HUD Debt Collection: Revisions and Update to the Procedures for the Collection of Claims, 69044-69049 [2011-28777]

Download as PDF 69044 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Rules and Regulations DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Part 17 [Docket No. FR–5166–F–02] RIN 2501–AD36 HUD Debt Collection: Revisions and Update to the Procedures for the Collection of Claims Office of the Secretary, HUD. ACTION: Final rule. AGENCY: On July 5, 2011, HUD published a proposed rule to revise and update HUD’s regulations governing the procedures for the collection of claims by HUD. The rule proposed to revise HUD’s debt collection regulations to implement the Debt Collection Improvement Act of 1996 and the revised Federal Claims Collection Standards. The DCIA and FCCS generally apply to the collection of nontax debt owed to the Federal Government and require referral of all eligible delinquent nontax debt to the Department of the Treasury for collection by centralized offset and to a designated debt collection center for debt servicing when a debt becomes 180 days delinquent. The rule also proposed to update and make technical corrections to HUD’s salary offset provisions to conform to the changes made to HUD’s debt collection regulations. HUD is adopting the proposed rule without change. HUD did not receive any public comments on the proposed rule. DATES: Effective date: December 7, 2011. FOR FURTHER INFORMATION CONTACT: Scott Moore, Financial Operations Analyst, Financial Policy and Procedures Division, Office of the Chief Financial Officer, Department of Housing and Urban Development, 451 7th Street SW., Room 3210, Washington, DC 20410; telephone number (202) 402– 2277 (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the toll-free Federal Relay Service at 1–(800) 877–8339. SUPPLEMENTARY INFORMATION: emcdonald on DSK5VPTVN1PROD with RULES2 SUMMARY: I. Statutory Background The Debt Collection Improvement Act of 1996 (DCIA), Public Law 104–134, 110 Stat. 1321, 1358 (approved April 26, 1996) (codified in scattered sections of 31 U.S.C. ch. 37), consolidated within the Department of the Treasury responsibility for the collection of most delinquent nontax debts owed to the Federal Government. The DCIA is implemented through the Treasury’s VerDate Mar<15>2010 18:30 Nov 04, 2011 Jkt 226001 regulations promulgated at 31 CFR part 285 and the revised Federal Claims Collection Standards (FCCS), issued jointly by the Secretary of the Treasury and the Attorney General, which are codified at 31 CFR parts 900 through 904. The DCIA and FCCS establish a framework for improved Federal Governmentwide debt collection by centralizing the management of debts that are over 180 days delinquent within the Department of the Treasury and by providing Federal agencies with more effective debt collection tools, including recovery through centralized administrative offsets and administrative wage garnishments. II. Regulatory Background On July 5, 2011, at 76 FR 39222, HUD published a proposed rule regarding the Treasury Offset Program (TOP), which is a centralized debt collection program that matches information about delinquent debts with information about payments being disbursed by Federal and state disbursing officials, including the Department of the Treasury, the Department of Defense, and U.S. Postal Service payment files. When a match between an eligible payment and an eligible debt occurs, the payment is offset and applied to the debt, up to the amount of the debt or up to the maximum amount allowed by law. As part of this streamlining effort, this rule eliminates provisions in HUD regulations that no longer conform to the DCIA and FCCS, or that simply repeat requirements under the DCIA and FCCS. For further information on specific changes that HUD proposed to make to its regulations governing the procedures for the collection of claims by HUD please see the preamble to HUD’s July 5, 2011, proposed rule (76 FR 39222). III. This Final Rule This final rule follows publication of the July 5, 2011, proposed rule. The comment period for the proposed rule closed on September 6, 2011. HUD did not receive any public comments on the proposed rule, and HUD is adopting as final the July 5, 2011, proposed rule without change. IV. Findings and Certifications Environmental Impact This rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate, real property acquisition, disposition, leasing, rehabilitation, alteration, demolition, or new construction; or establish, revise, or PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321). Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule revises HUD’s regulations at 24 CFR part 17, subpart C, which govern HUD’s procedures for the collection of claims owed to HUD or to another Federal agency. These revisions to HUD’s regulations are mandated by the DCIA, which directs Federal agencies to update their regulations, and are directed to all entities, small or large, in addition to individuals such as Federal employees. The revisions impose no significant economic impact on a substantial number of small entities. Therefore, the undersigned certifies that this rule will not have a significant impact on a substantial number of small entities. Federalism Executive Order 13132 (entitled ‘‘Federalism’’) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on state and local governments and is not required by statute, or the rule preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This rule does not have federalism implications and does not impose substantial direct compliance costs on state and local governments nor preempts state law within the meaning of the Executive Order. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531– 1538) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and the private sector. This rule will not impose any Federal mandates on any state, local, or tribal governments or the private sector within the meaning of UMRA. E:\FR\FM\07NOR2.SGM 07NOR2 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Rules and Regulations List of Subjects in 24 CFR Part 17 General Provisions Administrative practice and procedure, Claims, Government employees, Income taxes, Wages. Accordingly, for the reasons described in the preamble, this rule amends 24 CFR part 17 as follows. § 17.61 PART 17—ADMINISTRATIVE CLAIMS 1. The authority citation for part 17 continues to read as follows: ■ Authority: 5 U.S.C. 5514; 31 U.S.C. 3701, 3711, 3716–3720E; and 42 U.S.C. 3535(d). ■ 2. Revise subpart C to read as follows: Subpart C—Procedures for the Collection of Claims by the Government General Provisions 17.61 17.63 Purpose and scope. Definitions. Administrative Offset and Other Actions 17.65 Demand and notice of intent to collect. 17.67 Review of departmental records related to the debt. 17.69 Review within HUD of a determination that an amount is past due and legally enforceable. 17.71 Request for hearing. 17.73 Determination of the HUD Office of Appeals. 17.75 Postponements, withdrawals, and extensions of time. 17.77 Stay of referral for offset. 17.79 Administrative actions for nonpayment of debt. Administrative Wage Garnishment 17.81 Administrative wage garnishment. emcdonald on DSK5VPTVN1PROD with RULES2 Salary Offset 17.83 Scope and definitions. 17.85 Coordinating offset with another Federal agency. 17.87 Determination of indebtedness. 17.89 Notice requirements before offset. 17.91 Request for a hearing. 17.93 Result if employee fails to meet deadlines. 17.95 Written decision following a hearing. 17.97 Review of departmental records related to the debt. 17.99 Written agreement to repay debt as an alternative to salary offset. 17.101 Procedures for salary offset: when deductions may begin. 17.103 Procedures for salary offset: types of collection. 17.105 Procedures for salary offset: methods of collection. 17.107 Procedures for salary offset: imposition of interest. 17.109 Nonwaiver of rights. 17.111 Refunds. 17.113 Miscellaneous provisions: correspondence with the Department. VerDate Mar<15>2010 18:30 Nov 04, 2011 Jkt 226001 Purpose and scope. (a) In general. HUD will undertake debt collection pursuant to this subpart in accordance with the Debt Collection Improvement Act of 1996, codified in scattered sections of 31 U.S.C. chapter 37; the revised Federal Claims Collection Standards, codified at 31 CFR parts 900 through 904; the Treasury debt collection regulations set forth in 31 CFR part 285; and such additional provisions as provided in this subpart. (b) Applicability of other statutes and regulations. (1) Nothing in this subpart precludes the authority under statutes and regulations other than those described in this subpart to collect, settle, compromise, or close claims, including, but not limited to: (i) Debts incurred by contractors under contracts for supplies and services awarded by HUD under the authority of subpart 32.6 of the Federal Acquisition Regulation (FAR); (ii) Debts arising out of the business operations of the Government National Mortgage Association; and (iii) Debts arising under Title I or section 204(g) of Title II of the National Housing Act (12 U.S.C. 1701 et seq.). (2) This subpart is not applicable to tax debts or to any debt for which there is an indication of fraud or misrepresentation, unless the debt is returned by the Department of Justice to HUD for handling. (c) Scope. Sections 17.65 through 17.79, under the heading Administrative Offset and Other Actions, includes the procedures that apply when HUD seeks satisfaction of debts owed to HUD by administrative offset of payments by the Federal Government other than Federal salary payments, and when HUD takes other administrative actions for nonpayment of debt. Section 17.81, under the heading Administrative Wage Garnishment, includes the procedures that apply when HUD seeks to satisfy a debt owed to HUD out of the debtor’s compensation from an employer other than the Federal Government. Sections 17.83 through 17.113, under the heading Salary Offset, include procedures that apply when HUD or another Federal agency seeks to satisfy a debt owed to it through offset of the salary of a current Federal employee. § 17.63 Definitions. As used in this subpart: Department or HUD means the Department of Housing and Urban Development, and includes a person authorized to act for HUD. Office means the organization of each Assistant Secretary of HUD or other PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 69045 HUD official at the Assistant Secretary level, and each Field Office. Office of Appeals or OA means the HUD Office of Appeals within the HUD Office of Hearings and Appeals. Secretary means the Secretary of HUD. Treasury means the Department of the Treasury. United States includes an agency of the United States. Administrative Offset and Other Actions § 17.65 offset. Demand and notice of intent to HUD will make written demand upon the debtor pursuant to the requirements of 31 CFR 901.2 and send written notice of intent to offset to the debtor pursuant to the requirements of 31 CFR 901.3 and 31 CFR part 285, subpart A. The Secretary shall mail the demand and notice of intent to offset to the debtor, at the most current address that is available to the Secretary. HUD may refer the debt to the Treasury for collection and shall request that the amount of the debt be offset against any amount payable by the Treasury as a Federal payment, at any time after 60 days from the date such notice is sent to the debtor. § 17.67 Review of departmental records related to the debt. (a) Notification by the debtor. A debtor who intends to inspect or copy departmental records related to the debt pursuant to 31 CFR 901.3 must, within 20 calendar days after the date of the notice in § 17.65, send a letter to HUD, at the address indicated in the notice of intent to offset, stating his or her intention. A debtor may also request, within 20 calendar days from the date of such notice, that HUD provide the debtor with a copy of departmental records related to the debt. (b) HUD’s response. In response to a timely notification by the debtor as described in paragraph (a) of this section, HUD shall notify the debtor of the location and the time when the debtor may inspect or copy departmental records related to the debt. If the debtor requests that HUD provide a copy of departmental records related to the debt, HUD shall send the records to the debtor within 10 calendar days from the date that HUD receives the debtor’s request. HUD may charge the debtor a reasonable fee to compensate for the cost of providing a copy of the departmental records related to the debt. E:\FR\FM\07NOR2.SGM 07NOR2 69046 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Rules