[Federal Register Volume 59, Number 97 (Friday, May 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12426]
[[Page Unknown]]
[Federal Register: May 20, 1994]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Part 2609
RIN 1212-AA64
Debt Collection by Administrative Offset
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Proposed rule.
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SUMMARY: The Pension Benefit Guaranty Corporation (``PBGC'') is
proposing to provide for debt collection by administrative offset. The
PBGC believes that adoption of this proposed rule would enhance its
debt collection ability. The procedures in this proposed rule implement
administrative offset, as authorized by the Federal Claims Collection
Act of 1966, as amended by the Debt Collection Act of 1982, and in
accordance with standards prescribed by the Comptroller General of the
United States and the Attorney General of the United States.
DATES: Comments must be received on or before July 19, 1994.
ADDRESSES: Comments may be mailed to the Office of the General Counsel
(Suite 340), Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026, or hand-delivered to the above address
between 9 a.m. and 5 p.m., Monday through Friday. Comments will be
available for public inspection at the PBGC's Communications and Public
Affairs Department, suite 240, at the above address between 9 a.m. and
4 p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT:
Catherine B. Klion, Attorney, Office of the General Counsel (Suite
340), Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026, 202-316-4125 (202-326-4179 for TTY and TDD).
(These are not toll-free numbers.)
SUPPLEMENTARY INFORMATION: The Pension Benefit Guaranty Corporation
(``PBGC'') administers the pension plan termination insurance program
under title IV of the Employee Retirement Income Security Act of 1974,
as amended (``ERISA'') (29 FHWA 1301 et seq.). In conjunction with the
pension plan termination insurance program, persons (including
organizations and entities) incur various types of debts to the PBGC,
and the PBGC incurs various types of liabilities (including contractual
obligations).
The PBGC uses various methods to collect its debts; however, it
currently does not use administrative offset. The PBGC anticipates that
the ability to use administrative offset, particularly against payments
to be made by other agencies in connection with government contracts,
would enhance its debt collection ability. Therefore, the PBGC is
proposing to add part 2609, Debt Collection--Administrative Offset, to
its regulations (29 CFR part 2609). (Other debt collection tools
currently available to the PBGC include the use of collection agencies
and salary offset. Tax refund offset potentially is available to the
PBGC.)
The Debt Collection Act of 1982, which amended the Federal Claims
Collection Act of 1966 (31 U.S.C. 3701 et seq.), authorizes the
collection of debts owed to the United States by administrative offset
(31 U.S.C. 3716). Administrative offset is defined as ``withholding
money payable by the United States Government to, or held by the
Government for, a person to satisfy a debt the person owes the
Government'' (31 U.S.C. 3701(a)(1)).
Before collecting a claim by administrative offset under the
Federal Claims Collection Act, the head of an agency must prescribe
regulations on administrative offset based on the best interests of the
United States Government, the likelihood of collecting a claim by
administrative offset, and, for collecting a claim by administrative
offset after the six-year period for bringing a civil action on a claim
under 28 U.S.C. 2415 has expired, the cost-effectiveness of leaving a
claim unresolved for more than six years (31 U.S.C. 3716(b)).
The Comptroller General of the United States and the Attorney
General of the United States jointly issued amendments to the Federal
Claims Collections Standards (``FCCS'') (4 CFR parts 101 through 105)
to implement the Debt Collection Act of 1982. Part 102 of those
regulations prescribes standards for the administrative collection of
claims, including, in Sec. 102.3, collection by administrative offset.
The FCCS do not cover offset of debts against salaries of federal
employees (48 FR 23249, May 24, 1983). (See PBGC Notice No. 89-28 (Nov.
13, 1989) for the agency's salary offset procedures.) (See Sec. 101.3
for other limitations on the applicability of the FCCS.)
The FCCS use the terms ``claim'' and ``debt'' synonymously and
interchangeably to ``refer to an amount of money or property which has
been determined by an appropriate agency official to be owed to the
United States from any person, organization, or entity, except another
federal agency'' (Sec. 101.2(a)). They provided that collection by
administrative offset is to be undertaken, in accordance with an
agency's implementing regulations, on claims that are liquidated or
certain in amount when such collection is determined to be feasible and
not otherwise prohibited (Sec. 102.3(a)). The creditor agency is to
determine whether collection by administrative offset is feasible on a
case-by-case basis, in the exercise of sound discretion, based on
various factors; agencies are not required to use offset in every
instance in which there is an available source of funds
(Sec. 102.3(a)(2)).
