[Federal Register Volume 79, Number 76 (Monday, April 21, 2014)]
[Rules and Regulations]
[Pages 22025-22028]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08963]


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

POSTAL SERVICE

39 CFR Part 961


Rules of Practice in Proceedings Under Section 5 of the Debt 
Collection Act

AGENCY: Postal Service.

ACTION: Final rule.

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

SUMMARY: This document contains the final revisions to the rules of 
practice before the Judicial Officer in proceedings under section 5 of 
the Debt Collection Act. These rules of procedure completely replace 
and supersede the prior rules.

DATES: Effective Date: June 2, 2014.

FOR FURTHER INFORMATION CONTACT: Associate Judicial Officer Gary E. 
Shapiro, (703) 812-1910.

SUPPLEMENTARY INFORMATION: On February 18, 2014, the Judicial Officer 
Department published for comment proposed revisions to the rules 
governing practice in proceedings under section 5 of the Debt 
Collection Act of 1982 (79 FR 9120-21). Following the receipt of 
comments, the Judicial Officer has made further revisions to the 
original proposed rules, as discussed below, and has determined that it 
is appropriate to adopt the rules of practice, as revised. The Judicial 
Officer Department also has determined that it is appropriate to make 
these rules of practice effective on June 2, 2014, in the interest of 
orderly public administration.

A. Executive Summary

    Part 961 of title 39, Code of Federal Regulations, contains the 
rules of practice in proceedings under section 5 of the Debt Collection 
Act of 1982, as amended, 5 U.S.C. 5514, in which the Judicial Officer 
or an assigned Hearing Official provides the final agency adjudication 
for debt collection assessments by administrative salary offset issued 
by the Postal Service seeking to collect a debt owed it by a current 
employee. This authority is delegated by the Postmaster General. 
Although these rules provide a complete replacement for the former 
rules, the changes are not considered to affect the rights of the 
parties in a substantive way. Rather, the rules are revised to conform 
to current practices and to clarify the procedures.

B. Background

    The Judicial Officer Department published for comments proposed 
revisions to the rules governing proceedings under section 5 of the 
Debt Collection Act of 1982 in the Federal Register on February 18, 
2014 (79 FR 9120-21). This notice announces the intention to promulgate 
final rules of procedure, following our review and consideration of all 
comments. The period for comments closed on March 20, 2014. We 
considered all comments received, revised the proposed rules as 
explained below, and promulgate our final rules of procedure.

C. Summary of Comments and Changes

    The Judicial Officer Department received comments from one source: 
a labor union representing many Postal Service employees who are 
parties to Debt Collection Act litigation before the Judicial Officer 
Department. We carefully considered each comment and adopted some of 
the suggestions made. All comments are discussed below:

Section 961.4 Employee Petition for a Hearing

    A comment noted that the proposed rule provided the Hearing 
Official with discretion to resolve a dispute where the Postal Service 
has not initiated involuntary administrative salary offsets by issuing 
a Notice as required by the Debt Collection Act. This rule change 
reflects our experience that the Postal Service sometimes collects 
alleged debts by administrative salary offset without having issued the 
proper Notice. In such circumstances, our practice has been to order a 
refund of the improperly collected offset, and to offer the employee 
the choice whether to proceed to an adjudication on the merits without 
additional procedural requirements, or to dismiss the case without 
prejudice (or sometimes suspend the case) while requiring the Postal 
Service to issue the Notice. Retaining the case ensures that the 
employee remains protected against collection activity without undue 
delay of the adjudication. As explained however, at the option of the 
employee, we will dismiss the case as premature, or suspend it, and 
require that the Notice be issued. In either event, we will not permit 
collection activity to commence until our adjudication is final or the 
Postal Service has complied with the statute. As we believe that the 
revision is consistent with the statute, protects the rights of the 
employee/