and Regulations emcdonald on DSK5VPTVN1PROD with RULES2 § 17.69 Review within HUD of a determination that an amount is past due and legally enforceable. material evidence that the debt is presently not legally enforceable. (a) Notification by the debtor. A debtor who receives notice of intent to offset pursuant to § 17.65 has the right to a review of the case and to present evidence that all or part of the debt is not past due or not legally enforceable. The debtor may send a copy of the notice with a letter notifying the Office of Appeals of his or her intention to present evidence. Failure to give this notice shall not jeopardize the debtor’s right to present evidence within the 60 calendar days provided for in paragraph (b) of this section. If the Office of Appeals has additional procedures governing the review process, a copy of the procedures shall be mailed to the debtor after the request for review is received and docketed by the Office of Appeals. (b) Submission of evidence. If the debtor wishes to submit evidence showing that all or part of the debt is not past due or not legally enforceable, the debtor must submit such evidence to the Office of Appeals within 60 calendar days after the date of the notice of intent to offset. Failure to submit evidence will result in a dismissal of the request for review by the OA. (c) Review of the record. After timely submission of evidence by the debtor, the OA will review the evidence submitted by the Department that shows that all or part of the debt is past due and legally enforceable. The decision of an administrative judge of the OA will be based on a preponderance of the evidence as to whether there is a debt that is past due and whether it is legally enforceable. The administrative judge of the OA shall make a determination based upon a review of the evidence that comprises the written record, except that the OA may order an oral hearing if the administrative judge of the OA finds that: (1) An applicable statute authorizes or requires the Department to consider a waiver of the indebtedness and the waiver determination turns on credibility or veracity; or (2) The question of indebtedness cannot be resolved by review of the documentary evidence. (d) Previous decision by an administrative judge of the Office of Appeals. The debtor is not entitled to a review of the Department’s intent to offset if an administrative judge of the OA has previously issued a decision on the merits that the debt is past due and legally enforceable, except when the debt has become legally unenforceable since the issuance of that decision, or the debtor can submit newly discovered § 17.71 VerDate Mar<15>2010 18:30 Nov 04, 2011 Jkt 226001 Request for hearing. The debtor shall file a request for a hearing with the OA at the address specified in the notice or at such other address as the OA may direct in writing to the debtor. § 17.73 Determination of the HUD Office of Appeals. (a) Determination. An administrative judge of the OA shall issue a written decision that includes the supporting rationale for the decision. The decision of the administrative judge of the OA concerning whether a debt or part of a debt is past due and legally enforceable is the final agency decision with respect to the past due status and enforceability of the debt. (b) Copies. Copies of the decision of the administrative judge of the OA shall be distributed to HUD’s General Counsel, HUD’s Chief Financial Officer (CFO), or other appropriate HUD program official, the debtor, and the debtor’s attorney or other representative, if any. (c) Notification to the Department of the Treasury. If the decision of the administrative judge of the OA affirms that all or part of the debt is past due and legally enforceable, HUD shall notify the Treasury after the date that the determination of the OA has been issued under paragraph (a) of this section and a copy of the determination has been received by HUD’s CFO or other appropriate HUD program official. No referral shall be made to the Treasury if the review of the debt by an administrative judge of the OA subsequently determines that the debt is not past due or not legally enforceable. § 17.75 Postponements, withdrawals, and extensions of time. (a) Postponements and withdrawals. HUD may, for good cause, postpone or withdraw referral of the debt to the Treasury. (b) Extensions of time. At the discretion of an administrative judge of the OA, time limitations required in these procedures may be extended in appropriate circumstances for good cause. § 17.77 Stay of referral for offset. If the debtor timely submits evidence in accordance with § 17.69(b), the referral to the Treasury in § 17.65 shall be stayed until the date of the issuance of a written decision by an administrative judge of the OA that determines that a debt or part of a debt is past due and legally enforceable. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 § 17.79 Administrative actions for nonpayment of debt. (a) Referrals for nonpayment of debt. When a contractor, grantee, or other participant in a program sponsored by HUD, fails to pay its debt to HUD within a reasonable time after demand, HUD shall take such measures to: (1) Refer such contractor, grantee, or other participant to the Office of General Counsel for investigation of the matter and possible suspension or debarment pursuant to 2 CFR part 2424, 2 CFR 180.800, and 48 CFR subpart 9.4 of the Federal Acquisition Regulation (FAR); and (2) In the case of matters involving fraud or suspected fraud, refer such contractor, grantee, or other participant to the Office of Inspector General for investigation. However, the failure to pay HUD within a reasonable time after demand is not a prerequisite for referral for fraud or suspected fraud. (b) Excluded Parties List System (EPLS). Depending upon the outcome of the referral in paragraph (a) of this section, HUD shall take such measures to insure that the contractor, grantee, or other participant is placed on the EPLS. (c) Report to the Treasury. The failure of any surety to honor its obligations in accordance with 31 U.S.C. 9304 shall be reported to the Chief Financial Officer, who shall inform the Treasury. Administrative Wage Garnishment § 17.81 Administrative wage garnishment. (a) In general. HUD may collect a debt by using administrative wage garnishment pursuant to 31 CFR 285.11. To the extent that situations arise that are not covered by 31 CFR 285.11, those situations shall be governed by 24 CFR part 26, subpart A. (b) Hearing official. Any hearing required to establish HUD’s right to collect a debt through administrative wage garnishment shall be conducted by an administrative judge of the OA under 24 CFR part 26, subpart A of part 26. Salary Offset § 17.83 Scope and definitions. (a) The provisions set forth in §§ 17.83 through 17.113 are the Department’s procedures for the collection of delinquent nontax debts by salary offset of a Federal employee’s pay to satisfy certain debts owed the government, including centralized salary offsets in accordance with 31 CFR part 285. (b)(1) This section and §§ 17.85 through 17.99 apply to collections by the Secretary through salary offset from current employees of the Department and other agencies who owe debts to the Department; and E:\FR\FM\07NOR2.SGM 07NOR2 emcdonald on DSK5VPTVN1PROD with RULES2 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Rules and Regulations (2) This section, § 17.85, and §§ 17.101 through 17.113 apply to HUD’s offset of pay to current employees of the Department and of other agencies who owe debts to HUD or other agencies under noncentralized salary offset procedures, in accordance with 5 CFR 550.1109. (c) These regulations do not apply to debts or claims arising under the Internal Revenue Code of 1954 (26 U.S.C. 1–9602), the Social Security Act (42 U.S.C. 301–1397f), 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. (d) These regulations identify the types of salary offset available to the Department, as well as certain rights provided to the employee, which include a written notice before deductions begin, the opportunity to petition for a hearing, receiving a written decision if a hearing is granted, and the opportunity to propose a repayment agreement in lieu of offset. These employee rights do not apply to any adjustment to pay arising out of an employee’s election of coverage or a change in coverage under a Federal benefits program requiring periodic deductions from pay, if the amount to be recovered was accumulated over four pay periods or less. (e) Nothing in these regulations precludes the compromise, suspension, or termination of collection actions where appropriate under the Department’s regulations contained elsewhere in this subpart (see 24 CFR 17.61 through 17.79). (f) As used in the salary offset provisions at §§ 17.83 through 17.113: Agency means: (i) An Executive department, military department, Government corporation, or independent establishment as defined in 5 U.S.C. 101, 102, 103, or 104, respectively; (ii) The United States Postal Service; or (iii) The Postal Regulatory Commission. Debt means an amount owed to the United States and past due, from sources which include loans insured or guaranteed by the United States and all other amounts due the United States from assigned mortgages or deeds of trust, direct loans, advances, repurchase demands, fees, leases, rents, royalties, services, sale of real or personal property, overpayments, penalties, damages, interest, fines and forfeitures (except those arising under the Uniform Code of Military Justice), and all other similar sources. VerDate Mar<15>2010 18:30 Nov 04, 2011 Jkt 226001 Determination means the point at which the Secretary or his designee decides that the debt is valid. 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 deductions required by law. Deductions from pay include: (i) Amounts owed by the individual to the United States; (ii) Amounts withheld for Federal employment taxes; (iii) Amounts properly withheld for Federal, state, or local income tax purposes, if the withholding of the amount is authorized or required by law and if amounts withheld are not greater than would be the case if the individual claimed all dependents to which he or she were entitled. The withholding of additional amounts under 26 U.S.C. 3402(i) may be permitted only when the individual presents evidence of tax obligation that supports the additional withholding; (iv) Amounts deducted as health insurance premiums, including, but not limited to, amounts deducted from civil service annuities for Medicare where such deductions are requested by the Health Care Financing Administration; (v) Amounts deducted as normal retirement contributions, not including amounts deducted for supplementary coverage. Amounts withheld as Survivor Benefit Plan or Retired Serviceman’s Family Protection Plan payments are considered to be normal retirement contributions. Amounts voluntarily contributed toward additional civil service annuity benefits are considered to be supplementary; (vi) Amounts deducted as normal life insurance premiums from salary or other remuneration for employment, not including amounts deducted for supplementary coverage. Both Servicemembers’ Group Life Insurance and ‘‘Basic Life’’ Federal Employees’ Group Life Insurance premiums are considered to be normal life insurance premiums; all optional Federal Employees’ Group Life Insurance premiums and life insurance premiums paid for by allotment, such as National Service Life Insurance, are considered to be supplementary; (vii) Amounts withheld from benefits payable under title II of the Social Security Act where the withholding is required by law; (viii) Amounts mandatorily withheld for the U.S. Soldiers’ and Airmen’s Home; and (ix) Fines and forfeitures ordered by a court-martial or by a commanding officer. PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 69047 Employee means a current employee of a Federal agency, including a current member of the Armed Forces or Reserve of the Armed Forces of the United States. Pay means basic pay, special pay, income pay, retired pay, retainer pay, or, in the case of an employee not entitled to basic pay, other authorized pay. Salary offset means a deduction from the pay of an employee without his or her consent to satisfy a debt. Salary offset is one type of administrative offset that may be used by the Department in the collection of claims. Waiver means the cancellation, remission, forgiveness, or nonrecovery of a debt allegedly owed by an employee of an agency as permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, or 5 U.S.C. 8346(b), or any other law. § 17.85 Coordinating offset with another