[Federal Register Volume 81, Number 168 (Tuesday, August 30, 2016)]
[Rules and Regulations]
[Pages 59440-59445]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20800]


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MILLENNIUM CHALLENGE CORPORATION

22 CFR Part 1306

[MCC FR 16-03]


Collection of Debts

AGENCY: Millennium Challenge Corporation.

ACTION: Final rule.

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SUMMARY: The purpose of these regulations is to implement statutes 
which authorize the collection of debts owed to the Federal government, 
by persons, organizations, or entities including by salary offset, 
administrative offset, or tax refund offset. Generally, however, a debt 
may not be collected by such means if it has been outstanding for more 
than ten years after the agency's right to collect the debt first 
accrued. These regulations are consistent with the Office of Personnel 
Management regulations on salary offset, and with regulations on 
administrative offset. Persons with access to the internet may also 
view this document by going to the regulations.gov Web site at: http://www.regulations.gov/index.cfm.

DATES: This rule is effective September 24, 2016.

ADDRESSES:  You may submit comments by any of the following methods:
    Email: [email protected].
    Mail paper submissions to the Office of the General Counsel, 
Millennium Challenge Corporation, 1099 Fourteenth Street NW., 
Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT: Laura M. Leussing, Office of the 
General Counsel, Millennium Challenge Corporation, telephone 202-521-
3680.

SUPPLEMENTARY INFORMATION: The Debt Collection Improvement Act (DCIA), 
31 U.S.C. 3720B to 3720E, Public Law 104-134, enacted April 26, 1996) 
and the Federal Claims Collection Standards, 31 U.S.C. 3701 et seq., 
require the government to collect money it is owed.

[[Page 59441]]

For purposes of the DCIA, debts include overpayments of pay and 
allowances made to federal employees. 5 U.S.C. 5514. This regulation 
provides procedures for the collection of debts owed to MCC. MCC adopts 
the Government-wide debt collection standards promulgated by the 
Departments of the Treasury and Justice, known as the Federal Claims 
Collection Standards (FCCS), 31 CFR parts 900-904 (as revised on 
November 22, 2000) and supplements the FCCS by prescribing procedures 
consistent with the FCCS, as necessary and appropriate for MCC 
operations. Nothing in this regulation precludes the use of otherwise 
authorized collection remedies not contained in this regulation.

Regulatory Analysis

Administrative Procedures Act

    No notice of proposed rulemaking is required under the 
Administrative Procedure Act (APA) because these rules relate solely to 
agency procedure and practice (5 U.S.C. 553(b)(3)(A)).

Paperwork Reduction Act

    This rule does not impose any new reporting or recordkeeping 
requirements subject to the Paperwork Reduction Act, 44 U.S.C. chapter 
35.

Regulatory Flexibility Act

    MCC, in accordance with the Regulatory Flexibility Act (5 U.S.C. 
605(b)), has reviewed this regulation and, by approving it, certifies 
that this final rule will not have a significant economic impact on a 
substantial number of small entities.

Small Business Regulatory Enforcement Act of 1996

    This rule is not a major rule as defined by section 251 of the 
Small Business Regulatory Enforcement Act of 1996 (5 U.S.C. 804). This 
rule will not result in an annual effect on the economy of $100 million 
or more; a major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions; or significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based enterprises to compete with foreign-based enterprises in 
domestic and export markets.

Executive Order 12866

    These regulations are not classified as ``significant rules'' under 
Executive Order 12866 because they will not result in (1) an annual 
effect on the economy of $100 million or more; (2) a major increase in 
costs or prices for consumers, individual industries, Federal, State, 
or local government agencies, or geographic regions; or (3) significant 
adverse effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic or foreign markets. 
Accordingly, no regulatory impact assessment is required.

Executive Order 12988

    MCC has reviewed this regulation in light of sections 3(a) and 
3(b)(2) of Executive Order 12988, Civil Justice Reform, to eliminate 
ambiguity, minimize litigation, establish clear legal standards, and 
reduce burden.

List of Subjects in 22 CFR Part 1306

    Administrative practice and procedure, Claims, Debts, Garnishment 
of wages, Government employee, Hearing and appeal procedures, Pay 
administration, Salaries, Wages.

