Wednesday 

December 31, 1997 

federal register
 Part VII 

Department of The 

Treasury 

Department of 

Justice 

31 CFR Chapter IX and Parts 900, 901, 

902, 903, and 904 

Federal Claims Collection Standards; 

Proposed Rule 

68475 
68476 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 

DEPARTMENT OF THE TREASURY 

DEPARTMENT OF JUSTICE 

31 CFR Chapter IX and Parts 900, 901, 

902, 903, and 904 

[A.G. Order No. 2135–97] 

RIN 1510–AA57 and 1105–AA31 

Federal Claims Collection Standards 

AGENCIES: Department of the Treasury; 

Department of Justice. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document proposes to 

revise the Federal Claims Collection 

Standards issued by the Department of 

Justice and the General Accounting 

Office on March 9, 1984. The proposed 

revisions clarify and simplify Federal 

debt collection standards contained in 

the Federal Claims Collection Standards 

and reflect changes to Federal debt 

collection procedures under the Debt 

Collection Improvement Act of 1996 

and the General Accounting Office Act 

of 1996. 

DATES: Comments must be received on 

or before March 2, 1998. 

ADDRESSES: All comments should be 

addressed to Gerry Isenberg, Financial 

Program Specialist, Debt Management 

Services, Financial Management 

Service, Department of the Treasury, 

401 14th Street S.W., Room 151, 

Washington, D.C. 20227; or John W. 

Showalter, Assistant Director, 

Commercial Litigation Branch, Civil 

Division, Department of Justice, P.O. 

Box 875, Ben Franklin Station, 

Washington, D.C. 20044. A copy of this 

proposed rule is being made available 

for downloading from the Financial 

Management Service web site at the 

following address: http:// 

www.fms.treas.gov. 

FOR FURTHER INFORMATION CONTACT: 

Gerry Isenberg, Financial Program 

Specialist, Financial Management 

Service, Department of the Treasury, at 

(202) 874–6660; Ronda L. Kent or Ellen 

Neubauer, Senior Attorneys, Financial 

Management Service, Department of the 

Treasury, at (202) 874–6680; or John W. 

Showalter, Assistant Director, 

Commercial Litigation Branch, Civil 

Division, Department of Justice, at (202) 

307–0244. 

SUPPLEMENTARY INFORMATION: The 

Federal Claims Collection Standards 

(FCCS) are being revised for two 

primary reasons: (1) to clarify and 

simplify the Federal debt collection 

standards contained in the FCCS; and 

(2) to reflect changes to Federal debt 

collection procedures under the Debt 

Collection Improvement Act of 1996 

(DCIA), Pub. L. 104–134, 110 Stat. 1321, 

1358 (Apr. 26, 1996), as part of the 

Omnibus Consolidated Rescissions and 

Appropriations Act of 1996. 

Some of the changes made to clarify 

and simplify the FCCS were suggested 

by Federal officials in numerous 

Government agencies in the five years 

prior to the enactment of the DCIA. We 

appreciate their substantial efforts 

toward this revision. The revised FCCS 

provide agencies with greater latitude to 

adopt agency specific regulations 

considering the legal and policy 

requirements applicable to the various 

types of Federal debt and maximize the 

effectiveness of Federal debt collection 

procedures. 

The DCIA is the most significant 

legislation for the administrative 

collection of Federal debt since the Debt 

Collection Act of 1982, Pub. L. 97–365, 

96 Stat. 1749 (Oct. 25, 1982). The 

revised FCCS conform with relevant 

statutory changes to Federal debt 

collection procedures under the DCIA. 

The DCIA authorizes the issuance of 

rules concerning new debt collection 

procedures, including centralized 

administrative offset, the transfer or 

referral of delinquent debt to Treasury 

or Treasury-designated debt collection 

centers for collection (cross-servicing), 

administrative wage garnishment, and 

publication of debtor information. 

Additional rules concerning these new 

debt collection procedures will be 

issued separately in accordance with the 

DCIA. 

While this revision of the FCCS is 

being issued as a proposed rule, readers 

are reminded that most of the provisions 

of the DCIA became effective upon 

enactment on April 26, 1996. 

Publication of this proposed rule does 

not delay the effective date of the DCIA, 

nor does it postpone the duty of Federal 

agencies to comply with the provisions 

of the DCIA. 

The Secretary of the Treasury has 

been added as a co-promulgator of the 

FCCS in accordance with section 

31001(g)(1)(C) of the DCIA. The 

Comptroller General has been removed 

as a co-promulgator in accordance with 

section 115(g) of the General 

Accounting Office Act of 1996 (GAO 

Act), Pub. L. 104–316, 110 Stat. 3826 

(Oct. 19, 1996). The Department of the 

Treasury and the Department of Justice 

are establishing a new joint chapter IX 

in Title 31 of the Code of Federal 

Regulations. The Department of the 

Treasury and the Department of Justice 

will publish the revised FCCS as a joint 

rule in this new chapter. The current 

FCCS are found at 4 CFR parts 101–105. 

Discussion of Major Changes 

The revised FCCS contain numerous 

changes and amendments throughout 

the rule. Major changes contained in 

these revised FCCS are highlighted 

below. The various provisions of the 

FCCS that have been redrafted for 

clarity but that do not substantively 

change debt collection procedures are 

not discussed here. A detailed sectionby-section analysis comparing the 

revised FCCS to the current FCCS is 

available at the addresses noted above. 

Readers are encouraged to read the 

revised FCCS carefully to assure 

knowledge and understanding of all the 

changes and not rely solely on the 

changes highlighted in this discussion. 

The following major changes to the 

FCCS have been incorporated into these 

revised FCCS: 

1. The Comptroller General was 

removed as a co-promulgator of the 

FCCS. The revised FCCS will be 

published in parts 900–904 of chapter 

IX of Title 31 of the Code of Federal 

Regulations because the Secretary of the 

Treasury was added as a co-promulgator 

of the FCCS. See 4 CFR 101.1. 

2. The revised FCCS reflect the 

elimination of the Comptroller General’s 

role in Federal debt collection. 

3. The revised FCCS provide agencies 

with greater latitude to streamline and 

customize debt collection procedures to 

accommodate agency specific 

requirements or unique circumstances. 

4. The revised FCCS reflect the 

requirement that agencies use 

government-wide debt collection 

contracts (with certain exceptions) for 

referrals to private collection 

contractors. 

5. The revised FCCS contain a new 

requirement that agencies and debtors 

exchange mutual releases of non-tax 

liabilities, in all appropriate instances, 

when a claim is compromised. 

6. The revised FCCS reflect the 

increase in the principal claim amount, 

from $20,000 to $100,000, that agencies 

are authorized to compromise or to 

suspend or terminate collection activity 

thereon, without concurrence by the 

Department of Justice. In addition, the 

minimum amount of a claim that may 

be referred to the Department of Justice 

is increased from $600 to $2,500. The 

circumstances under which the 

Department of Justice will litigate when 

the claim amount does not meet the 

minimum threshold have not been 

changed. 

7. The revised FCCS reflect several 

new debt collection procedures under 

the DCIA, including, but not limited to: 

(a) transfer or referral of delinquent 

debt to the Department of the Treasury 
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 68477 

or Treasury-designated debt collection 

centers for collection, known as ‘‘crossservicing;’’ 

(b) mandatory, centralized 

administrative offset by disbursing 

officials; 

(c) mandatory credit bureau reporting; 

and 

(d) mandatory prohibition against 

extending Federal financial assistance 

in the form of a loan or loan guarantee 

to delinquent debtors. 

The Department of the Treasury and 

the Department of Justice have 

determined that this regulation is not a 

significant regulatory action as defined 

in Executive Order 12866 and 

accordingly this regulation has not been 

reviewed by the Office of Management 

and Budget. It is hereby certified that 

this regulation will not have a 

significant economic impact on a 

substantial number of small entities 

because the regulation either (1) results 

in greater flexibility for Federal agencies 

to streamline their own debt collection 

regulations, or (2) reflects the statutory 

language contained in the DCIA. 

Accordingly, a Regulatory Flexibility 

Analysis is not required. 

This regulation will not have a 

substantial direct effect on the states, on 

the relationship between the national 

government and the states, or on 

distribution of power and 

responsibilities among the various 

levels of government. Therefore, in 

accordance with Executive Order 12612, 

it is determined that this regulation does 

not have sufficient federalism 

implications to warrant the preparation 

of a Federalism Assessment. 

This regulation will not result in the 

expenditure by state, local and tribal 

governments, in the aggregate, or by the 

private sector, of $100,000,000 or more 

in any one year, and it will not 

significantly or uniquely affect small 

governments. Therefore, no actions were 

deemed necessary under the provisions 

of the Unfunded Mandates Reform Act 

of 1995. 

List of Subjects 

31 CFR Part 900 

Antitrust, Claims, Fraud, Taxes. 

31 CFR Part 901 

Administrative practice and 

procedure, Claims, Federal Employees, 

Penalties, Privacy. 

31 CFR Part 902 

Claims. 

31 CFR Part 903 

Claims. 

31 CFR Part 904 

Claims. 

For the reasons set out in the 

preamble, chapter IX, consisting of parts 

900 through 904, is proposed to be 

established in title 31 of the Code of 

Federal Regulations to read as follows: 

CHAPTER IX—FEDERAL CLAIMS 

COLLECTION STANDARDS 

(DEPARTMENT OF THE TREASURY— 

DEPARTMENT OF JUSTICE) 

Part


900 Scope of standards


901 Standards for the administrative


collection of claims 

902 Standards for the compromise of claims 

903 Standards for suspending or 

terminating collection activity 

904 Referrals to the Department of Justice 

PART 900—SCOPE OF STANDARDS 

Sec.