Federal agency. (a) When HUD is owed the debt. When the Department is owed a debt by an employee of another agency, the other agency shall not initiate the requested offset until the Department provides the agency with a written certification that the debtor owes the Department a debt (including the amount and basis of the debt and the due date of the payment) and that the Department has complied with these regulations. (b) When another agency is owed the debt. The Department may use salary offset against one of its employees who is indebted to another agency if requested to do so by that agency. Such a request must be accompanied by a certification by the requesting agency that the person owes the debt (including the amount) and that the employee has been given the procedural rights required by 5 U.S.C. 5514 and 5 CFR part 550, subpart K. § 17.87 Determination of indebtedness. In determining that an employee is indebted to HUD, the Secretary will review the debt to make sure that it is valid and past due. § 17.89 Notice requirements before offset. Except as provided in § 17.83(d), deductions will not be made unless the Secretary first provides the employee with a minimum of 30 calendar days written notice. This Notice of Intent to Offset Salary (Notice of Intent) will state: (a) That the Secretary has reviewed the records relating to the claim and has determined that a debt is owed, the amount of the debt, and the facts giving rise to the debt; E:\FR\FM\07NOR2.SGM 07NOR2 emcdonald on DSK5VPTVN1PROD with RULES2 69048 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Rules and Regulations (b) The Secretary’s intention to collect the debt by means of deduction from the employee’s current disposable pay account until the debt and all accumulated interest are paid in full; (c) The amount, frequency, approximate beginning date, and duration of the intended deductions; (d) An explanation of the Department’s requirements concerning interest, penalties, and administrative costs, including a statement that such assessments must be made unless excused in accordance with the Federal Claims Collection Standards as provided in 31 CFR 901.9 (although this information may alternatively be provided in the demand notice pursuant to 24 CFR 17.65); (e) The employee’s right to inspect and copy Department 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; (f) The employee’s right to enter into a written agreement with the Secretary for a repayment schedule differing from that proposed by the Secretary, so long as the terms of the repayment schedule proposed by the employee are agreeable to the Secretary; (g) The right to a hearing, conducted in accordance with subpart A of part 26 of this chapter by an administrative law judge of the Department or a hearing official of another agency, on the Secretary’s determination of the debt, the amount of the debt, or percentage of disposable pay to be deducted each pay period, so long as a petition is filed by the employee as prescribed by the Secretary; (h) That the timely filing of a petition for hearing will stay the collection proceedings (See § 17.91); (i) That a final decision on the hearing will be issued at the earliest practical date, but not later than 60 calendar days after the filing of the petition requesting the hearing, unless the employee requests and the hearing officer grants a delay in the proceedings; (j) That any knowingly false or frivolous statements, representations, or evidence may subject the employee to: (1) Disciplinary procedures appropriate under 5 U.S.C. Ch. 75, 5 CFR part 752, or any other applicable statutes or regulations; (2) Penalties under the False Claims Act, 31 U.S.C. 3729–3731, or any other applicable statutory authority; or (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or any other applicable statutory authority. (k) Any other rights and remedies available to the employee under statutes VerDate Mar<15>2010 18:30 Nov 04, 2011 Jkt 226001 or regulations governing the program for which the collection is being made; (l) 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; and (m) The method and time period for requesting a hearing, including the address of the Office of Appeals to which the request must be sent. § 17.91 Request for a hearing. (a) Except as provided in paragraph (d) of this section, an employee must file a petition for a hearing that is received by the Office of Appeals not later than 20 calendar days from the date of the Department’s notice described in § 17.89 if an employee wants a hearing concerning— (1) The existence or amount of the debt; or (2) The Secretary’s proposed offset schedule. (b) The petition must be signed by the employee, must include a copy of HUD’s Notice of Intent to Offset Salary, and should admit or deny the existence of or the amount of the debt, or any part of the debt, briefly setting forth any basis for a denial. If the employee objects to the percentage of disposable pay to be deducted from each check, the petition should state the objection and the reasons for it. The petition should identify and explain with reasonable specificity and brevity the facts, evidence, and witnesses that the employee believes support his or her position. (c) Upon receipt of the petition, the Office of Appeals will send the employee a copy of the Salary Offset Hearing Procedures Manual of the Department of Housing and Urban Development. (d) If the employee files a petition for hearing later than the 20 calendar days as described in paragraph (a) of this section, the hearing officer may accept the request if the employee can show that the delay was because of circumstances beyond his or her control or because of failure to receive notice of the filing deadline (unless the employee has actual notice of the filing deadline). § 17.93 Result if employee fails to meet deadlines. An employee waives the right to a hearing, and will have his or her disposable pay offset in accordance with the Secretary’s offset schedule, if the employee: (a) Fails to file a petition for a hearing as prescribed in § 17.91; or PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 (b) Is scheduled to appear and fails to appear at the hearing. § 17.95 Written decision following a hearing. Written decisions provided after a request for a hearing will include: (a) A statement of the facts presented to support the nature and origin of the alleged debt; (b) The hearing officer’s analysis, findings, and conclusions, in light of the hearing, concerning the employee’s or the Department’s grounds; (c) The amount and validity of the alleged debt; and (d) The repayment schedule, if applicable. § 17.97 Review of departmental records related to the debt. (a) Notification by employee. An employee who intends to inspect or copy departmental records related to the debt must send a letter to the Secretary stating his or her intention. The letter must be received by the Secretary within 20 calendar days of the date of the Notice of Intent. (b) Secretary’s response. In response to timely notice submitted by the debtor as described in paragraph (a) of this section, the Secretary will notify the employee of the location and time when the employee may inspect and copy Department records related to the debt. § 17.99 Written agreement to repay debt as alternative to salary offset. (a) Notification by employee. The employee may propose, in response to a Notice of Intent, a written agreement to repay the debt as an alternative to salary offset. Any employee who wishes to do this must submit a proposed written agreement to repay the debt, which is received by the Secretary within 20 calendar days of the date of the Notice of Intent. (b) Secretary’s response. In response to timely notice by the debtor as described in paragraph (a) of this section, the Secretary will notify the employee whether the employee’s proposed written agreement for repayment is acceptable. It is within the Secretary’s discretion to accept a repayment agreement instead of proceeding by offset. In making this determination, the Secretary will balance the Department’s interest in collecting the debt against hardship to the employee. If the debt is delinquent and the employee has not disputed its existence or amount, the Secretary will accept a repayment agreement instead of offset only if the employee is able to establish that offset would result in undue financial hardship or would be against equity and good conscience. E:\FR\FM\07NOR2.SGM 07NOR2 Federal Register / Vol. 76, No. 215 / Monday, November 7, 2011 / Rules and Regulations § 17.101 Procedures for salary offset: when deductions may begin. (a) Deductions to liquidate an employee’s debt will be by the method and in the amount stated in the Secretary’s Notice of Intent to collect from the employee’s current pay. (b) If the employee filed a petition for hearing with the Secretary before the expiration of the period provided for in § 17.91, then deductions will begin after: (1) The hearing officer has provided the employee with a hearing; and (2) The hearing officer has issued a final written decision in favor of the Secretary. (c) If an employee retires or resigns before collection of the amount of the indebtedness is completed, the remaining indebtedness will be collected according to the procedures for the collection of claims under §§ 17.61 through 17.79. § 17.103 Procedures for salary offset: types of collection. A debt will be collected in a lump sum or in installments. Collection will be by lump-sum collection unless the debt is for other than travel advances and training expenses, and the employee is financially unable to pay in one lump sum, or the amount of the debt exceeds 15 percent of disposable pay. In these cases, deduction will be by installments. emcdonald on DSK5VPTVN1PROD with RULES2 (a) General. A debt will be collected by deductions at officially established pay intervals from an employee’s current pay account, unless the 18:30 Nov 04, 2011 Jkt 226001 § 17.107 Procedures for salary offset: imposition of interest. Interest will be charged in accordance with the Federal Claims Collection Standards as provided in 31 CFR 901.9. § 17.109 § 17.105 Procedures for salary offset: methods of collection. VerDate Mar<15>2010 employee and the Secretary agree to alternative arrangements for repayment. The alternative arrangement must be in writing, signed by both the employee and the Secretary. (b) Installment deductions. Installment deductions will be made over a period not greater than the anticipated period of employment. The size and frequency of installment deductions will bear a reasonable relation to the size of the debt and the employee’s ability to pay. However, the amount deducted for any period 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. If possible, the installment payment will be sufficient in size and frequency to liquidate the debt in 3 years. Installment payments of less than $25 per pay period or $50 a month will be accepted only in the most unusual circumstances. (c) Sources of deductions. The Department will make deductions only from 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. Nonwaiver of rights. So long as there are no statutory or contractual provisions to the contrary, no employee involuntary payment (of all or a portion of a debt) collected under these regulations will be PO 00000 Frm 00007 Fmt 4701 Sfmt 9990 69049 interpreted as a waiver of any rights that the employee may have under 5 U.S.C. 5514 or any other provision of contract or law. § 17.111 Refunds. The Department will refund promptly to the appropriate individual amounts offset under these regulations when: (a) A debt is waived or otherwise found not owing the United States (unless expressly prohibited by statute or regulation); or (b) The Department is directed by an administrative or judicial order to refund amounts deducted from the employee’s current pay. § 17.113 Miscellaneous provisions: correspondence with the Department. The employee shall file a request for a hearing with the Clerk, OA, 409 3rd Street SW., 2nd Floor, Washington, DC 20024, on official work days between the hours of 8:45 a.m. and 5:15 p.m. (or such other address as HUD may provide by notice from time to time). All other correspondence shall be submitted to the Departmental Claims Officer, Office of the Chief Financial Officer, Department of Housing and Urban Development, 451 Seventh Street SW., Washington, DC 20410 (or such other officer or address as HUD may provide by notice from time to time). Documents may be filed by personal delivery or mail. Dated: October 26, 2011. Shaun Donovan, Secretary. [FR Doc. 2011–28777 Filed 11–4–11; 8:45 am] BILLING CODE 4210–67–P E:\FR\FM\07NOR2.SGM 07NOR2

