Procedures for Debt Collection, 11340-11346 [E8-3799]

Agencies

• National Credit Union Administration

[Federal Register Volume 73, Number 42 (Monday, March 3, 2008)]
[Rules and Regulations]
[Pages 11340-11346]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-3799]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 797


Procedures for Debt Collection

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: Pursuant to the Debt Collection Improvement Act of 1996 NCUA 
is issuing a regulation governing procedures for collecting debts owed 
to the federal government by present and former NCUA employees. The 
regulation sets forth the procedures NCUA will follow in collecting 
debts owed to the United States arising from activities under NCUA 
jurisdiction. These procedures include collection of debts through 
administrative offset and salary offset.

DATES: This rule is effective April 2, 2008.

FOR FURTHER INFORMATION CONTACT: Dianne Salva, Trial Attorney, at the 
above address or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION:

I. Background

    This final rule implements the Debt Collection Improvement Act of 
1996 (DCIA). The DCIA requires federal agencies to collect debts owed 
to the United States under regulations prescribed by the head of the 
agency, and standards prescribed by the Department of Justice and the 
Department of the Treasury. 31 U.S.C. 3711(d)(2). These standards, 
known as the Federal Claims Collection Standards (FCCS), became 
effective on December 22, 2000. 31 CFR chapter IX and parts 900 through 
904.
    The DCIA also requires agencies, prior to collecting debts owed to 
the United States, to:
    (1) Adopt without change regulations on collecting debts by offset 
promulgated by the Department of Justice or Department of the Treasury 
(FCCS); or (2) prescribe agency regulations for collecting such debts 
by offset, which are consistent with the FCCS. 31 U.S.C. 3716. Agency 
regulations protect the minimum due process rights that must be 
afforded to the debtor when an agency seeks to collect a debt by 
administrative offset, including the ability to verify, challenge, and 
compromise claims, and access to administrative appeals procedures 
which are both reasonable and protect the interests of the United 
States.
    NCUA has decided to issue its own rule for debt collection and 
offset, given NCUA's status as an independent regulatory agency. The 
final rule is consistent with the FCCS, as required by the DCIA. The 
salary offset portion of the rule has been submitted to and approved by 
the Office of Personnel Management (OPM), as required by 5 U.S.C. 
5514(b)(1). In addition to these legal authorities, NCUA is issuing 
these regulations pursuant to 12 U.S.C. 1752a(d), which authorizes NCUA 
to adopt regulations it deems necessary for transaction of its 
business.

II. The Final Rule

A. Subpart A--Scope, Purpose, Definitions and Delegations of Authority

    The final rule applies only to debts owed to the United States 
which arise out of NCUA transactions and functions in its agency 
capacity, including, but not limited to, erroneous salary overpayments 
to employees and claims arising out of employee benefit withholdings 
and contributions. The rule does not apply to debts owed to or payments 
made by NCUA in connection with NCUA's conservatorship, liquidation, 
supervision, enforcement, or insurance responsibilities, nor does it 
limit or affect NCUA's authority pursuant to 12 U.S.C. 1752(a) and 
1766.
    The Executive Director shall follow the procedural standards for 
collecting debts set forth in the FCCS when he determines that it is 
appropriate to initiate debt collection or seek offset to

[[Page 11341]]

collect a debt. 31 CFR parts 900 through 904. The FCCS establish 
procedures governing the following areas of the debt collection 
process: (1) Prompt demand for payment of the claim from the debtor; 
(2) review of the existence or amount of a debt claimed upon the 
debtor's demand for a final agency determination; (3) standards for 
collecting debts in installment payments; (4) the assessment of 
interest, penalties and administrative costs on debts claimed; (5) 
standards for compromise of claims due; and (6) standards to be 
followed in determining whether to suspend or terminate collection 
action.

B. Subpart B--Administrative Offset

    Pursuant to 31 U.S.C. 3716, NCUA may collect debts owed to the 
United States through administrative offset. Subpart B of the final 
rule authorizes NCUA to collect debts owed to the United States by: (1) 
Withholding money payable by NCUA to the debtor, or held by NCUA for 
the debtor; or (2) by requesting that another federal agency withhold 
money payable to the debtor, or held by the other federal agency for 
the debtor. Subpart B meets the requirements under 31 U.S.C. 3716(b) to 
provide due process rights to the debtor, including the ability to 
verify, challenge, and compromise claims, and to provide to 
administrative appeals procedures which are both reasonable and protect 
the interests of NCUA. Subpart B also meets the requirement of 31 
U.S.C. 3711(d) that NCUA promulgate administrative offset regulations 
consistent with the standards established by the Attorney General and 
the Secretary of the Treasury.

