[Federal Register: August 14, 2003 (Volume 68, Number 157)]
[Rules and Regulations]
[Page 48531-48543]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14au03-2]
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DEPARTMENT OF ENERGY
10 CFR Parts 1015 and 1018
RIN 1901-AA98
Collection of Claims Owed the United States
AGENCY: Department of Energy.
ACTION: Direct final rule.
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SUMMARY: This direct final rule adopts revisions to the regulations on
Collection of Claims Owed the United States to conform to the Federal
Claims Collection Standards issued by the Department of the Treasury
and the Department of Justice. The revisions clarify and simplify the
Department of Energy's debt collection standards and reflect changes to
Federal debt collection procedures that were made by the Debt
Collection Improvement Act of 1996 and the General Accounting Office
Act of 1996.
DATES: This direct final rule will be effective November 12, 2003
without further action, unless significant adverse comment is received
by September 15, 2003. If significant adverse comment is received, the
Department will publish a timely withdrawal of the rule in the Federal
Register. (See also ``Discussion of Direct Final Rulemaking'' in
Section III of the SUPPLEMENTARY INFORMATION section of this notice.)
ADDRESSES: All comments should be addressed to Helen O. Sherman,
Director, Office of Finance and Accounting Policy (ME-10); Office of
Management, Budget and Evaluation, U.S. Department of Energy, 1000
Independence Avenue, SW., Washington, DC 20585.
FOR FURTHER INFORMATION CONTACT: Philip R. Pegnato, Team Leader,
Management Accounting and Cash Management Team, U.S. Department of
Energy, at (301) 903-9704; or Susan A. Donahue, Accountant, Management
Accounting and Cash Management Team, U.S. Department of Energy, at
(301) 903-4666.
SUPPLEMENTARY INFORMATION:
I. Background
The Department of Energy (DOE) today revises and consolidates its
debt collection regulations that are codified at 10 CFR parts 1015 and
1018. The principal purpose of this rulemaking is to conform DOE's
regulations to the government-wide debt collection regulations that
were published by the Treasury and Justice Departments (65 FR 70390,
November 22, 2000). Consistent with that purpose, today's revised
regulations largely track the wording of the government-wide
regulations. Any significant differences are discussed below. The
Secretary of Energy has approved the revised regulations for
application to all divisions of DOE including the National Nuclear
Security Administration.
More specifically, this rulemaking is intended:
(a) To reflect changes to Federal debt collection procedures made
by the Debt Collection Improvement Act of 1996 (DCIA), Public Law 104-
134, 110 Stat. 1321, 1358 (April 26, 1996) as part of the Omnibus
Consolidated Rescissions and Appropriations Act of 1996; and the
publication of the revised Federal
[[Page 48532]]
Claims Collection Standards (FCCS) under new chapter IX, Title 31, Code
of Federal Regulations (65 FR 70390, November 22, 2000) by the
Department of the Treasury (Treasury) and the Department of Justice
(DOJ).
(b) To reflect the detailed guidance issued by Treasury and
codified at 31 CFR part 285, Debt Collection Authorities under the
DCIA. See, e.g., Offset of Tax Refund Payments to Collect Past-Due,
Legally Enforceable Non-Tax Debt (63 FR 46140, Aug. 28, 1998); Offset
of Federal Benefit Payments to Collect Past-Due, Legally Enforceable
Non-Tax Debt (63 FR 71204, Dec. 23, 1998); Salary Offset (63 FR 23354,
Apr. 28, 1998); Administrative Wage Garnishment (65 FR 51867, Oct. 11,
2001); Transfer of Debts to Treasury for Collection (64 FR 22906, Apr.
28, 1999); Barring Delinquent Debtors From Obtaining Federal Loans or
Loan Insurance or Guarantees (63 FR 67754, Dec. 8, 1998).
(c) To incorporate 10 CFR part 1018, Referral of Debts to IRS for
Tax Refund Offset, into 10 CFR part 1015, Collection of Claims Owed the
United States.
II. Discussion of Direct Final Rule
Revised 10 CFR part 1015 includes the following major changes from
DOE's existing regulations:
(1) The content of 10 CFR part 1018, Referral of Debts to IRS for
Tax Refund Offset, was merged into 10 CFR part 1015.
(2) The revised 10 CFR part 1015 reflects the elimination of the
Comptroller General's role in Federal debt collection.
(3) The revised 10 CFR part 1015 reflects the requirement that DOE
use government-wide debt collection contracts (with certain exceptions)
for referrals to private collection contractors.
(4) The revised 10 CFR part 1015 contains a new requirement that
DOE and debtors exchange mutual releases of non-tax liabilities in all
appropriate instances when a claim is compromised.
(5) The revised 10 CFR part 1015 reflects the increase in the
principal claim amount from up to $20,000 to up to $100,000, or such
other amount as the Attorney General may direct, that DOE is authorized
to compromise or to suspend or terminate collection activity thereon,
without concurrence by the DOJ. In addition, the minimum amount of a
claim that may be referred to the DOJ is increased from $600 to $2,500,
or such other amount as the Attorney General may direct. The
circumstances under which the DOJ will litigate when the claim amount
does not meet the minimum threshold have not been changed.
(6) The revised 10 CFR part 1015 reflects several new debt
collection procedures under the DCIA, including, but not limited to:
(a) The Treasury Regulations provide that 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. The revised 10 CFR
1015.212(h) provides that when a debtor requests a waiver or review of
the debt, DOE will continue to accrue interest, penalties and
administrative costs during the period collection activity is
suspended. Upon completion of DOE's review, interest, penalties and
administrative costs related to the portion of the debt found to be
without merit will be waived;
(b) Transfer or referral of delinquent debt to Treasury or
Treasury-designated debt collection centers for collection, known as
``cross-servicing'';
(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.
(7) The revised 10 CFR part 1015 requires one demand letter before
taking appropriate collection actions. Previously DOE required three
letters before taking further collection action.
(8) A section on cost analysis has been added to 10 CFR 1015.212,
Interest, penalties and administrative costs. This section ensures that
the most cost effective alternative collection techniques are used with
respect to the extensiveness of collection efforts, the evaluation of
offers of compromise, and the establishment of minimum debt amounts
below which collection efforts need not be taken.
(9) A new Sec. 1015.207, Suspension or revocation of eligibility
for loans and loan guarantees, licenses, permits, or privileges, has
been added.
III. Discussion of Direct Final Rulemaking
DOE is publishing this final rule without prior proposal because we
view this as a noncontroversial amendment and anticipate no significant
adverse comment. This rulemaking merely conforms DOE's regulations on
debt collection to Treasury and DOJ standards and to procedures
required by statute. However, in the ``Proposed Rules'' section of
today's Federal Register, we are publishing a separate document that
will serve as the proposal to amend 10 CFR part 1015 if significant
adverse comment is filed. This rule will be effective on November 12,
2003 without further notice unless we receive significant adverse
comment by September 15, 2003. If DOE receives such an adverse comment
on one or more distinct amendments, paragraphs, or sections of this
direct final rule, DOE will publish a timely withdrawal in the Federal
Register indicating which provisions will become effective and which
provisions are being withdrawn due to adverse comment. Any distinct
amendment, paragraph, or section of today's direct final rule for which
we do not receive significant adverse comment will become effective on
the date set forth in this direct final rule, notwithstanding any
adverse comment on any other distinct amendment, paragraph, or section
of today's rule. If significant adverse comment is received, we will
address all public comments in a subsequent final rule. We will not
institute a second comment period on this action. Any parties
interested in commenting must do so at this time.