Agencies

[Federal Register Volume 76, Number 215 (Monday, November 7, 2011)]
[Rules and Regulations]
[Pages 69044-69049]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28777]



[[Page 69043]]

Vol. 76

Monday,

No. 215

November 7, 2011

Part VI





Department of Housing and Urban Development





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24 CFR Part 17





HUD Debt Collection: Revisions and Update to the Procedures for the 
Collection of Claims; Final Rule

Federal Register / Vol. 76 , No. 215 / Monday, November 7, 2011 / 
Rules and Regulations

[[Page 69044]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 17

[Docket No. FR-5166-F-02]
RIN 2501-AD36


HUD Debt Collection: Revisions and Update to the Procedures for 
the Collection of Claims

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: On July 5, 2011, HUD published a proposed rule to revise and 
update HUD's regulations governing the procedures for the collection of 
claims by HUD. The rule proposed to revise HUD's debt collection 
regulations to implement the Debt Collection Improvement Act of 1996 
and the revised Federal Claims Collection Standards. The DCIA and FCCS 
generally apply to the collection of nontax debt owed to the Federal 
Government and require referral of all eligible delinquent nontax debt 
to the Department of the Treasury for collection by centralized offset 
and to a designated debt collection center for debt servicing when a 
debt becomes 180 days delinquent. The rule also proposed to update and 
make technical corrections to HUD's salary offset provisions to conform 
to the changes made to HUD's debt collection regulations. HUD is 
adopting the proposed rule without change. HUD did not receive any 
public comments on the proposed rule.

