This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

39567

Vol. 65, No. 124

Tuesday, June 27, 2000

SMALL BUSINESS ADMINISTRATION

13 CFR Parts 134 and 140

Administrative Wage Garnishment

AGENCY: Small Business Administration.

ACTION: Notice of proposed rulemaking.

SUMMARY: SBA is issuing a proposed

rule adopting administrative wage

garnishment regulations to implement

the Debt Collection Improvement Act of

1996. The rule would allow SBA to

garnish the wages of a person indebted

to the United States for any non-tax debt

without first obtaining a judgment. The

debtor generally would be entitled to a

hearing before a Judge assigned to SBA’s

Office of Hearings and Appeals.

DATES: Submit comments on or before

August 28, 2000.

ADDRESSES: Send all comments

concerning this proposed rule to:

Arnold S. Rosenthal, Assistant

Administrator, Office of Portfolio

Management, Small Business

Administration, 409 Third Street SW.,

Washington, DC 20416.

Submit electronic comments and

other data to: Walter.Intlekofer@sba.gov.

See SUPPLEMENTARY INFORMATION for file

formats and other information about

electronic filing.

FOR FURTHER INFORMATION CONTACT:

Arnold S. Rosenthal, Assistant

Administrator, Office of Portfolio

Management, (202) 205–6481.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

You may submit comments and data

by sending electronic mail (E-mail) to:

Walter.Intlekofer@sba.gov. Submit

comments as Microsoft Word 97 or as

ASCII files avoiding the use of special

characters and any form of encryption.

Identify all comments and data in

electronic form with the title,

‘‘Administrative Wage Garnishment

Regulations.’’ You may file electronic

comments on this proposed rule online

at many Federal Depository Libraries.

Public Review of Comments

Whether you comment on paper or

electronically, your comments,

including name, street address, or other

contact information (such as e-mail

address, FAX, or phone number), will

be available for public review at this

address during regular business hours (8

a.m. to 5 p.m.), Monday through Friday,

except federal holidays. You may

request confidentiality. If you want us to

consider withholding your contact

information from public review or from

FOIA disclosure, you must state this

prominently at the beginning of your

comment. We will honor requests for

confidentiality, to the extent the law

allows, on a case-by-case basis. If you

are an organization or business, or

identify yourself as a representative or

official of an organization or business,

we will make your entire submission

available for public inspection.

Background

SBA is issuing a proposed rule

adopting administrative wage

garnishment regulations implementing

the Debt Collection Improvement Act

(DCIA) of 1996. The Department of the

Treasury garnishment regulations

require agencies to publish regulations

for administrative wage garnishment

hearings.

Rulemaking History

Department of the Treasury (Treasury)

published its proposed rules, with

detailed analysis, at 62 FR 62458, Nov.

21, 1997 (Treasury Proposed Rule).

After receiving written comments,

Treasury published its final rule,

discussing comments and changes in

the final rules, at 63 FR 25136, May 6,

1998 (Treasury Final Rule). Treasury

has since published a technical

amendment at 64 FR 22906, April 28,

1999 (Treasury Technical Amendment).

The rule, with the technical

amendment, is now published in the

Code of Federal Regulations as 31 CFR

285.11.

SBA issued a proposed rule amending

its debt collection through offset

regulations, 13 CFR part 140, to conform

to the Debt Collection Procedures Act of

1996 and the DCIA, at 64 FR 3454, Jan

22, 1999 (Proposed Offset Rule). In

anticipation of the administrative wage

garnishment regulations, the Proposed

Offset Rule sets forth general rules,

applicable to offset collections and

administrative wage garnishments, at

subpart A of 13 CFR part 140 and rules

pertaining only to offset at subpart B of

13 CFR part 140. The comment period

for the Proposed Offset Rule ended

February 22, 1999, and the SBA

anticipates issuing a final rule (Final

Offset Rule) shortly. This proposed rule

takes into account SBA’s regulations as

the Final Offset Rule would amend

them; therefore, this proposed rule

includes citations that now do not exist

as such but will be effected by the

Proposed Offset Rule.

Same Organization as Treasury Final

Rule

The core of this proposed rule, to be

published in the Code of Federal

Regulations as 13 CFR 140.11, is

identical in subsection, paragraph, and

subparagraph organization to 31 CFR

285.11. Thus, for example, section

285.11(f)(11) of the Treasury Final Rule

corresponds to section 140.11(f)(11) of

this proposed rule.

Conformity in Substance to Treasury

Final Rule

Except as stated below, this proposed

rule is substantially identical to the

Treasury Final Rule.

Variation in Substance From Treasury

Final Rule

This proposed rule provides for a

hearing by a Judge assigned to the case

by SBA’s Assistant Administrator for

Hearings and Appeals (AA/OHA), rather

than a hearing official designated by the

Administrator. Additionally, it makes

minor editorial changes in accordance

with Administration plain-language

directives.

Basic Provisions

The rule would permit SBA to garnish

the wages of a person indebted to the

United States for any non-tax debt

without first obtaining a judgment. SBA

merely notifies the debtor it intends to

garnish his/her wages. Subject to the

exercise of appeal rights, SBA then may

notify the debtor’s employer (any state

or local government or private

employer, but not the federal

government) to begin the garnishment.

The OHA hearing, with a written

decision by a Judge, will enhance the

credibility and fairness of SBA’s

garnishment appeal procedure and will

ensure due process.

39568 Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Proposed Rules

Rules and Procedures

Except as stated below, this proposed

rule would establish for the SBA the

substantive and procedural

requirements of the Treasury Final Rule.