[[Page 22026]]

debtor, and conforms the rule to existing practice, we have declined to 
make a change in response to the comment.
    Another comment expressed concern about the proposed elimination of 
former paragraphs (b)(4) and (5) from Sec.  961.4. Deleted paragraph 
(b)(4) provided for an employee to include in his or her petition 
whether an oral hearing is requested, or alternatively, a hearing based 
solely on written submissions. Deleted paragraph (b)(5) provided for an 
employee requesting an oral hearing to include a statement of the 
evidence he or she will produce which makes an oral hearing necessary, 
including a list of witnesses, with their addresses, whom the employee 
expects to call; the proposed city for the hearing site, with 
justification for holding the hearing in that city; and recommended 
alternative dates for the hearing; which should be within 40 days from 
filing the Petition. These deletions are part of several former 
requirements for inclusion in an employee petition. Our objective was 
to simplify petition requirements and defer obtaining certain 
information from an employee until a later stage of the proceeding when 
the case is developed further. The requirements cited in the comment 
were deleted because at the petition stage, it often is premature to 
include such information resulting in incomplete petitions which 
unnecessarily delays the process. Both parties are given opportunities 
to express their preferences concerning the type of hearing requested 
which the Hearing Official will consider in deciding the most 
appropriate form for a hearing. We agree with the comment that the 
employee should be permitted to present arguments in support of his or 
her position regarding whether an oral or written hearing should occur. 
While that reflects our existing process, we have modified the language 
of the rules to make it explicit, and have done so in the most 
appropriate paragraph--Sec.  961.8(d), which has been changed to 
require the Hearing Official to consider the positions of the parties 
before determining whether an oral hearing (or alternatively, a hearing 
solely on written submissions) shall be conducted, and setting the 
place, date, and time for such a hearing. Where a hearing on written 
submissions is ordered, the Hearing Official explains the process 
thoroughly to both parties. Therefore, an additional change in that 
regard is not necessary.

Section 961.8 Hearing Official Authority and Responsibilities

    A comment expressed concern about the proposed elimination of the 
following sentence from Sec.  961.8: ``The proceedings must be 
expedited to ensure issuance of the final decision no later than 60 
days after the filing of the employee's hearing Petition.'' Our case 
law precedent establishes that the sixty-day timeframe referenced in 
the prior regulations and in the Debt Collection Act is not a statutory 
deadline or requirement that can be enforced by a party. See Celeste 
Guice, P.S. Docket No. DCA 12-19 (May 11, 2012). Additionally, our 
experience has been that both parties commonly request extensions or do 
not comply with deadlines in these cases making decisions within sixty 
days impossible. While the Judicial Officer Department's policy is to 
issue decisions in a timely manner after the record closes, a specific 
hard deadline is not practical. Furthermore, employees who have filed 
timely petitions remain protected against involuntary administrative 
salary offsets until the case is decided. Therefore, we do not believe 
that re-insertion of a sixty-day time period is necessary, nor does it 
reflect our case law or actual practice. However, to address the 
concern reflected in this comment, we have added language to Sec.  
961.8(i) to require the Hearing Official to issue the decision as soon 
as practicable after the close of the record, and to stay collection 
activity until the decision has issued.

D. Effective Date

    These revised rules will govern proceedings under part 961 docketed 
on or after June 2, 2014.

List of Subjects in 39 CFR Part 961

    Claims, Government employees, Wages.

    For the reasons stated in the preamble, the Postal Service hereby 
revises 39 CFR part 961 as set forth below:

PART 961--RULES OF PRACTICE IN PROCEEDINGS UNDER SECTION 5 OF THE 
DEBT COLLECTION ACT

Sec.
961.1 Authority for rules.
961.2 Scope of rules.
961.3 Definitions.
961.4 Employee petition for a hearing.
961.5 Effect of filing a petition.
961.6 Filing, docketing, and serving documents; computation of time; 
representation of parties.
961.7 Answer to petition.
961.8 Hearing Official authority and responsibilities.
961.9 Opportunity for oral hearing.
961.10 Effect of Hearing Official's decision; motion for 
reconsideration.
961.11 Consequences for failure to comply with rules.
961.12 Ex parte communications.

    Authority: 39 U.S.C. 204, 401; 5 U.S.C. 5514.


Sec.  961.1  Authority for rules.