    In consideration of the foregoing, the Millennium Challenge 
Corporation amends Chapter XIII of 22 CFR by adding part 1306, to read 
as follows:

PART 1306--DEBT COLLECTION

Subpart A--General Provisions
1306.1 Purpose.
1306.2 Scope.
1306.3 Definitions.
1306.4 Other procedures or actions.
1306.5 Interest, penalties, and administrative cost.
1306.6 Collection in installments.
1306.7 Designation.
1306.8 Application.
Subpart B--Administrative Wage Garnishment
1306.9 Administrative wage garnishment.
Subpart C--Salary Offset
1306.10 Scope.
1306.11 Coordinating offset with another Federal agency.
1306.12 Notice requirements before offset.
1306.13 Employee response.
1306.14 Request for a hearing for certain debts.
1306.15 Hearings.
1306.16 Procedures for salary offset.
1306.17 Non-waiver of rights by payment.
1306.18 Waiver of indebtedness.
1306.19 Compromise.
1306.20 Suspension.
1306.21 Termination.
1306.22 Discharge.
1306.23 Bankruptcy.
1306.24 Refunds.

    Authority:  31 U.S.C. 3701-3719; 5 U.S.C. 5514; 31 CFR part 285; 
31 CFR parts 900-904; 5 CFR part 550 subpart K.

Subpart A--General Provisions


Sec.  1306.1  Purpose.

    The regulations in this part prescribe the procedures to be used by 
the Millennium Challenge Corporation (MCC) in the collection and/or 
disposal of non-tax debts owed to MCC and to the United States.


Sec.  1306.2  Scope.

    (a) Applicability of Federal Claims Collection Standards (FCCS). 
MCC hereby adopts the provisions of the Federal Claims Collections 
Standards (31 CFR parts 900-904) and, except as set forth in this part 
or otherwise provided by law, MCC will conduct administrative actions 
to collect claims (including offset, compromise, suspension, 
termination, disclosure and referral) in accordance with the FCCS.
    (b) This part is not applicable to any debt or claim for which 
collection is explicitly provided for or prohibited under other 
statutory authorities. This includes, but is not limited to:
    (1) MCC claims against another Federal agency, any foreign country 
or any political subdivision thereof, or any public international 
organization.
    (2) Debts arising out of acquisitions subject to the Federal 
Acquisition Regulation (FAR) which shall be determined, collected, 
compromised, terminated, or settled in accordance with the regulations 
published at 48 CFR part 32.
    (3) Debts arising from the audit of transportation accounts 
pursuant to 31 U.S.C. 3726 which shall be determined, collected, 
compromised, terminated, or settled in accordance with the regulations 
published at 41 CFR parts 102-118.
    (4) Debts 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, 
presentation of a false claim, or misrepresentation on the part of the 
debtor or any other party having an interest in the claim, which shall 
be referred to the Department of Justice for compromise, suspension, or 
termination of collection action.
    (5) Tax debts.


Sec.  1306.3  Definitions.

    For purposes of this part:
    (a) Administrative offset means withholding funds payable by the 
United States to, or held by the United States for, a person to satisfy 
a debt owed by the person to the United States.
    (b) Administrative wage garnishment means the process by which a 
Federal agency orders a non-Federal employer to withhold amounts from a 
debtor's wages to satisfy a debt owed to the United States.

[[Page 59442]]

