[Federal Register Volume 67, Number 239 (Thursday, December 12, 2002)]
[Proposed Rules]
[Pages 76628-76645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30900]



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Part V





Federal Communications Commission





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47 CFR Part 1



Implementation of the Debt Collection Improvement Act of 1996 and 
Adoption of Rules Governing Applications or Requests for Benefits by 
Delinquent Debtors; Proposed Rule

  Federal Register / Vol. 67, No. 239 / Thursday, December 12, 2002 / 
Proposed Rules  

[[Page 76628]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[OMD Docket No. 02-339; FCC 02-299]


Implementation of the Debt Collection Improvement Act of 1996 and 
Adoption of Rules Governing Applications or Requests for Benefits by 
Delinquent Debtors

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission proposes to amend its rules to implement the 
Debt Collection Improvement Act of 1996 (DCIA). The proposed amendments 
largely follow the implementing rules promulgated by the Department of 
Treasury. The Commission also proposes to adopt a rule whereby 
applications or other requests for benefits would be dismissed upon 
discovery that the entity applying for or seeking the benefit is 
delinquent in any debt to the Commission, and that entity fails to 
resolve the delinquency.

DATES: Comments are due February 10, 2003; reply comments are due March 
12, 2003.

FOR FURTHER INFORMATION CONTACT: Regina W. Dorsey, Special Assistant to 
the Chief Financial Officer, at 1-202-418-1993, or by e-mail at 
<[email protected], or Laurence H. Schecker, Office of General 
Counsel, Administrative Law Division, at 1-202-418-1720, or by e-mail 
at <[email protected].

SUPPLEMENTARY INFORMATION: In this document, the Commission proposes to 
amend its rules governing the collection of claims owed the United 
States, 47 CFR Part 1 Subpart O, to implement the Debt Collection 
Improvement Act of 1996, Public Law 104-134, 110 Stat. 1321, 1358 
(1996) (DCIA). The Commission also proposes to adopt a rule withholding 
action on applications and other requests for benefits upon discovery 
that the entity applying for or seeking benefits is delinquent in its 
non-tax debts owed to the Commission, and mandating dismissal of such 
applications or requests if the delinquent debt is not resolved.

I. Debt Collection Rules

    The Commission's rules governing claims owed the United States were 
adopted in 1988 to implement the Debt Collection Act of 1982, Public 
Law 97-365, 96 Stat. 1749 (1982) (DCA), and the Deficit Reduction Act, 
Public Law 98-369, 98 Stat. 1153 (1984). The Commission's rules 
paralleled the implementing regulations issued in 1984 by the 
Department of Justice and the General Accounting Office known as the 
Federal Claims Collection Standards (FCCS). In 1996, faced with ``a 
rising tide of delinquent debts,'' 142 Cong. Rec. H4087 (Apr. 25, 1996) 
(remarks of Congressman Horn), Congress enacted the DCIA, revising 
federal debt collection procedures. Because our debt collection rules 
parallel the FCCS, we awaited revision of the FCCS before proposing to 
amend our rules. The Departments of Justice and Treasury have now 
issued final amendments to the FCCS. Federal Claims Collection 
Standards, 65 FR 70390, November 22, 2000 (FCCS), codified at 31 CFR. 
Chapter IX and Parts 900-904.
    Based on the revised FCCS, we propose to amend our debt collection 
rules presently found at 47 CFR Part 1 Subpart O. Our proposal also 
incorporates the Federal salary offset procedures, governed by 5 U.S.C. 
5514 and Office of Personnel Management (OPM) regulations. See 5 CFR 
550.1104. The proposed revisions to our DCIA rules include numerous 
changes and amendments. Major changes contained in our proposed 
revisions are discussed below. In addition, many adjustments have been 
made to take into account debts arising under our auction rules. Other 
provisions have been redrafted for clarity but do not substantively 
change debt collection procedures, and are not discussed here.
    The following major changes to the Commission's debt collection 
rules are proposed. The proposed rules reflect the increase in the 
principal claim amount from $20,000 to $100,000 or such amount as the 
Attorney General deems appropriate, that agencies are authorized to 
compromise or to suspend or terminate collection activity thereon 
without the concurrence of the Department of Justice. In addition, the 
minimum amount of a claim that may be referred to the Department of 
Justice is increased from $600 to $2,500. The proposed rules also 
reflect several new debt collection procedures under the DCIA, 
including but not limited to (a) transfer or referral of delinquent 
debt to the Department of the Treasury or Treasury-designated debt 
collection centers for collection (known as cross-servicing); (b) 
mandatory, centralized administrative offset by disbursing officials; 
(c) mandatory credit bureau reporting; and (d) mandatory prohibition 
against extending Federal assistance in the form of loan or loan 
guarantee to delinquent debtors. The proposed rules conform the 
Commission's definitions with those used by the Departments of Justice 
and Treasury in their regulations on the DCIA. Finally, we have added a 
new Sec.  1.1935 adopting the new Treasury regulations adopting the 
DCIA administrative wage garnishment requirements. See Administrative 
Wage Garnishment, 63 FR 25136, May 6, 1996 (permitting agencies to 
garnish up to 15 percent of the disposable pay of a debtor to satisfy 
delinquent non-tax debt owed), adopting 31 CFR 285.11. We invite 
comment on all aspects of the proposed revisions to our debt collection 
rules.

II. Delinquent Debtors

    Introduction. We have previously explained that the Commission is 
required to manage and collect substantial sums of money, including 
annual regulatory fees, application fees, civil monetary penalties, and 
auction payments, and oversees Universal Service Fund (USF) 
contributions. We envisioned a multi-step process to improve the 
management of the agency's accounts. The Commission established a 
Revenue Accounting and Management Information System (RAMIS) to support 
the agency's accounts receivable and to enable us to perform fee and 
debt sufficiency checks. We recently adopted the requirement that 
persons and entities doing business with the Commission obtain a unique 
identifying number called the FCC Registration Number (FRN), and supply 
it when doing business with the Commission. The Commission also 
established the Commission Registration System (CORES) to assign the 
FRN. Through these mechanisms, we are able to better track money owed 
to the Commission.
    The ``Red Light'' Rule. This Notice proposes to extend and clarify 
policies already in place in our rules. Our regulatory and application 
fee rules already permit us as a matter of discretion to dismiss 
applications for failure to pay appropriate fees. 47 U.S.C. 158(c)(2), 
159(c)(2). See 47 CFR 1.1109(c), 1.1109(d)(1); 1.1112(a)(1)(i); 
1.1112(a)(2)(ii); 1.1157(a)(2); 1.1161(a)(1)(i); 1.1161(a)(2)(ii); 
1.1164(e); and 1.1166(c). Our auctions rules provide that an applicant 
must certify that it ``is not in default on any Commission licenses and 
that it is not delinquent on any non-tax debt owed to any Federal 
agency,'' 47 CFR 1.2105(a)(2)(x); see also 47 CFR 1.2105(a)(2)(xi), or 
its application will be dismissed. 47 CFR 1.2105(b). (These rules are 
not affected by the proposed red light rule.) The next step in the 
improvement of the management of the Commission's accounts is our 
proposal

[[Page 76629]]

that anyone delinquent in any non-tax debts owed to the Commission will 
be ineligible for or barred from receiving a license or other benefit 
until the delinquency has been resolved by payment in full or by the 
completion of satisfactory arrangements for payment. We propose to 
revise our regulatory and application fee rules to make it clear that 
we will withhold action on applications or other requests for benefits 
by delinquent debtors and ultimately dismiss those applications or 
other requests if payment of the delinquent debt is not made or other 
satisfactory arrangement for payment is not made. In addition, we 
propose to add a generally applicable rule (with some necessary 
exceptions, as discussed below) to be added as proposed rule 1.1910 as 
set forth further to withhold action on applications or other requests 
for benefits by debtors delinquent in debts other than application or 
regulatory fees, and to dismiss those applications or other requests if 
the delinquent debt is not paid or satisfactory arrangement for payment 
is not made. We invite public comment on all aspects of the proposed 
``red light rule'' as set forth further. We specifically seek comment 
on whether receipt of support from the universal service support 
mechanisms should be considered other benefits for these purposes, 
particularly in light the mandatory service obligations imposed by 
section 254(h).
    Under the proposed rule changes, the Commission will not approve 
any applications or other authorizations until they determine that all 
delinquent debt to the Commission by entities using the same taxpayer 
identifying number (TIN) is paid or satisfactory arrangements are made 
for payment. Applications include requests to waive, defer, or reduce 
application fees or regulatory fees under 47 CFR 1.1117 and 1.1166, and 
petitions or applications for review under 47 CFR 1.1117, 1.1159, and 
1.1167 related to applications or other requests requiring the filing 
of an FRN. See also 31 U.S.C. 7701(c)(2) (DCIA definition of doing 
business with the federal government); 47 CFR 1.8002(a) (indicating 
anyone doing business with the Commission must obtain an FRN).
    An applicant's FRN will be used to determine all delinquent debt 
owed attributable to all entities using the same TIN. Entities may 
acquire multiple FRNs. However, only delinquent debt attributable to 
the same TIN will trigger our proposed red light rule. By delinquent 
debt we mean a claim or debt which has not been paid by the date 
specified in the initial written demand for payment, applicable 
agreement, instrument, or Commission rule or rules, unless other 
satisfactory payment arrangements have been made by that date, or, at 
any time thereafter, the debtor has failed to satisfy an obligation 
under a payment agreement or instrument with the agency, or pursuant to 
a Commission rule. See proposed 47 CFR 1.1901(j). See also 31 CFR 
900.2(b) (``a debt is ``delinquent'' if it has not been paid by the 
date specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including post-delinquency payment 
agreement), unless other satisfactory payment arrangements have been 
made.''). We note that pursuant to section 504(c) of the Communications 
Act, as amended, 47 U.S.C. 504(c), we do not treat monetary forfeitures 
imposed after issuance of a notice of apparent liability as debts owed 
to the United States until the forfeiture had been partially paid or a 
court of competent jurisdiction has ordered payment of the forfeiture 
and such order is final. We propose that if a timely challenge has been 
filed either to the existence of or the amount of a debt, that debt 
will not be considered delinquent for purposes of the red light rule. 
Cf. 47 CFR 285.13(d)(2)(iii) (a debt is not delinquent for purposes of 
the denial of financial assistance to delinquent debtors under 31 
U.S.C. 3720B if it is subject to time-filed administrative or judicial 
challenge). For purposes of Part 1, Subpart O only, an installment 
payment under 47 CFR 1.2110(g) will not be considered delinquent until 
the expiration of all applicable grace periods and any other applicable 
periods under Commission rules to make the payment due. The rules set 
forth in this subpart in no way affect the Commission's rules on 
default or automatic license cancellation as may be amended. All 
Commission electronic systems will be linked with RAMIS, which will 
check the FRN provided on the filing for eligibility-based fee 
sufficiency and the existence of any non-tax delinquent debt. All FRNs 
provided with a filing will be checked for delinquent debt, and the 
delinquency of any entity covered by the same TIN will trigger this 
proposed rule.
    We propose to withhold action on applications or other requests for 
benefits until delinquent debts have been resolved. The delinquent 
debtor will be notified that a fee and delinquent debt check revealed 
either a fee insufficiency or delinquent debt that must be resolved 
within 30 days of the notification. This resolution period is not 
intended to restrict our exercise of any right to recover or collect 
amounts due to the Commission. In no case would an application or other 
request for benefit be granted until the delinquent debt issue has been 
resolved. If the delinquency has not been resolved within 30 days of 
the date of the notification letter, we propose that the application or 
request for authorization will be dismissed.
    Exceptions to the ``Red Light'' Rule. Several unique situations may 
require exceptions to the general rule. We invite comment on the 
exceptions proposed and whether there are any other special 
circumstances requiring departure from our general proposed rule.
    We previously made exceptions for providing the FRN in the case of 
emergency authorizations and emergency special temporary authorities 
(STAs). We believe a similar adjustment is necessary here. Thus, we 
propose that emergency authorizations and STA applications involving 
safety of life or property, including national security emergencies, 
will not be subject to the red-light rule. Such applications should 
include the FRN. We propose that we will, however, examine any 
subsequent applications for regular authority in place of the emergency 
authorization or STA to determine if the applicant is a delinquent 
debtor, and will not grant such applications until such delinquencies 
are resolved.
    Certain sections of the Communications Act contain congressionally 
mandated deadlines. See 47 U.S.C. 271(d)(3) (Bell operating company 
interLATA applications must be decided within 90 days); 47 U.S.C. 
252(e)(5) (if a state commission fails to act on an interconnection 
agreement, the Commission shall issue an order preempting the state 
commission's jurisdiction within 90 days of notice of failure of the 
state to act); 47 U.S.C. 405(b)(1) (Commission must act on petition for 
reconsideration of an order concluding a hearing under section 204(a) 
or 208(b)); 47 U.S.C. 208(b)(1) (Commission must issue an order 
concluding an investigation of lawfulness of a charge, classification, 
regulation, or practice within 5 months after filing of complaint); 47 
U.S.C. 614(h)(C)(iv) (Commission must decide cable must carry 
complaints within 120 days). Other sections of the Communications Act 
provide that if the Commission fails to act by a set date, the 
Commission is deemed to have approved the action sought. See 47 U.S.C. 
160(c) (Commission must act on petition for forbearance within one 
year, extendable by an additional 90 days, or petition deemed granted). 
In addition,

