[Federal Register Volume 59, Number 229 (Wednesday, November 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29432]


[[Page Unknown]]

[Federal Register: November 30, 1994]


=======================================================================
-----------------------------------------------------------------------

PENSION BENEFIT GUARANTY CORPORATION

29 CFR Part 2609

RIN 1212-AA64

 

Debt Collection by Administrative Offset

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Pension Benefit Guaranty Corporation (``PBGC'') is 
amending its regulations to provide for debt collection by 
administrative offset. The procedures in this rule implement 
administrative offset, as authorized by the Federal Claims Collection 
Act of 1966, as amended by the Debt Collection Act of 1982, and in 
accordance with standards prescribed by the Comptroller General of the 
United States and the Attorney General of the United States. The PBGC 
believes that adoption of this rule will enhance its debt collection 
ability.

EFFECTIVE DATE: December 30, 1994.

FOR FURTHER INFORMATION CONTACT:
Catherine B. Klion, Attorney, Office of the General Counsel, Pension 
Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-
4026, 202-326-4024 (202-326-4179 for TTY and TDD). (These are not toll-
free numbers.)

SUPPLEMENTARY INFORMATION: The Pension Benefit Guaranty Corporation 
(``PBGC'') administers the pension plan termination insurance program 
under title IV of the Employee Retirement Income Security Act of 1974, 
as amended (``ERISA'') (29 U.S.C. 1301 et seq.). In conjunction with 
the pension plan termination insurance program, persons (including 
organizations and entities) incur various types of debts to the PBGC, 
and the PBGC incurs various types of liabilities (including contractual 
obligations). The PBGC anticipates that administrative offset will 
enhance its debt collection ability because persons owing debts to the 
PBGC sometimes receive payments from federal government agencies (e.g., 
in connection with government contracts). (As was stated in the 
preamble to the proposed administrative offset rule, the PBGC generally 
will not offset against plan benefits.)
    Administrative offset is defined as ``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'' (31 U.S.C. 
3701(a)(1)). The Debt Collection Act of 1982, which amended the Federal 
Claims Collection Act of 1966 (31 U.S.C. 3701, et seq.), authorizes the 
collection of debts owed to the United States by administrative offset 
(31 U.S.C. 3716). Before collecting a claim by administrative offset, 
the head of an agency must prescribe regulations on administrative 
offset based on the best interests of the United States Government, the 
likelihood of collecting a claim by administrative offset, and, for 
collecting a claim by administrative offset after the six-year period 
for bringing a civil action on a claim under 28 U.S.C. 2415 has 
expired, the cost-effectiveness of leaving a claim unresolved for more 
than six years (31 U.S.C. 3716(b)).
    The Comptroller General of the United States and the Attorney 
General have amended the Federal Claims Collections Standards 
(``FCCS'') (4 CFR parts 101 through 105) to implement the Debt 
Collection Act of 1982. Part 102 of those regulations prescribe 
standards for debt collection by administrative offset. The procedures 
prescribed in this rule are consistent with applicable provisions of 
those regulations.
    The PBGC's Financial Operations Department (``FOD'') will have 
primary responsibility for the new debt collection procedures in this 
rule, including applying amounts recovered by administrative offset to 
multiple debts, requesting offset by other agencies, and processing 
requests for offset from other agencies. However, ascertaining the 
indebtedness and providing notice to the debtor and administrative 
review will continue to be handled by the organizational unit with 
functional responsibility for the type of claim involved, including, 
where applicable, review by the Appeals Board (see Sec. 2606.1(b) (5) 
through (9)). (Applicable assignments of responsibilities are set forth 
in the mission and functions statements issued by the Executive 
Director and included (along with organization charts) in the PBGC 
Directives Manual as section 30-1 of Part GA (General Administration).)
    On May 20, 1994 (59 FR 26467), the PBGC proposed to add part 2609, 
Debt Collection--Administrative Offset, to its regulations (29 CFR part 
2609). The PBGC received no comments on proposed part 2609.
    The provisions of this final rule are identical to those proposed. 
However, in the near future the PBGC expects to issue an interim final 
rule on tax refund offset (as anticipated in the agency's semiannual 
regulatory agenda (59 FR 58424, 58429, November 14, 1994)). Because the 
PBGC plans to add its tax refund offset procedures to part 2609 (as 
subpart C), it is designating all but the definitions section of the 
proposed administrative offset regulations as subpart B (and 
substituting ``subpart'' for ``part''). (The terms in Sec. 2609.2 are 
included in a general subpart A.)
    Finally, in response to a letter from the Small Business 
Administration, the PBGC is reiterating its certification that sections 
603 and 604 of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do 
not apply to this action, with an expanded explanation of the reasons 
for such certification.

