Commercial Garnishment of Federal Employees' Pay

SUMMARY: The Office of Personnel management (OPM) is finalizing its

interim regulations for processing garnishment actions affecting

Federal employees' pay for commercial indebtednesses and tax

obligations due to State and local governments. This part provides

procedures and guidance for Executive Branch agencies of the Federal

Government, not including the Postal Service or the Postal Rate

Commission, to process commercial garnishment orders affecting the pay

of civilian employees.

EFFECTIVE DATE: April 10, 1995.

FOR FURTHER INFORMATION CONTACT: Murray M. Meeker, Attorney, Office of

the General Counsel, (202) 606-1980.

SUPPLEMENTARY INFORMATION: On October 6, 1993, Congress enacted the

Hatch Act Reform Amendments of 1993, Public law 103-94, section 9, 5

U.S.C. 5520a, which waived the Federal Government's sovereign immunity

to permit compliance with garnishment orders for commercial debts and

tax indebtednesses to State and local governments. On February 3, 1994,

the President signed Executive Order Number 12897 which delegated

responsibility to OPM to issue implementing regulations for most of the

Executive Branch, and on March 29, 1994, OPM issued an interim rule

with request for comments. (59 FR 14541) In addition to receiving

comments from more than twenty Federal agencies, private organizations,

and individuals in response to this publication, OPM expressly elicited

additional guidance from the Office of Management and Budget, the

Department of Justice, the Department of Labor, the Federal Retirement

Thrift Investment Board, and the United States Postal Service.

Several commenters requested clarification concerning whether

moneys payable to contractors would be subject to garnishment. In

response to these requests, we have amended the definition of employee

in Sec. 582.102(2). The amended definition provides that an individual

whose employment is based on a contract is not an employee under this

part. This amendment is consistent with judicial decisions which have

recognized that Federal employment is not contractual. See, e.g.,

United States v. The Citizens & Southern National Bank, 889 F.2d 1067

(Fed. Cir. 1989). An employee organization was concerned that

reemployed annuitants had been excluded from the definition of

employee. In fact, reemployed annuitants are included in the definition

of employee in Sec. 582.102(2). However, we have amended the definition

of employee to clarify that the pay of reemployed annuitants and

reemployed retired members of the uniformed services is subject to

garnishment.

An employee organization suggested that OPM's regulations indicate

that regulations pertaining to the garnishment of the salaries of

members of the uniformed services were to be promulgated by a separate

authority. In response to this suggestion, we have added two additional

sentences to the definition of agency in Sec. 582.102(1). This employee

organization also suggested that the definition of person be amended to

include courts. In response to this suggestion, we have amended the

definition of person in Sec. 582.102(4) to include courts and other

entities that are authorized to issue legal process.

Two commenters suggested that Federal agencies be permitted to use

commercial garnishment as a method to collect debts due the United

States. OPM has determined that as enacted, Public Law 103-94 does not

provide for commercial garnishment actions by Federal agencies. OPM's

determination is based on several factors. The primary reason being

that Public Law 103-94 does not expressly provide for garnishment by

the Federal Government, and there is no legislative history reflecting

such an intent. Additionally, the principles of statutory

interpretation require that all of the provisions of a statute be read

together. See United States v. Fausto, 484 U.S. 439, 453 (1988). In

accordance with this principle, OPM is mindful that in processing

commercial garnishment orders, Congress has provided that debts due the

United States are to be treated quite differently than commercial

indebtednesses. To appreciate this difference, compare the exclusion

provision in section 462(g) of the Social Security Act as incorporated

in 5 U.S.C. 5520a(g) with the limitation provisions of section 1673 of

title 15 of the United States Code (section 303 of the Consumer Credit

Protection Act, as amended) as incorporated in 5 U.S.C. 5520a(b). In

addition, there are several recent United States Supreme Court

decisions which recognize a rebuttable presumption that the term person

does not include the sovereign. See International Primate Protection

League v. Tulane Educ. Fund, 111 S.Ct. 1700, 1707-1708 (1991); Will v.

Michigan Department of State Police, 491 U.S. 58, 64 (1989); and Mesa

v. California, 489 U.S. 121, 136 (1989). In an effort to clarify the

matter, OPM has amended the definition of person in Sec. 582.102(4) to

expressly exclude the United States or an agency of the United States.

OPM has considered, but rejected a labor organizations' comment

that the definition of pay in Sec. 582.102(5) not include sick pay. We

believe that the inclusion of sick pay is mandated by express language

of 5 U.S.C. 5520a(a)(4) which expressly defines pay to include sick

pay. In accordance with guidance received from the Department of Labor,

we have expressly excluded ``amounts received under any Federal program

for compensation for work injuries'' from the definition of pay in

Sec. 582.102(5).

One of the Federal agencies that provides payroll services to a

host of Federal agencies advised OPM that they were treating support

garnishment orders as exclusions under Sec. 582.103. We have amended

Sec. 582.103 to clarify that amounts withheld in compliance with

garnishment orders based on child and/or alimony obligations are not

exclusions under this part. [[Page 13028]]

One agency requested clarification concerning the exclusion in

Sec. 582.103(b)(1) of amounts withheld for benefits payable under title

II of the Social Security Act. After consulting with the Social

Security Administration, we have deleted that provision and renumbered

the section.

Two commenters noted the exclusion in Sec. 582.103(e) of all

amounts contributed to the Thrift Savings Fund and asked whether

amounts deducted for Thrift Savings Fund loan repayments were also to

be excluded. In response to this comment, OPM requested guidance from

the Federal Retirement Thrift Investment Board. OPM concurs with the

Board's conclusion that these repayment amounts should not be added to

the list of exclusions in Sec. 582.103.