900.1 Prescription of standards.


900.2 Definitions and construction.


900.3 Antitrust, fraud, and tax and


interagency claims excluded. 

900.4 Compromise, waiver, or disposition 

under other statutes not precluded. 

900.5 Form of payment. 

900.6 Subdivision of claims not authorized. 

900.7 Required administrative proceedings. 

900.8 No private rights created. 

Authority: 31 U.S.C. 3711. 

§ 900.1 Prescription of standards. 

(a) The Secretary of the Treasury and 

the Attorney General of the United 

States are issuing the regulations in 

parts 900–904 of this chapter under 31 

U.S.C. 3711(d)(2). The regulations in 

this chapter prescribe standards for 

Federal agency use in the administrative 

collection, offset, compromise, and the 

suspension or termination of collection 

activity for civil claims for money, 

funds, or property, as defined by 31 

U.S.C. 3701(b), unless specific agency 

statutes or regulations apply to such 

activities or, as provided for by Title 11 

of the United States Code, when the 

claims involve bankruptcy. Federal 

agencies include agencies of the 

executive, legislative, and judicial 

branches of the Government, including 

Government corporations. These 

regulations in this chapter also prescribe 

standards for referring claims to the 

Department of Justice for litigation. 

Additional guidance is contained in the 

Office of Management and Budget’s 

Circular A–129 (Revised) ‘‘Policies for 

Federal Credit Programs and Non-Tax 

Receivables,’’ the Department of the 

Treasury’s ‘‘Managing Federal 

Receivables,’’ and other publications 

concerning debt collection and debt 

management. These publications are 

available from the Debt Management 

Services, Financial Management 

Service, Department of the Treasury, 

401 14th Street S.W., Room 151, 

Washington, D.C. 20227. 

(b) Additional rules governing 

disbursing official administrative offset 

and the transfer of delinquent debt to 

the Department of the Treasury or 

Treasury-designated debt collection 

centers for collection (cross-servicing) 

under the Debt Collection Improvement 

Act of 1996, Pub. L. 104–134, 110 Stat. 

1321, 1358 (Apr. 26, 1996), are issued in 

separate regulations by the Department 

of the Treasury. Rules governing the use 

of certain debt collection tools created 

under the Debt Collection Improvement 

Act of 1996, such as administrative 

wage garnishment and dissemination of 

information regarding delinquent 

debtors, also are issued in separate 

regulations by the Department of the 

Treasury. 

(c) Agencies are not limited to the 

remedies contained in parts 900–904 of 

this chapter and are encouraged to use 

all authorized remedies, including 

alternative dispute resolution and 

arbitration, to collect civil claims, to the 

extent that such remedies are not 

inconsistent with the Federal Claims 

Collection Act, as amended, Pub. L. 89– 

508, 80 Stat. 308 (July 19, 1966), the 

Debt Collection Act of 1982, Pub. L. 97– 

365, 96 Stat. 1749 (Oct. 25, 1982), the 

Debt Collection Improvement Act of 

1996, or other relevant statutes. These 

regulations in this chapter are not 

intended to impair agencies’ common 

law rights to collect claims. 

§ 900.2 Definitions and construction. 

(a) For the purposes of the standards 

in this chapter, the terms ‘‘claim’’ and 

‘‘debt’’ are synonymous and interchangeable. They refer to an amount of 

money, funds, or property that has been 

determined by an agency official to be 

due the United States from any person, 

organization, or entity, except another 

Federal agency. For the purposes of 

administrative offset under 31 U.S.C. 

3716, the terms ‘‘claim’’ and ‘‘debt’’ 

include an amount of money, funds, or 

property owed by a person to a State 

(including past-due support being 

enforced by a State), the District of 

Columbia, American Samoa, Guam, the 

United States Virgin Islands, the 

Commonwealth of the Northern Mariana 

Islands, or the Commonwealth of Puerto 

Rico. 

(b) A claim is ‘‘delinquent’’ if it has 

not been paid by the date specified in 

the agency’s initial written demand for 

payment or applicable agreement or 

instrument (including a postdelinquency payment agreement), 
68478 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 

unless other satisfactory payment 

arrangements have been made. 

(c) In parts 900–904 of this chapter, 

words in the plural form shall include 

the singular and vice versa, and words 

signifying the masculine gender shall 

include the feminine and vice versa. 

The terms ‘‘includes’’ and ‘‘including’’ 

do not exclude matters not listed but do 

include matters that are in the same 

general class. 

(d) Recoupment is a special method 

for adjusting claims arising under the 

same transaction or occurrence. For 

example, obligations arising under the 

same contract are generally subject to 

recoupment. 

(e) For purposes of the standards in 

this chapter, unless otherwise stated, 

‘‘Secretary’’ means the Secretary of the 

Treasury or the Secretary’s delegate. 

§ 900.3 Antitrust, fraud, and tax and 

interagency claims excluded. 

(a) The standards in parts 900–904 of 

this chapter relating to compromise, 

suspension, and termination of 

collection activity do not apply to any 

claim based in whole or in part on 

conduct in violation of the antitrust 

laws or to any claim involving fraud, the 

presentation of a false claim, or 

misrepresentation on the part of the 

debtor or any party having an interest in 

the claim. Only the Department of 

Justice has the authority to compromise, 

suspend, or terminate collection activity 

on such claims. The standards in parts 

900–904 of this chapter relating to the 

administrative collection of claims do 

apply, but only to the extent authorized 

by the Department of Justice in a 

particular case. Upon identification of a 

claim based in whole or in part on 

conduct in violation of the antitrust 

laws or any claim involving fraud, the 

presentation of a false claim, or 

misrepresentation on the part of the 

debtor or any party having an interest in 

the claim, agencies shall promptly refer 

the case to the Department of Justice for 

action. At its discretion, the Department 

of Justice may return the claim to the 

forwarding agency for further handling 

in accordance with the standards in 

parts 900–904 of this chapter. 

(b) Parts 900–904 of this chapter do 

not cover tax claims. 

(c) Parts 900–904 of this chapter do 

not apply to claims between Federal 

agencies. Federal agencies should 

attempt to resolve interagency claims by 

negotiation in accordance with 

Executive Order 12146 (3 CFR, 1980 

Comp., pp. 409–412). 

§ 900.4 Compromise, waiver, or 

disposition under other statutes not 

precluded. 

Nothing in parts 900–904 of this 

chapter precludes agency disposition of 

any claim under statutes and 

implementing regulations other than 

subchapter II of chapter 37 of Title 31 

of the United States Code (Claims of the 

United States Government) and these 

standards. See, e.g., the Federal Medical 

Care Recovery Act, Pub. L. 87–693, 76 

Stat. 593 (Sept. 25, 1962) (codified at 42 

U.S.C. 2651 et seq.), and applicable 

regulations, 28 CFR part 43. In such 

cases, the laws and regulations that are 

specifically applicable to claims 

collection activities of a particular 

agency generally take precedence over 

parts 900–904 of this chapter. 

§ 900.5 Form of payment. 

Claims may be paid in the form of 

money or, when a contractual basis 

exists, the Government may demand the 

return of specific property or the 

performance of specific services. 

§ 900.6 Subdivision of claims not 

authorized. 

Claims may not be subdivided to 

avoid the monetary ceiling established 

by 31 U.S.C. 3711(a)(2). A debtor’s 

liability arising from a particular 

transaction or contract shall be 

considered a single claim in 

determining whether the claim is one of 

less than $100,000 (excluding interest, 

penalties, or administrative costs) or 

such higher amount as the Attorney 

General shall from time to time 

prescribe for purposes of compromise or 

suspension or termination of collection 

activity. 

§ 900.7 Required administrative 

proceedings. 

Agencies are not required to omit, 

foreclose, or duplicate administrative 

proceedings required by contract or 

other laws or regulations. 

§ 900.8 No private rights created. 

The standards in this chapter do not 

create any right or benefit, substantive 

or procedural, enforceable at law or in 

equity by a party against the United 

States, its agencies, its officers, or any 

other person, nor shall the failure of an 

agency to comply with any of the 

provisions of parts 900–904 of this 

chapter be available to any debtor as a 

defense. 

PART 901—STANDARDS FOR THE 

ADMINISTRATIVE COLLECTION OF 

CLAIMS 

Sec.


901.1 Aggressive agency collection activity.


901.2 Demand for payment.


901.3 Collection by administrative offset. 

901.4 Administrative offset against amounts 

payable from Civil Service Retirement 

and Disability Fund and the Federal 

Employee Retirement System. 

901.5 Reporting claims. 

901.6 Contracting for debt collection 

agencies and to locate and recover 

unclaimed assets. 

901.7 Suspension or revocation of 

eligibility for loans and loan guaranties, 

licenses, permits, or privileges. 

901.8 Liquidation of collateral. 

901.9 Collection in installments. 

901.10 Interest, penalties, and 

administrative costs. 

901.11 Analysis of costs. 

901.12 Use and disclosure of mailing 

addresses. 

901.13 Exemptions. 

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

3717, 3718, and 3720B. 

§ 901.1 Aggressive agency collection 

activity. 

(a) Federal agencies shall aggressively 

collect all claims arising out of activities 

of, or referred or transferred for 

collection services to, that agency. 