C. Subpart C--Salary Offset

    Subpart C of the final rule provides that when NCUA determines it 
is appropriate to collect a debt by means of deductions from the 
current pay account of an NCUA employee, or any individual employed by 
the federal government (including a former NCUA employee), NCUA shall 
initiate a salary offset under 5 U.S.C. 5514(a)(1). Salary offset is a 
form of administrative offset governed by statute (5 U.S.C. 5514) and 
by regulations issued by the OPM (5 CFR part 550, subpart K). Salary 
offset may only be used to collect debts owed by persons currently 
employed by the federal government. Agencies are required to promulgate 
their own salary offset regulations that conform to OPM's salary offset 
regulations. As noted above, salary offset rules must receive OPM 
approval before the regulations become effective. 5 U.S.C. 5514(b)(1); 
5 CFR 550.1104. Subpart C implements those statutory requirements.

III. Administrative Procedure Act

    NCUA has determined that this rule pertains to agency practice and 
procedure and is interpretative in nature. The procedures contained in 
the rule for salary offset and administrative offset are mandated by 
law and by regulations promulgated by OPM, jointly by the Department of 
the Treasury and the Department of Justice and by the IRS. Notice of 
proposed rulemaking is not required under the Administrative Procedure 
Act (APA) because the rule pertains solely to agency procedure and 
practice. 5 U.S.C. 553(b)(3)(A). Notice and an opportunity for public 
comment are not necessary prior to issuance of this final rule because 
it implements a definitive statutory scheme mandated by the DCIA.

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires that NCUA prepare an 
analysis to describe any significant economic impact a rule may have on 
a substantial number of small credit unions, or those with under $10 
million dollars in assets. The final rule applies to federal agencies 
and federal employees. Accordingly, the Board determines and certifies 
that this final rule does not have significant economic impact on a 
substantial number of small credit unions and that a Regulatory 
Flexibility Analysis is not required.

Paperwork Reduction Act

    The final rule is not subject to the Paperwork Reduction Act (44 
U.S.C. 3501), since it does not contain any new information collection 
requirements.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. The final rule would not have substantial 
direct effects on the states, on the connection between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. NCUA has 
determined that this final rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this final rule would not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Public Law 105-277, 112 
Stat. 2682 (1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996, 
Public Law 104-121 (SBREFA) provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where NCUA issues a final rule as defined by Section 551 of the APA. 5 
U.S.C. 551. NCUA has obtained the determination of the Office of 
Management and Budget that this rule is not a major rule for purposes 
of the Small Business Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 12 CFR Part 797

    Administrative practice and procedure, Claims, Debt collection, 
Government employees, Hearing procedures, Wages.

    By the National Credit Union Administration Board on February 
21, 2008.
Mary F. Rupp,
Secretary of the Board.

0
For the reasons set forth in the preamble, NCUA adds 12 CFR part 797 to 
read as follows:

PART 797--PROCEDURES FOR DEBT COLLECTION

Subpart A--Scope, Purpose, Definitions and Delegation of Authority
Sec.
797.1 Scope.
797.2 Purpose.
797.3 Definitions.
797.4 Delegation of authority.
Subpart B--Administrative Offset
797.5 Authority and scope.
797.6 Administrative offset prior to completion of procedures.
797.7 Procedures.
797.8 Right to agency review.
797.9 Review procedures.
797.10 Special review.
797.11 Interest, administrative costs, and penalties.
797.12 Refunds.
797.13 Requests for administrative offset where NCUA is the creditor 
agency.
797.14 Requests for administrative offset where NCUA is the paying 
agency.
797.15 Administrative offset against amounts payable from Civil 
Service Retirement and Disability Fund.
797.16 Stay of offset.

[[Page 11342]]

Subpart C--Salary Offset
797.17 Authority and scope.
797.18 Notice requirements where NCUA is the creditor agency.
797.19 Review of agency records related to the debt.
797.20 Procedures to request a hearing.
797.21 Hearing procedures.
797.22 Voluntary repayment agreement.
797.23 Certification where NCUA is the creditor agency.
797.24 Certification where NCUA is the paying agency.
797.25 Recovery from final check or other payments due a separated 
employee.

    Authority: 12 U.S.C. 1752a; 5 U.S.C. 5514; 31 U.S.C. 3711, 3716, 
3720A, 3720D.

Subpart A--Scope, Purpose, Definitions and Delegation of Authority


Sec.  797.1  Scope.