One agency commented that some of its employees were attempting to

reduce their liability for garnishment orders by increasing their

voluntary allotments. We would emphasize that only the items listed as

exclusions in Sec. 582.103 may be deducted from an employee-obligor's

pay before a garnishment is processed. It may, therefore, be necessary

to terminate a voluntary allotment in order to comply with a commercial

garnishment order.

While one agency correctly noted that our exclusion for debts due

the United States in Sec. 582.103(a) does not list the various types of

debts due the United States or the order of precedence for such debts,

the General Accounting Office already maintains such a list.

While three Federal agencies expressed disagreement with the

statement in Sec. 582.202(a) that legal process need not expressly name

the agency as a garnishee, this statement is mandated by the decision

of the United States Court of Appeals for the Federal Circuit that was

announced in Millard v. United States, 916 F.2d 1 (Fed. Cir. 1990). We

have amended Sec. 582.202(a) in response to one agency's comment to

expressly include interrogatories.

One commenter noted that the interim regulations permitted State

courts to garnish the salaries of persons who live and work in a

different State and concluded that this raised ``a possible

constitutional question'' as to the legality of the regulations. In

fact, the Federal Government has been honoring garnishment orders based

on child support and alimony obligations that extended beyond State

boundaries for many years and OPM disagrees with any suggestion that

such orders or the regulations that provide for the processing of such

orders might be unconstitutional merely because they effect employee-

obligors who live and/or work in other States. More importantly, OPM

believes that this is another area where the Federal Government's

responsibilities as an employer are limited and that an employing

Federal agency is not required to review each order to determine

whether the court that issued the order had lawfully acquired

jurisdiction over the out-of-State obligor. See United States v.

Morton, 467 U.S. 822, 828-830 (1984). This same commenter also

suggested that the regulations be amended to require that in addition

to providing the employee-obligor with a copy of the legal process,

Federal agencies should be required to provide employee-obligors with

copies of any other documents submitted with the legal process. OPM is

confident that Federal agencies will use their discretion to provide

their employees with copies of any accompanying documents that will be

helpful or informative to the employee. However, to require that

employing agencies provide all documentation regardless of relevance or

potential value to the employee-obligor would, we believe, place an

undue burden on Federal agencies.

Two agencies commented on the fact that Sec. 582.202(b) does not

mandate service by certified or registered mail. This provision is in

accordance with the express language of 5 U.S.C. 5520a(c)(1) and does

reflect a change from the provisions applicable to service of process

for garnishment of child support and alimony obligations. OPM

emphasizes that agencies may not construe may to mean must; it was the

clear intent of Congress to permit less restrictive service of process

under this part.

Several commenters, including an employee organization and a law

firm that wrote on behalf of a collectors association, expressed a need

to clarify the fact that a creditor need not necessarily know or

provide all of the information listed in Sec. 582.203(a), particularly

the employee-obligor's date of birth or social security number, in

order to have a garnishment order processed by a Federal agency. In an

effort to clarify this fact, we have amended Sec. 582.203(a). In

response to a request from the Treasury Department, we have added a new

section, Sec. 582.204, concerning electronic disbursement.

Several commenters noted that two provisions in the interim

regulations--Sec. 582.303(a) which reiterates the requirement in 5

U.S.C. 5520a(d) that agencies respond to interrogatories and

Sec. 582.306(c) which states that agencies shall provide information

concerning subsequent employment--may conflict with the Privacy Act, 5

U.S.C. 552a, as implemented by numerous Federal regulations including

OPM's own disclosure regulations codified at 5 CFR 297.402, which

permit disclosure in response to legal process only where the legal

process is signed by a judge. While it might be argued that 5 U.S.C.

5520a(d) should be construed as an implicit exception to the Privacy

Act and to the regulations that agencies have promulgated to implement

the Privacy Act, OPM strongly recommends that agencies establish

routine uses that will enable them to respond to interrogatories served

in accordance with this part and, where appropriate, to provide

subsequent employment information, notwithstanding the absence of a

judge's signature or some other omission otherwise barred by the

agency's disclosure restrictions.

An employee organization commented that OPM exceeded its statutory

authority by providing in Sec. 582.303(a) that agencies may respond to

garnishment orders after 30 days where a longer period is provided by

local law as well as by State law as expressly stated in 5 U.S.C.

5520a(d). While OPM concurs that section 5520a(d) expressly refers only

to State law, references to State law have historically included both

State and local law. See, e.g., Ex parte Virginia, 100 U.S. 339 (1879),

as discussed in Civil Rights Cases, 109 U.S. 3, 57-58 (1883) (Harlan,

J., dissenting). For the same reason, we have declined to amend

Sec. 582.402 to exclude references to local law.

One agency suggested that Sec. 582.303(a) be amended to clarify

that agencies need only respond once to legal process. We have amended

Sec. 582.303(a) in response to this suggestion.

One agency commenter noted that Sec. 582.303 was redundant and

suggested that the word effectively be replaced with the word validly.

We have amended this section in response to these comments.

OPM received conflicting agency recommendations concerning the

action to be taken where an employee-obligor appeals a garnishment

action, and we have decided not to amend Sec. 582.305(c) at this time.

