[Federal Register Volume 67, Number 143 (Thursday, July 25, 2002)]
[Rules and Regulations]
[Pages 48525-48537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-18656]


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

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 313

RIN 3064-AC40


Procedures for Corporate Debt Collection

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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

SUMMARY: The FDIC is issuing a new regulation governing procedures for 
corporate debt collection. The Debt Collection Improvement Act of 1996 
requires agencies to promulgate regulations on this subject. The 
regulation sets forth the procedures the FDIC will follow in collecting 
debts owed to the United States. These procedures include collection of 
debts through administrative offset, salary offset, administrative wage 
garnishment and tax refund offset.

EFFECTIVE DATE: August 26, 2002.

FOR FURTHER INFORMATION CONTACT: Manuel A. Palau (202) 898-8829 of the 
Legal Division; Connie Brindle (202) 416-7224 of the Division of 
Finance; or David Harrington (202) 942-3396 of the Division of 
Administration. The FDIC's main office is located at 550 17th Street, 
NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

    This rule implements changes to the law made by the Debt Collection 
Improvement Act of 1996 (DCIA). The DCIA requires federal agencies to 
collect debts owed to the United States under regulations prescribed by 
the head of the agency, and standards prescribed by the Department of 
Justice and the Department of the Treasury. 31 U.S.C. 3711. These 
standards, known as the Federal Claims Collection Standards (FCCS), 
became effective on December 22, 2000. 31 CFR chapter IX and parts 900 
through 904.
    The DCIA also requires agencies, prior to collecting debts owed to 
the United States by administrative offset, to: (1) adopt without 
change regulations on collecting debts by administrative offset 
promulgated by the Department of Justice or Department of the Treasury 
(FCCS); or (2) prescribe agency regulations for collecting such debts 
by administrative offset, which are consistent with the FCCS. 31 U.S.C. 
3716. The agency regulations 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.
    The FDIC has decided to issue its own agency regulations for debt 
collection and administrative offset, in part to account for the FDIC's 
status as an independent regulatory agency. The regulations are, 
however, consistent with the FCCS, as required by the DCIA. The salary 
offset portion of the regulations has been submitted to and approved by 
the Office of Personnel Management (OPM), as required by 5 U.S.C. 5514. 
In addition, the tax refund offset provisions of the regulations 
satisfy the requirement in 31 CFR 285.2(c) that the FDIC adopt agency 
regulations authorizing its collection of debts by administrative 
offset in general and tax refund offset in particular. The 
administrative wage garnishment provisions of the regulations satisfy 
the requirement in 31 CFR 285.11(f) that the FDIC adopt regulations for 
the conduct of administrative wage garnishment hearings consistent with 
31 CFR 285.11.
    In addition to these legal authorities, the FDIC is issuing these 
regulations pursuant to 12 U.S.C. 1819(a), which authorizes the FDIC to 
adopt such reasonable regulations as it deems necessary to carry out 
its corporate functions and duties.

II. Discussion of the Rule

A. Subpart A--Scope, Purpose, Definitions and Delegations of Authority

    The regulations apply only to debts owed to the United States which 
arise out of FDIC transactions and functions in its corporate capacity, 
including, but not limited to: employee or former employee matters such 
as travel-related claims, claims arising out of the travel card 
program, and erroneous overpayments; agency contracting activities 
involving corporate operations; and debts related to requests for 
documents under the Freedom of Information Act (FOIA). These 
regulations do not apply to debts owed to or payments made by the FDIC 
in connection with the FDIC's receivership, liquidation, supervision, 
enforcement, or insurance responsibilities, nor do they limit or affect 
the FDIC's authority pursuant to 12 U.S.C. 1819(a) and 1820(a).
    When the FDIC Director of the Division of Administration (DOA) or 
Director of the Division of Finance (DOF) determines that it is 
appropriate to initiate debt collection or seek administrative offset 
to collect that debt, the Director shall conform to the procedural 
standards for collecting debts set forth in the FCCS. 31 CFR parts 900 
through 904. The FCCS establish standards governing the following areas 
of the debt collection process: prompt demand of payment of the claim 
from the debtor; review of the existence or amount of a debt claimed, 
upon the debtor's demand for a final agency determination; standards 
for collecting debts in installment payments; the required assessment 
of

[[Page 48526]]

interest, penalties and administrative costs on debts claimed; 
standards for compromise of claims due; standards to be followed in 
determining whether to suspend or terminate collection action; the 
required referral of delinquent debts to the Secretary of the Treasury, 
for collection by means of centralized administrative offset under the 
Treasury Offset Program; the reporting of debts to consumer reporting 
agencies and the use of credit reports; and the sale of delinquent 
debts. In addition, when the Director elects to pursue a specific debt 
collection remedy such as salary offset, administrative wage 
garnishment, offset against Civil Service Retirement and Disability 
Fund payments or offset against tax refunds, the Director shall follow 
the applicable procedures for that debt collection remedy set forth in 
the regulations.

B. Subpart B--Administrative Offset

    Pursuant to 31 U.S.C. 3716, the FDIC may collect debts owed to the 
United States through administrative offset. Under the administrative 
offset regulations, the FDIC is authorized to collect debts owed to the 
United States by: (1) withholding money payable by the FDIC to the 
debtor, or held by the FDIC for the debtor; or (2) by requesting that 
another federal agency withhold money payable to the debtor, or held by 
the agency for the debtor. Subpart B of the regulations meets the 
requirement under 31 U.S.C. 3716(b) that the FDIC promulgate 
regulations for administrative offset procedures and provide minimum 
due process rights to the debtor, 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 
FDIC. Subpart B of the regulations also meets the requirement under 4 
CFR 901.3 that the FDIC prescribe administrative offset regulations 
consistent with the FCCS prior to referring delinquent debts to the 
Secretary of the Treasury for collection by centralized administrative 
offset.

C. Subpart C--Salary Offset

    Subpart C of the regulations provides that when the FDIC determines 
it is appropriate to collect a debt by means of deductions from the 
current pay account of an FDIC employee, or any individual employed by 
the federal government (including a former FDIC employee), the FDIC 
shall initiate salary offset under 5 U.S.C. 5514(a)(1). Salary offset 
is a form of administrative offset governed by statute (5 U.S.C. 5514) 
and by regulations issued by the OPM (5 CFR part 550, subpart K). 
Salary offset may only be used to collect debts owed by persons 
currently employed by the federal government. As noted above, the 
statute requires agencies to promulgate regulations to carry out salary 
offset subject to OPM approval. 5 U.S.C. 5514(b)(1). Subpart C 
implements those statutory requirements.

D. Subpart D--Administrative Wage Garnishment

    Subpart D of the regulations sets forth procedures that may be used 
by the FDIC to collect debts by garnishing the wages of individuals 
employed outside the federal government. This includes persons employed 
by the private sector, as well as state and local governments. The 
administrative wage garnishment regulations are issued in compliance 
with 31 U.S.C. 3720D and 31 CFR 285.11(f). Administrative wage 
garnishment regulations do not apply to the collection of delinquent 
debts from the wages of federal employees. Federal pay is subject to 
the federal salary offset procedures set forth in 5 U.S.C. 5514 and 
other applicable laws.

E. Subpart E--Tax Refund Offset

    Where collection by salary offset or administrative offset is not 
feasible, the FDIC may also seek to recover a legally enforceable, 
past-due debt owed the United States by requesting that the Financial 
Management Service of the Department of the Treasury offset all or part 
of a tax refund to a debtor by the amount of the debt and pay such 
money to the FDIC. 31 U.S.C. 3720A; 26 CFR 301.6402 through 6406. In 
order to collect a debt by means of tax refund offset, the FDIC is 
required to promulgate its own regulations on salary offset, 
administrative offset, and tax refund offset. 31 U.S.C. 3720A(b)(4); 31 
CFR 285.2. Subpart E of the regulations implements this requirement.

F. Subpart F--Civil Service Retirement and Disability Fund Offset

    Under certain circumstances, the FDIC may also request that money 
payable from the Civil Service Retirement and Disability Fund be offset 
by the OPM to recover a valid debt due to the United States. 5 CFR 
831.1801 through 831.1808. The regulations governing such offsets 
provide that creditor agencies may make such requests to OPM upon 
compliance with the administrative offset procedures required under 31 
U.S.C. 3716, or the salary offset procedures required under 5 U.S.C. 
5514, and the corresponding regulations. Subpart F of the regulations 
provides a process for such offset.

G. Subpart G--Mandatory Centralized Administrative Offset

    When the FDIC is the creditor agency, it is required to refer all 
legally enforceable, non-tax debts that are delinquent (over 180 days 
past due), as defined in the FCCS, to the Secretary of the Treasury, to 
enable the Secretary to seek collection by centralized administrative 
offset. 31 U.S.C. 3716. Subpart G of the regulations implements this 
requirement.