[[Page 76630]]

certain sections of the Commission's rules provide that uncontested 
applications are granted automatically once a given period of time has 
passed. See, e.g., 47 CFR 63.03 (a), which allows an applicant to 
transfer control of the domestic lines or authorization to operate on 
the 31st day after the date of public notice listing a domestic section 
214 transfer of control application as accepted for filing as a 
streamline application. In these circumstances, if the applicant is 
found to be a delinquent debtor at the statutory or Commission imposed 
deadline, the application will be dismissed, consistent with the 
general rule. We think this result is unlikely, as we expect that most 
applicants will diligently check to determine whether they are 
delinquent in any debts owed to the Commission and resolve any such 
delinquencies in a timely manner. Nonetheless, dismissal of such 
applications for delinquencies is possible. We could alternatively 
adopt an exception to the general rule that would provide relief from 
the rule for applications involving statutory or Commission imposed 
deadlines. While we are not inclined to make such an exception, we seek 
comment on the handling of such situations. We seek comment on how we 
might reconcile our rule with these sections of the Communications Act 
or our own rules.
    The proposed red light rule permits delinquent debtors to resolve 
the delinquency within 30 days. We propose that the 30-day resolution 
period would not apply to applications or requests for benefits where 
more restrictive rules govern treatment of delinquent debtors. For 
example, under existing rules auction participants must already certify 
that they are not delinquent in non-tax debt or their short form 
application will be dismissed and they will be ineligible to 
participate in an auction. See 47 CFR 1.2105(a)(2)(x) and (xi). We 
note, however, that the proposed red light rule would apply to 
subsequent applications filed by winning bidders, e.g., the long-form 
application.
    The Bankruptcy Code may require an exception to the red light rule. 
Section 208 of the Bankruptcy Code permits the trustee in bankruptcy to 
fulfill an obligation within 60 days, see 11 U.S.C. 108(b)(2), whereas 
we have proposed a 30-day period for delinquent debtors to resolve the 
delinquency before we will dismiss an application or other request for 
benefit. We seek comment on how we can reconcile the proposed rule and 
section 208 of the Bankruptcy Code. We also note that if we may have to 
examine whether section 525 of the Bankruptcy Code, 11 U.S.C. 525(a) 
prevents application of the red light rule when the applicant has filed 
for bankruptcy. In addition, we seek comment on whether any other 
sections of the Bankruptcy Code require modification of our proposed 
red light rule.
    In some instances, such as tariffs, filings with the Commission go 
into effect immediately (or within one day), thus precluding a check to 
determine if the filer is a delinquent debtor before the request goes 
into effect. See 47 U.S.C. 203, 206. In the tariff situation, we have 
the ability to take appropriate action against a tariff after its 
effective date for noncompliance with any of our rules. See 47 U.S.C. 
205. We propose to use that approach for tariffs that go into effect 
immediately on filing and where it is later discovered that the filer 
is a delinquent debtor. We propose not to apply this rule to multi-
party tariffs where one party is discovered to be a delinquent debtor, 
as we do not wish to penalize the other parties to the tariff.
    Finally, we previously noted that Freedom of Information Act (FOIA) 
and due diligence requests required unique treatment. FOIA requesters 
and due diligence requesters will not be pre-screened for delinquent 
debt under the proposed procedures. Our FOIA rules already address 
situations where FOIA requesters previously failed to pay FOIA fees. 
See 47 CFR 0.469(a)(2).
    Effective Date of Red Light Rule. We propose that if we adopt the 
red light rule, it would apply to any applications or requests for 
benefits pending at the time the rule goes into effect. As noted, 
pending applications or requests for benefits are subject to a check 
for debt delinquency at any time before the request is granted. This 
approach is consistent with the general rule of applying regulations in 
effect at the time of the decision. We seek comment on the proposed 
application of the effective date.
    As previously noted, the FRN is the key to checking for delinquent 
debt. The FRN became mandatory on December 3, 2001. Prior to that date, 
we encouraged entities doing business with the Commission to obtain and 
include the FRN in their filings with the Commission. While many 
applicants included the FRN prior to December 3, 2001, many did not. We 
propose that applications still pending if we ultimately adopt the red 
light rule that were filed prior to December 3, 2001 without an FRN 
will not be subject to the rule due to the administrative difficulties 
in checking for delinquent debt on those applications. Alternatively, 
we propose that parties will have 30 days from the effective date of 
the rule to amend those applications to include FRNs. We seek comment 
on whether any other exceptions to this proposed application of the 
rule are necessary.
    Authority. We believe that ample authority exists for this proposed 
action under the Communications Act of 1934, as amended. See 47 U.S.C. 
158(c)(2) and 159(c)(2) (``the Commission may dismiss any application 
or other filing for failure to pay in a timely manner any * * * fee or 
penalty under this section''); see also 47 U.S.C. 154(i) and 303(r). 
While the DCIA does not specifically prohibit the issuance of licenses 
or authorizations to delinquent debtors, it strongly counsels that 
debtors who are delinquent in payments to the government should not 
receive benefits from the federal government while the delinquency is 
outstanding. Cf. 31 U.S.C. 3720B (those delinquent in non-tax debt are 
ineligible for federal assistance in the form of a loan or loan 
insurance); 31 CFR 285.13(c)(1) (a person owing delinquent nontax debt 
is not eligible for Federal financial assistance). The FCCS rules 
implementing the DCIA direct the Commission to ``aggressively collect 
all debts arising out of [our] activities,'' and encourage agencies to 
``consider suspension or revocation of licenses, permits, or other 
privileges for any inexcusable or willful failure of a debtor to pay 
such a debt in accordance with the agency's regulations or governing 
procedures.'' 31 CFR 901.6(b). Withholding action upon an application 
or request for authorization until delinquencies have been resolved is 
consistent with the intent of the DCIA and in furtherance of the 
Commission's implementing rules.

III. Procedural Matters and Ordering Clauses

    Initial Regulatory Flexibility Certification. We hereby certify, 
and tentatively conclude we will be able to so certify if we adopt 
these rules in final form, that the rules proposed in this Notice will 
not, if promulgated, have a significant economic impact on a 
substantial number of small entities. 5 U.S.C. 605(b). The proposed 
amendment of our Part 1 Subpart O rules to conform to the DCIA 
streamline our debt collection rules reflecting the statutory language 
contained in the DCIA, and therefore a regulatory flexibility analysis 
is not required. See FCCS Rules, 65 FR 70395 (certifying under section 
605(b) that the FCCS rules did not require a regulatory flexibility 
analysis). The proposed rule amendments requiring payment of delinquent 
debts before final action is taken on an application or other request 
for a federal benefit will

[[Page 76631]]

not affect a significant number of small entities. We estimate that 
there are approximately 3600 debtors currently delinquent in their debt 
to the Commission out of approximately 406,000 entities that hold an 
FRN. This means that potentially only one percent of entities doing 
business with the Commission could be affected by this rule. Of the 
3600 delinquent debtors, it is impossible to determine how many are 
small entities, but we can reasonably posit that less than all 3600 are 
small entities. Consequently, less than one percent of entities subject 
to this rule are small entities. Therefore, we propose to certify 
pursuant to 5 U.S.C. 605(b) that the ``red light rule'' does not 
require a regulatory flexibility analysis. We invite comments on our 
initial regulation flexibility certification.
    Ex Parte Matters. This proceeding will be treated as a ``permit-
but-disclose'' proceeding subject to the ``permit-but-disclose'' 
requirements under 1.1206(b) of the rules. 47 CFR 1.1206(b), as 
revised. Ex parte presentations are permissible if disclosed in 
accordance with Commission rules, except during the Sunshine Agenda 
period when presentations, ex parte or otherwise, are generally 
prohibited. Persons making oral ex parte presentations are reminded 
that a memorandum summarizing a presentation must contain a summary of 
the substance of the presentation and not merely a listing of the 
subjects discussed. More than a one or two sentence description of the 
views and arguments presented is generally required. See 47 CFR 
1.1206(b)(2), as revised. Additional rules pertaining to oral and 
written presentations are set forth in Sec.  1.1206(b)
    Comment Filing. Pursuant to Sec. Sec.  1.415 and 1.419 of the 
Commission's rules, 47 CFR 1.415, 1.419, interested parties may file 
comments on or before February 10, 2003, and reply comments on or 
before March 12, 2003. Comments may be filed using the Commission's 
Electronic Comment Filing System (ECFS) or by filing paper copies.
    Comments filed through the ECFS can be sent as an electronic file 
via the Internet to <http://www.fcc.gov/e-file/ecfs.html. 
Generally, only one copy of an electronic submission must be filed. If 
multiple docket or rulemaking numbers appear in the caption of this 
proceeding, however, commenters must transmit one electronic copy of 
the comments to each docket or rulemaking number referenced in the 
caption. In completing the transmittal screen, commenters should 
include their full name, U.S. Postal Service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit an 
electronic comment by Internet e-mail. To get filing instructions for 
e-mail comments, commenters should send an e-mail to [email protected], and 
should include the following words in the body of the message, ``get 
form .'' A sample form and directions 
will be sent in reply. Parties who choose to file by paper must file an 
original and four copies of each filing. Filings can be sent by hand or 
messenger delivery, by commercial overnight courier, or by first-class 
or overnight U.S. Postal Service mail (although we continue to 
experience delays in receiving U.S. Postal Service mail). The 
Commission's contractor, Vistronix, Inc., will receive hand-delivered 
or messenger-delivered paper filings for the Commission's Secretary at 
236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The 
filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries 
must be held together with rubber bands or fasteners. Any envelopes 
must be disposed of before entering the building. Commercial overnight 
mail (other than U.S. Postal Service Express Mail and Priority Mail) 
must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. 
U.S. Postal Service first-class mail, Express Mail, and Priority Mail 
should be addressed to 445 12th Street, SW, Washington, DC 20554. All 
filings must be addressed to the Commission's Secretary, Office of the 
Secretary, Federal Communications Commission.
    All relevant and timely comments will be considered by the 
Commission before final action is taken in this proceeding. Comments 
and reply comments will be available for public inspection during 
regular business hours in the Reference Information Center (Room CY-
A257) of the Federal Communications Commission, The Portals, 445--12th 
Street, SW., Washington, DC 20554. Copies of comments and reply 
comments will also be available through the Commission's duplicating 
contractor.
    Pursuant to Sections 4(i), 8(c)(2), 9(c)(2), and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 158(c)(2), 
159(c)(2), and 303(r), and 5 U.S.C. 5514, this Notice of Proposed 
Rulemaking is hereby adopted.
    The Commission's Consumer & Government Affairs Bureau, Reference 
Information Center, shall send a copy of this Notice of Proposed 
Rulemaking, including the Initial Regulatory Flexibility Certification, 
to the Chief Counsel for Advocacy of the Small Business Administration.

Lists of Subjects in 47 CFR Part 1

    Practice and procedures.

    Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Proposed Rule Changes

    Part 1 of Title 47 of the Code of Federal Regulations is proposed 
to be amended as follows:

PART 1--PRACTICE AND PROCEDURE

    1. The Authority citation for part 1 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 154(j), 155, 225, 303(r), 309, 
and 325(e).

    2. Section 1.1112 is amended by revising paragraph (a) introductory 
text and paragraph (c) to read as follows:


Sec.  1.1112  Conditionality of Commission or staff authorizations.

    (a) Any instrument of authorization granted by the Commission, or 
by its staff under delegated authority, will be conditioned upon final 
payment of the applicable fee or delinquent fees and timely payment of 
bills issued by the Commission. As applied to checks, bank drafts and 
money orders, final payment shall mean receipt by the Treasury of funds 
cleared by the financial institution on which the check, bank draft or 
money order is drawn.
* * * * *
    (c) Where an applicant is found to be delinquent in the payment of 
application fees, the Commission will withhold action on the 
application or filing made by a person or organization.
    (1) Before taking such action, the staff will make a written 
request for the delinquent fee, together with any penalties that may be 
due under this subpart. Such request shall inform the applicant/filer 
that failure to pay or make satisfactory payment arrangements will 
result in the Commission's withholding action on any other application 
or request filed by the applicant. The staff shall also inform the 
applicant of the procedures for seeking Commission review of the 
staff's fee determination.
    (2) If, after final determination that the fee is due or is 
delinquent, and payment is not made in a timely manner, the staff will 
withhold action on the application or filing until payment or other 
satisfactory arrangement is made. If payment or satisfactory 
arrangement is not made within 30 days, the application will be 
dismissed.
    3. Section 1.1116 is amended by revising paragraph (a) introductory 
text,

[[Page 76632]]

paragraph (b) and by adding paragraph (d) to read as follows:


Sec.  1.1116  Penalty for late or insufficient payments.

