[Federal Register Volume 68, Number 240 (Monday, December 15, 2003)]
[Proposed Rules]
[Pages 69634-69637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30877]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 143


Collection of Claims Owed the United States Arising From 
Activities Under the Commission's Jurisdiction

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (Commission) proposes 
to revise its regulations governing the collection of claims owed to 
the United States arising from activities under the Commission's 
jurisdiction. The proposed revision implements the administrative wage 
garnishment provisions of the Debt Collection Improvement Act of 1996 
(DCIA). The DCIA authorizes Federal agencies to collect money from a 
debtor's disposable income by means of administrative wage garnishment. 
Prior to enactment of the DCIA, a court order was required for an 
agency to garnish a debtor's wages. In accordance with the requirements 
of the DCIA, the procedures being proposed by the Commission to garnish 
wages administratively are based upon, and consistent with, 
implementing regulations issued by the Department of the Treasury.

DATES: Comments must be received by January 14, 2004.

ADDRESSES: Comments should refer to ``Proposed Administrative Wage 
Garnishment Rules'' and be submitted to the Office of the Secretariat, 
Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st 
Street, NW., Washington, DC 20581.

FOR FURTHER INFORMATION CONTACT: Stephen Mihans, Esq., Office of 
General Counsel, Commodity Futures Trading Commission, at (202) 418-
5399 or [email protected].

SUPPLEMENTARY INFORMATION:

[[Page 69635]]

I. Background

    Part 143 of the Commission's regulations, 17 CFR part 143, sets 
forth the Commission's policies and procedures for collecting debts 
owed to the United States arising from activities under the 
Commission's jurisdiction. At present, the part 143 rules, which apply 
to debts owed by persons not employed by the Federal government, 
authorize collection by (1) administrative offset against obligations 
owed to the debtor by the United States, (2) compromise (if the debt 
owed is not more than $100,000), or (3) referral to the Department of 
Justice for litigation.\1\ The part 143 rules were first published in 
1985 (50 FR 5383) to implement the Federal Claims Collection Act of 
1966, as amended by the Debt Collection Act of 1982, 31 U.S.C. 3701, et 
seq. They were amended in 1992 (57 FR 61291) to increase the maximum 
dollar amount of claims that the Commission itself may settle, and 
again in 1996 (61 FR 55564) and 2000 (65 FR 45709) to adjust for 
inflation the maximum dollar amount of civil penalties assessable for 
violations of the Commodity Exchange Act and the Commission's 
regulations and orders.\2\
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    \1\ The collection of debts owed to the Commission by its 
current employees or by the employees of other Federal agencies, and 
of debts owed to other Federal agencies by current Commission 
employees, is separately governed by part 141 of the Commission's 
regulations, 17 CFR part 141.
    \2\ The 1996 and 2000 amendments to the Commission's part 143 
rules implemented the Federal Civil Penalties Inflation Adjustment 
Act of 1990 (FCPIAA), as amended by the DCIA. The FCPIAA and the 
relevant amendments made to the FCPIAA by the DCIA, are codified at 
28 U.S.C. 2461 note.
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    As a result of the Department of the Treasury's issuance of 
regulations implementing the administrative wage garnishment provisions 
of the DCIA, the Commission is proposing to further amend its part 143 
rules. Under the DCIA, the head of a Federal agency administering a 
program that gives rise to a delinquent non-tax debt owed to the United 
States by an individual may garnish the individual's disposable pay to 
collect the amount owed. See 31 U.S.C. 3720D. On May 6, 1998, the 
Financial Management Service (FMS),\3\ a bureau of the Department of 
the Treasury, promulgated regulations (63 FR 23156) establishing rules 
and procedures governing administrative wage garnishment by Federal 
agencies. See 31 CFR 285.11. Agencies that wish to use administrative 
wage garnishment to collect delinquent debts must comply with all of 
the requirements set forth in 31 CFR 285.11. They are permitted, 
however, to prescribe their own rules for the conduct of administrative 
wage garnishment hearings, so long as the rules are consistent with 
criteria set forth in 31 CFR 285.11(f).
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    \3\ On August 27, 1999, the Commission entered into a cross-
servicing agreement with the FMS, which allows the FMS to undertake 
debt collection activities on behalf of the Commission. It is 
anticipated that, pursuant to that agreement, the FMS also will 
assist the Commission in collecting delinquent debts through 
administrative wage garnishment.
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    The Commission's proposal would revise existing Rule 143.1 by 
adding administrative wage garnishment to the list of available debt 
collection procedures. Existing Rules 143.2 through 143.8, which 
address the collection of delinquent debt through administrative 
offset, compromise, or referral to the Department of Justice for 
litigation, would be grouped together as subpart A, ``General 
Provisions.'' To address the collection of delinquent debt through 
garnishment of the debtor's wages, a new subpart B, ``Administrative 
Wage Garnishment,'' would be added to part 143. In addition to these 
changes, the Commission's proposal would correct citations in part 143 
to the Federal Claims Collections Standards to reflect their transfer 
from part 4 to part 31 of the Code of Federal Regulations and make 
other editorial changes of a non-substantive nature.