IV. Regulatory Analysis
A. Executive Order 12866
Today's regulatory action has been determined not to be ``a
significant regulatory action'' under Executive Order 12866,
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993).
Accordingly, this action was not subject to review under that Executive
Order by the Office of Information and Regulatory Affairs of OMB.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. This rule
amends 10 CFR part 1015 to incorporate revisions to the Federal Claims
Collection Standards issued by Treasury and DOJ and to reflect changes
to Federal debt collection procedures made by the Debt Collection
Improvement Act of 1996 and the General Accounting Office Act of 1996.
Most of the rule provisions relate to agency management and procedure
or are stated as policy statements. This rule contains few, if any, new
substantive requirements that directly apply to members of the public.
Any incremental economic impact of this rule on small entities would be
small. For these reasons, DOE certifies that this direct final rule
will not have a significant
[[Page 48533]]
economic impact on a substantial number of small entities. Accordingly,
DOE did not prepare a regulatory flexibility analysis for the rule.
C. Paperwork Reduction Act
No new collection of information is imposed by this direct final
rule. Accordingly, no clearance by OMB is required under the Paperwork
Reduction Act (44 U.S.C. 3501, et seq.).
D. National Environmental Policy Act
DOE has concluded that promulgation of this rule falls into a class
of actions that would not individually or cumulatively have a
significant impact on the human environment, as determined by DOE's
regulations implementing the National Environmental Policy Act of 1969
(42 U.S.C. 4321, et seq.). Specifically, this rule deals only with
agency procedures and, therefore, is covered under the Categorical
Exclusion in paragraph A6 to subpart D, 10 CFR part 1021. Accordingly,
neither an environmental assessment nor an environmental impact
statement is required.
E. Executive Order 13132
Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain
requirements on agencies formulating and implementing policies or
regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. DOE has examined today's rule and has
determined that it does not preempt State law and does not have a
substantial direct effect on the 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. No further
action is required by Executive Order 13132.
F. Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' (61 FR 4729, February 7, 1996), imposes on
Federal agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. Section 3(b) of Executive
Order 12988 specifically requires that Executive agencies make every
reasonable effort to ensure that the regulation: (1) Clearly specifies
the preemptive effect, if any; (2) clearly specifies any effect on
existing Federal law or regulation; (3) provides a clear legal standard
for affected conduct while promoting simplification and burden
reduction; (4) specifies the retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses other important issues affecting
clarity and general draftsmanship under any guidelines issued by the
Attorney General. Section 3(c) of Executive Order 12988 requires
Executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, this final rule meets the relevant standards of
Executive Order 12988.
G. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written assessment of the
effects of any Federal mandate in a proposed or final rule that may
result in the expenditure by state, local, and tribal governments, in
the aggregate, or by the private sector, of $100 million in any one
year. The Act also requires a Federal agency to develop an effective
process to permit timely input by elected officers of State, local, and
tribal governments on a proposed ``significant intergovernmental
mandate,'' and it requires an agency to develop a plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirement that might
significantly or uniquely affect small governments. The rule published
today does not contain any Federal mandate; therefore, these
requirements do not apply.
H. Treasury and General Government Appropriations Act, 1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any proposed rule or policy that may affect
family well-being. This rulemaking is not subject to a requirement to
propose for public comment, and section 654 therefore does not apply.
I. Review Under the Treasury and General Government Appropriations Act,
2001
The Treasury and General Government Appropriations Act, 2001 (44
U.S.C. 3516, note) provides for agencies to review most disseminations
of information to the public under guidelines established by each
agency pursuant to general guideline issued by OMB. OMB's guidelines
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed
today's notice under the OMB and DOE guidelines and has concluded that
it is consistent with applicable policies in those guidelines.
J. Review Under the Small Business Regulatory Enforcement Fairness Act
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of today's rule prior to its effective date. The report
will state that it has been determined that the rule is not a ``major
rule'' as defined by 5 U.S.C. 804(2).
List of Subjects
10 CFR Part 1015
Administrative practice and procedure, Antitrust, Claims, Federal
employees, Fraud penalties, Privacy.
10 CFR Part 1018
Claims, Income taxes.
Issued in Washington, DC, on August 6, 2003.
James T. Campbell,
Acting Director, Office of Management, Budget and Evaluation/Acting
Chief Financial Officer.
0
For the reasons set out in the preamble, DOE hereby amends title 10 of
the Code of Federal Regulations as follows:
PART 1015--COLLECTION OF CLAIMS OWED THE UNITED STATES
0
1. Part 1015 is revised to read as follows:
PART 1015--COLLECTION OF CLAIMS OWED THE UNITED STATES
Subpart A--General
Sec.
1015.100 Scope.
1015.101 Prescription of standards.
1015.102 Definitions and construction.
1015.103 Antitrust, fraud, tax, interagency, transportation account
audit, acquisition contract, and financial assistance instrument
claims excluded.
1015.104 Compromise, waiver, or disposition under other statutes not
precluded.
1015.105 Form of payment.
1015.106 Subdivision of claims not authorized.
[[Page 48534]]
1015.107 Required administrative proceedings.
1015.108 No private rights created.
Subpart B--Standards for the Administrative Collection of Claims.
1015.200 Scope.
1015.201 Aggressive agency collection activity.
1015.202 Demand for payment.
1015.203 Collection by administrative offset.
1015.204 Reporting debts.
1015.205 Credit reports.
1015.206 Contracting with private collection contractors and with
entities that locate and recover unclaimed assets.
1015.207 Suspension or revocation of eligibility for loans and loan
guaranties, licenses, permits, or privileges.
1015.208 Administrative wage garnishment.
1015.209 Tax refund offset.
1015.210 Liquidation of collateral.
1015.211 Collection in installments.
1015.212 Interest, penalties, and administrative costs.
1015.213 Analysis of costs.
1015.214 Use and disclosure of mailing addresses.
1015.215 Federal salary offset.
1015.216 Exemptions.
Subpart C--Standards for Compromise of Claims.
1015.300 Scope.
1015.301 Scope and application.
1015.302 Bases for compromise.
1015.303 Enforcement policy.
1015.304 Joint and several liability.
1015.305 Further review of compromise offers.
1015.306 Consideration of tax consequences to the Government.
1015.307 Mutual releases of the debtor and the Government.
Subpart D--Standards for Suspending or Terminating Collection Activity.
1015.400 Scope.
1015.401 Scope and application.
1015.402 Suspension of collection activity.
1015.403 Termination of collection activity.
1015.404 Exception to termination.
1015.405 Disharge of indebtedness; reporting requirements.
Subpart E--Referrals to the Department of Justice.