    (a) Filings subject to fees and accompanied by defective fee 
submissions will be dismissed under Sec.  1.1108 (b) of this subpart 
where the defect is discovered by the Commission's staff within 30 
calendar days from the receipt of the application or filing by the 
Commission. Filings by delinquent debtors will also be dismissed if the 
delinquent debt is not paid or satisfactory arrangements made. See 47 
CFR 1.1910.
* * * * *
    (b) Applications or filings accompanied by insufficient fees or no 
fees, or where such applications or filings are made by persons or 
organizations that are delinquent in fees owed to the Commission, that 
are inadvertently forwarded to Commission staff for substantive review 
will be billed for the amount due if the discrepancy is not discovered 
until after 30 calendar days from the receipt of the application or 
filing by the Commission. Applications or filings that are accompanied 
by insufficient fees or no fees will have a penalty charge equaling 25 
percent of the amount due added to each bill. Any Commission action 
taken prior to timely payment of these charges is contingent and 
subject to recission.
* * * * *
    (d) Failure to submit fees, following notice to the applicant of 
failure to submit the required fee, is subject to collection of the 
fee, including interest thereon, any associated penalties, and the full 
cost of collection to the Federal government pursuant to the provisions 
of the Debt Collection Act, 31 U.S.C. 3717 and 3720A. See 47 CFR 1.1901 
through 1.1952. The debt collection processes described above may 
proceed concurrently with any other sanction in this paragraph.
    4. Section 1.1118 is amended by revising paragraph (a) to read as 
follows:


Sec.  1.1118  Error claims.

    (a) Applicants who wish to challenge a staff determination of an 
insufficient fee or delinquent debt may do so in writing. These claims 
should be addressed to the same location as the original submission 
marked ``Attention Financial Operations.''
* * * * *
    5. Section 1.1161 is amended by revising introductory text of 
paragraph (a) and revising paragraph (c) to read as follows:


Sec.  1.1161  Conditional license grants and delegated authorizations.

    (a) Grant of any application or an instrument of authorization or 
other filing for which a regulatory fee is required to accompany the 
application or filing, will be conditioned upon final payment of the 
current or delinquent regulatory fees. Final payment shall mean receipt 
by the U.S. Treasury of funds cleared by the financial institution on 
which the check, bank draft, money order, credit card, wire or 
electronic payment is drawn.
* * * * *
    (c) Where an applicant is found to be delinquent in the payment of 
regulatory fees, the Commission will withhold action on the application 
or filing made by a person or organization.
    (1) Before taking such action, the staff will make a written 
request for the fee, together with any penalties that may be rendered 
under this subpart. Such request shall inform the regulatee that 
failure to pay may result in the Commission withholding action on any 
application or request filed by the applicant. The staff shall also 
inform the regulatee of the procedures for seeking Commission review of 
the staff's determination.
    (2) If, after final determination that the fee is due, payment is 
not made in a timely manner, the staff will withhold action on the 
application or filing until payment or other satisfactory arrangement 
is made. If payment or satisfactory arrangement is not made within 30 
days, the application will be dismissed.
    6. Section 1.1164 is amended by adding paragrapn (f)(5) as follows:


Sec.  1.1164  Penalties for late or insufficient regulatory fee 
payments.

* * * * *
    (f) * * *
    (5) An application or filing by a regulatee that is delinquent in 
its debt to the Commission is also subject to dismissal under 47 CFR 
1.1910.
    7. Section 1.1167 is amended by revising paragraph (a) to read as 
follows:


Sec.  1.1167  Error claims related to regulatory fees.

    (a) Challenges to determinations or an insufficient regulatory fee 
payment or delinquent fees should be made in writing. Challenges 
submitted with a fee payment must be submitted to the same location as 
the original fee payment, marked ``Attention: Fee Supervisor''. 
Challenges not accompanied by a fee payment should be filed with the 
Commission's Secretary and clearly marked to the attention of the 
Managing Director.
* * * * *
    8. Subpart O of Part 1 is revised to read as follows:
Subpart O--Collection of Claims Owed the United States

General Provisions

1.1901 Definitions and construction.
1.1902 Exceptions.
1.1903 Use of procedures.
1.1904 Conformance to law and regulations.
1.1905 Other procedures; collection of forfeiture penalties.
1.1906 Informal action.
1.1907 Return of property or collateral.
1.1908 Omissions not a defense.
1.1909 [Reserved]
1.1910 Effect of insufficient fee payments or delinquent debts, or 
debarment.

Administrative Offset--Consumer Reporting Agencies--Contracting for 
Collection

1.1911 Demand for payment.
1.1912 Collection by administrative offset.
1.1913 Administrative offset against amounts payable from Civil 
Service Retirement and Disability Fund.
1.1914 Collection in installments.
1.1915 Exploration of compromise.
1.1916 Suspending or terminating collection action.
1.1917 Referrals to the Department of Justice.
1.1918 Use of consumer reporting agencies.
1.1919 Contracting for collection services.
1.1920-1.1924 [Reserved]

Salary Offset--Individual Debt

1.1925 Purpose.
1.1926 Scope.
1.1927 Notification.
1.1928 Hearing.
1.1929 Deduction from employee's pay.
1.1930 Liquidation from final check or recovery from other payment.
1.1931 Non-waiver of rights by payments.
1.1932 Refunds.
1.1933 Interest, penalties and administrative costs.
1.1934 Recovery when paying agency is not creditor agency.
1.1935 Obtaining the services of a hearing official.
1.1936 Administrative Wage Garnishment.
1.1937-1.1939 [Reserved]

Interest, Penalties, Administrative Costs and Other Sanctions

1.1940 Assessment.
1.1941 Exemptions.
1.1942 Other sanctions.
1.1943-1.1949 [Reserved]

Cooperation With the Internal Revenue Service

1.1950 Reporting discharged debts to the Internal Revenue Service.
1.1951 Offset against tax refunds.
1.1952 Use and disclosure of mailing addresses.

General Provisions Concerning Interagency Requests

1.1953 Interagency requests.


[[Page 76633]]


    The authority citation for Subpart O continues to read:

    Authority: 31 U.S.C. 3701; 31 U.S.C. 3711 et seq.; 5 U.S.C. 
5514; sec. 8(1) of E.O. 11609; redesignated in sec. 2-1 of E.O. 
12107; 31 CFR Parts 901-904; 5 CFR Part 550.


Sec.  1.1901  Definitions and construction.

    For purposes of this subpart:
    (a) The term administrative offset means withholding money payable 
by the United States Government to, or held by the Government for, a 
person, organization, or entity to satisfy a debt the person, 
organization, or entity owes the Government.
    (b) The term agency means the Federal Communications Commission 
(Commission) (including the Universal Service Fund) or any other agency 
of the U.S. Government as defined by section 105 of title 5 U.S.C., the 
U.S. Postal Service, the U.S. Postal Rate Commission, a military 
department as defined by section 102 of title 5 U.S.C., an agency or 
court of the judicial branch, or and an agency of the legislative 
branch, including the U.S. Senate and the U.S. House of 
Representatives.
    (c) The term agency head means the Chairman of the Federal 
Communications Commission.
    (d) The term application includes in addition to petitions and 
applications elsewhere defined in the Commission's rules, any request, 
as for assistance, relief, declaratory ruling, or decision, by the 
Commission or on delegated authority.
    (e) The terms appropriate agency official or ``designee'' means the 
Managing Director of the Commission or such other official as may be 
designated by the Managing Director to act in his behalf on this 
matter.
    (f) The terms claim and debt are deemed synonymous and 
interchangeable. They refer to an amount of money, funds, or property 
that has been determined by an agency official to be due to the United 
States from any person, organization, or entity, except another federal 
agency. For purposes of administrative offset under 31 U.S.C. 3716, the 
terms ``claim'' and ``debt'' include an amount of money, funds, or 
property owed by a person to a State, the District of Columbia, 
American Samoa, Guam, the United States Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, or the Commonwealth of 
Puerto Rico. ``Claim'' and ``debt'' include amounts owing to the United 
States on account of extension of credit or loans made by, 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, taxes, 
and forfeitures issues after notice of apparent liability that have 
been partially paid or for which a court of competent jurisdiction has 
order payment and such order is final (except those arising under the 
Uniform Code of Military Justice), and other similar sources.
    (g) The term creditor agency means the agency to which the debt is 
owed.
    (h) The term debt collection center means an agency of a unit or 
subagency within an agency that has been designated by the Secretary of 
the Treasury to collect debt owed to the United States. The Financial 
Management Service (FMS), Fiscal Service, United States Treasury, is a 
debt collection center.
    (i) The term demand letter includes written letters, orders, 
judgments, and memoranda from the Commission or on delegated authority.
    (j) The term delinquent means a claim or debt which has not been 
paid by the date specified by the agency unless other satisfactory 
payment arrangements have been made by that date, or, at any time 
thereafter, the debtor has failed to satisfy an obligation under a 
payment agreement or instrument with the agency, or pursuant to a 
Commission rule. For purposes of this subpart only, an installment 
payment under 47 CFR 1.2110(g) will not be considered delinquent until 
the expiration of all applicable grace periods and any other applicable 
periods under Commission rules to make the payment due. The rules set 
forth in this subpart in no way affect the Commission rules on default 
or automatic cancellation as may be amended (see 47 CFR 1.1902(f)).
    (k) The term disposable pay means that part of current basic pay, 
special pay, incentive pay, retired pay, retainer pay, or in the case 
of an employee not entitled to basic pay, other authorized pay 
remaining after the deduction of any amount required by law to be 
withheld. Agencies must exclude deductions described in 5 CFR 
581.105(b) through (f) to determine disposable pay subject to salary 
offset.
    (l) The term employee means a current employee of the Commission or 
of another agency, including a current member of the Armed Forces or a 
Reserve of the Armed Forces (Reserve).
    (m) The term entity includes natural persons, legal associations, 
applicants, licensees, and regulatees.
    (n) The term FCCS means the Federal Claims Collection Standards 
jointly issued by the Secretary of the Treasury and the Attorney 
General of the United States at 31 CFR Parts 900-904.
    (o) The term paying agency means the agency employing the 
individual and authorizing the payment of his or her current pay.
    (p) The term referral for litigation means referral to the 
Department of Justice for appropriate legal proceedings except where 
the Commission has the statutory authority to handle the litigation 
itself.
    (q) The term 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.
    (r) The term waiver means the cancellation, remission, forgiveness, 
or non-recovery of a debt or fee, including, but not limited to, a debt 
due to the United States, by an entity or an employee to an agency and 
as the waiver is permitted or required by 5 U.S.C. 5584, 10 U.S.C. 
2774, 31 U.S.C. 3711, or 32 U.S.C 710, 5 U.S.C. 8346(b), or any other 
law.
    (s) Words in the plural form shall include the singular, and vice-
versa, and words signifying the masculine gender shall include the 
feminine, and vice-versa. The terms includes and including do not 
exclude matters not listed but do include matters of the same general 
class.


Sec.  1.1902  Exceptions.

    (a) Claims arising from the audit of transportation accounts 
pursuant to 31 U.S.C. 3726 shall be determined, collected, compromised, 
terminated or settled in accordance with regulations published under 
the authority of 31 U.S.C. 3726 (see 41 CFR Part 101-41).
    (b) Claims arising out of acquisition contracts subject to the 
Federal Acquisition Regulations (FAR) shall be determined, collected, 
compromised, terminated, or settled in accordance with those 
regulations. (See 48 CFR Part 32). If not otherwise provided for in the 
FAR, contract claims that have been the subject of a contracting 
officer's final decision in accordance with section 6(a) of the 
Contract Disputes Act of 1978 (41 U.S.C. 605(a)), may be determined, 
collected, compromised, terminated or settled under the provisions of 
this regulation, except that no additional review of the debt shall be 
granted beyond that provided by the contracting officer in accordance 
with the provisions of section 6 of the Contract Disputes Act of 1978 
(41 U.S.C. 605), and the amount of any interest, administrative charge, 
or penalty charge shall be subject to the limitations, if any,

[[Page 76634]]

contained in the contract out of which the claim arose.
    (c) Claims based in whole or in part on conduct in violation of the 
antitrust laws, or in regard to which there is an indication of fraud, 
the presentation of a false claim, or a misrepresentation on the part 
of the debtor or any other party having an interest in the claim, shall 
be referred to the Department of Justice (DOJ) as only the DOJ has 
authority to compromise, suspend, or terminate collection action on 
such claims. The standards in the FCCS relating to the administrative 
collection of claims do apply, but only to the extent authorized by the 
Department of Justice in a particular case. Upon identification of a 
claim based in whole or in part on conduct in violation of the 
antitrust laws or any claim involving fraud, the presentation of a 
false claim, or misrepresentation on the part of the debtor or any 
party having an interest in the claim, the Commission shall promptly 
refer the case to the Department of Justice for action. At its 
discretion, the Department of Justice may return the claim to the 
forwarding agency for further handling in accordance with the standards 
in the FCCS.
    (d) Tax claims are excluded from the coverage of this regulation.
    (e) The Commission will attempt to resolve interagency claims by 
negotiation in accordance with Executive Order 12146 (3 CFR, 1980 
Comp., pp. 409-412).
    (f) Nothing in this subpart shall supercede or invalidate other 
Commission rules, such as the Part 1 general competitive bidding rules 
(47 CFR Part 1, Subpart Q) or the service specific competitive bidding 
rules, as may be amended, regarding the Commission's rights, including 
but not limited to the Commission's right to cancel a license or 
authorization, obtain judgment, or collect interest, penalties, and 
administrative costs.