Except as otherwise required by law, the procedures to be
established by agency regulations must provide the debtor with written
notice of the nature and amount of the debt and the agency's intention
to collect by offset, opportunity to inspect and copy agency records
pertaining to the debt, opportunity to obtain review within the agency
of the agency's determination of indebtedness, and opportunity to enter
into a written agreement with the agency to repay the debt (``repayment
agreement''). An agency's regulations also must establish procedures
for making requests for offset to other agencies holding funds payable
to the debtor and procedures for processing requests for offset that
are received from other agencies (Sec. 102.3(b)).
The FCCS provide that agencies may not initiate administrative
offset to collect a debt under 31 U.S.C. 3716 more than 10 years after
the government's right to collect the debt first accrued unless facts
material to its right to collect the debt were not known and could not
reasonably have been known by the official(s) charged with the
responsibility to discover and collect such debts (Sec. 102.3(b)(3)).
Nor may agencies use administrative offset under 31 U.S.C. 3716 with
respect to debts owed by state or local governments or arising under
the Social Security Act, the Internal Revenue Code, or United States
tariff laws or in cases in which collection of the type of debt
involved is ``explicitly provided for or prohibited by another
statute'' (Sec. 102.3(b)(4)). (Administrative offset is not
``explicitly provided for or prohibited'' by Title IV of ERISA.)
However, unless otherwise provided by contract or law, such debts may
be collected by administrative offset under the common law or other
applicable statutory authority. Collection by offset against a judgment
obtained by a debtor against the United States must be accomplished in
accordance with 28 U.S.C. 3728 (which provides that the Comptroller
General shall withhold paying that part of a judgment against the
United States that is equal to a debt the plaintiff owes the United
States) (Sec. 102.3(e)).
The PBGC's Financial Operations Department (``FOD'') would have
primary responsibility for the new debt collection procedures in this
proposed rule, including applying amounts recovered by administrative
offset to multiple debts (Sec. 2609.3(c)), requesting offset by other
agencies (Sec. 2609.5), and processing requests for offset from other
agencies (Sec. 2609.6). However, ascertaining the indebtedness and
providing notice to the debtor and administrative review would continue
to be handled by the organizational unit with functional responsibility
for the type of claim involved, including, where applicable, review by
the Appeals Board (see Sec. 2606.1(b) (5) through (9)). For example,
the Premium Operations Division of FOD would continue to have
responsibility for premiums, interest, and late payment penalties,
including issuing initial determinations and reconsideration in
accordance with part 2606 (see Sec. 2606.1(b)(4)). (Applicable
assignments of responsibilities are set forth in the mission and
functions statements issued by the Executive Director and included
(along with organization charts) in the PBGC Directives Manual as
section 30-1 of Part GA (General Administration).)
Proposed Sec. 2609.1 sets out the purpose and scope of part 2609.
The PBGC will apply these procedures only when it determines that
collection by administrative offset of a claim that is liquidated or
certain in amount is feasible and not otherwise prohibited. As stated
in proposed Sec. 2609.3(a), the PBGC will determine whether collection
by administrative offset is feasible on a case-by-case basis, in the
exercise of sound discretion, as provided in the FCCS
(Sec. 102.3(a)(2)). (The PBGC generally will not offset against plan
benefits.)
Proposed Sec. 2609.3 also reiterates FCCS provisions regarding the
acceptance of a repayment agreement in lieu of offset and how to apply
amounts collected by administrative offset on multiple debts
(Sec. 102.3(b)(2) (i) and (g)). Proposed Sec. 2609.2 defines various
terms (e.g., ``repayment agreement'') used in this part of the
regulations.
Proposed Sec. 2609.4 addresses the procedures that the PBGC
generally must complete before effecting administrative offset against
a payment owed to a debtor. The FCCS do not require, however, that an
agency duplicate procedures provided in connection with the same debt
under other statutory or regulatory authority. (Sec. 102.3(b)(2)(ii)).
Accordingly, the PBGC would not do so (proposed Sec. 2609.4(a)). Thus,
for example, if the PBGC were to use administrative offset to collect a
debt for premiums, interest, and late payment penalties, it would not
duplicate any procedural protection previously provided under part
2606.