    These rules are issued by the Judicial Officer pursuant to 
authority delegated by the Postmaster General.


Sec.  961.2  Scope of rules.

    The rules in this part apply to the hearing provided by section 5 
of the Debt Collection Act of 1982, as amended, 5 U.S.C. 5514, 
challenging the Postal Service's determination of the existence or 
amount of an employee debt to the Postal Service, or of the terms of 
the employee's debt repayment schedule. In addition, these rules apply 
to a hearing under section 5 of the Debt Collection Act when an 
Administrative Law Judge or an Administrative Judge in the Judicial 
Officer Department is designated as the Hearing Official for a creditor 
Federal agency other than the Postal Service pursuant to an agreement 
between the Postal Service and that agency. In such cases, all 
references to Postal Service within these rules shall be construed to 
refer to the creditor Federal agency involved.


Sec.  961.3  Definitions.

    As used in this part:
    (a) Employee refers to a current employee of the Postal Service who 
is alleged to be indebted to the Postal Service; or to an employee of 
another Federal agency who is alleged to be indebted to that other 
creditor Federal agency and whose hearing under section 5 of the Debt 
Collection Act is being conducted under these rules.
    (b) General Counsel refers to the General Counsel of the Postal 
Service, and includes a designated representative.
    (c) Hearing Official refers to an Administrative Law Judge 
qualified to hear cases under the Administrative Procedure Act, an 
Administrative Judge appointed under the Contract Disputes Act of 1978, 
or other qualified person not under the control or supervision of the 
Postmaster General, who is designated by the Judicial Officer to 
conduct the hearing under section 5 of the Debt Collection Act of 1982, 
as amended, 5 U.S.C. 5514.
    (d) Judicial Officer refers to the Judicial Officer, Associate 
Judicial Officer, or Acting Judicial Officer of the United States 
Postal Service.
    (e) Notice of Involuntary Administrative Salary Offsets Under the 
Debt Collection Act refers to the formal written notice required by 
section 5 of the Debt Collection Act, including the provision of notice 
of the procedures under this Part, before involuntary

[[Page 22027]]

collection deductions can be taken from an employee's salary.
    (f) Postmaster/Installation Head refers to the Postal Service 
official who is authorized under the Postal Service Employee and Labor 
Relations Manual to make the initial determination of employee 
indebtedness and to issue the ``Notice of Involuntary Administrative 
Salary Offsets Under the Debt Collection Act.''
    (g) Recorder refers to the Recorder, Judicial Officer Department, 
U.S. Postal Service, located at 2101 Wilson Boulevard, Suite 600, 
Arlington, VA 22201-3078. The Recorder's telephone number is (703) 812-
1900, and the fax number is (703) 812-1901.


Sec.  961.4  Employee petition for a hearing.

    (a) If an employee desires a hearing, prescribed by section 5 of 
the Debt Collection Act, to challenge the Postal Service's 
determination of the existence or amount of a debt, or to challenge the 
involuntary repayment terms proposed by the Postal Service, the 
employee must file a written, signed petition with the Recorder, on or 
before the fifteenth (15th) calendar day following the employee's 
receipt of the Postal Service's ``Notice of Involuntary Administrative 
Salary Offsets Under the Debt Collection Act.'' The Hearing Official, 
in his or her discretion may waive this deadline upon a demonstration 
of good cause. In the event that the Postal Service initiated 
involuntary administrative salary offsets without having issued a 
Notice as required by the Debt Collection Act, the Hearing Official, in 
his or her discretion, may retain authority to resolve the debt 
assessment as if a Notice had been issued, and may order the Postal 
Service to return any improperly offset money.
    (b) The hearing petition shall include the following:
    (1) The words, ``Petition for Hearing under the Debt Collection 
Act,'' prominently captioned at the top of the first page;
    (2) The name of the employee, the employee's work address, home 
address, work telephone number, home telephone number, and email 
address, if any, or other address and telephone number at which the 
employee may be contacted during business hours;
    (3) A statement of the date on which the employee received the 
``Notice of Involuntary Administrative Salary Offsets Under the Debt 
Collection Act,'' and a copy of the Notice;
    (4) A statement indicating whether the employee challenges:
    (i) The existence of the debt identified in the Notice of 
Involuntary Administrative Salary Offsets;
    (ii) the amount of the debt identified in the Notice; and/or
    (iii) the involuntary repayment terms identified by the Postal 
Service in the Notice. For each challenge, the employee's petition 
shall indicate the basis of the employee's disagreement. The employee 
should identify and explain the facts, evidence, and legal arguments 
which support his or her position;
    (5) Copies of all records in the employee's possession which relate 
to the debt; and
    (6) If an employee contends that the Postal Service's proposed 
offset schedule would result in a severe financial hardship on the 
employee, his or her spouse, and dependents, the employee shall 
identify an alternative offset schedule. As directed by the Hearing 
Official, the employee shall provide a statement and supporting 
documents indicating the employee's financial status. This statement 
should address total income from all sources; assets; liabilities; 
number of dependents; and expenses for food, housing, clothing, 
transportation, medical care, and exceptional expenses, if any.
    (c) The employee shall file with the Recorder, any additional 
information directed by the Hearing Official.


