[Federal Register Volume 60, Number 47 (Friday, March 10, 1995)]
[Rules and Regulations]
[Pages 13027-13034]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5951]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 60, No. 47 / Friday, March 10, 1995 / Rules 
and Regulations
[[Page 13027]]

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 582

RIN 3206--AF83


Commercial Garnishment of Federal Employees' Pay

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel management (OPM) is finalizing its 
interim regulations for processing garnishment actions affecting 
Federal employees' pay for commercial indebtednesses and tax 
obligations due to State and local governments. This part provides 
procedures and guidance for Executive Branch agencies of the Federal 
Government, not including the Postal Service or the Postal Rate 
Commission, to process commercial garnishment orders affecting the pay 
of civilian employees.

EFFECTIVE DATE: April 10, 1995.

FOR FURTHER INFORMATION CONTACT: Murray M. Meeker, Attorney, Office of 
the General Counsel, (202) 606-1980.

SUPPLEMENTARY INFORMATION: On October 6, 1993, Congress enacted the 
Hatch Act Reform Amendments of 1993, Public law 103-94, section 9, 5 
U.S.C. 5520a, which waived the Federal Government's sovereign immunity 
to permit compliance with garnishment orders for commercial debts and 
tax indebtednesses to State and local governments. On February 3, 1994, 
the President signed Executive Order Number 12897 which delegated 
responsibility to OPM to issue implementing regulations for most of the 
Executive Branch, and on March 29, 1994, OPM issued an interim rule 
with request for comments. (59 FR 14541) In addition to receiving 
comments from more than twenty Federal agencies, private organizations, 
and individuals in response to this publication, OPM expressly elicited 
additional guidance from the Office of Management and Budget, the 
Department of Justice, the Department of Labor, the Federal Retirement 
Thrift Investment Board, and the United States Postal Service.
    Several commenters requested clarification concerning whether 
moneys payable to contractors would be subject to garnishment. In 
response to these requests, we have amended the definition of employee 
in Sec. 582.102(2). The amended definition provides that an individual 
whose employment is based on a contract is not an employee under this 
part. This amendment is consistent with judicial decisions which have 
recognized that Federal employment is not contractual. See, e.g., 
United States v. The Citizens & Southern National Bank, 889 F.2d 1067 
(Fed. Cir. 1989). An employee organization was concerned that 
reemployed annuitants had been excluded from the definition of 
employee. In fact, reemployed annuitants are included in the definition 
of employee in Sec. 582.102(2). However, we have amended the definition 
of employee to clarify that the pay of reemployed annuitants and 
reemployed retired members of the uniformed services is subject to 
garnishment.
    An employee organization suggested that OPM's regulations indicate 
that regulations pertaining to the garnishment of the salaries of 
members of the uniformed services were to be promulgated by a separate 
authority. In response to this suggestion, we have added two additional 
sentences to the definition of agency in Sec. 582.102(1). This employee 
organization also suggested that the definition of person be amended to 
include courts. In response to this suggestion, we have amended the 
definition of person in Sec. 582.102(4) to include courts and other 
entities that are authorized to issue legal process.
    Two commenters suggested that Federal agencies be permitted to use 
commercial garnishment as a method to collect debts due the United 
States. OPM has determined that as enacted, Public Law 103-94 does not 
provide for commercial garnishment actions by Federal agencies. OPM's 
determination is based on several factors. The primary reason being 
that Public Law 103-94 does not expressly provide for garnishment by 
the Federal Government, and there is no legislative history reflecting 
such an intent. Additionally, the principles of statutory 
interpretation require that all of the provisions of a statute be read 
together. See United States v. Fausto, 484 U.S. 439, 453 (1988). In 
accordance with this principle, OPM is mindful that in processing 
commercial garnishment orders, Congress has provided that debts due the 
United States are to be treated quite differently than commercial 
indebtednesses. To appreciate this difference, compare the exclusion 
provision in section 462(g) of the Social Security Act as incorporated 
in 5 U.S.C. 5520a(g) with the limitation provisions of section 1673 of 
title 15 of the United States Code (section 303 of the Consumer Credit 
Protection Act, as amended) as incorporated in 5 U.S.C. 5520a(b). In 
addition, there are several recent United States Supreme Court 
decisions which recognize a rebuttable presumption that the term person 
does not include the sovereign. See International Primate Protection 
League v. Tulane Educ. Fund, 111 S.Ct. 1700, 1707-1708 (1991); Will v. 
Michigan Department of State Police, 491 U.S. 58, 64 (1989); and Mesa 
v. California, 489 U.S. 121, 136 (1989). In an effort to clarify the 
matter, OPM has amended the definition of person in Sec. 582.102(4) to 
expressly exclude the United States or an agency of the United States.
    OPM has considered, but rejected a labor organizations' comment 
that the definition of pay in Sec. 582.102(5) not include sick pay. We 
believe that the inclusion of sick pay is mandated by express language 
of 5 U.S.C. 5520a(a)(4) which expressly defines pay to include sick 
pay. In accordance with guidance received from the Department of Labor, 
we have expressly excluded ``amounts received under any Federal program 
for compensation for work injuries'' from the definition of pay in 
Sec. 582.102(5).
    One of the Federal agencies that provides payroll services to a 
host of Federal agencies advised OPM that they were treating support 
garnishment orders as exclusions under Sec. 582.103. We have amended 
Sec. 582.103 to clarify that amounts withheld in compliance with 
garnishment orders based on child and/or alimony obligations are not 
exclusions under this part. [[Page 13028]] 
    One agency requested clarification concerning the exclusion in 
Sec. 582.103(b)(1) of amounts withheld for benefits payable under title 
II of the Social Security Act. After consulting with the Social 
Security Administration, we have deleted that provision and renumbered 
the section.
    Two commenters noted the exclusion in Sec. 582.103(e) of all 
amounts contributed to the Thrift Savings Fund and asked whether 
amounts deducted for Thrift Savings Fund loan repayments were also to 
be excluded. In response to this comment, OPM requested guidance from 
the Federal Retirement Thrift Investment Board. OPM concurs with the 
Board's conclusion that these repayment amounts should not be added to 
the list of exclusions in Sec. 582.103.
    One agency commented that some of its employees were attempting to 
reduce their liability for garnishment orders by increasing their 
voluntary allotments. We would emphasize that only the items listed as 
exclusions in Sec. 582.103 may be deducted from an employee-obligor's 
pay before a garnishment is processed. It may, therefore, be necessary 
to terminate a voluntary allotment in order to comply with a commercial 