Sec.  1.1903  Use of procedures.

    Procedures authorized by this regulation (including, but not 
limited to, disclosure to a consumer reporting agency, contracting for 
collection services, administrative offset and salary offset) may be 
used singly or in combination, so long as the requirements of 
applicable law and regulation are satisfied.


Sec.  1.1904  Conformance to law and regulations.

    The requirements of applicable law (31 U.S.C. 3701-3719, as amended 
by Public Law 97-365, 96 Stat. 1749 and Public Law 104-134, 110 Stat. 
1321, 1358) have been implemented in governmentwide standards which 
include the Regulations of the Office of Personnel Management (5 CFR 
Part 550) and the Federal Claims Collection Standards issued jointly by 
the Secretary of the Treasury and the Attorney General of the United 
States (31 CFR Parts 900-904). Not every item in the above-described 
standards has been incorporated or referenced in this regulation. To 
the extent, however, that circumstances arise which are not covered by 
the terms stated in these regulations, the Commission will proceed in 
any actions taken in accordance with applicable requirements found in 
the standards referred to in this section.


Sec.  1.1905  Other procedures; collection of forfeitures.

    Nothing contained in these regulations is intended to require the 
Commission to duplicate administrative or other proceedings required by 
contract or other laws or regulations, nor do these regulations 
supercede procedures permitted or required by other statutes or 
regulations. In particular, the assessment and collection of monetary 
forfeitures imposed by the Commission will be governed initially by the 
procedures prescribed by 47 U.S.C. 503, 504 and 47 CFR 1.80. After 
compliance with those procedures, the Commission may determine that the 
collection of a monetary forfeiture under the collection alternatives 
prescribed by this subpart is appropriate but need not duplicate 
administrative or other proceedings. Fees and penalties prescribed by 
law, e.g., 47 U.S.C. 158 and 159, and promulgated under the authority 
of 47 U.S.C. 309(j) (e.g., 47 CFR Part 1, Subpart Q) may be collected 
as permitted by applicable law. Nothing contained herein is intended to 
restrict the Commission from exercising any other right to recover or 
collect amounts owed to it.


Sec.  1.1906  Informal action.

    Nothing contained in these regulations is intended to preclude 
utilization of informal administrative actions or remedies which may be 
available (including, e.g., Alternative Dispute Resolution), and/or for 
the Commission to exercise rights as agreed to among the parties in 
written agreements, including notes and security agreements.


Sec.  1.1907  Return of property or collateral.

    Nothing contained in this regulation is intended to deter the 
Commission from exercising any other right under law or regulation or 
by agreement it may have or possess, or to exercise its authority and 
right as a regulator under the Communications Act of 1934, as amended, 
and the Commission's rules, and demanding the return of specific 
property or from demanding, as a non-exclusive alternative, either the 
return of property or the payment of its value or the amount due the 
United States under any agreement or Commission rule.


Sec.  1.1908  Omissions not a defense.

    The failure or omission of the Commission to comply with any 
provision in this regulation shall not serve as a defense to any 
debtor.


Sec.  1.1909  [Reserved]


Sec.  1.1910  Effect of insufficient fee payments, delinquent debts, or 
debarment.

    (a)(1) An application (including a petition for reconsideration or 
any application for review of a fee determination) or request for 
authorization subject to the FCC Registration Number (FRN) requirement 
set forth in subpart W of this chapter will be examined to determine if 
the applicant has paid the appropriate fee, appropriate regulatory 
fees, is delinquent in its debts owed the Commission, or is debarred 
from receiving Federal benefits (see, e.g., 31 CFR 285.13; 47 CFR Part 
1, Subpart P).
    (2) Fee payments, delinquent debt, and debarment will be examined 
based on the entity's taxpayer identifying number (TIN), supplied when 
the entity acquired or was assigned an FRN. See 47 CFR 1.8002(b)(1).
    (b)(1) Applications by any entity found not to have paid the proper 
application or regulatory fee will be handled pursuant to the rules set 
forth in 47 CFR Part 1, Subpart G.
    (2) Action will be withheld on applications, including on a 
petition for reconsideration or any application for review of a fee 
determination, or requests for authorization by any entity found to be 
delinquent in its debt to the Commission (see paragraph 1.1901(g)), 
unless otherwise provided for in this regulation, e.g., 47 CFR 1.1928 
(employee petition for a hearing). The entity will be informed that 
action will be withheld on the application until full payment or 
arrangement to pay any non-tax delinquent debt owed to the Commission 
is made. Any Commission action taken prior to the payment of delinquent 
non-tax debt owed to the Commission is contingent and subject to 
recission. Failure to make payment on any delinquent debt is subject to 
collection of the debt, including interest thereon, any associated 
penalties, and

[[Page 76635]]

the full cost of collection to the Federal government pursuant to the 
provisions of the Debt Collection Improvement Act, 31 U.S.C. 3717.
    (3) If a delinquency has not been resolved within 30 days of the 
date of the notice provided pursuant to paragraph (b)(2) of this 
section, the application or request for authorization will be 
dismissed.
    (4) The provisions of paragraphs (b)(2) and (b)(3) of this section 
will not apply if the applicant has timely filed a challenge through an 
adminstrative appeal or a contested judicial proceeding either to the 
existence or amount of the non-tax delinquent debt owed to the 
Commission.
    (5) The provisions of paragraphs (b)(2) and (b)(3) of this section 
will not apply where more restrictive rules govern treatment of 
delinquent debtors, such as 47 CFR 1.2105(a)(2)(x) and (xi).
    (c) Applications, emergency applications or special temporary 
authority involving safety of life or property (including national 
security emergencies), will not be subject to the provisions of 
paragraphs (a) and (b) of this section. However, paragraphs (a) and (b) 
will be applied to permanent authorizations for these services.


Sec.  1.1911  Demand for payment.

    (a) Written demand as described in paragraph (b) of this section, 
and which may be in the form of a letter, order, memorandum, or other 
form of written communication, will be made promptly upon a debtor of 
the United States in terms that inform the debtor of the consequences 
of failing to cooperate to resolve the debt. The specific content, 
timing, and number of demand letters depend upon the type and amount of 
the debt, including, e.g., any notes and the terms of agreements of the 
parties, and the debtor's response, if any, to the Commission's letters 
or telephone calls. Generally, one demand letter should suffice. In 
determining the timing of the demand letter(s), the Commission will 
give due regard to the need to refer debts promptly to the Department 
of Justice for litigation, in accordance with the FCCS. When necessary 
to protect the Government's interest (for example, to prevent the 
running of a statute of limitations), written demand may be preceded by 
other appropriate actions under the FCCS, including immediate referral 
for litigation. Nothing contained herein is intended to limit the 
Commission's authority or discretion as may otherwise be permitted to 
collect debts owed.
    (b) Demand letters will inform the debtor of:
    (1) The basis for the indebtedness and the rights, if any, of the 
debtor to request review within the Commission;
    (2) The applicable standards for assessing any interest, penalties, 
and administrative costs (Sec. Sec.  1.1940 and 1.1941);
    (3) The date by which payment is to be made to avoid late charges 
and enforced collection, which normally will not be more than 30 days 
from the date that the initial demand letter was mailed or hand-
delivered; and
    (4) The name, address, and phone number of a contact person or 
office within the Commission.
    (c) The Commission will expend all reasonable effort to ensure that 
demand letters are mailed or hand-delivered on the same day that they 
are dated. Exigent circumstances may necessitate other forms of 
delivery, including, e.g., facsimile telecopier or electronic mail. 
There is no prescribed format for demand letters. The Commission 
utilizes demand letters and procedures that will lead to the earliest 
practicable determination of whether the debt can be resolved 
administratively or must be referred for litigation.
    (d) The Commission may, as circumstances and the nature of the debt 
permit, include in demand letters such items as the Commission's 
willingness to discuss alternative methods of payment; its policies 
with respect to the use of credit bureaus, debt collection centers, and 
collection agencies; the Commission's remedies to enforce payment of 
the debt (including assessment of interest, administrative costs and 
penalties, administrative garnishment, the use of collection agencies, 
Federal salary offset, tax refund offset, administrative offset, and 
litigation); the requirement that any debt delinquent for more than 180 
days be transferred to the Department of the Treasury for collection; 
and, depending on applicable statutory authority, the debtor's 
entitlement to consideration of a waiver.
    (e) The Commission will respond promptly to communications from the 
debtor, within 30 days whenever feasible, and will advise debtors who 
dispute the debt that they must furnish available evidence to support 
their contentions.
    (f) If, either prior to the initiation of, at any time during, or 
after completion of the demand cycle, the Commission determines to 
pursue administrative offset, then the procedures specified in 
Sec. Sec.  1.1912 and 1.1913, as applicable, will be followed. The 
availability of funds for offset and the Commission's determination to 
pursue that remedy, release the Commission from the necessity of 
further compliance with paragraphs (a), (b), (c) and (d) of this 
section.
    (g) Prior to the initiation of the demand process or at any time 
during or after completion of the demand process, if the Commission 
determines to pursue, or is required to pursue, offset, the procedures 
applicable to offset in Sec. Sec.  1.1912 and 1.1913, as applicable, 
will be followed. The availability of funds or money for debt 
satisfaction by offset and the Commission's determination to pursue 
collection by offset shall release the Commission from the necessity of 
further compliance with paragraphs (a), (b), (c), and (d) of this 
section.
    (h) Prior to referring a debt for litigation, the Commission will 
advise each person determined to be liable for the debt that, unless 
the debt can be collected administratively, litigation may be 
initiated. This notification will follow the requirements of Executive 
Order 12988 (3 CFR, 1996 Comp., pp. 157-163) and may be given as part 
of a demand letter under paragraph (b) of this section or in a separate 
document. Litigation counsel for the Government will be advised that 
this notice has been given.
    (i) When the Commission learns that a bankruptcy petition has been 
filed with respect to a debtor, before proceeding with further 
collection action, the Commission may immediately seek legal advice 
from its counsel concerning the impact of the Bankruptcy Code on any 
pending or contemplated collection activities. Unless the Commission 
determines that the automatic stay imposed at the time of filing 
pursuant to 11 U.S.C. 362 has been lifted or is no longer in effect, in 
most cases collection activity against the debtor should stop 
immediately.
    (1) After seeking legal advice, a proof of claim will be filed in 
most cases with the bankruptcy court or the Trustee. The Commission 
will refer to the provisions of 11 U.S.C. 106 relating to the 
consequences on sovereign immunity of filing a proof of claim.
    (2) If the Commission is a secured creditor, it may seek relief 
from the automatic stay regarding its security, subject to the 
provisions and requirements of 11 U.S.C. 362.
    (3) Offset is stayed in most cases by the automatic stay. However, 
the Commission will determine from its counsel whether it's payments to 
the debtor and payments of other agencies available for offset may be 
frozen by the Commission until relief from the automatic stay can be 
obtained from the bankruptcy court. The Commission will

[[Page 76636]]

also determine from its counsel whether recoupment is available.


Sec.  1.1912  Collection by administrative offset.