III. Administrative Procedure Act

    No notice of proposed rulemaking is required under the 
Administrative Procedure Act (APA) because these rules relate solely to 
agency procedure and practice. 5 U.S.C. 553(b)(3)(A). Furthermore, 
notice and an opportunity for public comment are not necessary prior to 
issuance of this final rule because it implements a definitive 
statutory scheme mandated by the DCIA.

IV. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act, the FDIC hereby 
certifies that the rules set forth in this notice do not have a 
significant economic impact on a substantial number of small business 
entities. The rule applies primarily to federal agencies and employees 
and a limited number of business entities. 5 U.S.C. 605(b).

V. Paperwork Reduction Act

    These rules are not subject to the Paperwork Reduction Act (44 
U.S.C. 3501), since they do not contain any new information collection 
requirements.

VI. Assessment of Impact of Federal Regulation on Families

    The FDIC has determined that the rule will not affect family well-
being within the meaning of section 654 of the Treasury and General 
Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act, 1999 (Pub. 
L. 105-277, 112 Stat. 2681).

VII. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) (Pub. L. 104-121) provides generally for agencies to report 
rules to Congress for review. The reporting requirement is triggered 
when the FDIC issues a final rule as defined by the APA at 5 U.S.C. 
551. Because the FDIC is issuing a final rule as defined by the APA, 
the FDIC will file the reports required by SBREFA. The Office of

[[Page 48527]]

Management and Budget has determined that this final rule does not 
constitute a ``major rule'' as defined by SBREFA.

List of Subjects in 12 CFR Part 313

    Administrative practice and procedure, Claims, Debt collection, 
Government employees, Hearing procedures, Wages.


    For the reasons set forth in the preamble, 12 CFR part 313 is added 
as follows:

PART 313--PROCEDURES FOR CORPORATE DEBT COLLECTION

Subpart A--Scope, Purpose, Definitions and Delegations of Authority
Sec.
313.1  Scope.
313.2  Purpose.
313.3  Definitions.
313.4  Delegations of authority.
313.5--313.19  [Reserved]
Subpart B--Administrative Offset
313.20  Applicability and scope.
313.21  Definitions.
313.22  Collection.
313.23  Offset prior to completion of procedures.
313.24  Omission of procedures.
313.25  Debtor's rights.
313.26  Interest.
313.27  Refunds.
313.28  No requirement for duplicate notice.
313.29  Requests for offset to other federal agencies.
313.30  Requests for offset from other federal agencies.
313.31--313.39  [Reserved]
Subpart C--Salary Offset
313.40   Scope.
313.41   Notice requirement where FDIC is creditor agency.
313.42   Procedures to request a hearing.
313.43   Failure to timely submit request for hearing.
313.44   Procedure for hearing.
313.45   Certification of debt by FDIC as creditor agency.
313.46   Notice of salary offset where FDIC is the paying agency.
313.47   Voluntary repayment agreements as alternative to salary 
offset where the FDIC is the creditor agency.
313.48   Special review of repayment agreement or salary offset due 
to changed circumstances.
313.49   Coordinating salary offset with other agencies.
313.50   Interest, penalties, and administrative costs.
313.51   Refunds.
313.52   Request from a creditor agency for services of a hearing 
official.
313.53   Non-waiver of rights by payments.
313.54   Exception to due process procedures.
313.55   Salary adjustments.
313.56-313.79   [Reserved]
Subpart D--Administrative Wage Garnishment
313.80   Scope and purpose.
313.81   Notice.
313.82   Debtor's rights.
313.83   Form of hearing.
313.84   Effect of timely request.
313.85   Failure to timely request a hearing.
313.86   Hearing official.
313.87   Procedure.
313.88   Format of hearing.
313.89   Date of decision.
313.90   Content of decision.
313.91   Finality of agency action.
313.92   Failure to appear.
313.93   Wage garnishment order.
313.94   Certification by employer.
313.95   Amounts withheld.
313.96   Exclusions from garnishment.
313.97   Financial hardship.
313.98   Ending garnishment.
313.99   Prohibited actions by employer.
313.100   Refunds.
313.101   Right of action.
313.102-313.119   [Reserved]
Subpart E--Tax Refund Offset
313.120   Scope.
313.121   Definitions.
313.122   Notification of debt to FMS.
313.123   Certification and referral of debt.
313.124   Pre-offset notice and consideration of evidence.
313.125   Referral of past-due, legally enforceable debt.
313.126   Correcting and updating referral.
313.127   Disposition of amounts collected.
313.128-313.139   [Reserved]
Subpart F--Civil Service Retirement and Disability Fund Offset
313.140   Future benefits.
313.141   Notification to OPM.
313.142   Request for administrative offset.
313.143   Cancellation of deduction.
313.144-313.159   [Reserved]
Subpart G--Mandatory Centralized Administrative Offset
313.160   Treasury notification.
313.161   Certification of debt.
313.162   Compliance with 31 CFR part 285.
313.163   Notification of debts of 180 days or less.
313.164-313.180   [Reserved]

    Authority: 12 U.S.C. 1819(a); 5 U.S.C. 5514; Pub. L. 104-143, 
110 Stat. 1321 (31 U.S.C. 3711, 3716).

Subpart A--Scope, Purpose, Definitions and Delegations of Authority


Sec. 313.1  Scope.

    This part establishes FDIC procedures for the collection of certain 
debts owed to the United States.
    (a) This part applies to collections by the FDIC from:
    (1) Federal employees who are indebted to the FDIC;
    (2) Employees of the FDIC who are indebted to other agencies; and
    (3) Other persons, organizations, or entities that are indebted to 
the FDIC, except those excluded in paragraph (b)(3) of this section.
    (b) This part does not apply:
    (1) To debts or claims arising under the Internal Revenue Code of 
1986 (Title 26, U.S. Code), the Social Security Act (42 U.S.C. 301 et 
seq.), or the tariff laws of the United States;
    (2) To a situation to which the Contract Disputes Act (41 U.S.C. 
601 et seq.) applies; or
    (3) In any case where collection of a debt is explicitly provided 
for or prohibited by another statute.
    (c) This part applies only to debts owed to and payments made by 
the FDIC acting in its corporate capacity; that is, in connection with 
employee matters such as travel-related claims and erroneous 
overpayments, contracting activities involving corporate operations, 
debts related to requests to the FDIC for documents under the Freedom 
of Information Act (FOIA) or where a request for an offset is received 
by the FDIC from another federal agency. It does not apply to debts 
owed to or payments made by the FDIC in connection with the FDIC's 
liquidation, supervision, enforcement, or insurance responsibilities, 
nor does it limit or affect the FDIC's authority with respect to debts 
and/or claims pursuant to 12 U.S.C. 1819(a) and 1820(a).
    (d) Nothing in this part 313 precludes the compromise, suspension, 
or termination of collection actions, where appropriate, under: 
standards implementing the Debt Collection Improvement Act (DCIA) (31 
U.S.C. 3711 et seq.), the Federal Claims Collection Standards (FCCS) 
(31 CFR chapter IX and parts 900 through 904); or any other applicable 
law.


Sec. 313.2  Purpose.

    (a) The purpose of this part is to implement federal statutes and 
regulatory standards authorizing the FDIC to collect debts owed to the 
United States. This part is consistent with the following federal 
statutes and regulations:
    (1) DCIA at 31 U.S.C. 3711 (collection and compromise of claims); 
section 3716 (administrative offset), section 3717 (interest and 
penalty on claims), and section 3718 (contracts for collection 
services);
    (2) 5 U.S.C. 5514 (salary offset);
    (3) 5 U.S.C. 5584 (waiver of claims for overpayment);
    (4) 31 CFR chapter IX and parts 900 through 904 (Federal Claims 
Collection Standards);
    (5) 5 CFR part 550, subpart K (salary offset);
    (6) 31 U.S.C. 3720D, 31 CFR 285.11 (administrative wage 
garnishment);

[[Page 48528]]

    (7) 26 U.S.C. 6402(d), 31 U.S.C. 3720A and 31 CFR 285.2 (tax refund 
offset); and
    (8) 5 CFR 831.1801 through 1808 (U. S. Office of Personnel 
Management (OPM) offset).
    (b) Collectively, these statutes and regulations prescribe the 
manner in which federal agencies should proceed to establish the 
existence and validity of debts owed to the federal government and 
describe the remedies available to agencies to offset valid debts.


Sec. 313.3  Definitions.