Section Analysis

The following is a section-by-section

analysis of how this proposed rule

would affect SBA’s regulations. This

proposed rule would:

• Amend Section 134.101 (Definitions) to

define ‘‘business day,’’ used in

§ 134.202(c)(ii);

• Amend Section 134.102(i) (Jurisdiction

of OHA) to add collection of debts under

DCIA to the jurisdiction of SBA’s Office of

Hearings and Appeals (OHA);

• Amend Section 134.202

(Commencement of cases) to specify the time

limit for requesting a hearing on an

administrative wage garnishment;

• Amend Section 134.222(a) (Availability

of oral hearing) to add administrative wage

garnishment to that group of cases in which

a party might obtain an oral hearing;

• Amend Section 134.226(b) (Time limits

for decision) to add collection of debts under

DCIA to that group of cases in which OHA

must render a decision within 60 days;

• Amend Section 134.227(a) (Final

decisions) to add collection of debts under

DCIA to that group of cases in which OHA’s

decision constitutes a final agency decision;

• Amend Section 140.1 (Coverage) to

specify the coverage of subpart A of part 140;

• Amend Section 140.2 (Definitions) to

add definitions pertaining to administrative

wage garnishment;

• Add Section 140.3, a table showing

features of part 140’s debt collection

methods;

• Add Section 140.10 (Coverage) to specify

the coverage of subpart C of part 140; and

• Add Section 140.11 (Administrative

wage garnishment) to implement the

Treasury Final Rule, with the following

modifications:

1. Definitions.

Section 285.11(c) of the Treasury

Final Rule contains definitions. Section

140.11(c) contains no definitions, but

incorporates by reference § 140.2, which

defines terms applicable to debt

collections through both offset and

administrative wage garnishment.

Except as stated below, the definitions

pertaining to administrative wage

garnishment are substantially identical

to those in the Treasury Final Rule.

Business day. Section 285.11(c) of the

Treasury Final Rule defines ‘‘business

day’’ as ‘‘Monday through Friday,’’ then

tells the reader to count the last day of

the period unless it was a Federal legal

holiday. The SBA believes all federal

legal holidays, not merely those on the

last day of a given period, are properly

excluded from the term ‘‘business day.’’

Therefore, proposed § 140.2(c) would

define ‘‘business day’’ as ‘‘Monday

through Friday, excluding federal legal

holidays.’’

Certificate of service. Both the

Treasury Final Rule, 31 CFR 285.11(c),

and SBA’s procedural rules, 13 CFR

134.204 (d), define ‘‘certificate of

service.’’ In the Treasury Final Rule,

‘‘Certificate of service’’ refers only to

documentation by the Agency, not by a

party or by counsel, of which

documents it mailed to the debtor and

when it mailed them.

Under SBA’s procedural rules, such a

certificate of service is inadequate to

document service of pleadings: A party

serving pleadings must prepare a

certificate of service conforming with 13

CFR 134.204(d).

Therefore, proposed § 140.11(d)

applies only to a certificate signed by an

SBA official and retained as evidence of

mailing of a part 140 document, such as

a notice of proposed garnishment or a

garnishment order. When, for example,

a debtor serves a request for hearing

under proposed § 140.11(f)(2), the

certificate of service must conform to

§ 134.204(d).

Debt or claim. The Treasury Final

Rule defined ‘‘debt’’ or ‘‘claim’’ as ‘‘any

amount of money, funds or property

that has been determined by an

appropriate official of the Federal

Government to be owed to the United

States by an individual, including debt

administered by a third party as an

agent for the Federal Government.’’ 31

CFR 285.11(c). The SBA believes this

definition raises more questions than it

answers: For example, the meaning of

‘‘appropriate official,’’ which is defined

neither in statute nor in case law.

Because many SBA collections arise

from loan defaults, proposed § 140.2(g)

defines ‘‘debt,’’ in accordance with 31

U.S.C. § 3701(b): ‘‘Debt means money

owed to the United States for any

reason, including loans made or

guaranteed by the United States, fees,

leases, rents, royalties, services, sales of

real or personal property, overpayments,

fines, penalties, damages, interest, or

forfeitures.’’

Additionally, the Treasury Final Rule

defines ‘‘delinquent’’ and ‘‘non-tax’’

under the definition for ‘‘debt or claim.’’

31 CFR 285.11(c). Proposed §§ 140.2(n)

and 140.2(m) would define these key

terms separately.

Delinquent or past due. The Treasury

Final Rule uses ‘‘delinquent,’’ while the

offset regulations use ‘‘past due.’’ The

garnishment statute, 31 U.S.C. § 3720D,

refers to neither. Because ‘‘past due’’ is

clearer than ‘‘delinquent,’’ the SBA

adopted ‘‘past due.’’ However, the

Treasury Final Rule’s definition of

‘‘delinquent’’ for purposes of

garnishment differs from that of ‘‘past

due’’ for purposes of offset. Therefore,

the SBA would adopt two definitions of

‘‘past due’’: One, proposed § 140.2(n)(1),

would apply to offset only; the other,

proposed § 140.2(n)(2), would apply to

garnishment only.

Disposable pay. ‘‘Disposable pay’’ is

defined differently in 5 U.S.C. § 5514

and in the Treasury Final Rule. The

garnishment statute, 31 U.S.C. § 3720D,

defines ‘‘disposable pay’’ broadly, as

does 5 U.S.C. § 5514; however, the

Treasury Final Rule excludes ‘‘health

insurance premiums.’’ 31 CFR 285.11(c).

The analysis did not suggest a rationale.

Treasury Final Rule, 63 FR 25136 at

25137; Treasury Proposed Rule, 62 FR

62458 at 62459.

The SBA is reluctant to define

‘‘disposable pay’’ more broadly than in

the Treasury Final Rule. Additionally,

one could argue that sound public

policy favors encouraging debtors to

maintain health insurance, which may

reduce time lost from work and promote

healthy families and businesses.

Therefore, and because this definition

varies from that used in the offset

regulations, the SBA would adopt two

definitions: One, proposed § 140.2(i)(1),

would apply to offset only; the other,

§ 140.2(i)(2), would apply to

garnishment only.

2. Hearing

Section 285.11(f)(1) allows agencies

either to prescribe their own regulations

or to adopt § 285.11 without change.

Proposed § 140.11(f)(1) states that all

procedures set forth in § 140.11, as well

as the provisions of part 134, subparts

A and B, consistent with § 140.11, will

apply to any hearing on an

administrative wage garnishment.

Additionally, SBA is adding two

sentences to proposed § 140.11(f)(1).

These sentences, now part of

§ 285.11(f)(9), state that a hearing need

not be a formal judicial hearing, but that

witnesses who testify in oral hearings

must do so under oath or affirmation.

Because these statements more directly

relate to hearings rather than to the

record, SBA is placing them in proposed

140.11(f)(1).