An association of collection attorneys commented that in the

collection world there are two major areas: commercial and retail with

commercial referring to the collection of debts from firms and retail

referring to collection from consumers. While we appreciate the fact

that our terminology is not consistent with the nomenclature used by

some private attorneys, we have determined [[Page 13029]] that no other

term would be as generally understood as the term commercial for the

purpose of distinguishing garnishment actions under this part from

garnishment actions based on child support and alimony obligations.

Several commenters requested that the regulations clarify the

effect of a garnishment order for child support and/or alimony on the

processing of a commercial garnishment order. In response to these

requests, we have amended Secs. 582.305(f) and 582.402(a) to better

explain the interrelationship between the two types of legal process.

One commenter requested that OPM delete Sec. 582.305(k) because by

permitting Federal agencies to charge fees in commercial garnishment

actions while not having a similar provision relating to support

garnishment actions, OPM's regulations were possibly discriminatory

against women. OPM would emphasize that while the child support and

alimony garnishment provisions in the Social Security Act do not

provide for administrative costs or processing fees, Congress has

expressly provided for such fees in the processing of commercial

garnishment actions. See 5 U.S.C. 5520a(j)(2).

In response to an employee organization's suggestion, we have

amended Sec. 582.305(k) concerning the administrative fees. Three

commenters suggested that OPM establish uniform administrative fees.

Instead, OPM has deferred to individual agencies to determine whether

administrative fees should be assessed and in what amounts based on

their own cost figures. OPM has been advised that several agencies have

established and have begun to assess administrative fees based on their

costs in processing commercial garnishment orders.

While 5 U.S.C. 5520a(h)(1) provides that legal process shall be

processed on a first come, first served basis, the laws in several

jurisdictions, including California and the District of Columbia,

provide that legal process may only be satisfied on a ``one at a time''

basis. Based on this information, we have amended Sec. 582.402(a) in an

effort to eliminate any confusion that may exist in these

jurisdictions. In accordance with guidance received from the Department

of Labor, we have also amended Sec. 582.402(a) to provide that

administrative costs or fees provided under Sec. 582.305(k) must be

included in the amounts subject to the garnishment restrictions of the

Consumer Credit Protection Act. In other words, an agency may not

withhold more than 25% of an employee-obligor's aggregate disposable

earnings in order to offset administrative costs. Rather, the amount to

be withheld in compliance with the legal process would have to be

reduced in order that the administrative costs could be recovered

without exceeding the maximum garnishment limitations.

OPM received comments from two Federal agencies concerning the

processing of garnishment orders where the employee-obligor has filed a

bankruptcy petition. We have amended Sec. 582.305(l) in accordance with

these recommendations. One individual commented that the regulations

failed to recognize exemptions which employees may be entitled to under

various provisions of State law. We would direct the commenter to

Sec. 582.402(a) which encompasses these exemption provisions.

However, we would also emphasize that it is primarily the employee-

obligor's responsibility and not the employee-obligor's employer's

responsibility to ensure that the debtor is allowed all of the

exemptions to which the employee-obligor is entitled under State law.

Four commenters recommended that Sec. 582.402(b) be amended to

apply only where the bankruptcy action is under Chapter 13, and one

agency commented that Sec. 582.402(b) should also include Federal tax

levies. In response to these comments and after conferring with the

Department of Labor which administers the Consumer Credit Protection

Act, we have amended Sec. 582.402(b) to incorporate these

recommendations.

While OPM is sympathetic to agencies and individuals who complained

that the time limitations, particularly with regard to notifying

employees stationed overseas, are too short, these time limitations are

statutory and OPM's implementing time limit provisions only repeat

these statutory limits. See 5 U.S.C. 5520a(d). OPM does not believe

that it has the authority to extend these time limits even where the

garnishment order being processed will affect the pay of an employee

stationed overseas. See Federal Election Commission v. Democratic

Senatorial Campaign Committee, 454 U.S. 27, 32 (1981).

Two commenters expressed concern regarding whether any time limit

existed concerning the age of the underlying judgment that the

garnishment order was attempting to enforce. Because Public Law 103-94

does not address this issue, we believe that the answer would depend on

the law of the jurisdiction from which the garnishment order was issued

and that, in any event, as long as the order was ``regular on its

face,'' it would not be the employing agency's burden to determine

whether the garnishment order had been issued in accordance with the

limitation provisions of the jurisdiction from which the order was

issued. See United States v. Morton, supra, at 828-830 (the Federal

Government need only ascertain that legal process is ``regular on its

face''). In other words, this is an issue that the employee-obligor

would be responsible for contesting rather than the employing agency.

Similarly, we do not believe that the agency bears the burden of

determining when garnishment orders themselves expire, except, of

course, where the order, on its face, indicates when it will expire.

While most of the comments focused on the interim regulations,

several commenters stressed the need for a garnishment application

form. In response to these requests, OPM sought and obtained approval

from the Office of Management and Budget to issue a voluntary

garnishment application form. In addition, OPM has elicited suggestions

from several other Federal agencies concerning a voluntary application

form and is currently reviewing those suggestions.

One agency requested additional guidance concerning what action

should be taken where an agency is advised that the garnishment action

should either be terminated or that the amount being garnished should

be reduced as a result of a payment having been made or an agreement

having been reached between the parties. While OPM has not attempted at

this time to promulgate regulations that would dictate the actions that

must be taken in such situations, OPM urges agencies to exercise their

discretion in determining when a garnishment action should be

terminated or modified as a result of such payments or agreements

between the parties.