    (a) Scope. (1) The term administrative offset has the meaning 
provided in Sec.  1.1901.
    (2) This section does not apply to:
    (i) Debts arising under the Social Security Act, except as provided 
in 42 U.S.C. 404;
    (ii) Payments made under the Social Security Act, except as 
provided for in 31 U.S.C. 3716(c) (see 31 CFR 285.4, Federal Benefit 
Offset);
    (iii) Debts arising under, or payments made under, the Internal 
Revenue Code (see 31 CFR 285.2, Tax Refund Offset) or the tariff laws 
of the United States;
    (iv) Offsets against Federal salaries to the extent these standards 
are inconsistent with regulations published to implement such offsets 
under 5 U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K, 
and 31 CFR 285.7, Federal Salary Offset);
    (v) Offsets under 31 U.S.C. 3728 against a judgment obtained by a 
debtor against the United States;
    (vi) Offsets or recoupments under common law, State law, or Federal 
statutes specifically prohibiting offsets or recoupments of particular 
types of debts; or
    (vii) Offsets in the course of judicial proceedings, including 
bankruptcy.
    (3) Unless otherwise provided for by contract or law, debts or 
payments that are not subject to administrative offset under 31 U.S.C. 
3716 may be collected by administrative offset under the common law or 
other applicable statutory authority.
    (4) Unless otherwise provided by law, administrative offset of 
payments under the authority of 31 U.S.C. 3716 to collect a debt may 
not be conducted more than 10 years after the Government's right to 
collect the debt first accrued, unless facts material to the 
Government's right to collect the debt were not known and could not 
reasonably have been known by the official or officials of the 
Government who were charged with the responsibility to discover and 
collect such debts. This limitation does not apply to debts reduced to 
a judgment.
    (5) In bankruptcy cases, the Commission will seek legal advice from 
its counsel concerning the impact of the Bankruptcy Code, particularly 
11 U.S.C. 106, 362, and 553, on pending or contemplated collections by 
offset.
    (b) Mandatory centralized administrative offset. (1) The Commission 
is required to refer past due, legally enforceable nontax debts which 
are over 180 days delinquent to the Treasury for collection by 
centralized administrative offset. Debts which are less than 180 days 
delinquent also may be referred to the Treasury for this purpose. See 
FCCS for debt certification requirements.
    (2) The names and taxpayer identifying numbers (TINs) of debtors 
who owe debts referred to the Treasury as described in paragraph (b)(1) 
of this section shall be compared to the names and TINs on payments to 
be made by Federal disbursing officials. Federal disbursing officials 
include disbursing officials of Treasury, the Department of Defense, 
the United States Postal Service, other Government corporations, and 
disbursing officials of the United States designated by the Treasury. 
When the name and TIN of a debtor match the name and TIN of a payee and 
all other requirements for offset have been met, the payment will be 
offset to satisfy the debt.
    (3) Federal disbursing officials will notify the debtor/payee in 
writing that an offset has occurred to satisfy, in part or in full, a 
past due, legally enforceable delinquent debt. The notice shall include 
a description of the type and amount of the payment from which the 
offset was taken, the amount of offset that was taken, the identity of 
the creditor agency requesting the offset, and a contact point within 
the creditor agency who will respond to questions regarding the offset.
    (4)(i) Before referring a delinquent debt to the Treasury for 
administrative offset, and subject to any agreement and/or waiver to 
the contrary by the debtor, the Commission shall ensure that offsets 
are initiated only after the debtor:
    (A) Has been sent written notice of the type and amount of the 
debt, the intention of the Commission to use administrative offset to 
collect the debt, and an explanation of the debtor's rights under 31 
U.S.C. 3716; and
    (B) The debtor has been given:
    (1) The opportunity, unless otherwise waived by the debtor, to 
inspect and copy Commission records related to the debt;
    (2) The opportunity, unless otherwise waived by the debtor, for a 
review within the Commission of the determination of indebtedness; and
    (3) The opportunity to make a written agreement to repay the debt.
    (ii) The Commission may omit the procedures set forth in paragraph 
(a)(4)(i) of this section when:
    (A) The offset is in the nature of a recoupment;
    (B) The debt arises under a contract as set forth in Cecile 
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and 
other procedural protections set forth in 31 U.S.C. 3716(a) 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 conducted 
under paragraph (c) of this section, the Commission first learns of the 
existence of the amount owed by the debtor when there is insufficient 
time before payment would be made to the debtor/payee to allow for 
prior notice and an opportunity for review. When prior notice and an 
opportunity for review are omitted, the Commission shall give the 
debtor such notice and an opportunity for review as soon as practicable 
and shall promptly refund any money ultimately found not to have been 
owed to the Government.
    (iii) When the Commission previously has given a debtor any of the 
required notice and review opportunities with respect to a particular 
debt (see 31 CFR 901.2), the Commission need not duplicate such notice 
and review opportunities before administrative offset may be initiated.
    (5) Before the Commission refers delinquent debts to the Treasury, 
OMD must certify, in a form acceptable to the Treasury, that:
    (i) The debt(s) is (are) past due and legally enforceable; and
    (ii) The Commission has complied with all due process requirements 
under 31 U.S.C. 3716(a) and its regulations.
    (6) Payments that are prohibited by law from being offset are 
exempt from centralized administrative offset. The Treasury shall 
exempt payments under means-tested programs from centralized 
administrative offset when requested in writing by the head of the 
payment certifying or authorizing agency. Also, the Treasury may exempt 
other classes of payments from centralized offset upon the written 
request of the head of the payment certifying or authorizing agency.
    (7) Benefit payments made under the Social Security Act (42 U.S.C. 
301 et seq.), part B of the Black Lung Benefits Act (30 U.S.C. 921 et 
seq.), and any law administered by the Railroad Retirement Board (other 
than tier 2 benefits), may be offset only in accordance with Treasury 
regulations, issued in consultation with the Social Security 
Administration, the Railroad Retirement Board, and the Office of 
Management and Budget. See 31 CFR 285.4.
    (8) In accordance with 31 U.S.C. 3716(f), the Treasury may waive 
the provisions of the Computer Matching and Privacy Protection Act of 
1988 concerning matching agreements and

[[Page 76637]]

post-match notification and verification (5 U.S.C. 552a(o) and (p)) for 
centralized administrative offset upon receipt of a certification from 
a creditor agency that the due process requirements enumerated in 31 
U.S.C. 3716(a) have been met. The certification of a debt in accordance 
with paragraph (b)(5) of this section will satisfy this requirement. If 
such a waiver is granted, only the Data Integrity Board of the 
Department of the Treasury is required to oversee any matching 
activities, in accordance with 31 U.S.C. 3716(g). This waiver authority 
does not apply to offsets conducted under paragraphs (c) and (d) of 
this section.
    (c) Non-centralized administrative offset. (1) Generally, non-
centralized administrative offsets are ad hoc case-by-case offsets that 
the Commission conducts, at the Commission's discretion, internally or 
in cooperation with the agency certifying or authorizing payments to 
the debtor. Unless otherwise prohibited by law, when centralized 
administrative offset is not available or appropriate, past due, 
legally enforceable nontax delinquent debts may be collected through 
non-centralized administrative offset. In these cases, a creditor 
agency may make a request directly to a payment-authorizing agency to 
offset a payment due a debtor to collect a delinquent debt. For 
example, it may be appropriate for a creditor agency to request that 
the Office of Personnel Management (OPM) offset a Federal employee's 
lump-sum payment upon leaving Government service to satisfy an unpaid 
advance.
    (2) The Commission will make reasonable effort to ensure that such 
offsets may occur only after:
    (i) The debtor has been provided due process as set forth in 
paragraph (b)(4) of this section (subject to any waiver by the debtor); 
and
    (ii) The payment authorizing agency has received written 
certification from the Commission that the debtor owes the past due, 
legally enforceable delinquent debt in the amount stated, and that the 
creditor agency has fully complied with its regulations concerning 
administrative offset.
    (3) Payment authorizing agencies shall comply with offset requests 
by creditor agencies to collect debts owed to the United States, unless 
the offset would not be in the best interests of the United States with 
respect to the program of the payment authorizing agency, or would 
otherwise be contrary to law. Appropriate use should be made of the 
cooperative efforts of other agencies in effecting collection by 
administrative offset.
    (4)When collecting multiple debts by non-centralized administrative 
offset, agencies should apply the recovered amounts to those debts in 
accordance with the best interests of the United States, as determined 
by the facts and circumstances of the particular case, particularly the 
applicable statute of limitations.


Sec.  1.1913  Administrative offset against amounts payable from Civil 
Service Retirement and Disability Fund.

    Upon providing OPM written certification that a debtor has been 
afforded the procedures provided in Sec.  1.1912(b)(4), the Commission 
may request OPM to offset a debtor's anticipated or future benefit 
payments under the Civil Service Retirement and Disability Fund (Fund) 
in accordance with regulations codified at 5 CFR 831.1801-831.1808. 
Upon receipt of such a request, OPM will identify and ``flag'' a 
debtor's account in anticipation of the time when the debtor requests, 
or becomes eligible to receive, payments from the Fund. This will 
satisfy any requirement that offset be initiated prior to the 
expiration of the time limitations referenced in paragraph 
1.1914(a)(4).


Sec.  1.1914  Collection in installments.

    (a) Whenever feasible, the Commission shall collect the total 
amount of a debt in one lump sum. If a debtor is financially unable to 
pay a debt in one lump sum, the Commission may accept payment in 
regular installments. The Commission will obtain financial statements 
from debtors who represent that they are unable to pay in one lump sum 
and independently verify such representations whenever possible (see 31 
CFR 902.2(g)). The Commission will require and obtain a legally 
enforceable written agreement from the debtor that specifies all of the 
terms of the arrangement and that contains a provision accelerating the 
debt in the event of default.
    (b) The size and frequency of installment payments should bear a 
reasonable relation to the size of the debt and the debtor's ability to 
pay. If possible, the installment payments will be sufficient in size 
and frequency to liquidate the debt in three years or less.
    (c) Security for deferred payments will be obtained in appropriate 
cases. The Commission may accept installment payments notwithstanding 
the refusal of the debtor to execute a written agreement or to give 
security, at the Commission's option.
    (d) The Commission may deny the extension of credit to any debtor 
who fails to provide the records requested or fails to show an ability 
to pay the debt.


Sec.  1.1915  Exploration of compromise.

    The Commission may attempt to effect compromise, preferably during 
the course of personal interviews, in accordance with the standards set 
forth in Part 902 of the Federal Claims Collection Standards (31 CFR 
Part 902). The Commission will also consider a request submitted by the 
debtor to compromise the debt. Such requests should be submitted in 
writing with full justification of the offer and addressing the bases 
for compromise at 31 CFR 902.2. Debtors will provide full financial 
information to support any request for compromise based on the debtor's 
inability to pay the debt. Unless otherwise provided by law, when the 
principal balance of a debt, exclusive of interest, penalties, and 
administrative costs, exceeds $100,000 or any higher amount authorized 
by the Attorney General, the authority to accept the compromise rests 
with the Department of Justice. The Commission will evaluate an offer, 
using the factors set forth in 31 CFR 902.2 and, as appropriate, refer 
the offer with the appropriate financial information to the Department 
of Justice. Department of Justice approval is not required if the 
Commission rejects a compromise offer.


Sec.  1.1916  Suspending or terminating collection action.

    The suspension or termination of collection action shall be made in 
accordance with the standards set forth in Part 903 of the Federal 
Claims Collection Standards (31 CFR Part 903).


Sec.  1.1917  Referrals to the Department of Justice and transfer of 
delinquent debt to the Secretary of Treasury.

    (a) Referrals to the Department of Justice shall be made in 
accordance with the standards set forth in Part 904 of the Federal 
Claims Collection Standards (31 CFR Part 904).
    (b) The DCIA includes separate provisions governing the 
requirements that the Commission transfer delinquent debts to Treasury 
for general collection purposes (cross-servicing) in accordance with 31 
U.S.C. 3711(g)(1) and (2), and notify Treasury of delinquent debts for 
the purpose of administrative offset in accordance with 31 U.S.C. 
3716(c)(6). Title 31, United States Code Section 3711(g)(1) requires 
the Commission to transfer to Treasury all collection activity for a 
given debt. Under section 3711(g), Treasury will use all appropriate 
debt collection tools to collect the debt, including referral to a 
designated debt collection center or private collection agency, and

[[Page 76638]]

administrative offset. Once a debt has been transferred to Treasury 
pursuant to the procedures at 31 CFR 285.12, the Commission will cease 
all collection activity related to that debt.
    (c) All non-tax debts of claims owed to the Commission that have 
been delinquent for a period of 180 days shall be transferred to the 
Secretary of the Treasury; and, upon such transfer the Secretary of the 
Treasury shall take appropriate action to collect or terminate 
collection actions on the debt or claim. A debt is considered 
delinquent for purposes of this section it is 180 days past due and is 
legally enforceable. A debt is past-due if it has not been paid by the 
date specified in the Commission's initial written demand for payment 
or applicable agreement or instrument (including a post-delinquency 
payment agreement) unless other satisfactory payment arrangements have 
been made.


Sec.  1.1918  Use of consumer reporting agencies.