    This part establishes NCUA procedures for the collection of certain 
debts owed to the United States.
    (a) This part applies to collections by NCUA from:
    (1) Federal employees who are indebted to NCUA;
    (2) Employees of NCUA who are indebted to other agencies or NCUA; 
and
    (3) Former federal employees who are indebted to NCUA.
    (b) This part does not apply:
    (1) To debts or claims arising under the Internal Revenue Code of 
1986 (Title 26, U.S. Code), the Social Security Act (42 U.S.C. 301 et 
seq.), or the tariff laws of the United States;
    (2) To a situation to which the Contract Disputes Act (41 U.S.C. 
601 et seq.) applies;
    (3) In any case where collection of a debt is explicitly provided 
for or prohibited by another statute;
    (4) To debts owed to or payments made by NCUA in connection with 
NCUA's conservatorship, liquidation, supervision, enforcement, or 
insurance responsibilities pursuant to 12 U.S.C. 1786 and 1787, nor 
does it limit or affect NCUA's authority with respect to debts and/or 
claims pursuant to 12 U.S.C. 1752(a) and 1766.
    (c) Nothing in this part precludes the compromise, suspension, or 
termination of collection actions, where appropriate, under standards 
implementing the Debt Collection Improvement Act (DCIA) (31 U.S.C. 3711 
et seq.), the Federal Claims Collection Standards (FCCS) (31 CFR parts 
900 through 904); or any other applicable law.


Sec.  797.2  Purpose.

    (a) The purpose of this part is to implement federal statutes and 
regulatory standards authorizing NCUA to collect debts owed to the 
United States. This part is consistent with the following federal 
statutes and regulations:
    (1) DCIA at 31 U.S.C. 3711 (collection and compromise of claims); 
section 3716 (administrative offset), and section 3717 (interest and 
penalty on claims).
    (2) 5 U.S.C. 5514 (salary offset);
    (3) 5 U.S.C. 5584 (waiver of claims for overpayment);
    (4) 31 CFR parts 900 through 904 (FCCS);
    (5) 5 CFR part 550, subpart K (salary offset);
    (6) 31 U.S.C. 3720D, 31 CFR 285.11 (administrative wage 
garnishment); and
    (7) 5 CFR 831.1801 through 1808 (U.S. Office of Personnel 
Management (OPM) offset).
    (b) Collectively, these statutes and regulations prescribe the 
manner in which federal agencies should proceed to establish the 
existence and validity of debts owed to the federal government and 
describe the remedies available to agencies to offset valid debts.


Sec.  797.3  Definitions.

    Except where the context clearly indicates otherwise or where the 
term is defined elsewhere in this subpart, the following definitions 
shall apply to this subpart.
    (a) Administrative offset, as defined in 31 U.S.C. 3701(a)(1), 
means withholding money payable by the United States government to, or 
held by the government for, a person to satisfy a debt the person owes 
the government.
    (b) Agency means a department, agency, or instrumentality in the 
Executive, Judicial, or Legislative branch of the government.
    (c) Claim or debt means money or property owed by a person or 
entity to an agency of the federal government. A ``claim'' or ``debt'' 
includes amounts due the government, fees, services, overpayments, 
penalties, damages, interest, fines and forfeitures. For purposes of 
this part, a debt owed to NCUA constitutes a debt owed to the federal 
government.
    (d) Claim certification means a creditor agency's written request 
to a paying agency to effect an administrative or salary offset.
    (e) Creditor agency means an agency to which a claim or debt is 
owed.
    (f) Debtor means the person or entity owing money to the federal 
government.
    (g) Disposable pay means that part of current basic pay or other 
authorized pay remaining after the deduction of any amount required by 
law to be withheld. NCUA shall allow the deductions described in 5 CFR 
581.105(b) through (f).
    (h) Employee means a current employee of NCUA or another agency.
    (i) FCCS means the Federal Claims Collection Standards published in 
31 CFR part 900.
    (j) Hearing official means an individual who is authorized to 
conduct a hearing with respect to the existence or amount of a debt 
claimed and issue a final decision on the basis of such hearing. A 
hearing official may not be under the supervision or control of NCUA 
when NCUA is the creditor agency.
    (k) NCUA means the National Credit Union Administration.
    (l) Paying agency means an agency of the federal government owing 
money to a debtor against which an administrative or salary offset can 
be effected.
    (m) Salary offset means an administrative offset to collect a debt 
under 5 U.S.C. 5514 by deductions at one or more officially established 
pay intervals from the current pay account of a debtor.
    (n) Waiver means the cancellation, remission, forgiveness, or 
nonrecovery of a debt allegedly owed by an employee to NCUA or another 
agency as permitted or required by 5 U.S.C. 5584 or any other law.