DATES: Effective date: December 7, 2011.

FOR FURTHER INFORMATION CONTACT: Scott Moore, Financial Operations 
Analyst, Financial Policy and Procedures Division, Office of the Chief 
Financial Officer, Department of Housing and Urban Development, 451 7th 
Street SW., Room 3210, Washington, DC 20410; telephone number (202) 
402-2277 (this is not a toll-free number). Persons with hearing or 
speech impairments may access this number via TTY by calling the toll-
free Federal Relay Service at 1-(800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Statutory Background

    The Debt Collection Improvement Act of 1996 (DCIA), Public Law 104-
134, 110 Stat. 1321, 1358 (approved April 26, 1996) (codified in 
scattered sections of 31 U.S.C. ch. 37), consolidated within the 
Department of the Treasury responsibility for the collection of most 
delinquent nontax debts owed to the Federal Government. The DCIA is 
implemented through the Treasury's regulations promulgated at 31 CFR 
part 285 and the revised Federal Claims Collection Standards (FCCS), 
issued jointly by the Secretary of the Treasury and the Attorney 
General, which are codified at 31 CFR parts 900 through 904.
    The DCIA and FCCS establish a framework for improved Federal 
Governmentwide debt collection by centralizing the management of debts 
that are over 180 days delinquent within the Department of the Treasury 
and by providing Federal agencies with more effective debt collection 
tools, including recovery through centralized administrative offsets 
and administrative wage garnishments.

II. Regulatory Background

    On July 5, 2011, at 76 FR 39222, HUD published a proposed rule 
regarding the Treasury Offset Program (TOP), which is a centralized 
debt collection program that matches information about delinquent debts 
with information about payments being disbursed by Federal and state 
disbursing officials, including the Department of the Treasury, the 
Department of Defense, and U.S. Postal Service payment files. When a 
match between an eligible payment and an eligible debt occurs, the 
payment is offset and applied to the debt, up to the amount of the debt 
or up to the maximum amount allowed by law. As part of this 
streamlining effort, this rule eliminates provisions in HUD regulations 
that no longer conform to the DCIA and FCCS, or that simply repeat 
requirements under the DCIA and FCCS.
    For further information on specific changes that HUD proposed to 
make to its regulations governing the procedures for the collection of 
claims by HUD please see the preamble to HUD's July 5, 2011, proposed 
rule (76 FR 39222).

III. This Final Rule

    This final rule follows publication of the July 5, 2011, proposed 
rule. The comment period for the proposed rule closed on September 6, 
2011. HUD did not receive any public comments on the proposed rule, and 
HUD is adopting as final the July 5, 2011, proposed rule without 
change.

IV. Findings and Certifications

Environmental Impact

    This rule does not direct, provide for assistance or loan and 
mortgage insurance for, or otherwise govern or regulate, real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction; or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule 
is categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This rule revises HUD's regulations at 24 CFR part 17, subpart C, which 
govern HUD's procedures for the collection of claims owed to HUD or to 
another Federal agency. These revisions to HUD's regulations are 
mandated by the DCIA, which directs Federal agencies to update their 
regulations, and are directed to all entities, small or large, in 
addition to individuals such as Federal employees. The revisions impose 
no significant economic impact on a substantial number of small 
entities. Therefore, the undersigned certifies that this rule will not 
have a significant impact on a substantial number of small entities.

Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This rule does not have federalism 
implications and does not impose substantial direct compliance costs on 
state and local governments nor preempts state law within the meaning 
of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments and the private sector. This rule will not impose 
any Federal mandates on any state, local, or tribal governments or the 
private sector within the meaning of UMRA.

[[Page 69045]]

List of Subjects in 24 CFR Part 17

    Administrative practice and procedure, Claims, Government 
employees, Income taxes, Wages.
    Accordingly, for the reasons described in the preamble, this rule 
amends 24 CFR part 17 as follows.

PART 17--ADMINISTRATIVE CLAIMS

0
1. The authority citation for part 17 continues to read as follows:

    Authority:  5 U.S.C. 5514; 31 U.S.C. 3701, 3711, 3716-3720E; and 
42 U.S.C. 3535(d).


0
2. Revise subpart C to read as follows:

Subpart C--Procedures for the Collection of Claims by the 
Government

General Provisions

17.61 Purpose and scope.
17.63 Definitions.

Administrative Offset and Other Actions

17.65 Demand and notice of intent to collect.
17.67 Review of departmental records related to the debt.
17.69 Review within HUD of a determination that an amount is past 
due and legally enforceable.
17.71 Request for hearing.
17.73 Determination of the HUD Office of Appeals.
17.75 Postponements, withdrawals, and extensions of time.
17.77 Stay of referral for offset.
17.79 Administrative actions for nonpayment of debt.

Administrative Wage Garnishment

17.81 Administrative wage garnishment.

Salary Offset

17.83 Scope and definitions.
17.85 Coordinating offset with another Federal agency.
17.87 Determination of indebtedness.
17.89 Notice requirements before offset.
17.91 Request for a hearing.
17.93 Result if employee fails to meet deadlines.
17.95 Written decision following a hearing.
17.97 Review of departmental records related to the debt.
17.99 Written agreement to repay debt as an alternative to salary 
offset.
17.101 Procedures for salary offset: when deductions may begin.
17.103 Procedures for salary offset: types of collection.
17.105 Procedures for salary offset: methods of collection.
17.107 Procedures for salary offset: imposition of interest.
17.109 Nonwaiver of rights.
17.111 Refunds.
17.113 Miscellaneous provisions: correspondence with the Department.

General Provisions


Sec.  17.61  Purpose and scope.

    (a) In general. HUD will undertake debt collection pursuant to this 
subpart in accordance with the Debt Collection Improvement Act of 1996, 
codified in scattered sections of 31 U.S.C. chapter 37; the revised 
Federal Claims Collection Standards, codified at 31 CFR parts 900 
through 904; the Treasury debt collection regulations set forth in 31 
CFR part 285; and such additional provisions as provided in this 
subpart.
    (b) Applicability of other statutes and regulations. (1) Nothing in 
this subpart precludes the authority under statutes and regulations 
other than those described in this subpart to collect, settle, 
compromise, or close claims, including, but not limited to:
    (i) Debts incurred by contractors under contracts for supplies and 
services awarded by HUD under the authority of subpart 32.6 of the 
Federal Acquisition Regulation (FAR);
    (ii) Debts arising out of the business operations of the Government 
National Mortgage Association; and
    (iii) Debts arising under Title I or section 204(g) of Title II of 
the National Housing Act (12 U.S.C. 1701 et seq.).
    (2) This subpart is not applicable to tax debts or to any debt for 
which there is an indication of fraud or misrepresentation, unless the 
debt is returned by the Department of Justice to HUD for handling.
    (c) Scope. Sections 17.65 through 17.79, under the heading 
Administrative Offset and Other Actions, includes the procedures that 
apply when HUD seeks satisfaction of debts owed to HUD by 
administrative offset of payments by the Federal Government other than 
Federal salary payments, and when HUD takes other administrative 
actions for nonpayment of debt. Section 17.81, under the heading 
Administrative Wage Garnishment, includes the procedures that apply 
when HUD seeks to satisfy a debt owed to HUD out of the debtor's 
compensation from an employer other than the Federal Government. 
Sections 17.83 through 17.113, under the heading Salary Offset, include 
procedures that apply when HUD or another Federal agency seeks to 
satisfy a debt owed to it through offset of the salary of a current 
Federal employee.