Collection activities shall be undertaken 

promptly with follow-up action taken as 

necessary depending upon the 

circumstances. Nothing contained in 

parts 900–904 of this chapter requires 

the Department of Justice, the 

Department of the Treasury, or other 

Treasury-designated debt collection 

center, to duplicate collection activities 

previously undertaken by other agencies 

or to perform collection activities that 

other agencies should have undertaken. 

(b) Claims referred or transferred shall 

be serviced, collected, or compromised, 

or the collection action will be 

suspended or terminated, in accordance 

with the statutory requirements and 

authorities otherwise applicable to the 

collection of such claims. 

(c) Agencies shall cooperate with one 

another in their debt collection 

activities. 

(d) Agencies should consider referring 

claims that are less than 180 days 

delinquent to ‘‘debt collection centers’’ 

of the Federal Government to 

accomplish efficient, cost effective debt 

collection. The Department of the 

Treasury is a debt collection center, is 

authorized to designate other debt 

collection centers within the Federal 

Government based on the debt 

collection centers’ performance in 

collecting delinquent claims owed to 

the Government, and may withdraw 

such designations. Referrals to debt 

collection centers shall be at the 

discretion of, and for a time period 

acceptable to, the Secretary. Referrals 

may be for servicing, collection, 

compromise, suspension, or termination 

of collection action. 
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 68479 

(e) Agencies shall transfer to the 

Secretary any claim that has been 

delinquent for a period of 180 days or 

more so that the Secretary may take 

appropriate action to collect the claim 

or terminate collection action. This 

requirement does not apply to any claim 

that: 

(1) Is in litigation or foreclosure; 

(2) Will be disposed of under an 

approved asset sale program; 

(3) Has been referred to a private 

collection contractor for a period of time 

acceptable to the Secretary; 

(4) Is at a debt collection center for a 

period of time acceptable to the 

Secretary (see paragraph (d) of this 

section); 

(5) Will be collected under internal 

offset procedures within three years 

after the debt first became delinquent; or 

(6) To other classes of claims for 

which the Secretary has determined that 

an exemption from this requirement is 

in the best interest of the Government. 

Agencies may request that the Secretary 

exempt specific classes of claims. 

(f) Agencies operating debt collection 

centers are authorized to charge a fee for 

services rendered regarding referred or 

transferred claims. The fee may be paid 

out of amounts collected and may be 

added on the claim as an administrative 

cost (see § 901.10). 

§ 901.2 Demand for payment. 

(a) Written demand as described in 

paragraph (b) of this section shall be 

made promptly upon a debtor of the 

United States in terms that inform the 

debtor of the consequences of failing to 

cooperate with the agency to resolve the 

claim. The specific content, timing, and 

number of demand letters shall depend 

upon the type and amount of the claim 

and the debtor’s response, if any, to the 

agency’s letters or calls. Generally, one 

demand letter should suffice. In 

determining the timing of the demand 

letter or letters, agencies should give 

due regard to the need to refer claims 

promptly to the Department of Justice 

for litigation, in accordance with § 904.1 

of this chapter or otherwise. When 

necessary to protect the Government’s 

interest (for example, to prevent the 

running of a statute of limitations), 

written demand may be preceded by 

other appropriate actions under parts 

900–904 of this chapter, including 

immediate referral for litigation. 

(b) Demand letters shall inform the 

debtor of: 

(1) The basis for the indebtedness and 

the rights, if any, the debtor may have 

to seek review within the agency; 

(2) The applicable standards for 

imposing any interest, penalties, or 

administrative costs; 

(3) The date by which payment 

should be made to avoid late charges 

and enforced collection, which 

generally should not be more than 30 

days from the date that the demand 

letter is mailed or hand-delivered; and 

(4) The name, address, and phone 

number of a contact person or office 

within the agency. 

(c) Agencies should exercise care to 

ensure that demand letters are mailed or 

hand-delivered on the same day that 

they are dated. There is no prescribed 

format for demand letters. Agencies 

should utilize demand letters and 

procedures that will lead to the earliest 

practicable determination of whether 

the claim can be resolved 

administratively or must be referred for 

litigation. 

(d) Agencies should include in 

demand letters such items as the 

agency’s willingness to discuss 

alternative methods of payment; its 

policies with respect to the use of credit 

bureaus, debt collection centers, and 

collection agencies; the agency’s 

remedies to enforce payment of the 

claim (including assessment of interest, 

administrative costs and penalties, 

administrative garnishment, the use of 

collection agencies, Federal salary 

offset, tax refund offset, administrative 

offset, and litigation); the requirement 

that any debt delinquent for more than 

180 days be transferred to the 

Department of the Treasury for 

collection; and, depending on 

applicable statutory authority, the 

debtor’s entitlement to consideration of 

a waiver. 

(e) Agencies should respond promptly 

to communications from debtors, within 

30 days whenever feasible, and should 

advise debtors who dispute claims to 

furnish available evidence to support 

their contentions. 

(f) Prior to the initiation of the 

demand process or at any time during 

or after completion of the demand 

process, if an agency determines to 

pursue or is required to pursue offset, 

the procedures applicable to offset 

should be followed (see § 901.3). The 

availability of funds or money for debt 

satisfaction by offset and the agency’s 

determination to pursue collection by 

offset shall release the agency from the 

necessity of further compliance with 

paragraphs (a), (b), (c), and (d) of this 

section. 

(g) Prior to referring a claim for 

litigation, agencies should advise each 

person determined to be liable for the 

claim that, unless the claim can be 

collected administratively, litigation 

may be initiated. This notification 

should comply with Executive Order 

12988 and may be given as part of a 

demand letter under paragraph (b) of 

this section or in a separate document. 

Litigation counsel for the Government 

should be advised that this notice has 

been given. 

(h) When an agency learns that a 

bankruptcy petition has been filed with 

respect to a debtor, before proceeding 

with further collection action, the 

agency should immediately seek legal 

advice from its agency counsel 

concerning the impact of the 

Bankruptcy Code on any pending or 

contemplated collection activities. 

Unless the agency determines that the 

automatic stay imposed at the time of 

filing pursuant to 11 U.S.C. 362 has 

been lifted or is no longer in effect, in 

most cases collection activity against the 

debtor should stop immediately. 

(1) After seeking legal advice, a proof 

of claim should be filed in most cases 

with the bankruptcy court or the 

Trustee. Agencies should refer to the 

provisions of 11 U.S.C. 106 relating to 

the consequences on sovereign 

immunity of filing a proof of claim. 

(2) If the agency is a secured creditor, 

it may seek relief from the automatic 

stay regarding its security, subject to the 

provisions and requirements of 11 

U.S.C. 362. 

(3) Offset is stayed in most cases by 

the automatic stay. However, agencies 

should seek legal advice from their 

agency counsel to determine whether 

their payments to the debtor and 

payments of other agencies available for 

offset may be frozen by the agency until 

relief from the automatic stay can be 

obtained from the bankruptcy court. 

Agencies also should seek legal advice 

from their agency counsel to determine 

whether recoupment is available. 

§ 901.3 Collection by administrative offset. 

(a) In general. Two types of 

administrative offset exist under this 

section: Administrative offset by nondisbursing officials and administrative 

offset by disbursing officials. The 

standards contained in paragraph (a) 

apply to both types of administrative 

offset. The standards contained in 

paragraph (b) of this section apply 

solely to non-disbursing official offset, 

and the standards contained in 

paragraph (c) of this section apply solely 

to disbursing official offset. Collection 

by administrative offset shall be 

undertaken in accordance with §§ 901.3 

and 901.4 and implementing regulations 

established by each agency on all claims 

where such collection is determined to 

be feasible and not otherwise 

prohibited. 

(1) Agencies shall prescribe 

regulations for the exercise of 

administrative offset consistent with 
68480 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 

this section or adopt this section 

without change by cross-reference. 

(2) For purposes of this section, the 

term ‘‘administrative offset’’ has the 

meaning provided in 31 U.S.C. 

3701(a)(1). 

(3) This section applies to 

administrative offsets undertaken by 

agencies pursuant to 31 U.S.C. 3716 

against funds or money payable to, or 

held for, a debtor. It does not apply to: 

(i) Claims arising under the Social 

Security Act, except as provided in 42 

U.S.C. 404; 

(ii) Payments made under the Social 

Security Act, except as provided for in 

31 U.S.C. 3716(c); 

(iii) Claims arising under or payments 

made under the Internal Revenue Code 

or the tariff laws of the United States; 

(iv) Offsets against Federal salaries, to 

the extent these standards are 

inconsistent with regulations published 

to implement such offsets under 5 

U.S.C. 5514; 

(v) Offsets under 31 U.S.C. 3728 

against a judgment obtained by a debtor 

against the United States; 

(vi) Offsets or recoupments under 

common law, State law, or Federal 

statutes specifically prohibiting offsets 

or recoupments of particular types of 

claims; or 

(vii) Offsets in the course of judicial 

proceedings, including bankruptcy. 

(4) Unless otherwise provided for by 

contract or law, claims or payments that 

are not subject to administrative offset 

under 31 U.S.C. 3716 may be collected 

by administrative offset under the 

common law or other applicable 

statutory authority. 

