Administrative Offset

FEDERAL MARITIME COMMISSION

46 CFR Part 505

[Docket No. 96-15]

Administrative Offset

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

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SUMMARY: This final rule adopts, without change, the existing

regulations on administrative offset promulgated by the Department of

the Treasury as mandated by the Debt Collection Improvement Act of

1996. The rule allows the Commission to collect by administrative

offset any delinquent debt owed it and sets forth the minimum due

process rights that must be provided to the debtor when the Commission

seeks to collect a debt by administrative offset.

EFFECTIVE DATE: October 28, 1996.

FOR FURTHER INFORMATION CONTACT:

Robert D. Bourgoin, General Counsel, Federal Maritime Commission, 800

North Capitol Street, NW., Washington, DC 20573, (202) 523-5740.

SUPPLEMENTARY INFORMATION: The Debt Collection Improvement Act of 1996,

Pub. L. 104-134, Chapter 10, section 31001, 101 Stat. 1321-358

(``Act''), requires that before collecting a claim by administrative

offset, a federal agency must either adopt, without change, regulations

on collecting by administrative offset promulgated by the Departments

of Justice or Treasury or the General Accounting Office, or prescribe

regulations on collecting by administrative offset consistent with the

aforementioned regulations. Administrative offset means the withholding

of funds otherwise payable by the United States to a person, or held by

the U.S. for a person, to satisfy a claim or debt.

In compliance with the Act, the Federal Maritime Commission adopts

as a final rule the existing regulations of the Department of the

Treasury set forth at 31 CFR 5.30 (1995), which incorporate the Federal

Claims Collection Standards on administrative offset issued jointly by

the Department of Justice and the General Accounting Office as set

forth in 4 CFR 102.3. The purpose of the regulations is to protect the

minimum due process rights that must be afforded to the debtor when an

agency seeks to collect a debt by administrative offset, including the

ability to verify, challenge, and compromise claims, and access to

administrative appeals procedures which are both reasonable and protect

the interests of the United States.

Notice and an opportunity for public comment are not necessary

prior to issuance of this final rule because it is interpretive in

nature and implements a definitive statutory scheme mandated by the

Act. In addition, notice and an opportunity for public comment are

unnecessary inasmuch as both were provided previously when the Federal

Claims Collection Standards were enacted, 49 FR 8897, March 9, 1984,

and when the Treasury regulations were implemented, 52 FR 52, January

2, 1987.

The Commission certifies pursuant to the Regulatory Flexibility

Act, 5 U.S.C. 605(b), that this rule will not have a significant

economic impact on a substantial number of small entities, including

small businesses, small organizational units, and small governmental

jurisdictions because it merely facilitates collection of already

incurred debts.

The rule does not contain any collection of information

requirements as defined by the Paperwork Reduction Act of 1995, as

amended. Therefore, Office of Management and Budget review is not

required.

List of Subjects in 46 CFR Part 505

Administrative offset, Administrative practice and procedure,

Claims, Debt collections.

Part 505 of Title 46 of the Code of Federal Regulations is added to

read as follows:

PART 505--ADMINISTRATIVE OFFSET

505.1 Scope of regulations.

505.2 Definitions.

505.3 General.

505.4 Notification procedures.

505.5 Agency review.

505.6 Written agreement for repayment.

505.7 Administrative offset.

505.8 Jeopardy procedure.

Authority: 31 U.S.C. 3701; 31 U.S.C. 3711; 31 U.S.C. 3716.

Sec. 505.1 Scope of regulations.

These regulations apply to the collection of debts owed to the

United States arising from transactions with the Commission, or where a

request for an offset is received by the Commission from another

agency. These regulations are consistent with the Federal Claims

Collection Standards on administrative offset issued jointly by the

Department of Justice and the General Accounting Office as set forth in

4 CFR 102.3.

Sec. 505.2 Definitions.

(a) Administrative offset, as defined in 31 U.S.C. 3701(a)(1),

means withholding money payable by the United States Government to, or

held by the Government for, a person to satisfy a debt the person owes

the Government.

(b) Person includes a natural person or persons, profit or non-

profit corporation, partnership, association, trust, estate,

consortium, or other entity which is capable of owing a debt to the

United States Government except that agencies of the United States, or

of any State or local government shall be excluded.

Sec. 505.3 General.

(a) The Chairman or his or her designee, after attempting to

collect a debt from a person under section 3(a) of the Federal Claims

Collection Act of 1966, as assembled (31 U.S.C. 3711(a)), may collect

the debt by administrative offset subject to the following:

(1) The debt is certain in amount; and

(2) It is in the best interests of the United States to collect the

debt by administrative offset because of the decreased costs of

collection and the acceleration in the payment of the debt.

(b) The Chairman, or his or her designee, may initiate

administrative offset with regard to debts owed by a person to another

agency of the United States Government, upon receipt of a request from

the head of another agency or his or her designee, and a certification

that the debt exists and that the person has been afforded the

necessary due process rights.

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(c) The Chairman, or his or her designee, may request another

agency that holds funds payable to a Commission debtor to offset the

debt against the funds held and will provide certification that:

(1) The debt exists; and

(2) The person has been afforded the necessary due process rights.