    (c) Compromise means that the creditor agency accepts less than the 
full amount of an outstanding debt in full satisfaction of the entire 
amount of the debt.
    (d) Creditor agency means the Federal agency to which a debt is 
owed including a debt collection center when acting in behalf of a 
creditor agency in matters pertaining to the collection of a debt (as 
provided in 5 CFR 550.1110).
    (e) Debt or claim means an amount of money which has been 
determined to be owed to the United States from any person. A debtor's 
liability arising from a particular contract or transaction shall be 
considered a single claim for purposes of the monetary ceilings of the 
FCCS.
    (f) Debtor means a person who owes the Federal government money.
    (g) Delinquent debt means a debt that has not been paid by the date 
specified in MCC's written notification or applicable contractual 
agreement, unless other satisfactory arrangements have been made by 
that date, or that has not been paid in accordance with a payment 
agreement with MCC.
    (h) Discharge means the release of a debtor from personal liability 
for a debt. Further collection action is prohibited.
    (i) Disposable pay means the amount that remains from an employee's 
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 required deductions for Federal, State 
and local income taxes; Social Security taxes, including Medicare 
taxes; Federal retirement programs; normal premiums for life and health 
insurance benefits and such other deductions that are required by law 
to be withheld, excluding garnishments.
    (j) FCCS means the Federal Claims Collection Standards published 
jointly by the Departments of the Treasury and Justice and codified at 
31 CFR parts 900-904.
    (k) Person means an individual, corporation, partnership, 
association, organization, State or local government, or any other type 
of entity other than a Federal agency, Foreign Government, or public 
international organization.
    (l) 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 a Federal 
employee without his or her consent to satisfy a debt owed by that 
employee to the United States.
    (m) Suspension means the temporary cessation of active debt 
collection pending the occurrence of an anticipated event.
    (n) Termination means the cessation of all active debt collection 
action for the foreseeable future.
    (o) Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by an employee to an agency as 
permitted or required by 5 U.S.C. 5522, 5 U.S.C. 5584, 5 U.S.C. 5922, 5 
U.S.C. 8346(b), or any other law.


Sec.  1306.4  Other procedures or actions.

    (a) Nothing contained in this part is intended to require MCC to 
duplicate administrative proceedings required by contract or other laws 
or regulations.
    (b) Nothing in this part is intended to preclude utilization of 
informal administrative actions or remedies which may be available.
    (c) Nothing contained in this part is intended to deter MCC from 
demanding the return of specific property or from demanding the return 
of the property or the payment of its value.
    (d) The failure of MCC to comply with any provision in this part 
shall not serve as defense to the debt.


Sec.  1306.5  Interest, penalties, and administrative costs.

    Except as otherwise provided by statute, contract or excluded in 
accordance with the FCCS, MCC will assess:
    (a) Interest on delinquent debts in accordance with 31 CFR 901.9.
    (b) Penalties at the rate of 6 percent a year or such other rate as 
authorized by law on any portion of a debt that is delinquent for more 
than 90 days.
    (c) Administrative costs to cover the costs of processing and 
calculating delinquent debts.
    (d) Late payment charges under paragraphs (a) and (b) of this 
section shall be computed from the date of delinquency.
    (e) When a debt is paid in partial or installment payments, amounts 
received shall be applied first to outstanding penalty and 
administrative cost charges, second to accrued interest, and then to 
outstanding principal.
    (f) MCC shall consider waiver of interest, penalties and/or 
administrative costs in accordance with the FCCS, 31 CFR 901.9(g).


Sec.  1306.6  Collection in installments.

    (a) Whenever feasible, and except as required otherwise by law, 
debts owed to the United States, together with interest, penalties, and 
administrative costs as required by this part, should be collected in 
one lump sum. This is true whether the debt is being collected under 
administrative offset, including salary offset, or by another method, 
including voluntary payment. However, if the debtor is financially 
unable to pay the indebtedness in one lump sum or the amount of debt 
exceeds 15 percent of disposable pay for an officially established pay 
interval collection must be made in regular installments. If possible, 
the installment payments should be sufficient in size and frequency to 
liquidate the Government's claim within three years, and in the case of 
a current MCC employee, installment repayment plans must be made over a 
period not greater than the anticipated period of employment, except as 
provided in paragraph (b) in this section. However, the amount deducted 
for any period under this section and Sec.  1306.16 may 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 
or a higher deduction has been ordered by a court.
    (b) If the employee retires or resigns or if his or her employment 
ends before collection of the debt is completed, MCC may collect the 
debt from subsequent payments of any nature (e.g., final salary 
payment, lump-sum leave, etc.) due the employee from the paying agency 
as of the date of separation to the extent necessary to liquidate the 
debt. Following the employee's separation, MCC may collect any later 
payments of any kind that are due to the former employee from the 
United States to the extent necessary to liquidate the debt.


Sec.  1306.7  Designation.