1015.500 Scope.
1015.501 Referrals to the Department of Justice and the Department
of the Treasury's Cross-Servicing Program.
1015.502 Prompt referral.
1015.503 Claims Collection Litigation Report.
1015.504 Preservation of evidence.
1015.505 Minimum amount of referrals to the Department of Justice.
Authority: 31 U.S.C. 3701, 3711, 3716, 3717, 3718, and 3720B; 42
U.S.C. 2201 and 7101, et seq.; 50 U.S.C. 2401 et seq.
Subpart A--General
Sec. 1015.100 Scope.
This subpart describes the scope of the standards set forth in this
part. This subpart corresponds to 31 CFR part 900 in the Department of
the Treasury (Treasury) Federal Claims Collection Standards.
Sec. 1015.101 Prescription of standards.
(a) The Secretary of the Treasury and the Attorney General of the
United States issued regulations in 31 CFR parts 900-904, under the
authority contained in 31 U.S.C. 3711(d)(2). Those regulations
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 Federal 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. The
regulations in 31 CFR parts 900-904 also prescribe standards for
referring debts to the Department of Justice (DOJ) for litigation.
Additional guidance is contained in the Office of Management and
Budget's (OMB) Circular A-129 (Revised), ``Policies for Federal Credit
Programs and Non-Tax Receivables,'' the Treasury's ``Managing Federal
Receivables,'' and other publications concerning debt collection and
debt management. These publications are available from the Department
of Energy (DOE) Office of Financial Policy, 1000 Independence Ave.,
SW., Washington, DC 20585.
(b) Additional rules governing centralized administrative offset
and the transfer of delinquent debt to Treasury or Treasury-designated
debt collection centers for collection (cross-servicing) under the Debt
Collection Improvement Act of 1996 (DCIA), Public Law 104-134, 110
Stat. 1321, 1358 (April 26, 1996), are set forth in separate
regulations issued by Treasury. Rules governing the use of certain debt
collection tools created under the DCIA, such as administrative wage
garnishment, also are set forth in separate regulations issued by
Treasury. See generally, 31 CFR part 285.
(c) DOE is not limited to the remedies contained in this part and
may use any other 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, Public Law 89-508, 80 Stat. 308 (July 19, 1966), the
Debt Collection Act of 1982, Public Law 97-365, 96 Stat. 1749 (October
25, 1982), the DCIA or other relevant law. The regulations in this part
do not impair DOE's common law rights to collect debts.
(d) Standards and policies regarding the classification of debt for
accounting purposes (for example, write-off of uncollectible debt) are
contained in OMB's Circular A-129 (Revised), ``Policies for Federal
Credit Programs and Non-Tax Receivables.''
Sec. 1015.102 Definitions and construction.
(a) For the purposes of the standards in this part, 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 debt is ``delinquent'' if it has not been paid by the date
specified in DOE's initial written demand for payment or applicable
agreement or instrument (including a post-delinquency payment
agreement), unless other satisfactory payment arrangements have been
made.
(c) In this part, 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 debts arising
under the same transaction or occurrence. For example, obligations
arising under the same contract generally are subject to recoupment.
(e) The term ``Department of Energy'' or ``DOE'' includes the
National Nuclear Security Administration.
Sec. 1015.103 Antitrust, fraud, tax, interagency, transportation
account audit, acquisition contract, and financial assistance
instrument claims excluded.
(a) The standards in this part relating to compromise, suspension,
and termination of collection activity do not apply to any debt based
in whole or in part on conduct in violation of the antitrust laws or to
any debt 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 DOJ has the
[[Page 48535]]
authority to compromise, suspend, or terminate collection activity on
such claims. The standards in this part relating to the administrative
collection of claims do apply, but only to the extent authorized by the
DOJ 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, DOE will promptly refer the case to the DOJ for
action. At its discretion, the DOJ may return the claim to DOE for
further handling in accordance with the standards in this part.
(b) Part 1015 does not apply to tax debts.
(c) Part 1015 does 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).
(d) Part 1015 does not apply to claims arising from the audit of
transportation accounts pursuant to 31 U.S.C. 3726 which shall be
determined, collected, compromised, terminated, or settled in
accordance with regulations published under the authority of 31 U.S.C.
3726 (see 41 CFR parts 101-141, administered by the Director, Office of
Transportation Audits, General Services Administration) and are
otherwise excepted from these regulations.
(e)(1) Part 1015 does not apply to claims arising out of
acquisition contracts, subcontracts, and purchase orders which are
subject to the Federal Acquisition Regulations System, including the
Federal Acquisition Regulation, 48 CFR subpart 32.6, and the Department
of Energy Acquisition Regulation, 48 CFR subpart 932.6, and which shall
be determined or settled in accordance with those regulations; and
(2) Part 1015 does not apply to claims arising out of financial
assistance instruments (e.g., grants, cooperative agreements, and
contracts under cooperative agreements) and loans and loan guarantees,
which shall be determined or settled in accordance with 10 CFR 600.26
and 10 CFR 600.112(f).
Sec. 1015.104 Compromise, waiver, or disposition under other statutes
not precluded.
Nothing in this part precludes DOE from disposing 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 the standards in this part. In such cases, the
specifically applicable laws and regulations will generally take
precedence over this part.
Sec. 1015.105 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.
Sec. 1015.106 Subdivision of claims not authorized.
Debts 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 debt
in determining whether the debt is one of less than $100,000 (excluding
interest, penalties, and 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.
Sec. 1015.107 Required administrative proceedings.
DOE is not required to omit, foreclose, or duplicate administrative
proceedings required by contract or other laws or regulations.
Sec. 1015.108 No private rights created.
The standards in this part 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 DOE, Treasury, the DOJ or other agency
to comply with any of the provisions of this part be available to any
debtor as a defense.
Subpart B--Standards for the Administrative Collection of Claims
Sec. 1015.200 Scope.
The subpart sets forth the standards for administrative collection
of claims under this part. This subpart corresponds to 31 CFR part 901
of the Treasury Federal Claims Collection Standards.
Sec. 1015.201 Aggressive agency collection activity.
(a) Heads of DOE Headquarters Elements and Field Elements or their
designees must promptly notify the appropriate DOE finance office of
claims arising from their operations. A claim will be recorded and
controlled by the responsible finance office upon receipt of
documentation from a competent authority establishing the amount due.
(b) In accordance with 31 CFR Chapter IX parts 900-904 and this
part, DOE will aggressively collect all debts arising out of
activities. Collection activities shall be undertaken promptly with
follow-up action taken as necessary.
(c) Debts referred or transferred to Treasury, or Treasury-
designated debt collection centers under the authority of 31 U.S.C.
3711(g), shall be serviced, collected, or compromised, or the
collection action will be suspended or terminated, in accordance with
the statutory requirements and authorities applicable to the collection
of such debts.
(d) DOE will cooperate with other agencies in its debt collection
activities.
