[Federal Register Volume 69, Number 95 (Monday, May 17, 2004)]
[Rules and Regulations]
[Pages 27843-27861]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 04-10661]


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

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 0 and 1

[OMD Docket No. 02-339; FCC 04-72]


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: Final rule.

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

SUMMARY: The Commission amends its rules to implement the Debt 
Collection Improvement Act of 1996 (DCIA). The amendments largely 
follow the implementing rules promulgated by the Department of 
Treasury. The Commission also adopts 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: Effective June 16, 2004, except Sec. Sec.  1.1112, 1.1116, 
1.1161 and 1.1164 and 1.1910 which will become effective on October 1, 
2004.

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

SUPPLEMENTARY INFORMATION: By this document, FCC 04-72, adopted March 
25, and released on April 13, 2004, we amend our 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 term ``claim'' or 
``debt'' has the meaning used in 31 U.S.C. 3701(b), which is any amount 
of funds or property that has been determined by an appropriate 
official of the Federal Government to be owed to the United States by a 
person, organization or entity other than a Federal Agency. We also 
adopt a rule providing that we will withhold 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 dismiss such applications or requests if the delinquent 
debt is not resolved.

[[Page 27844]]

I. DCIA Rules

    In the Notice of Proposed Rulemaking (NPRM) in this proceeding, we 
proposed many revisions to our rules based on the statutory changes 
adopted in the DCIA, as implemented in rules adopted by the Departments 
of Treasury and Justice. No comments relevant to the proposed rule 
changes were received. We therefore adopt the DCIA rule changes as 
generally proposed in the NPRM. As we noted in the NPRM, the major 
changes to the Commission's debt collection rules include an 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, and an increase 
in the minimum amount of a claim that may be referred to the Department 
of Justice from $600 to $2,500. The 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 guarantees to delinquent debtors. The rules 
adopted conform the Commission's definitions to those used by the 
Departments of Justice and Treasury in their regulations on the DCIA. 
Finally, we have added Sec.  1.1935 adopting the new Treasury 
regulations adopting the DCIA administrative wage garnishment 
requirements. See Administrative Wage Garnishment, 63 FR 25139 (May 6, 
1998) (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 also incorporate the Federal salary offset procedures, governed 
by 5 U.S.C. 5514 and Office of Personnel Management (OPM) regulations. 
See 5 CFR 550.1104. Many other 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.

II. Delinquent Debtors

    As noted, we received no comments concerning our proposed rules 
changes, including the proposed ``red light rule.'' In the NPRM, we 
explained that our regulatory and application fee rules already permit 
us as a matter of discretion to dismiss applications for failure to pay 
appropriate fees. See 47 U.S.C. 158(c)(2), 159(c)(2). See also 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 auction 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'' or its 
application will be dismissed. 47 CFR 1.2105(a)(2)(x). See also 47 CFR 
1.2105(a)(2)(xi). (These rules are not affected by the proposed red 
light rule.) 47 CFR 1.2105(b). We proposed that as a next step in the 
improvement of the management of the Commission's accounts, we would 
adopt a rule 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 adopt the rule changes as indicated in the Appendix to this 
Order. Our regulatory and application fee rules are amended (with some 
minor modifications from the rules proposed in the NPRM) 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 are adding a generally applicable rule (with some 
necessary exceptions, as discussed below) to be added as Sec.  1.1910 
of our rules as set forth in the appendix 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.
    Under the rules adopted here, the Commission will not approve any 
applications or other authorizations until we 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 subject to the red light rule do not include 
matters that are subject to more restrictive procedures, e.g. 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 para 10, infra. 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 FCC Register Number (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 that 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 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. All Commission electronic systems are linked 
with Revenue And Management Information System (RAMIS), which after the 
rules take effect, will check the FRN provided on the filing for 
eligibility-based fee sufficiency and the existence of any non-tax 
delinquent debt. The delinquency of any entity covered by the same TIN 
as that used by the entity making the filing will trigger this new 
rule. 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. Resolution 
includes payment of the debt, or other satisfactory resolution such as 
adequate arrangement that the debt will be paid. This resolution period 
is not intended to restrict our exercise of any right to recover or 
collect amounts due to the Commission. An application or other request 
for benefit