The FCCS provide that whenever an agency is required to afford a
debtor with a hearing or review within the agency, the agency must
provide a reasonable opportunity for an oral hearing when: (1) An
applicable statute authorizes or requires the agency to consider waiver
of the indebtedness involved, the debtor requests such waiver, and the
waiver determination turns on an issue of credibility or veracity, or
(2) the debtor requests reconsideration of the debt and the agency
determines that the question of the indebtedness cannot be resolved by
a review of the documentary evidence (Sec. 102.3(c)(1)). However, an
agency need not provide oral hearings with respect to debt collection
systems in which determinations of indebtedness or waiver rarely
involve issues of credibility or veracity and the agency has determined
that review of the written record ordinarily is an adequate means to
correct prior mistakes. In administering such a system, the agency is
not required to sift through all requests received in order to accord
oral hearings in those few cases which may involve issues of
credibility or veracity. (Section 102.3(c)(2).)
Based on its experience, the PBGC has determined that with respect
to its debt collection system, review of the written record ordinarily
is adequate, and, therefore, part 2609 does not provide for oral
hearings. (When reviewing determinations described in Sec. 2606.1(b)
(5) through (9), the Appeals Board may, at its discretion, permit an
opportunity to appear or to present witnesses (Sec. 2606.56).)
If the debtor does not submit a timely request for administrative
review (see proposed Sec. 2609.4(c)(1)), or if upon review the PBGC has
notified the debtor of its decision that a debt is owed (see proposed
Sec. 2609.(c)(3)), then the PBGC may pursue administrative offset
without further notice to the debtor (see also proposed
Sec. 2609.4(e)).
Proposed Sec. 2609.4(d) provides that the PBGC will not consider
entering a repayment agreement in lieu of offset unless a debtor
submits information regarding the debtor's financial condition,
including specified financial statement information (paragraph (d)(1)).
The PBGC may require appropriate security as a condition of accepting a
repayment agreement in lieu of offset (paragraph (d)(2)).
Proposed Sec. 2609.4(e), as authorized by the FCCS
(Sec. 102.3(b)(5)), provides that the PBGC may effect administrative
offset prior to completion of the procedures specified in paragraphs
(b) and (c) under certain circumstances (in particular, to avoid
prejudicing the Government's ability to collect the debt). Under the
special rule in Sec. 2622.9(c) of this chapter, the PBGC need not
follow certain procedures when it believes that its ability to assert
or obtain payment of liability incurred upon termination of a single-
employer plan is in jeopardy. The PBGC views any case in which it
applies Sec. 2622.9(c) as one that would meet the criteria in proposed
Sec. 2609.4(e)(1) and therefore a case in which it could effect
administrative offset prior to the completion of the specified
procedures. Proposed Sec. 2609.4(e)(2) reflects this view.
Proposed Secs. 2609.5 and 2609.6 prescribe procedures for making
requests for offset to other agencies and for processing requests for
offset from other agencies, respectively. Any PBGC requests for
administrative offset against amounts due and payable from the Civil
Service Retirement and Disability Fund would be made in accordance with
applicable Office of Personnel Management (``OPM'') regulations (Agency
Requests to OPM for Recovery of a Debt from the Civil Service
Retirement and Disability Fund, 5 CFR part 831, subpart R), as well as
applicable provisions of the FCCS. As provided in the FCCS,
(Sec. 102.3(d)), the PBGC generally will comply with requests from
other agencies to initiate administrative offset unless the requesting
agency has not complied with the applicable provisions of the FCCS or
the offset would be otherwise contrary to law (proposed
Sec. 2609.6(a)).
E.O. 12866 and the Regulatory Flexibility Act
The PBGC has determined that this action is not a ``significant
regulatory action'' under the criteria set forth in Executive Order
12866 because the rule would not have an annual effect on the economy
of $100 or more or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities, create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency; materially
alter the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or raise
novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866. The purpose of the rule is to enhance the PBGC's debt collection
ability. The procedures will be triggered only by a failure to pay a
debt already owed.
For the same reason, the PBGC certifies that, if adopted, this
proposed rule will not have a significant economic effect on a
substantial number of small entities. Accordingly, as provided in
section 605 of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.),
sections 603 and 604 do not apply.
List of Subjects in 29 CFR Part 2609
Administrative, Practice and procedure, Claims.
For the reasons set forth above, the PBGC proposes to amend
subchapter A, chapter XXVI of 29 CFR by adding a new part 2609 to read
as follows:
PART 2609--DEBT COLLECTION--ADMINISTRATIVE OFFSET
Sec.
2609.1 Purpose and scope.
2609.2 Definitions.
2609.3 Application of Federal Claims Collection Standards.
2609.4 Administrative offset procedures.
2609.5 PBGC requests for offset to other agencies.
2609.6 Requests for offset from other agencies.
Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3716; 4 CFR part
102.
