[Federal Register Volume 62, Number 112 (Wednesday, June 11, 1997)]
[Proposed Rules]
[Pages 31763-31766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15182]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 62, No. 112 / Wednesday, June 11, 1997 / 
Proposed Rules  

[[Page 31763]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 581 and 582

RIN 3206-AH43


Processing Garnishment Orders for Child Support and Alimony and 
Commercial Garnishment of Federal Employees' Pay

AGENCY: Office of Personnel Management.

ACTION: Proposed rulemaking.

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SUMMARY: The Office of Personnel Management (OPM) proposes to amend the 
rules for processing garnishment orders for child support and alimony 
and the rules for processing commercial garnishment orders. The 
majority of the amendments to the child support and alimony garnishment 
regulations (``support regulations'') are mandated by the provisions of 
the Personal Responsibility and Work Opportunity Reconciliation Act of 
1996.
    In addition, OPM proposes to amend both the support regulations and 
the commercial garnishment regulations to provide that while the 
Federal Government's sovereign immunity has been waived to allow for 
processing garnishment orders, this waiver necessarily limited and that 
the Federal Government is not liable to pay money damages for failure 
to comply with legal process.

DATES: Comments should be received by August 11, 1997.

ADDRESSES: Send or deliver comments to Lorraine Lewis, General Counsel, 
Office of Personnel Management, Room 7355, 1900 E Street NW., 
Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT:
Murray M. Meeker, Senior Attorney, Office of the General Counsel, (202) 
606-1701.

SUPPLEMENTARY INFORMATION: In accordance with the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996, Public 
Law 104-193, enacted on August 22, 1996, OPM proposes to revise the 
definition of ``child support'' to permit the garnishment of attorney 
fees relating to the garnishment action. OPM also proposes to include 
three more types of Federal payments, that will be subject to 
garnishment: pension payments disbursed by the Department of Veterans 
Affairs; compensation for death payments; and ``black lung'' benefits 
payable under any Federal program.
    While not expressly mandated by Public Law 104-193, OPM believes 
that it was the intent of Congress in enacting this law, that awards 
for making suggestions as authorized by 5 U.S.C. 4503 be subject to 
support garnishment. OPM is, therefore, proposing to delete the 
exception for suggestion awards in section 581.104(j). These awards 
remain exempt from commercial garnishment orders.
    OPM proposes amendments to clarify section 581.105 concerning the 
precedence of tax levies and section 581.402 concerning the 
applicability of the maximum limitation of the Consumer Credit 
Protection Act, 15 U.S.C. 1673, in the unusual situation where an 
employee-obligor receives remuneration from more than one governmental 
entity.
    In compliance with the National Defense Authorization Act (NDAA) 
for Fiscal Year 1996, Public Law 104-106, enacted on February 10, 1996, 
OPM proposes to amend section 582.305(k) to require employing agencies 
to deduct the agency's administrative costs incurred in complying with 
commercial garnishment orders. In accordance with the intent of 
Congress as evidenced by the applicable legislative history of the 
NDAA, the creditor will be required to pay these costs.
    As requested by the Department of Justice, OPM is also proposing to 
amend section 582.305(c) where an appeal of a commercial garnishment 
action is filed and to amend section 582.305(g) in response to an issue 
raised in a recent judicial decision, First Virginia Bank v. Randolph, 
920 F.Supp. 213 (D.D.C. 1996), rev'd, No. 96-5205 (D.C. Cir. April 11, 
1997). Section 582.305(g) currently provides that where an employing 
agency initially determines that legal process should not be honored, 
if it subsequently determines that the initial determination was 
erroneous, the agency may correct its initial determination and honor 
the legal process. The district court indicated that the current 
section 582.305(g) supported the court's holding that Congress had 
waived the Federal Government's immunity in instances where an 
employing agency failed to comply with a commercial garnishment order. 
OPM's regulations are neither intended, nor may they be properly 
constructed, as support for the conclusion that Congress has waived the 
Federal Government's sovereign immunity in a manner that would make the 
Federal Government liable for damages as a result of a failure to 
comply with legal process. The proposed amendment to section 582.305(g) 
would delete both that portion of the paragraph that discusses an 
agency's authority to correct an error and the conclusion that under no 
circumstances will an agency be required to pay more than if it had 
originally honored the legal process, as this provision may be 
mistakenly construed as acknowledging Government liability and a 
concomitant waiver of sovereign immunity.
    OPM also proposed, in accordance with a request from the Justice 
Department, to amend section 581.305(e) to state the Government's 
similar absence of liability in the context of improperly effectuated 
support garnishment orders. It is the Federal Government's position 
that the support garnishment statute did not waive sovereign immunity 
in a manner that would make the Federal Government liable for damages 
as a result of failure to comply with legal process. This amendment to 
the support garnishment regulations alters regulatory language that has 
been in effect since 1980. The current regulatory language is incorrect 
as a matter of law. This amendment is in accordance with several 
important judicial decisions concerning sovereign immunity, including 
the decision recently announced by the United States Court of Appeals 
for the District of Columbia Circuit in Department of the Army v. 
Federal Labor Relations Authority, 56 F.3d 273 (1995).
    In accordance with the Minimum Wage Increase Act of 1996, section 
2104 of Public Law 104-188, OPM is amending section 582.402. Effective 
October 1, 1996, section 2104 set the minimum hourly wage at $4.75, and