Section 285.11(f)(2) allows the debtor

to request a hearing concerning the

existence or amount of the debt or the

terms of the repayment schedule unless

the repayment schedule is based on a

written agreement under paragraph

(e)(2)(ii). Proposed § 140.11(f)(2) also

contains this provision. In addition, it

requires the debtor to specifically state

in the request for hearing that the debtor

deserves a hearing because of questions

concerning the existence or amount of

the debt or the terms of the repayment

schedule. The debtor also must file the

Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Proposed Rules 39569

request for hearing with OHA, serving a

copy on the office initiating the

garnishment action. Subsequent

references to the entity to which a

debtor directs a request for hearing

(specifically, (f)(4), (f)(5), and (f)(10))

will substitute ‘‘OHA’’ for the Treasury

Final Rule’s ‘‘agency.’’

Section 285.11(f)(3)(i) states the

agency will determine whether an oral

hearing is required. To ensure a fair

process and decision, proposed

§ 140.11(f)(3)(i) requires the OHA Judge

appointed to the case, rather than SBA,

to determine whether an oral hearing is

justified and to conduct any hearing.

Subsequent paragraphs (specifically,

(f)(4), (f)(5), (f)(6), (f)(7), (f)(9), (f)(10),

(f)(11), (f)(12), and (n)(1)) substitute

‘‘Judge’’ for the Treasury Final Rule’s

‘‘hearing official.’’

Similarly, section 285.11(f)(3)(ii)

requires the agency to set the time and

location of any oral hearing. OHA’s

Judges have authority to ‘‘take all

appropriate action to ensure the

efficient, prompt, and fair determination

of a case.’’ 13 CFR 134.218(b).

Therefore, proposed § 140.11(f)(3)(ii)

places this determination in the hands

of the OHA Judge assigned to the case.

If an oral hearing is not required,

§ 285.11(f)(3)(iii) requires a ‘‘paper

hearing,’’ defined as a resolution based

on the written record. Proposed

§ 140.11(f)(3)(iii) also requires a

resolution based on the written record,

but refers to it as a ‘‘written hearing.’’

Additionally, section 285.11(f)(3)(iii)

requires the agency to set the deadline

for the submission of evidence.

Proposed § 140.11(f)(7)(iii) states the

Judge will notify the debtor of this

deadline, and proposed

§ 140.11(f)(3)(iii) omits the requirement

to set the deadline.

Section 285.11(f)(4) provides that an

agency will conduct a hearing before

issuing a withholding order if the

agency receives the debtor’s request for

a hearing within 15 business days after

the agency mails the notice described in

§ 285.11(e)(1) of this section. This

deadline is inconsistent with proposed

§ 134.202(b), which states that a pregarnishment hearing will be given if the

debtor files a petition within 15

business days after SBA mails the

notification letter to the debtor. Filing is

effective, not only on receipt of a

pleading by personal delivery, express

mail, or commercial delivery service,

but also on the postmark date of firstclass mail or the transmission date of a

facsimile. 13 CFR 134.204(e). Therefore,

proposed § 140.11(f)(4) reads, ‘‘if you

file your written request,’’ rather than,

‘‘if [your written request] is received by

[SBA].’’

Section 285.11(f)(5) provides that an

agency need not delay issuing a

withholding order unless the agency

receives the debtor’s request for a

hearing within 15 business days after

the agency mails the notice described in

§ 285.11(e)(1). Like that in § 285.11(f)(4),

above, this deadline is inconsistent with

proposed § 134.202(b). Therefore,

proposed § 140.11(f)(5) reads, ‘‘if you

file your written request,’’ rather than,

‘‘if [your written request] is received by

[SBA].’’

Section 185.11(f)(5) states the agency

will determine whether a request for

hearing was untimely for reasons

beyond the debtor’s control or whether

other circumstances justify delaying or

canceling the withholding order.

Proposed 140.11(f)(5) authorizes the

assigned Judge to make this decision.

Section 285.11(f)(6) authorizes the

head of the agency to designate any

qualified individual as a hearing

official, including an Administrative

Law Judge (ALJ). Proposed § 140.11(f)(6)

states that a Judge assigned to OHA will

conduct the hearing. The Assistant

Administrator for Hearings and Appeals

(AA/OHA) may assign any OHA case

not subject to the Administrative

Procedure Act to an ALJ or

Administrative Judge or, if an attorney,

may decide it personally, 13 CFR

134.218(a). Therefore, proposed

§ 140.11(f)(6) is substantially identical

to § 285.11(f)(6), except that the AA/

OHA, rather than the SBA

Administrator, actually assigns the

Judge to each case.

Paragraph (f)(8) describes the burden

of proof on the respective parties to a

hearing. Consistent with the Treasury

Final Rule, proposed § 140.11(f)(8)

requires the debtor to show, by a

preponderance of the evidence, that no

debt exists or that the amount of the

debt is incorrect. Proposed 140.11(f)(8)

also briefly defines ‘‘preponderance of

the evidence’’ in plain English.

Section 285.11(f)(9), first sentence,

requires the hearing official to maintain

a summary record. The term ‘‘summary’’

is not defined; therefore, SBA is

omitting it from proposed § 140.11(f)(9).

OHA’s regulations require a verbatim

record for oral hearings, and any party

can purchase a transcript. 13 CFR

134.222(e). Thus, any record the Judge

keeps will not be verbatim, but will

consist of the entire written record on

appeal.

Additionally, § 285.11(f)(9), in its

second and third sentences, states that

the hearing need not be a formal judicial

hearing, but that witnesses who testify

in oral hearings must do so under oath

or affirmation. These statements more

directly relate to hearings rather than to

the record. Therefore, SBA is placing

those sentences in proposed

§ 140.11(f)(1).

Section 285.11(f)(10) provides that the

hearing official must issue a written

decision within 60 days after receipt of

a hearing request. This deadline is

inconsistent with proposed § 134.226(b),

which provides that a decision

pertaining to debt collection must be

made within 60 days after a petition is

filed. Filing is effective, not only on

receipt of a pleading by personal

delivery, express mail, or commercial

delivery service, but also on the

postmark date of first-class mail or the

transmission date of a facsimile. 13 CFR

134.204(e). Therefore, proposed

§ 140.11(f)(10)) reads, ‘‘after you filed

your request for a hearing,’’ rather than,

‘‘after receipt of [your written request].’’

