[Federal Register Volume 61, Number 188 (Thursday, September 26, 1996)]
[Rules and Regulations]
[Pages 50444-50445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24717]


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FEDERAL MARITIME COMMISSION

46 CFR Part 505

[Docket No. 96-15]


Administrative Offset

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

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SUMMARY: This final rule adopts, without change, the existing 
regulations on administrative offset promulgated by the Department of 
the Treasury as mandated by the Debt Collection Improvement Act of 
1996. The rule allows the Commission to collect by administrative 
offset any delinquent debt owed it and sets forth the minimum due 
process rights that must be provided to the debtor when the Commission 
seeks to collect a debt by administrative offset.

EFFECTIVE DATE: October 28, 1996.

FOR FURTHER INFORMATION CONTACT:
Robert D. Bourgoin, General Counsel, Federal Maritime Commission, 800 
North Capitol Street, NW., Washington, DC 20573, (202) 523-5740.

SUPPLEMENTARY INFORMATION: The Debt Collection Improvement Act of 1996, 
Pub. L. 104-134, Chapter 10, section 31001, 101 Stat. 1321-358 
(``Act''), requires that before collecting a claim by administrative 
offset, a federal agency must either adopt, without change, regulations 
on collecting by administrative offset promulgated by the Departments 
of Justice or Treasury or the General Accounting Office, or prescribe 
regulations on collecting by administrative offset consistent with the 
aforementioned regulations. Administrative offset means the withholding 
of funds otherwise payable by the United States to a person, or held by 
the U.S. for a person, to satisfy a claim or debt.
    In compliance with the Act, the Federal Maritime Commission adopts 
as a final rule the existing regulations of the Department of the 
Treasury set forth at 31 CFR 5.30 (1995), which incorporate 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. The purpose of the regulations is to protect the 
minimum due process rights that must be afforded to the debtor when an 
agency seeks to collect a debt by administrative offset, including the 
ability to verify, challenge, and compromise claims, and access to 
administrative appeals procedures which are both reasonable and protect 
the interests of the United States.
    Notice and an opportunity for public comment are not necessary 
prior to issuance of this final rule because it is interpretive in 
nature and implements a definitive statutory scheme mandated by the 
Act. In addition, notice and an opportunity for public comment are 
unnecessary inasmuch as both were provided previously when the Federal 
Claims Collection Standards were enacted, 49 FR 8897, March 9, 1984, 
and when the Treasury regulations were implemented, 52 FR 52, January 
2, 1987.
    The Commission certifies pursuant to the Regulatory Flexibility 
Act, 5 U.S.C. 605(b), that this rule will not have a significant 
economic impact on a substantial number of small entities, including 
small businesses, small organizational units, and small governmental 
jurisdictions because it merely facilitates collection of already 
incurred debts.
    The rule does not contain any collection of information 
requirements as defined by the Paperwork Reduction Act of 1995, as 
amended. Therefore, Office of Management and Budget review is not 
required.

List of Subjects in 46 CFR Part 505

    Administrative offset, Administrative practice and procedure, 
Claims, Debt collections.
    Part 505 of Title 46 of the Code of Federal Regulations is added to 
read as follows:

PART 505--ADMINISTRATIVE OFFSET

505.1  Scope of regulations.
505.2  Definitions.
505.3  General.
505.4  Notification procedures.
505.5  Agency review.
505.6  Written agreement for repayment.
505.7  Administrative offset.
505.8  Jeopardy procedure.

    Authority: 31 U.S.C. 3701; 31 U.S.C. 3711; 31 U.S.C. 3716.


Sec. 505.1  Scope of regulations.

    These regulations apply to the collection of debts owed to the 
United States arising from transactions with the Commission, or where a 
request for an offset is received by the Commission from another 
agency. 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. 505.2  Definitions.

    (a) 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.
    (b) 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. 505.3  General.

    (a) The Chairman 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 assembled (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 interests of the United States to collect the 
debt by administrative offset because of the decreased costs of 
collection and the acceleration in the payment of the debt.
    (b) The Chairman, 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.

[[Page 50445]]

    (c) The Chairman, or his or her designee, may request another 
agency that holds funds payable to a Commission 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 six-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; 
or
    (2) Debts owed by other agencies of the United States or by any 
State or local government.


Sec. 505.4  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 the Commission. The notice shall provide:
    (a) A description of the nature and amount of the debt and the 
intention of the Commission to collect the debt through administrative 
offset;
    (b) An opportunity to inspect and copy the records of the 
Commission with respect to the debt;
    (c) An opportunity for review within the Commission of the 
determination of the Commission 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. 505.5  Agency review.

    (a) A debtor may dispute the existence of the debt, the amount of 
debt, or the terms of repayment. A request to review a disputed debt 
must be submitted to the Commission official who provided notification 
within 30 calendar days of the receipt of the written notice described 
in Sec. 505.4.
    (b) If the debtor requests an opportunity to inspect or copy the 
Commission'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 by the debtor, transactions 
in any of the debtor's account(s) maintained in the Commission may be 
temporarily suspended. Depending on the type of transaction the 
suspension could preclude its 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 
immediately lifted.
    (d) During the review period, interest, penalties, and 
administrative costs authorized under the Federal Claims Collection Act 
of 1996, as amended, will continue to accrue.


Sec. 505.6  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 the Commission's 
request for the statement. At the Commission's option, a confess-
judgment note or bond of indemnity with surety may be required for 
installment agreements. Notwithstanding the provisions of this section, 
any reduction or compromise of a claim will be governed by 4 CFR part 
103.


Sec. 505.7  Administrative offset.

    (a) If the debtor does not exercise the right to request a review 
within the time specified in Sec. 505.5 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) Requests for offset to other Federal agencies. The Chairman or 
his or her designee may request that funds due and payable to a debtor 
by another Federal agency be administratively offset in order to 
collect a debt owed to the Commission by that debtor. In requesting 
administrative offset, the Commission, 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 the agency 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) Requests for offset from other Federal agencies. Any Federal 
agency may request that funds due and payable to its debtor by the 
Commission be administratively offset in order to collect a debt owed 
to such Federal agency by the debtor. The Commission shall initiate the 
requested 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 the Commission that collection by offset 
against funds payable by the Commission would be in the best interest 
of the United States as determined by the facts and circumstances of 
the particular case, and that such offset would not otherwise be 
contrary to law.


Sec. 505.8  Jeopardy procedure.

    The Commission may effect an administrative offset against a 
payment to be made to the debtor prior to the completion of the 
procedures required by Secs. 505.4 and 505.5 of this part if failure to 
take the offset would substantially jeopardize the Commission'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 the Commission shall be promptly refunded.

    By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 96-24717 Filed 9-25-96; 8:45 am]
BILLING CODE 6730-01-M