[Federal Register Volume 73, Number 208 (Monday, October 27, 2008)]
[Rules and Regulations]
[Pages 63627-63629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-25324]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 140

RIN 3245-AF72


Debt Collection; Clarification of Administrative Wage Garnishment 
Regulation and Reassignment of Hearing Official

AGENCY: Small Business Administration.

ACTION: Direct final rule.

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SUMMARY: The U.S. Small Business Administration (SBA) is amending its 
Debt Collection regulations by clarifying terminology within the 
regulation and streamlining administrative wage garnishment hearing 
procedures. These modifications are few in number and result in 
revisions to the definition of terms and the process by which a debtor 
requests a hearing regarding administrative wage garnishment.
    SBA believes that this rule is routine and noncontroversial, and 
the Agency anticipates no significant adverse comment. If SBA receives 
a significant adverse comment, it will withdraw the rule.

DATES: This rule is effective December 11, 2008, without further 
action, unless SBA receives a significant adverse comment by November 
26, 2008. If SBA receives any significant adverse comments, the Agency 
will publish a timely withdrawal of this rule in the Federal Register.

ADDRESSES: You may submit comments, identified by RIN: 3245-AF72, by 
any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting documents.
     Mail, for paper, disk, or CD-ROM submissions: Walter C. 
Intlekofer, Chief, Portfolio Management Division, 409 Third Street, 
SW., Mail Code 7024, Washington, DC 20416.
     Hand Delivery/Courier: Walter C. Intlekofer, Chief, 
Portfolio Management Division, 409 Third Street, SW., Mail Code 7024, 
Washington, DC 20416.
    SBA will post all comments on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.regulations.gov, please submit the 
information to Walter C. Intlekofer, Chief, Portfolio Management 
Division, 409 Third Street, SW., Mail Code 7024, Washington, DC 20416, 
or send an e-mail to [email protected]. Highlight the 
information that you consider to be CBI and explain why you believe SBA 
should hold this information as confidential. SBA will review the 
information and make its final determination of whether it will publish 
the information or not.

FOR FURTHER INFORMATION CONTACT: Walter C. Intlekofer, Chief, Portfolio 
Management Division, 409 Third Street, SW., Mail Code 7024, Washington, 
DC 20416, (202) 205-7543 or [email protected].

SUPPLEMENTARY INFORMATION: SBA regulations at 13 CFR 140.11 set forth 
the scope and processes by which SBA may institute administrative wage 
garnishment (``AWG'') against individuals in the collection of debts, 
as well as the process by which an individual may contest AWG. These 
regulations were promulgated in conjunction with U.S. Department of 
Treasury regulations concerning AWG. The process of AWG is implemented 
by Treasury on behalf of SBA through Treasury's debt cross-servicing 
program (in which Treasury pursues debts on behalf of SBA). Under the 
current Sec.  140.11, debtors subject to AWG may request a hearing with 
SBA's Office of Hearings and Appeals (``OHA'') to contest the existence 
or amount of the debt, or the terms of repayment.
    On implementation of AWG through the cross-servicing program, SBA 
became aware of certain issues regarding hearings requested by debtors 
regarding their AWG. First, Sec.  140.11(d) and (e) refer to the 
authority of SBA to initiate AWG against its debtors and states that 
``SBA will send a written notice'' of the AWG to the debtor. However, 
through cross-servicing, it is Treasury and its private contractors, 
not SBA, who initiate AWG on SBA's behalf, by sending the written 
notice. Thus, since Sec.  140.11 was implemented in part to implement 
cross-servicing, it has become necessary to clarify the terminology 
throughout Sec.  140.11 to make clear that not only SBA, but also 
public and private entities pursuing debt on SBA's behalf, may 
implement AWG against SBA's debtors.
    This purpose is accomplished by redefining the term ``Agency'' in 
Sec.  140.11, to include not only SBA, but also public and private 
entities that pursue debt on SBA's behalf. Thereafter, all other 
references throughout Sec.  140.11 to ``SBA'' performing functions 
related to the implementation of AWG are changed to the ``Agency'' 
performing those functions, to make clear that not only SBA, but also 
public and private entities pursuing debt on SBA's behalf, may perform 
those functions under the regulation.
    The second issue that arose on the implementation of AWG through 
the cross-servicing program relates to the hearing process itself. 
Under the current regulation, debtors who wish to contest the existence 
or amount of their debt, or the terms of repayment, must file for a 
hearing with an Administrative Judge at OHA, who is SBA's currently 
designated hearing official for SBA under Sec.  140.11. Thereafter, 
those hearings are governed by the procedural rules set forth at Part 
134 of Title 13 of the CFR. OHA procedures include full administrative 
litigation, with formal filings, deadlines, and motion practice. 
Additionally, SBA and Treasury discovered that the process of providing 
notice to debtors of their rights to request a hearing necessitated 
lengthy descriptions of the debtor's rights and duties to be 
transmitted with the notice of AWG.
    Thus, OHA and SBA's Office of Financial Assistance have determined 
that by removing OHA's Administrative Judges and OHA procedures from 
the AWG hearing process, that process can be greatly simplified for not 
only debtors subject to AWG, but also to SBA. This purpose is 
accomplished by replacing references to OHA and the