Similarly, proposed § 285.11(f)(10)(ii)

requires SBA to suspend previously

issued withholding orders beginning on

the 61st day after filing, rather than

receipt, of the hearing request.

3. Wage Garnishment Order.

Section 285.11(g)(1) requires the

agency to send a garnishment order

within specified time limits unless it

receives ‘‘information that the agency

believes justifies a delay or cancellation

of the withholding order.’’ This wording

appears to render the Judge’s decision

irrelevant or, at best, advisory.

Therefore, proposed § 140.11(g)(1)

requires the SBA to send a garnishment

order within specified time limits

unless it receives ‘‘an adverse decision

from the Judge or other justification to

delay or cancel the withholding order.’’

In the Treasury Final Rule,

§ 285.11(g)(2) provided in part that the

withholding order sent to an employer

must be on the garnishing agency’s

letterhead. The Treasury Technical

Amendment deleted the words ‘‘on the

agency’s letterhead’’ from § 285.11(g)(2).

This amendment ‘‘allows * * *

agencies to use [Standard Form (SF) 329

(11–98),] prescribed by [Treasury] for

the issuance of an administrative wage

garnishment order[,] without preparing

the form on agency letterhead.’’

Treasury Technical Amendment, 64 FR

22906, 22908 (1999). Because the form

will clearly identify SBA as the

garnishing agency and requiring SBA

letterhead would interfere with use of

SF 329, SBA is adopting this

amendment.

Section 285.11(g)(3), second sentence,

allows the agency to retain an electronic

copy of the certificate of service.

Because the SBA chooses not to exercise

this option, the second sentence does

not appear in proposed § 140.11(g)(3).

39570 Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Proposed Rules

4. Amounts Withheld.

Section 285.11(i)(2)(i)(B) clarifies that

the amount of garnishment is limited by

the Consumer Credit Protection Act

(CCPA). The CCPA, § 303(a)(2), codified

at 15 U.S.C. 1673(a)(2) (maximum

allowable garnishment), sets an

additional limit on the amount of

disposable pay that may be collected

from a debtor’s wages: The difference

between 30 times the minimum hourly

wage and the debtor’s weekly

disposable pay. This subparagraph did

not appear in the Treasury Proposed

Rule; Treasury added it to the final rule

based upon the recommendations of two

commenters. Treasury Final Rule, 63 FR

25136, 25138–39 (1998). However, the

terms ‘‘hourly’’ and ‘‘weekly’’ do not

appear in § 285.11(i)(2)(i)(B). Because

both the comments on the final rule, 63

FR at 25139, and SF 329C (Wage

Garnishment Worksheet), block 9,

clearly indicate those terms are

necessary to understand the limit set by

CCPA, the SBA is inserting them in

proposed § 285.11(i)(2)(i)(B).

Section 285.11(i)(3), introductory

clause, purports to discuss

‘‘withholding orders with priority.’’

However, the subparagraphs of

§ 285.11(i)(3) describe how to determine

whether another withholding order has

priority. Therefore, proposed

§ 140.11(i)(3) replaces ‘‘withholding

orders with priority’’ with ‘‘other

withholding orders.’’

Compliance With the Regulatory

Flexibility Act (5 U.S.C. 601–12); the

Paperwork Reduction Act (44 U.S.C. ch.

35); and Executive Orders 12866,

12988, and 13132

1. Regulatory Flexibility Act

The Administrator, in accordance

with the Regulatory Flexibility Act (5

U.S.C. §§ 601–12), has reviewed this

regulation and certifies that this rule,

including the certification contained in

proposed section 140.11(h), would not

have a significant economic impact on

a substantial number of small entities

within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601–12.

This proposed rule applies only to

individuals, as well as employers of

such individuals, with outstanding

debts to the United States. Though a

substantial number of small entities will

be subject to this proposed regulation

and to its certification requirement, the

requirements will not have a significant

economic impact on these entities.

Though a delinquent debtor’s employer

must certify certain information about

the debtor, including the debtor’s

employment status and earnings, the

employer’s payroll records already

contain this information. Therefore, an

employer will not expend significant

time or expense completing the

certification form. Even if an employer

received withholding orders on several

employees during the year, the cost

imposed on the employer to complete

the certifications would not be

significant. Employers need not vary

normal pay cycles to comply with

withholding orders issued under this

proposed rule.

2. Paperwork Reduction Act of 1995

For purposes of the Paperwork

Reduction Act (44 U.S.C. ch. 35), we

certify this proposed rule would impose

no new reporting or record-keeping

requirements on employers. As noted at

1, above, though an employer of a

delinquent debtor must certify certain

information about the debtor, the

employer’s payroll records already

contain this information; and, even if an

employer received withholding orders

on several employees, the burden of

completing the certifications would not

be significant.

3. Executive Order 12866

a. Significance of This Regulation

We have drafted and reviewed this

regulation in accordance with Executive

Order 12866, section 1(b), Principles of

Regulation. This regulation falls within

a category of regulatory actions that the

Office of Management and Budget

(OMB) does not constitute as

‘‘significant’’ within the meaning of

section 3(f) of Executive Order 12866.

Accordingly, OMB did not require

review of this regulation.

b. Clarity of This Regulation

Executive Order 12866 and the

President’s memorandum of June 1,

1998, require us to write all rules in

plain language. Other ‘‘Plain Language’’

directives include Writing UserFriendly Documents (visited March 22,

2000) <http://www.blm.gov/nhp/NPR/

pe_toc.html>; and the Federal Register

Document Drafting Handbook, October

1998 Revision (visited March 22, 2000)

<http://www.nara.gov/fedreg/

ddhhome.html#top>. Following these

directives, we have reworded many

provisions to help you understand

them.

4. Executive Order 12988

For purposes of Executive Order

12988, we certify we drafted this rule,

to the extent practicable, in accordance

with the standards set forth in Section

3 of that Order.

5. Executive Order 13132

For purposes of Executive Order

13132, we determine this proposed rule

does not have federalism implications to

justify preparing a Federalism

Assessment.