    Except where the context clearly indicates otherwise or where the 
term is defined elsewhere in this subpart, the following definitions 
shall apply to this subpart.
    (a) Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of government, including government corporations.
    (b) Board means the Board of Directors of the FDIC.
    (c) Centralized administrative offset means the mandatory referral 
to the Secretary of the Treasury by a creditor agency of a past due 
debt which is more than 180 days delinquent, for the purpose of 
collection under the Treasury's centralized offset program.
    (d) Certification means a written statement transmitted from a 
creditor agency to a paying agency for purposes of administrative or 
salary offset, or to the Secretary of the Treasury for centralized 
administrative offset. The certification confirms the existence and 
amount of the debt and verifies that required procedural protections 
have been afforded the employee. Where the debtor requests a hearing on 
a claimed debt, the decision by a hearing official or administrative 
law judge constitutes a certification.
    (e) Chairman means the Chairman of the FDIC.
    (f) Compromise means the settlement or forgiveness of a debt under 
31 U.S.C. 3711, in accordance with standards set forth in the FCCS and 
applicable federal law.
    (g) Creditor agency means an agency of the federal government to 
which the debt is owed, or a debt collection center when acting on 
behalf of a creditor agency to collect a debt.
    (h) Debt means an amount owed to the United States from loans 
insured or guaranteed by the United States and all other amounts due 
the United States from fees, leases, rents, royalties, services, sales 
of real or personal property, overpayments, penalties, damages, 
interest, fines and forfeitures, and all other similar sources. For 
purposes of this part, a debt owed to the FDIC constitutes a debt owed 
to the United States.
    (i) Debt collection center means the Department of the Treasury or 
other government agency or division designated by the Secretary of the 
Treasury with authority to collect debts on behalf of creditor agencies 
in accordance with 31 U.S.C. 3711(g).
    (j) Director means the Director of the Division of Finance (DOF) or 
the Director of the Division of Administration (DOA), as applicable, or 
the applicable Director's delegate.
    (k) Disposable pay means that part of current adjusted basic pay, 
special pay, incentive pay, retired pay, retainer pay, and, in the case 
of an employee not entitled to adjusted basic pay, other authorized 
pay, remaining for each pay period after the deduction of any amount 
required by law to be withheld. The FDIC shall allow the following 
deductions in determining the amount of disposable pay that is subject 
to salary offset:
    (1) Federal employment taxes;
    (2) Federal, state, or local income taxes to the extent authorized 
or required by law, but 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;
    (3) Medicare deductions;
    (4) Health insurance premiums;
    (5) Normal retirement contributions, including employee 
contributions to the Thrift Savings Plan or the FDIC 401(k) Plan;
    (6) Normal life insurance premiums (e.g., Serviceman's Group Life 
Insurance and ``Basic Life'' Federal Employee's Group Life Insurance 
premiums), not including amounts deducted for supplementary coverage;
    (7) Amounts mandatorily withheld for the United States Soldiers' 
and Airmen's Home;
    (8) Fines and forfeiture ordered by a court-martial or by a 
commanding officer.
    (l) Division of Administration (DOA) means the Division of 
Administration of the FDIC.
    (m) Division of Finance (DOF) means the Division of Finance of the 
FDIC.
    (n) Federal Claims Collection Standards (FCCS) means standards 
published at 31 CFR chapter IX and parts 900 through 904.
    (o) Garnishment means the process of withholding amounts from the 
disposable pay of a person employed outside the federal government, and 
the paying of those amounts to a creditor in satisfaction of a 
withholding order.
    (p) Hearing official means an administrative law judge or other 
individual authorized to conduct a hearing and issue a final decision 
in response to a debtor's request for hearing. A hearing official may 
not be under the supervision or control of the Chairman or FDIC Board 
when the FDIC is the creditor agency.
    (q) Notice of Intent to Offset or Notice of Intent means a written 
notice from a creditor agency to an employee, organization, or entity 
that claims a debt and informs the debtor that the creditor agency 
intends to collect the debt by administrative offset. The notice also 
informs the debtor of certain procedural rights with respect to the 
claimed debt and offset.
    (r) Notice of Salary Offset means a written notice from a paying 
agency to its employee informing the employee that salary offset to 
collect a debt due to the creditor agency will begin at the next 
officially established pay interval. The paying agency transmits this 
notice to its employee after receiving a certification from the 
creditor agency.
    (s) Paying agency means the agency of the federal government that 
employs the individual who owes a debt to an agency of the federal 
government. The same agency may be both the creditor agency and the 
paying agency.
    (t) 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.
    (u) Waiver means the cancellation, remission, forgiveness or non-
recovery of a debt allegedly owed by an employee to an agency, as 
authorized or required by 5 U.S.C. 5584 or any other law.
    (v) Withholding order means any order for withholding or 
garnishment of pay issued by an agency, or judicial or administrative 
body. For purposes of administrative wage garnishment, the terms ``wage 
garnishment order'' and ``garnishment order'' have the same meaning as 
``withholding order.''


Sec. 313.4  Delegations of authority.

    Authority to conduct the following activities is delegated to the 
Director of DOA or Director of DOF, as applicable, or the applicable 
Director's delegate, to:
    (a) Initiate and carry out the debt collection process on behalf of 
the FDIC, in accordance with the FCCS;
    (b) Accept or reject compromise offers and suspend or terminate 
collection actions to the full extent of the FDIC's legal authority 
under 12 U.S.C. 1819(a)

[[Page 48529]]

and 1820(a), 31 U.S.C. 3711(a)(2), and any other applicable statute or 
regulation, provided, however, that no such claim shall be compromised 
or collection action terminated, except upon the concurrence of the 
FDIC General Counsel or his or her designee;
    (c) Report to consumer reporting agencies certain data pertaining 
to delinquent debts, where appropriate;
    (d) Use administrative offset procedures, including salary offset, 
to collect debts; and
    (e) Take any other action necessary to promptly and effectively 
collect debts owed to the United States in accordance with the policies 
contained herein and as otherwise provided by law.


Secs. 313.5-313.19  [Reserved]

Subpart B--Administrative Offset


Sec. 313.20  Applicability and scope.

    The provisions of this subpart apply to the collection of debts 
owed to the United States arising from transactions with the FDIC. 
Administrative offset is authorized under the DCIA. This subpart is 
consistent with the FCCS on administrative offset issued by the 
Department of Justice.


Sec. 313.21  Definitions.

    (a) Administrative offset means withholding funds payable by the 
United States to, or held by the United States for, a person to satisfy 
a debt.
    (b) Person includes a natural person or persons, profit or 
nonprofit 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 
any state or local government shall be excluded.


Sec. 313.22  Collection.

    (a) The Director may collect a claim from a person by 
administrative offset of monies payable by the Government only after:
    (1) Providing the debtor with due process required under this part; 
and
    (2) Providing the paying agency with written certification that the 
debtor owes the debt in the amount stated and that the FDIC, as 
creditor agency, has complied with this part.
    (b) Prior to initiating collection by administrative offset, the 
Director should determine that the proposed offset is within the scope 
of this remedy, as set forth in 31 CFR 901.3(a). Administrative offset 
under 31 U.S.C. 3716 may not be used to collect debts more than 10 
years after the federal government's right to collect the debt first 
accrued, except as otherwise provided by law. In addition, 
administrative offset may not be used when a statute explicitly 
prohibits its use to collect the claim or type of claim involved.
    (c) Unless otherwise provided, debts or payments not subject to 
administrative offset under 31 U.S.C. 3716 may be collected by 
administrative offset under common law, or any other applicable 
statutory authority.


Sec. 313.23  Offset prior to completion of procedures.

    The FDIC may collect a debt by administrative offset prior to the 
completion of the procedures described in Sec. 313.25, if:
    (a) Failure to offset a payment would substantially prejudice the 
FDIC's ability to collect the debt; and
    (b) The time before the payment is to be made does not reasonably 
permit completion of the procedures described in Sec. 313.25. Such 
prior offsetting shall be followed promptly by the completion of the 
procedures described in Sec. 313.25.


Sec. 313.24  Omission of procedures.

    The FDIC shall not be required to follow the procedures described 
in Sec. 313.25 where:
    (a) The offset is in the nature of a recoupment (i.e., the FDIC may 
offset a payment due to the debtor when both the payment due to the 
debtor and the debt owed to the FDIC arose from the same transaction); 
or
    (b) The debt arises under a contract as set forth in Cecile 
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993), which 
provides that procedural protections under administrative offset do not 
supplant or restrict established procedures for contractual offsets 
accommodated by the Contracts Disputes Act; or
    (c) In the case of non-centralized administrative offsets, the FDIC 
first learns of the existence of a debt due when there would be 
insufficient time to afford the debtor due process under these 
procedures before the paying agency makes payment to the debtor; in 
such cases, the Director shall give the debtor notice and an 
opportunity for review as soon as practical and shall refund any money 
ultimately found not to be due to the U.S. Government.


Sec. 313.25  Debtor's rights.

