed by both the employee and the creditor agency designee 
and meet the other requirements of this section for a voluntary 
repayment agreement.


Sec. 179.210  Special review.

    (a) An OPM employee subject to salary offset or a voluntary 
repayment agreement, may, at any time, request a special review by the 
Office of the amount of the salary offset or voluntary payment, based 
on materially changed circumstances such as, but not limited to, 
catastrophic illness, divorce, death, or disability.
    (b) In determining whether an offset would prevent the employee 
from meeting essential subsistence expenses (food, housing, clothing, 
transportation and medical care), the employee shall submit a detailed 
statement and supporting documents for the employee, his or her spouse, 
and dependents indicating:
    (1) Income from all sources;
    (2) Assets;
    (3) Liabilities;
    (4) Number of dependents;
    (5) Expenses for food, housing, clothing and transportation;
    (6) Medical expenses; and
    (7) Exceptional expenses, if any.

If an OPM employee requests a special review under this section, the 
employee shall file an alternative proposed offset or payment schedule 
and a statement, with supporting documents (Sec. 179.210(b)), stating 
why the current salary offset or payments result in an extreme 
financial hardship to the employee.
    (c) The Director shall evaluate the statement and supporting 
documents, and determine whether the original offset or repayment 
schedule imposes an extreme financial hardship on the employee. The 
Director shall notify the employee in writing of such determination, 
including, if appropriate, a revised offset or repayment schedule.
    (d) If the special review results in a revised offset or repayment 
schedule, the OPM salary offset coordinator shall provide a new 
certification to the payroll office.


Sec. 179.211  Notice of salary offset.

    (a) Upon receipt of proper certification from a creditor agency, 
the OPM payroll office will send the OPM employee, identified in the 
certification as the debtor, a written notice of salary offset. Such 
notice shall, at a minimum:
    (1) State that OPM has received a properly certified debt claim 
from a creditor agency;
    (2) Contain a copy of the certification received from the creditor 
agency;
    (3) Advise the employee that salary offset will be initiated at the 
next officially established pay interval; and
    (4) State the amount of the claim and amount of deductions.
    (b) The payroll office shall provide a copy of the notice to the 
creditor agency and advise such agency of the dollar amount to be 
offset and the pay period when the offset will begin.


Sec. 179.212  Procedures for salary offset.

    (a) The Director or his or her designee shall coordinate salary 
deductions under this subpart.
    (b) OPM payroll office shall determine the amount of an employee's 
disposable pay and implement the salary offset.
    (c) Deductions shall begin effective the pay period following 
receipt by OPM's payroll office of proper certification of the debt 
(Sec. 179.208).
    (d) Types of collection.--(1) Lump-sum payment. A debt will be 
collected in a lump sum if possible. If an employee is financially 
unable to pay in one lump sum or the amount of the debt exceeds 15 
percent of disposable pay for an officially established pay interval, 
collection must be made in installments.
    (2) Installment deductions. Installment deductions will be made 
over a period not greater than the anticipated period of employment 
and, except in rare circumstances, not to exceed 3 years. The size and 
frequency of installment deductions will bear a reasonable relation to 
the size of the debt and the employee's ability to pay. The amount 
deducted for any period will not exceed 15 percent of the disposable 
pay from which the deduction is made unless the employee has agreed in 
writing to the deduction of a greater amount.
    (3) Lump-sum deductions from final check. A lump-sum deduction 
exceeding the 15 percent disposable pay limitation may be made from any 
final salary payment pursuant to 31 U.S.C. 3716 in order to liquidate 
the debt, whether the employee is being separated voluntarily or 
involuntarily.
    (4) Lump-sum deductions from other sources. When an employee 
subject to salary offset is separated from OPM and the balance of the 
debt cannot be liquidated by offset of the final salary check, the 
Office, pursuant to 31 U.S.C. 3716, the FCCS and OPM's implementing 
regulations, may offset the balance of the debt against any financial 
payment due the employee from the U.S. Government.
    (e) Multiple debts. In instances where two or more creditor 
agencies are seeking salary offset, or where two or more debts are owed 
to a single creditor agency, OPM payroll office may, at its discretion, 
determine whether one or more debts should be offset simultaneously 
within the 15 percent limitation.
    (f) Precedence of debts owed to OPM. For OPM employees, debts owed 
to the Office generally take precedence over debts owed to other 
agencies. In the event that a debt to the Office is certified while an 
employee is subject to a salary offset to repay another agency, the OPM 
payroll office may decide whether to have that debt repaid in full 
before collecting its claim or whether changes should be made in the 
salary deduction being sent to the other agency. If debts owed the 
Office can be collected in one pay period, the payroll office may 
suspend the salary offset to the other agency for that pay period in 
order to liquidate the office debt.
    (g) When an employee owes two or more debts, the best interests of 
the Government shall be the primary consideration in determining the 
order of debt collection. The OPM payroll office, in making this 
determination, will be guided primarily by the statute of limitations 
that affects the collection of the debt(s).