List of Subjects

13 CFR Part 134

Administrative practice and

procedure, Claims, Equal access to

justice, Lawyers, Organization and

functions (Government agencies).

13 CFR Part 140

Administrative practice and

procedure, Claims, Debts, Hearing and

appeal procedures, Salaries, Wages.

Accordingly, under the authority

contained in section 5(b)(6) of the Small

Business Act (15 U.S.C. 634(b)(6)), SBA

proposes to amend 13 CFR parts 134

and 140 as follows:

PART 134—RULES OF PROCEDURE

GOVERNING CASES BEFORE THE

OFFICE OF HEARINGS AND APPEALS

1. The authority citation for part 134

continues to read as follows:

Authority: 5 U.S.C. 504; 15 U.S.C. 632,

634(b)(6), and 637(a).

2. Amend § 134.101 by adding a new

definition for ‘‘Business day’’ in

alphabetical order to read as follows:

§ 134.101 Definitions.

* * * * *

Business day means Monday through

Friday, excluding federal legal holidays.

* * * * *

3. Revise § 134.102(i) to read as

follows:

§ 134.102 Jurisdiction of OHA.

* * * * *

(i) Collection of debts owed to SBA

and the United States under the Debt

Collection Act of 1982, the Debt

Collection Improvement Act of 1996,

and part 140 of this chapter;

* * * * *

4. Amend § 134.202 as follows:

a. Redesignate paragraphs (c) and (d)

as paragraphs (d) and (e), respectively.

b. Add a new paragraph (c) to read as

follows:

§ 134.202 Commencement of cases.

* * * * *

(c) In proceedings for debt collection

by administrative wage garnishment

under part 140, subpart B, of this

chapter:

(1) At any time after SBA mails to

you, as the debtor, the notification letter

described in § 140.11(e)(1);

(2) But no later than 15 business days

after SBA mails the notification letter to

Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Proposed Rules 39571

you, if you desire a hearing before SBA

issues the withholding order to your

employer;

* * * * *

5. Amend § 134.222(a) by adding

paragraph (a)(3) to read as follows:

§ 134.222 Oral hearing.

* * * * *

(a) * * *

(3) In administrative wage

garnishment proceedings under the Debt

Collection Improvement Act of 1996

and part 140, subpart C, of this chapter,

you make a timely request under

§ 140.11(f)(3)(i) of this chapter, and the

Judge finds a genuine dispute as to a

material fact that cannot be resolved

solely by reviewing documents.

* * * * *

6. Revise § 134.226(b) to read as

follows:

§ 134.226 The decision.

* * * * *

(b) Time limits. Decisions pertaining

to the collection of debts owed to SBA

and the United States under the Debt

Collection Act of 1982, the Debt

Collection Improvement Act of 1996,

and part 140 of this chapter must be

made within 60 days after a petition is

filed.

* * * * *

7. Revise § 134.227(a) to read as

follows:

§ 134.227 Finality of decisions.

(a) Final decisions. A decision on the

merits will be a final decision, when

issued, in proceedings concerning the

collection of debts owed to SBA and the

United States, under the Debt Collection

Act of 1982, the Debt Collection

Improvement Act of 1996, and part 140

of this chapter.

* * * * *

PART 140—DEBT COLLECTION

8. Revise part 140 to read as follows:

PART 140—DEBT COLLECTION

Subpart A—General Rules

Sec.

140.1 What does this subpart cover?

140.2 Definitions.

140.3 What debt collection methods does

part 140 provide?

Subpart B—Debt Collection Through Offset

[Reserved]

140.5 What does this subpart cover?

[Reserved]

140.6 How does SBA verify whether I owe

a debt, or collect a debt from me through

offset? [Reserved]

Subpart C—Debt Collection Through

Administrative Wage Garnishment

140.10 What does this subpart cover?

140.11 What type of debt is subject to

administrative wage garnishment, and

how can the SBA get an administrative

wage garnishment of my pay?

Authority: 31 U.S.C. 3711, Collection and

compromise; 31 U.S.C. 3720A, Reduction of

tax refund by amount of debt; 5 U.S.C. 5514,

Installment deduction for indebtedness to the

United States; 31 U.S.C. 3716, Administrative

offset; 15 U.S.C. 634(b)(6), Small Business

Act; 31 U.S.C. 3720, Collection of payments;

31 U.S.C. 3720D, Garnishment.

Subpart A—General Rules

§ 140.1 What does this subpart cover?

This subpart establishes general rules

for subparts B and C of this part.

§ 140.2 Definitions.

Unless otherwise noted, the following

definitions apply to both subpart B and

subpart C of this part.

(a) Administrative offset. To satisfy a

debt, we may withhold money we owe

you or another federal agency owes you.

This procedure is an administrative

offset and is authorized by 31 U.S.C.

3716.

(b) Agency. Agency includes a

department, agency, court, or court

administrative office, in the executive,

judicial, or legislative branch of the

federal government, including

government corporations. For purposes

of this section, agency means either the

agency administering the program

giving rise to the debt or the agency

attempting to recover the debt.

(c) Business day. Business day means

Monday through Friday, excluding

federal legal holidays. To count

business days after an event, count

every day from the day after the event

through the last day, but exclude

Saturdays, Sundays, and federal legal

holidays.

(d) Certificate of service. For purposes

of this part only, certificate of service

means a certificate signed by an agency

official showing the type of document

being sent, the mailing date, and to

whom it was sent. When preparing a

certificate of service for any other

purpose, see § 134.204(d) of this

chapter.

(e) Creditor agency. Creditor agency

means any agency owed a debt that

seeks to collect that debt through

administrative offset.

(f) Day. Day means calendar day. To

count days after an event, count every

day from the day after the event through

the last day, unless the last day is a

Saturday, a Sunday, or a federal legal

holiday; if so, the next working day will

be the last day.

(g) Debt. Debt means money owed to

the United States for any reason,

including loans made or guaranteed by

the United States, fees, leases, rents,

royalties, services, sales of real or

personal property, overpayments, fines,

penalties, damages, interest, or

forfeitures. A debtor is someone who

owes money to the United States from

any source.

(h) Debtor/You/Your. Debtor/You/

Your means a person, organization, or

entity, other than a federal, state, or

local agency, that owes a debt.