[[Page 27845]]

will not 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, the application or request for authorization 
will be dismissed.
    We asked in the NPRM how to handle those situations where a timely 
challenge has been filed either to the existence of or the amount of a 
debt, and whether such debts should be considered delinquent for 
purposes of the red light rule. Cf. 31 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). No comments were received. We 
believe that a timely written challenge to a debt should preclude 
consideration of the debt for purposes of the red light rule. 
Accordingly, where an applicant has filed a timely administrative 
appeal, or a contested judicial proceeding, challenging either the 
existence of, or the amount of, a debt, such debt shall not be 
considered delinquent for purpose of the red light rule. For the 
purpose of the red light rule, we will consider appeals made to the 
Administrators of the Universal Service Fund and the Telecommunications 
Relay Services Fund and to the Billing and Collections Agent for the 
North American Numbering Plan as administrative appeals. Similarly, if 
an applicant has submitted a written request for compromise of debt in 
conformance with applicable rules, such a debt shall not be considered 
delinquent for purposes of the red light rule. See 31 U.S.C. 3711. As 
we noted in the NPRM, 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 adopted here in no way affect the Commission's rules 
regarding payment for licenses (including installment, down, or final 
payments) or automatic cancellation of Commission licenses.
    We invited comment on the exceptions to the red light rule, but 
received no comments. However, we raised several issues in this regard 
that we now resolve.
    In the NPRM, we proposed that emergency authorizations, special 
temporary authority (STA) applications involving safety of life or 
property, including national security emergencies, requests to waive, 
defer, or reduce applications 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 other requests will not be 
subject to the red light rule. See FRN Order, 16 FCC Rcd at 16146 n.63 
(citing regulations for emergency authorizations and STAs).
    We proposed that such applications should include the FRN, as we 
noted in the FRN Order. Id. at 46. We also proposed that we would 
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 would not grant such applications until such 
delinquencies are resolved. We adopt this proposal as set forth in the 
NPRM. Further, we expand these exceptions to include situations where 
an entity's license is cancelled or expired, and where the entity seeks 
STA in order to continue providing service to a substantial number of 
customers or end-users for a brief period until those customers or end-
users can be transitioned to other methods of communication. This 
approach minimizes service disruption to the public, including those 
who use radio systems for E911 and emergency communications.
    We also sought comment on how to handle certain sections of the 
Communications Act that contain congressionally mandated deadlines, or 
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. 
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). 
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, we noted that 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 streamlined application. We proposed that 
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 received no 
comments on this proposal. We therefore adopt the rule as proposed. We 
continue to believe that this result is unlikely. Debtors will receive 
sufficient notice in advance of a debt being classified as delinquent. 
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.
    The red light rule permits delinquent debtors to resolve the 
delinquency within 30 days to avoid dismissal of an application. We 
proposed 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 applicants 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 noted, however, that the red light rule would apply to 
subsequent applications filed by winning bidders, e.g., the long-form 
application. We adopt this proposal without modification.
    In the NPRM, we asked whether the Bankruptcy Code requires an 
exception to the red light rule. No comments were received concerning 
this question. We have concluded that we must adopt an exception to the 
red light rule to comply with section 525(a) of the Bankruptcy Code as 
interpreted by the Supreme Court in FCC v. Nextwave Personal 
Communications, Inc., 537 U.S. 293 (2003). Therefore, the rules provide 
that applications or requests for benefits to which 11 U.S.C. 525(a) 
applies will not be dismissed by virtue of the applicant's delinquent 
status. We are not always aware that a delinquent debtor has filed for 
bankruptcy. Therefore, if an applicant receives a letter pursuant to

[[Page 27846]]

