[Federal Register: November 19, 2002 (Volume 67, Number 223)]
[Rules and Regulations]
[Page 69670-69673]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19no02-4]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Parts 1951 and 3550
Servicing and Collections
AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, and Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: This rule explains the procedures used by certain Rural
Development Agencies and the Farm Service Agency, Farm Loan Programs to
refer accounts to the Department of the Treasury for administrative
offset (TOP) and cross-servicing as required by the Debt Collection
Improvement Act (DCIA), and by the Treasury Department's rules
regarding the Federal Claims Collection Standards concerning
administrative offset, cross-servicing procedures, and Treasury Offset
of Internal Revenue Service (IRS) tax refund payments.
EFFECTIVE DATE: December 19, 2002.
FOR FURTHER INFORMATION CONTACT: Barry G. Sykes, Chief, Program
Reporting Branch, Program Management Division, Rural Development, USDA,
Office of the Deputy Chief Financial Officer, P.O. Box 200011, FC-351,
St. Louis, Missouri 63120-0011, Telephone (314) 539-2222.
SUPPLEMENTARY INFORMATION:
Classification
This action is not subject to the provisions of Executive Order
12866 since it involves only internal Agency management. This action is
not published for prior notice and comment under the Administrative
Procedure Act since it involves only internal Agency management and
publication for comment is unnecessary and contrary to the public
interest.
Programs Affected
The catalog of Federal Domestic Assistance programs impacted by
this action are as follows:
10.404--Emergency Loans
10.405--Farm Labor Housing Loans and Grants
10.406--Farm Operating Loans
10.407--Farm Ownership Loans
10.410--Very Low to Moderate Income Housing Loans
10.411--Rural Housing Site Loans and Self-Help Housing Land
Development Loans
10.415--Rural Rental Housing Loans
10.417--Very Low-Income Housing Repair Loans and Grants
10.420--Rural Self-Help Housing Technical Assistance
10.427--Rural Rental Assistance Payments
10.760--Water and Waste Disposal Systems for Rural Communities
10.766--Community Facilities Loans and Grants
10.767--Intermediary Relending Program
10.768--Business and Industry Loans
10.770--Water and Waste Disposal Loans and Grants (section 306C)
10.854--Rural Economic Development Loans and Grants
Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. In accordance with this Executive Order: (1)
Unless otherwise specifically provided, all State and local laws and
regulations that are in conflict with this rule will be preempted; (2)
no retroactive effect will be given to this rule except as specifically
prescribed in the rule; and (3) administrative proceedings of the
National Appeals Division (7 CFR part 11) must be exhausted before
litigation against the Department is instituted.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (44 U.S.C. 3507),
the information collection requirements contained in this regulation
have been approved by the Office of Management and Budget (OMB) under
the provisions of 44 U.S.C. chapter 35 and have been assigned OMB
control number 0575-0119. This rule does not revise or impose any new
information collection requirements from those approved by OMB.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA),
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. Agencies generally must prepare a written
statement, including a cost-benefit analysis, for proposed and final
rules with ``Federal mandates'' that may
[[Page 69671]]
result in expenditures to State, local, or tribal governments, in the
aggregate, or to the private sector, of $100 million or more in any one
year. When such a statement is needed for a rule, section 205 of the
UMRA generally requires the Agencies to identify and consider a
reasonable number of regulatory alternatives and adopt the least
costly, more cost-effective, or least burdensome alternative that
achieves the objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of title II of the UMRA) for State, local, and tribal
governments or the private sector. Thus, the rule is not subject to the
requirements of sections 202 and 205 of the UMRA.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' The Agencies have determined that
this action does not constitute a major Federal action significantly
affecting the quality of human environment, and in accordance with the
National Environmental Policy Act of 1969, Public Law 91-190, an
Environmental Impact Statement is not required.
Executive Order 13132, Federalism
The policies contained in this rule do not have any substantial
direct effect on States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on State and local
governments. Therefore, consultation with the States is not required.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
602), the undersigned have determined and certified by signature of
this document that this rule will not have a significant economic
impact on a substantial number of small entities. New provisions
included in this rule will not impact a substantial number of small
entities to a greater extent than large entities. Thus, large entities
are subject to these rules to the same extent as small entities.
Therefore, a regulatory flexibility analysis was not performed.
Discussion of Final Rule
The final rule adopts the Department of Treasury (Treasury) Debt
Collection procedures required by the Debt Collection Improvement Act
(DCIA), Pub. L. 104-434, April 26, 1996, the Federal Claims Collection
Standards concerning administrative offset at 31 CFR 901.3, cross-
servicing procedures at 31 CFR part 285, subpart A and Treasury Offset
of Internal Revenue Service (IRS) tax refund payments at 31 CFR 285.2.