(e) DOE will refer debts to Treasury as soon as due process
requirements are complete, and should refer such debts no later than
180 days after the debt has become delinquent. On behalf of DOE,
Treasury will take appropriate action to collect or compromise the
referred debt, or to suspend or terminate collection action thereon, in
accordance with the statutory and regulatory requirements and
authorities applicable to the debt and action. Appropriate action to
collect a debt may include referral to another debt collection center,
a private collection contractor, or the DOJ for litigation. (See 31 CFR
285.12, Transfer of Debts to Treasury for Collection.) This requirement
does not apply to any debt 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 Treasury; or
(4) Will be collected under internal offset procedures within three
years after the debt first became delinquent.
(f) Treasury is authorized to charge a fee for services rendered
regarding referred or transferred debts. DOE will add the fee to the
debt as an administrative cost (see Sec. 1015.212(c)).
Sec. 1015.202 Demand for payment.
(a) Written demand as described in paragraph (b) of this section
will be made promptly upon a debtor of the United States in terms that
inform the debtor of the consequences of failing to cooperate with DOE
to resolve the debt. Generally, one demand letter issued 30 days after
the initial notice, bill, or written demand should suffice. 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 this Part, including
immediate referral for litigation.
[[Page 48536]]
(b) Demand letters will inform the debtor of:
(1) The basis for the indebtedness and the rights, if any, the
debtor may have to seek review within DOE;
(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
(i.e., interest, penalties, and administrative costs) and enforced
collection, which generally should not be more than 30 days from the
date that the demand letter is mailed or hand-delivered;
(4) The name, address, and phone number of a contact person or
office within DOE;
(5) DOE's intent to refer unpaid debts to Treasury for collection;
(6) DOE's intent to authorize Treasury to add fees for services
rendered as an administrative fee;
(7) DOE's intent to authorize Treasury to utilize collection tools
such as credit bureau reporting, private collection agencies,
administrative wage garnishment, Federal salary offset, tax refund
offset, administrative offset, litigation, and other tools, as
appropriate, to collect the debt;
(8) DOE's willingness to discuss alternative methods of payment;
(9) The debtor's entitlement to consideration of a waiver,
depending on applicable statutory authority; and
(10) DOE's intent to suspend or revoke licenses, permits, or
privileges for any inexcusable or willful failure of a debtor to pay
such a debt in accordance with DOE regulations or governing procedures.
(c) DOE will seek to ensure that demand letters are mailed or hand-
delivered on the same day that they are dated.
(d) DOE will seek to respond promptly to communications from
debtors, within 30 days whenever feasible, and will advise debtors who
dispute debts to furnish available evidence to support their
contentions.
(e) Prior to the initiation of the demand process or at any time
during or after completion of the demand process, if DOE determines to
pursue, or is required to pursue, offset, the procedures applicable to
offset should be followed (see Sec. 1015.203 of this subpart). The
availability of funds or money for debt satisfaction by offset and
DOE's determination to pursue collection by offset shall release DOE
from the necessity of further compliance with paragraphs (a), (b), and
(c) of this section.
(f) Prior to referring a debt for litigation, DOE should advise
each person determined to be liable for the debt that, unless the debt
can be collected administratively, litigation may be initiated. This
notification should comply with Executive Order 12988 (3 CFR, 1996
Comp, pp. 157-163) and should be given as part of a demand letter under
paragraph (b) of this section.
(g) When DOE learns that a bankruptcy petition has been filed with
respect to a debtor, before proceeding with further collection action,
DOE should immediately seek legal advice from appropriate legal counsel
concerning the impact of the Bankruptcy Code on any pending or
contemplated collection activities. Unless counsel 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. DOE will 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 DOE 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,
DOE will seek legal advice from counsel to determine whether its
payments to the debtor and payments of other agencies available for
offset may be frozen until relief from the automatic stay can be
obtained from the bankruptcy court. DOE also will seek legal advice
from counsel to determine whether recoupment is available.
Sec. 1015.203 Collection by administrative offset.
(a) Scope. (1) The term ``administrative offset'' has the meaning
provided in 31 U.S.C. 3701(a)(1).
(2) This section does not apply to:
(i) Debts arising under the Social Security Act (42 U.S.C. 301, et.
seq.) except as provided in 42 U.S.C. 404;
(ii) Payments made under the Social Security Act (42 U.S.C. 301,
et. seq.) except as provided for in 31 U.S.C. 3716(c) (see 31 CFR
285.4, Federal Benefit Offset);
(iii) Debts arising under, or payments made under, the Internal
Revenue Code (see 31 CFR 285.2, Tax Refund Offset) 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 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K,
and 31 CFR 285.7, Federal Salary Offset);
(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 debts; or
(vii) Offsets in the course of judicial proceedings, including
bankruptcy.
(3) Unless otherwise provided for by contract or law, debts 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.
(4) Unless otherwise provided by law, administrative offset of
payments under the authority of 31 U.S.C. 3716 to collect a debt may
not be conducted more than 10 years after the Government's right to
collect the debt first accrued, unless facts material to the
Government's right to collect the debt 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 debts. This limitation does not apply to debts reduced to
a judgment.
(5) In bankruptcy cases, DOE will seek legal advice from
appropriate legal counsel concerning the impact of the Bankruptcy Code,
particularly 11 U.S.C. 106, 362, and 553, on pending or contemplated
collections by offset.
(b) Mandatory centralized administrative offset. (1) As described
in Sec. 1015.201(e), under the DCIA, DOE is required to refer all
debts over 180 days delinquent to Treasury for purposes of debt
collection (i.e., cross-servicing). Administrative offset is one type
of collection tool used by Treasury to collect debts referred under 31
CFR 285.12. Thus, by transferring debts to Treasury, DOE will satisfy
the requirement to notify Treasury of debts for the purposes of
administrative offset and duplicate referrals are not required. A debt,
which is not transferred to Treasury for purposes of debt collection,
however, may be subject to the DCIA requirement of notification to
Treasury for purposes of administrative offset.
(2) The names and taxpayer identifying numbers (TINs) of debtors
who owe debts referred to Treasury as described in paragraph (b)(1) of
this section shall be compared to the names and TINs on payments to be
made by Federal disbursing officials. Federal disbursing officials
include disbursing officials of Treasury, the Department of
[[Page 48537]]
Defense, the United States Postal Service, other Government
corporations, and disbursing officials of the United States designated
by the Secretary of the Treasury. When the name and TIN of a debtor
match the name and TIN of a payee and all other requirements for offset
have been met, the payment will be offset to satisfy the debt.
(3) Treasury will notify the debtor/payee in writing that an offset
has occurred to satisfy, in part or in full, a past due, legally
enforceable delinquent debt. The notice shall include a description of
the type and amount of the payment from which the offset was taken, the
amount of offset that was taken, the identity of DOE as the creditor
agency requesting the offset, and a contact point within DOE who will
respond to questions regarding the offset.