Sec.  17.63  Definitions.

    As used in this subpart:
    Department or HUD means the Department of Housing and Urban 
Development, and includes a person authorized to act for HUD.
    Office means the organization of each Assistant Secretary of HUD or 
other HUD official at the Assistant Secretary level, and each Field 
Office.
    Office of Appeals or OA means the HUD Office of Appeals within the 
HUD Office of Hearings and Appeals.
    Secretary means the Secretary of HUD.
    Treasury means the Department of the Treasury.
    United States includes an agency of the United States.

Administrative Offset and Other Actions


Sec.  17.65  Demand and notice of intent to offset.

    HUD will make written demand upon the debtor pursuant to the 
requirements of 31 CFR 901.2 and send written notice of intent to 
offset to the debtor pursuant to the requirements of 31 CFR 901.3 and 
31 CFR part 285, subpart A. The Secretary shall mail the demand and 
notice of intent to offset to the debtor, at the most current address 
that is available to the Secretary. HUD may refer the debt to the 
Treasury for collection and shall request that the amount of the debt 
be offset against any amount payable by the Treasury as a Federal 
payment, at any time after 60 days from the date such notice is sent to 
the debtor.


Sec.  17.67  Review of departmental records related to the debt.

    (a) Notification by the debtor. A debtor who intends to inspect or 
copy departmental records related to the debt pursuant to 31 CFR 901.3 
must, within 20 calendar days after the date of the notice in Sec.  
17.65, send a letter to HUD, at the address indicated in the notice of 
intent to offset, stating his or her intention. A debtor may also 
request, within 20 calendar days from the date of such notice, that HUD 
provide the debtor with a copy of departmental records related to the 
debt.
    (b) HUD's response. In response to a timely notification by the 
debtor as described in paragraph (a) of this section, HUD shall notify 
the debtor of the location and the time when the debtor may inspect or 
copy departmental records related to the debt. If the debtor requests 
that HUD provide a copy of departmental records related to the debt, 
HUD shall send the records to the debtor within 10 calendar days from 
the date that HUD receives the debtor's request. HUD may charge the 
debtor a reasonable fee to compensate for the cost of providing a copy 
of the departmental records related to the debt.

[[Page 69046]]

Sec.  17.69  Review within HUD of a determination that an amount is 
past due and legally enforceable.

    (a) Notification by the debtor. A debtor who receives notice of 
intent to offset pursuant to Sec.  17.65 has the right to a review of 
the case and to present evidence that all or part of the debt is not 
past due or not legally enforceable. The debtor may send a copy of the 
notice with a letter notifying the Office of Appeals of his or her 
intention to present evidence. Failure to give this notice shall not 
jeopardize the debtor's right to present evidence within the 60 
calendar days provided for in paragraph (b) of this section. If the 
Office of Appeals has additional procedures governing the review 
process, a copy of the procedures shall be mailed to the debtor after 
the request for review is received and docketed by the Office of 
Appeals.
    (b) Submission of evidence. If the debtor wishes to submit evidence 
showing that all or part of the debt is not past due or not legally 
enforceable, the debtor must submit such evidence to the Office of 
Appeals within 60 calendar days after the date of the notice of intent 
to offset. Failure to submit evidence will result in a dismissal of the 
request for review by the OA.
    (c) Review of the record. After timely submission of evidence by 
the debtor, the OA will review the evidence submitted by the Department 
that shows that all or part of the debt is past due and legally 
enforceable. The decision of an administrative judge of the OA will be 
based on a preponderance of the evidence as to whether there is a debt 
that is past due and whether it is legally enforceable. The 
administrative judge of the OA shall make a determination based upon a 
review of the evidence that comprises the written record, except that 
the OA may order an oral hearing if the administrative judge of the OA 
finds that:
    (1) An applicable statute authorizes or requires the Department to 
consider a waiver of the indebtedness and the waiver determination 
turns on credibility or veracity; or
    (2) The question of indebtedness cannot be resolved by review of 
the documentary evidence.
    (d) Previous decision by an administrative judge of the Office of 
Appeals. The debtor is not entitled to a review of the Department's 
intent to offset if an administrative judge of the OA has previously 
issued a decision on the merits that the debt is past due and legally 
enforceable, except when the debt has become legally unenforceable 
since the issuance of that decision, or the debtor can submit newly 
discovered material evidence that the debt is presently not legally 
enforceable.


Sec.  17.71  Request for hearing.

    The debtor shall file a request for a hearing with the OA at the 
address specified in the notice or at such other address as the OA may 
direct in writing to the debtor.


Sec.  17.73  Determination of the HUD Office of Appeals.

    (a) Determination. An administrative judge of the OA shall issue a 
written decision that includes the supporting rationale for the 
decision. The decision of the administrative judge of the OA concerning 
whether a debt or part of a debt is past due and legally enforceable is 
the final agency decision with respect to the past due status and 
enforceability of the debt.
    (b) Copies. Copies of the decision of the administrative judge of 
the OA shall be distributed to HUD's General Counsel, HUD's Chief 
Financial Officer (CFO), or other appropriate HUD program official, the 
debtor, and the debtor's attorney or other representative, if any.
    (c) Notification to the Department of the Treasury. If the decision 
of the administrative judge of the OA affirms that all or part of the 
debt is past due and legally enforceable, HUD shall notify the Treasury 
after the date that the determination of the OA has been issued under 
paragraph (a) of this section and a copy of the determination has been 
received by HUD's CFO or other appropriate HUD program official. No 
referral shall be made to the Treasury if the review of the debt by an 
administrative judge of the OA subsequently determines that the debt is 
not past due or not legally enforceable.


Sec.  17.75  Postponements, withdrawals, and extensions of time.

    (a) Postponements and withdrawals. HUD may, for good cause, 
postpone or withdraw referral of the debt to the Treasury.
    (b) Extensions of time. At the discretion of an administrative 
judge of the OA, time limitations required in these procedures may be 
extended in appropriate circumstances for good cause.


Sec.  17.77  Stay of referral for offset.

    If the debtor timely submits evidence in accordance with Sec.  
17.69(b), the referral to the Treasury in Sec.  17.65 shall be stayed 
until the date of the issuance of a written decision by an 
administrative judge of the OA that determines that a debt or part of a 
debt is past due and legally enforceable.


Sec.  17.79  Administrative actions for nonpayment of debt.

    (a) Referrals for nonpayment of debt. When a contractor, grantee, 
or other participant in a program sponsored by HUD, fails to pay its 
debt to HUD within a reasonable time after demand, HUD shall take such 
measures to:
    (1) Refer such contractor, grantee, or other participant to the 
Office of General Counsel for investigation of the matter and possible 
suspension or debarment pursuant to 2 CFR part 2424, 2 CFR 180.800, and 
48 CFR subpart 9.4 of the Federal Acquisition Regulation (FAR); and
    (2) In the case of matters involving fraud or suspected fraud, 
refer such contractor, grantee, or other participant to the Office of 
Inspector General for investigation. However, the failure to pay HUD 
within a reasonable time after demand is not a prerequisite for 
referral for fraud or suspected fraud.
    (b) Excluded Parties List System (EPLS). Depending upon the outcome 
of the referral in paragraph (a) of this section, HUD shall take such 
measures to insure that the contractor, grantee, or other participant 
is placed on the EPLS.
    (c) Report to the Treasury. The failure of any surety to honor its 
obligations in accordance with 31 U.S.C. 9304 shall be reported to the 
Chief Financial Officer, who shall inform the Treasury.

