[Federal Register Volume 67, Number 49 (Wednesday, March 13, 2002)]
[Proposed Rules]
[Pages 11264-11268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-5924]


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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. 67, No. 49 / Wednesday, March 13, 2002 / 
Proposed Rules  

[[Page 11264]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 32

RIN Number 0990-AA05


Administrative Wage Garnishment

AGENCY: Department of Health and Human Services.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Health and Human Services (HHS) proposes to 
amend its regulations on claims collection to implement the 
administrative wage garnishment provisions (AWG) of the Debt Collection 
Improvement Act of 1996 (DCIA). The proposed rule will allow HHS to 
garnish the disposable pay of an individual to collect delinquent non-
tax debts owed to the United States without first obtaining a court 
order.

DATES: Submit comments on or before May 13, 2002.

ADDRESSES: Send all comments concerning this proposed rule to: Timothy 
M. White, Associate General Counsel, Office of the General Counsel, 
Business and Administrative Law Division, Cohen Building, Room 5362, 
330 Independence Avenue, SW., Washington, DC 20201.

FOR FURTHER INFORMATION CONTACT: Timothy M. White, 202-619-0150; or 
Katherine M. Drews, 202-619-0150.

SUPPLEMENTARY INFORMATION:

Background

    This proposed regulation implements the administrative wage 
garnishment provisions in section 31001(o) of the Debt Collection 
Improvement Act of 1996 (DCIA), Public Law 104-134, 110 Stat. 1321-358, 
codified at 31 U.S.C 3720D. Under the administrative wage garnishment 
provisions of the DCIA, Federal agencies may garnish administratively 
up to 15 percent of the wages of a debtor to satisfy a delinquent non-
tax debt owed to the United States. Prior to the enactment of the DCIA, 
Federal agencies were required to obtain a court judgment before 
garnishing the wages of non-Federal employees. Section 31001 (o) of the 
DCIA preempts State laws that prohibit wage garnishment or otherwise 
govern wage garnishment procedures.
    As authorized by the DCIA, a Federal agency collecting a delinquent 
non-tax debt may garnish a delinquent debtor's wages in accordance with 
regulations promulgated by the Secretary of the Treasury. The Financial 
Management Service (FMS), a bureau of the Department of the Treasury 
(Treasury), is responsible for promulgating the regulations 
implementing this and other debt collection tools established by the 
DCIA. FMS published its final rule at 63 FR 25136, May 6, 1998, 
(Treasury Final Rule) and published a technical amendment at 64 FR 
22901, April 28, 1999. The Treasury Final Rule, as amended, is 
published in Sec. 285.11 of title 31 of the Code of Federal 
Regulations. Pursuant to 31 CFR 285.11 (f), Federal agencies must 
either prescribe regulations for the conduct of AWG hearings consistent 
with the procedural requirements set forth in the Treasury Final Rule 
or adopt Sec. 285.11 without change by reference.

Basic Provisions

    In accordance with the requirements of the DCIA and the 
implementing regulations at 31 CFR 285.11, the rule establishes the 
rules and procedures for providing a debtor with written notice at 
least 30 days before the Department initiates garnishment proceedings, 
an opportunity to inspect and copy Department records relating to the 
debt, an opportunity to enter into a repayment agreement, and an 
opportunity to receive a hearing concerning the existence or amount of 
the debt and the terms of a repayment schedule. The rule also 
establishes the employer's responsibilities for carrying out a wage 
garnishment order issued by the Department.

Rules and Procedures

    Except for minor editorial changes to make the provisions agency-
specific, the proposed rule is substantially identical to the Treasury 
Final Rule. In accordance with the substantive and procedural 
requirements of the DCIA and the Treasury Final Rule, this proposed 
rule would establish for HHS the following rules and procedures:
    1. Providing a debtor with written notice at least 30 days before 
the Department initiates garnishment proceedings informing the debtor 
of the nature and amount of the debt, the intention of the Department 
to collect the debt through deductions from the debtor's disposable 
pay, and the debtor's rights regarding the proposed action.
    2. Providing the debtor with an opportunity to inspect and copy 
Department records relating to the debt, to enter into a repayment 
agreement with the Department, and to receive a hearing concerning the 
existence or amount of the debt and the terms of a repayment schedule.
    3. Conducting a hearing prior to the issuance of a withholding 
order, if the debtor's request for a hearing is timely received by HHS. 
When a debtor's request for a hearing is not received within the time 
period specified, HHS will not delay issuance of a withholding order 
prior to conducting the hearing.
    4. Sending to the employer of a delinquent debtor a wage 
garnishment order directing the employer to withhold up to 15% of the 
debtor's disposable pay and remit those amounts to the Federal 
Government.
    5. Requiring the debtor's employer to certify certain payment 
information about the debtor.

