Processing Garnishment Orders for Child Support and Alimony and Commercial Garnishment of Federal Employees' Pay

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 581 and 582

RIN 3206-AH43

Processing Garnishment Orders for Child Support and Alimony and

Commercial Garnishment of Federal Employees' Pay

AGENCY: Office of Personnel Management.

ACTION: Proposed rulemaking.

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SUMMARY: The Office of Personnel Management (OPM) proposes to amend the

rules for processing garnishment orders for child support and alimony

and the rules for processing commercial garnishment orders. The

majority of the amendments to the child support and alimony garnishment

regulations (``support regulations'') are mandated by the provisions of

the Personal Responsibility and Work Opportunity Reconciliation Act of

1996.

In addition, OPM proposes to amend both the support regulations and

the commercial garnishment regulations to provide that while the

Federal Government's sovereign immunity has been waived to allow for

processing garnishment orders, this waiver necessarily limited and that

the Federal Government is not liable to pay money damages for failure

to comply with legal process.

DATES: Comments should be received by August 11, 1997.

ADDRESSES: Send or deliver comments to Lorraine Lewis, General Counsel,

Office of Personnel Management, Room 7355, 1900 E Street NW.,

Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT:

Murray M. Meeker, Senior Attorney, Office of the General Counsel, (202)

606-1701.

SUPPLEMENTARY INFORMATION: In accordance with the Personal

Responsibility and Work Opportunity Reconciliation Act of 1996, Public

Law 104-193, enacted on August 22, 1996, OPM proposes to revise the

definition of ``child support'' to permit the garnishment of attorney

fees relating to the garnishment action. OPM also proposes to include

three more types of Federal payments, that will be subject to

garnishment: pension payments disbursed by the Department of Veterans

Affairs; compensation for death payments; and ``black lung'' benefits

payable under any Federal program.

While not expressly mandated by Public Law 104-193, OPM believes

that it was the intent of Congress in enacting this law, that awards

for making suggestions as authorized by 5 U.S.C. 4503 be subject to

support garnishment. OPM is, therefore, proposing to delete the

exception for suggestion awards in section 581.104(j). These awards

remain exempt from commercial garnishment orders.

OPM proposes amendments to clarify section 581.105 concerning the

precedence of tax levies and section 581.402 concerning the

applicability of the maximum limitation of the Consumer Credit

Protection Act, 15 U.S.C. 1673, in the unusual situation where an

employee-obligor receives remuneration from more than one governmental

entity.

In compliance with the National Defense Authorization Act (NDAA)

for Fiscal Year 1996, Public Law 104-106, enacted on February 10, 1996,

OPM proposes to amend section 582.305(k) to require employing agencies

to deduct the agency's administrative costs incurred in complying with

commercial garnishment orders. In accordance with the intent of

Congress as evidenced by the applicable legislative history of the

NDAA, the creditor will be required to pay these costs.

As requested by the Department of Justice, OPM is also proposing to

amend section 582.305(c) where an appeal of a commercial garnishment

action is filed and to amend section 582.305(g) in response to an issue

raised in a recent judicial decision, First Virginia Bank v. Randolph,

920 F.Supp. 213 (D.D.C. 1996), rev'd, No. 96-5205 (D.C. Cir. April 11,

1997). Section 582.305(g) currently provides that where an employing

agency initially determines that legal process should not be honored,

if it subsequently determines that the initial determination was

erroneous, the agency may correct its initial determination and honor

the legal process. The district court indicated that the current

section 582.305(g) supported the court's holding that Congress had

waived the Federal Government's immunity in instances where an

employing agency failed to comply with a commercial garnishment order.

OPM's regulations are neither intended, nor may they be properly

constructed, as support for the conclusion that Congress has waived the

Federal Government's sovereign immunity in a manner that would make the

Federal Government liable for damages as a result of a failure to

comply with legal process. The proposed amendment to section 582.305(g)

would delete both that portion of the paragraph that discusses an

agency's authority to correct an error and the conclusion that under no

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

originally honored the legal process, as this provision may be

mistakenly construed as acknowledging Government liability and a

concomitant waiver of sovereign immunity.

OPM also proposed, in accordance with a request from the Justice

Department, to amend section 581.305(e) to state the Government's

similar absence of liability in the context of improperly effectuated

support garnishment orders. It is the Federal Government's position

that the support garnishment statute did not waive sovereign immunity

in a manner that would make the Federal Government liable for damages

as a result of failure to comply with legal process. This amendment to

the support garnishment regulations alters regulatory language that has

been in effect since 1980. The current regulatory language is incorrect

as a matter of law. This amendment is in accordance with several

important judicial decisions concerning sovereign immunity, including

the decision recently announced by the United States Court of Appeals

for the District of Columbia Circuit in Department of the Army v.