Sec.  797.4  Delegation of authority.

    Authority to conduct the following activities is delegated to the 
Executive Director to:
    (a) Initiate and carry out the debt collection process on behalf of 
NCUA, in accordance with the FCCS;
    (b) Accept or reject compromise offers, suspend, terminate or waive 
collection actions to the full extent of NCUA's legal authority under 
12 U.S.C. 1752(a) and 1789; 31 U.S.C. 3711, and any other applicable 
statute or regulation.
    (c) Report to consumer reporting agencies certain data pertaining 
to delinquent debts, where appropriate;
    (d) Use offset procedures, including administrative and salary 
offset, to collect debts; and
    (e) Take any other action necessary to promptly and effectively 
collect debts owed to the government in accordance with the policies 
contained herein and as otherwise provided by law.

Subpart B--Administrative Offset


Sec.  797.5  Authority and scope.

    NCUA may collect a debt owed to the federal government from a 
person, organization, or other entity by administrative offset, 
pursuant to 31 U.S.C. 3716, where:
    (a) The debt is certain in amount;
    (b) Administrative offset is feasible, desirable, and not otherwise 
prohibited;

[[Page 11343]]

    (c) The applicable statute of limitations has not expired; and
    (d) Administrative offset is in the best interest of the federal 
government.


Sec.  797.6  Administrative offset prior to completion of procedures.

    Prior to the completion of the procedures described in Sec.  797.7, 
NCUA may effect administrative offset if failure to offset would 
substantially prejudice its ability to collect the debt, and if the 
time before the payment is to be made does not reasonably permit 
completion of the procedures described in Sec.  797.7. Such prior 
administrative offset shall be followed promptly by the completion of 
the procedures described in Sec.  797.7.


Sec.  797.7  Procedures.

    Prior to collecting any debt by administrative offset or referring 
such claim to another agency for collection through administrative 
offset, NCUA shall provide the debtor with a written Notice of Intent 
to Collect by Administrative Offset (the Notice) at least 30 calendar 
days before administrative offset is to commence.
    The Notice shall provide the following information:
    (a) The nature and amount of the debt, the intention of NCUA to 
collect the debt through administrative offset, and a statement of the 
rights of the debtor under this section, including the right to request 
a waiver under 5 U.S.C. 5584;
    (b) An opportunity to inspect and copy the records of NCUA related 
to the debt or receive copies if personal inspection is impractical;
    (c) The payment due date, which shall be 30 calendar days from the 
date after receipt of the initial demand for payment;
    (d) An opportunity for the debtor to obtain a review of the 
determination of indebtedness. Any request for review by the debtor 
shall be in writing and shall be submitted to NCUA within 15 calendar 
days after receipt of the Notice. NCUA may waive the time limits for 
requesting review for good cause shown by the debtor. NCUA shall 
provide the debtor with a reasonable opportunity for an oral hearing 
when:
    (1) An applicable statute authorizes or requires NCUA to consider 
waiver of the indebtedness involved, the debtor requests waiver of the 
indebtedness, and the waiver determination turns on an issue of 
credibility or veracity; or
    (2) The debtor requests reconsideration of the debt and NCUA 
determines that the question of the indebtedness cannot be resolved by 
review of the documentary evidence, as for example, when the validity 
of the debt turns on an issue of credibility or veracity. Unless 
otherwise required by law, an oral hearing under this subpart is not 
required to be a formal evidentiary hearing, although NCUA shall 
document all significant matters discussed at the hearing. In those 
cases where an oral hearing is not required by this subpart, NCUA shall 
make its determination on the request for waiver or reconsideration 
based upon a review of the written record.
    (e) An opportunity to enter into a written agreement for the 
repayment of the amount of the claim at the discretion of NCUA;
    (f) That charges for interest, penalties, and administrative costs 
will be assessed against the debtor, in accordance with 31 U.S.C. 3717, 
if payment is not received by the payment due date, unless excused by 
the FCCS;
    (g) That if the debtor has not entered into an agreement with NCUA 
to pay the debt, has not requested NCUA to review the debt, or has not 
paid the debt by the payment due date, NCUA intends to collect the debt 
by all legally available means;
    (h) The name and address of the Executive Director whom the debtor 
shall send all correspondence relating to the debt; and
    (i) Other information, as may be appropriate.


Sec.  797.8  Right to agency review.