(5) Agency regulations for offsets 

pursuant to 31 U.S.C. 3716 shall provide 

also that, except as is provided in 

paragraph (b)(2) of this section, offsets 

may be initiated only after the debtor 

has received: 

(i) Written notice of the type and 

amount of the claim and that the agency 

intends to use administrative offset to 

collect the claim; 

(ii) An opportunity to inspect and 

copy agency records related to the 

claim; 

(iii) An opportunity for a hearing or 

review within the agency of the 

determination of indebtedness; and 

(iv) An opportunity to make a written 

agreement to repay the claim. 

(6) When an agency previously has 

given a debtor any of the required notice 

and review opportunities with respect 

to a particular claim, the agency need 

not give notice and review opportunities 

duplicating those previously given 

before initiating administrative offset 

with respect to that claim. 

(7) (i) For purposes of this section, 

whenever an agency is required to 

afford a debtor a hearing or review 

within the agency, the agency shall 

provide the debtor with a reasonable 

opportunity for an oral hearing when: 

(A) An applicable statute authorizes 

or requires the agency to consider 

waiver of the indebtedness involved, the 

debtor requests waiver of the 

indebtedness, and the waiver 

determination turns on an issue of 

credibility or veracity; or 

(B) The debtor requests 

reconsideration of the claim and the 

agency determines that the question of 

the indebtedness cannot be resolved by 

review of the documentary evidence, for 

example, when the validity of the claim 

turns on the issue of credibility or 

veracity. 

(ii) Unless otherwise required by law, 

an oral hearing under this section is not 

required to be a formal evidentiary-type 

hearing, although the agency should 

carefully document all significant 

matters discussed at the hearing. 

(iii) This section does not require an 

oral hearing with respect to debt 

collection systems in which a 

determination of indebtedness or waiver 

rarely involves issues of credibility or 

veracity and the agency has determined 

that review of the written record is 

ordinarily an adequate means to correct 

prior mistakes. 

(iv) In those cases when an oral 

hearing is not required by this section, 

an agency shall nevertheless accord the 

debtor a ‘‘paper hearing,’’ that is, a 

determination of the request for waiver 

or reconsideration based upon a review 

of the written record. 

(8) Unless otherwise provided by law, 

agencies may not initiate administrative 

offset to collect a claim under 31 U.S.C. 

3716 more than 10 years after the 

Government’s right to collect the claim 

first accrued, unless facts material to the 

Government’s right to collect the claim 

were not known and could not 

reasonably have been known by the 

official or officials of the Government 

who were charged with the 

responsibility to discover and collect 

such claims. 

(b) Administrative offset by nondisbursing officials. Generally, 

administrative offsets by non-disbursing 

officials are offsets that an agency 

conducts internally or in cooperation 

with the agency certifying or 

authorizing payments to the debtor. 

Disbursing agencies also are authorized 

to conduct offsets in accordance with 

this paragraph on a case-by-case basis. 

(1) The creditor agency is responsible 

for determining, in its discretion on a 

case-by-case basis, whether collection 

by administrative offset under this 

subsection is feasible. Creditor agencies 

should consider whether administrative 

offset may be accomplished practically 

and legally and whether offset furthers 

and protects the Government’s interests. 

In appropriate circumstances, such as 

when a debtor is unable to pay the full 

amount that could be collected by offset 

(see § 902.2(b) of this chapter), the 

agency may consider the debtor’s 

financial condition and is not required 

to use offset in every instance in which 

there is an available source of funds or 

money. Agencies also may consider 

whether offset would tend to interfere 

substantially with, or defeat the 

purposes of, the program authorizing 

the payments against which offset is 

contem plated. For example, under a 

grant program in which payments are 

made in advance of the grantee’s 

performance, offset may be 

inappropriate. This concept generally 

does not apply, however, when payment 

is in the form of reimbursement. 

(2) Agency regulations may provide 

for the omission of the procedures set 

forth in paragraph (a)(5) of this section 

when: 

(i) The offset is in the nature of a 

recoupment; 

(ii) The claim arises under a contract 

as set forth in Cecile Industries, Inc. v. 

Cheney, 995 F.2d 1052 (Fed. Cir. 1993); 

or 

(iii) The agency first learns of the 

existence of the amount owed by the 

debtor when there is insufficient time 

before payment would be made to the 

debtor to allow for prior notice and an 

opportunity for review. When prior 

notice and an opportunity for review are 

omitted, the agency shall give the debtor 

such notice and an opportunity for 

review as soon as practicable and shall 

promptly refund any money ultimately 

found not to have been owed to the 

Government. 

(3) Agencies shall comply with 

requests from other agencies to collect 

claims owed to the United States by 

administrative offset, unless the offset 

would not be in the best interests of the 

Government with respect to the program 

of the agency conducting the offset as 

determined by the head of the agency, 

or would be otherwise contrary to law. 

Appropriate use should be made of the 

cooperative efforts of other agencies in 

effecting collection by administrative 

offset. 

(4) Agency regulations shall provide 

that the agency making a payment 

against which administrative offset is 

sought should not make the requested 

offset until it has been provided with a 

written certification by the creditor 

agency that the debtor owes the claim in 

the amount specified and that the 

creditor agency has fully complied with 
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 68481 

its regulations concerning 

administrative offset. 

(5) When collecting multiple claims 

by administrative offset, agencies 

should apply the recovered amounts to 

those claims in accordance with the best 

interests of the United States, as 

determined by the facts and 

circumstances of the particular case, 

particularly the applicable statutes of 

limitation. 

(c) Administrative offset by disbursing 

officials. Disbursing officials of the 

Department of the Treasury, the 

Department of Defense, the United 

States Postal Service, other Government 

corporations, and disbursing officials of 

the United States designated by the 

Secretary are required to conduct 

administrative offset to collect claims 

that agencies have certified to the 

Secretary for collection by 

administrative offset. Agencies shall 

certify claims to the Secretary and the 

Secretary shall share information 

concerning delinquent claims with the 

aforesaid disbursing officials so that 

offsets may occur government-wide. If 

an agency has not certified a specific 

claim to the Secretary, an agency still 

may collect the claim by administrative 

offset in accordance with paragraph (b) 

of this section by contacting the 

payment certifying agency or the 

disbursing agency directly. 

(1) Certification of claims to the 

Secretary shall be in a form acceptable 

to the Secretary and shall include, at a 

minimum: 

(i) A statement that the claim(s) is 

past due and legally enforceable; and 

(ii) A statement that the agency 

certifying the claim has complied with 

all the due process requirements 

enumerated in 31 U.S.C. 3716(a) and the 

agency’s regulations. 

(2) Federal agencies that are owed 

past due, legally enforceable claims over 

180 days delinquent shall certify those 

claims to the Secretary for collection 

through the disbursing official offset 

program. In addition to claims that, by 

law, may not be collected by 

administrative offset, the Secretary may 

exempt any claim or class of claims 

from this requirement if the Secretary 

determines exemption is in the best 

interest of the United States. 

(3) Payments that are prohibited by 

law from being offset are exempt from 

offset by disbursing officials. Meanstested benefit payments shall be 

exempted from offset by the Secretary at 

the request of the head of the agency 

administering the means-tested benefit 

program. For the purposes of this 

section, ‘‘means-tested benefit 

payments’’ are payments made to an 

individual under a program where 

eligibility is based on a determination 

that the income, assets, and/or resources 

of the beneficiary are inadequate to 

provide the beneficiary with an 

adequate standard of living without 

program assistance. The Secretary may 

exempt other classes of payments upon 

the written request of the head of the 

payment certifying or authorizing 

agency. Such requests may be granted if 

the Secretary determines that exemption 

is in the best interests of the 

Government. For example, offsets that 

would tend to interfere substantially 

with, or defeat the purposes of, the 

payment agency’s program may qualify 

for an exemption. 

(4) Benefit payments made under the 

Social Security Act (42 U.S.C. 301 et 

seq.), part B of the Black Lung Benefits 

Act (30 U.S.C. 921 et seq.), and any law 

administered by the Railroad Retirement 

Board (other than tier 2 benefits) may be 

offset only in accordance with 

Department of the Treasury regulations, 

issued in consultation with the Social 

Security Administration, the Railroad 

Retirement Board, and the Office of 

Management and Budget. 

(5) The disbursing official shall notify 

the debtor/payee in writing that an 

offset has occurred. The notice shall 

include a description of the payment 

from which the offset was taken, the 

amount of offset that was taken, the 

identity of the creditor agency 

requesting the offset, and a contact point 

within the creditor agency who will 

respond to questions regarding the 

offset. 

(6) If more than one claim is owed by 

a debtor, funds or money collected by 

offset shall be applied to the claims in 

an order that is in the best interests of 

the United States as determined by the 

Secretary. 

(7) In accordance with 31 U.S.C. 

3716(f), the Secretary may waive the 

provisions in the Computer Matching 

and Privacy Protection Act of 1988 

concerning matching agreements and 

post-match notification and verification 

(5 U.S.C. 552a(o) and (p)) for 

administrative offset under paragraph 

(c) of this section upon receipt of a 

certification from a creditor agency that 

the due process requirements 

enumerated in 31 U.S.C. 3716(a) have 

been met. The certification of a claim in 

accordance with paragraph (c)(1) of this 

section will satisfy this requirement. If 

such a waiver is granted, only the Data 

Integrity Board of the Department of the 

Treasury is required to oversee any 

matching activities, in accordance with 

31 U.S.C. 3716(g). 

(8) Under 31 U.S.C. 3716(h), the 

Secretary may enter into reciprocal 

agreements with states for Federal 

disbursing officials to collect state debts 

through offset of Federal payments and 

for state disbursing officials to collect 

Federal debts through offset of state 

payments. States shall have regulations 

or procedures concerning offsets 

consistent with those contained in these 

standards. This section shall not apply 

to claims or payments that are not 

subject to offset by Federal law. The 

Secretary may exempt additional claims 

and/or payments from these reciprocal 

agreements if the Secretary determines 

such exemptions are in the best interest 

of the Federal Government. 