E.O. 12866 and the Regulatory Flexibility Act

    The PBGC has determined that this action is not a ``significant 
regulatory action'' under the criteria set forth in Executive Order 
12866 because the rule will not have an annual effect on the economy of 
$100 million or more or adversely affect in a material way the economy, 
a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency; materially 
alter the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or raise 
novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in Executive Order 
12866. The purpose of the rule is to enhance the PBGC's debt collection 
ability. The procedures will be triggered only by a failure to pay a 
debt already owed.
    The PBGC certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
as provided in section 605 of the Regulatory Flexibility Act (5 U.S.C. 
601, et seq.), sections 603 and 604 do not apply. As indicated above, 
this rule is limited to procedures required by the Federal Claims 
Collections Standards for use of administrative offset to collect 
certain debts owed to the United States. Thus, a small entity can avoid 
the application of this rule by paying such debts when due. Further, 
insofar as provisions of this rule do apply, their primary effect will 
be to provide procedural protection to persons whose debts are 
otherwise subject to collection by administrative offset.

List of Subjects in 29 CFR Part 2609

    Administrative practice and procedure, Claims.

    For the reasons set forth above, the PBGC is amending subchapter A, 
chapter XXVI of 29 CFR by adding a new part 2609 to read as follows:

PART 2609--DEBT COLLECTION

Subpart A--General

Sec.
2609.1  [Reserved]
2609.2  Definitions.

Subpart B--Administrative Offset

2609.21  Purpose and scope.
2609.22  Application of Federal Claims Collection Standards.
2609.23  Administrative offset procedures.
2609.24  PBGC requests for offset by other agencies.
2609.25  Requests for offset from other agencies.

Subpart C--Tax Refund Offset [Reserved]

    Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3716; 4 CFR part 
102.

Subpart A--General


Sec. 2609.1   [Reserved]


Sec. 2609.2   Definitions.

    For purposes of this part:
    Administrative offset has the meaning set forth in 31 U.S.C. 
3701(a)(1).
    Agency means an executive or legislative agency (within the meaning 
of 31 U.S.C. 3701(a)(4)).
    Claim and debt, as defined in the Federal Claims Collection 
Standards (4 CFR 101.2(a)), are used synonymously and interchangeably 
to refer to an amount of money or property which has been determined by 
an appropriate agency official to be owed to the United States from any 
person, organization, or entity, except another Federal agency.
    Federal Claims Collection Act means the Federal Claims Collection 
Act of 1966, as amended (31 U.S.C. 3701 et seq.).
    Federal Claims Collection Standards means 4 CFR parts 101 through 
105, which are regulations issued jointly by the Comptroller General of 
the United States and the Attorney General of the United States that 
implement the Federal Claims Collection Act.
    PBGC means the Pension Benefit Guaranty Corporation.
    Repayment agreement means a written agreement by a debtor to repay 
a debt to the PBGC.

Subpart B--Administrative Offset


Sec. 2609.21   Purpose and scope.

    (a) Purpose. This subpart prescribes procedures for debt collection 
by administrative offset, as authorized by the Federal Claims 
Collection Act (31 U.S.C. 3716), and consistent with applicable 
provisions of the Federal Claims Collection Standards.
    (b) Scope. The procedures in this subpart apply when the PBGC 
determines that collection by administrative offset of a claim that is 
liquidated or certain in amount is feasible and not otherwise 
prohibited or when another agency seeks administrative offset against a 
payment to be made by the PBGC.