garnishment order.
    While one agency correctly noted that our exclusion for debts due 
the United States in Sec. 582.103(a) does not list the various types of 
debts due the United States or the order of precedence for such debts, 
the General Accounting Office already maintains such a list.
    While three Federal agencies expressed disagreement with the 
statement in Sec. 582.202(a) that legal process need not expressly name 
the agency as a garnishee, this statement is mandated by the decision 
of the United States Court of Appeals for the Federal Circuit that was 
announced in Millard v. United States, 916 F.2d 1 (Fed. Cir. 1990). We 
have amended Sec. 582.202(a) in response to one agency's comment to 
expressly include interrogatories.
    One commenter noted that the interim regulations permitted State 
courts to garnish the salaries of persons who live and work in a 
different State and concluded that this raised ``a possible 
constitutional question'' as to the legality of the regulations. In 
fact, the Federal Government has been honoring garnishment orders based 
on child support and alimony obligations that extended beyond State 
boundaries for many years and OPM disagrees with any suggestion that 
such orders or the regulations that provide for the processing of such 
orders might be unconstitutional merely because they effect employee-
obligors who live and/or work in other States. More importantly, OPM 
believes that this is another area where the Federal Government's 
responsibilities as an employer are limited and that an employing 
Federal agency is not required to review each order to determine 
whether the court that issued the order had lawfully acquired 
jurisdiction over the out-of-State obligor. See United States v. 
Morton, 467 U.S. 822, 828-830 (1984). This same commenter also 
suggested that the regulations be amended to require that in addition 
to providing the employee-obligor with a copy of the legal process, 
Federal agencies should be required to provide employee-obligors with 
copies of any other documents submitted with the legal process. OPM is 
confident that Federal agencies will use their discretion to provide 
their employees with copies of any accompanying documents that will be 
helpful or informative to the employee. However, to require that 
employing agencies provide all documentation regardless of relevance or 
potential value to the employee-obligor would, we believe, place an 
undue burden on Federal agencies.
    Two agencies commented on the fact that Sec. 582.202(b) does not 
mandate service by certified or registered mail. This provision is in 
accordance with the express language of 5 U.S.C. 5520a(c)(1) and does 
reflect a change from the provisions applicable to service of process 
for garnishment of child support and alimony obligations. OPM 
emphasizes that agencies may not construe may to mean must; it was the 
clear intent of Congress to permit less restrictive service of process 
under this part.
    Several commenters, including an employee organization and a law 
firm that wrote on behalf of a collectors association, expressed a need 
to clarify the fact that a creditor need not necessarily know or 
provide all of the information listed in Sec. 582.203(a), particularly 
the employee-obligor's date of birth or social security number, in 
order to have a garnishment order processed by a Federal agency. In an 
effort to clarify this fact, we have amended Sec. 582.203(a). In 
response to a request from the Treasury Department, we have added a new 
section, Sec. 582.204, concerning electronic disbursement.
    Several commenters noted that two provisions in the interim 
regulations--Sec. 582.303(a) which reiterates the requirement in 5 
U.S.C. 5520a(d) that agencies respond to interrogatories and 
Sec. 582.306(c) which states that agencies shall provide information 
concerning subsequent employment--may conflict with the Privacy Act, 5 
U.S.C. 552a, as implemented by numerous Federal regulations including 
OPM's own disclosure regulations codified at 5 CFR 297.402, which 
permit disclosure in response to legal process only where the legal 
process is signed by a judge. While it might be argued that 5 U.S.C. 
5520a(d) should be construed as an implicit exception to the Privacy 
Act and to the regulations that agencies have promulgated to implement 
the Privacy Act, OPM strongly recommends that agencies establish 
routine uses that will enable them to respond to interrogatories served 
in accordance with this part and, where appropriate, to provide 
subsequent employment information, notwithstanding the absence of a 
judge's signature or some other omission otherwise barred by the 
agency's disclosure restrictions.
    An employee organization commented that OPM exceeded its statutory 
authority by providing in Sec. 582.303(a) that agencies may respond to 
garnishment orders after 30 days where a longer period is provided by 
local law as well as by State law as expressly stated in 5 U.S.C. 
5520a(d). While OPM concurs that section 5520a(d) expressly refers only 
to State law, references to State law have historically included both 
State and local law. See, e.g., Ex parte Virginia, 100 U.S. 339 (1879), 
as discussed in Civil Rights Cases, 109 U.S. 3, 57-58 (1883) (Harlan, 
J., dissenting). For the same reason, we have declined to amend 
Sec. 582.402 to exclude references to local law.
    One agency suggested that Sec. 582.303(a) be amended to clarify 
that agencies need only respond once to legal process. We have amended 
Sec. 582.303(a) in response to this suggestion.
    One agency commenter noted that Sec. 582.303 was redundant and 
suggested that the word effectively be replaced with the word validly. 
We have amended this section in response to these comments.
    OPM received conflicting agency recommendations concerning the 
action to be taken where an employee-obligor appeals a garnishment 
action, and we have decided not to amend Sec. 582.305(c) at this time.
    An association of collection attorneys commented that in the 
collection world there are two major areas: commercial and retail with 
commercial referring to the collection of debts from firms and retail 
referring to collection from consumers. While we appreciate the fact 
that our terminology is not consistent with the nomenclature used by 
some private attorneys, we have determined [[Page 13029]] that no other 
term would be as generally understood as the term commercial for the 
purpose of distinguishing garnishment actions under this part from 
garnishment actions based on child support and alimony obligations.
    Several commenters requested that the regulations clarify the 
effect of a garnishment order for child support and/or alimony on the 
processing of a commercial garnishment order. In response to these 
requests, we have amended Secs. 582.305(f) and 582.402(a) to better 
explain the interrelationship between the two types of legal process.
    One commenter requested that OPM delete Sec. 582.305(k) because by 
permitting Federal agencies to charge fees in commercial garnishment 
actions while not having a similar provision relating to support 
garnishment actions, OPM's regulations were possibly discriminatory 
against women. OPM would emphasize that while the child support and 
alimony garnishment provisions in the Social Security Act do not 
provide for administrative costs or processing fees, Congress has 