[[Page 63628]]

Administrative Judge in Sec.  140.11 with a ``hearing official,'' the 
definition of which, at Sec.  140.11(f)(6), will be amended to replace 
``Judge'' with ``qualified official designated in the pre-garnishment 
notice.'' Further, Sec.  140.11(f)(1) will be amended to remove the 
reference to OHA regulations and be replaced with language stating that 
the entirety of the hearing procedures are contained within Sec.  
140.11.
    These changes will bring Sec.  140.11 more closely in line with 
Treasury's AWG and cross-servicing regulations at 31 CFR 285.11 and 
285.12, upon which Sec.  140.11 is based and which do not contemplate 
any additional hearing procedures than those that exist at 31 CFR 
285.11 (such as the OHA at 13 CFR 134, incorporated into Sec.  140.11).

Consideration of Comments

    This is a direct final rule, and SBA will review all comments. SBA 
believes that this rule is routine and noncontroversial, and SBA 
anticipates no significant adverse comments to this rulemaking. If SBA 
receives any significant adverse comments, it will publish a timely 
withdrawal of this direct final rule.

Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork 
Reduction Act (44 U.S.C. Ch. 35) and the Regulatory Flexibility Act (5 
U.S.C. 601-612)

    OMB has determined that this direct final rule is not a 
``significant'' regulatory action for purposes of Executive Order 
(E.O.) 12866. This direct final rule results in changes to nomenclature 
and hearing procedure.
    For purposes of E.O. 12988, SBA has determined that this rule is 
drafted, to the extent practicable, under the standards established in 
that order.
    For purposes of E.O. 13132, SBA has determined that this rule does 
not have any federalism implications warranting the preparation of a 
Federalism Assessment.
    For purposes of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, SBA 
has determined that this rule does not impose any new reporting or 
recordkeeping requirements.
    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires 
administrative agencies to consider the effect of their actions on 
small entities, including small businesses. Pursuant to the RFA, when 
an agency issues a rule, the agency must prepare an analysis to 
determine whether the impact of the rule will have a significant 
economic impact on a substantial number of small entities. However, the 
RFA requires analysis of a rule only where notice and comment 
rulemaking are required. Rules are exempt from Administrative Procedure 
Act (APA) notice and comment requirements, and therefore from the RFA 
requirements, when the agency for good cause finds (and incorporates 
the finding and brief statement of reasons in the rules issued) that 
notice and public procedure thereon is impracticable, unnecessary or 
contrary to the public interest. In this case it would be unnecessary 
in light of the non-controversial nature of the rule.

List of Subjects in 13 CFR Part 140

    Claims, Government employees, Income taxes, Wages.

0
For the reasons set forth in the preamble, SBA amends 13 CFR Part 140 
as follows:

PART 140--DEBT COLLECTION

0
1. The authority citation for Part 140 continues to read as follows:

    Authority: 5 U.S.C. 5514; 15 U.S.C. 634(b)(6); 31 U.S.C. 3711, 
3716, 3720, 3720A and 3720D.