    The Chief Financial Officer is delegated authority and designated 
to perform all the duties for which head of the agency is responsible 
under the forgoing statutes and joint regulations. The authority 
delegated hereunder may be further delegated by the Chief Financial 
Officer subject to applicable laws, regulations and MCC policies.


Sec.  1306.8  Application.

    (a) MCC shall aggressively collect claims and debts in accordance 
with this part and applicable law.
    (b) In accordance with the FCCS:
    (1) MCC will transfer to the Department of the Treasury, Financial 
Management Service (FMS) any past due, legally enforceable non-tax debt 
that has been delinquent for 180 days or more so that FMS may take 
appropriate action to collect the debt or take other appropriate action 
in accordance with applicable law and regulation; and
    (2) MCC may transfer any past due, legally enforceable debt that 
has been delinquent for fewer than 180 days to FMS for collection in 
accordance with applicable law and regulation. (See 31 CFR part 285).

[[Page 59443]]

Subpart B--Administrative Wage Garnishment


Sec.  1306.9  Administrative wage garnishment.

    MCC hereby adopts the administrative wage garnishment rules issued 
by the Department of the Treasury at 31 CFR 285.11.

Subpart C--Salary Offset


Sec.  1306.10  Scope.

    (a) This subpart sets forth MCC's procedures for the collection of 
a Federal employee's current pay by salary offset to satisfy certain 
debts owed to the United States.
    (b) This subpart applies to:
    (1) Current employees of MCC and other agencies who owe debts to 
MCC;
    (2) Current employees of MCC who owe debts to other agencies.
    (c) This subpart does not apply to:
    (1) Debts or claims arising under the Internal Revenue Code of 1954 
(26 U.S.C. 1 et seq.); the Social Security Act (42 U.S.C. 301 et seq.); 
the tariff laws of the United States.
    (2) 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); or
    (3) Any other debts excluded by the Federal Claims Collections 
Standards (31 CFR parts 900-904) or 31 CFR part 285.
    (d) This part does not preclude an employee from requesting waiver 
of the debt, if waiver is available under subpart C of this part or by 
other regulation or statute.
    (e) Nothing in this part precludes the compromise, suspension or 
termination of collection actions where appropriate under Sec.  1306.18 
or other regulations or statutes.


Sec.  1306.11  Coordinating offset with another Federal agency.

    (a) When MCC is owed a debt by an employee of another agency, MCC 
shall provide the agency with a written certification that the debtor 
owes MCC a debt (including the amount and basis of the debt and the due 
date of payment) and that MCC has complied with this part.
    (b) When another agency is owed the debt, MCC may use salary offset 
against one of its employees who is indebted to another agency, if 
requested to do so by that agency. Such request must be accompanied by 
a certification that the person owes the debt (including the amount and 
basis of the debt and the due date of payment) and that the agency has 
complied with its regulations as required by 5 U.S.C. 5514 and 5 CFR 
part 550, subpart K.


Sec.  1306.12  Notice requirements before offset.