Economic Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review) and the 
Regulatory Flexibility Act (RFA) (September 19, 1980; Pub. L. 96-354), 
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive 
Order 13132.
    Executive Order 12866 (the Order) directs agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
We have determined that the proposed rule is consistent with the 
principles set forth in the Order, and we find that the proposed rule 
would not have an effect

[[Page 11265]]

on the economy that exceeds $100 million in any one year. In addition, 
this rule is not a major rule as defined at 5 U.S.C. 804(2). In 
accordance with the provisions of the Order, this regulation was 
reviewed by the Office of Management and Budget.
    It is hereby certified under the RFA that this proposed regulation, 
including the certification referenced in this notice of proposed 
rulemaking (see Sec. 32.7), will not have a significant economic impact 
on a substantial number of small entities. This proposed rule applies 
only to individuals, as well as employers of such individuals, with 
delinquent debts owed to the United States. Although a substantial 
number of small entities will be subject to this proposed regulation 
and to the certification requirement in this proposed rule, the 
requirements will not have a significant economic impact on these 
entities. Employers of delinquent debtors must certify certain 
information about the debtor such as the debtor's employment status and 
earnings. This information is contained in the employer's payroll 
records. Therefore, it will not take a significant amount of time or 
result in a significant cost for an employer to complete the 
certification form. Even if an employer is served withholding orders on 
several employees over the course of a year, the cost imposed on the 
employer to complete the certifications would not have a significant 
economic impact on that entity. Employers are not required to vary 
their normal pay cycles in order to comply with a withholding order 
issued pursuant to this proposed rule.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. As noted above, we find that the proposed rule 
would not have an effect on the economy of this magnitude.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this proposed rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
this proposed rule would not have substantial direct effect on the 
States, on the relationship between the National Government and States, 
or on the distribution of power and responsibilities among the various 
levels of government. As there are no Federalism implications, a 
Federalism impact statement is not required.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. chapter 35, 
this proposed rule will impose no new reporting or record-keeping 
requirements on employers. As noted above, although an employer of a 
delinquent debtor must certify certain information about the debtor, 
the employer's payroll records already contain this information, and, 
even if an employer receives withholding orders on several employers, 
the burden of completing the certification would not be significant. 
Furthermore, we believe that these reporting requirements fall within 
the ``administrative action'' exemption in Sec. 1320.4(a)(2) of the 
Paperwork Reduction Act.

List of Subjects in 45 CFR Part 32

    Administrative practice and procedure, Claims, Debts, Garnishment 
of wages, Hearings and appeal procedures, Salaries, Wages.

    For the reasons set forth in the preamble, HHS proposes to amend 45 
CFR Subtitle A as follows:
    Add part 32 to read as follows:

PART 32--ADMINISTRATIVE WAGE GARNISHMENT

Sec.
32.1  Purpose and scope.
32.2  Definitions.
32.3  General rule.
32.4  Notice.
32.5  Hearing.
32.6  Withholding order.
32.7  Certification by employer.
32.8  Amounts withheld.
32.9  Financial hardship.
32.10  Refunds.
32.11  Ending garnishment.
32.12  Right of action.

    Authority: 31 U.S.C. 3720D, 5 U.S.C. 552, 553, E.O. 12866, 
12988, 13808.


Sec. 32.1  Purpose and scope.