II. Overview of Proposed Wage Garnishment Procedures

    Under proposed Rule 143.9, administrative wage garnishment 
proceedings initiated by the Commission would be governed by the FMS 
regulations codified at 31 CFR 285.11.\4\ Those regulations allow the 
Commission to garnish the disposable pay of any individual, other than 
an employee of the Federal government, who owes a delinquent non-tax 
debt to the United States arising from an activity within the 
Commission's jurisdiction. 31 CFR 285.11(d). At least 30 days before a 
garnishment proceeding is initiated, the Commission (or FMS, acting on 
the Commission's behalf) will send the debtor written notice informing 
him or her of the nature and amount of the debt and the Commission's 
intention to collect it through deductions from the debtor's pay, and 
explaining the debtor's rights with respect to the proposed action. 31 
CFR 285.11(e)(1).
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    \4\ The Commission's use of other debt-collection measures set 
forth in subpart A of the part 143 rules would not preclude it from 
initiating an administrative wage garnishment proceeding against a 
delinquent debtor.
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    The debtor will be given an opportunity to inspect and copy 
Commission records related to his or her debt, to enter into a written 
repayment agreement on terms acceptable to the Commission, and to 
request a hearing concerning the existence or amount of the debt or the 
terms of the repayment schedule. 31 CFR 285.11(e)(2). If a hearing 
request is received within 15 business days after the Commission's 
notice is mailed to the debtor, a hearing must be held before a 
garnishment order can be issued. 31 CFR 285.11(f)(4). For hearing 
requests not received within 15 business days, the Commission need not 
delay the issuance of the garnishment order prior to conducting a 
hearing. 31 CFR 285.11(f)(5). The Commission may not garnish the pay of 
a delinquent debtor who has been involuntarily separated from 
employment until he or she has been reemployed continuously for at 
least 12 months. 31 CFR 295.11(j). The debtor bears the burden of 
informing the Commission of the circumstances surrounding an 
involuntary separation from employment.
    Within 30 days after a delinquent debtor fails to make a timely 
request for a hearing or, if a timely request is received, within 30 
days after a final decision is made to proceed with garnishment, the 
Commission (or FMS, acting on the Commission's behalf) will mail a wage 
garnishment order, in a form prescribed by the Department of the 
Treasury, to the debtor's employer. 31 CFR 285.11(g). The order will 
direct that the employer pay a specified portion of the debtor's wages 
to the Federal government. Along with the order, the Commission (or 
FMS, acting on the Commission's behalf) will send a certification form, 
to be executed by the employer, addressing such matters as the debtor's 
current employment status and the amount of disposable income available 
for garnishment. 31 CFR 285.11(h). Although the employer must promptly 
pay all amounts that are required to be withheld from the debtor's pay, 
the employer will not be required to alter its normal pay cycle in 
order to do so.
    As provided by the DCIA, no more than 15 percent of a delinquent 
debtor's disposable income may be garnished for each pay period. A 
debtor may, at any time, seek review by the Commission of the amount 
being withheld under an administrative wage garnishment order, based on 
materially changed circumstances (such as disability, divorce, or 
catastrophic illness) which result in financial hardship. The DCIA 
makes it unlawful for an employer to take disciplinary action against 
an employee based on the fact that the employee's pay is subject to 
administrative wage garnishment. In addition, it authorizes the 
Commission to sue an employer for amounts that are

[[Page 69636]]

not withheld under a garnishment order.