Sec.  1.1910 of the Commission's rules and that applicant has filed for 
bankruptcy, it should notify the Managing Director in writing of its 
status so that it can be determined whether section 525(a) applies.
    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 adopt this proposal for tariffs 
that go into effect immediately on filing and where it is later 
discovered that the filer is a delinquent debtor. We will not 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.
    We did not propose to pre-screen FOIA requestors for delinquent 
debt under the proposed procedures, as our FOIA rules already address 
situations where FOIA requesters previously failed to pay FOIA fees. 
See 47 CFR 0.469(a)(2).
    We adopt this proposal as previously stated. We note, however, that 
if an applicant is delinquent in paying its FOIA fees that delinquency 
will trigger the red light rule for other applications.
    We proposed that if we adopted the red light rule, it would apply 
to any applications or requests for benefits pending at the time the 
rule goes into effect. Pending applications or requests for benefits 
are subject to a check for debt delinquency at any time before the 
request is granted. No comments were received on this proposal, and we 
adopt it as stated. Any submissions on or after the effective date of 
the red light rule will be subject to screening for delinquent debt.
    The FRN became mandatory on December 3, 2001. See FRN Order, 16 FCC 
Rcd at 16148. Prior to that date, we encouraged entities doing business 
with the Commission to obtain and include the FRN in their filings with 
the Commission. See New Commission Registration System (CORES) to be 
Implemented July 19, 15 FCC Rcd 18754 (2001).
    While many applicants included the FRN prior to December 3, 2001, 
many did not. We proposed 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. Absent any comments on this issue, we adopt the proposal 
as stated.

III. Delegation of Authority

    Pursuant to the DCIA and the FCCS, the head of the agency is 
empowered to collect claims of the United States for money or property 
arising out of activities of the agency, compromise debts that do not 
exceed $100,000 without the approval of the Department of Justice, and 
to suspend or terminate collection activity on a debt. See 31 U.S.C. 
3711 (a) (1); 31 CFR part 901. See also 31 U.S.C. 3711(a) (2); 31 CFR 
part 902.
    The DCIA rules we adopt here (and the predecessor rules) define the 
Chairman as the head of the agency for DCIA purposes, but neither the 
DCIA implementing rules nor our existing delegations of authority 
expressly address various administrative determinations specifically 
assigned to the head of the agency under the DCIA. See 47 CFR 1.1901(c) 
See also 47 CFR 0.211 and part 1, subpart O (2002).
    Additionally, the head of the agency is authorized to waive the ban 
on the issuance of Federal financial assistance to persons or entities 
delinquent in non-tax debt owed to the Federal Government, and to 
delegate this authority to the Chief Financial Officer or the Deputy 
Chief Financial Officer. See 31 U.S.C. 3720B(a) (waiver of ban on 
issuance of Federal Financial assistance to delinquent debtors by 
agency head); 3720B(b) (delegation of waiver authority to Chief or 
Deputy Chief Financial Officer).
    Our existing regulations did not specifically address this 
authority. See 47 CFR 0.211, 0.231, and part 1, subpart O (2002).
    We amend the delegations of authority to make clear that the 
Chairman may make all administrative determinations under the DCIA. We 
also amend the rules to delegate to the Managing Director and the 
General Counsel authority to make administrative determinations (except 
waiver determinations under section 3720B) under the DCIA. Finally, we 
add a delegation to the Chief Financial Officer and the Deputy Chief 
Financial Officer to make the waiver determination under 31 U.S.C. 
3720B. We adopt these rules of agency organization, procedure and 
practice without notice and comment. See 5 U.S.C. 553(b)(A).

IV. Procedural Matters and Ordering Clauses

    Regulatory Flexibility Certification. We hereby certify that the 
rules adopted in this Order will not have a significant economic impact 
on a substantial number of small entities. See 5 U.S.C. 605(b). The 
amendment of the delegations of authority is adopted without notice and 
comment and therefore does not require regulatory flexibility analysis. 
See 5 U.S.C. 604(a). The 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, 
November 22, 2000 (certifying under section 605(b) that the FCCS rules 
did not require a regulatory flexibility analysis). The rule amendments 
requiring payment of delinquent debts before final action is taken on 
an application or other request for a federal benefit will not affect a 
substantial number of small entities. We estimate that there are 
approximately 1,225 debtors currently delinquent in their debt to the 
Commission out of approximately 750,000 entities that hold an FRN. This 
means that potentially less than \1/4\ percent of entities doing 
business with the Commission could be affected by this rule. Of the 
1225 delinquent debtors, it is impossible to determine how many are 
small entities, but we can reasonably posit that less than all 1225 are 
small entities. Consequently, fewer than one percent of entities 
subject to this rule are small entities. We have no reason to expect 
that this percentage will change over time. Therefore, we certify 
pursuant to 5 U.S.C. 605(b) that the ``red light rule'' does not 
require a regulatory flexibility analysis.
    Accordingly, it is ordered that, 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, the rules set forth in the appendix are hereby adopted, 
effective June 16, 2004, except that changes to rules 1.1112, 1.1116, 
1.1161 and 1.1164 and newly adopted rule 1.1910 are effective October 
1, 2004.
    It is further ordered that the Commission's Consumer & Governmental 
Affairs Bureau, Reference Information Center, shall send a copy of this 
Report and Order including the Regulatory Flexibility Certification, to 
the Chief Counsel for Advocacy of the Small Business Administration.