    Unless the procedures described in Sec. 313.23 are used, prior to 
collecting any claim by administrative offset or referring such claim 
to another agency for collection through administrative offset, the 
Director shall provide the debtor with the following:
    (a) Written notification of the nature and amount of the claim, the 
intention of the Director to collect the claim through administrative 
offset, and a statement of the rights of the debtor under this 
paragraph;
    (b) An opportunity to inspect and copy the records of the FDIC with 
respect to the claim, unless such records are exempt from disclosure;
    (c) An opportunity to have the FDIC's determination of indebtedness 
reviewed by the Director:
    (1) Any request by the debtor for such review shall be in writing 
and shall be submitted to the FDIC within 30 calendar days of the date 
of the notice of the offset. The Director may waive the time limit for 
requesting review for good cause shown by the debtor;
    (2) Upon acceptance of a request for review by the debtor, the FDIC 
shall provide the debtor with a reasonable opportunity for an oral 
hearing when the determination turns on an issue of credibility or 
veracity, or the Director determines that the question of the 
indebtedness cannot be resolved by review of the documentary evidence 
alone. Unless otherwise required by law, an oral hearing under this 
section is not required to be a formal evidentiary hearing, although 
the Director shall document all significant matters discussed at the 
hearing. In cases where an oral hearing is not required by this 
section, the Director shall make his determination based on a 
documentary hearing consisting of a review of the written record; and
    (d) An opportunity to enter into a written agreement for the 
voluntary repayment of the amount of the claim at the discretion of the 
Director.


Sec. 313.26  Interest.

    Pursuant to 31 U.S.C. 3717, the FDIC shall assess interest, 
penalties and administrative costs on debts owed to the United States. 
The FDIC is authorized to assess interest and related charges on debts 
that are not subject to 31 U.S.C. 3717 to the extent authorized under 
the common law or other applicable statutory authority.


Sec. 313.27  Refunds.

    Amounts recovered by administrative offset but later found not to 
be owed to the Government shall be promptly refunded. Unless required 
by law or contract, such refunds shall not bear interest.


Sec. 313.28  No requirement for duplicate notice.

    Where the Director has previously given a debtor any of the 
required notice and review opportunities with respect to a particular 
debt, the Director is not required to duplicate such notice and

[[Page 48530]]

review opportunities prior to initiating administrative offset.


Sec. 313.29  Requests for offset to other federal agencies.

    The Director may request that a debt owed to the FDIC be 
administratively offset against funds due and payable to a debtor by 
another federal agency. In requesting administrative offset, the FDIC, 
as the creditor agency, will certify in writing to the federal agency 
holding funds payable to the debtor:
    (a) That the debtor owes the debt;
    (b) The amount and basis of the debt; and
    (c) That the FDIC has complied with the requirements of its own 
administrative offset regulations and the applicable provisions of 31 
U.S.C. 3716 with respect to providing the debtor with due process, 
unless otherwise provided.


Sec. 313.30  Requests for offset from other federal agencies.

    Any federal agency may request that funds due and payable to its 
debtor by the FDIC be administratively offset by the FDIC in order to 
collect a debt owed to such agency by the debtor. The FDIC shall 
initiate the requested offset only upon:
    (a) Receipt of written certification from the creditor agency 
stating:
    (1) That the debtor owes the debt;
    (2) The amount and basis of the debt; and
    (3) That the agency has complied with its own administrative offset 
regulations and with the applicable provisions of 31 CFR 901.3, 
including providing any required hearing or review.
    (b) A determination by the creditor agency that collection by 
offset against funds payable by the FDIC would be in the best interest 
of the United States and that such offset would not otherwise be 
contrary to law.


Secs. 313.31--313.39  [Reserved]

Subpart C--Salary Offset


Sec. 313.40  Scope.

    These salary offset regulations are issued in compliance with 5 
U.S.C. 5514 and 5 CFR part 550, subpart K, and apply to the collection 
of debts owed by employees of the FDIC or other federal agencies. These 
salary offset procedures do not apply where an employee consents to the 
recovery of a debt from his current pay account. These procedures do 
not apply to debts arising under the Internal Revenue Code, 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 under 5 U.S.C. 5705 and employee 
training expenses under 5 U.S.C. 4108). These procedures do not 
preclude an employee from requesting waiver of an erroneous payment 
under 5 U.S.C. 5584, or in any way questioning the amount or validity 
of a debt, in the manner specified by law or these agency regulations. 
This section also does not preclude an employee from requesting waiver 
of the collection of a debt under any other applicable statutory 
authority. When possible, salary offset through centralized 
administrative offset procedures should be attempted before seeking 
salary offset from a paying agency different than the creditor agency.


Sec. 313.41  Notice requirement where FDIC is creditor agency.

    Where the FDIC seeks salary offset under 5 U.S.C. 5514 as the 
creditor agency, the FDIC shall first provide the employee with a 
written Notice of Intent to Offset at least 30 calendar days before 
salary offset is to commence. The Notice of Intent to Offset shall 
include the following information and statements:
    (a) That the Director has determined that a debt is owed to the 
FDIC and intends to collect the debt by means of deduction from the 
employee's current disposable pay account until the debt and all 
accumulated interest is paid in full or otherwise resolved;
    (b) The amount of the debt and the factual basis for the debt;
    (c) A salary offset schedule stating the frequency and amount of 
each deduction, stated as a fixed dollar amount or percentage of 
disposable pay (not to exceed 15%);
    (d) That in lieu of salary offset, the employee may propose a 
voluntary repayment plan to satisfy the debt on terms acceptable to the 
FDIC, which must be documented in writing, signed by the employee and 
the Director or the Director's designee, and documented in the FDIC's 
files;
    (e) The FDIC's policy concerning interest, penalties, and 
administrative costs, and a statement that such assessments must be 
made, unless excused in accordance with the FCCS;
    (f) That the employee has the right to inspect and copy FDIC 
records not exempt from disclosure relating to the debt claimed, or to 
receive copies of such records if the employee or the employee's 
representative is unable personally to inspect the records, due to 
geographical or other constraints:
    (1) That such requests be made in writing, and identify by name and 
address the Director or other designated individual to whom the request 
should be sent; and
    (2) That upon receipt of such a request, the Director or the 
Director's designee shall notify the employee of the time and location 
where the records may be inspected and copied;
    (g) That the employee has a right to request a hearing regarding 
the existence and amount of the debt claimed or the salary offset 
schedule proposed by the FDIC, provided that the employee files a 
request for such a hearing with the FDIC in accordance with Sec. 313.42 
that such a hearing will be conducted by an impartial official who is 
an administrative law judge or other hearing official not under the 
supervision or control of the Board;
    (h) The procedure and deadline for requesting a hearing, including 
the name, address, and telephone number of the Director or other 
designated individual to whom a request for hearing must be sent;
    (i) That a request for hearing must be received by the FDIC on or 
before the 30th calendar day following receipt of the Notice of Intent, 
and that filing of a request for hearing will stay the collection 
proceedings;
    (j) That the FDIC will initiate salary offset procedures not less 
than 30 days from the date of the employee's receipt of the Notice of 
Intent to Offset, unless the employee files a timely request for a 
hearing;
    (k) That if a hearing is held, the administrative law judge or 
other hearing official will issue a decision at the earliest practical 
date, but not later than 60 days after the filing of the request for 
the hearing, unless the employee requests a delay in the proceedings 
which is granted by the hearing official;
    (l) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 
5 CFR part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729 through 
3731, or under any other applicable statutory authority; or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
under any other applicable statutory authority;
    (m) That the employee also has the right to request waiver of 
overpayment pursuant to 5 U.S.C. 5584, and may exercise any other 
rights and remedies available under statutes or regulations governing 
the program for which the collection is being made; and
    (n) That amounts paid on or deducted from debts that are later 
waived or found not to be owed to the United States will be promptly 
refunded to the

[[Page 48531]]

employee, unless there are applicable contractual or statutory 
provisions to the contrary.


Sec. 313.42  Procedures to request a hearing.

    (a) To request a hearing, an employee must send a written request 
to the Director. The request must be received by the Director within 30 
calendar days after the employee's receipt of the Notice of Intent.
    (b) The request must be signed by the employee and must fully 
identify and explain with reasonable specificity all the facts, 
evidence, and witnesses, if any, that the employee believes support his 
or her position. The request for hearing must state whether the 
employee is requesting an oral or documentary hearing. If an oral 
hearing is requested, the request shall explain why the matter cannot 
be resolved by a review of documentary evidence alone.


Sec. 313.43  Failure to timely submit request for hearing.