III. Administrative Wage Garnishment Hearings

    If a delinquent debtor requests a hearing concerning the existence 
or amount of his or her debt or the terms of repayment set forth in the 
garnishment order, the hearing will be conducted by the Commission in 
accordance with the requirements of 31 CFR 285.11(f). Under proposed 
Rule 143.10, the Commission would authorize its Executive Director (or 
any Commission employee designated by the Executive Director) to decide 
whether the hearing will be oral or in writing, and to select a 
qualified and impartial employee of the Commission to conduct the 
hearing and render a decision. Consistent with the requirements of 31 
CFR 285.11(f)(10), the Commission's proposed rules require that a 
decision be issued within 60 days after the Commission's receipt of the 
debtor's request for a hearing. The hearing official's decision would 
be the final agency action for purposes of judicial review under the 
Administrative Procedure Act, 7 U.S.C. 701, et seq.
    The proposed rules state that, at the hearing, the Commission has 
the burden of going forward to prove the existence and amount of the 
debt. Depending on his or her claims, the debtor then would have to 
establish, by a preponderance of the evidence, that no debt exists or 
the amount of the debt is incorrect, that the terms of the repayment 
schedule are either unlawful or would cause a financial hardship to the 
debtor, or that collection of the debt may not be pursued due to the 
operation of law. Although the FMS regulations require only that a 
``summary record'' of the hearing be maintained, proposed Rule 143.10 
would require that all testimony adduced at an oral hearing be 
transcribed on the record and under oath or affirmation, and that all 
documents presented for consideration by the hearing official be marked 
as exhibits and retained in the record.

IV. Related Matters

A. Administrative Procedure Act

    The proposed amendments to the Commission's part 143 rules 
governing debt collection relate solely to agency organization, 
procedure, and practice. Therefore, the provisions of the 
Administrative Procedure Act, 5 U.S.C. 553, generally requiring notice 
of proposed rulemaking and opportunity for public comment, are not 
applicable. Moreover, because the rules implement a definitive 
statutory scheme established by the DCIA, notice and an opportunity for 
public comment are not required. However, since the proposed amendments 
represent an additional tool in the Commission's debt-collection 
efforts, the Commission has determined that it would be useful to 
receive comments from any interested members of the public before 
proceeding to final rulemaking.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-611, 
requires that, in proposing rules, agencies consider the impact of 
those rules on small businesses. Since the proposed rules are not being 
effected pursuant to 5 U.S.C. 553, the analysis and certification 
process mandated by the RFA do not apply. In any event, the Chairman, 
on behalf of the Commission, certifies that the proposed rules will not 
have a significant economic impact on a substantial number of small 
businesses. Although an employer of a delinquent debtor will have to 
certify certain information about the debtor, such as the debtor's 
employment status and current earnings, this information is already 
contained in the employer's payroll records. Moreover, an employer 
would not be required to vary its normal payroll cycle to accommodate 
an administrative wage garnishment order.

C. Paperwork Reduction Act

    The proposed part 143 rules do not impose a burden within the 
meaning and intent of the Paperwork Reduction Act of 1980, 44 U.S.C. 
3501, et seq.

D. Cost-Benefit Analysis

    Section 15(a) of the Commodity Exchange Act, 7 U.S.C. 19(a), 
requires the Commission to consider the costs and benefits of its 
action before issuing a new regulation. The Commission understands 
that, by its terms, section 15(a) does not require the Commission to 
quantify the costs and benefits of a new regulation or to determine 
whether the benefits of the proposed regulation outweigh its costs. Nor 
does it require that each proposed rule be analyzed in isolation when 
that rule is a component of a larger package of rules or rule 
revisions. Rather, section 15(a) simply requires the Commission to 
``consider the costs and benefits'' of its action.
    Section 15(a) further specifies that costs and benefits shall be 
evaluated in light of five broad areas of market and public concern: 
Protection of market participants and the public; efficiency, 
competitiveness, and financial integrity of futures markets; price 
discovery; sound risk management practices; and other public interest 
considerations. Accordingly, the Commission can, in its discretion, 
give greater weight to any one of the five enumerated areas of concern 
and can, in its discretion, determine that notwithstanding its costs, a 
particular rule is necessary or appropriate to protect the public 
interest or to effectuate any of the provisions, or accomplish any of 
the purposes, of the Commodity Exchange Act.
    The proposed administrative wage garnishment rules are not related 
to the marketplace and thus should not affect the protection of market 
participants; the efficiency, competitiveness, and financial integrity 
of futures markets; price discovery; or sound risk management 
practices. These proposed rules, however, do address other public 
interest considerations, namely, the collection of debts owed to the 
United States arising from activities under the Commission's 
jurisdiction. The costs associated with implementing administrative 
wage garnishment, which are mandated by the DCIA and 31 CFR 285.11, 
will be small. On the other hand, the benefits include providing an 
additional means to prevent persons who have been found liable for 
violating the Commodity Exchange Act or the Commission's regulations or 
orders from avoiding payment of monetary sanctions lawfully imposed on 
them.