Administrative Wage Garnishment


Sec.  17.81  Administrative wage garnishment.

    (a) In general. HUD may collect a debt by using administrative wage 
garnishment pursuant to 31 CFR 285.11. To the extent that situations 
arise that are not covered by 31 CFR 285.11, those situations shall be 
governed by 24 CFR part 26, subpart A.
    (b) Hearing official. Any hearing required to establish HUD's right 
to collect a debt through administrative wage garnishment shall be 
conducted by an administrative judge of the OA under 24 CFR part 26, 
subpart A of part 26.

Salary Offset


Sec.  17.83  Scope and definitions.

    (a) The provisions set forth in Sec. Sec.  17.83 through 17.113 are 
the Department's procedures for the collection of delinquent nontax 
debts by salary offset of a Federal employee's pay to satisfy certain 
debts owed the government, including centralized salary offsets in 
accordance with 31 CFR part 285.
    (b)(1) This section and Sec. Sec.  17.85 through 17.99 apply to 
collections by the Secretary through salary offset from current 
employees of the Department and other agencies who owe debts to the 
Department; and

[[Page 69047]]

    (2) This section, Sec.  17.85, and Sec. Sec.  17.101 through 17.113 
apply to HUD's offset of pay to current employees of the Department and 
of other agencies who owe debts to HUD or other agencies under 
noncentralized salary offset procedures, in accordance with 5 CFR 
550.1109.
    (c) These regulations do not apply to debts or claims arising under 
the Internal Revenue Code of 1954 (26 U.S.C. 1-9602), the Social 
Security Act (42 U.S.C. 301-1397f), 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.
    (d) These regulations identify the types of salary offset available 
to the Department, as well as certain rights provided to the employee, 
which include a written notice before deductions begin, the opportunity 
to petition for a hearing, receiving a written decision if a hearing is 
granted, and the opportunity to propose a repayment agreement in lieu 
of offset. These employee rights do not apply to any adjustment to pay 
arising out of an employee's election of coverage or a change in 
coverage under a Federal benefits program requiring periodic deductions 
from pay, if the amount to be recovered was accumulated over four pay 
periods or less.
    (e) Nothing in these regulations precludes the compromise, 
suspension, or termination of collection actions where appropriate 
under the Department's regulations contained elsewhere in this subpart 
(see 24 CFR 17.61 through 17.79).
    (f) As used in the salary offset provisions at Sec. Sec.  17.83 
through 17.113:
    Agency means:
    (i) An Executive department, military department, Government 
corporation, or independent establishment as defined in 5 U.S.C. 101, 
102, 103, or 104, respectively;
    (ii) The United States Postal Service; or
    (iii) The Postal Regulatory Commission.
    Debt means an amount owed to the United States and past due, from 
sources which include loans insured or guaranteed by the United States 
and all other amounts due the United States from assigned mortgages or 
deeds of trust, direct loans, advances, repurchase demands, fees, 
leases, rents, royalties, services, sale of real or personal property, 
overpayments, penalties, damages, interest, fines and forfeitures 
(except those arising under the Uniform Code of Military Justice), and 
all other similar sources.
    Determination means the point at which the Secretary or his 
designee decides that the debt is valid.
    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 
deductions required by law. Deductions from pay include:
    (i) Amounts owed by the individual to the United States;
    (ii) Amounts withheld for Federal employment taxes;
    (iii) Amounts properly withheld for Federal, state, or local income 
tax purposes, if the withholding of the amount is authorized or 
required by law and if amounts withheld are not greater than would be 
the case if the individual claimed all dependents to which he or she 
were entitled. The withholding of additional amounts under 26 U.S.C. 
3402(i) may be permitted only when the individual presents evidence of 
tax obligation that supports the additional withholding;
    (iv) Amounts deducted as health insurance premiums, including, but 
not limited to, amounts deducted from civil service annuities for 
Medicare where such deductions are requested by the Health Care 
Financing Administration;
    (v) Amounts deducted as normal retirement contributions, not 
including amounts deducted for supplementary coverage. Amounts withheld 
as Survivor Benefit Plan or Retired Serviceman's Family Protection Plan 
payments are considered to be normal retirement contributions. Amounts 
voluntarily contributed toward additional civil service annuity 
benefits are considered to be supplementary;
    (vi) Amounts deducted as normal life insurance premiums from salary 
or other remuneration for employment, not including amounts deducted 
for supplementary coverage. Both Servicemembers' Group Life Insurance 
and ``Basic Life'' Federal Employees' Group Life Insurance premiums are 
considered to be normal life insurance premiums; all optional Federal 
Employees' Group Life Insurance premiums and life insurance premiums 
paid for by allotment, such as National Service Life Insurance, are 
considered to be supplementary;
    (vii) Amounts withheld from benefits payable under title II of the 
Social Security Act where the withholding is required by law;
    (viii) Amounts mandatorily withheld for the U.S. Soldiers' and 
Airmen's Home; and
    (ix) Fines and forfeitures ordered by a court-martial or by a 
commanding officer.
    Employee means a current employee of a Federal agency, including a 
current member of the Armed Forces or Reserve of the Armed Forces of 
the United States.
    Pay means basic pay, special pay, income pay, retired pay, retainer 
pay, or, in the case of an employee not entitled to basic pay, other 
authorized pay.
    Salary offset means a deduction from the pay of an employee without 
his or her consent to satisfy a debt. Salary offset is one type of 
administrative offset that may be used by the Department in the 
collection of claims.
    Waiver means the cancellation, remission, forgiveness, or 
nonrecovery of a debt allegedly owed by an employee of an agency as 
permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, 
or 5 U.S.C. 8346(b), or any other law.


Sec.  17.85  Coordinating offset with another Federal agency.

    (a) When HUD is owed the debt. When the Department is owed a debt 
by an employee of another agency, the other agency shall not initiate 
the requested offset until the Department provides the agency with a 
written certification that the debtor owes the Department a debt 
(including the amount and basis of the debt and the due date of the 
payment) and that the Department has complied with these regulations.
    (b) When another agency is owed the debt. The Department may use 
salary offset against one of its employees who is indebted to another 
agency if requested to do so by that agency. Such a request must be 
accompanied by a certification by the requesting agency that the person 
owes the debt (including the amount) and that the employee has been 
given the procedural rights required by 5 U.S.C. 5514 and 5 CFR part 
550, subpart K.


Sec.  17.87  Determination of indebtedness.

    In determining that an employee is indebted to HUD, the Secretary 
will review the debt to make sure that it is valid and past due.


Sec.  17.89  Notice requirements before offset.

    Except as provided in Sec.  17.83(d), deductions will not be made 
unless the Secretary first provides the employee with a minimum of 30 
calendar days written notice. This Notice of Intent to Offset Salary 
(Notice of Intent) will state:
    (a) That the Secretary has reviewed the records relating to the 
claim and has determined that a debt is owed, the amount of the debt, 
and the facts giving rise to the debt;

[[Page 69048]]

    (b) The Secretary's intention to collect the debt by means of 
deduction from the employee's current disposable pay account until the 
debt and all accumulated interest are paid in full;
    (c) The amount, frequency, approximate beginning date, and duration 
of the intended deductions;
    (d) An explanation of the Department's requirements concerning 
interest, penalties, and administrative costs, including a statement 
that such assessments must be made unless excused in accordance with 
the Federal Claims Collection Standards as provided in 31 CFR 901.9 
(although this information may alternatively be provided in the demand 
notice pursuant to 24 CFR 17.65);
    (e) The employee's right to inspect and copy Department 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;
    (f) The employee's right to enter into a written agreement with the 
Secretary for a repayment schedule differing from that proposed by the 
Secretary, so long as the terms of the repayment schedule proposed by 
the employee are agreeable to the Secretary;
    (g) The right to a hearing, conducted in accordance with subpart A 
of part 26 of this chapter by an administrative law judge of the 
Department or a hearing official of another agency, on the Secretary's 
determination of the debt, the amount of the debt, or percentage of 
disposable pay to be deducted each pay period, so long as a petition is 
filed by the employee as prescribed by the Secretary;
    (h) That the timely filing of a petition for hearing will stay the 
collection proceedings (See Sec.  17.91);
    (i) That a final decision on the hearing will be issued at the 
earliest practical date, but not later than 60 calendar days after the 
filing of the petition requesting the hearing, unless the employee 
requests and the hearing officer grants a delay in the proceedings;
    (j) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. Ch. 75, 5 
CFR part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority; or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
any other applicable statutory authority.
    (k) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (l) 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; and
    (m) The method and time period for requesting a hearing, including 
the address of the Office of Appeals to which the request must be sent.