    If the Director does not receive an employee's request for hearing 
within the 30-day period set forth in Sec. 313.42(a), the employee 
shall not be entitled to a hearing. However, the Director may accept an 
untimely request for hearing if the employee can show that the delay 
was the result of circumstances beyond his or her control or that he or 
she failed to receive actual notice of the filing deadline.


Sec. 313.44  Procedure for hearing.

    (a) Obtaining the services of a hearing official. When the FDIC is 
the creditor agency and the debtor is an FDIC employee, the FDIC shall 
designate an administrative law judge or contact any agent of another 
agency designated in appendix A to 5 CFR part 581 to arrange for a 
hearing official. When the FDIC is the creditor agency and the debtor 
is not an FDIC employee (i.e., the debtor is employed by another 
federal agency, also known as the paying agency), and the FDIC cannot 
provide a prompt and appropriate hearing before an administrative law 
judge or a hearing official furnished pursuant to a lawful arrangement, 
the FDIC may contact an agent of the paying agency designated in 
appendix A to 5 CFR part 581 to arrange for a hearing official. The 
paying agency must cooperate with the FDIC to provide a hearing 
official, as required by the FCCS.
    (b) Notice and format of hearing. (1) Notice. The hearing official 
shall determine whether the hearing shall be oral or documentary and 
shall notify the employee of the form of the hearing. If the hearing 
will be oral, the notice shall set forth the date, time, and location 
of the hearing, which must be held within 30 calendar days after the 
request is received, unless the employee requests that the hearing be 
delayed. If the hearing will be documentary, the employee shall be 
notified to submit evidence and written arguments in support of his or 
her case to the hearing official within 30 calendar days.
    (2) Oral hearing. The hearing official may grant a request for an 
oral hearing if he or she determines that the issues raised by the 
employee cannot be resolved by review of documentary evidence alone 
(e.g., where credibility or veracity are at issue). An oral hearing is 
not required to be an adversarial adjudication, and the hearing 
official is not required to apply rules of evidence. Witnesses who 
testify in oral hearings shall do so under oath or affirmation. 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 are given full opportunity to 
present evidence, witnesses, and argument;
    (ii) Informal meetings in which the hearing examiner interviews the 
employee; or
    (iii) Formal written submissions followed by an opportunity for 
oral presentation.
    (3) Documentary hearing. If the hearing official determines that an 
oral hearing is not necessary, he or she shall decide the issues raised 
by the employee based upon a review of the written record.
    (4) Record. The hearing official shall maintain a summary record of 
any hearing conducted under this section.
    (c) Rescheduling of the hearing date. The hearing official shall 
reschedule a hearing if requested to do so by both parties, who shall 
be given reasonable notice of the time and place of this new hearing.
    (d) Failure to appear. In the absence of good cause, 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 issue a decision based upon the oral 
testimony presented and the documentation submitted by both parties.
    (e) Date of decision. The hearing official shall issue a written 
decision based upon the evidence and information developed at the 
hearing, as soon as practicable after the hearing, but not later than 
60 calendar days after the date on which the request for hearing was 
received by the FDIC, unless the hearing was delayed at the request of 
the employee. In the event of such a delay, the 60-day decision period 
shall be extended by the number of days by which the hearing was 
postponed. The decision of the hearing official shall be final.
    (f) Content of decision. The written decision shall include:
    (1) A summary of the facts concerning the origin, nature, and 
amount of the debt;
    (2) The hearing official's findings, analysis, and conclusions; and
    (3) The terms of the repayment schedule, if applicable.
    (g) Official certification of debt. The hearing official's decision 
shall constitute an official certification regarding the existence and 
amount of the debt for purposes of executing salary offset under 5 
U.S.C. 5514. Where the FDIC is the creditor agency but not the current 
paying agency, the FDIC may make a certification regarding the 
existence and amount of the debt owed to the FDIC, based on the hearing 
official's certification. The FDIC may make this certification to: the 
Secretary of the Treasury so that Treasury may offset the employee's 
current pay account by means of centralized administrative offset (5 
CFR 550.1108); or to the current paying agency (5 CFR 550.1109). If the 
hearing official determines that a debt may not be collected through 
salary offset but the FDIC as the creditor agency determines that the 
debt is still valid, the FDIC may seek collection of the debt through 
other means, including administrative offset of other federal payments 
or litigation.


Sec. 313.45  Certification of debt by FDIC as creditor agency.

    The Director may also issue a certification of the debt where there 
has not been a hearing, if the employee has admitted the debt, or 
failed to contest the existence and amount of the debt in a timely 
manner (e.g., by failing to request a hearing). The certification shall 
be in writing and shall state:
    (a) The amount and basis of the debt owed by the employee;
    (b) The date the FDIC's right to collect the debt first accrued;
    (c) That the FDIC's debt collection regulations have been approved 
by OPM pursuant to 5 CFR part 550, subpart K;
    (d) If the collection is to be made by lump-sum payment, the amount 
and date such payment will be collected;
    (e) If the collection is to be made in installments through salary 
offset, the number of installments to be collected, the amount of each 
installment, and the date of the first installment, if a date

[[Page 48532]]

other than the next officially established pay period; and
    (f) The date the employee was notified of the debt, the action(s) 
taken pursuant to the FDIC's regulations, and the dates such actions 
were taken.


Sec. 313.46  Notice of salary offset where FDIC is the paying agency.

    (a) Upon issuance of a proper certification by the Director for 
debts owed to the FDIC, or upon receipt of a proper certification from 
a creditor agency, the Director shall send the employee a written 
notice of salary offset. Such notice shall advise the employee:
    (1) That certification has been issued by the Director or received 
from another creditor agency;
    (2) Of the amount of the debt and of the deductions to be made; and
    (3) Of the initiation of salary offset at the next officially 
established pay interval or as otherwise provided for in the 
certification.
    (b) Where appropriate, the Director 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. 313.47  Voluntary repayment agreements as alternative to salary 
offset where the FDIC is the creditor agency.

    (a) In response to a Notice of Intent, an employee may propose to 
voluntarily repay the debt through scheduled voluntary payments, in 
lieu of salary offset. An employee who wishes to repay a debt in this 
manner shall submit to the Director a written agreement proposing a 
repayment schedule. This proposal must be received by the Director 
within 30 calendar days after receipt of the Notice of Intent.
    (b) The Director shall notify the employee whether the employee's 
proposed voluntary repayment agreement is acceptable. It is within the 
discretion of the Director whether to accept or reject the debtor's 
proposal, or whether to propose to the debtor a modification of the 
proposed repayment agreement:
    (1) If the Director decides that the proposed repayment agreement 
is unacceptable, he or she shall notify the employee and the employee 
shall have 30 calendar days from the date he or she received notice of 
the decision in which to file a request for a hearing on the proposed 
repayment agreement, as provided in Sec. 313.42; or
    (2) If the Director decides that the proposed repayment agreement 
is acceptable or the debtor agrees to a modification proposed by the 
Director, the agreement shall be put in writing and signed by both the 
employee and the Director.


Sec. 313.48  Special review of repayment agreement or salary offset due 
to changed circumstances.

    (a) An employee subject to a voluntary repayment agreement or 
salary offset payable to the FDIC as creditor agency may request a 
special review by the Director of the amount of the salary offset or 
voluntary repayment, based on materially changed circumstances, 
including, but not limited to, catastrophic illness, divorce, death, or 
disability. A request for special review may be made at any time.
    (b) In support of a request for special review, the employee shall 
submit to the Director 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) Monthly expenses for food, housing, clothing, and 
transportation;
    (6) Medical expenses; and
    (7) Exceptional expenses, if any.
    (c) The employee shall also file an alternative proposed offset or 
payment schedule and a statement, with supporting documents, showing 
why the current salary offset or payments result in extreme financial 
hardship to the employee.
    (d) The Director shall evaluate the statement and supporting 
documents and determine whether the original salary offset or repayment 
schedule imposes extreme financial hardship on the employee, for 
example, by preventing the employee from meeting essential subsistence 
expenses such as food, housing, clothing, transportation, and medical 
care. The Director shall notify the employee in writing within 30 
calendar days of his or her determination.
    (e) If the special review results in a revised salary offset or 
repayment schedule, the Director shall provide a new certification to 
the paying agency.


Sec. 313.49  Coordinating salary offset with other agencies.