Sec.  961.5  Effect of filing a petition.

    Upon receipt and docketing of the employee's petition for a 
hearing, further collection activity by the Postal Service must cease, 
as required by section 5 of the Debt Collection Act until the petition 
is resolved by the Hearing Official.


Sec.  961.6  Filing, docketing and serving documents; computation of 
time; representation of parties.

    (a) Filing. All documents relating to the Debt Collection Act 
hearing proceedings must be filed by the employee or the General 
Counsel's designee with the Recorder. (Normal Recorder office business 
hours are between 8:45 a.m. and 4:45 p.m., Eastern Time.) Unless 
otherwise directed by the Hearing Official, the party filing a document 
shall send a copy thereof to the opposing party.
    (b) Docketing. The Recorder will maintain a record of Debt 
Collection Act proceedings and will assign a docket number to each such 
case. After notification of the docket number, the employee and the 
Postal Service's representative should refer to it on any further 
filings regarding the petition.
    (c) Time computation. A filing period under the rules in this Part 
excludes the day the period begins, and includes the last day of the 
period unless the last day is a Saturday, Sunday, or legal holiday, in 
which event the period runs until the close of business on the next 
business day. Requests for extensions of time shall be made in writing 
prior to the date on which the submission is due, state the reason for 
the extension request, represent that the moving party has contacted 
the opposing party about the request, or made reasonable efforts to do 
so, and indicate whether the opposing party consents to the extension. 
Requests for extensions of time submitted after the date on which the 
submission was due shall explain why the moving party was unable to 
request an extension prior to the deadline.
    (d) Representation of parties. The representative of the Postal 
Service, as designated by the General Counsel, shall file a notice of 
appearance as soon as practicable, but no later than the date for 
filing the answer. If an employee has a representative, he or she also 
shall file a notice of appearance as soon as practicable, and further 
transmissions of documents and other communications by and with the 
employee shall be made through his or her representative.


Sec.  961.7  Answer to petition.

    Within 15 days from the date of receiving the petition, the Postal 
Service's representative shall file an answer to the petition, and 
attach all available relevant records and documents in support of the 
Postal Service's debt claim, and/or the administrative salary offset 
schedule proposed by the Postal Service for collecting any such claim. 
The answer shall provide a clear and thorough description of the basis 
for the Postal Service's determination of the alleged debt, its 
calculation of the amount of the alleged debt, and/or its proposed 
offset schedule.


Sec.  961.8  Hearing Official authority and responsibilities.