(4) As required in 31 CFR 901.3(b)(4), DOE will refer a delinquent
debt to Treasury for administrative offset, only after the debtor:
(i) Has been sent written notice of the type and amount of the
debt, the intention of DOE to use administrative offset to collect the
debt, and an explanation of the debtor's rights under 31 U.S.C. 3716;
and
(ii) Has been given:
(A) The opportunity to inspect and copy DOE records related to the
debt;
(B) The opportunity for a review within DOE of the determination of
indebtedness; and
(C) The opportunity to make a written agreement to repay the debt.
(iii) DOE may omit the procedures set forth in paragraph (a)(4) of
this section when:
(A) The offset is in the nature of a recoupment;
(B) The debt arises under a contract as set forth in Cecile
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and
other procedural protections set forth in 31 U.S.C. 3716(a) do not
supplant or restrict established procedures for contractual offsets
accommodated by the Contracts Disputes Act); or
(C) In the case of non-centralized administrative offsets conducted
under paragraph (c) of this section, DOE 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/payee to allow for prior notice and
an opportunity for review. When prior notice and an opportunity for
review are omitted, DOE 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.
(iv) When DOE previously has given a debtor any of the required
notice and review opportunities with respect to a particular debt (see
Sec. 1015.202), DOE need not duplicate such notice and review
opportunities before administrative offset may be initiated.
(5) When DOE refers delinquent debts to Treasury, DOE must certify,
in a form acceptable to Treasury, that:
(i) The debt(s) is (are) past due and legally enforceable; and
(ii) DOE has complied with all due process requirements under 31
U.S.C. 3716(a) and DOE regulations.
(6) Payments that are prohibited by law from being offset are
exempt from centralized administrative offset. Treasury may exempt
classes of DOE payments from centralized offset upon the written
request of the Secretary of DOE.
(7) In accordance with 31 U.S.C. 3716(f), Treasury may waive the
provisions of 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 centralized administrative
offset upon receipt of a certification from DOE that the due process
requirements enumerated in 31 U.S.C. 3716(a) have been met. The
certification of a debt in accordance with paragraph (b)(5) of this
section will satisfy this requirement. If such a waiver is granted,
only the Data Integrity Board of Treasury is required to oversee any
matching activities, in accordance with 31 U.S.C. 3716(g). This waiver
authority does not apply to offsets conducted under paragraphs (c) and
(d) of this section.
(c) Non-centralized administrative offset. (1) Generally, non-
centralized administrative offsets are ad hoc case-by-case offsets that
DOE conducts, at DOE's discretion, internally or in cooperation with
the agency certifying or authorizing payments to the debtor. Unless
otherwise prohibited by law, when centralized administrative offset is
not available or appropriate, past due, legally enforceable non-tax
delinquent debts may be collected through non-centralized
administrative offset. In these cases, DOE may make a request directly
to a payment-authorizing agency to offset a payment due a debtor to
collect a delinquent debt. For example, it may be appropriate for DOE
to request that the Office of Personnel Management (OPM) offset a
Federal employee's lump sum payment upon leaving Government service to
satisfy an unpaid advance.
(2) DOE shall comply with offset requests by creditor agencies to
collect debts owed to the United States, unless the offset would not be
in the best interest of the United States with respect to the program
of DOE, or would otherwise be contrary to law. Appropriate use will be
made of the cooperative efforts of other agencies in effecting
collection by administrative offset.
(3) When collecting multiple debts by non-centralized
administrative offset, DOE generally will apply the recovered amounts
to those debts in accordance with the best interests of the United
States, as determined by the facts and circumstances of the particular
case, particularly the applicable statute of limitations.
(d) Requests to OPM to offset a debtor's anticipated or future
benefit payments under the Civil Service Retirement and Disability
Fund. Upon providing OPM written certification that a debtor has been
afforded the procedures provided in paragraph (b)(4) of this section,
DOE may request OPM to offset a debtor's anticipated or future benefit
payments under the Civil Service Retirement and Disability Fund (Fund)
in accordance with regulations codified at 5 CFR 831.1801-831.1808.
Upon receipt of such a request, OPM will identify and ``flag'' a
debtor's account in anticipation of the time when the debtor requests,
or becomes eligible to receive, payments from the Fund. This will
satisfy any requirement that offset be initiated prior to the
expiration of the time limitations referenced in paragraph (a)(4) of
this section.
(e) Review requirements. (1) For purposes of this section, whenever
DOE is required to afford a debtor a review within the agency, DOE
shall provide the debtor with a reasonable opportunity for an oral
hearing when the debtor requests reconsideration of the debt and DOE
determines that the question of the indebtedness cannot be resolved by
review of the documentary evidence, for example, when the validity of
the debt turns on an issue of credibility or veracity.
(2) Unless otherwise required by law, an oral hearing under this
section is not required to be a formal evidentiary hearing, although
DOE will carefully document all significant matters discussed at the
hearing.
(3) This section does not require an oral hearing with respect to
debt collection systems in which a determination of indebtedness rarely
involves issues of credibility or veracity and DOE has determined that
review of the written record is ordinarily an adequate means to correct
prior mistakes.
[[Page 48538]]
(4) In those cases when an oral hearing is not required by this
section, DOE will accord the debtor a ``paper hearing,'' that is, a
determination of the request for reconsideration based upon a review of
the written record.
Sec. 1015.204 Reporting debts.
(a) DOE may disclose delinquent debts to consumer reporting
agencies in accordance with 31 U.S.C. 3711(e), the DCIA, the revised
Federal Claims Collection Standards (31 CFR parts 900-904) published
November 22, 2000, and other applicable authorities. DOE will ensure
that all of the rights and protections afforded to the debtor under 31
U.S.C. 3711(e) have been fulfilled. Additional guidance is contained in
Treasury's ``Guide to the Federal Credit Bureau Program,'' revised
October 2001.
(b) As described in Sec. 1015.201(e), under the DCIA (31 U.S.C.
3711(g)), DOE is required to transfer all debts over 180 days
delinquent to Treasury for purposes of debt collection (i.e., cross-
servicing). As part of its regular debt collection procedures, Treasury
will report debts it is collecting to the appropriate designated credit
reporting agencies on behalf of DOE. A debt not transferred to Treasury
for purposes of debt collection, however, may be subject to the DCIA
requirement to report all non-tax delinquent consumer debts to credit
reporting agencies.
Sec. 1015.205 Credit reports.
(a) In order to aid DOE in making appropriate determinations as to
the collection and compromise of claims; the collection of interest,
penalties, and administrative costs; and the likelihood of collecting
the claim, DOE may institute a credit investigation of the debtor at
any time following receipt of knowledge of the claim.
(b) As described in Sec. 1015.201(e), under the DCIA (31 U.S.C.
3711(g)), DOE is required to transfer all debts over 180 days
delinquent to Treasury for purposes of debt collection (i.e., cross-
servicing). As part of its regular debt collection procedures, Treasury
may also institute a credit investigation of the debtor on behalf of
DOE.
Sec. 1015.206 Contracting with private collection contractors and
with entities that locate and recover unclaimed assets.