expressly provided for such fees in the processing of commercial 
garnishment actions. See 5 U.S.C. 5520a(j)(2).
    In response to an employee organization's suggestion, we have 
amended Sec. 582.305(k) concerning the administrative fees. Three 
commenters suggested that OPM establish uniform administrative fees. 
Instead, OPM has deferred to individual agencies to determine whether 
administrative fees should be assessed and in what amounts based on 
their own cost figures. OPM has been advised that several agencies have 
established and have begun to assess administrative fees based on their 
costs in processing commercial garnishment orders.
    While 5 U.S.C. 5520a(h)(1) provides that legal process shall be 
processed on a first come, first served basis, the laws in several 
jurisdictions, including California and the District of Columbia, 
provide that legal process may only be satisfied on a ``one at a time'' 
basis. Based on this information, we have amended Sec. 582.402(a) in an 
effort to eliminate any confusion that may exist in these 
jurisdictions. In accordance with guidance received from the Department 
of Labor, we have also amended Sec. 582.402(a) to provide that 
administrative costs or fees provided under Sec. 582.305(k) must be 
included in the amounts subject to the garnishment restrictions of the 
Consumer Credit Protection Act. In other words, an agency may not 
withhold more than 25% of an employee-obligor's aggregate disposable 
earnings in order to offset administrative costs. Rather, the amount to 
be withheld in compliance with the legal process would have to be 
reduced in order that the administrative costs could be recovered 
without exceeding the maximum garnishment limitations.
    OPM received comments from two Federal agencies concerning the 
processing of garnishment orders where the employee-obligor has filed a 
bankruptcy petition. We have amended Sec. 582.305(l) in accordance with 
these recommendations. One individual commented that the regulations 
failed to recognize exemptions which employees may be entitled to under 
various provisions of State law. We would direct the commenter to 
Sec. 582.402(a) which encompasses these exemption provisions.
    However, we would also emphasize that it is primarily the employee-
obligor's responsibility and not the employee-obligor's employer's 
responsibility to ensure that the debtor is allowed all of the 
exemptions to which the employee-obligor is entitled under State law.
    Four commenters recommended that Sec. 582.402(b) be amended to 
apply only where the bankruptcy action is under Chapter 13, and one 
agency commented that Sec. 582.402(b) should also include Federal tax 
levies. In response to these comments and after conferring with the 
Department of Labor which administers the Consumer Credit Protection 
Act, we have amended Sec. 582.402(b) to incorporate these 
recommendations.
    While OPM is sympathetic to agencies and individuals who complained 
that the time limitations, particularly with regard to notifying 
employees stationed overseas, are too short, these time limitations are 
statutory and OPM's implementing time limit provisions only repeat 
these statutory limits. See 5 U.S.C. 5520a(d). OPM does not believe 
that it has the authority to extend these time limits even where the 
garnishment order being processed will affect the pay of an employee 
stationed overseas. See Federal Election Commission v. Democratic 
Senatorial Campaign Committee, 454 U.S. 27, 32 (1981).
    Two commenters expressed concern regarding whether any time limit 
existed concerning the age of the underlying judgment that the 
garnishment order was attempting to enforce. Because Public Law 103-94 
does not address this issue, we believe that the answer would depend on 
the law of the jurisdiction from which the garnishment order was issued 
and that, in any event, as long as the order was ``regular on its 
face,'' it would not be the employing agency's burden to determine 
whether the garnishment order had been issued in accordance with the 
limitation provisions of the jurisdiction from which the order was 
issued. See United States v. Morton, supra, at 828-830 (the Federal 
Government need only ascertain that legal process is ``regular on its 
face''). In other words, this is an issue that the employee-obligor 
would be responsible for contesting rather than the employing agency. 
Similarly, we do not believe that the agency bears the burden of 
determining when garnishment orders themselves expire, except, of 
course, where the order, on its face, indicates when it will expire.
    While most of the comments focused on the interim regulations, 
several commenters stressed the need for a garnishment application 
form. In response to these requests, OPM sought and obtained approval 
from the Office of Management and Budget to issue a voluntary 
garnishment application form. In addition, OPM has elicited suggestions 
from several other Federal agencies concerning a voluntary application 
form and is currently reviewing those suggestions.
    One agency requested additional guidance concerning what action 
should be taken where an agency is advised that the garnishment action 
should either be terminated or that the amount being garnished should 
be reduced as a result of a payment having been made or an agreement 
having been reached between the parties. While OPM has not attempted at 
this time to promulgate regulations that would dictate the actions that 
must be taken in such situations, OPM urges agencies to exercise their 
discretion in determining when a garnishment action should be 
terminated or modified as a result of such payments or agreements 
between the parties.
    An issue that provoked numerous comments concerned the payment of 
interest. For the most part, it is our understanding that agencies have 
had no particular difficulty in garnishing amounts for interest that 
were included in the judgment total or judgment amount provided in the 
garnishment order, but several States, including Maryland and Hawaii, 
issue orders that do not expressly state a dollar figure for all of the 
interest that may be subject to garnishment. While 5 U.S.C. 5520a(b) 
provides that Federal agencies will be ``subject to legal process in 
the same manner and to the same extent as if the agency were a private 
person,'' section 5520a(a)(3)(B) defines legal process, in pertinent 
part, as a writ, order, or summons that orders the employing agency to 
withhold ``an amount'' from the employee-obligor's pay. There is, 
therefore, an ambiguity in the statute as [[Page 13030]] concerns the 
garnishment of sums such as interest that are not expressly included in 
the order, and absent clearer statutory language, OPM declines at this 
time to promulgate a regulation that would require agencies to compute 
and pay interest that is not included in the amount specified in the 
garnishment order.
    A process serving company in the District of Columbia advised OPM 
that while some agencies facilitate service of process on their 
employees, other agencies did not. In response to this information, OPM 
requested guidance from the Justice Department and was advised that 
when it comes to gaining access to restricted Governmental worksites, 
process servers have no more rights than anyone else and that a 
regulatory provision concerning this matter would be inappropriate.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