An issue that provoked numerous comments concerned the payment of

interest. For the most part, it is our understanding that agencies have

had no particular difficulty in garnishing amounts for interest that

were included in the judgment total or judgment amount provided in the

garnishment order, but several States, including Maryland and Hawaii,

issue orders that do not expressly state a dollar figure for all of the

interest that may be subject to garnishment. While 5 U.S.C. 5520a(b)

provides that Federal agencies will be ``subject to legal process in

the same manner and to the same extent as if the agency were a private

person,'' section 5520a(a)(3)(B) defines legal process, in pertinent

part, as a writ, order, or summons that orders the employing agency to

withhold ``an amount'' from the employee-obligor's pay. There is,

therefore, an ambiguity in the statute as [[Page 13030]] concerns the

garnishment of sums such as interest that are not expressly included in

the order, and absent clearer statutory language, OPM declines at this

time to promulgate a regulation that would require agencies to compute

and pay interest that is not included in the amount specified in the

garnishment order.

A process serving company in the District of Columbia advised OPM

that while some agencies facilitate service of process on their

employees, other agencies did not. In response to this information, OPM

requested guidance from the Justice Department and was advised that

when it comes to gaining access to restricted Governmental worksites,

process servers have no more rights than anyone else and that a

regulatory provision concerning this matter would be inappropriate.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget

in accordance with Executive Order 12866.

Regulatory Flexibility Act

I certify that these regulations will not have significant economic

impact on a substantial number of small entities because their effects

are limited to Federal employees and their creditors.

List of Subjects in 5 CFR Part 582

Claims.

Office of Personnel Management.

Lorraine A. Green,

Deputy Director.

Accordingly, OPM is revising part 582 of title 5, Code of Federal

Regulations as follows:

PART 582--COMMERCIAL GARNISHMENT OF FEDERAL EMPLOYEES' PAY

Subpart A--Purpose, Definitions, and Exclusions

Sec.

582.101 Purpose.

582.102 Definitions.

582.103 Exclusions.

Subpart B--Service of Legal Process

582.201 Agent to receive process.

582.202 Service of legal process.

582.203 Information minimally required to accompany legal process.

582.204 Electronic disbursement.

Subpart C--Compliance With Legal Process

582.301 Suspension of payment.

582.302 Notification of employee-obligor.

582.303 Response to legal process or interrogatories.

582.304 Nonliability for disclosure.

582.305 Honoring legal process.

582.306 Lack of entitlement by the employee-obligor to pay from the

agency served with legal process.

Subpart D--Consumer Credit Protection Act Restrictions

582.401 Aggregate disposable earnings.

582.402 Maximum garnishment limitations.

Subpart E--Implementation by Agencies

582.501 Rules, regulations, and directives by agencies.

Appendix A to part 582--List of Agents Designated to Accept Legal

Process

Authority: 5 U.S.C. 5520a; 15 U.S.C. 1673; E.O. 12897

Subpart A--Purpose, Definitions, and Exclusions

Sec. 582.101 Purpose.

Section 5520a of title 5 of the United States Code provides that

with certain exceptions set forth in this part, pay from an agency to

an employee is subject to legal process in the same manner and to the

same extent as if the agency were a private person. The purpose of this

part is to implement the objectives of section 5520a as they pertain to

each executive agency of the United States Government, except with

regard to employees of the United States Postal Service, the Postal

Rate Commission, and the General Accounting Office.

Sec. 582.102 Definitions.

In this part--(1) Agency means each agency of the executive branch

of the Federal Government, excluding the United States Postal Service,

the Postal Rate Commission, and the General Accounting Office; agency

does not include the government of the District of Columbia or the

territories and possessions of the United States. (Section 5520a(j)(1)

of title 5 of the United States Code provides that separate

implementing regulations shall be promulgated by the legislative branch

and the judicial branch; section 5520a(k) provides that separate

implementing regulations shall be promulgated with regard to members of

the uniformed services; and Executive Order 12897 provides that

separate implementing regulations shall be promulgated with regard to

employees of the United States Postal Service. The regulations

promulgated for employees of the United States Postal Service also

apply to employees of the Postal Rate Commission.)

(2) Employee or employee-obligor means an individual who is

employed by an agency as defined in this section, including reemployed

annuitants and retired members of the uniformed services who are

employed by an agency. Employee does not include a retired employee,

member of the uniformed services, a retired member of the uniformed

services, or an individual whose service is based on a contract,

including individuals who provide personal services based on a contract

with an agency.

(3) Legal process means any writ, order, summons, or other similar

process in the nature of garnishment, which may include an attachment,

writ of execution, court ordered wage assignment, or tax levy from a

State or local government, which--

(i) Is issued by:

(A) A court of competent jurisdiction, including Indian tribal

courts, within any State, territory, or possession of the United

States, or the District of Columbia. As stated in Sec. 582.101, pay is

subject to legal process in the same manner and to the same extent as

if the agency were a private person. There is, therefore, no

requirement in this part that, for example, legal process be signed by

a Judge; or.

(B) An authorized official pursuant to an order of a court of

competent jurisdiction or pursuant to State or local law; or

(C) A State agency authorized to issue income withholding notices

pursuant to State or local law; and

(ii) Orders an agency to withhold an amount from the pay of an

employee-obligor and to make a payment of such withholding to a person,

for a specifically described satisfaction of a legal debt of the

employee-obligor, or recovery of attorney fees, interest, or court

costs;

(4) Person may include an individual, partnership, corporation,

association, joint venture, private organization or other legal entity,

and includes the plural of that term; person may include any of the

entities that may issue legal process as set forth in

Sec. 582.102(3)(i) (A), (B), and (C), and a State or local government

as well as a foreign entity or a foreign governmental unit, but does

not include the United States or an agency of the United States.