(d) In bankruptcy cases, agencies 

should seek legal advice from their 

agency counsel concerning the impact 

of the Bankruptcy Code, particularly 11 

U.S.C. 106, 362, and 553, on pending or 

contemplated collections by offset. 

§ 901.4 Administrative offset against 

amounts payable from Civil Service 

Retirement and Disability Fund and the 

Federal Employee Retirement System. 

(a) For claims that have not been 

certified to the Secretary for 

administrative offset by disbursing 

officials, unless otherwise prohibited by 

law, agencies may request that moneys 

that are due and payable to a debtor 

from the Civil Service Retirement and 

Disability Fund (CSRD) or the Federal 

Employee Retirement System (FERS) be 

administratively offset, in amounts 

authorized under 5 CFR 831.1807, to 

collect claims owed to the United States 

by the debtor. Because disbursing 

officials of the Department of the 

Treasury are authorized to offset these 

payments under § 901.3, requests under 

this section should be limited to those 

instances in which offset cannot be 

accomplished by certification to the 

Secretary. Requests under this section 

shall be made to appropriate officials of 

the Office of Personnel Management 

(OPM) in accordance with such regula 

tions as are prescribed by the Director 

of that office at 5 CFR 831.1801– 

831.1808. 

(b) Agencies that decide to request 

administrative offset under paragraph 

(a) of this section should make the 

request as soon as practical after 

completion of the applicable 

procedures. Unless the debtor has filed 

for a refund, there is no specific time 

period for filing an offset request (see 5 

CFR 831.1805), other than the 10-year 

limitation period described in 

§ 901.3(a)(6). The filing of the request 

for offset within the 10-year period shall 

satisfy any requirement that offset be 

initiated prior to expiration of the 

statute of limitations. The OPM shall 

retain the claim for future recovery and 

make the collection when the debtor 
68482 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 

applies for a refund or benefits from the 

retirement fund. The OPM shall notify 

the agency if it does not have an 

application for a refund or benefits from 

the debtor so that the agency may 

continue to attempt recovery using other 

collection mechanisms. The agency 

shall notify the OPM if it collects the 

claim using alternative means and 

wishes to modify or terminate its offset 

request. 

(c) If the offset request has been 

pending for a year or more when the 

debtor files an application for a refund 

or benefits, the OPM shall contact the 

agency to determine if the claim is still 

due and the current balance of the 

claim. If the claim is still due, the 

agency shall allow the debtor to offer a 

satisfactory repayment plan in lieu of 

the offset, upon establishing that 

changes in the debtor’s financial 

condition would render the offset unjust 

(see § 901.9 and § 902.2(b) of this 

chapter). 

(d) This section does not authorize the 

OPM or the Merit Systems Protection 

Board to review the merits of the 

requesting agency’s determination with 

respect to the amount and validity of the 

claim, its determination as to waiver 

under an applicable statute, or its 

determination whether to provide a 

hearing. The Merit Systems Protection 

Board or any other review panel is not 

precluded from providing hearing 

officials, on a reimbursable basis, to 

other Federal agencies where hearing 

officials are required by law. 

(e) In bankruptcy cases, agencies 

should seek legal advice from their 

agency counsel concerning the impact 

of the Bankruptcy Code, particularly 11 

U.S.C. 106, 362 and 553, on pending or 

contemplated collections by offset. 

§ 901.5 Reporting claims. 

(a) Agencies shall develop and 

implement procedures for reporting 

delinquent claims to credit bureaus and 

other automated databases. Agencies 

also may develop procedures to report 

non-delinquent claims to credit bureaus. 

(1) In developing procedures for 

reporting claims to credit bureaus, 

agencies shall comply with the 

Bankruptcy Code and the Privacy Act of 

1974, 5 U.S.C. 552a, as amended. Credit 

bureaus are not subject to the Privacy 

Act. 

(2) Agency procedures for reporting 

consumer claims to credit bureaus shall 

be consistent with the due process and 

other requirements contained in 31 

U.S.C. 3711(e). When an agency has 

given a debtor any of the required notice 

and review opportunities with respect 

to a particular claim, the agency need 

not give notice and review opportunities 

duplicating those previously given 

before reporting that consumer claim to 

credit bureaus. 

(b) Agencies should report delinquent 

claims to the Department of Housing 

and Urban Development’s Credit Alert 

Interactive Voice Response System 

(CAIVRS). For information about 

participating in the CAIVRS program, 

agencies should contact the Director of 

Information Resources Management 

Policy and Management Division, Office 

of Information Technology, Department 

of Housing and Urban Development, 

451 7th Street, S.W., Washington, DC 

20410. 

§ 901.6 Contracting for debt collection 

agencies and to locate and recover 

unclaimed assets. 

(a) Agencies may contract with 

collection agencies to recover 

delinquent claims provided that: 

(1) Agencies retain the authority to 

resolve disputes, compromise claims, 

suspend or terminate collection activity, 

and refer claims for litigation; 

(2) The collection agency is not 

allowed to offer the debtor, as an 

incentive for payment, the opportunity 

to pay the claim less the collection 

agency’s fee unless the agency has 

granted such authority prior to the offer; 

(3) The collection agency is subject to 

the Privacy Act of 1974 to the extent 

specified in 5 U.S.C. 552a(m) and to 

applicable Federal and state laws and 

regulations pertaining to debt collection 

practices, including but not limited to 

the Fair Debt Collection Practices Act, 

15 U.S.C. 1692; and 

(4) The collection agency is required 

to account for all amounts collected. 

(b) Except for those agencies 

specifically exempted by procurement 

statutes or with collection contracts in 

effect prior to the award of the 

government-wide contracts, agencies 

shall use government-wide debt 

collection contracts to obtain debt 

collection services provided by 

collection agencies. 

(c) Agencies may fund collection 

agency contracts on a fixed-fee basis, 

that is, by providing for payment of a 

fixed fee determined without regard to 

the amount actually collected under the 

contract, provided that the payment of 

the fee under this type of contract shall 

be charged to available agency 

appropriations or funds. 

(d) Unless prohibited by statute, 

agencies may fund collection agency 

contracts on a contingent-fee basis, that 

is, by including a provision in the 

contract permitting the collection 

agency to deduct a fee, consistent with 

prevailing commercial practice, based 

on a percentage of the amount collected 

under the contract. 

(e) Agencies also may enter into 

contracts for locating and recovering 

unclaimed assets of the United States. 

Agencies must establish procedures that 

are acceptable to the Secretary before 

entering into contracts to recover assets 

of the United States held by a state 

government or a financial institution. 

§ 901.7 Suspension or revocation of 

eligibility for loans and loan guaranties, 

licenses, permits, or privileges. 

(a) Unless waived by the head of the 

agency, agencies are not permitted to 

extend financial assistance in the form 

of a loan, loan guarantee, or loan 

insurance to any person delinquent on 

a non-tax claim owed to a Federal 

agency. This prohibition does not apply 

to disaster loans. The authority to waive 

the application of this section may be 

delegated to the Chief Financial Officer 

and redelegated only to the Deputy 

Chief Financial Officer of the agency. 

Agencies may extend credit after the 

delinquency has been resolved. The 

Secretary may exempt classes of claims 

from this prohibition and shall prescribe 

standards defining when a 

‘‘delinquency’’ is ‘‘resolved’’ for 

purposes of this prohibition. 

(b) In non-bankruptcy cases, agencies 

seeking the collection of statutory 

penalties, forfeitures, or other types of 

claims should give serious 

consideration to the suspension or 

revocation of licenses, permits, or other 

privileges for any inexcusable or willful 

failure of a debtor to pay such a claim 

in accordance with the agency’s 

regulations or governing procedures. 

The debtor should be advised in the 

agency’s written demand for payment of 

the agency’s ability to suspend or revoke 

licenses, permits, or privileges. Any 

agency making, guaranteeing, insuring, 

acquiring, or participating in loans 

should give consideration to suspending 

or disqualifying any lender, contractor, 

or broker from doing further business 

with it or engaging in programs 

sponsored by it if such a debtor fails to 

pay its claims to the Government within 

a reasonable time or if such debtor has 

been suspended, debarred, or 

disqualified from participation in a 

program or activity by another Federal 

agency. The failure of any surety to 

honor its obligations in accordance with 

31 U.S.C. 9305 should be reported to the 

Department of the Treasury. The 

Department of the Treasury shall 

forward to all interested agencies 

notification that a surety’s certificate of 

authority to do business with the 

Government has been revoked or 

forfeited by the Department. 
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 68483 

(c) The suspension or revocation of 

licenses, permits, or privileges should 

also extend to Federal programs or 

activities that are administered by the 

states on behalf of the Federal 

Government, to the extent that they 

affect the Government’s ability to collect 

money or funds owed by debtors. 

Therefore, states that manage Federal 

activities, pursuant to approval from the 

agencies, should ensure that appropriate 

steps are taken to safeguard against 

issuing licenses, permits, or privileges 

to debtors who fail to pay their claims 

to the Government. 

(d) In bankruptcy cases, before 

advising the debtor of an agency’s 

intention to suspend or revoke licenses, 

permits, or privileges, agencies should 

seek legal advice from their agency 

counsel concerning the impact of the 

Bankruptcy Code, particularly 11 U.S.C. 