Regulatory Flexibility Act

    I certify that these regulations will not have significant economic 
impact on a substantial number of small entities because their effects 
are limited to Federal employees and their creditors.

List of Subjects in 5 CFR Part 582

    Claims.

Office of Personnel Management.
Lorraine A. Green,
Deputy Director.

    Accordingly, OPM is revising part 582 of title 5, Code of Federal 
Regulations as follows:

PART 582--COMMERCIAL GARNISHMENT OF FEDERAL EMPLOYEES' PAY

Subpart A--Purpose, Definitions, and Exclusions
Sec.
582.101  Purpose.
582.102  Definitions.
582.103  Exclusions.

Subpart B--Service of Legal Process

582.201  Agent to receive process.
582.202  Service of legal process.
582.203  Information minimally required to accompany legal process.
582.204  Electronic disbursement.

Subpart C--Compliance With Legal Process

582.301  Suspension of payment.
582.302  Notification of employee-obligor.
582.303  Response to legal process or interrogatories.
582.304  Nonliability for disclosure.
582.305  Honoring legal process.
582.306  Lack of entitlement by the employee-obligor to pay from the 
agency served with legal process.
Subpart D--Consumer Credit Protection Act Restrictions
582.401  Aggregate disposable earnings.
582.402  Maximum garnishment limitations.

Subpart E--Implementation by Agencies

582.501  Rules, regulations, and directives by agencies.

Appendix A to part 582--List of Agents Designated to Accept Legal 
Process

    Authority: 5 U.S.C. 5520a; 15 U.S.C. 1673; E.O. 12897

Subpart A--Purpose, Definitions, and Exclusions


Sec. 582.101  Purpose.

    Section 5520a of title 5 of the United States Code provides that 
with certain exceptions set forth in this part, pay from an agency to 
an employee is subject to legal process in the same manner and to the 
same extent as if the agency were a private person. The purpose of this 
part is to implement the objectives of section 5520a as they pertain to 
each executive agency of the United States Government, except with 
regard to employees of the United States Postal Service, the Postal 
Rate Commission, and the General Accounting Office.


Sec. 582.102  Definitions.

    In this part--(1) Agency means each agency of the executive branch 
of the Federal Government, excluding the United States Postal Service, 
the Postal Rate Commission, and the General Accounting Office; agency 
does not include the government of the District of Columbia or the 
territories and possessions of the United States. (Section 5520a(j)(1) 
of title 5 of the United States Code provides that separate 
implementing regulations shall be promulgated by the legislative branch 
and the judicial branch; section 5520a(k) provides that separate 
implementing regulations shall be promulgated with regard to members of 
the uniformed services; and Executive Order 12897 provides that 
separate implementing regulations shall be promulgated with regard to 
employees of the United States Postal Service. The regulations 
promulgated for employees of the United States Postal Service also 
apply to employees of the Postal Rate Commission.)
    (2) Employee or employee-obligor means an individual who is 
employed by an agency as defined in this section, including reemployed 
annuitants and retired members of the uniformed services who are 
employed by an agency. Employee does not include a retired employee, 
member of the uniformed services, a retired member of the uniformed 
services, or an individual whose service is based on a contract, 
including individuals who provide personal services based on a contract 
with an agency.
    (3) Legal process means any writ, order, summons, or other similar 
process in the nature of garnishment, which may include an attachment, 
writ of execution, court ordered wage assignment, or tax levy from a 
State or local government, which--
    (i) Is issued by:
    (A) A court of competent jurisdiction, including Indian tribal 
courts, within any State, territory, or possession of the United 
States, or the District of Columbia. As stated in Sec. 582.101, pay is 
subject to legal process in the same manner and to the same extent as 
if the agency were a private person. There is, therefore, no 
requirement in this part that, for example, legal process be signed by 
a Judge; or.
    (B) An authorized official pursuant to an order of a court of 
competent jurisdiction or pursuant to State or local law; or
    (C) A State agency authorized to issue income withholding notices 
pursuant to State or local law; and
    (ii) Orders an agency to withhold an amount from the pay of an 
employee-obligor and to make a payment of such withholding to a person, 
for a specifically described satisfaction of a legal debt of the 
employee-obligor, or recovery of attorney fees, interest, or court 
costs;
    (4) Person may include an individual, partnership, corporation, 
association, joint venture, private organization or other legal entity, 
and includes the plural of that term; person may include any of the 
entities that may issue legal process as set forth in 
Sec. 582.102(3)(i) (A), (B), and (C), and a State or local government 
as well as a foreign entity or a foreign governmental unit, but does 
not include the United States or an agency of the United States.
    (5) In conformance with 5 U.S.C. 5520a, pay means basic pay; 
premium pay paid under chapter 55, subchapter V, of title 5 of the 
United States Code; any payment received under chapter 55, subchapters 
VI, VII, or VIII, of title 5 of the United States Code; severance pay 
and back pay under chapter 55, subchapter IX, of title 5 of the United 
States Code; sick pay, and any other paid leave; incentive pay; 
locality pay (including interim geographic adjustments, special pay 
adjustments for law enforcement officers, and locality-based 
comparability payments); back pay awards; and any other 
[[Page 13031]] compensation paid or payable for personal services, 
whether such compensation is demoninated as pay, wages, salary, lump-
sum leave payments, commission, bonus, award, or otherwise; but does 
not include amounts received under any Federal program for compensation 
for work injuries; awards for making suggestions, reimbursement for 
expenses incurred by an individual in connection with employment, or 
allowances in lieu thereof as determined by the employing agency.