(5) In conformance with 5 U.S.C. 5520a, pay means basic pay;

premium pay paid under chapter 55, subchapter V, of title 5 of the

United States Code; any payment received under chapter 55, subchapters

VI, VII, or VIII, of title 5 of the United States Code; severance pay

and back pay under chapter 55, subchapter IX, of title 5 of the United

States Code; sick pay, and any other paid leave; incentive pay;

locality pay (including interim geographic adjustments, special pay

adjustments for law enforcement officers, and locality-based

comparability payments); back pay awards; and any other

[[Page 13031]] compensation paid or payable for personal services,

whether such compensation is demoninated as pay, wages, salary, lump-

sum leave payments, commission, bonus, award, or otherwise; but does

not include amounts received under any Federal program for compensation

for work injuries; awards for making suggestions, reimbursement for

expenses incurred by an individual in connection with employment, or

allowances in lieu thereof as determined by the employing agency.

Sec. 582.103 Exclusions.

In determining the amount of pay subject to garnishment under this

part, there shall be excluded amounts which:

(a) Are owed by the employee-obligor to the United States;

(b) Are required by law to be deducted from the employee-obligor's

pay, including, but not limited to amounts deducted in compliance with

the Federal Insurance and Contributions Act (FICA), including amounts

deducted for Medicare and for Old Age, Survivor, and Disability

Insurance (OASDI);

(c) Are properly withheld for Federal, State, or local income tax

purposes, if the withholding of the amounts is authorized or required

by law and if amounts withheld are not greater than would be the case

if the employee-obligor claimed all dependents to which the employee-

obligor were entitled. The withholding of additional amounts pursuant

to section 3402(i) of title 26 of the United States Code may be

permitted only when the employee-obligor presents evidence of a tax

obligation which supports the additional withholding;

(d) Are deducted as health insurance premiums;

(e) Are deducted as normal retirement contributions, not including

amounts deducted for supplementary coverage. For purposes of this

section, all amounts contributed under sections 8351 and 8432(a) of

title 5 of the United States Code to the Thrift Savings Fund are deemed

to be normal retirement contributions. Except as provided in this

paragraph, amounts voluntarily contributed toward additional retirement

benefits are considered to be supplementary;

(f) Are deducted as normal life insurance premiums from salary or

other remuneration for employment, not including amounts deducted for

supplementary coverage. Federal Employees' Group Life Insurance

premiums for ``Basic Life'' coverage are considered to be normal life

insurance premiums; all optional Federal Employees' Group Life

Insurance premiums and any life insurance premiums paid for by

allotment are considered to be supplementary.

(g) Amounts withheld in compliance with legal process based on

child support and/or alimony indebtedness are not exclusions.

Subpart B--Service of Legal Process

Sec. 582.201 Agent to receive process.

(a) Except as provided in appendix A to this part, appendix A to 5

CFR part 581 lists agents designated to accept service of process under

part 581 and this part.

(b) United States Attorneys are not considered appropriate agents

to accept service of process.

Sec. 582.202 Service of legal process.

(a) A person using this part shall serve interrogatories and legal

process on the agent to receive process as explained in Sec. 582.201.

Where the legal process is directed to an agency, and the purpose of

the legal process is to compel an agency to garnish an employee's pay,

the legal process need not expressly name the agency as a garnishee.

(b) Service of legal process may be accomplished by certified or

registered mail, return receipt requested, or by personal service only

upon the agent to receive process as explained in Sec. 582.201, or if

no agent has been designated, then upon the head of the employee-

obligor's employing agency. The designated agent shall note the date

and time of receipt on the legal process.

(c) Parties bringing garnishment actions shall comply with the

service of process provisions in this section. Service will not be

effective where parties fail to comply with the service of process

provisions of this section, notwithstanding whether the person bringing

the garnishment action has complied with the service of process

requirements of the jurisdiction issuing the legal process.

Sec. 582.203 Information minimally required to accompany legal

process.

(a) Sufficient identifying information must accompany the legal

process in order to enable processing by the agency. Parties seeking

garnishment actions, therefore, should provide as many of the following

identifying pieces of information concerning the employee-obligor as

possible:

(1) Full name;

(2) Date of birth;

(3) Employment number or social security number;

(4) Component of the agency for which the employee-obligor works;

(5) Official duty station or worksite; and

(6) Home address or current mailing address.

(b) If the information submitted is not sufficient to identify the

employee-obligor, the legal process shall be returned directly to the

court, or other authority, with an explanation of the deficiency.

However, prior to returning the legal process, if there is sufficient

time prior to the time limits imposed in Sec. 582.303, an attempt

should be made to inform the person who caused the legal process to be

served, or the person's representative, that it will not be honored

unless adequate identifying information is supplied.

Sec. 582.204 Electronic disbursement.

The party designated to receive the garnished funds may forward a

written request to the garnishing agency to have the funds remitted by

electronic funds transfer, rather than by paper check. The request

shall include the designated party's name, address, and deposit account

number, and the name, address, and 9-digit routing transit number of

the designated party's financial institution. Written requests

accompanying service of process will be honored beginning with the

first remission of garnished funds. Written requests received by the

agency subsequent to service of process will be honored in as timely a

manner as the agency deems feasible.

Subpart C--Compliance With Legal Process

Sec. 582.301 Suspension of payment.

Upon proper service of legal process as specified in Secs. 582.202

and 582.203, the agency shall suspend, i.e., withhold, payment of such

moneys for the amount necessary to permit compliance with the legal

process in accordance with this part.