    (a) Responsibility of the FDIC as the creditor agency. Upon 
completion of the procedures established in Sec. 313.40 through 
Sec. 313.45, the Director shall take the following actions:
    (1) Submit a debt claim to the paying agency, containing the 
information described in paragraphs (a)(2) and (a)(3) of this section, 
together with the certification of debt or an installment agreement (or 
other instruction regarding the payment schedule, if applicable).
    (2) If the collection must be made in installments, inform the 
paying agency of the amount or percentage of disposable pay to be 
collected in each installment. The Director may also inform the paying 
agency of the commencement date and number of installments to be paid, 
if a date other than the next officially established pay period is 
required.
    (3) Unless the employee has consented to the salary offset in 
writing or has signed a statement acknowledging receipt of the required 
procedures and the written consent or statement is forwarded to the 
paying agency, the Director must also advise the paying agency of the 
actions the FDIC has taken under 5 U.S.C. 5514 and state the dates such 
action was taken.
    (4) If the employee is in the process of separating from 
employment, the Director shall submit the debt claim to the employee's 
paying agency for collection by lump-sum deduction from the employee's 
final check. The paying agency shall certify the total amount of its 
collection and furnish a copy of the certification to the FDIC and to 
the employee.
    (5) If the employee is already separated and all payments due from 
his or her former paying agency have been paid, the Director may, 
unless otherwise prohibited, request that money due and payable to the 
employee from the federal government, including payments from the Civil 
Service Retirement and Disability Fund (5 CFR 831.1801), be 
administratively offset to collect the debt.
    (6) In the event an employee transfers to another paying agency, 
the Director shall not repeat the procedures described in Sec. 313.40 
through Sec. 313.45 in order to resume collecting the debt. Instead, 
the FDIC shall review the debt upon receiving the former paying 
agency's notice of the employee's transfer and shall ensure that 
collection is resumed by the new paying agency. The FDIC must submit a 
properly certified claim to the new paying agency before collection can 
be resumed.
    (b) Responsibility of the FDIC as the paying agency. (1) Complete 
claim. When the FDIC receives a properly certified claim from a 
creditor agency, the employee shall be given written notice of the 
certification, the date salary offset will begin, and the amount of the 
periodic deductions. The FDIC shall schedule deductions to begin at the 
next officially established pay interval or as otherwise provided for 
in the certification.

[[Page 48533]]

    (2) Incomplete claim. When the FDIC receives an incomplete 
certification of debt from a creditor agency, the FDIC shall return the 
debt claim with notice that procedures under 5 U.S.C. 5514 and 5 CFR 
550.1104 must be followed and that a properly certified debt claim must 
be received before action will be taken to collect from the employee's 
current pay account.
    (3) Review. The FDIC 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 
agency. If, after the creditor agency has submitted the debt claim to 
the FDIC, the employee transfers to a different paying agency before 
the debt is collected in full, the FDIC must certify the total amount 
collected on the debt. One copy of the certification shall be furnished 
to the employee, and one copy shall be sent to the creditor agency 
along with notice of the employee's transfer. If the FDIC is aware that 
the employee is entitled to payments from the Civil Service Retirement 
and Disability Fund, or other similar payments, it must provide written 
notification to the agency responsible for making such payments that 
the debtor owes a debt (including the amount) and that the requirements 
set forth herein and in the OPM's regulation (5 CFR part 550, subpart 
K) have been fully met.


Sec. 313.50  Interest, penalties, and administrative costs.

    Where the FDIC is the creditor agency, it shall assess interest, 
penalties, and administrative costs pursuant to 31 U.S.C. 3717 and 31 
CFR parts 900 through 904.


Sec. 313.51  Refunds.

    (a) Where the FDIC is the creditor agency, it shall promptly refund 
any amount deducted under the authority of 5 U.S.C. 5514 when the debt 
is compromised or otherwise found not to be owing to the United States, 
or when an administrative or judicial order directs the FDIC to make a 
refund.
    (b) Unless required by law or contract, such refunds shall not bear 
interest.


Sec. 313.52  Request from a creditor agency for services of a hearing 
official.

    (a) The FDIC may provide a hearing official upon request of the 
creditor agency when the debtor is employed by the FDIC and the 
creditor agency cannot provide a prompt and appropriate hearing before 
a hearing official furnished pursuant to another lawful arrangement.
    (b) The FDIC may provide a hearing official upon request of a 
creditor agency when the debtor works for the creditor agency and that 
agency cannot arrange for a hearing official.
    (c) The Director shall arrange for qualified personnel to serve as 
hearing officials.
    (d) Services rendered under paragraph (a) of this section shall be 
provided on a fully reimbursable basis pursuant to 31 U.S.C. 1535.


Sec. 313.53  Non-waiver of rights by payments.

    A debtor's payment, whether voluntary or involuntary, of all or any 
portion of a debt being collected pursuant to this section shall not be 
construed as a waiver of any rights that the debtor may have under any 
statute, regulation, or contract except as otherwise provided by law or 
contract.


Sec. 313.54  Exception to due process procedures.

    (a) The procedures set forth in this subpart shall not apply to 
routine intra-agency salary adjustments of pay, including the 
following:
    (1) Any adjustment to pay arising out of 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;
    (2) A routine adjustment of pay that is made to correct an 
overpayment attributable to clerical or administrative errors or delays 
in processing pay documents, if the overpayment occurred within the 
four pay periods preceding the adjustment and, at the time of such 
adjustment or as soon thereafter as is practical, the individual is 
provided written notice of the nature and amount of the adjustment and 
the point of contact for contesting such adjustment; or
    (3) Any adjustment to collect a debt amount to $50 or less, if, at 
the time of such adjustment, or as soon thereafter as is practical, the 
individual is provided written notice of the nature and amount of the 
adjustment and the point of contact for contesting such adjustment.
    (b) The procedure for notice to the employee and collection of such 
adjustments is set forth in Sec. 313.55.


Sec. 313.55  Salary adjustments.

    Any negative adjustment to pay arising out of an employee's 
election of coverage, or a change in coverage, under a federal benefits 
program requiring periodic deductions from pay shall not be considered 
collection of a ``debt'' for the purposes of this section if the amount 
to be recovered was accumulated over four pay periods or less. In such 
cases, the FDIC shall not apply this subpart C, but will provide a 
clear and concise statement in the employee's earnings statement 
advising the employee of the previous overpayment at the time the 
adjustment is made.


Secs. 313.56--313.79  [Reserved]

Subpart D--Administrative Wage Garnishment


Sec. 313.80  Scope and purpose.

    (a) These administrative wage garnishment regulations are issued in 
compliance with 31 U.S.C. 3720D and 31 CFR 285.11(f). The subpart 
provides procedures for the FDIC to collect money from a debtor's 
disposable pay by means of administrative wage garnishment. The receipt 
of payments pursuant to this subpart does not preclude the FDIC from 
pursuing other debt collection remedies, including the offset of 
federal payments. The FDIC may pursue such debt collection remedies 
separately or in conjunction with administrative wage garnishment. This 
subpart does not apply to the collection of delinquent debts 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.


Sec. 313.81  Notice.

    At least 30 days before the initiation of garnishment proceedings, 
the Director will send, by first class mail to the debtor's last known 
address, a written notice informing the debtor of:
    (a) The nature and amount of the debt;
    (b) The FDIC's intention to initiate proceedings to collect the 
debt through deductions from the debtor's pay until the debt and all 
accumulated interest penalties and administrative costs are paid in 
full;
    (c) An explanation of the debtor's rights as set forth in 
Sec. 313.82(c); and
    (d) The time frame within which the debtor may exercise these 
rights. The FDIC shall retain a stamped copy of the notice indicating 
the date the notice was mailed.


Sec. 313.82  Debtor's rights.

    The FDIC shall afford the debtor the opportunity:
    (a) To inspect and copy records related to the debt;
    (b) To enter into a written repayment agreement with the FDIC, 
under terms agreeable to the FDIC; and
    (c) To the extent that a debt owed has not been established by 
judicial or

[[Page 48534]]

administrative order, to request a hearing concerning the existence or 
amount of the debt or the terms of the repayment schedule. With respect 
to debts established by a judicial or administrative order, a debtor 
may request a hearing concerning the payment or other discharge of the 
debt. The debtor is not entitled to a hearing concerning the terms of 
the proposed repayment schedule if these terms have been established by 
written agreement.


Sec. 313.83  Form of hearing.

    (a) If the debtor submits a timely written request for a hearing as 
provided in Sec. 313.82(c), the FDIC will afford the debtor a hearing, 
which at the FDIC's option may be oral or written. The FDIC will 
provide the debtor with a reasonable opportunity for an oral hearing 
when the Director determines that the issues in dispute cannot be 
resolved by review of the documentary evidence, for example, when the 
validity of the claim turns on the issue of credibility or veracity.
    (b) If the FDIC determines that an oral hearing is appropriate, the 
time and location of the hearing shall be established by the FDIC. An 
oral hearing may, at the debtor's option, be conducted either in person 
or by telephone conference. All travel expenses incurred by the debtor 
in connection with an in-person hearing will be borne by the debtor. 
All telephonic charges incurred during the hearing will be the 
responsibility of the agency.
    (c) In cases when it is determined that an oral hearing is not 
required by this section, the FDIC will accord the debtor a ``paper 
hearing,'' that is, the FDIC will decide the issues in dispute based 
upon a review of the written record.