Sec. 2609.1 Purpose and scope.
(a) Purpose. This part prescribes procedures for debt collection by
administrative offset, as authorized by the Federal Claims Collection
Act (31 U.S.C. 3716), and consistent with applicable provisions of the
Federal Claims Collection Standards.
(b) Scope. The procedures in this part apply when the PBGC
determines that collection by administrative offset of a claim that is
liquidated or certain in amount is feasible and not otherwise
prohibited or when another agency seeks administrative offset against a
payment to be made by the PBGC.
Sec. 2609.2 Definitions.
For purposes of this part:
Administrative offset has the meaning set forth in 31 U.S.C.
3701(a)(1).
Agency means an executive or legislative agency (within the meaning
of 31 U.S.C. 3701(a)(4)).
Claim and debt, as defined in the Federal Claims Collection
Standards (4 CFR 101.2(a)), are used synonymously and interchangeably
to refer to an amount of money or property which has been determined by
an appropriate agency official to be owed to the United States from any
person, organization, or entity, except another Federal agency.
Federal Claims Collection Act means the Federal Claims Collection
Act of 1966, as amended (31 U.S.C. 3701 et. seq.).
Federal Claims Collection Standards means 4 CFR parts 101 through
105, which are regulations issued jointly by the Comptroller General of
the United States and the Attorney General of the United States that
implement the Federal Claims Collection Act.
PBGC means the Pension Benefit Guaranty Corporation.
Repayment agreement means a written agreement by a debtor to repay
a debt to the PBGC.
Sec. 2609.3 Application of Federal Claims Collection Standards.
The PBGC will determine the feasibility of collection by
administrative offset, whether to accept a repayment agreement in lieu
of offset, and how to apply amounts collected by administrative offset
on multiple debts as provided in the Federal Claims Collection
Standards (4 CFR 102.3).
(a) Feasibility. The PBGC will determine whether collection by
administrative offset is feasible on a case-by-case basis in the
exercise of sound discretion. In making such determinations, the PBGC
will consider:
(1) Whether administrative offset can be accomplished, both
practically and legally;
(2) Whether administrative offset is best suited to further and
protect all governmental interests;
(3) In appropriate circumstances, the debtor's financial condition;
and
(4) Whether offset would tend to interfere substantially with or
defeat the purposes of the program authorizing the payments against
which offset is contemplated.
(b) Repayment agreements. The PBGC will exercise its discretion in
determining whether to accept a repayment agreement in lieu of offset,
balancing the Government's interest in collecting the debt against
fairness to the debtor. If the debt is delinquent (within the meaning
of 4 CFR 101.2(b)) and the debtor has not disputed its existence or
amount, the PBGC will accept a repayment agreement in lieu of offset
only if the debtor is able to establish that offset would result in
undue financial hardship or would be against equity and good
conscience.
(c) Multiple debts. When the PBGC collects multiple debts by
administrative offset, it will apply the recovered amounts to those
debts in accordance with the best interests of the United States, as
determined by the facts and circumstances of the particular case,
paying special attention to applicable statutes of limitations.
Sec. 2609.4 Administrative offset procedures.
(a) General. Except as otherwise required by law or as provided in
paragraph (e) of this section, the PBGC will not effect administrative
offset against a payment to be made to a debtor prior to the completion
of the procedures specified in paragraphs (b) and (c) of this section.
However, the PBGC will not duplicate any notice or other procedural
protection it previously provided in connection with the same debt
under some other statutory or regulatory authority, such as part 2606
of this subchapter.
(b) Notice. The PBGC will provide written notice informing the
debtor of the following:
(1) The nature and amount of the debt, and the PBGC's intention to
collect by offset;
(2) That the debtor may inspect and copy PBGC records pertaining to
the debt in accordance with part 2603 or part 2607 of this subchapter,
as applicable (access under the Freedom of Information Act (5 U.S.C.
552) or the Privacy Act (5 U.S.C. 552a), respectively);
(3) How and from whom the debtor may obtain administrative review
of a determination of indebtedness;
(4) The facts and circumstances that the PBGC will consider in
determining whether to accept a repayment agreement in lieu of offset;
and
(5) If the PBGC has not previously demanded payment of the debt,
the date by which payment must be made to avoid further collection
action.
(c) Administrative review. (1) A debtor may obtain review within
the PBGC of a determination of indebtedness by submitting a written
request for review, designated as such, to the PBGC official specified
in the notice of indebtedness. Unless another regulation in this
chapter specifies a different period of time, such a request must be
submitted within 30 days after the date of a PBGC notice under
paragraph (b) of this section.