Sec. 582.302 Notification of employee-obligor.

(a) As soon as possible, but not later than 15 calendar days after

the date of valid service of legal process, the agent designated to

accept legal process shall send to the employee-obligor, at his or her

duty station or last known home address, written notice that such

process has been served, including a copy of the legal process;

(b) The agency may provide the employee-obligor with the following

additional information:

(1) Copies of any other documents submitted in support of or in

addition to the legal process;

(2) Notice that the United States does not represent the interests

of the employee-obligor in the pending legal proceedings;

and [[Page 13032]]

(3) Advice that the employee-obligor may wish to consult legal

counsel regarding defenses to the legal process that he or she may wish

to assert.

Sec. 582.303 Response to legal process or interrogatories.

(a) Whenever the designated agent is validly served with legal

process, the agent shall respond within 30 calendar days after receipt,

or within such longer period as may be prescribed by applicable State

or local law. The agent shall also respond within this time period to

interrogatories which accompany legal process. Notwithstanding State

law, an agent need only respond once to legal process.

(b) If State or local law authorizes the issuance of

interrogatories prior to or after the issuance of legal process, the

agent shall respond to the interrogatories within 30 calendar days

after being validly served, or within such longer period as may be

prescribed by applicable State or local law.

Sec. 582.304 Nonliability for disclosure.

(a) No agency employee whose duties include responding to

interrogatories pursuant to Sec. 582.303(b), shall be subject to any

disciplinary action or civil or criminal liability or penalty for any

disclosure of information made in connection with the carrying out of

any duties pertaining directly or indirectly to answering such

interrogatories.

(b) However, an agency would not be precluded from taking

disciplinary action against an employee who consistently or purposely

failed to provide correct information requested by interrogatories.

Sec. 582.305 Honoring legal process.

(a) The agency shall comply with legal process, except where the

process cannot be complied with because:

(1) It is not regular on its face.

(2) The legal process would require the withholding of funds not

deemed pay as described in Sec. 582.102(a)(5).

(3) It does not comply with section 5520a of title 5 of the United

States Code or with the mandatory provisions of this part; or

(4) An order of a court of competent jurisdiction enjoining or

suspending the operation of the legal process has been served on the

agency.

(b) While an agency will not comply with legal process which, on

its face, indicates that it has expired or is otherwise no longer

valid, legal process will be deemed valid notwithstanding the fact that

the underlying debt and/or the underlying judgment arose prior to the

effective date of section 5520a of title 5 of the United States Code.

(c) While the filing of an appeal by an employee-obligor will not

generally delay the processing of a garnishment action, if the

employee-obligor establishes to the satisfaction of the employee-

obligor's agency that the law of the jurisdiction which issued the

legal process provides that the processing of the garnishment action

will be suspended during an appeal and if the employee-obligor

establishes that he or she has filed an appeal, the employing agency

shall comply with the applicable law of the jurisdiction and delay or

suspend the processing of the garnishment action.

(d) Under the circumstances set forth in Sec. 582.305 (a) or (b),

or where the agency is directed by the Justice Department not to comply

with the legal process, the agency shall respond directly to the court,

or other authority, setting forth its reasons for non-compliance with

the legal process. In addition, the agency shall inform the person who

caused the legal process to be served, or the person's representative,

that the legal process will not be honored. Thereafter, if litigation

is initiated or appears imminent, the agency shall immediately refer

the matter to the United States Attorney for the district from which

the legal process issued. To ensure uniformity in the executive branch,

agencies which have statutory authority to represent themselves in

court shall coordinate their representation with the United States

Attorney.

(e) In the event that an agency is served with more than one legal

process or garnishment order with respect to the same payments due or

payable to the same employee, the agency shall satisfy such processes

in priority based on the time of service: Provided, That in no event

will the total amount garnished for any pay or disbursement cycle

exceed the applicable limitation set forth in Sec. 582.402. Provided

further, That processes which are not limited in time shall preserve

their priority based on time of service until fully satisfied.

Generally, a modified order will retain its original priority while a

time limited order will lose its priority after it has expired.

(f) Legal process to which an agency is subject under sections 459,

461, and 462 of the Social Security Act (42 U.S.C. 659, 661, and 662)

for the enforcement of an employee's legal obligation to provide child

support or to make alimony payments, including child support or alimony

arrearages, shall have priority over any legal process to which an

agency is subject under this part. In addition to having priority,

compliance with legal process to which an agency is subject under

sections 459, 461, and 462 of the Social Security Act may exhaust the

moneys available for compliance with legal process under this part. See

Sec. 582.402(a).

(g) Neither the United States, an executive agency, nor any

disbursing officer shall be liable for any payment made from moneys due

from, or payable by, the United States to any individual pursuant to

legal process regular on its face, if such payment is made in

accordance with this part. Where an agency initially determines that

legal process should not be honored, if it subsequently determines that

its initial determination was erroneous, it may correct its initial

determination and honor the legal process. If an agency corrects an

error or is required to do so by a court or other authority, under no

circumstances will the agency be required to pay more than if it had

originally honored the legal process.

(h) Agencies affected by legal process served under this part shall

not be required to vary their normal pay or disbursement cycles to

comply with the legal process. However, legal process, valid at the

time of service, which is received too late to be honored during the

disbursement cycle in which it is received, shall be honored, to the

extent that the legal process may be satisfied, during the next

disbursement cycle within the limits set forth in Sec. 582.402. The

fact that the legal process may have expired during this period would

not relieve the agency of its obligation to honor legal process which

was valid at the time of service. If, in the next disbursement cycle,

no further payment will be due from the agency to the employee-obligor,

the agency shall follow the procedures set forth in Sec. 582.306.