(d) If the six-year period for bringing action on a debt provided

in 28 U.S.C. 2415 has expired, then administrative offset may be used

to collect the debt only if the costs of bringing such action are

likely to be less than the amount of the debt.

(e) No collection by administrative offset shall be made on any

debt that has been outstanding for more than 10 years unless facts

material to the Government's right to collect the debt were not known,

and reasonably could not have been known, by the official or officials

responsible for discovering and collecting such debt.

(f) These regulations do not apply to:

(1) A case in which administrative offset of the type of debt

involved is explicitly provided for or prohibited by another statute;

or

(2) Debts owed by other agencies of the United States or by any

State or local government.

Sec. 505.4 Notification procedures.

Before collecting any debt through administrative offset, a notice

of intent to offset shall be sent to the debtor by certified mail,

return receipt requested, at the most current address that is available

to the Commission. The notice shall provide:

(a) A description of the nature and amount of the debt and the

intention of the Commission to collect the debt through administrative

offset;

(b) An opportunity to inspect and copy the records of the

Commission with respect to the debt;

(c) An opportunity for review within the Commission of the

determination of the Commission with respect to the debt; and

(d) An opportunity to enter into a written agreement for the

repayment of the amount of the debt.

Sec. 505.5 Agency review.

(a) A debtor may dispute the existence of the debt, the amount of

debt, or the terms of repayment. A request to review a disputed debt

must be submitted to the Commission official who provided notification

within 30 calendar days of the receipt of the written notice described

in Sec. 505.4.

(b) If the debtor requests an opportunity to inspect or copy the

Commission's records concerning the disputed claim, 10 business days

will be granted for the review. The time period will be measured from

the time the request for inspection is granted or from the time the

copy of the records is received by the debtor.

(c) Pending the resolution of a dispute by the debtor, transactions

in any of the debtor's account(s) maintained in the Commission may be

temporarily suspended. Depending on the type of transaction the

suspension could preclude its payment, removal, or transfer, as well as

prevent the payment of interest or discount due thereon. Should the

dispute be resolved in the debtor's favor, the suspension will be

immediately lifted.

(d) During the review period, interest, penalties, and

administrative costs authorized under the Federal Claims Collection Act

of 1996, as amended, will continue to accrue.

Sec. 505.6 Written agreement for repayment.

A debtor who admits liability but elects not to have the debt

collected by administrative offset will be afforded an opportunity to

negotiate a written agreement for the repayment of the debt. If the

financial condition of the debtor does not support the ability to pay

in one lump-sum, reasonable installments may be considered. No

installment arrangement will be considered unless the debtor submits a

financial statement, executed under penalty of perjury, reflecting the

debtor's assets, liabilities, income, and expenses. The financial

statement must be submitted within 10 business days of the Commission's

request for the statement. At the Commission's option, a confess-

judgment note or bond of indemnity with surety may be required for

installment agreements. Notwithstanding the provisions of this section,

any reduction or compromise of a claim will be governed by 4 CFR part

103.

Sec. 505.7 Administrative offset.

(a) If the debtor does not exercise the right to request a review

within the time specified in Sec. 505.5 or if as a result of the

review, it is determined that the debt is due and no written agreement

is executed, then administrative offset shall be ordered in accordance

with these regulations without further notice.

(b) Requests for offset to other Federal agencies. The Chairman or

his or her designee may request that funds due and payable to a debtor

by another Federal agency be administratively offset in order to

collect a debt owed to the Commission by that debtor. In requesting

administrative offset, the Commission, as creditor, will certify in

writing to the Federal agency holding funds of the debtor:

(1) That the debtor owes the debt;

(2) The amount and basis of the debt; and

(3) That the agency has complied with the requirements of 31 U.S.C.

3716, its own administrative offset regulations and the applicable

provisions of 4 CFR part 102 with respect to providing the debtor with

due process.

(c) Requests for offset from other Federal agencies. Any Federal

agency may request that funds due and payable to its debtor by the

Commission be administratively offset in order to collect a debt owed

to such Federal agency by the debtor. The Commission shall initiate the

requested offset only upon:

(1) Receipt of written certification from the creditor agency:

(i) That the debtor owes the debt;

(ii) The amount and basis of the debt;

(iii) That the agency has prescribed regulations for the exercise

of administrative offset; and

(iv) That the agency has complied with its own administrative

offset regulations and with the applicable provisions of 4 CFR part

102, including providing any required hearing or review.

(2) A determination by the Commission that collection by offset

against funds payable by the Commission would be in the best interest

of the United States as determined by the facts and circumstances of

the particular case, and that such offset would not otherwise be

contrary to law.

Sec. 505.8 Jeopardy procedure.

The Commission may effect an administrative offset against a

payment to be made to the debtor prior to the completion of the

procedures required by Secs. 505.4 and 505.5 of this part if failure to

take the offset would substantially jeopardize the Commission's ability

to collect the debt, and the time before the payment is to be made does

not reasonably permit the completion of those procedures. Such prior

offset shall be promptly followed by the completion of those

procedures. Amounts recovered by offset but later found not to be owed

to the Commission shall be promptly refunded.

By the Commission.

Joseph C. Polking,

Secretary.

[FR Doc. 96-24717 Filed 9-25-96; 8:45 am]

BILLING CODE 6730-01-M