[[Page 27847]]

List of Subjects in 47 CFR Parts 0 and 1

    Administrative practice and procedure.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Rule Changes

0
For the reasons discussed in the preamble the Federal Communications 
Commission proposes to amend 47 CFR parts 0 and 1 as follows:

PART 0--COMMISSION ORGANIZATION

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

    Authority: Sec. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 
225, unless otherwise noted.


0
2. Section 0.211 is amended by adding paragraph (f) to read as follows:


Sec.  0.211  Chairman.

* * * * *
    (f) Authority to act as ``Head of the Agency'' or ``Agency Head'' 
for all administrative determinations pursuant to the Debt Collection 
Improvement Act of 1996, Public Laws 104-134, 110 Stat. 1321, 1358 
(1996) (DCIA).

0
3. Section 0.231 is amended by adding paragraph (f) to read as follows:


Sec.  0.231  Authority delegated

* * * * *
    (f) (1) The Managing Director, or his designee, is delegated 
authority to perform all administrative determinations provided for by 
the Debt Collection Improvement Act of 1996, Public Laws 104-134, 110 
Stat. 1321, 1358 (1996) (DCIA), including, but not limited to the 
provisions of Title 31, United States Code section 3711 to:
    (i) Collect claims of the United States Government for money or 
property arising out of the activities of, or referred to, the Federal 
Communications Commission,
    (ii) Compromise a claim of the Government of not more than $100,000 
(excluding interest) or such higher amount as the Attorney General of 
the United States may from time to time prescribe, and
    (iii) Suspend or end collection action on a claim of the Government 
of not more than $100,000 (excluding interest) when it appears that no 
person liable on the claim has the present or prospective ability to 
pay a significant amount of the claim or the cost of collecting the 
claim is likely to be more than the amount recovered.
    (2)(i) This delegation does not include waiver authority provided 
by 31 U.S.C. 3720B.
    (ii) The Chief Financial Officer, or the Deputy Chief Financial 
Officer, is delegated authority to perform all administrative 
determinations provided for by 31 U.S.C. 3720B.
* * * * *

0
4. Section 0.251 is amended by adding paragraph (i) to read as follows:


Sec.  0.251  Authority delegated.

* * * * *
    (i) The General Counsel is delegated authority to perform all 
administrative determinations provided for by the Debt Collection 
Improvement Act of 1996, Public Law 104-134, 110 Stat. 1321, 1358 
(1996) (DCIA), including, but not limited to the provisions of Title 
31, U.S.C. 3711 to:
    (1) Collect claims of the United States Government of money or 
property arising out of the activities of, or referred to, the Federal 
Communications Commission,
    (2) Compromise a claim of the Government of not more than $100,000 
(excluding interest) or such higher amount as the Attorney General of 
the United States may from time to time prescribe, and
    (3) Suspend or end collection action on a claim of the Government 
of not more than $100,000 (excluding interest) when it appears that no 
person liable on the claim has the present or prospective ability to 
pay a significant amount of the claim or the cost of collecting the 
claim is likely to be more than the amount recovered.


    Note to paragraph (i): This delegation does not include waiver 
authority provided by 31 U.S.C. 3720B.

PART 1--PRACTICE AND PROCEDURE

0
5. 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).


0
6. 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) (1) Where an applicant is found to be delinquent in the payment 
of application fees, the Commission 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, and/or as appropriate, dismissal 
of, any applications or requests 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 that the 
applicant is delinquent in the payment of fees, 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 of the 
date of the original notification, the application will be dismissed.

0
7. Section 1.1116 is amended by revising paragraph (a) introductory 
text, 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.  1.1109 (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 are not made 
within 30 days of the date of the original notification. 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

[[Page 27848]]

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 rescission.
* * * * *
    (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 Improvement 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.