(i) Agencies need not establish escrow accounts in order to comply

with legal process. Therefore, even if the amount garnished by an

agency in one disbursement cycle is not sufficient to satisfy the

entire indebtedness, the agency need not retain those funds until the

amount retained would satisfy the entire indebtedness. On the contrary,

agencies will, in most instances, remit the garnished amount after each

disbursement cycle. Agencies need not pro-rate payments for less than a

full disbursement cycle.

(j) If an agency receives legal process which is regular on its

face, the agency shall not be required to ascertain whether the

authority which issued the legal process had obtained personal

jurisdiction over the employee-obligor.

(k) At the discretion of the executive agency, the agency's

administrative costs in executing a garnishment may be

[[Page 13033]] added to the garnishment amount and the agency may

retain costs recovered as offsetting collections. To facilitate

recovery of these administrative costs, an administrative fee may be

assessed for each legal process that is received and processed by an

agency, provided that the fee constitutes the agency's administrative

costs in executing the garnishment action.

(l) Where an employee-obligor has filed a bankruptcy petition under

section 301 or 302 of title 11 of the United States Code, or is the

debtor named in an involuntary petition filed under section 303 of

title 11, the agency must cease garnishment proceedings affected by the

automatic stay provision, section 362(a) of title 11. Upon filing a

petition in bankruptcy or upon learning that he or she is the debtor

named in an involuntary petition, the employee-obligor should

immediately notify the agency. To enable the agency to determine if the

automatic stay applies, the employee-obligor should provide the agency

with a copy of the filing or a letter from counsel stating that the

petition was filed and indicating the court and the case number, the

chapter under which the petition was filed, whether State or federal

exemptions were elected, and the nature of the claim underlying the

garnishment order.

Sec. 582.306 Lack of entitlement by the employee-obligor to pay from

the agency served with legal process.

(a) When legal process is served on an agency and the individual

identified in the legal process as the employee-obligor is found not to

be entitled to pay from the agency, the agency shall follow the

procedures set forth in the legal process for that contingency or, if

no procedures are set forth therein, the agency shall return the legal

process to the court, or other authority from which it was issued, and

advise the court, or other authority, that the identified employee-

obligor is not entitled to any pay from the agency.

(b) Where it appears that the employee-obligor is only temporarily

not entitled to pay from the agency, the court, or other authority,

shall be fully advised as to why, and for how long, the employee-

obligor's pay will not be garnished, if that information is known by

the agency and if disclosure of that information would not be

prohibited.

(c) In instances where an employee-obligor separates from

employment with an agency that had been honoring a continuing legal

process, the agency shall inform the person who caused the legal

process to be served, or the person's representative, and the issuing

court, or other authority, that the garnishment action is being

discontinued. In cases where the employee-obligor has been employed by

either another agency or by a private employer, and where this

information is known by the agency, the agency shall provide the person

with the designated agent for the new employing agency or with the name

and address of the private employer.

Subpart D--Consumer Credit Protection Act Restrictions

Sec. 582.401 Aggregate disposable earnings.

In accordance with the Consumer Credit Protection Act, the

aggregate disposable earnings under this part are the employee-

obligor's pay less those amounts excluded in accordance with

Sec. 582.103.

582.402 Maximum garnishment limitations.

Pursuant to section 1673(a)(1) of title 15 of the United States

Code (the Consumer Credit Protection Act, as amended) and the

Department of Labor regulations to title 29, Code of Federal

Regulations, part 870, the following limitations are applicable:

(a) Unless a lower maximum limitation is provided by applicable

State or local law, the maximum part of an employee-obligor's aggregate

disposable earnings subject to garnishment to enforce any legal debt

other than an order for child support or alimony, including any amounts

withheld to offset administrative costs as provided for in

Sec. 582.305(k), shall not exceed 25 percent of the employee-obligor's

aggregate disposable earnings for any workweek. As appropriate, State

or local law should be construed as providing a lower maximum

limitation where legal process may only be processed on a one at a time

basis. Where an agency is garnishing 25 percent or more of an employee-

obligor's aggregate disposable earnings for any workweek in compliance

with legal process to which an agency is subject under sections 459,

461, and 462 of the Social Security Act, no additional amount may be

garnished in compliance with legal process under this part.

Furthermore, the following dollar limitations, which are contained in

title 29 of the Code of Federal Regulations, part 870, must be applied

in determining the garnishable amount of the employee's aggregate

disposable earnings:

(1) If the employee-obligor's aggregate disposable earnings for the

workweek are in excess of 40 times the Fair Labor Standards Act (FLSA)

minimum hourly wage, 25 percent of the employee-obligor's aggregate

disposable earnings may be garnished. For example, when the FLSA

minimum wage rate is $4.25 per hour, this rate multiplied by 40 equals

$170.00 and thus, if an employee-obligor's disposable earnings are in

excess of $170.00 for a workweek, 25 percent of the employee-obligor's

disposable earnings are subject to garnishment.

(2) If the employee-obligor's aggregate disposable earnings for a

workweek are less than 40 times the FLSA minimum hourly wage,

garnishment may not exceed the amount by which the employee-obligor's

aggregate disposable earnings exceed 30 times the current minimum wage

rate. For example, at an FLSA minimum wage rate of $4.25 per hour, the

amount of aggregate disposable earnings which may not be garnished is

$127.50 [$4.25 x 30]. Only the amount above $127.50 is garnishable.