(a) DOE may contract with private collection contractors in
accordance with 31 U.S.C. 3718(d), the DCIA, the revised Federal Claims
Collection Standards (31 CFR parts 900-904) published November 22,
2000, and other applicable authorities.
(b) As described in Sec. 1015.201(e), under the DCIA, DOE is
required to transfer all debts over 180 days delinquent to Treasury for
purposes of debt collection (i.e., cross-servicing) under 31 U.S.C.
3711(g). As part of its regular debt collection procedures, Treasury
may refer delinquent debts to private collection contractors on behalf
of DOE.
(c) DOE may enter into contracts for locating and recovering assets
of the United States, such as unclaimed assets. DOE must establish
procedures acceptable to Treasury before entering into contracts to
recover assets of the United States held by a state government or a
financial institution.
(d) DOE may enter into contracts for debtor asset and income search
reports. In accordance with 31 U.S.C. 3718(d), such contracts may
provide that the fee a contractor charges DOE for such services may be
payable from the amounts recovered, unless otherwise prohibited by
statute.
Sec. 1015.207 Suspension or revocation of eligibility for loans and
loan guaranties, licenses, permits, or privileges.
(a) Unless waived by the Secretary of DOE or his designee, DOE may
not extend financial assistance in the form of a loan, loan guarantee,
or loan insurance to any person who DOE knows to be delinquent on a
non-tax debt 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 DOE. DOE may extend
credit after the delinquency has been resolved. See 31 CFR 285.13
(Barring Delinquent Debtors From Obtaining Federal Loans or Loan
Insurance or Guarantees).
(b) In non-bankruptcy cases, DOE offices seeking the collection of
statutory penalties, forfeitures, or other types of claims should
consider the suspension or revocation of licenses, permits, or other
privileges for any inexcusable or willful failure of a debtor to pay
such a debt in accordance with DOE's regulations or governing
procedures. The debtor should be advised in DOE's written demand for
payment of DOE's ability to suspend or revoke licenses, permits, or
privileges. Any DOE office making, guaranteeing, insuring, acquiring,
or participating in loans should consider suspending or disqualifying
any lender, contractor, or broker from doing further business with DOE
or engaging in programs sponsored by DOE if such lender, contractor, or
broker fails to pay its debts to the Government within a reasonable
time or if such lender, contractor, or broker 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
Treasury. Treasury will forward to all interested agencies notification
that a surety's certificate of authority to do business with the
Government has been revoked by Treasury.
(c) The suspension or revocation of licenses, permits, or
privileges also should 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 Federal Government's ability to collect
money or funds owed by debtors. Therefore, states that manage Federal
activities, pursuant to approval from DOE, should ensure that
appropriate steps are taken to safeguard against issuing licenses,
permits, or privileges to debtors who fail to pay their debts to the
Federal Government.
(d) In bankruptcy cases, before advising the debtor of DOE's
intention to suspend or revoke licenses, permits, or privileges, DOE
will seek legal advice from counsel concerning the impact of the
Bankruptcy Code, particularly 11 U.S.C. 362 and 525, which may restrict
such action.
Sec. 1015.208 Administrative wage garnishment.
(a) DOE may use administrative wage garnishment to collect money
from a debtor's disposable pay to satisfy delinquent debt in accordance
with section 31001(o) of the DCIA, codified at 31 U.S.C. 3720D.
Treasury has issued regulations implementing the administrative wage
garnishment provisions contained in the DCIA, at 31 CFR 285.11. DOE has
adopted these regulations in their entirety.
(b) As described in Sec. 1015.201(e) of this part, under the DCIA
(31 U.S.C. 3711(g)), DOE is required to transfer all debts over 180
days delinquent to Treasury for purposes of debt collection (i.e.,
cross-servicing). As part of its regular debt collection procedures,
Treasury may use administrative wage garnishment on behalf of DOE.
Sec. 1015.209 Tax refund offset.
(a) DOE may authorize the Internal Revenue Service (IRS) to offset
a tax refund to satisfy delinquent debt in accordance with 31 U.S.C.
3720A, Reduction of Tax Refund by Amount of Debt. Treasury has issued
regulations implementing the tax refund offset as part of Treasury's
mandatory centralized offset at 31 CFR 285.2, Offset of Tax Refund to
Collect Past-Due, Legally
[[Page 48539]]
Enforceable Non-tax Debt. DOE has adopted 31 U.S.C. 3720A and 31 CFR
285.2 in their entirety. The due process requirements of 31 U.S.C.
3720A are contained in Sec. Sec. 1015.203(b)(4), and 1015.203(e) of
this part.
(b) As described in Sec. 1015.201(e) of this part, under the DCIA
(31 U.S.C. 3711(g)), DOE is required to transfer all debts over 180
days delinquent to Treasury for purposes of debt collection (i.e.,
cross-servicing). As part of its regular debt collection procedures,
Treasury may use tax refund offset on behalf of DOE.
Sec. 1015.210 Liquidation of collateral.
(a) DOE may liquidate security or collateral through the exercise
of a power of sale in the security instrument or a nonjudicial
foreclosure, and apply the proceeds to the applicable debt(s), if the
debtor fails to pay the debt(s) within a reasonable time after demand
and if such action is in the best interest of the United States.
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 DOE learns that a bankruptcy petition has been filed with
respect to a debtor, DOE will seek legal advice from counsel concerning
the impact of the Bankruptcy Code, including, but not limited to, 11
U.S.C. 362, to determine the applicability of the automatic stay and
the procedures for obtaining relief from such stay prior to proceeding
under paragraph (a) of this section.
Sec. 1015.211 Collection in installments.
(a) Whenever feasible, DOE shall collect the total amount of a debt
in one lump sum. If a debtor is financially unable to pay a debt in one
lump sum, DOE may accept payment in regular installments. DOE will
obtain a current financial statement showing the debtor's assets,
liabilities, income, and expenses from debtors who represent that they
are unable to pay in one lump sum, and independently verify such
representations whenever possible. DOE may also obtain credit reports
or other financial information to assess installment requests. DOE may
use its own financial information form or a DOJ form, such as the
Financial Statement of Debtor (OBD-500) (see Sec. 1015.302(g) of this
part). When DOE agrees to accept payments in regular installments, it
will 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 debt in the event of default.
(b) The size and frequency of installment payments should bear a
reasonable relation to the size of the debt and the debtor's ability to
pay. If possible, the installment payments should be sufficient in size
and frequency to liquidate the debt in three years or less.
(c) Security for deferred payments should be obtained in
appropriate cases. DOE may accept installment payments notwithstanding
the refusal of the debtor to execute a written agreement or to give
security, at DOE's option.
Sec. 1015.212 Interest, penalties and administrative costs.
(a) Except as provided in paragraphs (g), (h), and (i) of this
section, DOE shall charge interest, penalties and administrative costs
on debts owed to the United States pursuant to 31 U.S.C. 3717. DOE
shall mail or hand-deliver a written notice to the debtor, at the
debtor's most recent address available to DOE, explaining DOE'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 debt is paid in full or otherwise
resolved through compromise, termination, or waiver of the charges.