0
8. 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. A challenge 
to a determination that a party is delinquent in paying the full 
application fee must be accompanied by suitable proof that the fee had 
been paid or waived (or deferred from payment during the period in 
question), or by the required application payment and any assessment 
penalty payment (see Sec.  1.1116) of this subpart). Failure to comply 
with these procedures will result in dismissal of the challenge. These 
claims should be addressed to the Federal Communications Commission, 
Attention: Financial Operations, 445 12th St. SW., Washington, DC 20554 
or emailed to ARINQUIRIES@fcc.gov.
* * * * *

0
9. Section 1.1161 is amended by revising paragraph (a) introductory 
text and by 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 (Visa, 
MasterCard, American Express, or Discover), wire or electronic payment 
is drawn.
* * * * *
    (c)(1) Where an applicant is found to be delinquent in the payment 
of regulatory fees, the Commission 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 or that the 
applicant is delinquent in the payment of fees 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.

0
10. Section 1.1164 is amended by adding paragraph (f)(5) to read 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.

0
11. 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. A challenge to a 
determination that a party is delinquent in paying a standard 
regulatory fee must be accompanied by suitable proof that the fee had 
been paid or waived (deferred from payment during the period in 
question), or by the required regulatory payment and any assessed 
penalty payment (see Sec.  1.1164(c) of this subpart). Challenges 
submitted with a fee payment must be submitted to address stated on the 
invoice or billing statement. 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 or emailed to 
ARINQUIRIES@fcc.gov.
* * * * *

0
12. Subpart O of part 1 is revised to read as follows:
Subpart O--Collection of Claims Owed the United States

General Provisions

Sec.
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, 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 and transfers of 
delinquent debt to the Secretary of Treasury.
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 the Commission 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.

    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 (3 CFR , 1971-1975 Comp., p.586); 
redesignated in sec. 2-1 of E.O. 12107; (3 CFR, 1978 Comp., p.264); 
31 CFR parts 901-904; 5 CFR part 550.


Sec.  1.1901  Definitions and construction.

    For purposes of this subpart:

[[Page 27849]]

    (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 or Commission means the Federal Communications 
Commission (including the Universal Service Fund, the 
Telecommunications Relay Service Fund, and any other reporting 
components of the Commission) 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 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 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 owed 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 issued after a 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.
    (f) The term creditor agency means the agency to which the debt is 
owed.
    (g) 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.
    (h) The term demand letter includes written letters, orders, 
judgments, and memoranda from the Commission or on delegated authority.
    (i) 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 deliquent 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, as may 
be amended, regarding payment for licenses (including installment, 
down, or final payments) or automatic cancellation of Commission 
licenses (see 47 CFR 1.1902(f)).
    (j) 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.
    (k) 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).
    (l) The term entity includes natural persons, legal associations, 
applicants, licensees, and regulatees.
    (m) 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.
    (n) The term paying agency means the agency employing the 
individual and authorizing the payment of his or her current pay.
    (o) 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.
    (p) The term reporting component means any program, account, or 
entity required to be included in the Agency's Financial Statements by 
generally accepted accounting principles for Federal Agencies.
    (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 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, 
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

[[Page 27850]]

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 DOJ 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 DOJ 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 government-wide 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 previous sentence 
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 forfeiture penalties.

    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 application 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 Sec.  1.1901(j)), 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 and/or that the application may be dismissed. See the 
provisions of Sec. Sec.  1.1108, 1.1109, 1.1116 and 1.1118. Any 
Commission action taken prior to the payment of delinquent non-tax debt 
owed to the Commission is contingent and subject to rescission. Failure 
to make payment on any delinquent debt is subject to collection of the 
debt, including interest thereon, any associated penalties, and the 
full cost of collection to the Federal government pursuant to the 
provisions of the Debt Collection Improvement Act, 31 U.S.C. 3717.

[[Page 27851]]

    (2) If a delinquency has not been paid or the debtor has not made 
other satisfactory arrangements 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.
    (3) 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 
administrative appeal or a contested judicial proceeding either to the 
existence or amount of the non-tax delinquent debt owed the Commission.
    (4) 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)(1) Applications for emergency or special temporary authority 
involving safety of life or property (including national security 
emergencies) or involving a brief transition period facilitating 
continuity of service to a substantial number of customers or end 
users, will not be subject to the provisions of paragraphs (a) and (b) 
of this section. However, paragraphs (a) and (b) of this section will 
be applied to permanent authorizations for these services.
    (2) Provisions of paragraph (a) and (b) of this section will not 
apply to application or requst for authorization to which 11 U.S.C. 
525(a) is applicable.