(3) If the employee-obligor's aggregate disposable earnings in a

workweek are equal to or less than 30 times the FLSA minimum hourly

wage, the employee-obligor's earnings may not be garnished in any

amount.

(b) There is no limit on the percentage of an employee-obligor's

aggregate disposable earnings that may be garnished for a Federal,

State or local tax obligation or in compliance with an order of any

court of the United States having jurisdiction over bankruptcy cases

under Chapter 13 of title 11 of the United States Code. Orders from

courts having jurisdiction over bankruptcy cases under Chapter 7 or

Chapter 11 of the United States Code are subject to the maximum

garnishment restrictions in Sec. 582.402(a).

Subpart E--Implementation by Agencies

Sec. 582.501 Rules, regulations, and directives by agencies.

Appropriate officials of all agencies shall, to the extent

necessary, issue implementing rules, regulations, and/or directives

that are consistent with this part.

Appendix A to Part 582--List of Agents Designated To Accept Legal

Process

Note: The agents designated to accept legal process are listed

in appendix A to part 581 of this chapter. This appendix A to part

582 provides listings only for those executive agencies where the

designations differ from those found in appendix A to part 581 of

this chapter.

I. Departments

Department of Defense. Defense Finance and Accounting Service,

Cleveland Center, Office of General Counsel, [[Page 13034]] Attention:

Code L, P.O. Box 998002, Cleveland, OH 44199-8002, (216) 522-5301.

Agents for receipt of all legal process for all Department of

Defense civilian employees except where another agent has been

designated as set forth below.

For requests that apply to employees of the Army and Air Force

Exchange Service or to civilian employees of the Defense Contract Audit

Agency (DCAA) and the Defense Logistics Agency (DLA) who are employed

outside the United States: See appendix A to part 581 of this chapter.

For requests that apply to civilian employees of the Army Corps of

Engineers, the National Security Agency, the Defense Intelligence

Agency, and non-appropriated fund civilian employees of the Air Force,

serve the following offices:

Army Corps of Engineers. U.S. Army Corps of Engineers, Omaha District,

Central Payroll Office, Attn: Garnishments, P.O. Box 1439 DTS, Omaha,

NE 68101-1439, (402) 221-4060.

Army Nonappropriated Fund Employees in Europe. Commander, 266th Theater

Finance Command, NAF Payroll, Unit #29001-07, APO AE 09007-0137, 011-

49-6221-57-7752, DSN 379-7752.

National Security Agency. General Counsel, National Security Agency/

Central Security Service, 9800 Savage Rd., Ft. George G. Meade, MD

20755-6000, (301) 688-6705.

Defense Intelligence Agency. Office of General Counsel, Defense

Intelligence Agency, Pentagon, 2E238, Washington, DC 20340-1029, (202)

697-3945.

Air Force Nonappropriated Fund Employees. Office of General Counsel,

Air Force Services Agency, 10100 Reunion Place, Suite 503, San Antonio,

TX 78216-4138, (210) 652-7051.

For civilian employees of the Army, Navy and Marine Corps who are

employed outside the United States, serve the following offices:

Army Civilian Employees in Europe. Commander, 266th Theater Finance

Command, ATTN: AEUCF-CPF, APO AE 09007-0137, 011-49-6221-57-6303/2136,

DSN 370-6303/2136.

Army Civilian Employees in Japan. Commander, U.S. Army Finance and

Accounting Office, Japan, ATTN: APAJ-RM-FA-E-CP, Unit 45005, APO AP

96343-0087, DSN 233-3362.

Army Civilian Employees in Korea. Commander, 175th Finance and

Accounting Office, Korea, ATTN: EAFC-FO (Civilian Pay), Unit 15300, APO

AP 96205-0073, 011-822-791-4599, DSN 723-4599.

Army Civilian Employees in Panama. DCSRM Finance & Accounting Office,

ATTN: SORM-FAP-C, Unit 7153, APO AA 34004-5000, 011-507-287-6766, DSN

287-5312.

Navy and Marine Corps Civilian Employees Overseas. Director of the

Office of Civilian Personnel Management, Office of Counsel, Office of

Civilian Personnel Management (OCPM-OL), Department of the Navy, 800 N.

Quincy Street, Arlington, VA 22203-1990, (703) 696-4717.

Navy and Marine Corps Nonappropriated Fund Employees. The agents

are the same as those designated to receive garnishment orders of Navy

and Marine Corps nonappropriated fund personnel for the collection of

child support and alimony, published at 32 CFR part 734 (1994 ed.),

except as follows:

For non-civil service civilian personnel of the Navy Exchanges or

related nonappropriated fund instrumentalities administered by the Navy

Exchange Service Command: Commander, Navy Exchange Service Command,

ATTN: Human Resources Beverly Building, 3280 Virginia Beach Boulevard,

Virginia Beach, VA 23453-5274, (804) 631-3675.

For non-civil service civilian personnel of Marine Corps

nonappropriated fund instrumentalities, process may be served on the

Commanding Officer of the employing activity ATTN: Morale, Welfare and

Recreation Director.

Department of the Interior. Chief, Payroll Operations Division Attn:

Code: D-2605, Bureau of Reclamation. Administrative Service Center,

Department of the Interior, P.O. Box 272030, 7201 West Mansfield

Avenue, Denver, CO 80227-9030, (303) 969-7739.

[FR Doc. 95-5951 Filed 3-9-95; 8:45 am]

BILLING CODE 6325-01-M