    (a) Deductions under the authority of 5 U.S.C. 5514 shall not be 
made unless the creditor agency first provides the employee with 
written notice that he/she owes a debt to the Federal Government at 
least 30 calendar days before salary offset is to be initiated. When 
MCC is the creditor agency this notice of intent to offset an 
employee's salary shall be hand-delivered or sent by certified mail to 
the most current address that is available. The written notice will 
state:
    (1) That MCC has reviewed the records relating to the claim and has 
determined that a debt is owed, its origin and nature, and the amount 
of the debt;
    (2) The intention of MCC to collect the debt by means of deduction 
from the employee's current disposable pay account until the debt, all 
accumulated interest, penalties and administrative costs are paid in 
full;
    (3) The amount, frequency, approximate beginning date, and duration 
of the intended deductions;
    (4) An explanation of MCC's policy concerning interest, penalties 
and administrative costs, including a statement that such assessments 
must be made unless excused in accordance with the FCCS;
    (5) The employee's right to inspect and copy all records of MCC 
pertaining to the debt claimed or to receive copies of such records if 
personal inspection is impractical;
    (6) If not previously provided, the opportunity (under terms 
agreeable to MCC) 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 MCC, and documented 
in MCC's files;
    (7) The employee's right to a hearing conducted by a hearing 
official (an administrative law judge, or alternatively, an individual 
not under the supervision or control of MCC, but in each case arranged 
by MCC) with respect to the existence and amount of the debt claimed, 
or the repayment schedule, so long as a petition is filed by the 
employee in accordance with this part;
    (8) The name, address and telephone number of an official to whom 
questions and correspondence regarding this notice may be directed;
    (9) The method and time period for requesting a hearing;
    (10) That the timely filing of a petition for a hearing as 
prescribed by this part will stay the commencement of collection 
proceedings;
    (11) The name and address of the office to which the petition for 
hearing should be sent;
    (12) That MCC will initiate certification procedures to implement a 
salary offset, as appropriate, (which may not exceed 15 percent of the 
employee's disposable pay) not less than 30 calendar days from the date 
of delivery of the notice of debt, unless the employee files a timely 
petition for a hearing;
    (13) That a final decision on the hearing (if one is requested) 
will be issued at the earliest practical date, but not later than 60 
calendar days after the filing of the petition requesting the hearing, 
unless the employee requests and the hearing official grants a delay in 
the proceedings;
    (14) That any knowingly false or frivolous statements, 
representation, or evidence may subject the employee to disciplinary 
procedures (5 U.S.C. Chapter 75, 5 CFR part 752 or other applicable 
statutes or regulations); penalties (31 U.S.C. 3729-3731 or other 
applicable statutes or regulations); or criminal penalties (18 U.S.C. 
286, 287, 1001, and 1002 or other applicable statutes or regulations);
    (15) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (16) That unless there are applicable contractual or statutory 
provisions to the contrary, 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; and
    (17) That proceedings with respect to such debt are governed by 5 
U.S.C. 5514.
    (b) MCC is not required to provide prior notice to an employee when 
the following adjustments are made by MCC to an MCC employee's pay:
    (1) Any adjustment to pay arising out of an employee's election of 
coverage or a change in coverage under a Federal benefits program 
requiring periodic deductions from pay if the amount to be recovered 
was accumulated over four pay periods or less;
    (2) A routine adjustment of pay that is made to correct an 
overpayment 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,

[[Page 59444]]

and, 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 the 
adjustment; or
    (3) Any adjustment to collect a debt of $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 of the amount of 
the adjustment and a point of contact for contesting the adjustment.


Sec.  1306.13  Employee response.

    (a) Voluntary repayment agreement. An employee may submit a request 
to enter into a written repayment agreement of the debt in lieu of 
offset. The request must be made within 7 days of receipt of notice 
under Sec.  1306.12 to the official identified in Sec.  1306.12(a)(8). 
The agreement must be in writing signed by both the employee and the 
appropriate official within MCC. Acceptance of such an agreement is 
discretionary with the Agency. An employee who enters into such an 
agreement may, nevertheless, seek a waiver under Sec.  1306.18.
    (b) Reconsideration. (1) An employee may seek a reconsideration of 
MCC's determination regarding the existence and/or amount of the debt. 
The request must be made within 7 days of receipt of notice under Sec.  
1306.12 to the official identified in 1306.12(a)(8). Within 20 days of 
receipt of this notice, the employee must submit a detailed statement 
of reasons for reconsideration that must be accompanied by supporting 
documentation.
    (2) An employee may seek a reconsideration of MCC's proposed offset 
schedule. The request must be made within 7 days of receipt of notice 
under Sec.  1306.12 to the official identified in Sec.  1306.12(a)(8). 
Within 20 days of receipt of this notice, the employee must submit an 
alternative repayment schedule accompanied by a detailed statement, 
supported by documentation, evidencing financial hardship resulting 
from MCC's proposed schedule. Acceptance of the request is at MCC's 
discretion. MCC will notify the employee in writing of its decision 
concerning the request to reduce the rate of an involuntary deduction.


Sec.  1306.14  Request for a hearing for certain debts.