Sec. 582.103  Exclusions.

    In determining the amount of pay subject to garnishment under this 
part, there shall be excluded amounts which:
    (a) Are owed by the employee-obligor to the United States;
    (b) Are required by law to be deducted from the employee-obligor's 
pay, including, but not limited to amounts deducted in compliance with 
the Federal Insurance and Contributions Act (FICA), including amounts 
deducted for Medicare and for Old Age, Survivor, and Disability 
Insurance (OASDI);
    (c) Are properly withheld for Federal, State, or local income tax 
purposes, if the withholding of the amounts is authorized or required 
by law and if amounts withheld are not greater than would be the case 
if the employee-obligor claimed all dependents to which the employee-
obligor were entitled. The withholding of additional amounts pursuant 
to section 3402(i) of title 26 of the United States Code may be 
permitted only when the employee-obligor presents evidence of a tax 
obligation which supports the additional withholding;
    (d) Are deducted as health insurance premiums;
    (e) Are deducted as normal retirement contributions, not including 
amounts deducted for supplementary coverage. For purposes of this 
section, all amounts contributed under sections 8351 and 8432(a) of 
title 5 of the United States Code to the Thrift Savings Fund are deemed 
to be normal retirement contributions. Except as provided in this 
paragraph, amounts voluntarily contributed toward additional retirement 
benefits are considered to be supplementary;
    (f) Are deducted as normal life insurance premiums from salary or 
other remuneration for employment, not including amounts deducted for 
supplementary coverage. Federal Employees' Group Life Insurance 
premiums for ``Basic Life'' coverage are considered to be normal life 
insurance premiums; all optional Federal Employees' Group Life 
Insurance premiums and any life insurance premiums paid for by 
allotment are considered to be supplementary.
    (g) Amounts withheld in compliance with legal process based on 
child support and/or alimony indebtedness are not exclusions.

Subpart B--Service of Legal Process


Sec. 582.201  Agent to receive process.

    (a) Except as provided in appendix A to this part, appendix A to 5 
CFR part 581 lists agents designated to accept service of process under 
part 581 and this part.
    (b) United States Attorneys are not considered appropriate agents 
to accept service of process.


Sec. 582.202  Service of legal process.

    (a) A person using this part shall serve interrogatories and legal 
process on the agent to receive process as explained in Sec. 582.201. 
Where the legal process is directed to an agency, and the purpose of 
the legal process is to compel an agency to garnish an employee's pay, 
the legal process need not expressly name the agency as a garnishee.
    (b) Service of legal process may be accomplished by certified or 
registered mail, return receipt requested, or by personal service only 
upon the agent to receive process as explained in Sec. 582.201, or if 
no agent has been designated, then upon the head of the employee-
obligor's employing agency. The designated agent shall note the date 
and time of receipt on the legal process.
    (c) Parties bringing garnishment actions shall comply with the 
service of process provisions in this section. Service will not be 
effective where parties fail to comply with the service of process 
provisions of this section, notwithstanding whether the person bringing 
the garnishment action has complied with the service of process 
requirements of the jurisdiction issuing the legal process.


Sec. 582.203  Information minimally required to accompany legal 
process.

    (a) Sufficient identifying information must accompany the legal 
process in order to enable processing by the agency. Parties seeking 
garnishment actions, therefore, should provide as many of the following 
identifying pieces of information concerning the employee-obligor as 
possible:
    (1) Full name;
    (2) Date of birth;
    (3) Employment number or social security number;
    (4) Component of the agency for which the employee-obligor works;
    (5) Official duty station or worksite; and
    (6) Home address or current mailing address.
    (b) If the information submitted is not sufficient to identify the 
employee-obligor, the legal process shall be returned directly to the 
court, or other authority, with an explanation of the deficiency. 
However, prior to returning the legal process, if there is sufficient 
time prior to the time limits imposed in Sec. 582.303, an attempt 
should be made to inform the person who caused the legal process to be 
served, or the person's representative, that it will not be honored 
unless adequate identifying information is supplied.


Sec. 582.204  Electronic disbursement.

    The party designated to receive the garnished funds may forward a 
written request to the garnishing agency to have the funds remitted by 
electronic funds transfer, rather than by paper check. The request 
shall include the designated party's name, address, and deposit account 
number, and the name, address, and 9-digit routing transit number of 
the designated party's financial institution. Written requests 
accompanying service of process will be honored beginning with the 
first remission of garnished funds. Written requests received by the 
agency subsequent to service of process will be honored in as timely a 
manner as the agency deems feasible.

Subpart C--Compliance With Legal Process


Sec. 582.301  Suspension of payment.