    (a) The term individual means a natural person, and the term 
``consumer reporting agency'' has the meaning provided in the Federal 
Claims Collection Act, as amended, 31 U.S.C. 3701(a)(3) or the Fair 
Credit Reporting Act, 15 U.S.C. 168a(f).
    (b) The Commission may disclose to a consumer reporting agency, or 
provide information to the Treasury who may disclose to a consumer 
reporting agency from a system of records, information that an 
individual is responsible for a claim. System information includes, for 
example, name, taxpayer identification number, business and home 
address, business and home telephone numbers, the amount of the debt, 
the amount of unpaid principle, the late period, and the payment 
history. Before the Commission reports the information, it will;
    (1) Provide notice required by section 5 U.S.C. 552a(e)(4) that 
information in the system may be disclosed to a consumer reporting 
agency;
    (2) Review the claim to determine that it is valid and overdue;
    (3) Make reasonable efforts using information provided by the 
debtor in Commission files to notify the debtor, unless otherwise 
specified under the terms of a contract or agreement--
    (i) That payment of the claim is overdue;
    (ii) That, within not less than 60 days from the date of the 
notice, the Commission intends to disclose to a consumer reporting 
agency that the individual is responsible for that claim;
    (iii) That information in the system of records may be disclosed to 
the consumer reporting agency; and
    (iv) That unless otherwise specified and agreed to in an agreement, 
contract, or by the terms of a note and/or security agreement, or that 
the debt arises from the nonpayment of a Commission fee, penalty, or 
other statutory or regulatory obligations, the individual will be 
provided with an explanation of the claim, and, as appropriate, 
procedures to dispute information in the records of the agency about 
the claim, and to administrative appeal or review of the claim; and
    (4) Review Commission records to determine that the individual has 
not--
    (i) Repaid or agreed to repay the claim under a written repayment 
plan agreed to and signed by both the individual and the Commission's 
representative; or, if eligible,
    (ii) Filed for review of the claim under paragraph (g) of this 
section;
    (c) The Commission shall: (1) Disclose to each consumer reporting 
agency to which the original disclosure was made a substantial change 
in the condition or amount of the claim;
    (2) Verify or correct promptly information about the claim, on 
request of a consumer reporting agency for verification of any or all 
information so disclosed; and
    (3) Obtain assurances from each consumer reporting agency that they 
are complying with all laws of the United States relating to providing 
consumer credit information.
    (d) The Commission shall ensure that information disclosed to the 
consumer reporting agency is limited to--
    (1) Information necessary to establish the identity of the 
individual, including name, address, and taxpayer identification 
number;
    (2) The amount, status, and history of the claim; and
    (3) The agency or program under which the claim arose.
    (e) All accounts in excess of $100 that have been delinquent more 
than 31 days will normally be referred to a consumer reporting agency.
    (f) Under the same provisions as described above, the Commission 
may disclose to a credit reporting agency, information relating to a 
debtor other than a natural person. Such commercial debt accounts are 
not covered by the Privacy Act. Moreover, commercial debt accounts are 
subject to the Commission's rules concerning debt obligation, including 
Part 1 rules related to auction debt, and the agreements of the 
parties.


Sec.  1.1919  Contracting for collection services.

    (a) Subject to the provisions of paragraph (b) of this section, the 
Commission may contract with private collection contractors, as defined 
in 31 U.S.C. 3701(f), to recover delinquent debts. In that regard, the 
Commission:
    (1) Retains the authority to resolve disputes, compromise debts, 
suspend or terminate collection activity, and refer debts for 
litigation;
    (2) Restricts the private collection contractor from offering, as 
an incentive for payment, the opportunity to pay the debt less the 
private collection contractor's fee unless the Commission has granted 
such authority prior to the offer;
    (3) Specifically requires, as a term of its contract with the 
private collection contractor, that the private collection contractor 
is subject to the Privacy Act of 1974 to the extent specified in 5 
U.S.C. 552a(m), and to applicable Federal and state laws and 
regulations pertaining to debt collection practices, including but not 
limited to the Fair Debt Collection Practices Act, 15 U.S.C. 1692; and
    (4) The private collection contractor is required to account for 
all amounts collected.
    (b) Although the Commission will use government-wide debt 
collection contracts to obtain debt collection services provided by 
private collection contractors, the Commission may refer debts to 
private collection contractors pursuant to a contract between the 
Commission and the private collection contractor in those situations 
where the Commission is not required to transfer debt to the Secretary 
of the Treasury for debt collection.
    (c) Agencies may fund private collection contractor in accordance 
with 31 U.S.C. 3718(d), or as otherwise permitted by law.
    (d) The Commission may enter into contracts for locating and 
recovering assets of the United States, such as unclaimed assets, but 
it will first establish procedures that are acceptable to Treasury 
before entering into contracts to recover assets of the United States 
held by a state government or a financial institution.
    (e) The Commission may enter into contracts for debtor asset and 
income search reports. In accordance with 31 U.S.C. 3718(d), such 
contracts may provide that the fee a contractor charges the Commission 
for such services may be payable from the amounts recovered, unless 
otherwise prohibited by statute. In that regard, fees for those 
services will be added to the amount collected and are part of the 
administrative

[[Page 76639]]

collection costs passed on to the debtor. See Sec.  1.1940.


Sec. Sec.  1.1920 through 1.1924  [Reserved]


Sec.  1.1925  Purpose.

    This section applies to individuals who are employees of the 
Commission and provides the standards to be followed by the Commission 
in implementing 5 U.S.C. 5514; sec. 8(1) of E.O. 11609; redesignated in 
sec. 2-1 of E.O. 12107 to recover a debt from the pay account of a 
Commission employee. It also establishes procedural guidelines to 
recover debts when the employee's creditor and paying agencies are not 
the same.


Sec.  1.1926  Scope.

    (a) Coverage. This section applies to the Commission and employees 
as defined by Sec.  1.1901.
    (b) Applicability. This section and 5 U.S.C. 5514 apply in 
recovering certain debts by offset, except where the employee consents 
to the recovery, from the current pay account of that employee. Because 
it is an administrative offset, debt collection procedures for salary 
offset which are not specified in 5 U.S.C. 5514 and these regulations 
should be consistent with the provisions of the Federal Claims 
Collection Standards (31 CFR Parts 900-904).
    (1) Excluded debts or claims. The procedures contained in this 
section do not apply to debts or claims arising under the Internal 
Revenue Code of 1954, as amended (26 U.S.C. 1 et seq.), the Social 
Security Act (42 U.S.C. 301 et seq.) or 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 in 5 U.S.C. 5705 and employee training expenses in 5 U.S.C. 
4108).
    (2) This section does not preclude an employee from requesting 
waiver of an erroneous payment under 5 U.S.C. 5584, 10 U.S.C. 2774, or 
32 U.S.C. 716, or in any way questioning the amount or validity of a 
debt, in the manner prescribed by the Commissioner. Similarly, this 
subpart does not preclude an employee from requesting waiver of the 
collection of a debt under any other applicable statutory authority.
    (c) Time limit. Under 31 CFR 901.3(a)(4) offset may not be 
initiated more than 10 years after the Government's right to collect 
the debt first accrued, unless an exception applies as stated in Sec.  
901.3(a)(4).


Sec.  1.1927  Notification.

    (a) Salary offset deductions will not be made unless the Managing 
Director of the Commission, or the Managing Director's designee, 
provides to the employee at least 30 days before any deduction, written 
notice stating at a minimum:
    (1) The Commission's determination that a debt is owed, including 
the origin, nature, and amount of the debt;
    (2) The Commission's intention to collect the debt by means of 
deduction from the employee's current disposable pay account;
    (3) The frequency and amount of the intended deduction (stated as a 
fixed dollar amount or as a percentage of pay, not to exceed 15 percent 
of disposable pay) and the intention to continue the deductions until 
the debt is paid in full or otherwise resolved;
    (4) An explanation of the Commission's policy concerning interest, 
penalties, and administrative costs (Sec. Sec.  1.1940 and 1.1941 of 
this regulation), a statement that such assessments must be made unless 
excused in accordance with the FCCS;
    (5) The employee's right to inspect and copy Government records 
relating to the debt or, if the employee or his or her representative 
cannot personally inspect the records, to request and receive a copy of 
such records.
    (6) If not previously provided, the opportunity (under terms 
agreeable to the Commission) to establish a schedule for the voluntary 
repayment of the debt or to enter into a written agreement to establish 
a schedule for repayment of the debt in lieu of offset. The agreement 
must be in writing, signed by both the employee and the Managing 
Director (or designee) of the Commission and documented in Commission 
files (see the FCCS).
    (7) The employee's right to a hearing conducted by an official 
arranged by the Commission (an administrative law judge, or 
alternatively, a hearing official not under the control of the head of 
the Commission) if a petition is filed as prescribed by this subpart.
    (8) The method and time period for petitioning for a hearing;
    (9) That the timely filing of a petition for hearing will stay the 
commencement of collection proceedings;
    (10) That the final decision in the hearing (if one is requested) 
will be issued at the earliest practical date, but not later than 60 
days after the filing of the petition requesting the hearing unless the 
employee requests and the hearing official grants a delay in the 
proceedings;
    (11) That any knowingly false, misleading, or frivolous statements, 
representations, or evidence may subject the employee to:
    (i) Disciplinary procedures appropriate under Chapter 75 of Title 
5, United States Code, Part 752 of Title 5, Code of Federal 
Regulations, or any other applicable statutes or regulations.
    (ii) Penalties under the False Claims Act sections 3729-3731 of 
Title 31, United States Code, or any other applicable statutory 
authority; or
    (iii) Criminal penalties under sections 286, 287, 1001, and 1002 of 
Title 18, United States Code, or any other applicable statutory 
authority.
    (12) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made; and
    (13) Unless there are applicable contractual or statutory 
provisions to the contrary, that amounts paid on or deducted for the 
debt which are later waived or found not owed to the United States will 
be promptly refunded to the employee.
    (b) Notifications under this section shall be hand delivered with a 
record made of the date of delivery, or shall be mailed by certified 
mail, return receipt requested.
    (c) No notification, hearing, written responses or final decisions 
under this regulation are required by the Commission for:
    (1) Any adjustment to pay arising out of an employee's election of 
coverage, or change in coverage, under a Federal benefit program 
requiring periodic deductions from pay, if the amount to be recovered 
was accumulated over four pay periods or less;
    (2) A routine intra-Commission adjustment of pay that is made to 
correct an overpayment of pay attributable to clerical or 
administrative errors or delays in processing pay documents, if the 
overpayment occurred within the four pay periods preceding the 
adjustment, or as soon thereafter as practical, the individual is 
provided written notice of the nature and the amount of the adjustment 
and point of contact for contesting such adjustment; or
    (3) Any adjustment to collect a debt amounting to $50 or less, if, 
at the time of such adjustment, or as soon thereafter as practical, the 
individual is provided written notice of the nature and the amount of 
the adjustment and a point of contact for contesting such adjustment.


Sec.  1.1928  Hearing.

    (a) Petition for hearing. (1) An employee may request a hearing by 
filing a written petition with the Managing Director of the Commission, 
or designated official stating why the employee believes the 
determination of the Commission concerning the

[[Page 76640]]

existence or the amount of the debt is in error.
    (2) The employee's petition must be executed under penalty of 
perjury by the employee and fully identify and explain with reasonable 
specificity all the facts, evidence and witnesses, if any, which the 
employee believes support his or her position.
    (3) The petition must be filed no later than fifteen (15) calendar 
days from the date that the notification was hand delivered or the date 
of delivery by certified mail, return receipt requested.
    (4) If a petition is received after the fifteenth (15) calendar day 
deadline referred to paragraph (a) (3) of this section, the Commission 
will nevertheless accept the petition if the employee can show, in 
writing, that the delay was due to circumstances beyond his or her 
control, or because of failure to receive notice of the time limit 
(unless otherwise aware of it).
    (5) If a petition is not filed within the time limit specified in 
paragraph (a) (3) of this section, and is not accepted pursuant to 
paragraph (a)(4) of this section, the employee's right to hearing will 
be considered waived, and salary offset will be implemented by the 
Commission.
    (b) Type of hearing. (1) The form and content of the hearing will 
be determined by the hearing official who shall be a person outside the 
control or authority of the Commission except that nothing herein shall 
be construed to prohibit the appointment of an administrative law judge 
by the Commission. In determining the type of hearing, the hearing 
officer will consider the nature and complexity of the transaction 
giving rise to the debt. The hearing may be conducted as an informal 
conference or interview, in which the Commission and employee will be 
given a full opportunity to present their respective positions, or as a 
more formal proceeding involving the presentation of evidence, 
arguments and written submissions.
    (2) The employee may represent him or herself, or may be 
represented by an attorney.
    (3) The hearing official shall maintain a summary record of the 
hearing.
    (4) The decision of the hearing officer shall be in writing, and 
shall state:
    (i) The facts purported to evidence the nature and origin of the 
alleged debt;
    (ii) The hearing official's analysis, findings, and conclusions, in 
the light of the hearing, as to--
    (A) The employee's and/or agency's grounds,
    (B) The amount and validity of the alleged debt, and,
    (C) The repayment schedule, if applicable.
    (5) The decision of the hearing official shall constitute the final 
administrative decision of the Commission.