List of Subjects in 17 CFR Part 143

    Civil monetary penalty, Claims.

    In consideration of the foregoing, the Commission proposes to amend 
chapter 1 of title 17 of the Code of Federal Regulations as follows:

PART 143--COLLECTION OF CLAIMS OWED THE UNITED STATES ARISING FROM 
ACTIVITIES UNDER THE COMMISSION'S JURISDICTION

    1. The authority citation for part 143 is revised to read as 
follows:

    Authority: 7 U.S.C. 9 and 15, 9a, 12a(5), 13a, 13a-1(d), and 
13(a); 31 U.S.C. 3701-3720E; 28 U.S.C. 2461 note.

    2. Section 143.1 is revised to read as follows:


Sec.  143.1  Purpose.

    This part provides procedures that the Commission will use to 
collect debts owed the United States arising from activities under the 
Commission's jurisdiction. As applicable, these procedures are based 
upon, and conform to, the Federal Claims Collection Act, as amended, 31 
U.S.C. 3701-3720E; the Federal Claims Collection Standards, 31 CFR 
parts 900-905, issued by the Department of the Treasury and the 
Department of Justice;

[[Page 69637]]

administrative wage garnishment regulations issued by the Department of 
the Treasury, 31 CFR 285.11; and other laws applicable to the 
collection of non-tax debts owed to the United States arising from 
activities under the Commission's jurisdiction. Subpart A describes 
procedures for collection by offset against obligations of the United 
States to the debtor, by compromise, and by referral to the Department 
of Justice for litigation. It also sets forth the Commission's policy 
on collecting interest on unpaid claims, the method used in calculating 
such interest, and the maximum inflation-adjusted civil monetary 
penalties that may be assessed and enforced for each violation of the 
Commodity Exchange Act or regulations or orders of the Commission 
promulgated thereunder. Subpart B describes procedures for collection 
by administrative garnishment of the debtor's wages.
    3. Sections 143.2 through 143.8 are designated as subpart A of part 
143, and a new heading, ``Subpart A--General Provisions,'' is added 
above section 143.2 to read as follows:

Subpart A--General Provisions

    4. Section 143.2 is amended by revising paragraph (c) to read as 
follows:


Sec.  143.2  Notice of claim.

* * * * *
    (c) If no response or an unsatisfactory response is received by the 
date indicated in the notice, the Commission may take further action as 
appropriate under the Commodity Exchange Act or regulations thereunder, 
or under 31 CFR parts 900-905 or the Federal Claims Collection Act, as 
amended, 31 U.S.C. 3701-3720E.
    5. Section 143.7 is amended by revising paragraph (a) to read as 
follows:


Sec.  143.7  Delegation of authority to the Executive Director.

    (a) The Commission hereby delegates, until such time as the 
Commission orders otherwise, to the Executive Director or to any 
Commission employee under the Executive Director's supervision as he or 
she may designate, authority to take action to carry out subpart A and 
subpart B of this Part and the requirements of 31 CFR parts 900-905 and 
31 CFR 285.11.
* * * * *
    6. A new subpart B consisting of Sec. Sec. 143.9 and 143.10 is 
added to part 143, to read as follows:

Subpart B--Administrative wage garnishment


Sec.  143.9  Administrative wage garnishment orders.

    Whenever an individual owes the United States a delinquent non-tax 
debt arising from activities under the Commission's jurisdiction, the 
Commission, or another federal agency collecting the debt on behalf of 
the Commission, may initiate administrative proceedings to garnish the 
disposable income of the delinquent debtor in accordance with the 
requirements of, and the procedures set forth in, 31 CFR 285.11. The 
Commission's use of other debt-collection measures set forth in subpart 
A of this part does not preclude the initiation of an administrative 
wage garnishment proceeding against a delinquent debtor.


Sec.  143.10  Garnishment hearings.

    Any oral or written hearing required to establish the Commission's 
right to collect a delinquent debt through administrative wage 
garnishment will be presided over by a hearing official designated by 
the Executive Director. Any qualified and impartial employee of the 
Commission designated by the Executive Director may serve as a hearing 
official. All documents presented to the hearing official for his or 
her consideration shall be marked as exhibits and retained in the 
record. All testimony given at an oral hearing, either in person or by 
telephone, shall be under oath or affirmation. A transcript of the 
hearing shall be prepared and made part of the record.

    Issued in Washington, DC, on December 9, 2003, by the 
Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 03-30877 Filed 12-12-03; 8:45 am]
BILLING CODE 6351-01-P