Federal Labor Relations Authority, 56 F.3d 273 (1995).

In accordance with the Minimum Wage Increase Act of 1996, section

2104 of Public Law 104-188, OPM is amending section 582.402. Effective

October 1, 1996, section 2104 set the minimum hourly wage at $4.75, and

[[Page 31764]]

effective September 1, 1997, the minimum hourly wage will be $5.15.

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.

Executive Order 12866, Regulatory Review

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

in accordance with Executive Order 12866.

List of Subjects in 5 CFR Parts 581 and 582

Alimony, Child support, Claims, Government employees, and Wages.

U.S. Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is proposing to amend parts 581 and 582 of Title

5, Code of Federal Regulations, as follows:

PART 581--PROCESSING GARNISHMENT ORDERS FOR CHILD SUPPORT AND

ALIMONY

1. The authority citation for part 581 is revised as follows:

Authority: 42 U.S.C. 659; 15 U.S.C. 1673; E.O. 12105 43 FR 59465

and 3 CFR, 1979 Comp., p. 262.

2. Section 581.101 is revised to read as follows:

Sec. 581.101 Purpose.

(a) Notwithstanding any other provision of law (including section

407 of title 42, United States Code, section 5301 of title 38, United

States Code, and sections 8346 and 8470 of title 5, United States

Code), section 659 of title 42, United States Code, as amended,

provides that moneys, the entitlement to which is based upon

remuneration for employment, due from, or payable by, the United States

or the District of Columbia to any individual, shall be subject, in

like manner and to the same extent as if the United States or the

District of Columbia were a private person:

(1) To legal process for the enforcement of an obligor's legal

obligations to provide child support, alimony, or both, resulting from

an action brought by an individual obligee; and

(2) To withholding in accordance with State law enacted pursuant to

subsections (a)(1) and (b) of section 666 of title 42, United States

Code, and to regulations of the Secretary of Health and Human Services

under such subsections, and to any other legal process brought by a

State agency subject to regulations of the Secretary of Health and

Human Services that is administering a program under an approved State

plan to enforce the legal obligations of obligors to provide child

support and alimony.

(b) Section 659 of title 42, United States Code, as amended,

provides further that each governmental entity shall be subject to the

same requirements as would apply if the governmental entity were a

private person, except as set forth in this part.

3. In Sec. 581.102, paragraphs (d) and (f) are revised and

paragraph (k) is added to read as follows:

Sec. 581.102 Definitions.

* * * * *

(d) Child support means the amounts required to be paid for the

support and maintenance of a child, including a child who has attained

the age of majority under the law of the issuing State, or a child and

the parent with whom the child is living, who provides for monetary

support, health care, arrearages or reimbursement, and which may

include other related costs and fees, interest and penalties, income

withholding, attorney's fees, and other relief.

* * * * *

(f) Legal process means any writ, order, summons, notice to

withhold income pursuant to subsection (a)(1) or (b) of section 666 of

title 42, United States Code, or other similar process in the nature of

garnishment, which may include an attachment, writ of execution, or

court ordered wage assignment, which--

(1) Is issued by:

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

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

States, or the District of Columbia;

(ii) A court of competent jurisdiction in any foreign country with

which the United States has entered into an agreement that requires the

United States to honor such process; or

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

competent jurisdiction or pursuant to State or local law; or

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

pursuant to State or local law or pursuant to the requirements of

section 666(b) to title 42 of the United States Code; and

(2) Is directed to, and the purpose of which is to compel, a

governmental entity, to make a payment from moneys otherwise payable to

an individual, to another party to satisfy a legal obligation of the

individual to provide child support, alimony, or both

* * * * *

(k) Individual obligee means any individual or entity other than a

State agency authorized to issue income withholding notices pursuant to

the requirements of section 666(b) to title 42 of the United States

Code.

4. In Sec. 581.103, paragraph (c) is revised to read as follows:

Sec. 581.103 Moneys which are subject to garnishment.

* * * * *

(c) For obligors generally:

(1) Periodic benefits, including a periodic benefit as defined in

section 429(h)(3) of title 42 of the United States Code, title II of

the Social Security Act, to include a benefit payable in a lump sum if

it is commutation of, or a substitute for, periodic payments; or other

payments to these individuals under the programs established by

subchapter II of chapter 7 of title 42 of the United States Code

(Social Security Act); pension payments made by the Department of

Veterans Affairs; and payments under chapter 9 of title 45 of the

United States Code (Railroad Retirement Act) or any other system, plan,

or fund established by the United States (as defined in section 662(a)

of title 42 of the United States Code) which provides for the payment

of:

(i) Pensions;

(ii) Retirement benefits;

(iii) Retired/retainer pay;

(iv) Annuities; and

(v) Dependents' or survivors' benefits when payable to the obligor;

(2) Refunds of retirement contributions where an application has

been filed;

(3) Employee contributions and Government contributions to the

obligor's Thrift Savings Fund account in accordance with section

8437(e) of title 5 of the United States Code;

(4) Amounts received under any Federal program for compensation for

work injuries; and

(5) Benefits received under the Longshoremen's and Harbor Workers'

Compensation Act.

