Permissibility of Administrative Law Judges Presiding Over Salary Pre-Offset Hearings, 40332-40335 [2021-15897]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 86, Number 142 (Wednesday, July 28, 2021)]
[Rules and Regulations]
[Pages 40332-40335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15897]


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DEPARTMENT OF EDUCATION

34 CFR Parts 31 and 32

[Docket ID ED-2021-OFO-0083]
RIN 1880-AA90


Permissibility of Administrative Law Judges Presiding Over Salary 
Pre-Offset Hearings

AGENCY: Office of Finance and Operations (OFO), Department of 
Education.

ACTION: Final regulations.

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SUMMARY: The Department of Education (Department) amends its 
regulations regarding salary pre-offset hearings to expressly permit 
administrative law judges (ALJs) to act as the presiding officers.

DATES: These final regulations are effective July 28, 2021.

FOR FURTHER INFORMATION CONTACT: Anthony Cummings, 550 12th Street SW, 
Room 10089, Potomac Center Plaza, Washington, DC 20202. Telephone:

[[Page 40333]]

(202) 245-7185. Email: [email protected].
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION: As explained more fully below, the 
Department is revising its regulations in 34 CFR parts 31 and 32 to 
permit ALJs to preside over salary pre-offset hearings.
    Statute: Under 20 U.S.C. 1221e-3, the Secretary is vested with 
broad authority to make, promulgate, issue, rescind, and amend rules 
and regulations governing the manner and operation of, and governing 
the applicable programs administered by, the Department. This provision 
is mirrored in 20 U.S.C. 3474, providing the Secretary authority to 
prescribe such rules and regulations as the Secretary determines 
necessary or appropriate to administer and manage the functions of the 
Secretary or the Department. In particular, under 20 U.S.C. 1234(f)(1), 
the Secretary shall prescribe by regulation the rules for conducting 
proceedings within its Office of Administrative Law Judges (OALJ). Such 
rules must conform to the Administrative Procedure Act (APA) at 5 
U.S.C. 554, 556, and 557.
    Under 5 U.S.C. 5514(a)(1), the Secretary may collect debts owed to 
the United States by employees of the Federal Government. Such debts 
are commonly recoupment of overpayments made by the Department to an 
employee due to a miscalculation of the employee's level of pay or a 
failure of the Department to correctly calculate a deduction to the 
employee's pay. To collect these debts, the Secretary generally imposes 
deductions to the employee's pay in regular installments. This process 
of debt collection is referred to as administrative offset. 31 U.S.C. 
3716.
    Prior to implementing an administrative offset, an employee is 
entitled to, among other things, a minimum of 30 days' written notice, 
informing the employee of the nature and amount of the indebtedness and 
the agency's intention to initiate an administrative offset. 5 U.S.C. 
5514(a)(2)(A). After receipt of the notice, the employee is entitled to 
request a hearing on the agency's determination concerning the 
existence or the amount of the debt or to challenge the terms of any 
nonvoluntary repayment schedule the agency intends to implement. 5 
U.S.C. 5514(a)(2)(D).
    A hearing conducted under the authority of 5 U.S.C. 5514(a)(2)(D) 
may not be conducted by an individual under the supervision or control 
of the head of the agency, except that nothing in this sentence shall 
be construed to prohibit the appointment of an ALJ. 5 U.S.C. 
5514(a)(2).
    The Secretary is required to establish regulations to carry out the 
statutory provisions for administrative offsets described above. 5 
U.S.C. 5514(b)(1); 31 U.S.C. 3716(b)(2).
    Current Regulations: Under 34 CFR 31.7(a), a hearing conducted for 
a salary offset for a current or former Federal employee indebted to 
the United States under a program administered by the Secretary is 
conducted by a hearing official who is neither an employee of the 
Department nor otherwise under the supervision or control of the 
Secretary.
    Under 34 CFR 32.5(d), a salary pre-offset hearing held to recover 
overpayments of pay or allowances paid to a current or former 
Department employee is conducted by a hearing official who is not an 
employee of the Department or under the supervision or control of the 
Secretary.
    New Regulations: Revised Sec. Sec.  31.7(a) and 32.5(d) expressly 
provide that ALJs are not prohibited from presiding over hearings for 
the collection of debts owed to the United States by current or former 
employees of the Federal Government.
    Reasons: The Department employs ALJs within OALJ. Congress 
established OALJ to consider cases before the Department involving 
hearings for recovery of funds, withholding hearings, cease-and-desist 
hearings, and other proceedings designated by the Secretary. 20 U.S.C. 
1234(a); 34 CFR 81.3. The Secretary appoints ALJs to OALJ in accordance 
with 5 U.S.C. 3105 and 20 U.S.C. 1234(b).
    The statutory authority for salary pre-offset hearings prohibits 
individuals under the supervision or control of an agency head from 
presiding but specifically excepts ALJs from that prohibition. 5 U.S.C. 
5514(a)(2). However, a review of the Department's regulations revealed 
a disconnect between the regulations and the statute. Sections 31.7(a) 
and 32.5(d) mirror the statutory prohibition on individuals under the 
supervision or control of the Secretary presiding over hearings, but 
they do not include the statute's exception, allowing ALJs to preside 
over such hearings.
    The omission in Sec. Sec.  31.7(a) and 32.5(d) of the exception for 
ALJs was likely due to a drafting oversight. This amendment of the 
regulations harmonizes the regulations with the express statutory 
exception that ALJs are not prohibited from presiding over pre-offset 
hearings involving collection of indebtedness to the United States from 
Federal employees.
    As contemplated in the statutory exception, the Department's ALJs 
are well-suited for the task of presiding over such hearings because 
they act with impartiality and independence. ALJs are subject to less 
supervision and control by the Secretary than ordinary Department 
employees. For example, pursuant to 5 CFR 930.206, ALJs may not be 
rated on their job performance and may not receive a monetary or 
honorary award or incentive. Similarly, pursuant to 5 U.S.C. 7521, ALJs 
may not be removed from their positions or have other specified actions 
taken against them except by the independent action of the Merit 
Systems Protection Board.
    Therefore, the Department is revising its regulations to correct 
the drafting oversight and expressly permit ALJs to preside over salary 
pre-offset hearings.