362 and 525, which may restrict such 

action by the Government. 

§ 901.8 Liquidation of collateral. 

(a) Agencies should liquidate security 

or collateral and apply the proceeds to 

the applicable claim(s) due through the 

exercise of a power of sale in the 

security instrument or a nonjudicial 

foreclosure if debtors fail to pay the 

claim(s) within a reasonable time after 

demand and such action is in the 

Government’s best interest. Collection 

from other sources, including 

liquidation of security or collateral, is 

not a prerequisite to requiring payment 

by a surety, insurer, or guarantor unless 

such action is expressly required by 

statute or contract. 

(b) When an agency learns that a 

bankruptcy petition has been filed with 

respect to a debtor, the agency should 

seek legal advice from their agency 

counsel concerning the impact of the 

Bankruptcy Code, including, but not 

limited to, 11 U.S.C. 362, to determine 

applicability of the automatic stay and 

the procedures for obtaining relief from 

such stay prior to proceeding under 

paragraph (a) of this section. 

§ 901.9 Collection in installments. 

(a) Whenever feasible, agencies shall 

collect the total amount of a claim in 

one lump sum regardless of the 

collection mechanism being used. If a 

debtor is financially unable to pay a 

claim in one lump sum, agencies may 

accept payment in regular installments. 

Agencies should obtain financial 

statements from debtors who represent 

that they are unable to pay in one lump 

sum and independently verify such 

representations whenever possible (see 

§ 902.2(g) of this chapter). Agencies that 

agree to accept payments in regular 

installments should obtain a legally 

enforceable written agreement from the 

debtor that specifies all of the terms of 

the arrangement and that contains a 

provision accelerating the claim in the 

event of default. 

(b) The size and frequency of 

installment payments should bear a 

reasonable relation to the size of the 

claim and the debtor’s ability to pay. If 

possible, the installment payments 

should be sufficient in size and 

frequency to liquidate the Government’s 

claim in three years or less. 

(c) Security for deferred payments 

should be obtained in appropriate cases. 

Agencies may accept installment 

payments notwithstanding the refusal of 

the debtor to execute a written 

agreement or to give security, at the 

agency’s option. 

§ 901.10 Interest, penalties, and 

administrative costs. 

(a) Except as provided in paragraphs 

(g), (h), and (i) of this section, agencies 

shall charge interest, penalties, and 

administrative costs on claims owed to 

the United States pursuant to 31 U.S.C. 

3717. An agency shall mail or handdeliver a written notice to the debtor, at 

the debtor’s most recent address 

available to the agency, explaining the 

agency’s requirements concerning these 

charges except where these 

requirements are included in a 

contractual or repayment agreement. 

These charges shall continue to accrue 

until the claim is paid in full or 

otherwise resolved through 

compromise, termination, or waiver of 

the charges. 

(b) Agencies shall charge interest on 

claims owed the United States as 

follows: 

(1) Interest shall accrue from the date 

of delinquency when all circumstances 

have occurred to give rise to the claim 

or as otherwise provided by law. 

(2) Unless otherwise established in a 

contract, repayment agreement, or by 

statute, the rate of interest charged shall 

be the rate established annually by the 

Secretary in accordance with 31 U.S.C. 

3717. Pursuant to 31 U.S.C. 3717, an 

agency may charge a higher rate of 

interest if it reasonably determines that 

a higher rate is necessary to protect the 

rights of the United States. The agency 

should document the reasons for its 

determination that the higher rate is 

necessary. 

(3) The rate of interest, as initially 

charged, shall remain fixed for the 

duration of the indebtedness. When a 

debtor has defaulted on a repayment 

agreement and seeks to enter into a new 

agreement, the agency may require 

payment of interest at a new rate that 

reflects the current value of funds to the 

Treasury at the time the new agreement 

is executed. Interest shall not be 

compounded, that is, interest shall not 

be charged on interest, penalties, or 

administrative costs required by this 

section. If, however, a debtor defaults on 

a previous repayment agreement, 

charges that accrued but were not 

collected under the defaulted agreement 

shall be added to the principal to be 

paid under the new repayment 

agreement. 

(c) Agencies shall assess 

administrative costs incurred for 

processing and handling delinquent 

claims. The calculation of 

administrative costs should be based on 

actual costs incurred or upon estimated 

costs as determined by the assessing 

agency. 

(d) Unless otherwise established in a 

contract, repayment agreement, or by 

statute, agencies shall charge a penalty, 

pursuant to 31 U.S.C. 3717(e)(2), not to 

exceed six percent a year on the amount 

due on a claim that is delinquent for 

more than 90 days. This charge shall 

accrue from the date of delinquency. 

(e) Agencies may increase an 

‘‘administrative claim’’ by the cost of 

living adjustment in lieu of charging 

interest and penalties under this 

section. Such increases shall be 

computed annually. Agencies should 

use this alternative only when there is 

a legitimate reason to do so, such as 

when calculating interest and penalties 

on a claim would be extremely difficult 

because of the age of the claim. 

‘‘Administrative claim’’ includes, but is 

not limited to, a claim based on fines, 

penalties, and overpayments, but does 

not include a claim based on the 

extension of Government credit, such as 

those arising from loans and loan 

guaranties. The cost of living adjustment 

is the percentage by which the 

Consumer Price Index for the month of 

June of the calendar year preceding the 

adjustment exceeds the Consumer Price 

Index for the month of June of the 

calendar year in which the claim was 

determined or last adjusted. 

(f) When a claim is paid in partial or 

installment payments, amounts received 

by the agency shall be applied first to 

outstanding penalties, second to 

administrative charges, third to interest, 

and lastly to principal. 

(g) Agencies shall waive the collection 

of interest and administrative charges 

imposed pursuant to this section on the 

portion of the claim that is paid within 

30 days after the date on which interest 

began to accrue. Agencies may extend 

this 30-day period on a case-by-case 

basis. In addition, agencies may waive 

interest, penalties, and administrative 

costs charged under this section, in 
68484 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 

whole or in part, without regard to the 

amount of the claim, either under the 

criteria set forth in these standards for 

the compromise of claims, or if the 

agency determines that collection of 

these charges is against equity and good 

conscience or is not in the best interests 

of the United States. 

(h) Agencies shall set forth in their 

regulations the circumstances under 

which interest and related charges will 

not be imposed for periods during 

which collection activity has been 

suspended pending agency review. 

(i) Agencies are authorized to impose 

interest and related charges on claims 

not subject to 31 U.S.C. 3717 in 

accordance with the applicable common 

law. 

§ 901.11 Analysis of costs. 

Agency collection procedures should 

provide for periodic comparison of costs 

incurred and amounts collected. Data on 

costs and corresponding recovery rates 

for claims of different types and in 

various dollar ranges should be used to 

compare the cost effectiveness of 

alternative collection techniques, 

establish guidelines with respect to 

points at which costs of further 

collection efforts are likely to exceed 

recoveries, assist in evaluating offers in 

compromise, and establish minimum 

claim amounts below which collection 

efforts need not be taken. 

§ 901.12 Use and disclosure of mailing 

addresses. 

(a) When attempting to locate a debtor 

in order to collect or compromise a 

claim under parts 900–904 of this 

chapter or other authority, agencies may 

send a request to the Secretary of the 

Treasury (or designee) to obtain a 

debtor’s mailing address from the 

records of the Internal Revenue Service. 

(b) Agencies are authorized to use 

mailing addresses obtained under 

paragraph (a) of this section to enforce 

collection of a delinquent claim and 

may disclose such mailing addresses to 

other agencies and to collection 

agencies for collection purposes. 

§ 901.13 Exemptions. 

(a) The preceding sections of this part, 

to the extent they reflect remedies or 

procedures prescribed by the Debt 

Collection Act of 1982 and the Debt 

Collection Improvement Act of 1996, 

such as administrative offset, use of 

credit bureaus, contracting for collection 

agencies, and interest and related 

charges, do not apply to claims arising 

under, or payments made under, the 

Internal Revenue Code of 1986 as 

amended (26 U.S.C. 1 et seq.); the Social 

Security Act (42 U.S.C. 301 et seq.), 

except to the extent provided under 42 

U.S.C. 404 and 31 U.S.C. 3716(c); or the 

tariff laws of the United States. These 

remedies and procedures, however, may 

be authorized with respect to claims 

that are exempt from the Debt Collection 

Act of 1982 and the Debt Collection 

Improvement Act of 1996, to the extent 

that they are authorized under some 

other statute or the common law. 

(b) This section should not be 

construed as prohibiting the use of these 

authorities or requirements when 

collecting claims owed by persons 

employed by agencies administering the 

laws cited in paragraph (a) of this 

section unless the claim arose under 

those laws. 

PART 902—STANDARDS FOR THE 

COMPROMISE OF CLAIMS 

Sec.


902.1—Scope and application.


902.2—Bases for compromise.


902.3—Enforcement policy.


902.4—Joint and several liability.


902.5—Further review of compromise offers.


902.6—Consideration of tax consequences to


the Government. 

902.7—Mutual releases of debtor and the 

Government. 

Authority: 31 U.S.C. 3711. 

§ 902.1 Scope and application. 

(a) The standards set forth in this part 

apply to the compromise of claims 

pursuant to 31 U.S.C. 3711. An agency 

may exercise such compromise 

authority for claims arising out of 

activities of, or referred or transferred 

for collection services to, that agency 

when the amount of the claim then due, 

exclusive of interest, penalties, and 

administrative costs, does not exceed 

$100,000 or any higher amount 

authorized by the Attorney General. 