    (a) Purpose. This part prescribes the standards and procedures for 
the Department to collect money from a debtor's disposable pay by means 
of administrative wage garnishment to satisfy delinquent non-tax debts 
owed to the United States.
    (b) Authority. These standards and procedures are authorized under 
the wage garnishment provisions of the Debt Collection Improvement Act 
of 1996, codified at 31 U.S.C. 3720D, and the Department of the 
Treasury Administrative Wage Garnishment Regulations at 31 CFR 285.11.
    (c) Scope. (1) This part applies to all Departmental Operating 
Divisions and Regional Offices that administer a program that gives 
rise to a delinquent non-tax debt owed to the United States and to all 
officers or employees of the Department authorized to collect such 
debt.
    (2) This part shall apply notwithstanding any provision of State 
law.
    (3) Nothing in this part precludes the compromise of a debt or the 
suspension or termination of collection action in accordance with part 
30 of this title, or other applicable law or regulation.
    (4) The receipt of payments pursuant to this part does not preclude 
the Department from pursuing other debt collection remedies, including 
the offset of Federal payments to satisfy delinquent non-tax debt owed 
to the United States. The Department may pursue such debt collection 
remedies separately or in conjunction with administrative wage 
garnishment.
    (5) This part does not apply to the collection of delinquent non-
tax debts owed to the United States from the wages of Federal employees 
from their Federal employment. Federal pay is subject to the Federal 
salary offset procedures set forth in 5 U.S.C. 5514 and other 
applicable laws.
    (6) Nothing in this part requires the Department to duplicate 
notices or administrative proceedings required by contract or other 
laws or regulations.


Sec. 32.2  Definitions.

    In this part, unless the context otherwise requires:
    Business day means Monday through Friday. For purposes of 
computation, the last day of the period will be included unless it is a 
Federal legal holiday, in which case the next business day following 
the holiday will be considered the last day of the period.
    Certificate of service means a certificate signed by an employee of 
the Department indicating the nature of the document to which it 
pertains, the date of mailing of the document, and to whom it is being 
sent.
    Day means calendar day. For purposes of computation, the last day 
of the period will be included unless it is a Saturday, Sunday, or a 
Federal legal holiday, in which case the next business day will be 
considered the last day of the period.
    Debt or claim means an amount of money, funds, or property that has 
been determined by the Secretary to be owed to the United States by an 
individual, including debt administered by a third party as an agent of 
the Federal Government. A debt or claim includes, but is not limited 
to: amounts owed on account of loans made, insured or

[[Page 11266]]

guaranteed by the Federal Government, including any deficiency or 
difference between the price obtained by the Federal Government upon 
selling the property and the amount owed to the Federal Government; 
overpayments to program beneficiaries; any amount the Federal 
Government is authorized by statute to collect for the benefit of any 
person; the unpaid share of any non-Federal partner in a program 
involving a Federal payment, including a matching or cost-sharing 
payment of the non-Federal partner; any fine, civil penalty or 
assessment; and other amounts or money or property owed to the Federal 
Government.
    Debtor means an individual who owes a delinquent non-tax debt to 
the United States.
    Delinquent debt means any non-tax debt that has not been paid by 
the date specified in the Department's initial written demand for 
payment, or applicable payment agreement or instrument, unless other 
satisfactory payment arrangements have been made. For purposes of this 
part, ``delinquent'' and ``overdue'' have the same meaning.
    Department means the United States Department of Health and Human 
Services, including each of its Operating Divisions and regional 
offices.
    Disposable pay means that part of the debtor's compensation 
(including, but not limited to, salary, bonuses, commissions, and 
vacation pay) from an employer remaining after the deduction of health 
insurance premiums and any amounts required by law to be withheld. For 
purposes of this part, ``amounts required by law to be withheld'' 
include amounts for deductions such as social security taxes and 
withholding taxes, but do not include any amount withheld pursuant to a 
court order.
    Employer means a person or entity that employs the services of 
others and that pays their wages or salaries. The term employer 
includes, but is not limited to, State and local Governments, but does 
not include an agency of the Federal Government as defined by 31 CFR 
285.11 (c).
    Garnishment means the process of withholding amounts from an 
employee's disposable pay and paying those amounts to a creditor in 
satisfaction of a withholding order.
    Hearing means a review of the documentary evidence concerning the 
existence or amount of a debt, or the terms of a repayment schedule, 
provided such repayment schedule is established other than by a written 
agreement entered into pursuant to this part. If the hearing official 
determines that the issues in dispute cannot be resolved solely by 
review of the written record, such as when the validity of the debt 
turns on the issue of credibility or veracity, an oral hearing may be 
provided.
    Hearing official means any qualified individual, as determined by 
the Secretary, including a Departmental Appeals Board administrative 
law judge.
    Secretary means the Secretary of Health and Human Services, or the 
Secretary's designee within the Department.
    Withholding order for purposes of this part means ``Wage 
Garnishment Order (SF-329B).'' Also for purposes of this part, the 
terms ``wage garnishment order'' and ``garnishment order'' have the 
same meaning as ``withholding order.''