[[Page 31764]]

effective September 1, 1997, the minimum hourly wage will be $5.15.

Regulatory Flexibility Act

    I certify that these regulations will not have significant economic 
impact on a substantial number of small entities because their effects 
are limited to Federal employees and their creditors.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

List of Subjects in 5 CFR Parts 581 and 582

    Alimony, Child support, Claims, Government employees, and Wages.

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

    Accordingly, OPM is proposing to amend parts 581 and 582 of Title 
5, Code of Federal Regulations, as follows:

PART 581--PROCESSING GARNISHMENT ORDERS FOR CHILD SUPPORT AND 
ALIMONY

    1. The authority citation for part 581 is revised as follows:

    Authority: 42 U.S.C. 659; 15 U.S.C. 1673; E.O. 12105 43 FR 59465 
and 3 CFR, 1979 Comp., p. 262.

    2. Section 581.101 is revised to read as follows:


Sec. 581.101  Purpose.

    (a) Notwithstanding any other provision of law (including section 
407 of title 42, United States Code, section 5301 of title 38, United 
States Code, and sections 8346 and 8470 of title 5, United States 
Code), section 659 of title 42, United States Code, as amended, 
provides that moneys, the entitlement to which is based upon 
remuneration for employment, due from, or payable by, the United States 
or the District of Columbia to any individual, shall be subject, in 
like manner and to the same extent as if the United States or the 
District of Columbia were a private person:
    (1) To legal process for the enforcement of an obligor's legal 
obligations to provide child support, alimony, or both, resulting from 
an action brought by an individual obligee; and
    (2) To withholding in accordance with State law enacted pursuant to 
subsections (a)(1) and (b) of section 666 of title 42, United States 
Code, and to regulations of the Secretary of Health and Human Services 
under such subsections, and to any other legal process brought by a 
State agency subject to regulations of the Secretary of Health and 
Human Services that is administering a program under an approved State 
plan to enforce the legal obligations of obligors to provide child 
support and alimony.
    (b) Section 659 of title 42, United States Code, as amended, 
provides further that each governmental entity shall be subject to the 
same requirements as would apply if the governmental entity were a 
private person, except as set forth in this part.
    3. In Sec. 581.102, paragraphs (d) and (f) are revised and 
paragraph (k) is added to read as follows:


Sec. 581.102  Definitions.

* * * * *
    (d) Child support means the amounts required to be paid for the 
support and maintenance of a child, including a child who has attained 
the age of majority under the law of the issuing State, or a child and 
the parent with whom the child is living, who provides for monetary 
support, health care, arrearages or reimbursement, and which may 
include other related costs and fees, interest and penalties, income 
withholding, attorney's fees, and other relief.
* * * * *
    (f) Legal process means any writ, order, summons, notice to 
withhold income pursuant to subsection (a)(1) or (b) of section 666 of 
title 42, United States Code, or other similar process in the nature of 
garnishment, which may include an attachment, writ of execution, or 
court ordered wage assignment, which--
    (1) Is issued by:
    (i) A court of competent jurisdiction, including Indian tribal 
courts, within any State, territory, or possession of the United 
States, or the District of Columbia;
    (ii) A court of competent jurisdiction in any foreign country with 
which the United States has entered into an agreement that requires the 
United States to honor such process; or
    (iii) An authorized official pursuant to an order of a court of 
competent jurisdiction or pursuant to State or local law; or
    (iv) A State agency authorized to issue income withholding notices 
pursuant to State or local law or pursuant to the requirements of 
section 666(b) to title 42 of the United States Code; and
    (2) Is directed to, and the purpose of which is to compel, a 
governmental entity, to make a payment from moneys otherwise payable to 
an individual, to another party to satisfy a legal obligation of the 
individual to provide child support, alimony, or both
* * * * *
    (k) Individual obligee means any individual or entity other than a 
State agency authorized to issue income withholding notices pursuant to 
the requirements of section 666(b) to title 42 of the United States 
Code.
    4. In Sec. 581.103, paragraph (c) is revised to read as follows:


Sec. 581.103  Moneys which are subject to garnishment.