    The Hearing Official's authority includes, but is not limited to, 
the following:
    (a) Ruling on all motions or requests by the parties.
    (b) Issuing notices, orders or memoranda to the parties concerning 
the hearing proceedings.
    (c) Conducting telephone conferences with the parties to expedite 
the proceedings. The Hearing Official will prepare a Memorandum of 
Telephone Conference, which shall be transmitted to both parties and 
which serves as the official record of that conference.
    (d) After considering the positions of the parties, determining 
whether an oral

[[Page 22028]]

hearing (or alternatively, a hearing solely on written submissions) 
shall be conducted, and setting the place, date, and time for such a 
hearing.
    (e) Administering oaths or affirmations to witnesses.
    (f) Conducting the hearing in a manner to maintain discipline and 
decorum while assuring that relevant, reliable and probative evidence 
is elicited on the issues in dispute, but irrelevant, immaterial or 
repetitious evidence is excluded. The Hearing Official in his or her 
discretion may examine witnesses to ensure that a satisfactory record 
is developed.
    (g) Establishing the record in the case. The weight to be attached 
to any evidence of record will rest within the discretion of the 
Hearing Official. Except as the Hearing Official may otherwise order, 
no proof shall be received in evidence after completion of an oral 
hearing or, in cases submitted on the written record, after 
notification by the Hearing Official that the record is closed. The 
Hearing Official may require either party, with appropriate notice to 
the other party, to submit additional evidence on any relevant matter.
    (h) Granting reasonable time extensions or other relief for good 
cause shown in the Hearing Official's sole discretion.
    (i) Issuing the final decision. The decision must include the 
determination of the amount and validity of the alleged debt and, where 
applicable, the repayment schedule. The Hearing Official will issue the 
decision as soon as practicable after the close of the record. 
Collection activity remains stayed until the decision has issued.


Sec.  961.9  Opportunity for oral hearing.

    An oral hearing shall be conducted in the sole discretion of the 
Hearing Official. An oral hearing may be conducted in-person, by 
telephone, by video conference, or other appropriate means as directed 
by the Hearing Official. When the Hearing Official determines that an 
oral hearing shall not be conducted, the decision shall be based solely 
on the written submissions. The Hearing Official shall arrange for the 
recording and transcription of an oral hearing, which shall serve as 
the official record of the hearing. In the event of an unexcused 
absence, the hearing may proceed without the participation of the 
absent party.


Sec.  961.10  Effect of Hearing Official's decision; motion for 
reconsideration.

    (a) After the receipt of written submissions or after the 
conclusion of the hearing and the receipt of post-hearing briefs, if 
any, the Hearing Official shall issue a written decision, which shall 
include the findings of fact and conclusions of law, relied upon.
    (b) The Hearing Official shall send each party a copy of the 
decision. The Hearing Official's decision shall be the final 
administrative determination on the employee's debt or repayment 
schedule. No reconsideration of the decision will be allowed unless a 
motion for reconsideration is filed within 10 days from receipt of the 
decision and shows good cause for reconsideration. Reconsideration will 
be allowed only in the discretion of the Hearing Official. A motion for 
reconsideration by the employee will not operate to stay a collection 
action authorized by the Hearing Official's decision.


Sec.  961.11  Consequences for failure to comply with rules.

    (a) The Hearing Official may determine that the employee has 
abandoned the right to a hearing, and that administrative offset may be 
initiated if the employee files his or her petition late without good 
cause; or files a withdrawal of the employee's petition for a hearing.
    (b) The Hearing Official may determine that the administrative 
offset may not be initiated if the Postal Service fails to file the 
answer or files the answer late without good cause; or files a 
withdrawal of the debt determination at issue.
    (c) If a party fails to comply with these Rules or the Hearing 
Official's orders, the Hearing Official may take such action as he or 
she deems reasonable and proper under the circumstances, including 
dismissing or granting the petition as appropriate.


Sec.  961.12  Ex parte communications.

    Ex parte communications are not allowed between a party and the 
Hearing Official or the Official's staff. Ex parte communication means 
an oral or written communication, not on the public record, with one 
party only with respect to which reasonable prior notice to all parties 
is not given, but it shall not include requests for status reports or 
procedural matters. A memorandum of any communication between the 
Hearing Official and a party will be transmitted to both parties.

Stanley F. Mires,
Attorney, Legal Policy & Legislative Advice.
[FR Doc. 2014-08963 Filed 4-18-14; 8:45 am]
BILLING CODE 7710-12-P