(b) DOE shall charge interest on debts owed the United States as
follows:
(1) Interest shall accrue from the date of delinquency, 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 Treasury in accordance with 31 U.S.C.
3717. Pursuant to 31 U.S.C 3717, DOE 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. DOE will document the
reason(s) 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 defaults on a
repayment agreement and seeks to enter into a new agreement, DOE 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 under the new
repayment agreement.
(c) DOE shall assess administrative costs incurred for processing
and handling delinquent debts. The calculation of administrative costs
should be based on actual costs incurred or upon estimated costs as
determined by the assessing office.
(d) Unless otherwise established in a contract, repayment
agreement, or by statute, DOE 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 debt that is delinquent for more than 90 days. This charge shall
accrue from the date of delinquency.
(e) DOE may increase an ``administrative debt'' by the cost of
living adjustment in lieu of charging interest and penalties under this
section. ``Administrative debt'' includes, but is not limited to, a
debt based on fines, penalties, and overpayments, but does not include
a debt 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
debt was determined or last adjusted. Increases to administrative debts
shall be computed annually. DOE will use this alternative only when
there is a legitimate reason to do so, such as when calculating
interest and penalties on a debt would be extremely difficult because
of the age of the debt.
(f) When a debt is paid in partial or installment payments, amounts
received by DOE shall be applied first to outstanding penalties, second
to administrative costs, third to interest, and last to principal.
(g) DOE shall waive the collection of interest and administrative
costs imposed pursuant to this section on the portion of the debt that
is paid within 30 days after the date on which interest began to
accrue. DOE may extend this 30-day period on a case-by-case basis. In
addition, DOE may waive interest, penalties, and administrative costs
charged under this section, in whole or in part, without regard to the
amount of the debt, either under the criteria set forth in these
standards for the compromise of debts, or if DOE determines that
collection of these charges is against equity and good conscience or is
not in the best interest of the United States.
(h) When a debtor requests a waiver or review of the debt, DOE will
continue
[[Page 48540]]
to accrue interest, penalties, and administrative costs during the
period collection activity is suspended. Upon completion of DOE's
review, interest, penalties, and administrative costs related to the
portion of the debt found to be without merit will be waived.
(i) DOE is authorized to impose interest and related charges on
debts not subject to 31 U.S.C. 3717, in accordance with the common law.
Sec. 1015.213 Analysis of costs.
DOE will prepare periodic comparisons of costs incurred and amounts
collected. Data on costs and corresponding recovery rates for debts of
different types and in various dollar ranges will 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 debt amounts below which collection
efforts need not be taken.
Sec. 1015.214 Use and disclosure of mailing addresses.
(a) When attempting to locate a debtor in order to collect or
compromise a debt under Sec. Sec. 1015.100-105 of this part or other
authority, DOE may send a request to Treasury to obtain a debtor's
mailing address from the records of the IRS.
(b) DOE may use mailing addresses obtained under paragraph (a) of
this section to enforce collection of a delinquent debt and may
disclose such mailing addresses to other agencies and to collection
agencies for collection purposes.
Sec. 1015.215 Federal salary offset.
(a) DOE may authorize Treasury to offset a Federal salary to
satisfy delinquent debt in accordance with 5 U.S.C. 5514, Installment
Deduction for Indebtedness to the United States; 5 CFR 550.1101 through
550.1108, Collection by Offset from Indebted Government Employees; 31
CFR parts 900-904, the revised Federal Claims Collection Standards; and
31 CFR 285.7, Salary Offset. DOE shall ensure that all of the rights
and protections afforded to the debtor under 5 U.S.C. 5514 and 31 CFR
901.3 have been fulfilled. Claims due from Federal employees will be
collected in accordance with DOE Order 2200.2B, Collection from Current
and Former Employees for Indebtedness to the United States.
(b) As described in Sec. 1015.201(e), under the DCIA (31 U.S.C.
3711(g)), DOE is required to refer all debts over 180 days delinquent
to Treasury for purposes of debt collection (i.e., cross-servicing). As
part of its regular debt collection procedures, Treasury may use
Federal salary offset on behalf of DOE.
Sec. 1015.216 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 DCIA, such as administrative offset, use of credit bureaus,
contracting for collection agencies, and interest and related charges,
do not apply to debts 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 debts that are exempt from the Debt
Collection Act of 1982 and the DCIA, 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 debts owed by persons
employed by agencies administering the laws cited in paragraph (a) of
this section unless the debt arose under those laws.
Subpart C--Standards for the Compromise of Claims
Sec. 1015.300 Scope.
This subpart sets forth the standards for the compromise of claims
under this part. This subpart corresponds to 31 CFR part 902 of the
Treasury Federal Claims Collection Standards.
Sec. 1015.301 Scope and application.
(a) The standards set forth in this subpart apply to the compromise
of debts pursuant to 31 U.S.C. 3711. DOE's Chief Financial Officer or
designee or Heads of Field Elements or designees in field locations may
exercise such compromise authority for debts arising out of activities
of, or referred or transferred for collection services to, DOE when the
amount of the debt then due, exclusive of interest, penalties, and
administrative costs, does not exceed $100,000 or any higher amount
authorized by the Attorney General.
(b) Unless otherwise provided by law, when the principal balance of
a debt, 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 DOJ. DOE
will evaluate the compromise offer, using the factors set forth in this
part. If an offer to compromise any debt in excess of $100,000 is
acceptable to DOE, DOE shall refer the debt to the Civil Division or
other appropriate litigating division in the DOJ using a Claims
Collection Litigation Report (CCLR). DOE may obtain the CCLR from the
DOJ's National Central Intake Facility. The referral shall include
appropriate financial information and a recommendation for the
acceptance of the compromise offer. DOJ approval is not required if DOE
rejects a compromise offer.
Sec. 1015.302 Bases for compromise.
(a) DOE may compromise a debt 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 debt in full within a
reasonable time by enforced collection proceedings;
(3) The cost of collecting the debt 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, DOE should
consider relevant factors such as 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) DOE will 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. DOE will consider the applicable
exemptions available to the debtor under state and Federal law in
determining the Government's ability to enforce collection. DOE may
also consider uncertainty as to the price that collateral or other
property will bring at a 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
[[Page 48541]]
prove its case in court for the full amount claimed, either because of
the 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, DOE will 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) DOE may compromise a debt if the cost of collecting the debt
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
debts. In determining whether the cost of collecting justifies enforced
collection of the full amount, DOE should consider whether continued
collection of the debt, regardless of cost, is necessary to further an
enforcement principle, such as the Government's willingness to pursue
aggressively defaulting and uncooperative debtors.
(f) DOE generally will 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, DOE will obtain a legally
enforceable, written agreement providing that, in the event of default,
the full original principal balance of the debt prior to compromise,
less sums paid thereon, is reinstated. Whenever possible, DOE also will
obtain security for repayment in the manner set forth in subpart B of
this part.