Sec. 2609.22   Application of Federal Claims Collection Standards.

    The PBGC will determine the feasibility of collection by 
administrative offset, whether to accept a repayment agreement in lieu 
of offset, and how to apply amounts collected by administrative offset 
on multiple debts as provided in the Federal Claims Collection 
Standards (4 CFR 102.3).
    (a) Feasibility. The PBGC will determine whether collection by 
administrative offset is feasible on a case-by-case basis in the 
exercise of sound discretion. In making such determinations, the PBGC 
will consider:
    (1) Whether administrative offset can be accomplished, both 
practically and legally;
    (2) Whether administrative offset is best suited to further and 
protect all governmental interests;
    (3) In appropriate circumstances, the debtor's financial condition; 
and
    (4) Whether offset would tend to interfere substantially with or 
defeat the purposes of the program authorizing the payments against 
which offset is contemplated.
    (b) Repayment agreements. The PBGC will exercise its discretion in 
determining whether to accept a repayment agreement in lieu of offset, 
balancing the Government's interest in collecting the debt against 
fairness to the debtor. If the debt is delinquent (within the meaning 
of 4 CFR 101.2(b)) and the debtor has not disputed its existence or 
amount, the PBGC will accept a repayment agreement in lieu of offset 
only if the debtor is able to establish that offset would result in 
undue financial hardship or would be against equity and good 
conscience.
    (c) Multiple debts. When the PBGC collects multiple debts by 
administrative offset, it will apply the recovered amounts to those 
debts in accordance with the best interests of the United States, as 
determined by the facts and circumstances of the particular case, 
paying special attention to applicable statutes of limitations.


Sec. 2609.23  Administrative offset procedures.

    (a) General. Except as otherwise required by law or as provided in 
paragraph (e) of this section, the PBGC will not effect administrative 
offset against a payment to be made to a debtor prior to the completion 
of the procedures specified in paragraphs (b) and (c) of this section. 
However, the PBGC will not duplicate any notice or other procedural 
protection it previously provided in connection with the same debt 
under some other statutory or regulatory authority, such as part 2606 
of this subchapter.
    (b) Notice. The PBGC will provide written notice informing the 
debtor of the following:
    (1) The nature and amount of the debt, and the PBGC's intention to 
collect by offset;
    (2) That the debtor may inspect and copy PBGC records pertaining to 
the debt in accordance with part 2603 or part 2607 of this subchapter, 
as applicable (access under the Freedom of Information Act (5 U.S.C. 
552) or the Privacy Act (5 U.S.C. 552a), respectively);
    (3) How and from whom the debtor may obtain administrative review 
of a determination of indebtedness;
    (4) The facts and circumstances that the PBGC will consider in 
determining whether to accept a repayment agreement in lieu of offset; 
and
    (5) If the PBGC has not previously demanded payment of the debt, 
the date by which payment must be made to avoid further collection 
action.
    (c) Administrative review. (1) A debtor may obtain review within 
the PBGC of a determination of indebtedness by submitting a written 
request for review, designated as such, to the PBGC official specified 
in the notice of indebtedness. Unless another regulation in this 
chapter specifies a different period of time, such a request must be 
submitted within 30 days after the date of a PBGC notice under 
paragraph (b) of this section.
    (2) A request for review must:
    (i) State the ground(s) on which the debtor disputes the debt; and
    (ii) Reference all pertinent information already in the possession 
of the PBGC and include any additional information believed to be 
relevant.
    (3) The PBGC will review a determination of indebtedness, when 
requested to do so in a timely manner. The PBGC will issue a written 
decision, based on the written record, and will notify the debtor of 
its decision.
    (i) The review will be conducted by an official of at least the 
same level of authority as the person who made the determination of 
indebtedness.
    (ii) The notice of the PBGC's decision on review will include a 
brief statement of the reason(s) why the determination of indebtedness 
has or has not been changed.
    (4) Upon receipt of a request for administrative review, the PBGC 
may, in its discretion, temporarily suspend transactions in any of the 
debtor's accounts maintained by the PBGC. If the PBGC resolves the 
dispute in the debtor's favor, it will lift the suspension immediately.
    (d) Repayment agreement in lieu of offset. (1) The PBGC will not 
consider entering a repayment agreement in lieu of offset unless a 
debtor submits a copy of the debtor's most recent audited (or if not 
available, unaudited) financial statement (with balance sheets, income 
statements, and statements of changes in financial position), to the 
extent such documents have been prepared, and other information 
regarding the debtor's financial condition (e.g., the types of 
information on assets, liabilities, earnings, and other factors 
specified in Sec. 2622.6 (b)(3) through (b)(7) of this chapter).
    (2) The PBGC may require appropriate security as a condition of 
accepting a repayment agreement in lieu of offset.
    (e) Exception. (1) The PBGC may effect administrative offset 
against a payment to be made to the debtor prior to completing the 
procedures specified in paragraphs (b) and (c) of this section if:
    (i) Failure to take the offset would substantially prejudice the 
government's ability to collect the debt; and
    (ii) The time before the payment is to be made does not reasonably 
permit the completion of those procedures.
    (2) The PBGC has determined that a case in which it applies the 
special rule in Sec. 2622.9(c) of this chapter meets the criteria in 
paragraph (e)(1) of this section.
    (3) If the PBGC effects administrative offset against a payment to 
be made to a debtor prior to completing the procedures specified in 
paragraphs (b) and (c) of this section, the PBGC--
    (i) Will promptly complete those procedures; and
    (ii) Will promptly refund any amounts recovered by offset but later 
found not to be owed to the Government.