Sec.  1.1929  Deduction from employee's pay.

    (a) Deduction by salary offset, from an employee's current 
disposable pay, shall be subject to the following conditions:
    (1) Ordinarily, debts to the United States will be collected in 
full, in one lump sum. This will be done when funds are available for 
payment in one lump sum. However, if the employee is financially unable 
to pay in one lump sum or the amount of the debt exceeds 15 percent of 
disposable pay for an officially established pay interval, collection 
must be made in installments.
    (2) The size of the installment deductions will bear a reasonable 
relationship to the size of the debt and the employee's ability to pay 
(see the FCCS). However, the installments will not exceed 15 percent of 
the disposable pay from which the deduction is made, unless the 
employee has agreed in writing to the deduction of a greater amount.
    (3) Deduction will generally commence with the next full pay 
interval (ordinarily the next biweekly pay period) following the date: 
of the employee's written consent to salary offset, the waiver of 
hearing, or the decision issued by the hearing officer.
    (4) Installment deductions will be prorated for a period not 
greater than the anticipated period of employment except as provided in 
Sec.  1.1930.


Sec.  1.1930  Liquidation from final check or recovery from other 
payment.

    (a) If the employee retires or resigns or if his or her employment 
or period of active duty ends before collection of the debt is 
completed, offset of the entire remaining balance of the debt may be 
made from a final payment of any nature, including, but not limited to 
a final salary payment or lump-sum leave due the employee as of the 
date of separation, to such extent as is necessary to liquidate the 
debt.
    (b) If the debt cannot be liquidated by offset from a final 
payment, offset may be made from later payments of any kind due from 
the United States, including, but not limited to, the Civil Service 
Retirement and Disability Fund, pursuant to Sec.  1.1913.


Sec.  1.1931  Non-waiver of rights by payments.

    An employee's involuntary payment of all or any portion of a debt 
being collected under 5 U.S.C. 5514 shall not be construed as a waiver 
of any rights which the employee may have under 5 U.S.C. 5514 or any 
other provision of contract or law, unless statutory or contractual 
provisions provide to the contrary.


Sec.  1.1932  Refunds.

    (a) Refunds shall promptly be made when--(1) A debt is waived or 
otherwise found not owing to the United States (unless expressly 
prohibited by statute or regulation); or
    (2) The employee's paying agency is directed by an administrative 
or judicial order to refund amounts deducted from his or her current 
pay.
    (b) Refunds do not bear interest unless required or permitted by 
law or contract.


Sec.  1.1933  Interest, penalties and administrative costs.

    The assessment of interest, penalties and administrative costs 
shall be in accordance with Sec. Sec.  1.1940 and 1.1941.


Sec.  1.1934  Recovery when the Commission is not creditor agency.

    (a) Responsibilities of creditor agency. Upon completion of the 
procedures established under 5 U.S.C. 5514, the creditor agency must do 
the following:
    (1) The creditor agency must certify, in writing, that the employee 
owes the debt, the amount and basis of the debt, the date on which 
payment(s) is due, the date of the Government's right to collect the 
debt first accrued, and that the creditor agency's regulations 
implementing 5 U.S.C. 5514 have been approved by OPM.
    (2) If the collection must be made in installments, the creditor 
agency also must advise the Commission of the number of installments to 
be collected, the amount of each installment, and the commencement date 
of the first installment (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 signed a statement acknowledging receipt of the required 
procedures, and the written consent or statement is forwarded to the 
Commission, the creditor agency also must advise the Commission of the 
action(s) taken under 5 U.S.C. 5514(b) and give the date(s) the 
action(s) was taken.
    (4) Except as otherwise provided in this paragraph, the creditor 
agency must submit a debt claim containing the information specified in 
paragraphs (a)(1) through (a)(3) of this section and an installment 
agreement (or other instruction on the payment schedule), if applicable 
to the Commission.
    (5) If the employee is in the process of separating, the creditor 
agency must

[[Page 76641]]

submit its claim to the Commission for collection pursuant to Sec.  
1.1930. The Commission will certify the total amount of its collection 
and provide copies to the creditor agency and the employee as stated in 
paragraph (c)(1) of this section. If the Commission 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 there has been 
full compliance with the provisions of this section. However, the 
creditor agency must submit a properly certified claim to the agency 
responsible for making such payments before collection can be made.
    (6) If the employee is already separated and all payments from the 
Commission have been paid, the creditor agency may request, unless 
otherwise prohibited, that money due and payable to the employee from 
the Civil Service Retirement and Disability Fund (5 CFR 831.1801 et 
seq.), or other similar funds, be administratively offset to collect 
the debt. (31 U.S.C. 3716 and 4 CFR 102.4)
    (b) Responsibilities of the Commission--(1) Complete claim. When 
the Commission receives a properly certified debt claim from a creditor 
agency, deductions should be scheduled to begin prospectively at the 
next official established pay interval. The Commission will notify the 
employee that the Commission has received a certified debt claim from 
the creditor agency (including the amount) and written notice of the 
date deductions from salary will commence and of the amount of such 
deductions.
    (2) Incomplete claim. When the Commission receives an incomplete 
debt claim from a creditor agency, the Commission will return the debt 
claim with a notice that procedures under 5 U.S.C. 5514 and this 
subpart must be provided, and a properly certified debt claim received, 
before action will be taken to collect from the employee's current pay 
account.
    (3) Review. The Commission will not review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (c) Employees who transfer from one paying agency to another.
    (1) If, after the creditor agency has submitted the debt claim to 
the Commission, the employee transfers to a position served by a 
different paying agency before the debt is collected in full, the 
Commission must certify the total amount of the collection made on the 
debt. One copy of the certification must be furnished to the employee, 
another to the creditor agency along with notice of employee's 
transfer. However, the creditor agency must submit a properly certified 
claim to the new paying agency before collection can be resumed.
    (2) When an employee transfers to another paying agency, the 
creditor agency need not repeat the due process procedures described by 
5 U.S.C. 5514 and this subpart to resume the collection. However, the 
creditor agency is responsible for reviewing the debt upon receiving 
the former paying agency's notice of the employee's transfer to make 
sure the collection is resumed by the new paying agency.


Sec.  1.1935  Obtaining the services of a hearing official.

    (a) When the debtor does not work for the creditor agency and the 
creditor agency cannot provide a prompt and appropriate hearing before 
an administrative law judge or before a hearing official furnished 
pursuant to another lawful arrangement, the creditor agency may contact 
an agent of the Commission designated in Appendix A of 5 CFR part 581 
for a hearing official, and the Commission will then cooperate as 
provided by the FCCS and provide a hearing official.
    (b) When the debtor works for the creditor agency, the creditor 
agency may contact any agent (of another agency) designated in Appendix 
A of 5 CFR part 581 to arrange for a hearing official. Agencies must 
then cooperate as required by the FCCS and provide a hearing official.
    (c) The determination of a hearing official designated under this 
section is considered to be an official certification regarding the 
existence and amount of the debt for purposes of executing salary 
offset under 5 U.S.C. 5514. A creditor agency may make a certification 
to the Secretary of the Treasury under 31 CFR 550.1108 or a paying 
agency under 31 CFR 550.1109 regarding the existence and amount of the 
debt based on the certification of a hearing official. If a hearing 
official determines that a debt may not be collected via salary offset, 
but the creditor agency finds that the debt is still valid, the 
creditor agency may still seek collection of the debt through other 
means, such as offset of other Federal payments, litigation, etc.


Sec.  1.1936  Administrative wage garnishment.

    (a) Purpose. This section provides procedures for the Commission to 
collect money from a debtor's disposable pay by means of administrative 
wage garnishment to satisfy delinquent non-tax debt owed to the United 
States.
    (b) Scope. (1) This section applies to Commission-administered 
programs that give rise to a delinquent nontax debt owed to the United 
States and to the Commission's pursuit of recovery of such debt.
    (2) This section shall apply notwithstanding any provision of State 
law.
    (3) Nothing in this section precludes the compromise of a debt or 
the suspension or termination of collection action in accordance with 
applicable law. See, for example, the Federal Claims Collection 
Standards (FCCS), 31 CFR parts 900 through 904.
    (4) The receipt of payments pursuant to this section does not 
preclude the Commission from pursuing other debt collection remedies, 
including the offset of Federal payments to satisfy delinquent nontax 
debt owed to the United States. The Commission may pursue such debt 
collection remedies separately or in conjunction with administrative 
wage garnishment.
    (5) This section does not apply to the collection of delinquent 
nontax debt owed to the Commission 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, Sec. Sec.  1.1925 
through 1.1935, and other applicable laws.
    (6) Nothing in this section requires the Commission to duplicate 
notices or administrative proceedings required by contract or other 
laws or regulations.
    (c) Definitions. In addition to the definitions set forth in Sec.  
1.1901 as used in this section, the following definitions shall apply:
    (1) 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.
    (2) Certificate of service means a certificate signed by a 
Commission official indicating the nature of the document to which it 
pertains, the date of mailing of the document, and to whom the document 
is being sent.
    (3) Day means calendar day. For purposes of computation, the last 
day of the period will be included unless it is a Saturday, a Sunday, 
or a Federal legal holiday.
    (4) 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

[[Page 76642]]

of health insurance premiums and any amounts required by law to be 
withheld.
    (5) 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.
    (6) 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.
    (7) Garnishment means the process of withholding amounts from an 
employee's disposable pay and the paying of those amounts to a creditor 
in satisfaction of a withholding order.
    (8) Withholding order means any order for withholding or 
garnishment of pay issued by an agency, or judicial or administrative 
body. For purposes of this section, the terms ``wage garnishment 
order'' and ``garnishment order'' have the same meaning as 
``withholding order.''
    (d) General rule. Whenever the Commission determines that a 
delinquent debt is owed by an individual, the Commission may initiate 
proceedings administratively to garnish the wages of the delinquent 
debtor as governed by procedures prescribed by 31 CFR 285. Wage 
garnishment will usually be performed for the Commission by the 
Treasury as part of the debt collection processes for Commission debts 
referred to Treasury for further collection action.
    (e) Notice requirements. (1) At least 30 days before the initiation 
of garnishment proceedings, the Commission shall mail, by first class 
mail, to the debtor's last known address a written notice informing the 
debtor of:
    (i) The nature and amount of the debt;
    (ii) The intention of the Commission 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; and
    (iii) An explanation of the debtor's rights, including those set 
forth in paragraph (e)(2) of this section, and the time frame within 
which the debtor may exercise his or her rights.
    (2) The debtor shall be afforded the opportunity:
    (i) To inspect and copy agency records related to the debt;
    (ii) To enter into a written repayment agreement with the 
Commission under terms agreeable to the Commission; and
    (iii) For a hearing in accordance with paragraph (f) of this 
section concerning the existence or the amount of the debt or the terms 
of the proposed repayment schedule under the garnishment order. 
However, 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 under paragraph (e)(2)(ii) of this section.
    (3) The Commission will keep a copy of a certificate of service 
indicating the date of mailing of the notice. The certificate of 
service may be retained electronically so long as the manner of 
retention is sufficient for evidentiary purposes.
    (f) Hearing. Pursuant to 31 CFR 285.11(f)(1), the Commission hereby 
adopts by reference the hearing procedures of 31 CFR 285.11(f).
    (g) Wage garnishment order. (1) Unless the Commission receives 
information that the Commission believes justifies a delay or 
cancellation of the withholding order, the Commission 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 
described in paragraph (e)(1) of this section), or, if a timely request 
for a hearing is made by the debtor, within 30 days after a final 
decision is made by the Commission to proceed with garnishment, or as 
soon as reasonably possible thereafter.
    (2) The withholding order sent to the employer under paragraph 
(g)(1) of this section shall be in a form prescribed by the Secretary 
of the Treasury on the Commission's letterhead and signed by the head 
of the Commission or his/her delegate. The order shall contain only the 
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.
    (3) The Commission will keep a copy of a certificate of service 
indicating the date of mailing of the order. The certificate of service 
may be retained electronically so long as the manner of retention is 
sufficient for evidentiary purposes.
    (h) Certification by employer. Along with the withholding order, 
the Commission shall 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 Commission within the time 
frame prescribed in the instructions to the form addressing matters 
such as information about the debtor's employment status and disposable 
pay available for withholding.
    (i) Amounts withheld. (1) After receipt of the garnishment order 
issued under this section, the employer shall deduct from all 
disposable pay paid to the applicable debtor during each pay period the 
amount of garnishment described in paragraph (i)(2) of this section.
    (2) Subject to the provisions of paragraphs (i)(3) and (i)(4) of 
this section, the amount of garnishment shall be the lesser of:
    (i) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (ii) The amount set forth in 15 U.S.C. 1673(a)(2) (Restriction on 
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.
    (3) When a debtor's pay is subject to withholding orders with 
priority the following shall apply:
    (i) Unless otherwise provided by Federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (i)(2) of this section and shall have priority over other 
withholding orders which are served later in time. Notwithstanding the 
foregoing, withholding orders for family support shall have priority 
over withholding orders issued under this section.
    (ii) 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:
    (A) The amount calculated under paragraph (i)(2) of this section, 
or
    (B) An amount equal to 25% of the debtor's disposable pay less the 
amount(s) withheld under the withholding order(s) with priority.
    (iii) If a debtor owes more than one debt to the Commission, the 
Commission 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 (i)(2) of this section. For 
purposes of this paragraph (i)(3)(iii), the term agency refers to the 
Commission that is owed the debt.
    (4) An amount greater than that set forth in paragraphs (i)(2) and 
(i)(3) of this section may be withheld upon the written consent of 
debtor.