    Upon proper service of legal process as specified in Secs. 582.202 
and 582.203, the agency shall suspend, i.e., withhold, payment of such 
moneys for the amount necessary to permit compliance with the legal 
process in accordance with this part.


Sec. 582.302  Notification of employee-obligor.

    (a) As soon as possible, but not later than 15 calendar days after 
the date of valid service of legal process, the agent designated to 
accept legal process shall send to the employee-obligor, at his or her 
duty station or last known home address, written notice that such 
process has been served, including a copy of the legal process;
    (b) The agency may provide the employee-obligor with the following 
additional information:
    (1) Copies of any other documents submitted in support of or in 
addition to the legal process;
    (2) Notice that the United States does not represent the interests 
of the employee-obligor in the pending legal proceedings; 
and [[Page 13032]] 
    (3) Advice that the employee-obligor may wish to consult legal 
counsel regarding defenses to the legal process that he or she may wish 
to assert.


Sec. 582.303  Response to legal process or interrogatories.

    (a) Whenever the designated agent is validly served with legal 
process, the agent shall respond within 30 calendar days after receipt, 
or within such longer period as may be prescribed by applicable State 
or local law. The agent shall also respond within this time period to 
interrogatories which accompany legal process. Notwithstanding State 
law, an agent need only respond once to legal process.
    (b) If State or local law authorizes the issuance of 
interrogatories prior to or after the issuance of legal process, the 
agent shall respond to the interrogatories within 30 calendar days 
after being validly served, or within such longer period as may be 
prescribed by applicable State or local law.


Sec. 582.304  Nonliability for disclosure.

    (a) No agency employee whose duties include responding to 
interrogatories pursuant to Sec. 582.303(b), shall be subject to any 
disciplinary action or civil or criminal liability or penalty for any 
disclosure of information made in connection with the carrying out of 
any duties pertaining directly or indirectly to answering such 
interrogatories.
    (b) However, an agency would not be precluded from taking 
disciplinary action against an employee who consistently or purposely 
failed to provide correct information requested by interrogatories.


Sec. 582.305  Honoring legal process.

    (a) The agency shall comply with legal process, except where the 
process cannot be complied with because:
    (1) It is not regular on its face.
    (2) The legal process would require the withholding of funds not 
deemed pay as described in Sec. 582.102(a)(5).
    (3) It does not comply with section 5520a of title 5 of the United 
States Code or with the mandatory provisions of this part; or
    (4) An order of a court of competent jurisdiction enjoining or 
suspending the operation of the legal process has been served on the 
agency.
    (b) While an agency will not comply with legal process which, on 
its face, indicates that it has expired or is otherwise no longer 
valid, legal process will be deemed valid notwithstanding the fact that 
the underlying debt and/or the underlying judgment arose prior to the 
effective date of section 5520a of title 5 of the United States Code.
    (c) While the filing of an appeal by an employee-obligor will not 
generally delay the processing of a garnishment action, if the 
employee-obligor establishes to the satisfaction of the employee-
obligor's agency that the law of the jurisdiction which issued the 
legal process provides that the processing of the garnishment action 
will be suspended during an appeal and if the employee-obligor 
establishes that he or she has filed an appeal, the employing agency 
shall comply with the applicable law of the jurisdiction and delay or 
suspend the processing of the garnishment action.
    (d) Under the circumstances set forth in Sec. 582.305 (a) or (b), 
or where the agency is directed by the Justice Department not to comply 
with the legal process, the agency shall respond directly to the court, 
or other authority, setting forth its reasons for non-compliance with 
the legal process. In addition, the agency shall inform the person who 
caused the legal process to be served, or the person's representative, 
that the legal process will not be honored. Thereafter, if litigation 
is initiated or appears imminent, the agency shall immediately refer 
the matter to the United States Attorney for the district from which 
the legal process issued. To ensure uniformity in the executive branch, 
agencies which have statutory authority to represent themselves in 
court shall coordinate their representation with the United States 
Attorney.
    (e) In the event that an agency is served with more than one legal 
process or garnishment order with respect to the same payments due or 
payable to the same employee, the agency shall satisfy such processes 
in priority based on the time of service: Provided, That in no event 
will the total amount garnished for any pay or disbursement cycle 
exceed the applicable limitation set forth in Sec. 582.402. Provided 
further, That processes which are not limited in time shall preserve 
their priority based on time of service until fully satisfied. 
Generally, a modified order will retain its original priority while a 
time limited order will lose its priority after it has expired.
    (f) Legal process to which an agency is subject under sections 459, 
461, and 462 of the Social Security Act (42 U.S.C. 659, 661, and 662) 
for the enforcement of an employee's legal obligation to provide child 
support or to make alimony payments, including child support or alimony 
arrearages, shall have priority over any legal process to which an 
agency is subject under this part. In addition to having priority, 
compliance with legal process to which an agency is subject under 
sections 459, 461, and 462 of the Social Security Act may exhaust the 
moneys available for compliance with legal process under this part. See 
Sec. 582.402(a).
    (g) Neither the United States, an executive agency, nor any 
disbursing officer shall be liable for any payment made from moneys due 
from, or payable by, the United States to any individual pursuant to 
legal process regular on its face, if such payment is made in 
accordance with this part. Where an agency initially determines that 
legal process should not be honored, if it subsequently determines that 
its initial determination was erroneous, it may correct its initial 
determination and honor the legal process. If an agency corrects an 
error or is required to do so by a court or other authority, under no 
circumstances will the agency be required to pay more than if it had 
originally honored the legal process.
    (h) Agencies affected by legal process served under this part shall 
not be required to vary their normal pay or disbursement cycles to 
comply with the legal process. However, legal process, valid at the 
time of service, which is received too late to be honored during the 
disbursement cycle in which it is received, shall be honored, to the 
extent that the legal process may be satisfied, during the next 
disbursement cycle within the limits set forth in Sec. 582.402. The 
fact that the legal process may have expired during this period would 
not relieve the agency of its obligation to honor legal process which 
was valid at the time of service. If, in the next disbursement cycle, 
no further payment will be due from the agency to the employee-obligor, 
the agency shall follow the procedures set forth in Sec. 582.306.
    (i) Agencies need not establish escrow accounts in order to comply 
with legal process. Therefore, even if the amount garnished by an 
agency in one disbursement cycle is not sufficient to satisfy the 
entire indebtedness, the agency need not retain those funds until the 
amount retained would satisfy the entire indebtedness. On the contrary, 
agencies will, in most instances, remit the garnished amount after each 
disbursement cycle. Agencies need not pro-rate payments for less than a 
full disbursement cycle.
    (j) If an agency receives legal process which is regular on its 
face, the agency shall not be required to ascertain whether the 
authority which issued the legal process had obtained personal 
jurisdiction over the employee-obligor.
    (k) At the discretion of the executive agency, the agency's 
administrative costs in executing a garnishment may be 
[[Page 13033]] added to the garnishment amount and the agency may 
retain costs recovered as offsetting collections. To facilitate 
recovery of these administrative costs, an administrative fee may be 
assessed for each legal process that is received and processed by an 
agency, provided that the fee constitutes the agency's administrative 
costs in executing the garnishment action.
    (l) Where an employee-obligor has filed a bankruptcy petition under 
section 301 or 302 of title 11 of the United States Code, or is the 
debtor named in an involuntary petition filed under section 303 of 
title 11, the agency must cease garnishment proceedings affected by the 
automatic stay provision, section 362(a) of title 11. Upon filing a 
petition in bankruptcy or upon learning that he or she is the debtor 
named in an involuntary petition, the employee-obligor should 
immediately notify the agency. To enable the agency to determine if the 
automatic stay applies, the employee-obligor should provide the agency 
with a copy of the filing or a letter from counsel stating that the 
petition was filed and indicating the court and the case number, the 
chapter under which the petition was filed, whether State or federal 
exemptions were elected, and the nature of the claim underlying the 
garnishment order.