(6) Compensation for death under any Federal program, including

death gratuities authorized under 5 U.S.C. 8133(f); 5 U.S.C. 8134(a);

Public Law 103-332, section 312; and Public Law 104-208, section 651.

(7) Any payment under any Federal program established to provide

``black lung'' benefits;

(8) Any payment by the Secretary of Veterans Affairs as

compensation for a service-connected disability paid by the Secretary

to a former member of the

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Armed Forces who is in receipt of retired or retainer pay if the former

member has waived either the entire amount or a portion of the retired

or retainer pay in order to receive such compensation. In such cases,

only that part of the Department of Veterans Affairs payment that is in

lieu of the waived retired pay or waived retainer pay is subject to

garnishment.

Sec. 581.104 [Amended]

5. In Sec. 581.104, paragraph (j) is removed and paragraph (k) is

redesignated as paragraph (j).

6. In Sec. 581.105, paragraph (a) is revised to read as follows:

Sec. 581.105 Exclusions.

* * * * *

(a) Are owed by the individual to the United States, except that an

indebtedness based on a levy for income tax under section 6331 of title

26 of the United States Code, shall not be excluded in complying with

legal process for the support of minor children if the legal process

was entered prior to the date of the levy;

* * * * *

7. In Sec. 581.202, paragraphs (a) and (b) are revised to read as

follows:

Sec. 581.202 Service of process.

(a) A party using this part shall serve legal process on the agent

designated in appendix A to this part, or if no agent has been

designated for the governmental entity having payment responsibility

for the moneys involved, then upon the head of that governmental

entity, which has moneys due and payable to the obligor. Where the

legal process is directed to, and the purpose of the legal process is

to compel a governmental entity which holds moneys which are otherwise

payable to an individual, to make a payment from such moneys in order

to satisfy a legal obligation of such individual to provide child

support or make alimony payments, the legal process need not expressly

name the governmental entity as a garnishee.

(b) Service shall be accomplished pursuant to State procedures in

effect pursuant to subsection (a)(1) or (b) of section 666 of title 42

of the United States Code. The designated agent shall note the date and

time of receipt on the legal process. The governmental entity shall

make every reasonable effort to facilitate proper service of process on

its designated agent(s). If legal process is not directed to any

particular official within the entity, or if it is addressed to the

wrong individual, the recipient shall, nonetheless, forward the legal

process to the designated agent. However, valid service is not

accomplished until the legal process is received in the office of the

designated agent.

* * * * *

8. In Sec. 581.303, paragraph (a) is revised to read as follows:

Sec. 581.303 Response to legal process or interrogatories.

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

process pursuant to State procedures in effect pursuant to subsection

(a)(1) or (b) of section 666 of title 42, United States Code, within 30

calendar days, or within such longer period as may be prescribed by

applicable State law, the agent shall comply with all applicable

provisions of section 666, including as follows:

(1) If an agent is served with notice concerning amounts owed by an

obligor to more than one person, the agent shall comply with section

666(b)(7);

(2) Allocation of moneys due and payable to an individual under

section 666(b) shall be governed by section 666(b) and the regulations

prescribed under such section by the Secretary of Health and Human

Services;

(3) Such moneys as remain after compliance with paragraphs (a)(1)

and (a)(2) of this section shall be available to satisfy any other such

legal process on a first-come, first-served basis, with any such legal

process being satisfied out of such moneys as remain after the

satisfaction of all such legal process which have been previously

served.

(4) The agent shall also respond within 30 days to interrogatories

which accompany legal process.

* * * * *

9. In Sec. 581.305, paragraphs (d) and (e) are revised to read as

follows:

Sec. 581.305 Honoring legal process.

* * * * *

(d) If a governmental entity is served with more than one legal

process for the same moneys due or payable to an individual, the entity

shall comply with Sec. 581.303(a). Provided, That in no event will the

total amount garnished for any pay or disbursement cycle exceed the

applicable limitation set forth in Sec. 581.402.

(e)(1) Neither the United States, any disbursing officer, nor any

governmental entity 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.

(2) Neither the United States, any disbursing officer, nor any

governmental entity shall be liable under this part to pay money

damages for failure to comply with legal process.