Sec. 179.213  Coordinating salary offset with other agencies.

    (a) Responsibility of OPM as the creditor agency. (1) The Director 
or his or her designee shall coordinate debt collections with other 
agencies and shall, as appropriate:
    (i) Arrange for a hearing or special review upon proper petitioning 
by a Federal employee; and
    (ii) Prescribe, upon consultation with the General Counsel, such 
additional practices and procedures as may be necessary to carry out 
the intent of this regulation.
    (2) The designated salary offset coordinator will be responsible 
for:
    (i) Ensuring that each notice of intent to offset is consistent 
with the requirements of Sec. 179.206;
    (ii) Ensuring that each certification of debt that is sent to a 
paying agency is consistent with the requirements of Sec. 179.208;
    (iii) Obtaining hearing officials from other agencies pursuant to 
Sec. 179.207(f); and
    (iv) Ensuring that hearings are properly scheduled.
    (3) Requesting recovery from current paying agency. Upon completion 
of the procedures established in these regulations and pursuant to 5 
U.S.C. 5514, the Office must:
    (i) Certify, in writing, to the paying agency that the employee 
owes the debt, the amount and basis of the debt, the date on which 
payment(s) is due, the date the Government's right to collect the debt 
first accrued, and that the Office's regulations implementing 5 U.S.C. 
5514 have been approved by the Office of Personnel Management;
    (ii) Advise the paying agency of the amount or percentage of 
disposable pay to be collected in each installment and the number and 
commencing date of the installments (if a date other than the next 
officially established pay period is required);
    (iii) Advise the paying agency of the action(s) taken under 5 
U.S.C. 5514(b) and give the date(s) and action(s) was taken (unless the 
employee has consented to the salary offset in writing or signed a 
statement acknowledging receipt of the required procedures and the 
written consent or statement is forwarded to the paying agency);
    (iv) Submit a debt claim certification containing the information 
specified in paragraphs (a)(3)(i), (a)(3)(ii) and (a)(3)(iii) of this 
section and an installment agreement (or other instruction on the 
payment schedule), if applicable, to the employee's paying agency; and
    (v) Submit the debt claim, as provided in Sec. 179.208, to the 
employee's paying agency for collection if the employee is in the 
process of separating, and has not received a final salary check, or 
other final payment(s) from the paying agency. The paying agency must 
certify the total amount of its collection on the debt and send a copy 
of the certification to the employee and another copy to the creditor 
agency. If the paying agency's collection does not fully satisfy the 
debt, and the paying agency is aware that the debtor is entitled to 
payments from the Civil Service Retirement and Disability Fund or other 
similar payments that may be due the debtor employee from other Federal 
Government sources, the paying agency will provide written notification 
of the outstanding debt to the agency responsible for making such other 
payments to the debtor employee. The written notification shall state 
that the employee owes a debt (including the amount) and that the 
provisions of this section have been fully complied with. The Office 
must submit a properly certified claim to the agency responsible for 
making such payments before the collection can be made.
    (4) Separated employee. If the employee is already separated and 
all payments due from his or her former paying agency have been paid, 
the Office may request, unless otherwise prohibited, that money due and 
payable to the employee from the Civil Service Retirement and 
Disability Fund (5 CFR 831.1801 et seq.  or 5 CFR 845.401 et seq.) or 
other similar funds, be administratively offset to collect the debt (31 
U.S.C. 3716 and the FCCS).
    (5) Employee transfer. When an employee transfers from one paying 
agency to another paying agency, the Office is not required to repeat 
the due process procedures described in 5 U.S.C. 5514 and this subpart 
to resume the collection. The Office will submit a properly certified 
claim to the new paying agency and will subsequently review the debt to 
make sure the collection is resumed by the new paying agency.
    (b) Responsibility of the Office as the paying agency--(1) Complete 
claim. When the Office receives a certified claim from a creditor 
agency, deductions should be scheduled to begin at the next officially 
established pay interval. Before deductions can begin, the employee 
must receive written notice from the Office including:
    (i) A statement that the Office has received a certified debt claim 
from the creditor agency;
    (ii) The amount of the debt claim;
    (iii) The date salary offset deductions will begin, and
    (iv) The amount of such deductions.
    (2) Incomplete claim. When the Office receives an incomplete 
certification of debt from a creditor agency, the Office must return 
the debt claim with notice that procedures under 5 U.S.C. 5514 and 5 
CFR 550.1101 et seq. must be followed and a properly certified debt 
claim received before action will be taken to collect from the 
employee's current pay account.
    (3) Review. The Office is not authorized to review the merits of 
the creditor agency's determination with respect to the amount or 
validity of the debt certified by the creditor agency.
    (4) Employees who transfer from one paying agency to another. If, 
after the creditor agency has submitted the debt claim to the Office, 
the employee transfers from OPM to a different paying agency before the 
debt is collected in full, the Office will certify the total amount 
collected on the debt. One copy of the certification will be furnished 
to the employee and one copy to the creditor agency along with notice 
of the employee's transfer.