Sec. 313.84  Effect of timely request.

    If the FDIC receives a debtor's written request for hearing within 
15 business days of the date the FDIC mailed its notice of intent to 
seek garnishment, the FDIC shall not issue a withholding order until 
the debtor has been provided the requested hearing, and a decision in 
accordance with Sec. 313.88 and Sec. 313.89 has been rendered.


Sec. 313.85  Failure to timely request a hearing.

    If the FDIC receives a debtor's written request for hearing after 
15 business days of the date the FDIC mailed its notice of intent to 
seek garnishment, the FDIC shall provide a hearing to the debtor. 
However, the FDIC will not delay issuance of a withholding order unless 
it determines that the untimely filing of the request was caused by 
factors over which the debtor had no control, or the FDIC receives 
information that the FDIC believes justifies a delay or cancellation of 
the withholding order.


Sec. 313.86  Hearing official.

    A hearing official may be any qualified individual, as determined 
by the FDIC, including an administrative law judge.


Sec. 313.87  Procedure.

    After the debtor requests a hearing, the hearing official shall 
notify the debtor of:
    (a) The date and time of a telephonic hearing;
    (b) The date, time, and location of an in-person oral hearing; or
    (c) The deadline for the submission of evidence for a written 
hearing.


Sec. 313.88  Format of hearing.

    The FDIC will have the burden of proof to establish the existence 
or amount of the debt. Thereafter, if the debtor disputes the existence 
or amount of the debt, the debtor must prove by a preponderance of the 
evidence that no debt exists, or that the amount of the debt is 
incorrect. In addition, the debtor may present evidence that the terms 
of the repayment schedule are unlawful, would cause a financial 
hardship to the debtor, or that collection of the debt may not be 
pursued due to operation of law. The hearing official shall maintain a 
record of any hearing held under this section. Hearings are not 
required to be formal, and evidence may be offered without regard to 
formal rules of evidence. Witnesses who testify in oral hearings shall 
do so under oath or affirmation.


Sec. 313.89  Date of decision.

    The hearing official shall issue a written opinion stating his or 
her decision as soon as practicable, but not later than sixty (60) days 
after the date on which the request for such hearing was received by 
the FDIC. If the FDIC is unable to provide the debtor with a hearing 
and decision within sixty (60) days after the receipt of the request 
for such hearing:
    (a) The FDIC may not issue a withholding order until the hearing is 
held and a decision rendered; or
    (b) If the FDIC had previously issued a withholding order to the 
debtor's employer, the withholding order will be suspended beginning on 
the 61st day after the date the FDIC received the hearing request and 
continuing until a hearing is held and a decision is rendered.


Sec. 313.90  Content of decision.

    The written decision shall include:
    (a) A summary of the facts presented;
    (b) The hearing official's findings, analysis and conclusions; and
    (c) The terms of any repayment schedule, if applicable.


Sec. 313.91  Finality of agency action.

    Unless the FDIC on its own initiative orders review of a decision 
by a hearing official pursuant to 17 CFR 201.431(c), a decision by a 
hearing official shall become the final decision of the FDIC for the 
purpose of judicial review under the Administrative Procedure Act.


Sec. 313.92  Failure to appear.

    In the absence of good cause shown, a debtor who fails to appear at 
a scheduled hearing will be deemed as not having timely filed a request 
for a hearing.


Sec. 313.93  Wage garnishment order.

    (a) Unless the FDIC receives information that it believes justifies 
a delay or cancellation of the withholding order, the FDIC will send by 
first class mail a withholding order 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 the mailing of the notice of the 
FDIC's intent to seek garnishment) or, if a timely request for a 
hearing is made by the debtor, within 30 days after a decision to issue 
a withholding order becomes final.
    (b) The withholding order sent to the employer will be in the form 
prescribed by the Secretary of the Treasury, on the FDIC's letterhead, 
and signed by the head of the agency or delegate. The order will 
contain all information necessary for the employer to comply with the 
withholding order, including the debtor's name, address, and social 
security number, as well as instructions for withholding and 
information as to where payments should be sent.
    (c) The FDIC will keep a stamped copy of the order indicating the 
date it was mailed.


Sec. 313.94  Certification by employer.

    Along with the withholding order, the FDIC will send to the 
employer a certification in a form prescribed by the Secretary of the 
Treasury. The employer shall complete and return the certification to 
the FDIC within the time frame prescribed in the instructions to the 
form. The certification will address matters such as information about 
the debtor's employment status and disposable pay available for 
withholding.

[[Page 48535]]

Sec. 313.95  Amounts withheld.

    (a) Upon receipt of the garnishment order issued under this 
section, the employer shall deduct from all disposable pay paid to the 
debtor during each pay period the amount of garnishment described in 
paragraphs (b) through (d) of this section.
    (b) Subject to the provisions of 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). The amount set 
forth at 15 U.S.C. 1673(a)(2) is the amount by which the debtor's 
disposable pay exceeds an amount equivalent to thirty times the minimum 
wage. See 29 CFR 870.10.
    (c) When a debtor's pay is subject to withholding orders with 
priority, the following shall apply:
    (1) Unless otherwise provided by federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (b) of this section and shall have priority over other 
withholding orders which are served later in time. However, withholding 
orders for family support shall have priority over withholding orders 
issued under this section.
    (2) 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 section, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to the withholding order issued under this section 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.
    (3) If a debtor owes more than one debt to the FDIC, the FDIC may 
issue multiple withholding orders. The total amount garnished from the 
debtor's pay for such orders will not exceed the amount set forth in 
paragraph (b) of this section.
    (d) An amount greater than that set forth in paragraphs (b) and (c) 
of this section may be withheld upon the written consent of the debtor.
    (e) The employer shall promptly pay to the FDIC all amounts 
withheld in accordance with the withholding order issued pursuant to 
this section.
    (f) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (g) Any assignment or allotment by the employee of the employee's 
earnings shall be void to the extent it interferes with or prohibits 
execution of the withholding order under this section, except for any 
assignment or allotment made pursuant to a family support judgment or 
order.
    (h) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the FDIC to discontinue wage withholding. The 
garnishment order shall indicate a reasonable period of time within 
which the employer is required to commence wage withholding.


Sec. 313.96  Exclusions from garnishment.

    The FDIC will not garnish the wages of a debtor it 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 FDIC of the circumstances surrounding an involuntary 
separation from employment.


Sec. 313.97  Financial hardship.

    (a) A debtor whose wages are subject to a wage withholding order 
under this section, may, at any time, request a review by the FDIC 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 a review under 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.
    (c) If a financial hardship is found, the FDIC will downwardly 
adjust, by an amount and for a period of time agreeable to the FDIC, 
the amount garnished to reflect the debtor's financial condition. The 
FDIC will notify the employer of any adjustments to the amounts to be 
withheld.


Sec. 313.98  Ending garnishment.

    (a) Once the FDIC has fully recovered the amounts owed by the 
debtor, including interest, penalties, and administrative costs 
consistent with the FCCS, the FDIC will send the debtor's employer 
notification to discontinue wage withholding.
    (b) At least annually, the FDIC will review its debtors' accounts 
to ensure that garnishment has been terminated for accounts that have 
been paid in full.


Sec. 313.99  Prohibited actions by employer.

    The DCIA prohibits an employer from discharging, refusing to 
employ, or taking disciplinary action against the debtor due to the 
issuance of a withholding order under this subpart.


Sec. 313.100  Refunds.

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


Sec. 313.101  Right of action.

    The FDIC may sue any employer for any amount that the employer 
fails to withhold from wages owed and payable to its employee in 
accordance with this subpart. However, a suit will 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. For purposes of this subpart, 
``termination of the collection action'' occurs when the agency has 
terminated collection action in accordance with the FCCS (31 CFR 903.1 
through 903.5) or other applicable standards. In any event, termination 
of the collection action will have been deemed to occur if the FDIC has 
not received any payments to satisfy the debt from the particular 
debtor whose wages were subject to garnishment, in whole or in part, 
for a period of one (1) year.


Secs. 313.102--313.119  [Reserved]

Subpart E--Tax Refund Offset


Sec. 313.120  Scope.

    The provisions of 26 U.S.C. 6402(d) and 31 U.S.C. 3720A authorize 
the Secretary of the Treasury to offset a delinquent debt owed to the 
United States Government from the tax refund due a taxpayer when other 
collection efforts have failed to recover the amount due. In addition, 
the FDIC is authorized to collect debts by means of administrative 
offset under 31 U.S.C. 3716 and, as part of the debt collection 
process, to notify the Financial Management Service (FMS), a bureau of 
the Department of the Treasury, of the amount of such debt for 
collection by tax refund offset.