The Rural Business-Cooperative Service and the Rural Housing Service,
Community Facilities program, both part of the Rural Development
mission area, are adopting this rule to enable it to refer delinquent
accounts to Treasury for administrative offset (TOP) and cross-
servicing as required by the DCIA. A new section has been added
explaining the Farm Service Agency (FSA), Farm Loan Programs (FLP)
procedures for referring accounts to Treasury. Additional revisions
have been made for readability and to make corrections to conform to
Treasury regulations which have consolidated the IRS offset program
with the Treasury Offset Program (TOP). Therefore, this rule revises
the reference contained in the Rural Housing Service's regulations at 7
CFR 3550.210(a) to reference the correct authorities for conducting IRS
offsets.
Rural Development is also revising its servicing and collections
regulations to reflect that the Rural Housing Service, for its Single
Family Housing and Multi-Family Housing programs and the Rural
Utilities Service for its Water and Environmental program have
developed their own servicing handbooks providing internal
administrative guidance to agency personnel for their Treasury Offset
and Cross-Servicing procedures. Farm Services Agency is amending its
salary offset guidance to clarify when salary offset will begin and to
clarify when notification will be sent to the borrower. There is no
additional burden being imposed upon the public and no financial impact
imposed on the Government or on the public as a result of this action.
List of Subjects
7 CFR Part 1951
Accounting, Accounting servicing, Credit, Loan programs--
Agriculture, Low and moderate income housing loans--Servicing.
7 CFR Part 3550
Direct single family housing loan and grants.
PART 1951--SERVICING AND COLLECTIONS
1. The authority citation for part 1951 continues to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1932 note; 7 U.S.C. 1989; 31
U.S.C. 3716; 42 U.S.C. 1480.
Subpart C--Offsets of Federal Payments to USDA Agency Borrowers
2. Section 1951.101 is revised to read as follows:
Sec. 1951.101 General.
Federal debt collection statutes provide for the use of
administrative, salary, and Internal Revenue Service (IRS) offsets by
government agencies, including the Farm Service Agency (FSA), Rural
Housing Service (RHS) for its community facility program, and Rural
Business-Cooperative Service (RBS), herein referred to collectively as
``United States Department of Agriculture (USDA) Agency,'' to collect
delinquent debts. Any money that is or may become payable from the
United States to an individual or entity indebted to a USDA Agency may
be subject to offset for the collection of a debt owed to a USDA
Agency. In addition, money may be collected from the debtor's
retirement payments for delinquent amounts owed to the USDA Agency if
the debtor is an employee or retiree of a Federal agency, the U.S.
Postal Service, the Postal Rate Commission, or a member of the U.S.
Armed Forces or the Reserve. Amounts collected will be processed as
regular payments and credited to the borrower's account. USDA Agencies
will process requests by other Federal agencies for offset in
accordance with Sec. 1951.102 of this subpart. This subpart does not
apply to direct single family housing loans, direct multi-family
housing loans, and the Rural Utilities Service. Section 1951.136 of
this subpart only applies to RHS for its community facility program and
RBS for the offset of Federal payments. Nothing in this subpart affects
the common law right of set off available to USDA Agencies.
2a. In section 1951.102, paragraph (b)(1) is revised to read as
follows:
Sec. 1951.102 Administrative offset.
* * * * *
(b) * * *
(1) Agency means Farm Service Agency, Farm Loan Programs; Rural
Housing Service, except direct Single Family Housing loans and direct
Multi-Family Housing loans; and Rural Business-Cooperative Service, or
any successor agency.
* * * * *
3. In Section 1951.111 the introductory text and paragraph (d) (1)
are revised to read as follows:
Sec. 1951.111 Salary offset.
Salary offset may be used to collect debts arising from delinquent
USDA Agency loans and other debts which
[[Page 69672]]
arise through such activities as theft, embezzlement, fraud, salary
overpayments, under withholding of amounts payable for life and health
insurance, and any amount owed by former employees from loss of federal
funds through negligence and other matters. Salary offset may also be
used by other Federal agencies to collect delinquent debts owed to them
by employees of the USDA Agency, excluding county committee members.
Administrative offset, rather than salary offset, will be used to
collect money from Federal employee retirement benefits. For delinquent
Farm Loan Programs direct loans, salary offset will not begin until the
borrower has been notified of servicing options in accordance with 7
CFR 1951.907. In addition, for Farm Loan Programs direct loans, salary
offset will not be instituted if the Federal salary has been considered
on the Farm and Home Plan, and it was determined the funds were to be
used for another purpose other than payment on the USDA Agency loan.
For Farm Loan Programs guaranteed debtors, salary offset can not begin
until a final loss claim has been paid. When salary offset is used,
payment for the debt will be deducted from the employee's pay and sent
directly to the creditor agency. Not more than 15 percent of the
employee's disposable pay can be offset per pay period, unless the
employee agrees to a larger amount. The debt does not have to be
reduced to judgment or be undisputed, and the payment does not have to
be covered by a security instrument. This section describes the
procedures which must be followed before the USDA Agency can ask a
Federal agency to offset any amount against an employee's salary.
* * * * *
(d) Notice to debtor.