Sec.  17.91  Request for a hearing.

    (a) Except as provided in paragraph (d) of this section, an 
employee must file a petition for a hearing that is received by the 
Office of Appeals not later than 20 calendar days from the date of the 
Department's notice described in Sec.  17.89 if an employee wants a 
hearing concerning--
    (1) The existence or amount of the debt; or
    (2) The Secretary's proposed offset schedule.
    (b) The petition must be signed by the employee, must include a 
copy of HUD's Notice of Intent to Offset Salary, and should admit or 
deny the existence of or the amount of the debt, or any part of the 
debt, briefly setting forth any basis for a denial. If the employee 
objects to the percentage of disposable pay to be deducted from each 
check, the petition should state the objection and the reasons for it. 
The petition should identify and explain with reasonable specificity 
and brevity the facts, evidence, and witnesses that the employee 
believes support his or her position.
    (c) Upon receipt of the petition, the Office of Appeals will send 
the employee a copy of the Salary Offset Hearing Procedures Manual of 
the Department of Housing and Urban Development.
    (d) If the employee files a petition for hearing later than the 20 
calendar days as described in paragraph (a) of this section, the 
hearing officer may accept the request if the employee can show that 
the delay was because of circumstances beyond his or her control or 
because of failure to receive notice of the filing deadline (unless the 
employee has actual notice of the filing deadline).


Sec.  17.93  Result if employee fails to meet deadlines.

    An employee waives the right to a hearing, and will have his or her 
disposable pay offset in accordance with the Secretary's offset 
schedule, if the employee:
    (a) Fails to file a petition for a hearing as prescribed in Sec.  
17.91; or
    (b) Is scheduled to appear and fails to appear at the hearing.


Sec.  17.95  Written decision following a hearing.

    Written decisions provided after a request for a hearing will 
include:
    (a) A statement of the facts presented to support the nature and 
origin of the alleged debt;
    (b) The hearing officer's analysis, findings, and conclusions, in 
light of the hearing, concerning the employee's or the Department's 
grounds;
    (c) The amount and validity of the alleged debt; and
    (d) The repayment schedule, if applicable.


Sec.  17.97  Review of departmental records related to the debt.

    (a) Notification by employee. An employee who intends to inspect or 
copy departmental records related to the debt must send a letter to the 
Secretary stating his or her intention. The letter must be received by 
the Secretary within 20 calendar days of the date of the Notice of 
Intent.
    (b) Secretary's response. In response to timely notice submitted by 
the debtor as described in paragraph (a) of this section, the Secretary 
will notify the employee of the location and time when the employee may 
inspect and copy Department records related to the debt.


Sec.  17.99  Written agreement to repay debt as alternative to salary 
offset.

    (a) Notification by employee. The employee may propose, in response 
to a Notice of Intent, a written agreement to repay the debt as an 
alternative to salary offset. Any employee who wishes to do this must 
submit a proposed written agreement to repay the debt, which is 
received by the Secretary within 20 calendar days of the date of the 
Notice of Intent.
    (b) Secretary's response. In response to timely notice by the 
debtor as described in paragraph (a) of this section, the Secretary 
will notify the employee whether the employee's proposed written 
agreement for repayment is acceptable. It is within the Secretary's 
discretion to accept a repayment agreement instead of proceeding by 
offset. In making this determination, the Secretary will balance the 
Department's interest in collecting the debt against hardship to the 
employee. If the debt is delinquent and the employee has not disputed 
its existence or amount, the Secretary will accept a repayment 
agreement instead of offset only if the employee is able to establish 
that offset would result in undue financial hardship or would be 
against equity and good conscience.

[[Page 69049]]

Sec.  17.101  Procedures for salary offset: when deductions may begin.

    (a) Deductions to liquidate an employee's debt will be by the 
method and in the amount stated in the Secretary's Notice of Intent to 
collect from the employee's current pay.
    (b) If the employee filed a petition for hearing with the Secretary 
before the expiration of the period provided for in Sec.  17.91, then 
deductions will begin after:
    (1) The hearing officer has provided the employee with a hearing; 
and
    (2) The hearing officer has issued a final written decision in 
favor of the Secretary.
    (c) If an employee retires or resigns before collection of the 
amount of the indebtedness is completed, the remaining indebtedness 
will be collected according to the procedures for the collection of 
claims under Sec. Sec.  17.61 through 17.79.


Sec.  17.103  Procedures for salary offset: types of collection.

    A debt will be collected in a lump sum or in installments. 
Collection will be by lump-sum collection unless the debt is for other 
than travel advances and training expenses, and the employee is 
financially unable to pay in one lump sum, or the amount of the debt 
exceeds 15 percent of disposable pay. In these cases, deduction will be 
by installments.


Sec.  17.105  Procedures for salary offset: methods of collection.

    (a) General. A debt will be collected by deductions at officially 
established pay intervals from an employee's current pay account, 
unless the employee and the Secretary agree to alternative arrangements 
for repayment. The alternative arrangement must be in writing, signed 
by both the employee and the Secretary.
    (b) Installment deductions. Installment deductions will be made 
over a period not greater than the anticipated period of employment. 
The size and frequency of installment deductions will bear a reasonable 
relation to the size of the debt and the employee's ability to pay. 
However, the amount deducted for any period 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. If 
possible, the installment payment will be sufficient in size and 
frequency to liquidate the debt in 3 years. Installment payments of 
less than $25 per pay period or $50 a month will be accepted only in 
the most unusual circumstances.
    (c) Sources of deductions. The Department will make deductions only 
from 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.


Sec.  17.107  Procedures for salary offset: imposition of interest.

    Interest will be charged in accordance with the Federal Claims 
Collection Standards as provided in 31 CFR 901.9.


Sec.  17.109  Nonwaiver of rights.

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


Sec.  17.111  Refunds.

    The Department will refund promptly to the appropriate individual 
amounts offset under these regulations when:
    (a) A debt is waived or otherwise found not owing the United States 
(unless expressly prohibited by statute or regulation); or
    (b) The Department is directed by an administrative or judicial 
order to refund amounts deducted from the employee's current pay.


Sec.  17.113  Miscellaneous provisions: correspondence with the 
Department.

    The employee shall file a request for a hearing with the Clerk, OA, 
409 3rd Street SW., 2nd Floor, Washington, DC 20024, on official work 
days between the hours of 8:45 a.m. and 5:15 p.m. (or such other 
address as HUD may provide by notice from time to time). All other 
correspondence shall be submitted to the Departmental Claims Officer, 
Office of the Chief Financial Officer, Department of Housing and Urban 
Development, 451 Seventh Street SW., Washington, DC 20410 (or such 
other officer or address as HUD may provide by notice from time to 
time). Documents may be filed by personal delivery or mail.

    Dated: October 26, 2011.
Shaun Donovan,
 Secretary.
[FR Doc. 2011-28777 Filed 11-4-11; 8:45 am]
BILLING CODE 4210-67-P