    (a) If the debtor disputes the claim, the debtor may request a 
review of NCUA's determination of the existence of the debt or of the 
amount of the debt. If only part of the claim is disputed, the 
undisputed portion should be paid by the payment due date.
    (b) To obtain a review, the debtor shall submit a written request 
for review to the Executive Director within 15 calendar days after 
receipt of the Notice. The debtor's request for review shall state the 
basis on which the claim is disputed.
    (c) The NCUA shall promptly notify the debtor, in writing, that the 
NCUA has received the request for review. The NCUA shall conduct its 
review of the claim in accordance with Sec.  797.9.


Sec.  797.9  Review procedures.

    (a) Unless an oral hearing is required by Sec.  797.7(d), NCUA's 
review shall be a review of the written record of the claim.
    (b) If an oral hearing is required, NCUA shall provide the debtor 
with a reasonable opportunity for such a hearing. The oral hearing, 
however, shall not be an adversarial adjudication and need not take the 
form of a formal evidentiary hearing. All significant matters discussed 
at the hearing, however, will be carefully documented.
    (c) Any review required by this part, whether a review of the 
written record or an oral hearing, shall be conducted by a hearing 
official. When NCUA is the creditor agency and the debtor is an NCUA 
employee, NCUA shall contact any agency designated in appendix A to 5 
CFR part 581 to arrange for a hearing official. When NCUA is the 
creditor agency and the debtor is not an NCUA employee (i.e., the 
debtor is employed by another federal agency, also known as the paying 
agency), and NCUA cannot provide a prompt and appropriate hearing, NCUA 
may contact an agent of the paying agency designated in appendix A to 5 
CFR part 581 to arrange for a hearing official. The paying agency must 
cooperate with NCUA to provide a hearing official, as required by the 
FCCS.
    (d) The hearing official shall issue a final written decision based 
on documentary evidence and, if applicable, information developed at an 
oral hearing. The written decision shall be issued as soon as 
practicable after the review but not later than 60 days after the date 
on which the request for review was received by NCUA, unless the debtor 
requests a delay in the proceedings. A delay in the proceedings shall 
be granted if the hearing official determines that there is good cause 
to grant the delay. If a delay is granted, the 60-day decision period 
shall be extended by the number of days by which the review was 
postponed.
    (e) Upon issuance of the written opinion, NCUA shall promptly 
notify the debtor of the hearing official's decision. The notification 
shall include a copy of the written decision issued by the hearing 
official.


Sec.  797.10  Special review.

    (a) An employee subject to offset, or a voluntary repayment 
agreement, may, at any time, request a special review by the Executive 
Director of the amount of the offset or voluntary repayment, based on 
materially changed circumstances, including, but not limited to, 
catastrophic illness, divorce, death, or disability.
    (b) To determine whether an offset would prevent the employee from 
meeting essential subsistence expenses, the employee shall submit a 
detailed statement and supporting documents for the employee, the 
employee's spouse, and dependents indicating the employee's assets and 
liabilities.
    (c) If the employee requests a special review under this section, 
the employee shall file an alternative proposed offset or payment 
schedule and a statement.

[[Page 11344]]

    (d) The Executive Director shall evaluate the statement and 
supporting documents, and determine whether the original offset or 
repayment schedule imposes an undue financial hardship on the employee. 
The Executive Director shall notify the employee in writing within 30 
calendar days of such determination, including, if appropriate, a 
revised offset or payment schedule. If the special review results in a 
revised offset or repayment schedule, NCUA shall provide a new 
certification to the paying agency.


Sec.  797.11  Interest, administrative costs, and penalties.

    Where NCUA is the creditor agency, it shall assess interest, 
penalties and administrative costs pursuant to 31 U.S.C. 3717 and 31 
CFR parts 900 through 904, unless excused in accordance with the FCCS.


Sec.  797.12  Refunds.

    NCUA shall refund promptly those amounts recovered by offset but 
later found not to be owed to the federal government.


Sec.  797.13  Requests for administrative offset where NCUA is the 
creditor agency.

    (a) NCUA may request that a debt owed to NCUA be collected by 
administrative offset against funds due and payable to a debtor by 
another agency.
    (b) In requesting administrative offset, NCUA, as creditor, shall 
certify in writing to the agency holding funds of the debtor:
    (1) That the debtor owes the debt;
    (2) The amount and basis of the debt; and
    (3) That NCUA has complied with the requirements of its own 
administrative offset regulations and the applicable provisions of the 
FCCS with respect to providing the debtor with due process.


Sec.  797.14  Requests for administrative offset from other federal 
agencies where NCUA is the paying agency.