Agency heads may designate officials 

within their respective agencies to 

exercise the authorities referred to in 

this section. 

(b) Unless otherwise provided by law, 

when the principal balance of a claim, 

exclusive of interest, penalties, and 

administrative costs, exceeds $100,000 

or any higher amount authorized by the 

Attorney General, the authority to 

accept the compromise rests with the 

Department of Justice. The agency 

should evaluate the offer, using the 

factors set forth in this part. If the 

agency decides that an offer to 

compromise any claim in excess of 

$100,000 is acceptable to the agency, it 

shall refer the claim to the appropriate 

litigating division in the Department of 

Justice using a Claims Collection 

Litigation Report (CCLR). Agencies may 

obtain the CCLR from the Department of 

Justice or local United States Attorney’s 

Office. The referral shall include 

appropriate financial information and a 

recommendation for the acceptance of 

the compromise offer. Justice 

Department approval is not required if 

the agency decides to reject a 

compromise offer. 

§ 902.2 Bases for compromise. 

(a) Agencies may compromise a claim 

if the Government cannot collect the full 

amount because: 

(1) The debtor is unable to pay the full 

amount in a reasonable time, as verified 

through credit reports or other financial 

information; 

(2) The Government is unable to 

collect the claim in full within a 

reasonable time by enforced collection 

proceedings; 

(3) The cost of collecting the claim 

does not justify the enforced collection 

of the full amount; or 

(4) There is significant doubt 

concerning the Government’s ability to 

prove its case in court. 

(b) In determining the debtor’s 

inability to pay, among other relevant 

factors, agencies should consider the 

following: 

(1) Age and health of the debtor; 

(2) Present and potential income; 

(3) Inheritance prospects; 

(4) The possibility that assets have 

been concealed or improperly 

transferred by the debtor; and 

(5) The availability of assets or 

income that may be realized by enforced 

collection proceedings. 

(c) Agencies should verify the debtor’s 

claim of inability to pay by using a 

credit report and other financial 

information as provided in paragraph (g) 

of this section. Agencies may use their 

own financial information form or may 

request suitable forms from the 

Department of Justice or local United 

States Attorney’s Office. Agencies 

should consider the applicable 

exemptions available to the debtor 

under state and Federal law in 

determining the Government’s ability to 

enforce collection. Agencies also may 

consider uncertainty as to the price that 

collateral or other property will bring at 

forced sale in determining the 

Government’s ability to enforce 

collection. A compromise effected 

under this section should be for an 

amount that bears a reasonable relation 

to the amount that can be recovered by 

enforced collection procedures, with 

regard to the exemptions available to the 

debtor and the time that collection will 

take. 

(d) If there is significant doubt 

concerning the Government’s ability to 

prove its case in court for the full 

amount claimed, either because of the 
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 68485 

legal issues involved or because of a 

bona fide dispute as to the facts, then 

the amount accepted in compromise of 

such cases should fairly reflect the 

probabilities of successful prosecution 

to judgment, with due regard given to 

the availability of witnesses and other 

evidentiary support for the 

Government’s claim. In determining the 

litigative risks involved, agencies 

should consider the probable amount of 

court costs and attorney fees pursuant to 

the Equal Access to Justice Act, 28 

U.S.C. 2412, that may be imposed 

against the Government if it is 

unsuccessful in litigation. 

(e) Agencies may compromise a claim 

if the cost of collecting the claim does 

not justify the enforced collection of the 

full amount. The amount accepted in 

compromise in such cases may reflect 

an appropriate discount for the 

administrative and litigative costs of 

collection, with consideration given to 

the time it will take to effect collection. 

Collection costs may be a substantial 

factor in the settlement of small claims. 

In determining whether the cost of 

collecting justifies enforced collection of 

the full amount, agencies should 

consider whether continued collection 

of the claim, regardless of cost, is 

necessary to further an enforcement 

principle, such as the Government’s 

willingness to pursue aggressively 

defaulting and uncooperative debtors. 

(f) Agencies generally should not 

accept compromises payable in 

installments. This is not an 

advantageous form of compromise in 

terms of time and administrative 

expense. If, however, payment of a 

compromise in installments is 

necessary, agencies should obtain a 

legally enforceable written agreement 

providing that, in the event of default in 

payment of the compromise, the full 

original principal balance of the claim 

prior to compromise, less sums paid 

thereon, is reinstated. Whenever 

possible, agencies should also obtain 

security for repayment in the manner set 

forth in part 901 of this title. 

(g) Agencies should obtain a current 

financial statement from the debtor, 

executed under penalty of perjury, 

showing the debtor’s assets and 

liabilities, income and expenses, as a 

basis for assessing the merits of a 

compromise proposal. Agencies also 

may obtain credit reports or other 

financial information to assess 

compromise offers. Agencies may use 

their own financial information form or 

may request suitable forms from the 

Department of Justice or the local 

United States Attorney’s Office. 

§ 902.3 Enforcement policy. 

Agencies may compromise statutory 

penalties, forfeitures, or claims 

established as an aid to enforcement and 

to compel compliance, pursuant to this 

part, if the agency’s enforcement policy 

in terms of deterrence and securing 

compliance, present and future, will be 

adequately served by the agency’s 

acceptance of the sum to be agreed 

upon. Accidental or technical violations 

may be dealt with less severely than 

willful and substantial violations. 

§ 902.4 Joint and several liability. 

(a) When two or more debtors are 

jointly and severally liable, agencies 

should pursue collection activity against 

all debtors, as appropriate. Agencies 

should not attempt to allocate the 

burden of payment between the debtors 

but should proceed to liquidate the 

indebtedness as quickly as possible. 

(b) Agencies should ensure that a 

compromise agreement with one debtor 

does not release the agency’s claim 

against the remaining debtors. The 

amount of a compromise with one 

debtor shall not be considered a 

precedent or binding in determining the 

amount that will be required from other 

debtors jointly and severally liable on 

the claim. 

§ 902.5 Further review of compromise 

offers. 

If an agency receives a firm, written, 

substantive compromise offer on a claim 

that comes within its own delegated 

compromise authority, but is uncertain 

whether the offer should be accepted, it 

may refer the offer, using a CCLR 

accompanied by supporting data and 

particulars concerning the claim, to the 

appropriate litigating division in the 

Department of Justice. The Department 

of Justice may act upon such an offer or 

return it to the agency with instructions 

or advice. 

§ 902.6 Consideration of tax 

consequences to the Government. 

In negotiating a compromise with a 

business concern, agencies should 

consider the tax consequences to the 

Government. In particular, agencies 

should consider requiring a waiver of 

tax-loss-carry-forward and tax-losscarry-back rights of the debtor. 

§ 902.7 Mutual releases of debtor and the 

Government. 

In all appropriate instances, a 

compromise that is accepted by an 

agency should be implemented by 

means of a mutual release, whereby the 

debtor is released from further non-tax 

liability on the compromised claim in 

consideration of payment in full of the 

compromise amount. The Government 

and its officials, past and present, are 

released and discharged from any and 

all claims arising from the same 

transaction the debtor may have against 

them. 

PART 903—STANDARDS FOR 

SUSPENDING OR TERMINATING 

COLLECTION ACTIVITY 

Sec.


903.1 Scope and application.


903.2 Suspension of collection activity.


903.3 Termination of collection activity.


903.4 Exception to termination.


Authority: 31 U.S.C. 3711. 

§ 903.1 Scope and application. 

(a) The standards set forth in this part 

apply to the suspension or termination 

of collection activity pursuant to 31 

U.S.C. 3711 on claims that do not 

exceed $100,000, or such other amount 

as the Attorney General may direct, exclusive of interest, penalties, and 

administrative costs, after deducting the 

amount of partial payments or collections, if any. Prior to referring a claim 

to the Department of Justice for 

litigation, agencies may suspend or 

terminate collection under this part 

with respect to claims arising out of 

activities of, or referred or transferred 

for collection services to, that agency. 

(b) If, after deducting the amount of 

any partial payments or collections, the 

principal amount of a claim exceeds 

$100,000, or such other amount as the 

Attorney General may direct, exclusive 

of interest, penalties, and administrative 

costs, the authority to suspend or 

terminate rests solely with the 

Department of Justice. If the agency 

believes that suspension or termination 

of any claim in excess of $100,000 may 

be appropriate, it shall refer the claim to 

the appropriate litigating division in the 

Department of Justice, using the Claims 

Collection Litigation Report. The 

referral should specify the reasons for 

the agency’s recommendation. If, prior 

to referral to the Department of Justice, 

an agency determines that a claim is 

plainly erroneous or clearly without 

legal merit, the agency may terminate 

collection activity regardless of the 

amount involved without obtaining 

Department of Justice concurrence. 

§ 903.2 Suspension of collection activity. 

(a) Agencies may suspend collection 

activity on a claim when: 

(1) The agency cannot locate the 

debtor; 

(2) The debtor’s financial condition is 

expected to improve; or 

(3) The debtor has requested a waiver 

or review of the claim. 

(b) Based on the current financial 

condition of the debtor, agencies may 
68486 Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 

suspend collection activity on a claim 

when the debtor’s future prospects 

justify retention of the claim for 

periodic review and collection activity 

and: 

(1) The applicable statute of 

limitations has not expired; or 

(2) Future collection can be effected 

by administrative offset, 

notwithstanding the expiration of the 

applicable statute of limitations for 

litigation of claims, with due regard to 

the 10-year limitation for administrative 

offset prescribed by 31 U.S.C. 