(i) Disposable pay. (1) As used in

subpart B of this part (offset), disposable

pay means what remains of your pay

after any amounts required by law are

deducted.

(2) As used in subpart C of this part

(garnishment), disposable pay means

what remains of your pay (including

salary, bonuses, commissions, and

vacation pay) after health insurance

premiums and any amounts required by

law are deducted. ‘‘Amounts required

by law’’ include social security

deductions and withholding taxes, but

do not include amounts withheld

because of a court order.

(j) Employer. Employer means a

person or entity that employs the

services of others and pays their wages

or salaries. The term employer includes

state and local governments, but does

not include a federal agency.

(k) Garnishment. Garnishment means

the process of withholding amounts

from your disposable pay and then

paying those amounts to a creditor to

satisfy a withholding order.

(l) Legally enforceable. As used in

subpart B of this part (offset), a debt is

legally enforceable if, on the date of

offset, SBA’s claim would not be barred

in even one forum, including a state or

federal court or administrative agency.

Non-judgment debts are enforceable for

ten years; judgment debts are

enforceable beyond ten years.

(m) Non-tax. Non-tax means not

related to an obligation under the

Internal Revenue Code of 1986, as

amended.

(n) Past due. (1) As used in subpart B

of this part (offset), a debt is past due

if it has been reduced to judgment,

accelerated, or due for at least 90 days.

(2) As used in subpart C of this part

(garnishment), a past-due debt is one

you have not paid by the date specified

in our initial written demand for

payment or applicable agreement,

unless you have made other satisfactory

payment arrangements.

(o) Salary offset. If you are an active

or retired federal employee (a civilian

employee as defined by 5 U.S.C. 2105,

an employee of the U.S. Postal Service

or Postal Rate Commission, or a member

of the Uniformed Services or Reserve of

the Uniformed Services), we may

39572 Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Proposed Rules

deduct payments owed to the United

States from your paycheck. This

procedure is a salary offset and is

authorized by 5 U.S.C. 5514, 31 U.S.C.

3716, and subpart B of this part.

(1) Any amount deducted from your

salary in any one pay period will not

exceed 15 percent of your disposable

pay, unless you agree in writing to a

greater percentage.

(2) A federal agency also may collect

against travel advances, training

expenses, disallowed payments,

retirement benefits, or any other amount

due you, including lump sum payments.

These collection efforts are not subject

to the 15-percent limitation in

paragraph (o)(1) of this section.

(p) Tax refund offset. We may request

that the Department of the Treasury

(Treasury) reduce your tax refund by the

amount of the debt, as authorized by 31

U.S.C. 3720A. A federal agency, at the

same time, may take additional action

against you to collect the debt. Even if

SBA refers your debt to other agencies

(within six months of the initial notice),

it must review your debt only once

under subpart B and its authorizing

statutes.

(q) Treasury Offset Program. The

Treasury Offset Program, operated

through the Financial Management

Service, is a centralized process that

provides for the offset of federal

payments, including federal tax refunds,

federal salary payments, retirement

payments, and other types of payments,

to collect debts you owe the federal

government.

(r) We/Our/Us. We/Our/Us refers to

the SBA.

(s) Withholding order/wage

garnishment order/garnishment order.

Withholding order/wage garnishment

order/garnishment order refers to an

order issued by an agency or a judicial

or administrative body for withholding

or garnishing pay.

§ 140.3 What debt collection methods

does part 140 provide?.

This table shows some features of the

debt collection methods discussed in

this part.

SBA may use To collect from Under provisions of Subject to review by

(a) Salary offset ............................. Paychecks (including travel advances, training expenses, disallowed payments, retirement

benefits, and lump sum payments) of active or retired federal employees or members, including those U.S. Postal Service, Postal Rate Commission,

and active or reserve uniformed

services.

Part 140, subparts A and B, especially § 140.2(o), § 140.6(a)(4) &

(b)–(d); part 134, subparts A

and B).

Administrative Law Judge, Office

of Hearings and Appeals

(OHA).

(b) Administrative offset ................. Money any agency owes to the

debtor.

Part 140, subparts A and B, especially § 140.2(a), § 140.6(a)(5) &

(b)–(d).

SBA official identified in notice.

(c) Administrative wage garnishment.Disposable pay from employer (including state or local government, but not federal government).Part 140, subparts A and C, especially § 140.2(i), (k); § 140.11;

part 134, subparts A and B.

Judge, Office of Hearings and Appeals (OHA).

Subpart B—Debt Collection Through

Offset [Reserved]

§ 140.5 What does this subpart cover?

[Reserved]

§ 140.6 How does SBA verify whether I

owe a debt, or collect a debt from me

through offset? [Reserved]

Subpart C—Debt Collection Through

Administrative Wage Garnishment

§ 140.10 What does this subpart cover?

This subpart establishes procedures

we may use when we undertake an

administrative wage garnishment. An

administrative wage garnishment allows

us to collect money for past-due non-tax

debt owed to the United States. You

cannot use our failure to follow these

regulations to defend against a suit to

collect a debt.

§ 140.11 What type of debt is subject to

administrative wage garnishment, and how

can the SBA get an administrative wage

garnishment of my pay?

(a) We may collect money from your

disposable pay by an administrative

wage garnishment. This money is used

to satisfy past-due non-tax debt you owe

the United States.

(b) Scope. (1) This section applies to

past-due non-tax debt owed to the

United States arising from an SBA

program or being collected by us.

(2) This section applies despite any

State law.

(3) Nothing in this section prevents us

from settling for less than the full

amount of a debt or suspending or

stopping a debt collection action

authorized by law. See, for example, the

Federal Claims Collection Standards

(FCCS), 4 CFR parts 101–105; see also

part 140, subpart A, of this chapter.

(4) Our receipt of payments under this

section does not prevent us from

pursuing other debt collection remedies.

We may do so separately or together

with administrative wage garnishment.

(5) This section does not apply to the

collection of past-due non-tax debt

owed to the United States from the

wages of federal employees. Federal pay

is subject to the federal salary offset

procedures set forth in 5 U.S.C. 5514

and other laws, including subpart B of

this part.

(6) Nothing in this section requires us

to duplicate notices or hold

administrative proceedings required by

contract, other laws, or regulations.