    (a) Except as provided in paragraphs (d) and (e) of this section, 
an employee must file a request that is received by the official 
identified in the notice provided pursuant to Sec.  1306.12(a)(11) not 
later than 15 calendar days from the date of MCC's notice if an 
employee wants a hearing concerning:
    (1) The existence or amount of the debt; or
    (2) MCC's proposed offset schedule.
    (b) The request must be signed by the employee and should identify 
and explain with reasonable specificity and brevity the facts, evidence 
and witnesses, if any, which the employee believes support his or her 
position. If the employee objects to the percentage of disposable pay 
to be deducted from each check, the request should state the objection 
and the reasons for it.
    (c) The employee must also specify whether an oral or paper hearing 
is requested. If an oral hearing is desired, the request should explain 
why the matter cannot be resolved by review of the documentary evidence 
alone.
    (d) If the employee files a request for a hearing later than the 
required 15 calendar days as described in paragraph (a) of this 
section, MCC may accept the request if the employee can show that the 
delay was because of circumstances beyond his or her control or because 
of failure to receive notice of the filing deadline (unless the 
employee otherwise has actual notice of the filing deadline).
    (e) If the employee files a timely request for reconsideration 
pursuant to Sec.  1306.13(b), the employee must file a request for a 
hearing by the official identified in the notice provided pursuant to 
Sec.  1306.12(a)(11) not later than 15 calendar days from the date of 
MCC's written decision concerning the reconsideration request.
    (f) An employee waives the right to a hearing and will have his or 
her pay offset if the employee fails to file a petition for a hearing 
in accordance with this section.


Sec.  1306.15  Hearings.

    (a) If an employee timely files a request for a hearing under Sec.  
1306.14, pursuant to 5 U.S.C. 5514(a)(2), the hearing official shall 
select the time, date, and location of the hearing.
    (b) Hearings shall be conducted by a hearing official not under the 
supervision or control of MCC or an administrative law judge.
    (c) Procedure. (1) After the employee requests a hearing, the 
hearing official shall notify the employee of the form of the hearing 
to be provided. If the hearing will be oral, notice shall set forth the 
date, time and location of the hearing. If the hearing will be paper, 
the employee shall be notified that he or she should submit arguments 
in writing to the hearing official by a specified date after which the 
record shall be closed. This date shall give the employee reasonable 
time to submit documentation.
    (2) Oral hearing. An employee who requests an oral hearing shall be 
provided an oral hearing if the hearing official determines that the 
matter cannot be resolved by review of documentary evidence alone 
(e.g., when an issue of credibility or veracity is involved). The 
hearing is not an adversarial adjudication, and need not take the form 
of an evidentiary hearing.
    (3) Paper hearing. If the hearing official determines that an oral 
hearing is not necessary, he or she will make a decision based upon a 
review of the available written record.
    (4) Record. The hearing official must maintain a summary record of 
any hearing provided by this subpart. Witnesses who provide testimony 
will do so under oath or affirmation.
    (5) Content of decision. The written decision shall include:
    (i) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (ii) The hearing official's findings, analysis, and conclusions; 
and
    (iii) The terms of any repayment schedules, or the date salary 
offset will commence, if applicable.
    (6) Failure to appear. In the absence of good cause shown (e.g., 
excused illness), an employee who fails to appear at an oral hearing 
shall be deemed, for the purpose of this part, to admit the existence 
and amount of the debt as described in the notice of intent. The 
hearing official shall schedule a new hearing date upon the request of 
MCC's representative when good cause is shown.
    (d) A hearing official's decision 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 only.


Sec.  1306.16  Procedures for salary offset.

    Unless otherwise provided by statute, regulation, or contract, the 
following procedures apply to salary offset:
    (a) Method. Salary offset will be made by deduction at one or more 
officially established pay intervals from the current pay account of 
the employee without his or her consent.
    (b) Source. The source of salary offset is current disposable pay.
    (c) Types of collection. (1) Lump sum payment. Ordinarily debts 
will be collected by salary offset in one lump sum if possible. 
However, if the amount of the debt exceeds 15 percent of disposable pay 
for an officially established pay interval, the collection by salary 
offset must be made in installment deductions, except as