3716(e)(1); or 

(3) The debtor agrees to pay interest 

on the amount of the claim on which 

collection will be suspended, and such 

suspension is likely to enhance the 

debtor’s ability to pay the full amount 

of the principal of the claim with 

interest at a later date. 

(c) (1) Agencies shall suspend 

collection activity during the time 

required for consideration of the 

debtor’s request for waiver or 

administrative review of the claim if the 

statute under which the request is 

sought prohibits the agency from 

collecting the debt during that time. 

(2) If the statute under which the 

request is sought does not prohibit 

collection activity pending 

consideration of the request, agencies 

may use discretion, on a case-by-case 

basis, to suspend collection. Further, an 

agency ordinarily should suspend 

collection action upon a request for 

waiver or review if the agency is 

prohibited by statute or regulation from 

issuing a refund of amounts collected 

prior to agency consideration of the 

debtor’s request. However, an agency 

should not suspend collection when the 

agency determines that the request for 

waiver or review is frivolous or was 

made primarily to delay collection. 

(d) When an agency learns that a 

bankruptcy petition has been filed with 

respect to a debtor, in most cases the 

collection activity on a claim must be 

suspended, pursuant to the provisions 

of 11 U.S.C. 362, 1201, and 1301, unless 

the agency can clearly establish that the 

automatic stay has been lifted or is no 

longer in effect. Agencies should seek 

legal advice immediately from their 

agency counsel and, if legally permitted, 

take the necessary legal steps to ensure 

that no funds or money are paid by the 

agency to the debtor until relief from the 

automatic stay is obtained. 

§ 903.3 Termination of collection activity. 

(a) Agencies may terminate collection 

activity when: 

(1) The agency is unable to collect any 

substantial amount through its own 

efforts or through the efforts of a debt 

collection center; 

(2) The agency is unable to locate the 

debtor; 

(3) Costs of collection are anticipated 

to exceed the amount recoverable; 

(4) The claim is legally without merit 

or enforcement of the claim is barred by 

any applicable statute of limitations; 

(5) The claim cannot be substantiated; 

or 

(6) The claim against the debtor has 

been discharged in bankruptcy. 

(b) Before terminating collection 

activity, the agency should have 

pursued all appropriate means of 

collection and determined, based upon 

the results of the collection activity, that 

the claim is uncollectible. Termination 

of collection activity ceases active 

collection of the claim. The termination 

of collection activity does not preclude 

the agency from retaining a record of the 

account for purposes of: 

(1) Selling the debt, if the Secretary 

determines that such sale is in the best 

interests of the United States; 

(2) Pursuing collection at a 

subsequent date in the event there is a 

change in the debtor’s status or a new 

collection tool becomes available; 

(3) Offsetting against future income or 

assets not available at the time of 

termination of collection activity; or 

(4) Screening future applicants for 

prior indebtedness. 

(c) Generally, agencies shall terminate 

collection activity on a claim that has 

been discharged in bankruptcy, 

regardless of the amount. Agencies may 

continue collection activity, however, 

subject to the provisions of the 

Bankruptcy Code, for any payments 

provided under a plan of reorganization. 

Offset and recoupment rights may 

survive the discharge of the debtor in 

bankruptcy and, under some 

circumstances, claims also may survive 

the discharge. For example, the claims 

of an agency that is a known creditor of 

a debtor may survive a discharge if the 

agency did not receive formal notice of 

the proceedings. Agencies should seek 

legal advice from their agency counsel 

if they believe they have claims or 

offsets that may survive the discharge of 

a debtor. 

§ 903.4 Exception to termination. 

When a significant enforcement 

policy is involved, or recovery of a 

judgment is a prerequisite to the 

imposition of administrative sanctions, 

agencies may refer such a claim for 

litigation even though termination of 

collection activity might otherwise be 

appropriate. 

PART 904—REFERRALS TO THE 

DEPARTMENT OF JUSTICE 

Sec.


904.1 Prompt referral.


904.2 Claims Collection Litigation Report.


904.3 Preservation of evidence.


904.4 Minimum amount of referrals to the


Department of Justice. 

Authority: 31 U.S.C. 3711. 

§ 904.1 Prompt referral. 

(a) Agencies promptly shall refer to 

the Department of Justice for litigation 

claims on which aggressive collection 

activity has been taken in accordance 

with part 901 of this title and that 

cannot be compromised, or on which 

collection activity cannot be suspended 

or terminated, in accordance with parts 

902 and 903 of this chapter. Agencies 

may refer those claims arising out of 

activities of, or referred or transferred 

for collection services to, that agency. 

Claims for which the principal amount 

is over $1,000,000, or such other 

amount as the Attorney General may 

direct, exclusive of interest and 

penalties, shall be referred to the 

division responsible for litigating such 

claims at the Department of Justice, 

Washington, D.C. Claims for which the 

principal amount is $1,000,000, or less, 

or such other amount as the Attorney 

General may direct, exclusive of interest 

or penalties, shall be referred to the 

Department of Justice’s Nationwide 

Central Intake Facility as required by 

the CCLR instructions. Claims should be 

referred as early as possible, consistent 

with aggressive agency collection 

activity and the observance of the 

standards contained in parts 900–904 of 

this chapter, and, in any event, well 

within the period for initiating timely 

lawsuits against the debtors. Agencies 

shall make every effort to refer 

delinquent claims to the Department of 

Justice for litigation within one year of 

the date such claims last became 

delinquent. In the case of guaranteed or 

insured loans, agencies should make 

every effort to refer these delinquent 

claims to the Department of Justice for 

litigation within one year from the date 

the loan was presented to the agency for 

payment or re-insurance. 

(b) The Department of Justice has 

exclusive jurisdiction over the claims 

referred to it pursuant to this section. 

The referring agency shall refrain from 

having any contact with the debtor and 

shall direct all debtor inquiries 

concerning the claim to the Department 

of Justice. The referring agency shall 

notify immediately the Department of 

Justice of any payments credited by the 

agency to the debtor’s account after 

referral of a claim under this section. 
Federal Register / Vol. 62, No. 250 / Wednesday, December 31, 1997 / Proposed Rules 68487 

The Department of Justice shall notify 

the referring agency, in a timely manner, 

of any payments it receives from the 

debtor. 

§ 904.2 Claims Collection Litigation 

Report. 

(a) Unless excepted by the 

Department of Justice, agencies shall 

complete the Claims Collection 

Litigation Report (CCLR) (See § 902.1(b) 

of this chapter.), accompanied by a 

signed Certificate of Indebtedness, to 

refer all administratively uncollectible 

claims to the Department of Justice for 

litigation. Referring agencies shall 

complete all of the sections of the CCLR 

appropriate to each claim as required by 

the CCLR instructions and furnish such 

other information as may be required in 

specific cases. 

(b) Agencies shall indicate clearly on 

the CCLR the actions they wish the 

Department of Justice to take with 

respect to the referred claim. The CCLR 

permits the agency to indicate 

specifically any of a number of litigative 

activities which the Department of 

Justice may pursue, including enforced 

collection, judgment lien only, renew 

judgment lien only, renew judgment 

lien and enforce collection, program 

enforcement, foreclosure only, and 

foreclosure and deficiency judgment. 

(c) Agencies also shall use the CCLR 

to refer claims to the Department of 

Justice to obtain that Department’s 

approval of any proposals to 

compromise the claims or to suspend or 

terminate agency collection activity. 

§ 904.3 Preservation of evidence. 

Referring agencies must take care to 

preserve all files and records that may 

be needed by the Department of Justice 

to prove their claims in court. Agencies 

ordinarily should include certified 

copies of the documents that form the 

basis for the claim in the packages 

referring their claims to the Department 

of Justice for litigation. Agencies shall 

provide originals of such documents 

immediately upon request by the 

Department of Justice. 

§ 904.4 Minimum amount of referrals to the 

Department of Justice. 

(a) Agencies shall not refer for 

litigation claims of less than $2,500, 

exclusive of interest, penalties, and 

administrative costs, or such other 

amount as the Attorney General shall 

from time to time prescribe. The 

Department of Justice promptly shall 

notify referring agencies if the Attorney 

General changes this minimum amount. 

(b) Agencies shall not refer claims of 

less than the minimum amount unless: 

(1) Litigation to collect such smaller 

claims is important to ensure 

compliance with the agency’s policies 

or programs; 

(2) The claim is being referred solely 

for the purpose of securing a judgment 

against the debtor, which will be filed 

as a lien against the debtor’s property 

pursuant to 28 U.S.C. 3201 and returned 

to the referring agency for enforcement; 

or 

(3) The debtor has the clear ability to 

pay the claim and the Government 

effectively can enforce payment, with 

due regard for the exemptions available 

to the debtor under state and Federal 

law and the judicial remedies available 

to the Government. Agencies should 

consult with the Financial Litigation 

Staff of the Executive Office for United 

States Attorneys in the Department of 

Justice prior to referring claims valued 

at less than the minimum amount. 

Dated: December 16, 1997. 

Robert E. Rubin, 

Secretary of the Treasury. 

Dated: November 28, 1997. 

Janet Reno, 

Attorney General of the United States. 

[FR Doc. 97–33338 Filed 12–30–97; 8:45 am] 

BILLING CODE 4810–35–P, 4410–26–P