(c) Definitions. Unless otherwise

stated, the definitions in § 140.2 apply

to terms used in this section.

(d) When may the SBA initiate

administrative wage garnishment

proceedings? When we determine you

owe a past-due non-tax debt, we may

initiate administrative wage

garnishment proceedings to withhold a

portion of your wages to satisfy the debt.

(e) What notice must the SBA give the

debtor before beginning an

administrative wage garnishment? (1)

We must send a written notice by firstclass mail to your last known address at

least 30 days before we begin

garnishment proceedings. The notice

must inform you of:

(i) The type and amount of the debt;

(ii) SBA’s plans to collect the debt by

making deductions from your pay until

the debt and all interest, penalties, and

administrative costs are paid in full; and

(iii) An explanation of your rights,

including those in paragraph (e)(2) of

Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Proposed Rules 39573

this section, and a statement about the

amount of time you have to take action

before wage garnishment begins.

(2) We must give you the opportunity

to:

(i) Inspect and copy our records

related to the debt;

(ii) Enter into a written repayment

agreement with us under terms

agreeable to us; and

(iii) Have a hearing as described in

paragraph (f) of this section. The hearing

may address the existence of the debt,

the amount of the debt, or the terms of

the proposed repayment schedule under

the withholding order. You are not

entitled to a hearing about the terms of

a written repayment schedule, as

described in paragraph (e)(2)(ii) of this

section.

(3) We will retain a copy of a

certificate of service showing when we

mailed the notice of wage garnishment

proceedings.

(f) Hearing. (1) What type of hearing

must SBA give me? The procedures in

this section, as well as procedures in

part 134, subparts A and B of this

chapter (Rules of Procedure Governing

Cases Before the Office of Hearings and

Appeals) that are consistent with this

section, apply to your SBA hearing. A

hearing need not be a formal judicial

hearing. However, witnesses who testify

in oral hearings must do so under oath

or affirmation.

(2) Request for hearing. We must

provide you with a hearing if you

request one. Your request for a hearing

must be in writing. You must send the

original request to SBA’s Office of

Hearings and Appeals (OHA) and a copy

to the office initiating the garnishment

action. Your written request must state

you deserve a hearing because of

questions about whether the debt exists,

the amount of the debt, or the

repayment terms. You must specifically

describe the basis for each of these

questions. You cannot raise questions

about a written debt repayment

agreement under paragraph (e)(2)(ii) of

this section.

(3) Type of hearing. (i) We must

provide you with an oral hearing when

the Judge appointed to conduct the

hearing determines that he or she

cannot resolve the issues by reviewing

documents.

(ii) If the Judge determines that you

should have an oral hearing, he or she

will set the time and location. You may

choose whether the oral hearing is

conducted in person or by telephone.

You must pay all travel expenses

resulting from an in-person hearing. We

will pay telephone charges for

telephone hearings.

(iii) When an oral hearing is not

required, the Judge must conduct a

‘‘written hearing,’’ after which the Judge

decides the issues based upon a review

of documents.

(4) Effect of a timely request for a

hearing. We will not issue a

withholding order if you file your

written request for a hearing on or

before the 15th business day after we

mailed the notice informing you of the

wage garnishment. We will not issue the

withholding order until a Judge

conducts a hearing and makes a

decision, as required in paragraphs

(f)(10) and (f)(11) of this section.

(5) Effect of an untimely request for a

hearing. If you file your written request

for a hearing more than 15 business

days after we mailed your garnishment

notice, the Judge still will give you a

hearing. However, we will not delay

issuing the withholding order to your

employer. We will delay issuing a

withholding order only if the Judge

decides your request was untimely for

reasons beyond your control or other

information justifies delaying or

canceling the withholding order.

(6) Hearing official. An OHA Judge

will conduct the hearing.

(7) Procedure. After you request a

hearing, the Judge must notify you of

the following:

(i) The date and time of any telephone

oral hearing;

(ii) The date, time, and location of any

in-person oral hearing; and

(iii) The deadline to send evidence for

a written hearing.

(8) Burden of proof. (i) We have the

burden of first showing that you

probably have a past-due non-tax debt

and the amount of the debt.

(ii) If we show the probable existence

and amount of the debt, you must prove

by a preponderance of the evidence

(meaning that it is more likely than not)

that no debt exists or that the debt

amount is incorrect. In addition, you

may present evidence proving by a

preponderance of the evidence that the

terms of the repayment schedule are

illegal or would cause you a financial

hardship; or that collection of the debt

is illegal.

(9) Record. The Judge must maintain

a record of any hearing provided under

this section.

(10) Date of decision. The Judge must

issue a written opinion stating his or her

decision as soon as possible but no later

than sixty (60) days after you filed your

request for a hearing. If the Judge does

not do so—

(i) We cannot issue a withholding

order until the Judge holds a hearing

and makes a decision; or

(ii) We must suspend any previously

issued withholding orders beginning on

the 61st day after you filed your hearing

request. This suspension must continue

until the Judge holds a hearing and

makes a decision.

(11) Content of the decision. The

Judge’s written decision must include:

(i) A summary of the facts presented;

(ii) The findings, analysis, and

conclusions; and

(iii) The terms of any repayment

schedule.

(12) Final SBA action. The Judge’s

decision will be our final action for the

purposes of judicial review under the

Administrative Procedure Act, 5 U.S.C.

701–706.

(13) Failure to appear. If you fail to

appear at a hearing without a good

reason, we will treat you as if you did

not file a timely request for a hearing,

as described in paragraph (f)(5) of this

section.

(g) Wage garnishment order. (1)

Unless we receive an adverse decision

from the Judge or other justification to

delay or cancel the withholding order,

we will send a withholding order to

your employer by first-class mail. If you

made a timely request for a hearing, we

would mail the withholding order

within 30 days after the final SBA

action, as stated in paragraph (f)(12) of

this section. If you did not make a

timely request for a hearing, we would

mail the withholding order within 30

days after the time in paragraphs (f)(4)

and (f)(5) of this section had ended (that

is, 15 business days after we mailed you

the notice described in paragraph (e)(1)

of this section).