(2) A request for review must:
(i) State the ground(s) on which the debtor disputes the debt; and
(ii) Reference all pertinent information already in the possession
of the PBGC and include any additional information believed to be
relevant.
(3) The PBGC will review a determination of indebtedness, when
requested to do so in a timely manner. The PBGC will issue a written
decision, based on the written record, and will notify the debtor of
its decision.
(i) The review will be conducted by an official of at least the
same level of authority as the person who made the determination of
indebtedness; and
(ii) The notice of the PBGC's decision on review will include a
brief statement of the reason(s) why the determination of indebtedness
has or has not been changed.
(4) Upon receipt of a request for administrative review, the PBGC
may, in its discretion, temporarily suspend transactions in any of the
debtor's accounts maintained by the PBGC. If the PBGC resolves the
dispute in the debtor's favor, it will lift the suspension immediately.
(d) Repayment agreement in lieu of offset. (1) The PBGC will not
consider entering a repayment agreement in lieu of offset unless a
debtor submits a copy of the debtor's most recent audited (or if not
available, unaudited) financial statement (with balance sheets, income
statements, and statements of changes in financial position), to the
extent such documents have been prepared, and other information
regarding the debtor's financial condition (e.g., the types of
information on assets, liabilities, earnings, and other factors
specified in in paragraphs (b)(3) through (b)(7) of Sec. 2622.6 of this
chapter).
(2) The PBGC may require appropriate security as a condition of
accepting a repayment agreement in lieu of offset.
(e) Exception. (1) The PBGC may effect administrative offset
against a payment to be made to the debtor prior to completing the
procedures specified in paragraphs (b) and (c) of this section if:
(i) Failure to take the offset would substantially prejudice the
government's ability to collect the debt; and
(ii) The time before the payment is to be made does not reasonably
permit the completion of those procedures.
(2) The PBGC has determined that a case in which it applies the
special rule in Sec. 2622.9(c) of this chapter meets the criteria in
paragraph (e)(1) of this section.
(3) If the PBGC effects administrative offset against a payment to
be made to debtor prior to completing the procedures specified in
paragraphs (b) and (c) of this section, the PBGC--
(i) Will promptly complete those procedures; and
(ii) Will promptly refund any amounts recovered by offset but later
found not to be owed to the Government.
Sec. 2609.5 PBGC Requests for offset by other agencies.
(a) General. The PBGC may request that funds payable to its debtor
by another agency be administratively offset to collect a debt owed to
the PBGC by the debtor. A PBGC request for administrative offset
against amounts due and payable from the Civil Service Retirement and
Disability Fund will be made in accordance with 5 CFR part 831, supbart
R (Agency Requests to OPM for Recovery of a Debt from the Civil Service
Retirement and Disability Fund).
(b) Certification. In requesting administrative offset, the
Director of the Financial Operations Department (or a department
official designated by the Director) will certify in writing to the
agency holding funds of the debtor--
(1) That the debtor owes the debt (including the amount) and that
the PBGC has fully complied with the provisions of 4 CFR 102.3; and
(2) In a request for administrative offset against amounts due and
payable from the Civil Service Retirement and Disability Fund, that the
PBGC has complied with applicable statutes and the regulations and
procedures of the Office of Personnel Management.
Sec. 2609.6 Requests for offset from other agencies.
(a) General. As provided in the Federal Claims Collections
Standards (4 CFR 102.3(d)), the PBGC generally will comply with
requests from other agencies to initiate administrative offset to
collect debts owed the United States unless the requesting agency has
not complied with the applicable provisions of the Federal Claims
Collection Standards or the offset would be otherwise contrary to law.
(b) Submission of requests. (1) Any agency may request that funds
payable to its debtor by the PBGC be administratively offset to collect
a debt owed to such agency by the debtor by submitting the
certification described in paragraph (c) of this section.
(2) All such requests should be directed to the Director, Financial
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026.
(c) Certification required. The PBGC will not initiate
administrative offset in response to a request from another agency
until it receives written certification from the requesting agency,
signed by an appropriate agency official, that the debtor owes the debt
(including the amount) and that the requesting agency has fully
complied with the provisions of 4 CFR 102.3 (with a citation to the
agency's own administrative offset regulations).
Issued in Washington, D.C. this 17th day of May, 1994.
Martin Slate,
Executive Director Pension Benefit Guaranty Corporation.
[FR Doc. 94-12426 Filed 5-19-94; 8:45 am]
BILLING CODE 7708-01-M