* * * * *
    (c) For obligors generally:
    (1) Periodic benefits, including a periodic benefit as defined in 
section 429(h)(3) of title 42 of the United States Code, title II of 
the Social Security Act, to include a benefit payable in a lump sum if 
it is commutation of, or a substitute for, periodic payments; or other 
payments to these individuals under the programs established by 
subchapter II of chapter 7 of title 42 of the United States Code 
(Social Security Act); pension payments made by the Department of 
Veterans Affairs; and payments under chapter 9 of title 45 of the 
United States Code (Railroad Retirement Act) or any other system, plan, 
or fund established by the United States (as defined in section 662(a) 
of title 42 of the United States Code) which provides for the payment 
of:
    (i) Pensions;
    (ii) Retirement benefits;
    (iii) Retired/retainer pay;
    (iv) Annuities; and
    (v) Dependents' or survivors' benefits when payable to the obligor;
    (2) Refunds of retirement contributions where an application has 
been filed;
    (3) Employee contributions and Government contributions to the 
obligor's Thrift Savings Fund account in accordance with section 
8437(e) of title 5 of the United States Code;
    (4) Amounts received under any Federal program for compensation for 
work injuries; and
    (5) Benefits received under the Longshoremen's and Harbor Workers' 
Compensation Act.
    (6) Compensation for death under any Federal program, including 
death gratuities authorized under 5 U.S.C. 8133(f); 5 U.S.C. 8134(a); 
Public Law 103-332, section 312; and Public Law 104-208, section 651.
    (7) Any payment under any Federal program established to provide 
``black lung'' benefits;
    (8) Any payment by the Secretary of Veterans Affairs as 
compensation for a service-connected disability paid by the Secretary 
to a former member of the

[[Page 31765]]

Armed Forces who is in receipt of retired or retainer pay if the former 
member has waived either the entire amount or a portion of the retired 
or retainer pay in order to receive such compensation. In such cases, 
only that part of the Department of Veterans Affairs payment that is in 
lieu of the waived retired pay or waived retainer pay is subject to 
garnishment.


Sec. 581.104  [Amended]

    5. In Sec. 581.104, paragraph (j) is removed and paragraph (k) is 
redesignated as paragraph (j).
    6. In Sec. 581.105, paragraph (a) is revised to read as follows:


Sec. 581.105  Exclusions.

* * * * *
    (a) Are owed by the individual to the United States, except that an 
indebtedness based on a levy for income tax under section 6331 of title 
26 of the United States Code, shall not be excluded in complying with 
legal process for the support of minor children if the legal process 
was entered prior to the date of the levy;
* * * * *
    7. In Sec. 581.202, paragraphs (a) and (b) are revised to read as 
follows:


Sec. 581.202  Service of process.

    (a) A party using this part shall serve legal process on the agent 
designated in appendix A to this part, or if no agent has been 
designated for the governmental entity having payment responsibility 
for the moneys involved, then upon the head of that governmental 
entity, which has moneys due and payable to the obligor. Where the 
legal process is directed to, and the purpose of the legal process is 
to compel a governmental entity which holds moneys which are otherwise 
payable to an individual, to make a payment from such moneys in order 
to satisfy a legal obligation of such individual to provide child 
support or make alimony payments, the legal process need not expressly 
name the governmental entity as a garnishee.
    (b) Service shall be accomplished pursuant to State procedures in 
effect pursuant to subsection (a)(1) or (b) of section 666 of title 42 
of the United States Code. The designated agent shall note the date and 
time of receipt on the legal process. The governmental entity shall 
make every reasonable effort to facilitate proper service of process on 
its designated agent(s). If legal process is not directed to any 
particular official within the entity, or if it is addressed to the 
wrong individual, the recipient shall, nonetheless, forward the legal 
process to the designated agent. However, valid service is not 
accomplished until the legal process is received in the office of the 
designated agent.
* * * * *
    8. In Sec. 581.303, paragraph (a) is revised to read as follows:


Sec. 581.303  Response to legal process or interrogatories.