Sec. 32.3  General rule.

    (a) Except as provided in (b), whenever a delinquent debt is owed 
by an individual, the Secretary, or another federal agency collecting a 
debt on the Department behalf (See 45 CFR part 30), may initiate 
proceedings administratively to garnish the wages of the delinquent 
debtor.
    (b) The Secretary may not garnish the wages of a debtor who the 
Secretary knows has been involuntarily separated from employment until 
the debtor has been re-employed continuously for at least 12 months. 
The debtor has the burden of informing the Secretary of the 
circumstances surrounding an involuntary separation from employment.


Sec. 32.4  Notice.

    (a) Notice requirements. At least 30 days before the initiation of 
garnishment proceedings, the Secretary shall mail, by first class mail, 
to the debtor's last known address a written notice informing the 
debtor of:
    (1) The nature and amount of the debt;
    (2) The intention of the Secretary to initiate proceedings to 
collect the debt through deductions from pay until the debt and all 
accumulated interest, penalties, and administrative costs are paid in 
full;
    (3) The debtor's right--
    (i) To inspect and copy Department records related to the debt;
    (ii) To enter into a written repayment agreement with the 
Department under terms agreeable to the Department;
    (iii) To a hearing, in accordance with Sec. 32.5, concerning the 
existence or the amount of the debt or the terms of the proposed 
repayment schedule under the garnishment order, except that the debtor 
is not entitled to a hearing concerning the proposed repayment schedule 
if the terms were established by written agreement pursuant to 
paragraph (a)(3)(ii) of this section; and
    (4) The time frames within which the debtor may exercise his or her 
rights.
    (b) The Secretary will keep a copy of the dated notice. The notice 
may be retained electronically so long as the manner of retention is 
sufficient for evidentiary purposes.


Sec. 32.5  Hearing.

    (a) In general. Upon timely written request of the debtor, the 
Secretary shall provide a hearing, which at the Department's option may 
be oral or written, concerning the existence or amount of the debt, or 
the terms of a repayment schedule established other than by written 
agreement under Sec. 32.4(a)(3)(ii).
    (b) Request for hearing. (1) The request for a hearing must be 
signed by the debtor, state each issue being disputed, and identify and 
explain with reasonable specificity all facts and evidence that the 
debtor believes supports the debtor's position. Supporting 
documentation identified by the debtor should be attached to the 
request.
    (2) Effect of timely request. Subject to paragraph (j) of this 
section, if the debtor's written request is received on or before the 
15th business day following the mailing of the written notice required 
under this part, a withholding order shall not be issued under 
Sec. 32.6 until the debtor has been provided the requested hearing and 
a decision in accordance with paragraphs (g) and (h) of this section 
has been rendered.
    (3) Failure to timely request a hearing. If the debtor's written 
request is received after the 15th business day following the mailing 
of the written notice required under this part, the Secretary shall 
provide a hearing to the debtor. However, the Secretary shall not delay 
the issuance of a withholding order unless the Secretary determines 
that the delay in submitting such request was caused by factors beyond 
the control of the debtor, or the Secretary receives information that 
the Secretary determines justifies a delay or cancellation of the 
withholding order.
    (c) Oral hearing. (1) For purposes of this section, a debtor shall 
be provided a reasonable opportunity for an oral hearing when the 
hearing official determines that the issues in dispute cannot be 
resolved by review of the documentary evidence, such as when the 
validity of the claim turns on the issue of credibility or veracity.
    (2) If the hearing official determines an oral hearing is 
appropriate, the