    (a) Any agency may request that funds due and payable to a debtor 
by NCUA be administratively offset in order to collect a debt owed to 
such agency by the debtor.
    (b) NCUA shall initiate the requested administrative offset only 
upon receipt of a written certification from the creditor agency that:
    (1) The debtor owes the debt, including the amount and basis of the 
debt;
    (2) The agency has prescribed regulations for the exercise of 
administrative offset; and
    (3) The agency has complied with its own administrative offset 
regulations and with the applicable provisions of the FCCS, with 
respect to providing the debtor with due process.


Sec.  797.15  Administrative offset against amounts payable from Civil 
Service Retirement and Disability Fund.

    NCUA may request that monies payable to a debtor from the Civil 
Service Retirement and Disability Fund be administratively offset to 
collect debts owed to NCUA by the debtor. NCUA shall provide OPM with a 
written certification that states the debtor owes the debt, the amount 
of the debt, and that NCUA has complied with the agency's offset 
regulations, as well as, the requirements set forth in 31 CFR parts 900 
through 904 and OPM's regulations.


Sec.  797.16  Stay of offset.

    (a) When a creditor agency receives a debtor's request for 
inspection of agency records, the offset is stayed for 15 calendar days 
beyond the date set for the record inspection.
    (b) When a creditor agency receives a debtor's offer to enter into 
a repayment agreement, the offset is stayed until the debtor is 
notified as to whether the proposed agreement is acceptable.
    (c) When a review is conducted, the offset is stayed until the 
creditor agency issues a final written decision. The written decision 
must be issued within 60 days after receipt of the debtor's request for 
review.

Subpart C--Salary Offset


Sec.  797.17  Authority and scope.

    (a) NCUA may collect debts owed by employees to the federal 
government by means of salary offset under the authority of 5 U.S.C. 
5514, 5 CFR part 550, subpart K, and this subpart. The procedures set 
forth in this subpart apply to situations where NCUA is attempting to 
collect a debt by salary offset that is owed to it by an individual 
employed by NCUA or by another agency; or where NCUA employs an 
individual who owes a debt to another agency. Since salary offset is a 
type of administrative offset, this subpart supplements subpart B.
    (b) The procedures set forth in this subpart do not apply to:
    (1) Any routine intra-agency adjustment of pay that is attributable 
to clerical or administrative error or delay in processing pay 
documents that have occurred within the four pay periods preceding the 
adjustment, or any adjustment to collect a debt amounting to $50 or 
less. However, at the time of any such adjustment, or as soon 
thereafter as possible, NCUA or its designated payroll agent shall 
provide the employee with a written notice of the nature and the amount 
of the adjustment and a point of contact for contesting such 
adjustment.
    (2) Any negative adjustment to pay that arises from an employee's 
election of coverage or a change in coverage under a federal benefits 
program that requires periodic deductions from pay, if the amount to be 
recovered was accumulated over four pay periods or less. However, at 
the time that such adjustment is made, NCUA shall provide the employee 
a statement that informs the employee of the previous overpayment.


Sec.  797.18  Notice requirements where NCUA is the creditor agency.

    Where NCUA seeks salary offset under 5 U.S.C. 5514 as the creditor 
agency, NCUA shall first provide the employee with a written Notice of 
Intent to Collect by Salary Offset (the Notice) at least 30 calendar 
days before salary offset is to commence. The Notice shall provide the 
following information:
    (a) That the Executive Director has determined that a debt is owed 
to NCUA and intends to collect the debt by means of deduction from the 
employee's current disposable pay account until the debt and all 
accumulated interest is paid in full or otherwise resolved;
    (b) The amount of the debt and the factual basis for the debt;
    (c) A salary offset schedule stating the frequency and amount of 
each deduction, stated as a fixed dollar amount or percentage of 
disposable pay not to exceed 15 percent;
    (d) That in lieu of salary offset, the employee may propose a 
voluntary repayment plan to satisfy the debt on terms acceptable to 
NCUA, which must be documented in writing, signed by the employee and 
the Executive Director, and documented in NCUA's files;
    (e) NCUA's policy concerning interest, penalties, and 
administrative costs, and a statement that such assessments must be 
made, unless excused in accordance with the FCCS;
    (f) That the employee has the right to inspect and copy NCUA 
records related to the debt, or to receive copies of such records if 
personal inspection is impractical;
    (g) That the employee has a right to request a hearing regarding 
the existence and amount of the debt claimed or the salary offset 
schedule proposed by NCUA, provided that the employee files a request 
for such a hearing with NCUA in accordance with Sec.  797.20, and that 
such a hearing will be conducted by a hearing official not under the 
supervision or control of NCUA;

[[Page 11345]]