Sec. 582.306  Lack of entitlement by the employee-obligor to pay from 
the agency served with legal process.

    (a) When legal process is served on an agency and the individual 
identified in the legal process as the employee-obligor is found not to 
be entitled to pay from the agency, the agency shall follow the 
procedures set forth in the legal process for that contingency or, if 
no procedures are set forth therein, the agency shall return the legal 
process to the court, or other authority from which it was issued, and 
advise the court, or other authority, that the identified employee-
obligor is not entitled to any pay from the agency.
    (b) Where it appears that the employee-obligor is only temporarily 
not entitled to pay from the agency, the court, or other authority, 
shall be fully advised as to why, and for how long, the employee-
obligor's pay will not be garnished, if that information is known by 
the agency and if disclosure of that information would not be 
prohibited.
    (c) In instances where an employee-obligor separates from 
employment with an agency that had been honoring a continuing legal 
process, the agency shall inform the person who caused the legal 
process to be served, or the person's representative, and the issuing 
court, or other authority, that the garnishment action is being 
discontinued. In cases where the employee-obligor has been employed by 
either another agency or by a private employer, and where this 
information is known by the agency, the agency shall provide the person 
with the designated agent for the new employing agency or with the name 
and address of the private employer.

Subpart D--Consumer Credit Protection Act Restrictions


Sec. 582.401  Aggregate disposable earnings.

    In accordance with the Consumer Credit Protection Act, the 
aggregate disposable earnings under this part are the employee-
obligor's pay less those amounts excluded in accordance with 
Sec. 582.103.


582.402  Maximum garnishment limitations.

    Pursuant to section 1673(a)(1) of title 15 of the United States 
Code (the Consumer Credit Protection Act, as amended) and the 
Department of Labor regulations to title 29, Code of Federal 
Regulations, part 870, the following limitations are applicable:
    (a) Unless a lower maximum limitation is provided by applicable 
State or local law, the maximum part of an employee-obligor's aggregate 
disposable earnings subject to garnishment to enforce any legal debt 
other than an order for child support or alimony, including any amounts 
withheld to offset administrative costs as provided for in 
Sec. 582.305(k), shall not exceed 25 percent of the employee-obligor's 
aggregate disposable earnings for any workweek. As appropriate, State 
or local law should be construed as providing a lower maximum 
limitation where legal process may only be processed on a one at a time 
basis. Where an agency is garnishing 25 percent or more of an employee-
obligor's aggregate disposable earnings for any workweek in compliance 
with legal process to which an agency is subject under sections 459, 
461, and 462 of the Social Security Act, no additional amount may be 
garnished in compliance with legal process under this part. 
Furthermore, the following dollar limitations, which are contained in 
title 29 of the Code of Federal Regulations, part 870, must be applied 
in determining the garnishable amount of the employee's aggregate 
disposable earnings:
    (1) If the employee-obligor's aggregate disposable earnings for the 
workweek are in excess of 40 times the Fair Labor Standards Act (FLSA) 
minimum hourly wage, 25 percent of the employee-obligor's aggregate 
disposable earnings may be garnished. For example, when the FLSA 
minimum wage rate is $4.25 per hour, this rate multiplied by 40 equals 
$170.00 and thus, if an employee-obligor's disposable earnings are in 
excess of $170.00 for a workweek, 25 percent of the employee-obligor's 
disposable earnings are subject to garnishment.
    (2) If the employee-obligor's aggregate disposable earnings for a 
workweek are less than 40 times the FLSA minimum hourly wage, 
garnishment may not exceed the amount by which the employee-obligor's 
aggregate disposable earnings exceed 30 times the current minimum wage 
rate. For example, at an FLSA minimum wage rate of $4.25 per hour, the 
amount of aggregate disposable earnings which may not be garnished is 
$127.50 [$4.25 x 30]. Only the amount above $127.50 is garnishable.
    (3) If the employee-obligor's aggregate disposable earnings in a 
workweek are equal to or less than 30 times the FLSA minimum hourly 
wage, the employee-obligor's earnings may not be garnished in any 
amount.
    (b) There is no limit on the percentage of an employee-obligor's 
aggregate disposable earnings that may be garnished for a Federal, 
State or local tax obligation or in compliance with an order of any 
court of the United States having jurisdiction over bankruptcy cases 
under Chapter 13 of title 11 of the United States Code. Orders from 
courts having jurisdiction over bankruptcy cases under Chapter 7 or 
Chapter 11 of the United States Code are subject to the maximum 
garnishment restrictions in Sec. 582.402(a).