Sec. 2609.24  PBGC requests for offset by other agencies.

    (a) General. The PBGC may request that funds payable to its debtor 
by another agency be administratively offset to collect a debt owed to 
the PBGC by the debtor. A PBGC request for administrative offset 
against amounts due and payable from the Civil Service Retirement and 
Disability Fund will be made in accordance with 5 CFR part 831, subpart 
R (Agency Requests to OPM for Recovery of a Debt from the Civil Service 
Retirement and Disability Fund).
    (b) Certification. In requesting administrative offset, the 
Director of the Financial Operations Department (or a department 
official designated by the Director) will certify in writing to the 
agency holding funds of the debtor--
    (1) That the debtor owes the debt (including the amount) and that 
the PBGC has fully complied with the provisions of 4 CFR 102.3; and
    (2) In a request for administrative offset against amounts due and 
payable from the Civil Service Retirement and Disability Fund, that the 
PBGC has complied with applicable statutes and the regulations and 
procedures of the Office of Personnel Management.


Sec. 2609.25  Requests for offset from other agencies.

    (a) General. As provided in the Federal Claims Collections 
Standards (4 CFR 102.3(d)), the PBGC generally will comply with 
requests from other agencies to initiate administrative offset to 
collect debts owed to the United States unless the requesting agency 
has not complied with the applicable provisions of the Federal Claims 
Collection Standards or the offset would be otherwise contrary to law.
    (b) Submission of requests. (1) Any agency may request that funds 
payable to its debtor by the PBGC be administratively offset to collect 
a debt owed to such agency by the debtor by submitting the 
certification described in paragraph (c) of this section.
    (2) All such requests should be directed to the Director, Financial 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026.
    (c) Certification required. The PBGC will not initiate 
administrative offset in response to a request from another agency 
until it receives written certification from the requesting agency, 
signed by an appropriate agency official, that the debtor owes the debt 
(including the amount) and that the requesting agency has fully 
complied with the provisions of 4 CFR 102.3 (with a citation to the 
agency's own administrative offset regulations).

Subpart C--Tax Refund Offset [Reserved]

    Issued in Washington, DC this 21st day of November, 1994.
Martin Slate,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 94-29432 Filed 11-29-94; 8:45 am]
BILLING CODE 7708-01-M