    (h) The procedure and deadline for requesting a hearing, including 
the name, address, and telephone number of the Executive Director or 
other designated individual to whom a request for a hearing must be 
sent;
    (i) That a request for hearing must be received by NCUA on or 
before the 30th calendar day following receipt of the Notice, and that 
filing of a request for hearing will stay the collection proceedings;
    (j) That NCUA will initiate salary offset procedures not less than 
30 days from the date of the employee's receipt of the Notice, unless 
the employee files a timely request for a hearing;
    (k) That if a hearing is held, the hearing official will issue a 
decision at the earliest practical date, but not later than 60 days 
after the filing of the request for the hearing, unless the employee 
requests a delay in the proceedings which is granted by the hearing 
official;
    (l) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to disciplinary 
procedures appropriate under 5 U.S.C. chapter 75, 5 CFR part 752; 
penalties under the False Claims Act, 31 U.S.C. 3729 through 3731; 
criminal penalties under 18 U.S.C. 286, 287, 1001, 1002; or any other 
applicable statutory authority; and
    (m) That the employee also has the right to request waiver of 
overpayment pursuant to 5 U.S.C. 5584, and may exercise any other 
rights and remedies available under statutes or regulations governing 
the program for which the collection is being made.


Sec.  797.19  Review of NCUA records related to the debt.

    (a) An employee who desires to inspect or copy NCUA records related 
to the employee's debt must send a written request to the Executive 
Director or the individual designated in the Notice. The letter must be 
received in the office of that individual within 15 calendar days after 
the employee's receipt of the Notice.
    (b) In response to a timely request submitted by the employee, the 
employee shall be notified of the location and time when the employee 
may inspect and copy records related to the debt. If the employee is 
unable personally to inspect such records, NCUA shall arrange to send 
copies of such records to the employee.


Sec.  797.20  Procedures to request a hearing.

    (a) To request a hearing, an employee must send a written request 
to the Executive Director within 15 calendar days after the employee's 
receipt of the Notice. If the employee files a request for a hearing 
after the expiration of the 15th calendar day, NCUA may accept the 
request if the employee can show that the delay was the result of 
circumstances beyond the employee's control or the employee failed to 
receive actual notice of the filing deadline.
    (b) The request for a hearing must be signed by the employee and 
must fully identify and explain with reasonable specificity all the 
facts, evidence, and witnesses, if any, that support the employee's 
position. The request must also state whether the employee is 
requesting an oral or documentary hearing. If an oral hearing is 
requested, the request shall state why the matter cannot be resolved by 
a review of documentary evidence alone.
    (c) The failure of an employee to request a hearing will be 
considered an admission by the employee that the debt exists in the 
amount specified in the Notice.


Sec.  797.21  Hearing procedures.

    (a) Obtaining the services of a hearing official. When the debtor 
is not an NCUA employee and NCUA cannot provide a prompt and 
appropriate hearing before a hearing official, NCUA may request a 
hearing official from an agent of the paying agency, as designated in 5 
CFR part 581, appendix A, or as otherwise designated by the paying 
agency. When the debtor is an NCUA employee, NCUA may contact any agent 
of another agency, as designated in 5 CFR part 581, appendix A.
    (b) Notice of hearing. After the employee requests a hearing, the 
hearing official shall notify the employee of the form of the hearing 
to be provided. If the hearing will be oral, the notice shall set forth 
the date, time, and location of the hearing, which must occur no more 
than 30 calendar days after the request is received, unless the 
employee requests that the hearing be delayed. If the hearing will be 
conducted by an examination of documents, the employee, within 30 
calendar days, shall submit any evidence or written arguments that 
should be considered by the hearing official.
    (c) Oral hearing. (1) An employee who requests an oral hearing 
shall be provided an oral hearing if the hearing official determines 
that the matter cannot be resolved by an examination of the documents 
alone, as for example, when an issue of credibility or veracity is 
involved. The oral hearing need not be an adversarial adjudication and 
rules of evidence need not apply.
    (2) Oral hearings may take the form of, but are not limited to:
    (i) Informal conferences with the hearing official in which the 
employee and agency representative are given full opportunity to 
present evidence, witnesses, and argument;
    (ii) Informal meetings in which the hearing examiner interviews the 
employee; or
    (iii) Formal written submissions followed by an opportunity for 
oral presentation.
    (d) Hearing by examination of documents. If the hearing official 
determines that an oral hearing is not necessary, the hearing official 
shall make the determination based upon an examination of the 
documents.
    (e) Record. The hearing official shall maintain a summary record of 
any hearing conducted under this section.
    (f) Decision. (1) The hearing official shall issue a written 
decision based upon evidence and information developed at the hearing 
or in the case of a documentary hearing the decision shall be based on 
the documents and written submissions. The decision shall be issued, as 
soon as practicable after the hearing, but not later than 60 calendar 
days after the hearing request was received by NCUA. If the hearing was 
delayed at the request of the employee, the 60-day decision period 
shall be extended by the number of days by which the hearing was 
postponed.
    (2) The decision of the hearing official shall be final and is 
considered to be an official certification regarding the existence and 
the amount of the debt for purposes of executing salary offset under 5 
U.S.C. 5514. If the hearing official determines that a debt may not be 
collected by salary offset, but NCUA finds that the debt is still 
valid, NCUA may seek collection of the debt through other means in 
accordance with applicable law and regulations.
    (g) Content of decision. The written decision shall include:
    (1) A summary of the facts concerning the origin, nature, and 
amount of the debt;
    (2) The hearing official's findings, analysis, and conclusions; and
    (3) The terms of any repayment schedules, if applicable.
    (h) Failure to appear. If the employee or the NCUA representative 
fails to appear, the hearing official shall proceed with the hearing as 
scheduled, and issue the decision based upon the oral testimony 
presented and the documentation submitted by both parties. At the 
request of both parties, the hearing official may re-schedule the 
hearing date.