* * * * *

10. In subpart D, Sec. 581.402 is revised to read as follows:

Sec. 581.402 Maximum garnishment limitations.

(a) Except as provided in paragraph (b) of this section, pursuant

to section 1673(b)(2) (A) and (B) of title 15 of the United States Code

(the Consumer Credit Protection Act, as amended), unless a lower

maximum garnishment limitation is provided by applicable State or local

law, the maximum part of the aggregate disposable earnings subject to

garnishment to enforce any support order(s) shall not exceed:

(1) Fifty percent of the obligor's aggregate disposable earnings

for any workweek, where the obligor asserts by affidavit, or by other

acceptable evidence, that he or she is supporting a spouse, a dependent

child, or both, other than the former spouse, child, or both, for whose

support such order is issued, except that an additional five percent

will apply if it appears on the face of the legal process, or from

other evidence submitted in accordance with Sec. 581.202(d), that such

earnings are to enforce a support order for a period which is 12 weeks

prior to that workweek. An obligor shall be considered to be supporting

a spouse, dependent child, or both, only if the obligor provides over

half of the support for a spouse, dependent child or both.

(2) Sixty percent of the obligor's aggregate disposable earnings

for any workweek, where the obligor fails to assert by affidavit or

establishes by other acceptable evidence, that he or she is supporting

a spouse, dependent child, or both, other than a former spouse, child,

or both, with respect to whose support such order is issued, except

that an additional five percent will apply if it appears on the face of

the legal process, or from other evidence submitted in accordance with

Sec. 581.202(d), that such earnings are to enforce a support order for

period which is 12 weeks prior to that workweek.

(3) Where, under Sec. 581.302(a)(2), an obligor submits evidence

that he or she is supporting a second spouse, child, or both a second

spouse and dependent child, copies of the evidence shall be sent by the

governmental entity to the garnishor, or the garnishor's

representative, as well as the court, or other authority as specified

in Sec. 581.102(f)(1), together with notification that the obligor's

support claim will be honored. If the garnishor disagrees with the

obligor's support

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claim, the garnishor should immediately refer the matter to the court,

or other authority, for resolution.

(b) In instances where an obligor is receiving remuneration from

more than one governmental entity, an authority described in

Sec. 581.102(f)(1) may apply the limitations described in paragraph (a)

of this section to the total remuneration, i.e., to the combined

aggregate disposable earnings received by the obligor.

PART 582--COMMERCIAL GARNISHMENT OF FEDERAL EMPLOYEES' PAY

11. The authority citation for part 582 is revised as follows:

Authority: 5 U.S.C. 5520a; 15 U.S.C. 1673; Pub. L. 104-106,

section 643; E.O. 12897, 3 CFR, 1995 Comp., p. 858.

12. In Sec. 582.305, paragraphs (c), (g), and (k) are revised to

read as follows:

Sec. 582.305 Honoring legal process.

* * * * *

(c) (1) 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

shall 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.

(2) Notwithstanding paragraph (c)(1) of this section, the employing

agency shall not be required to establish an escrow account to comply

with legal process even if the applicable law of the jurisdiction

requires private employers to do so.

* * * * *

(g) (1) 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.

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

disbursing officer shall be liable under this part to pay money damages

for failure to comply with legal process.

* * * * *

(k) The agency's administrative costs incurred in executing a

garnishment shall be paid by the creditor. The amount garnished,

including the amount deducted as a administrative costs, may not exceed

the limitations in Sec. 582.401

[Example to paragraph (k): Where the employee-obligor's

aggregate disposable earnings are $1,000; the commercial garnishment

is at the 25% maximum percentage; and the cost of processing the

commercial garnishment order is $25 per garnishment action: $225

would be remitted in compliance with the order and $25 would be

deducted as the administrative cost for a deduction total of $250.

However, while only $225 would be remitted, the agency would reduce

the balance due as if $250 had been remitted.]

* * * * *

13. In Sec. 582.402, paragraph (a) is revised to read as follows:

Sec. 582.402 Maximum garnishment limitations.

* * * * *

(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 Standard Act (FLSA)

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

disposable earnings may be garnished. For example, effective September

1, 1997, when the FLSA minimum wage rate is $5.15 per hour, this rate

multiplied by 40 equals $206.00 and thus, if an employee-obligor's

aggregate disposable earnings are in excess of $206.00 for a workweek,

25 percent of the employee-obligor's aggregate 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 $5.15 per hour, the

amount of aggregate disposable earnings which may not be garnished is

$154.50 [$5.15 x 30]. Only the amount above $154.50 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.

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[FR Doc. 97-15182 Filed 6-10-97; 8:45 am]

BILLING CODE 6325-01-M