[[Page 76643]]

    (5) The employer shall promptly pay to the Commission all amounts 
withheld in accordance with the withholding order issued pursuant to 
this section.
    (6) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (7) Any assignment or allotment by an employee of his earnings 
shall be void to the extent it interferes with or prohibits execution 
of the withholding order issued under this section, except for any 
assignment or allotment made pursuant to a family support judgment or 
order.
    (8) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the Commission to discontinue wage withholding. The 
garnishment order shall indicate a reasonable period of time within 
which the employer is required to commence wage withholding.
    (j) Exclusions from garnishment. The Commission may not garnish the 
wages of a debtor who it knows has been involuntarily separated from 
employment until the debtor has been reemployed continuously for at 
least 12 months. The debtor has the burden of informing the Commission 
of the circumstances surrounding an involuntary separation from 
employment.
    (k) Financial hardship. (1) A debtor whose wages are subject to a 
wage withholding order under this section, may, at any time, request a 
review by the Commission of the amount garnished, based on materially 
changed circumstances such as disability, divorce, or catastrophic 
illness which result in demonstrated financial hardship.
    (2) A debtor requesting a review under paragraph (k)(1) of this 
section shall submit the basis for claiming that the current amount of 
garnishment results in demonstarted financial hardship to the debtor, 
along with supporting documentation. The Commission will consider any 
information submitted; however, demonstrated financial hardship must be 
based on financial records that include Federal and state tax returns, 
affidavits executed under the pain and penalty of perjury, and, in the 
case of business-related financial hardship (e.g., the debtor is a 
partner or member of a business-agency relationship) full financial 
statements (audited and/or submitted under oath) in accordance with 
procedures and standards established by the Commission.
    (3) If a financial hardship is found, the Commission will 
downwardly adjust, by an amount and for a period of time agreeable to 
the Commission, the amount garnished to reflect the debtor's financial 
condition. The Commission will notify the employer of any adjustments 
to the amounts to be withheld.
    (l) Ending garnishment. (1) Once the Commission has fully recovered 
the amounts owed by the debtor, including interest, penalties, and 
administrative costs consistent with the FCCS, the Commission will send 
the debtor's employer notification to discontinue wage withholding.
    (2) At least annually, the Commission shall review its debtors' 
accounts to ensure that garnishment has been terminated for accounts 
that have been paid in full.
    (m) Actions prohibited by the employer. An employer may not 
discharge, refuse to employ, or take disciplinary action against the 
debtor due to the issuance of a withholding order under this section.
    (n) Refunds. (1) If a hearing official, at a hearing held pursuant 
to paragraph (f)(3) of this section, determines that a debt is not 
legally due and owing to the United States, the Commission shall 
promptly refund any amount collected by means of administrative wage 
garnishment.
    (2) Unless required by Federal law or contract, refunds under this 
section shall not bear interest.
    (o) Right of action. The Commission may sue any employer for any 
amount that the employer fails to withhold from wages owed and payable 
to an employee in accordance with paragraphs (g) and (i) of this 
section. However, a suit 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 the 
collection action'' occurs when the Commission has terminated 
collection action in accordance with the FCCS or other applicable 
standards. In any event, termination of the collection action will have 
been deemed to occur if the Commission 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.


Sec. Sec.  1.1937 through 1.1939  [Reserved]


Sec.  1.1940  Assessment.

    (a) Except as provided in paragraphs (g), (h), and (i) of this 
section or Sec.  1.1941, the Commission shall charge interest, 
penalties, and administrative costs on debts owed to the United States 
pursuant to 31 U.S.C. 3717. The Commission will mail, hand-deliver, or 
use other forms of transmission, including facsimile telecopier 
service, a written notice to the debtor, at the debtor's most recent 
address available to the Commission, explaining the Commission's 
requirements concerning these charges except where these requirements 
are included in a contractual or repayment agreement, or otherwise 
provided in the Commission's rules, as may be amended from time to 
time. These charges shall continue to accrue until the debt is paid in 
full or otherwise resolved through compromise, termination, or waiver 
of the charges. This provision is not intended to modify to limit the 
terms of any contract, note, or security agreement from the debtor, or 
to modify or limit the Commission's rights under its rules with regard 
to the notice or the parties' agreement to waive notice.
    (b) The Commission shall charge interest on debts owed the United 
States as follows:
    (1) Interest shall accrue from the date of delinquency, or as 
otherwise provided by the terms of any contact, note, or security 
agreement, regulation, or law.
    (2) Unless otherwise established in a contract, repayment 
agreement, or by statute, the rate of interest charged shall be the 
rate established annually by the Treasury in accordance with 31 U.S.C. 
3717. Pursuant to 31 U.S.C. 3717, an agency may charge a higher rate of 
interest if it reasonably determines that a higher rate is necessary to 
protect the rights of the United States. The agency should document the 
reason(s) for its determination that the higher rate is necessary.
    (3) The rate of interest, as initially charged, shall remain fixed 
for the duration of the indebtedness. When a debtor defaults on a 
repayment agreement and seeks to enter into a new agreement, the agency 
may require payment of interest at a new rate that reflects the current 
value of funds to the Treasury at the time the new agreement is 
executed. Interest shall not be compounded, that is, interest shall not 
be charged on interest, penalties, or administrative costs required by 
this section. If, however, a debtor defaults on a previous repayment 
agreement, charges that accrued but were not collected under the 
defaulted agreement shall be added to the principal under the new 
repayment agreement.
    (c) The Commission shall assess administrative costs incurred for 
processing and handling delinquent

[[Page 76644]]

debts. The calculation of administrative costs may be based on actual 
costs incurred or upon estimated costs as determined by the Commission. 
Commission administrative costs include the personnel and service costs 
(e.g., telephone, copier, and overhead) to notify and collect the debt, 
without regard to the success of such efforts by the Commission.
    (d) Unless otherwise established in a contract, repayment 
agreement, or by statute, the Commission will charge a penalty, 
pursuant to 31 U.S.C. 3717(e)(2), currently not to exceed six percent 
(6%) a year on the amount due on a debt that is delinquent for more 
than 90 days. This charge shall accrue from the date of delinquency. If 
the rate permitted under 31 U.S.C. 3717 is changed, the Commission will 
apply that rate.
    (e) The Commission may increase an ``administrative debt'' by the 
cost of living adjustment in lieu of charging interest and penalties 
under this section. ``Administrative debt'' includes, but is not 
limited to, a debt based on fines, penalties, and overpayments, but 
does not include a debt based on the extension of Government credit, 
such as those arising from loans and loan guaranties. The cost of 
living adjustment is the percentage by which the Consumer Price Index 
for the month of June of the calendar year preceding the adjustment 
exceeds the Consumer Price Index for the month of June of the calendar 
year in which the debt was determined or last adjusted. Increases to 
administrative debts shall be computed annually. Agencies should use 
this alternative only when there is a legitimate reason to do so, such 
as when calculating interest and penalties on a debt would be extremely 
difficult because of the age of the debt.
    (f) When a debt is paid in partial or installment payments, amounts 
received by the agency shall be applied first to outstanding penalties 
and administrative cost charges, second to accrued interest, and third 
to the outstanding principal.
    (g) The Commission will waive the collection of interest and 
administrative charges imposed pursuant to this section on the portion 
of the debt that is paid within 30 days after the date on which 
interest began to accrue. The Commission will not extend this 30-day 
period except for good cause shown of extraordinary and compelling 
circumstances, completely documented and supported in writing, 
submitted and received before the expiration of the first 30-day 
period. The Commission may, on good cause shown of extraordinary and 
compelling circumstances, completely documented and supported in 
writing, waive interest, penalties, and administrative costs charged 
under this section, in whole or in part, without regard to the amount 
of the debt, either under the criteria set forth in these standards for 
the compromise of debts, or if the agency determines that collection of 
these charges is against equity and good conscience or is not in the 
best interest of the United States.
    (h) The Commission retains the common law right to impose interest 
and related charges on debts not subject to 31 U.S.C. 3717.


Sec.  1.1941  Exemptions.

    (a) The preceding sections of this part, to the extent they reflect 
remedies or procedures prescribed by the Debt Collection Act of 1982 
and the Debt Collection Improvement Act of 1996, such as administrative 
offset, use of credit bureaus, contracting for collection agencies, and 
interest and related charges, do not apply to debts arising under, or 
payments made under, the Internal Revenue Code of 1986, as amended (26 
U.S.C. 1 et seq.); the Social Security Act (42 U.S.C. 301 et seq.), 
except to the extent provided under 42 U.S.C. 404 and 31 U.S.C. 
3716(c); or the tariff laws of the United States. These remedies and 
procedures, however, may be authorized with respect to debts that are 
exempt from the Debt Collection Act of 1982 and the Debt Collection 
Improvement Act of 1996, to the extent that they are authorized under 
some other statute or the common law.
    (b) This section should not be construed as prohibiting the use of 
these authorities or requirements when collecting debts owed by persons 
employed by agencies administering the laws cited in paragraph (a) of 
this section unless the debt arose under those laws. However, the 
Commission is authorized to assess interest and related charges on 
debts which are not subject to 31 U.S.C. 3717 to the extent authorized 
under the common law or other applicable statutory authority.


Sec.  1.1942  Other sanctions.

    The remedies and sanctions available to the Commission in this 
subpart are not exclusive. The Commission may impose other sanctions, 
where permitted by law, for any inexcusable, prolonged, or repeated 
failure of a debtor to pay such a claim. In such cases, the Commission 
will provide notice, as required by law, to the debtor prior to 
imposition of any such sanction.


Sec. Sec.  1.1943 through 1.1949  [Reserved]


Sec.  1.1950  Reporting discharged debts to the Internal Revenue 
Service.

    When the Commission discharges a debt for less than the full value 
of the indebtedness, it will report the outstanding balance discharged, 
not including interest, to the Internal Revenue Service, using IRS Form 
1099-C or any other form prescribed by the Service as directed by the 
current instructions issued by the IRS for Form 1099-C. The Treasury 
will prepare the Form 1099-C for those debts transferred to Treasury 
for collection and deemed uncollectible.


Sec.  1.1951  Offset against tax refunds.

    The Commission will take action to effect administrative offset 
against tax refunds due to debtors under 26 U.S.C. 6402, in accordance 
with the provisions of 31 U.S.C. 3720A and Treasury Department 
regulations.


Sec.  1.1952  Use and disclosure of mailing addresses.

    (a) When attempting to locate a debtor in order to collect or 
compromise a debt under this subpart or other authority, the Commission 
may send a request to the Secretary of the Treasury (or designee) to 
obtain a debtor's mailing address from the records of the Internal 
Revenue Service.
    (b) The Commission is authorized to use mailing addresses obtained 
under paragraph (a) of this section to enforce collection of a 
delinquent debt and may disclose such mailing addresses to other 
agencies and to collection agencies for collection purposes.


Sec.  1.1953  Interagency requests.

    (a) Requests to the Commission by other Federal agencies for 
administrative or salary offset shall be in writing and forwarded to 
the Financial Operations Center, FCC, 445 12th Street, SW., Washington, 
DC 20554.
    (b) Requests by the Commission to other Federal agencies holding 
funds payable to the debtor will be in writing and forwarded, certified 
return receipt, as specified by that agency in its regulations. If the 
agency's rules governing this matter are not readily available or 
identifiable, the request will be submitted to that agency's office of 
legal counsel with a request that it be processed in accordance with 
their internal procedures.
    (c) Requests to and from the Commission shall be accompanied by a 
certification that the debtor owes the debt (including the amount) and 
that the procedures for administrative or salary offset contained in 
this subpart, or

[[Page 76645]]

comparable procedures prescribed by the requesting agency, have been 
fully complied with. The Commission will cooperate with other agencies 
in effecting collection.
    (d) Requests to and from the Commission shall be processed within 
30 calendar days of receipt. If such processing is impractical or not 
feasible, notice to extend the time period for another 30 calendar days 
will be forwarded 10 calendar days prior to the expiration of the first 
30-day period.

[FR Doc. 02-30900 Filed 12-11-02; 8:45 am]
BILLING CODE 6712-01-P