Subpart C--Administrative Wage Garnishment


Sec.  140.11  [Amended]

0
2. Section 140.11 is amended as follows:
0
a. In Sec.  140.11(c) revise the definition for the term, ``Agency'' to 
read as set forth below.
0
b. Remove the words ``SBA'' or ``the SBA'' and add, in their place, the 
words ``the Agency,'' wherever they appear in the following places:
    1. Sec.  140.11(c), in the definition for the term, Evidence of 
Service,
    2. Sec.  140.11(d),
    3. Sec.  140.11(e) heading, (e)(1) introductory text, and 
(e)(1)(ii),
    4. Sec.  140.11(e)(3),
    5. Sec.  140.11(f)(4),
    6. Sec.  140.11(f)(5),
    7. Sec.  140.11(f)10),
    8. Sec.  140.11(g)(1) introductory text and (g)(1)(i),
    9. Sec.  140.11(g)(3),
    10. Sec.  140.11(h),
    11. Sec.  140.11(i)(3)(i), (ii), and (iii),
    12. Sec.  140.11(i)(4),
    13. Sec.  140.11(i)(5),
    14. Sec.  140.11(i)(7),
    15. Sec.  140.11(i)(8),
    16. Sec.  140.11(j),
    17. Sec.  140.11(k)(1), in the first sentence only,
    18. Sec.  140.11(k)(3),
    19. Sec.  140.11(l)(1) and (2),
    20. Sec.  140.11(m)
    21. Sec.  140.11(n)(1) introductory text and (n)(1)(ii), and
    22. Sec.  140.11(o).
0
c. In Sec.  140.11(e), introductory text, remove the words ``What 
notice must the SBA give you before beginning an administrative wage 
garnishment?'' and add, in their place, the words ``Notice 
Requirements.''
0
d. In Sec.  140.11(e)(2)(iii), remove the words ``at SBA's Office of 
Hearings and Appeals (OHA)'' and add, in their place, the words 
``before an SBA hearing official.''
0
e. In Sec.  140.11(f)(1), remove the words ``Unless they expressly 
conflict with this section, the rules of procedure governing cases 
before OHA apply to administrative wage garnishment hearings'' and add, 
in their place, the words ``Procedural rules for the conduct of 
administrative wage garnishment hearings are established in this 
section.''
0
f. Revise Sec.  140.11(f)(6) to read as set forth below.
0
g. Remove the words ``at OHA'' and add, in their place, the words ``by 
the Hearing Official'' in the following places:
    1. Sec.  140.11(f)(4), and
    2. Sec.  140.11(f)(5).
0
h. Remove the word ``Judge'' and add, in its place, the words ``Hearing 
Official'' wherever they appear in the following places:
    1. Sec.  140.11(f)(3)(i), (ii), and (iii),
    2. Sec.  140.11(f)(4),
    3. Sec.  140.11(f)(5),
    4. Sec.  140.11(f)(7),
    5. Sec.  140.11(f)(9),
    6. Sec.  140.11(f)(10),
    7. Sec.  140.11(g).
0
i. Remove the word ``Judge's'' and add, in its place, the words 
``Hearing Official's'' wherever they appear in the following places:
    1. Sec.  140.11(f)(10), and
    2. Sec.  140.11(f)(11)(ii).
0
j. Revise Sec.  140.11(f)(12) to read as set forth below.
0
k. In Sec.  140.11(g)(1)(ii), remove the words ``the Judge renders a 
final decision'' and add, in their place, the words ``the final agency 
decision.''
    The revisions read as follows:


Sec.  140.11  What type of debt is subject to administrative wage 
garnishment, and how can SBA administratively garnish your pay?

* * * * *
    (c) * * *
    Agency means the SBA or any entity, public or private, that pursues 
recovery of the debt on SBA's behalf.
* * * * *
    (f) * * *
    (6) Hearing official. A hearing official may be any qualified 
individual designated in the pre-garnishment notice.
* * * * *

[[Page 63629]]

    (12) Final agency action. The decision of the hearing official is 
the final agency decision for the purposes of judicial review under the 
Administrative Procedure Act (5 U.S.C. 701 et seq.).
* * * * *

Sandy K. Baruah,
Acting Administrator.
[FR Doc. E8-25324 Filed 10-24-08; 8:45 am]
BILLING CODE 8025-01-P