    (a) Whenever the designated agent is validly served with legal 
process pursuant to State procedures in effect pursuant to subsection 
(a)(1) or (b) of section 666 of title 42, United States Code, within 30 
calendar days, or within such longer period as may be prescribed by 
applicable State law, the agent shall comply with all applicable 
provisions of section 666, including as follows:
    (1) If an agent is served with notice concerning amounts owed by an 
obligor to more than one person, the agent shall comply with section 
666(b)(7);
    (2) Allocation of moneys due and payable to an individual under 
section 666(b) shall be governed by section 666(b) and the regulations 
prescribed under such section by the Secretary of Health and Human 
Services;
    (3) Such moneys as remain after compliance with paragraphs (a)(1) 
and (a)(2) of this section shall be available to satisfy any other such 
legal process on a first-come, first-served basis, with any such legal 
process being satisfied out of such moneys as remain after the 
satisfaction of all such legal process which have been previously 
served.
    (4) The agent shall also respond within 30 days to interrogatories 
which accompany legal process.
* * * * *
    9. In Sec. 581.305, paragraphs (d) and (e) are revised to read as 
follows:


Sec. 581.305  Honoring legal process.

* * * * *
    (d) If a governmental entity is served with more than one legal 
process for the same moneys due or payable to an individual, the entity 
shall comply with Sec. 581.303(a). Provided, That in no event will the 
total amount garnished for any pay or disbursement cycle exceed the 
applicable limitation set forth in Sec. 581.402.
    (e)(1) Neither the United States, any disbursing officer, nor any 
governmental entity shall be liable for any payment made from moneys 
due from, or payable by, the United States to any individual pursuant 
to legal process regular on its face, if such payment is made in 
accordance with this part.
    (2) Neither the United States, any disbursing officer, nor any 
governmental entity shall be liable under this part to pay money 
damages for failure to comply with legal process.
* * * * *
    10. In subpart D, Sec. 581.402 is revised to read as follows:


Sec. 581.402  Maximum garnishment limitations.

    (a) Except as provided in paragraph (b) of this section, pursuant 
to section 1673(b)(2) (A) and (B) of title 15 of the United States Code 
(the Consumer Credit Protection Act, as amended), unless a lower 
maximum garnishment limitation is provided by applicable State or local 
law, the maximum part of the aggregate disposable earnings subject to 
garnishment to enforce any support order(s) shall not exceed:
    (1) Fifty percent of the obligor's aggregate disposable earnings 
for any workweek, where the obligor asserts by affidavit, or by other 
acceptable evidence, that he or she is supporting a spouse, a dependent 
child, or both, other than the former spouse, child, or both, for whose 
support such order is issued, except that an additional five percent 
will apply if it appears on the face of the legal process, or from 
other evidence submitted in accordance with Sec. 581.202(d), that such 
earnings are to enforce a support order for a period which is 12 weeks 
prior to that workweek. An obligor shall be considered to be supporting 
a spouse, dependent child, or both, only if the obligor provides over 
half of the support for a spouse, dependent child or both.
    (2) Sixty percent of the obligor's aggregate disposable earnings 
for any workweek, where the obligor fails to assert by affidavit or 
establishes by other acceptable evidence, that he or she is supporting 
a spouse, dependent child, or both, other than a former spouse, child, 
or both, with respect to whose support such order is issued, except 
that an additional five percent will apply if it appears on the face of 
the legal process, or from other evidence submitted in accordance with 
Sec. 581.202(d), that such earnings are to enforce a support order for 
period which is 12 weeks prior to that workweek.
    (3) Where, under Sec. 581.302(a)(2), an obligor submits evidence 
that he or she is supporting a second spouse, child, or both a second 
spouse and dependent child, copies of the evidence shall be sent by the 
governmental entity to the garnishor, or the garnishor's 
representative, as well as the court, or other authority as specified 
in Sec. 581.102(f)(1), together with notification that the obligor's 
support claim will be honored. If the garnishor disagrees with the 
obligor's support

[[Page 31766]]

claim, the garnishor should immediately refer the matter to the court, 
or other authority, for resolution.
    (b) In instances where an obligor is receiving remuneration from 
more than one governmental entity, an authority described in 
Sec. 581.102(f)(1) may apply the limitations described in paragraph (a) 
of this section to the total remuneration, i.e., to the combined 
aggregate disposable earnings received by the obligor.

PART 582--COMMERCIAL GARNISHMENT OF FEDERAL EMPLOYEES' PAY

    11. The authority citation for part 582 is revised as follows:

    Authority: 5 U.S.C. 5520a; 15 U.S.C. 1673; Pub. L. 104-106, 
section 643; E.O. 12897, 3 CFR, 1995 Comp., p. 858.