(1) After the Certifying Official determines that collection by
salary offset is feasible, the debtor should be notified within 15
calendar days after the salary offset determination. This notice will
notify the debtor of intended salary offset at least 30 days before the
salary offset begins. For Farm Loan Programs direct loans, this notice
will be sent after the borrower is over 90 days past due and
immediately after sending notification of servicing rights in
accordance with 7 CFR 1951.907 of this subpart. For Farm Loan Programs
guaranteed debtors, this notice will be sent after a final loss claim
has been paid. The salary offset determination notice will be delivered
to the debtor by regular mail.
* * * * *
4. Section 1951.136 and 1951.137 are added to read as follows:
Sec. 1951.136 Procedures for Department of Treasury Offset and Cross-
Servicing for the Rural Housing Service (Community Facility Program
only) and the Rural Business-Cooperative Service.
(a) The National Offices of the Rural Housing Service (RHS),
Community Facilities (CF) and the Rural Business-Cooperative Service
(RBS) will refer past due, legally enforceable debts which are over 180
days delinquent to the Secretary of the Treasury for collection by
centralized administrative offset (TOP), Internal Revenue Service
offset administered through TOP and Treasury's Cross-Servicing (Cross-
Servicing) Program, which centralizes all Government debt collection
actions. A borrower with a workout agreement in place, in bankruptcy or
litigation, or meeting other exclusion criteria, may be excluded from
TOP or Cross-Servicing.
(b) A 60 day due process notice will be sent to borrowers subject
to TOP or Cross-Servicing. The borrower will be given 60 days to
resolve any delinquency before the debt is reported to Treasury. The
notice will include:
(1) The nature and amount of the debt, the intention of the Agency
to collect the debt through TOP or Cross-Servicing, and an explanation
of the debtor's rights;
(2) An opportunity to inspect and copy the records related to the
debt from the Agency;
(3) An opportunity to review the matter within the Agency or the
National Appeals Division, if there has not been a previous opportunity
to appeal the offset; and
(4) An opportunity to enter into a written repayment agreement.
(c) In referring debt to the Department of Treasury the Agency will
certify that:
(1) The debt is past due and legally enforceable in the amount
submitted and the Agency will ensure that collections are properly
credited to the debt;
(2) Except in the case of a judgment debt or as otherwise allowed
by law, the debt is referred for offset within 10 years after the
Agency's right of action accrues;
(3) The Agency has made reasonable efforts to obtain payment; and
(4) Payments that are prohibited by law from being offset are
exempt from centralized administrative offset.
Sec. 1951.137 Procedures for Treasury Offset and Cross-Servicing for
the Farm Service Agency (FSA) Farm Loan Programs
(a) The Farm Service Agency, Farm Loan Programs, will refer past
due, legally enforceable debts which are over 180 days delinquent to
the Secretary of the Treasury for collection by centralized
administrative offset (TOP), Internal Revenue Service offset
administered through TOP and Treasury's Cross-Servicing (Cross-
Servicing) Program, which centralizes all Government debt collection
actions. A borrower with a workout agreement in place, in bankruptcy or
litigation, or meeting other exclusion criteria, may be excluded from
TOP or Cross-Servicing. Guaranteed debtors will only be referred to TOP
upon confirmation of payment on a final loss claim.
(b) A 60 day due process notice will be sent to borrowers subject
to TOP or Cross-Servicing by the Director of Kansas City Finance
Office. The borrower will be given 60 days to resolve any delinquency
before the debt is reported to Treasury. The notice will include:
(1) The nature and amount of the debt, the intention of the Agency
to collect the debt through TOP or Cross-Servicing, and an explanation
of the debtor's rights;
(2) An opportunity to inspect and copy the records related to the
debt, from the Agency;
(3) An opportunity to review the matter within the Agency; and
(4) An opportunity to enter into a written repayment agreement.
(c) In referring debt to the Department of Treasury the Agency will
certify that:
(1) The debt is past due and legally enforceable in the amount
submitted and the Agency will ensure that collections are properly
credited to the debt;
(2) Except in the case of a judgment debt or as otherwise allowed
by law, the debt is referred for offset within 10 years after the
Agency's right of action accrues;
(3) The Agency has made reasonable efforts to obtain payment; and
(4) Payments that are prohibited by law from being offset are
exempt from centralized administrative offset.
PART 3550--[AMENDED]
5. The authority citation for part 3550 continues to read as
follows:
Authority: 5 U.S.C. 301 and 42 U.S.C. 1480.
6. In Sec. 3550.210, paragraph (a) is revised to read as follows:
(a) IRS offset. RHS may take action to effect offset of claims due
RHS against tax refunds due to RHS debtors under 31 U.S.C. 3720a and 31
CFR 285.2.
[[Page 69673]]
Dated: October 2, 2002.
William F. Hagy III,
Acting Administrator, Rural Business-Cooperative Service.
Dated: October 2, 2002.
Arthur A. Garcia,
Administrator, Rural Housing Service.
Dated: October 3, 2002.
Curtis M. Anderson,
Acting Administrator, Rural Utilities Service.
Dated: October 25, 2002.
James R. Little,
Administrator, Farm Service Agency.
[FR Doc. 02-29050 Filed 11-18-02; 8:45 am]