[[Page 11346]]

Sec.  797.22  Voluntary repayment agreement.

    (a) In response to the Notice, an employee may propose to repay the 
debt voluntarily in lieu of salary offset by submitting a written 
proposed repayment schedule to NCUA. Any proposal under this section 
must be received by NCUA within 15 calendar days after receipt of the 
Notice.
    (b) In response to a timely proposal by the employee, NCUA shall 
notify the employee whether the employee's proposed repayment schedule 
is acceptable. NCUA has the discretion to accept, reject, or propose to 
the employee a modification of the proposed repayment schedule.
    (1) If NCUA decides that the proposed repayment schedule is 
unacceptable, the employee shall have 15 calendar days from the date of 
the decision in which to file a request for a hearing.
    (2) If NCUA decides that the proposed repayment schedule is 
acceptable or the employee agrees to a modification proposed by NCUA, 
an agreement shall be put in writing and signed by both the employee 
and NCUA.


Sec.  797.23  Certification where NCUA is the creditor agency.

    (a) NCUA shall issue a certification in all cases where the hearing 
official determines that a debt exists or the employee admits the 
existence and amount of the debt, as for example, by failing to request 
a hearing.
    (b) The certification must be in writing and state:
    (1) That the employee owes the debt;
    (2) The amount and basis of the debt;
    (3) The date the federal government's right to collect the debt 
first accrued;
    (4) The date the employee was notified of the debt, the action(s) 
taken pursuant to NCUA's regulations, and the dates such actions were 
taken;
    (5) If the collection is to be made by lump-sum payment, the amount 
and date such payment will be collected;
    (6) If the collection is to be made in installments, the amount or 
percentage of disposable pay to be collected in each installment and, 
if NCUA wishes, the desired commencing date of the first installment, 
if a date other than the next officially established pay period; and
    (7) A statement that NCUA's regulation on salary offset has been 
approved by OPM pursuant to 5 CFR part 550, subpart K.


Sec.  797.24  Certification where NCUA is the paying agency.

    (a) Upon issuance of a proper certification by NCUA or upon receipt 
of a proper certification from another creditor agency, NCUA shall send 
the employee a written notice of salary offset.
    (b) Such written notice of salary offset shall advise the employee 
of the:
    (1) Certification that has been issued by NCUA or received from 
another creditor agency;
    (2) Amount of the debt and of the deductions to be made; and
    (3) Date and pay period when the salary offset will begin.
    (c) If NCUA is not the creditor agency, NCUA shall provide a copy 
of the notice to the creditor agency and advise the creditor agency of 
the dollar amount to be offset and the pay period when the offset will 
begin.


Sec.  797.25  Recovery from final check or other payments due a 
separated employee.

    (a) Lump-sum deduction from final check. In order liquidate a debt, 
a lump-sum deduction exceeding 15 percent of disposable pay may be made 
pursuant to 31 U.S.C. 3716 from any final salary payment due a former 
employee, whether the former employee was separated voluntarily or 
involuntarily.
    (b) Lump-sum deductions from other sources. Whenever an employee 
subject to salary offset is separated from NCUA, and the balance of the 
debt cannot be liquidated by offset of the final salary payment, NCUA 
may offset any later payments of any kind to the former employee to 
collect the balance of the debt pursuant to 31 U.S.C. 3716.

[FR Doc. E8-3799 Filed 2-29-08; 8:45 am]
BILLING CODE 7535-01-P