[[Page 11267]]

hearing official will establish the date, time and location of the 
hearing. At the debtor's option, the oral hearing may be conducted in 
person or by telephone conference. The hearing official will notify the 
debtor of the date, time, and in the case of an in-person hearing, the 
location of the hearing. All travel expenses incurred by the debtor in 
connection with an in-person hearing will be borne by the debtor.
    (d) Paper hearing. (1) If the hearing official determines an oral 
hearing is not required by this section, the hearing official shall 
afford the debtor a paper hearing, that is, the issues in dispute will 
be decided based upon a review of the written record.
    (2) The hearing official shall notify the debtor of the deadline 
for the submission of additional evidence if necessary for a review of 
the record.
    (e) Burden of proof. (1) The Secretary has the initial burden of 
proving the existence or amount of the debt.
    (2) Thereafter, if the debtor disputes the existence or amount of 
the debt, the debtor must present by a preponderance of the evidence 
that no debt exists or that the amount is incorrect. When challenging 
the terms of a repayment schedule, the debtor must establish by a 
preponderance of the evidence that the terms of the repayment schedule 
are unlawful, would cause financial hardship to the debtor, or that 
collection of the debt may not be pursued due to operation of law.
    (f) Record. The hearing official shall maintain a summary record of 
any hearing provided under this part. A hearing is not required to be a 
formal evidentiary-type hearing, but witnesses who testify in an oral 
hearing must do so under oath or affirmation.
    (g) Date of decision. (1) The hearing official shall issue a 
written decision, as soon as practicable, but no later than sixty (60) 
days after the date on which the request for the hearing was received 
by the Department.
    (2) If the hearing official is unable to provide the debtor with a 
hearing and render a decision within 60 days after the receipt of the 
request for such hearing:
    (i) A withholding order may not be issued until the hearing is held 
and a decision is rendered; or
    (ii) A withholding order previously issued to the debtor's employer 
must be suspended beginning on the 61st day after the receipt of the 
hearing request and continuing until a hearing is held and a decision 
is rendered.
    (h) Content of decision. The written decision shall include:
    (1) A summary of the facts presented;
    (2) The hearing official's findings, analysis, and conclusions; and
    (3) The terms of any repayment schedule, if applicable.
    (i) Final agency action. The hearing official's decision will be 
the final agency action for the purposes of judicial review under the 
Administrative Procedure Act, 5 U.S.C. 701 et seq.
    (j) Failure to appear. In the absence of good cause shown, a debtor 
who fails to appear at a hearing will be deemed as not having timely 
filed a request for a hearing.


Sec. 32.6  Withholding order.

    (a) Unless the Secretary receives information that the Secretary 
determines justifies a delay or cancellation of a withholding order, 
the Secretary shall send, by first class mail, an SF-329A ``Letter to 
Employer & Important Notice to Employer,'' an SF-329B ``Wage 
Garnishment Order,'' an SF-329C ``Wage Garnishment Worksheet,'' and an 
SF-329D ``Employer Certification,'' to the debtor's employer within 30 
days after the debtor fails to make a timely request for a hearing, 
i.e., within 15 business days after mailing the notice required under 
this part, or, if the timely request for a hearing is made by the 
debtor, within 30 days after a final decision is made by the Secretary 
to proceed with garnishment.
    (b) The Secretary shall keep a copy of the dated letter to the 
employer and a copy of the wage garnishment order. The certificate of 
service may be retained electronically so long as the manner of 
retention is sufficient for evidentiary purposes.


Sec. 32.7  Certification by employer.

    The employer must complete and return the SF-329D, ``Employer 
Certification'' to the Department within 20 days of receipt.


Sec. 32.8  Amounts withheld.