Sec. 179.214  Interest, penalties and administrative costs.

    The office shall assess interest, penalties and administrative 
costs on debts owed pursuant to 31 U.S.C. 3717 and 4 CFR part 101.1 et 
seq. Penalties and administrative costs will be assessed on all 
delinquent debts.
    (a) In cases of default on a previous repayment agreement, the 
Office reserves the right to set a new interest rate which reflects the 
current value of funds to the Treasury at the time a new repayment 
agreement is executed.
    (b) The Office, on a case-by-case basis, may waive all interest 
accrued on debts paid in full within 60 days of the due date if there 
is no indication of fault or lack of good faith on the part of the 
debtor.
    (c) The Office may waive, in whole or in part, the collection of 
interest, penalties, and/or administrative costs assessed under this 
section under the criteria specified in part 103 of 4 CFR, chapter II, 
relating to the compromise of claims (without regard to the amount of 
the debt).
    (d) The Office may waive, in whole or in part, the collection of 
interest, penalties, and/or administrative costs assessed under this 
section if the Office determines that collection of these charges would 
be against equity and good conscience or not in the best interests of 
the United States.
    (e) The Office shall waive the accrual of interest pending 
consideration of a request for reconsideration, administrative review, 
or waiver of the underlying debt under provisions of a permissive 
statute providing for such review related to the debt.
    (f) The Office shall waive interest on repayment agreements when 
the amount of interest accruing equals or exceeds the amount of 
installments the debtor can reasonably afford and there is no 
indication of fault or lack of good faith on the part of the debtor.


Sec. 179.215  Refunds.

    (a) The Office shall promptly refund any amounts deducted under the 
authority of 5 U.S.C. 5514 when:
    (1) The debt is waived or otherwise found not to be owing the 
United States (unless expressly prohibited by statute or regulation); 
or
    (2) An administrative or judicial order directs the Office to make 
a refund.
    (b) Unless required or permitted by law or contract, refunds under 
this subsection shall not bear interest.


Sec. 179.216  Request for the services of a hearing official when the 
creditor agency is not OPM.

    (a) The Office will provide a hearing official upon request of the 
creditor agency when the debtor is employed by the Office and the 
creditor agency cannot provide a prompt and appropriate hearing before 
a hearing official furnished pursuant to another lawful arrangement.
    (b) The salary offset coordinator will secure qualified personnel 
to serve as hearing officials.
    (c) Services rendered under this section will be provided on a 
fully reimbursable basis pursuant to the Economy Act of 1932, as 
amended, 31 U.S.C. 1535.


Sec. 179.217  Non-waiver of rights by payments.

    An employee's involuntary payment of all or any portion of a debt 
collected under this subpart must not be construed as a waiver of any 
rights which the employee may have under 5 U.S.C. 5514 or any other 
provision of contract or law unless there are statutory or contractual 
provisions to the contrary.


Sec. 179.218  Additional administrative collection action.

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

[FR Doc. 94-16633 Filed 7-8-94; 8:45 am]
BILLING CODE 6325-01-M