Sec. 313.121  Definitions.

    For purposes of this subpart E:
    (a) Debt or claim means an amount of money, funds or property which 
has been determined by the FDIC to be due

[[Page 48536]]

to the United States from any person, organization, or entity, except 
another federal agency.
    (b) Debtor means a person who owes a debt or a claim. The term 
``person'' includes any individual, organization or entity, except 
another federal agency.
    (c) Tax refund offset means withholding or reducing a tax refund 
payment by an amount necessary to satisfy a debt owed by the payee(s) 
of a tax refund payment.
    (d) Tax refund payment means any overpayment of federal taxes to be 
refunded to the person making the overpayment after the Internal 
Revenue Service (IRS) makes the appropriate credits.


Sec. 313.122  Notification of debt to FMS.

    The FDIC shall notify FMS of the amount of any past due, legally 
enforceable non-tax debt owed to it by a person, for the purpose of 
collecting such debt by tax refund offset. Notification and referral to 
FMS of such debts does not preclude FDIC's use of any other debt 
collection procedures, such as wage garnishment, either separately or 
in conjunction with tax refund offset.


Sec. 313.123  Certification and referral of debt.

    When the FDIC refers a past-due, legally enforceable debt to FMS 
for tax refund offset, it will certify to FMS that:
    (a) The debt is past due and legally enforceable in the amount 
submitted to FMS and that the FDIC will ensure that collections are 
properly credited to the debt;
    (b) Except in the case of a judgment debt or as otherwise allowed 
by law, the debt is referred for offset within ten years after the 
FDIC's right of action accrues;
    (c) The FDIC has made reasonable efforts to obtain payment of the 
debt, in that it has:
    (1) Submitted the debt to FMS for collection by administrative 
offset and complied with the provisions of 31 U.S.C. 3716(a) and 
related regulations;
    (2) Notified, or has made a reasonable attempt to notify, the 
debtor that the debt is past-due, and unless repaid within 60 days 
after the date of the notice, will be referred to FMS for tax refund 
offset;
    (3) Given the debtor at least 60 days to present evidence that all 
or part of the debt is not past-due or legally enforceable, considered 
any evidence presented by the debtor, and determined that the debt is 
past-due and legally enforceable; and
    (4) Provided the debtor with an opportunity to make a written 
agreement to repay the debt; and
    (d) The debt is at least $25.


Sec. 313.124  Pre-offset notice and consideration of evidence.

    (a) For purposes of Sec. 313.123(c)(2), the FDIC has made a 
reasonable effort to notify the debtor if it uses the current address 
information contained in its records related to the debt. The FDIC may, 
but is not required to, obtain address information from the IRS 
pursuant to 26 U.S.C. 6103(m)(2), (4), (5).
    (b) For purposes of Sec. 313.123(c)(3), if evidence presented by a 
debtor is considered by an agent of the FDIC, or other entities or 
persons acting on behalf of the FDIC, the debtor must be accorded at 
least 30 days from the date the agent or other entity or person 
determines that all or part of the debt is past-due and legally 
enforceable to request review by an officer or employee of the FDIC of 
any unresolved dispute. The FDIC must then notify the debtor of its 
decision.


Sec. 313.125  Referral of past-due, legally enforceable debt.

    The FDIC shall submit past-due, legally enforceable debt 
information for tax refund offset to FMS, as prescribed by FMS. For 
each debt, the FDIC will include the following information:
    (a) The name and taxpayer identification number (as defined in 26 
U.S.C. 6109) of the debtor;
    (b) The amount of the past-due and legally enforceable debt;
    (c) The date on which the debt became past-due; and
    (d) The designation of FDIC as the agency referring the debt.


Sec. 313.126  Correcting and updating referral.

    If, after referring a past-due legally enforceable debt to FMS as 
provided in Sec. 313.125, the FDIC determines that an error has been 
made with respect to the information transmitted to FMS, or if the FDIC 
receives a payment or credits a payment to the account of the debtor 
referred to FMS for offset, or if the debt amount is otherwise 
incorrect, the FDIC shall promptly notify FMS and make the appropriate 
correction of the FDIC's records. FDIC will provide certification as 
required under Sec. 313.123 for any increases to amounts owed. In the 
event FMS rejects an FDIC certification for failure to comply with 
Sec. 323.123, the FDIC may resubmit the debt with a corrected 
certification.


Sec. 313.127  Disposition of amounts collected.

    FMS will transmit amounts collected for past-due, legally 
enforceable debts, less fees charged under this section, to the FDIC's 
account. The FDIC will reimburse FMS and the IRS for the cost of 
administering the tax refund offset program. FMS will deduct the fees 
from amounts collected prior to disposition and transmit a portion of 
the fees deducted to reimburse the IRS for its share of the cost of 
administering the tax refund offset program. To the extent allowed by 
law, the FDIC may add the offset fees to the debt.


Secs. 313.128--313.139  [Reserved]

Subpart F--Civil Service Retirement and Disability Fund Offset


Sec. 313.140  Future benefits.

    Unless otherwise prohibited by law, the FDIC may request that a 
debtor's anticipated or future benefit payments under the Civil Service 
Retirement and Disability Fund (Fund) be administratively offset in 
accordance with regulations at 5 CFR 831.1801 through 831.1808.


Sec. 313.141  Notification to OPM.

    When making a request for administrative offset under Sec. 313.140, 
the FDIC shall provide OPM with a written certification that:
    (a) The debtor owes the FDIC a debt, including the amount of the 
debt;
    (b) The FDIC has complied with the applicable statutes, 
regulations, and procedures of OPM; and
    (c) The FDIC has complied with the requirements of 31 CFR parts 900 
through 904, including any required hearing or review.


Sec. 313.142  Request for administrative offset.

    The Director shall request administrative offset under 
Sec. 313.140, as soon as practical after completion of the applicable 
procedures in order to help ensure that offset be initiated prior to 
expiration of the applicable statute of limitations. At such time as 
the debtor makes a claim for payments from the Fund, if at least a year 
has elapsed since the offset request was originally made, the debtor 
shall be permitted to offer a satisfactory repayment plan in lieu of 
offset upon establishing that changed financial circumstances would 
render the offset unjust.


Sec. 313.143  Cancellation of deduction.

    If the FDIC collects part or all of the debt by other means before 
deductions are made or completed pursuant to Sec. 313.140, the FDIC 
shall act promptly to modify or terminate its request for such offset.

[[Page 48537]]

Subpart G--Mandatory Centralized Administrative Offset


Sec. 313.160  Treasury notification.

    (a) In accordance with 31 U.S.C. 3716, the FDIC as a creditor 
agency must notify the Secretary of the Treasury of all debts that are 
delinquent (over 180 days past due), as defined in the FCCS, to enable 
the Secretary to seek collection by centralized administrative offset. 
This includes debts the FDIC seeks to recover from the pay account of 
an employee of another agency by means of salary offset.
    (b) For purposes of centralized administrative offset, a claim or 
debt is not delinquent if:
    (1) It is in litigation or foreclosure;
    (2) It will be disposed of under an asset sale program within one 
year after becoming eligible for sale;
    (3) It has been referred to a private collection contractor for 
collection;
    (4) It has been referred to a debt collection center;
    (5) It will be collected under internal offset, if such offset is 
sufficient to collect the claim within three years after the date the 
debt or claim is first delinquent; and
    (6) It is within a specific class of claims or debts which the 
Secretary of the Treasury has determined to be exempt, at the request 
of an agency.


Sec. 313.161  Certification of debt.

    Prior to referring a delinquent debt to the Secretary of the 
Treasury, the Director must have complied with the requirements of 5 
U.S.C. 5514, and 5 CFR part 550, subpart K, governing salary offset, 
and the FDIC regulations. The Director shall certify, in a form 
acceptable to the Secretary, that:
    (a) The debt is past due and legally enforceable; and
    (b) The FDIC has complied with all due process requirements under 
31 U.S.C. 3716 and the FDIC's administrative offset regulations.


Sec. 313.162  Compliance with 31 CFR part 285.

    The Director shall also comply with applicable procedures for 
referring a delinquent debt for purposes of centralized offset which 
are set forth at 31 CFR part 285 and the FCCS.


Sec. 313.163  Notification of debts of 180 days or less.

    The Director, in his discretion, may also notify the Secretary of 
the Treasury of debts that have been delinquent for 180 days or less, 
including debts the FDIC seeks to recover by means of salary offset.


Secs. 313.164--313.180  [Reserved]

    Dated at Washington, DC, this 12th day of July, 2002.

    By order of the Board of Directors.

    Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary/Supervisory Counsel.
[FR Doc. 02-18656 Filed 7-24-02; 8:45 am]
BILLING CODE 6714-01-P