    (a) After receipt of a withholding order issued under this part, 
the employer shall deduct from all disposable pay paid to the debtor 
during each pay period the amount of garnishment described in paragraph 
(b) of this section. The employer may use the SF-329C ``Wage 
Garnishment Worksheet'' to calculate the amount to be deducted from the 
debtor's disposable pay.
    (b) Subject to paragraphs (c) and (d) of this section, the amount 
of garnishment shall be the lesser of:
    (1) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (2) The amount set forth in 15 U.S.C. 1673(a)(2) (Maximum allowable 
garnishment). The amount set forth at 15 U.S.C. 1673(a)(2) is the 
amount by which a debtor's disposable pay exceeds an amount equivalent 
to thirty times the minimum wage. See 29 CFR 870.10.
    (c)(1) Except as provided in paragraph (c)(2) of this section, when 
a debtor's pay is subject to multiple withholding orders, unless 
otherwise provided by Federal law, withholding orders issued pursuant 
to this part shall have priority over other withholding orders that are 
served later in time.
    (2) Notwithstanding the foregoing, withholding orders for family 
support shall have priority over withholding orders issued under this 
part.
    (3) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this part, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to a withholding order issued under this part shall be the 
lesser of:
    (i) The amount calculated under paragraph (b) of this section, or
    (ii) An amount equal to 25% of the debtor's disposable pay less the 
amount(s) withheld under the withholding order(s) with priority.
    (d) If the debtor owes more than one debt to the Department, the 
Secretary may issue multiple withholding orders provided that the total 
amount garnished from the debtor's pay for such orders does not exceed 
the amount set forth in paragraph (b) of this section.
    (e) An amount greater than that set forth in paragraphs (b) or (c) 
of this section may be withheld upon the written consent of the debtor.
    (f) The employer shall promptly pay to the Department all amounts 
withheld in accordance with the withholding order issued pursuant to 
this part.
    (g) The employer is not required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (h) Any assignment or allotment by an employee shall be void to the 
extent it interferes with or prohibits execution of the withholding 
order issued under this part, except for any assignment or allotment 
made pursuant to a family support judgment or order.
    (i) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the Secretary to discontinue wage withholding.
    (j) The withholding order, SF-329B ``Wage Garnishment Order,'' sent 
to the

[[Page 11268]]

employer under Sec. 32.6, requires the employer to commence wage 
withholding on the first pay day after the employer receives the order. 
However, if the first pay day is within 10 days after receipt of the 
order, the employer may begin deductions on the second pay day.
    (k) An employer may not discharge, refuse to employ, or take 
disciplinary action against an debtor a result of the issuance of a 
withholding order under this part.


Sec. 32.9  Financial hardship.

    (a) A debtor whose wages are subject to a withholding order may, at 
any time, request a review by the Department of the amount garnished, 
based on materially changed circumstances such as disability, divorce, 
or catastrophic illness which result in financial hardship.
    (b) A debtor requesting such a review under paragraph (a) of this 
section shall submit the basis for claiming that the current amount of 
garnishment results in a financial hardship to the debtor, along with 
supporting documentation. The Secretary shall consider any information 
submitted in accordance with this part.
    (c) If a financial hardship is found, the Secretary shall 
downwardly adjust, by an amount and for a period of time established by 
the Secretary, the amount garnished to reflect the debtor's financial 
condition. The Secretary will notify the employer of any adjustments to 
the amount to be withheld.


Sec. 32.10  Refunds.

    (a) If the hearing official, pursuant to a hearing under this part, 
determines that a debt is not legally due and owing to the United 
States, the Secretary shall promptly refund any amount collected by 
means of administrative wage garnishment.
    (b) Unless required by Federal law or contract, refunds under this 
part shall not bear interest.


Sec. 32.11  Ending garnishment.

    (a) Once the Department has fully recovered the amounts owed by the 
debtor, including interest, penalties, and administrative costs 
assessed pursuant to and in accordance with part 30 of this title, the 
Secretary shall send the debtor's employer notification to discontinue 
wage withholding.
    (b) At least annually, the Secretary shall review its debtors' 
accounts to ensure that garnishment has been terminated for accounts 
that have been paid in full.


Sec. 32.12  Right of action.

    (a) The employer of a debtor subject to wage withholding pursuant 
to this part shall pay to the Department as directed in a withholding 
order issued under this part.
    (b) The Secretary may bring suit against an employer for any amount 
that the employer fails to withhold from wages owed and payable to a 
debtor in accordance with Secs. 32.6 and 32.8, plus attorney's fees, 
costs, and if applicable, punitive damages.
    (c) A suit under this section may not be filed before the 
termination of the collection action involving a particular debtor, 
unless earlier filing is necessary to avoid expiration of any 
applicable statute of limitations period. For purposes of this section, 
``termination of collection action'' occurs when the Secretary has 
terminated collection action in accordance with part 30 of this title, 
or other applicable law or regulation.
    (d) Notwithstanding paragraph (c) of this section, termination of 
the collection action will be deemed to occur if for a period of one 
(1) year the Department does not receive any payments from a debtor 
whose wages were subject to a garnishment order issued under this part.

    Dated: November 7, 2001.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-5924 Filed 3-12-02; 8:45 am]
BILLING CODE 4150-04-P