Subpart E--Implementation by Agencies


Sec. 582.501  Rules, regulations, and directives by agencies.

    Appropriate officials of all agencies shall, to the extent 
necessary, issue implementing rules, regulations, and/or directives 
that are consistent with this part.

Appendix A to Part 582--List of Agents Designated To Accept Legal 
Process

    Note: The agents designated to accept legal process are listed 
in appendix A to part 581 of this chapter. This appendix A to part 
582 provides listings only for those executive agencies where the 
designations differ from those found in appendix A to part 581 of 
this chapter.

I. Departments

Department of Defense. Defense Finance and Accounting Service, 
Cleveland Center, Office of General Counsel, [[Page 13034]] Attention: 
Code L, P.O. Box 998002, Cleveland, OH 44199-8002, (216) 522-5301.

    Agents for receipt of all legal process for all Department of 
Defense civilian employees except where another agent has been 
designated as set forth below.
    For requests that apply to employees of the Army and Air Force 
Exchange Service or to civilian employees of the Defense Contract Audit 
Agency (DCAA) and the Defense Logistics Agency (DLA) who are employed 
outside the United States: See appendix A to part 581 of this chapter.
    For requests that apply to civilian employees of the Army Corps of 
Engineers, the National Security Agency, the Defense Intelligence 
Agency, and non-appropriated fund civilian employees of the Air Force, 
serve the following offices:

Army Corps of Engineers. U.S. Army Corps of Engineers, Omaha District, 
Central Payroll Office, Attn: Garnishments, P.O. Box 1439 DTS, Omaha, 
NE 68101-1439, (402) 221-4060.
Army Nonappropriated Fund Employees in Europe. Commander, 266th Theater 
Finance Command, NAF Payroll, Unit #29001-07, APO AE 09007-0137, 011-
49-6221-57-7752, DSN 379-7752.
National Security Agency. General Counsel, National Security Agency/
Central Security Service, 9800 Savage Rd., Ft. George G. Meade, MD 
20755-6000, (301) 688-6705.
Defense Intelligence Agency. Office of General Counsel, Defense 
Intelligence Agency, Pentagon, 2E238, Washington, DC 20340-1029, (202) 
697-3945.
Air Force Nonappropriated Fund Employees. Office of General Counsel, 
Air Force Services Agency, 10100 Reunion Place, Suite 503, San Antonio, 
TX 78216-4138, (210) 652-7051.

    For civilian employees of the Army, Navy and Marine Corps who are 
employed outside the United States, serve the following offices:

Army Civilian Employees in Europe. Commander, 266th Theater Finance 
Command, ATTN: AEUCF-CPF, APO AE 09007-0137, 011-49-6221-57-6303/2136, 
DSN 370-6303/2136.
Army Civilian Employees in Japan. Commander, U.S. Army Finance and 
Accounting Office, Japan, ATTN: APAJ-RM-FA-E-CP, Unit 45005, APO AP 
96343-0087, DSN 233-3362.
Army Civilian Employees in Korea. Commander, 175th Finance and 
Accounting Office, Korea, ATTN: EAFC-FO (Civilian Pay), Unit 15300, APO 
AP 96205-0073, 011-822-791-4599, DSN 723-4599.
Army Civilian Employees in Panama. DCSRM Finance & Accounting Office, 
ATTN: SORM-FAP-C, Unit 7153, APO AA 34004-5000, 011-507-287-6766, DSN 
287-5312.
Navy and Marine Corps Civilian Employees Overseas. Director of the 
Office of Civilian Personnel Management, Office of Counsel, Office of 
Civilian Personnel Management (OCPM-OL), Department of the Navy, 800 N. 
Quincy Street, Arlington, VA 22203-1990, (703) 696-4717.

    Navy and Marine Corps Nonappropriated Fund Employees. The agents 
are the same as those designated to receive garnishment orders of Navy 
and Marine Corps nonappropriated fund personnel for the collection of 
child support and alimony, published at 32 CFR part 734 (1994 ed.), 
except as follows:
    For non-civil service civilian personnel of the Navy Exchanges or 
related nonappropriated fund instrumentalities administered by the Navy 
Exchange Service Command: Commander, Navy Exchange Service Command, 
ATTN: Human Resources Beverly Building, 3280 Virginia Beach Boulevard, 
Virginia Beach, VA 23453-5274, (804) 631-3675.
    For non-civil service civilian personnel of Marine Corps 
nonappropriated fund instrumentalities, process may be served on the 
Commanding Officer of the employing activity ATTN: Morale, Welfare and 
Recreation Director.

Department of the Interior. Chief, Payroll Operations Division Attn: 
Code: D-2605, Bureau of Reclamation. Administrative Service Center, 
Department of the Interior, P.O. Box 272030, 7201 West Mansfield 
Avenue, Denver, CO 80227-9030, (303) 969-7739.

[FR Doc. 95-5951 Filed 3-9-95; 8:45 am]
BILLING CODE 6325-01-M