Waiver of Proposed Rulemaking and Delayed Effective Date

    Under the APA (5 U.S.C. 553), the Department generally offers 
interested parties the opportunity to comment on proposed regulations. 
These regulations only govern the procedures for conducting 
administrative offset hearings to which the parties are the Department 
and current or former employees. As such, these regulations make 
procedural changes only and do not establish substantive policy. The 
regulations are, therefore, rules of agency practice and procedure and 
exempt from notice and comment rulemaking under 5 U.S.C. 553(b)(A). 
Moreover, the APA provides that an agency is not required to conduct 
notice and comment rulemaking when the agency for good cause finds that 
notice and public comment thereon are impracticable, unnecessary, or 
contrary to the public interest. 5 U.S.C. 553(b)(B). Rulemaking is 
``unnecessary'' when ``the administrative rule is a routine 
determination, insignificant in nature and impact, and inconsequential 
to the industry and to the public.'' Utility Solid Waste Activities 
Group v. EPA, 236 F.3d 749, 755 (D.C. Cir. 2001), quoting U.S. 
Department of Justice, Attorney General's Manual on the Administrative 
Procedure Act 31 (1947) and South Carolina v. Block, 558 F. Supp. 1004, 
1016 (D.S.C. 1983). Because we are amending these procedural 
regulations to align them more closely with the applicable statutory 
provision, under 5 U.S.C. 553(b)(B), the Secretary has determined that 
proposed regulations are unnecessary.
    The APA generally requires that regulations be published at least 
30 days before their effective date, unless the

[[Page 40334]]

agency has good cause to implement its regulations sooner (5 U.S.C. 
553(d)(3)). As previously stated, because the final regulations merely 
reflect an applicable statutory provision and address agency procedure, 
there is good cause to waive the delayed effective date in the APA and 
make the final regulations effective upon publication.