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. One demand letter will be deemed sufficient. 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 
expiration of a statute of limitations), written demand may be preceded 
by other appropriate actions under the FCCS, including immediate 
referral for litigation. The demand letter does not provide an 
additional period within to challenge the existence of, or amount of 
the non-tax debt if such time period has expired under Commission rules 
or other applicable limitation periods. Nothing contained herein is 
intended to limit the Commission's authority or discretion as may 
otherwise be permitted to collect debts owed.
    (b) The demand letter will inform the debtor of:
    (1) The basis for the indebtedness and the opportunities, 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. As provided for in any agreement among parties, or as may be 
required by exigent circumstances, the Commission may use 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. Where applicable, the debtor 
will be provided with a period of time (normally not more than 15 
calendar days) from the date of the demand in which to exercise the 
opportunity to request a review.
    (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) 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.
    (g) 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.
    (h) 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 its payments to 
the debtor and payments of other agencies available for offset may be 
frozen by the

[[Page 27852]]

Commission until relief from the automatic stay can be obtained from 
the bankruptcy court. The Commission will 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 to request within 15 days of the date of the 
written notice, after which opportunity is deemed 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 request within 15 days of the date of the 
written notice, after which the opportunity is deemed waived by the 
debtor, for the debtor 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, 
the Office of Managing Director 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

[[Page 27853]]

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 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 the Office of Personnel Management (OPM) with 
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 Sec.  1.1914(a)(4).


Sec.  1.1914  Collection in installments.

    (a) Subject to the Commission's rules pertaining to the installment 
loan program (see e.g., 47 CFR Sec.  1.2110(g)), subpart Q or other 
agreements among the parties, the terms of which will control, 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, in its sole discretion, 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 which are able to verify independently such representations (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, including, as appropriate, sureties and other 
indicia of creditworthiness (see Federal Credit Reform Act of 1990, 2 
U.S.C. 661, et seq., OMB Circular A-129), 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

[[Page 27854]]

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, U.S.C. 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 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. Debts which are less than 180 days 
delinquent may also be referred to the Treasury. 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 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; and
    (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 in paragraph (b) of this 
section, 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

[[Page 27855]]

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


Sec. Sec.  1.1920 through 1.1924  [Reserved]


Sec.  1.1925  Purpose.

    Sections 1.1925 through 1.1939 apply 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 (3 CFR, 1971-1975 Comp., p.586); redesignated in sec. 2-1 of E.O. 
12107 (3 CFR, 1978 Comp., p.264) 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) Section 1.1926 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 
section 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 (See Sec. Sec.  1.1940 and 1.1941), 
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, U.S.C., 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, U.S.C., or any other applicable statutory authority; or
    (iii) Criminal penalties under sections 286, 287, 1001, and 1002 of 
title 18, U.S.C., 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

[[Page 27856]]

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 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 pro-rated 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 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) 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

[[Page 27857]]

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 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.

[[Page 27858]]

    (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 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

[[Page 27859]]

    (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.
    (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 demonstrated 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 garnisheed 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 CORES contact 
address (see section 1.8002(b)) 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 or 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 contract, note, or security 
agreement, regulation, or law.
    (2) Unless otherwise established in a contract, note, or security 
agreement, 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

[[Page 27860]]

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 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.

    (a) In accordance with applicable provisions of the Internal 
Revenue Code and implementing regulations (26 U.S.C. 6050P; 26 CFR 
1.6050P-1), 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, 
when:
    (1) The principle amount of the debt not in dispute is $600 or 
more; and
    (2) The obligation has not been discharged in a bankruptcy 
proceeding; and
    (3) The obligation is no longer collectible either because the time 
limit in the applicable statute for enforcing collection expired during 
the tax year, or because during the year a formal compromise agreement 
was reached in which the debtor was legally discharged of all or a 
portion of the obligation.
    (b) 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

[[Page 27861]]

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 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. 04-10661 Filed 5-14-04; 8:45 am]
BILLING CODE 6712-01-P