(2) The withholding order we send to

your employer under paragraph (g)(1) of

this section must be in a form

determined by the Secretary of the

Treasury. It must be signed by the SBA’s

Administrator or someone he or she

designates. The withholding order must

contain the information your employer

needs to comply with it. Such

information includes your name,

address, and social security number;

instructions for withholding pay; and

the address for payments.

(3) We will retain a copy of a

certificate of service showing when we

mailed the withholding order.

(h) Certification by employer. Along

with the withholding order, we will

send your employer a certification, in a

form determined by the Secretary of the

Treasury. Your employer must complete

and return this certification to us within

the time stated in the certification

instructions. The certification will

include information about your

employment status and the amount of

39574 Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Proposed Rules

your disposable pay available for

withholding.

(i) Amounts withheld. (1) Your

employer must deduct from your

disposable pay during each pay period

the garnishment amount described in

paragraph (i)(2) of this section.

(2) Except as shown in paragraphs

(i)(3) and (i)(4) of this section, the

amount of garnishment will be the

lesser of:

(i) The amount stated on the

garnishment order, not to exceed 15% of

your disposable pay; or

(ii) The amount in 15 U.S.C.

1673(a)(2) (Restriction on Garnishment).

The amount in 15 U.S.C. 1673(a)(2) is

the amount by which your weekly

disposable pay is greater than thirty

times the minimum hourly wage. See 29

CFR 870.10.

(3) If your pay is subject to other

withholding orders, the following

applies:

(i) Unless otherwise provided by

federal law, withholding orders issued

by us must be paid in the amounts in

paragraph (i)(2) of this section, and will

have priority over other withholding

orders issued later. However,

withholding orders for family support

have priority over withholding orders

issued by us.

(ii) If amounts are being withheld

from your pay because of a withholding

order issued before we issued our

withholding order, or because of a

withholding order for family support

issued at any time, the earlier or family

support order will have priority, and the

amount withheld because of the SBA

withholding order will be the lesser of:

(A) The amount calculated under

paragraph (i)(2) of this section, or

(B) An amount equal to 25% of your

disposable pay minus the amount

withheld under the withholding order

with priority.

(iii) If you owe more than one debt to

an agency, we may issue multiple

withholding orders if the amount

withheld from your pay does not exceed

the amount in paragraph (i)(2) of this

section.

(4) You may give written consent for

us to withhold from your pay an amount

greater than that in paragraphs (i)(2) and

(i)(3) of this section.

(5) Your employer must pay to us as

soon as possible all amounts withheld

under a withholding order.

(6) Your employer is not required to

change normal pay cycles to provide for

the withholding order.

(7) No assignment or allotment of

your earnings you have requested may

interfere with or prohibit our

withholding order. The one exception to

this rule is that you may assign or allot

earnings because of a family support

judgment or order.

(8) The withholding order will state a

reasonable time period within which

your employer must begin wage

withholding. Your employer must

withhold the designated amount from

your wages each pay period until we

notify your employer to stop wage

withholding.

(j) Exclusions from garnishment. We

may not garnish your wages if we know

you have been involuntarily

unemployed at any time during the last

12 months. You are responsible for

informing us of the facts and

circumstances of your unemployment.

(k) Financial hardship. (1) You may

request us to review the amount being

withheld from your wages. You must

base this request on a material change

in circumstances that causes you

financial hardship, such as disability,

divorce, or catastrophic illness.

(2) If you request review under

paragraph (k)(1) of this section, you

must specifically state why the current

amount of garnishment causes you

financial hardship and you must send

documentation supporting your claim.

(3) If we find financial hardship, we

will decide how much and how long to

reduce the amount withheld from your

pay. We will notify your employer of

any reductions.

(l) Ending garnishment. (1) After we

have recovered the amount you owe,

including interest, penalties, and

administrative costs consistent with the

FCCS, we will send a notice to your

employer to stop wage withholding.

(2) At least annually, we will review

your account to ensure that withholding

has stopped if you have paid your debt

in full.

(m) Prohibited actions by the

employer. No employer may fire, refuse

to employ, or take disciplinary action

against you because of a withholding

order.

(n) Refunds. (1) We must promptly

refund any amount collected by

administrative wage garnishment if

either—

(i) A Judge, after a hearing held under

paragraph (f)(3) of this section,

determines you do not owe a debt to the

United States; or

(ii) We determine that your employer

continued withholding wages after you

had paid your debt in full.

(2) Refunds of amounts collected will

not earn interest unless required by

federal law or contract.

(o) Right of action. We may sue your

employer if your employer fails to

comply with the order to withhold from

your wages. However, we may not file

a suit until your collection action has

ended unless the expiration of a statute

of limitations period requires action.

Your collection action ends when we

stop the collection action as required by

the FCCS or other applicable standards.

Your collection action also ends if we

do not receive any garnishment

payments from your employer for one

(1) year.

Dated: June 7, 2000.

Aida Alvarez,

Administrator.

[FR Doc. 00–15923 Filed 6–26–00; 8:45 am]

BILLING CODE 8025–01–U

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 2000–NM–146–AD]

RIN 2120–AA64

Airworthiness Directives; Boeing

Model 737–100, –200, –300, –400, and

–500 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice of proposed rulemaking

(NPRM).

SUMMARY: This document proposes the

adoption of a new airworthiness

directive (AD) that is applicable to

certain Boeing Model 737–100, –200,

–300, –400, and –500 series airplanes.

This proposal would require inspection

of wire bundles in two junction boxes

in the main wheel well to detect chafing

or damage, and follow-on actions. This

action is necessary to prevent wire

damage, which could result in arcing

and consequent fire in the main wheel

well or passenger cabin, or inability to

stop the flow of fuel to an engine or to

the auxiliary power unit in the event of

a fire. This action is intended to address

the identified unsafe condition.

DATES: Comments must be received by

August 11, 2000.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, ANM–114,

Attention: Rules Docket No. 2000–NM–

146–AD, 1601 Lind Avenue, SW.,

Renton, Washington 98055–4056.

Comments may be inspected at this

location between 9:00 a.m. and 3:00

p.m., Monday through Friday, except

Federal holidays. Comments may be

submitted via fax to (425) 227–1232.

Comments may also be sent via the

Internet using the following address: 9-

anm-nprmcomment@faa.gov. Comments