Executive Orders 12866 and 13563

Regulatory Impact Analysis

    Under Executive Order 12866, the Office of Management and Budget 
(OMB) must determine whether this regulatory action is ``significant'' 
and, therefore, subject to the requirements of the Executive order and 
subject to review by OMB. Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action likely to result in a 
rule that may--
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
Tribal governments or communities in a material way (also referred to 
as an ``economically significant'' rule);
    (2) Create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impacts of entitlement grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles stated in the 
Executive order.
    This final regulatory action is not a significant regulatory action 
subject to review by OMB under section 3(f)(1) of Executive Order 
12866.
    We have also reviewed these regulations under Executive Order 
13563, which supplements and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, Executive Order 
13563 requires that an agency --
    (1) Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    In choosing among alternative regulatory approaches, we selected 
those approaches that maximize net benefits. Based on the analysis that 
follows, the Department believes that these final regulations are 
consistent with the principles in Executive Order 13563. We also have 
determined that this regulatory action does not unduly interfere with 
State, local, and Tribal governments in the exercise of their 
governmental functions.
    In accordance with both Executive orders, the Department has 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action. The potential costs associated 
with this regulatory action are those resulting from statutory 
requirements and those we have determined as necessary for 
administering the Department's programs and activities. Because this 
regulatory action does not implicate any new process or other financial 
commitment or burden, this regulatory action will not create any new 
costs.

Regulatory Flexibility Act Certification

    Because notice-and-comment rulemaking is not necessary for this 
procedural rule, the Regulatory Flexibility Act (96 Pub. L. 354, 5 
U.S.C. 601-612) does not apply.

Paperwork Reduction Act of 1995

    The final regulations do not create any new information collection 
requirements.
    Accessible Format: On request to the program contact person listed 
under FOR FURTHER INFORMATION CONTACT, individuals with disabilities 
can obtain this document and a copy of the application package in an 
accessible format. The Department will provide the requestor with an 
accessible format that may include Rich Text Format (RTF) or text 
format (txt), a thumb drive, an MP3 file, braille, large print, 
audiotape, or compact disc, or other accessible format.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov. At this site you can view this 
document, as well as all other documents of this Department published 
in the Federal Register, in text or Portable Document Format (PDF). To 
use PDF, you must have Adobe Acrobat Reader, which is available free at 
the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

List of Subjects

34 CFR Part 31

    Claims, Government employees, Grant programs--education, Loan 
programs--education, Student aid, Wages.

34 CFR Part 32

    Claims, Government employees, Wages.

Denise L. Carter,
Acting Assistant Secretary for Finance and Operations.

    For the reasons discussed in the preamble, the Secretary amends 
parts 31 and 32 of title 34 of the Code of Federal Regulations as 
follows:

PART 31--SALARY OFFSET FOR FEDERAL EMPLOYEES WHO ARE INDEBTED TO 
THE UNITED STATES UNDER PROGRAMS ADMINISTERED BY THE SECRETARY OF 
EDUCATION

0
1. The authority citation for part 31 continues to read as follows:

    Authority: 5 U.S.C. 5514; 31 U.S.C. 3716.


0
2. Section 31.7 is amended by revising paragraph (a) to read as 
follows:


Sec.  31.7   Hearing procedures.

    (a) Independence of hearing official. A hearing provided under this 
part is conducted by a hearing official who is not under the 
supervision or control of

[[Page 40335]]

the Secretary, except that this prohibition does not apply to the 
Department's administrative law judges.
* * * * *

PART 32--SALARY OFFSET TO RECOVER OVERPAYMENTS OF PAY OR ALLOWANCES 
FROM DEPARTMENT OF EDUCATION EMPLOYEES

0
3. The authority citation for part 32 continues to read as follows:

    Authority: 5 U.S.C. 5514; 31 U.S.C. 3716.


0
4. Section 32.5 is amended by revising paragraph (d) to read as 
follows:


Sec.  32.5   Pre-offset hearing--general.

* * * * *
    (d) The hearing is conducted by a hearing official who is not under 
the supervision or control of the Secretary, except that this 
prohibition does not apply to the Department's administrative law 
judges.
* * * * *
[FR Doc. 2021-15897 Filed 7-27-21; 8:45 am]
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