    12. In Sec. 582.305, paragraphs (c), (g), and (k) are revised to 
read as follows:


Sec. 582.305  Honoring legal process.

* * * * *
    (c) (1) The filing of an appeal by an employee-obligor will not 
generally delay the processing of a garnishment action. If the 
employee-obligor establishes to the satisfaction of the employee-
obligor's agency that the law of the jurisdiction which issued the 
legal process provides that the processing of the garnishment action 
shall be suspended during an appeal, and if the employee-obligor 
establishes that he or she has filed an appeal, the employing agency 
shall comply with the applicable law of the jurisdiction and delay or 
suspend the processing of the garnishment action.
    (2) Notwithstanding paragraph (c)(1) of this section, the employing 
agency shall not be required to establish an escrow account to comply 
with legal process even if the applicable law of the jurisdiction 
requires private employers to do so.
* * * * *
    (g) (1) Neither the United States, an executive agency, nor any 
disbursing officer shall be liable for any payment made from moneys due 
from, or payable by, the United States to any individual pursuant to 
legal process regular on its face, if such payment is made in 
accordance with this part.
    (2) Neither the United States, an executive agency, nor any 
disbursing officer shall be liable under this part to pay money damages 
for failure to comply with legal process.
* * * * *
    (k) The agency's administrative costs incurred in executing a 
garnishment shall be paid by the creditor. The amount garnished, 
including the amount deducted as a administrative costs, may not exceed 
the limitations in Sec. 582.401

    [Example to paragraph (k): Where the employee-obligor's 
aggregate disposable earnings are $1,000; the commercial garnishment 
is at the 25% maximum percentage; and the cost of processing the 
commercial garnishment order is $25 per garnishment action: $225 
would be remitted in compliance with the order and $25 would be 
deducted as the administrative cost for a deduction total of $250. 
However, while only $225 would be remitted, the agency would reduce 
the balance due as if $250 had been remitted.]
* * * * *
    13. In Sec. 582.402, paragraph (a) is revised to read as follows:


Sec. 582.402  Maximum garnishment limitations.

* * * * *
    (a) Unless a lower maximum limitation is provided by applicable 
State or local law, the maximum part of an employee-obligor's aggregate 
disposable earnings subject to garnishment to enforce any legal debt 
other than an order for child support or alimony, including any amounts 
withheld to offset administrative costs as provided for in 
Sec. 582.305(k), shall not exceed 25 percent of the employee-obligor's 
aggregate disposable earnings for any workweek. As appropriate, State 
or local law should be construed as providing a lower maximum 
limitation where legal process may only be processed on a one at a time 
basis. Where an agency is garnishing 25 percent or more of an employee-
obligor's aggregate disposable earnings for any workweek in compliance 
with legal process to which an agency is subject under sections 459, 
461, and 462 of the Social Security Act, no additional amount may be 
garnished in compliance with legal process under this part. 
Furthermore, the following dollar limitations, which are contained in 
title 29 of the Code of Federal Regulations, part 870, must be applied 
in determining the garnishable amount of the employee's aggregate 
disposable earnings:
    (1) If the employee-obligor's aggregate disposable earnings for the 
workweek are in excess of 40 times the Fair Labor Standard Act (FLSA) 
minimum hourly wage, 25 percent of the employee-obligor's aggregate 
disposable earnings may be garnished. For example, effective September 
1, 1997, when the FLSA minimum wage rate is $5.15 per hour, this rate 
multiplied by 40 equals $206.00 and thus, if an employee-obligor's 
aggregate disposable earnings are in excess of $206.00 for a workweek, 
25 percent of the employee-obligor's aggregate disposable earnings are 
subject to garnishment.
    (2) If the employee-obligor's aggregate disposable earnings for a 
workweek are less than 40 times the FLSA minimum hourly wage, 
garnishment may not exceed the amount by which the employee-obligor's 
aggregate disposable earnings exceed 30 times the current minimum wage 
rate. For example, at an FLSA minimum wage rate of $5.15 per hour, the 
amount of aggregate disposable earnings which may not be garnished is 
$154.50 [$5.15 x 30]. Only the amount above $154.50 is garnishable.
    (3) If the employee-obligor's aggregate disposable earnings in a 
workweek are equal to or less than 30 times the FLSA minimum hourly 
wage, the employee-obligor's earnings may not be garnished in any 
amount.
* * * * *
[FR Doc. 97-15182 Filed 6-10-97; 8:45 am]
BILLING CODE 6325-01-M