[Federal Register: June 11, 1997 (Volume 62, Number 112)]
[Proposed Rules]
[Page 31763-31766]

[[Page 31763]]

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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

[[Page 31765]]

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

[[Page 31766]]

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.
* * * * *
[FR Doc. 97-15182 Filed 6-10-97; 8:45 am]
BILLING CODE 6325-01-M