[[Page 59445]]

provided by other laws or regulations or unless the employee has agreed 
in writing to a greater amount.
    (2) Installment deductions. (i) The size of installment deductions 
must bear a reasonable relation to the size of the debt and the 
employee's ability to pay. If possible, the size of the deduction will 
be that necessary to liquidate the debt in no more than 1 year. 
However, the amount deducted for any period must not exceed 15 percent 
of the disposable pay from which the deduction is made, except as 
provided by other laws or regulations or unless the employee has agreed 
in writing to a greater amount.
    (ii) Installment payments of less than $50 per pay period will be 
accepted only in unusual circumstances such as when that amount exceeds 
15% of disposable pay.
    (iii) Installment deductions should be sufficient in size and 
frequency to liquidate the Government's claim within three years and 
must be made over a period not greater than the anticipated period of 
employment.


Sec.  1306.17  Non-waiver of rights by payments.

    So long as there are no statutory or contractual provisions to the 
contrary, no employee payment (of all or a portion of a debt) collected 
under this part will be interpreted as a waiver of any rights that the 
employee may have under 5 U.S.C. 5514.


Sec.  1306.18  Waiver of indebtedness.

    (a) An employee may request a waiver of indebtedness. When an 
employee makes a request under a statutory right, further collection 
may be stayed pending an administrative determination on the request. 
During the period of any suspension, interest, penalties and 
administrative charges may be held in abeyance. MCC will not duplicate, 
for purposes of salary offset, any of the notices/procedures already 
provided the debtor prior to a request for waiver.
    (b) Waiver of indebtedness is an equitable remedy and as such must 
be based on an assessment of the facts involved in the individual case 
under consideration. The burden is on the employee to demonstrate that 
the applicable waiver standard has been met in accordance with MCC's 
Policy on Waivers of Indebtedness.
    (c) A debtor requesting a waiver shall do so in writing to the 
official identified in Sec.  1306.12(a)(8) and within the timeframe 
stated within the initial notice sent under Sec.  1306.12. The debtor's 
written response shall state the basis for the dispute and include any 
relevant documentation in support.
    (d) While a waiver request is pending, MCC may suspend collection, 
including the accrual of interest and penalties, on the debt if MCC 
determines that suspension is in the agency's best interest or would 
serve equity and good conscience.


Sec.  1306.19  Compromise.

    MCC may attempt to effect a compromise with respect to the debt in 
accordance with the process and standards set forth in the FCCS, 31 CFR 
part 902.


Sec.  1306.20  Suspension.

    Any suspension of collection action shall be made in accordance 
with the standards set forth in the FCCS, 31 CFR 903.1-903.2.


Sec.  1306.21  Termination.

    Any termination of a collection action shall be made in accordance 
with the standards set forth in the FCCS, 31 CFR 903.1 and 903.3-903.4.


Sec.  1306.22  Discharge.

    Once a debt has been closed out for accounting purposes and 
collection has been terminated, the debt is discharged. MCC must report 
discharged debt as income to the debtor to the Internal Revenue Service 
per 26 U.S.C. 6050P and 26 CFR 1.6050P-1.


Sec.  1306.23  Bankruptcy.

    A debtor should notify MCC at the contact office provided in the 
original notice of the debt, if the debtor has filed for bankruptcy. 
MCC will require documentation from the applicable court indicating the 
date of filing and type of bankruptcy. Pursuant to the laws of 
bankruptcy, MCC will suspend debt collection upon such filing unless 
the automatic stay is no longer in effect or has been lifted. In 
general, collection of a debt discharged in bankruptcy shall be 
terminated unless otherwise provided for by bankruptcy law.


Sec.  1306.24  Refunds.

    (a) MCC will refund promptly to the appropriate individual amounts 
offset under this part when:
    (1) A debt is waived or otherwise found not owing the United States 
(unless expressly prohibited by statute or regulation); or
    (2) MCC is directed by an administrative or judicial order to make 
a refund.
    (b) Refunds do not bear interest unless required or permitted by 
law or contract.

    Dated: August 25, 2016.
Laura M. Leussing,
Assistant General Counsel, Millennium Challenge Corporation.
[FR Doc. 2016-20800 Filed 8-29-16; 8:45 am]
 BILLING CODE 9211-03-P