(g) To assess the merits of a compromise offer based in whole or in
part on the debtor's inability to pay the full amount of a debt within
a reasonable time, DOE will, if feasible, obtain a current financial
statement from the debtor, executed under penalty of perjury, showing
the debtor's assets, liabilities, income, and expenses. DOE also may
obtain credit reports or other financial information to assess
compromise offers. DOE may use its own financial information form or
may request suitable forms from the DOJ or the local United States
Attorney's Office.
Sec. 1015.303 Enforcement policy.
Pursuant to this part, DOE may compromise statutory penalties,
forfeitures, or claims established as an aid to enforcement and to
compel compliance, if DOE's enforcement policy in terms of deterrence
and securing compliance, present and future, will be adequately served
by DOE's acceptance of the sum to be agreed upon.
Sec. 1015.304 Joint and several liability.
(a) When two or more debtors are jointly and severally liable, DOE
will pursue collection activity against all debtors, as appropriate.
DOE will not attempt to allocate the burden of payment between the
debtors, but will proceed to liquidate the indebtedness as quickly as
possible.
(b) DOE will seek to ensure that a compromise agreement with one
debtor does not release DOE'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.
Sec. 1015.305 Further review of compromise offers.
If DOE is uncertain whether to accept a firm, written, substantive
compromise offer on a debt that is within DOE's delegated compromise
authority, it may refer the offer to the Civil Division or other
appropriate litigating division in the DOJ, using a CCLR accompanied by
supporting data and particulars concerning the debt. The DOJ may act
upon such an offer or return it to DOE with instructions or advice.
Sec. 1015.306 Consideration of tax consequences to the Government.
In negotiating a compromise, DOE will consider the tax consequences
to the Government. In particular, DOE will consider requiring a waiver
of tax-loss-carry-forward and tax-loss-carry-back rights of the debtor.
For information on discharge of indebtedness reporting requirements see
Sec. 1015.405 of this part.
Sec. 1015.307 Mutual releases of the debtor and the Government.
In all appropriate instances, a compromise that is accepted by DOE
will be implemented by means of a mutual release, in which the debtor
is released from further non-tax liability on the compromised debt in
consideration of payment in full of the compromise amount and the
Government and its officials, past and present, are released and
discharged from any and all claims and causes of action arising from
the same transaction that the debtor may have. In the event a mutual
release is not executed when a debt is compromised, unless prohibited
by law, the debtor is still deemed to have waived any and all claims
and causes of action against the Government and its officials related
to the transaction giving rise to the compromised debt.
Subpart D--Standards for Suspending or Terminating Collection
Activity
Sec. 1015.400 Scope.
The subpart sets forth the standards for terminating collection
activity. This subpart corresponds to 31 CFR part 903 of the Treasury
Federal Claims Collection Standards.
Sec. 1015.401 Scope and application.
(a) The standards set forth in this subpart apply to the suspension
or termination of collection activity pursuant to 31 U.S.C. 3711 on
debts 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 debt to the DOJ for
litigation, DOE may suspend or terminate collection under this part
with respect to debts arising out of activities of, or referred to,
DOE.
(b) If, after deducting the amount of any partial payments or
collections, the principal amount of a debt 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 DOJ. If DOE believes that suspension or
termination of any debt in excess of $100,000 may be appropriate, DOE
shall refer the debt to the Civil Division or other appropriate
litigating division in the DOJ, using the CCLR. The referral should
specify the reasons for DOE's recommendation. If, prior to referral to
the DOJ, DOE determines that a debt is plainly erroneous or clearly
without legal merit, DOE may terminate collection activity regardless
of the amount involved without obtaining DOJ concurrence.
Sec. 1015.402 Suspension of collection activity.
(a) DOE may suspend collection activity on a debt when:
(1) DOE cannot locate the debtor;
(2) The debtor's financial condition is expected to improve; or
[[Page 48542]]
(3) The debtor has requested a waiver or review of the debt.
(b) Based on the current financial condition of the debtor, DOE may
suspend collection activity on a debt when the debtor's future
prospects justify retention of the debt 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 debt 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 debt with interest at a later date.
(c)(1) DOE shall suspend collection activity during the time
required for consideration of the debtor's request for waiver or
administrative review of the debt if the statute under which the
request is sought prohibits DOE from collecting the debt during that
time. As indicated in Sec. 1015.212(h), DOE will continue to accrue
interest, penalties, and administrative costs during the period
collection activity is suspended.
(2) If the statute under which the request is sought does not
prohibit collection activity pending consideration of the request, DOE
may use discretion, on a case-by-case basis, to suspend collection.
Further, DOE ordinarily will suspend collection action upon a request
for waiver or review if DOE is prohibited by statute or regulation from
issuing a refund of amounts collected prior to DOE's consideration of
the debtor's request. However, DOE will not suspend collection when DOE
determines that the request for waiver or review is frivolous or was
made primarily to delay collection.
(d) When DOE learns that a bankruptcy petition has been filed with
respect to a debtor, in most cases the collection activity on a debt
must be suspended, pursuant to the provisions of 11 U.S.C. 362, 1201,
and 1301, unless DOE can clearly establish that the automatic stay has
been lifted or is no longer in effect. DOE will seek legal advice
immediately from counsel and, if legally permitted, take the necessary
legal steps to ensure that no funds or money is paid by DOE to the
debtor until relief from the automatic stay is obtained.
Sec. 1015.403 Termination of collection activity.
(a) DOE may terminate collection activity when:
(1) DOE is unable to collect any substantial amount through its own
efforts or through the efforts of others;
(2) DOE is unable to locate the debtor;
(3) Costs of collection are anticipated to exceed the amount
recoverable;
(4) The debt is legally without merit, or enforcement of the debt
is barred by any applicable statute of limitations;
(5) The debt cannot be substantiated; or
(6) The debt against the debtor has been discharged in bankruptcy.
(b) Before terminating collection activity, DOE will have pursued
all appropriate means of collection and determined, based upon the
results of the collection activity, that the debt is uncollectible.
Termination of collection activity ceases active collection of the
debt. The termination of collection activity does not preclude DOE from
retaining a record of the account for purposes of:
(1) Selling the debt, if Treasury 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, DOE shall terminate collection activity on a debt
that has been discharged in bankruptcy, regardless of the amount. DOE
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, if DOE is a known creditor of a
debtor, its claims may survive a discharge if DOE did not receive
formal notice of the proceedings. DOE will seek legal advice from
counsel if it believes it has claims or offsets that may survive the
discharge of a debtor.
Sec. 1015.404 Exception to termination.
When a significant enforcement policy is involved, or recovery of a
judgment is a prerequisite to the imposition of administrative
sanctions, DOE may refer debts for litigation even though termination
of collection activity may otherwise be appropriate.
Sec. 1015.405 Discharge of indebtedness; reporting requirements.
(a) Before discharging a delinquent debt (also referred to as a
close out of the debt), DOE shall take all appropriate steps to collect
the debt in accordance with 31 U.S.C. 3711(g), including, as
applicable, administrative offset, tax refund offset, Federal salary
offset, referral to Treasury, Treasury-designated debt collection
centers or private collection contractors, credit bureau reporting,
wage garnishment, litigation, and foreclosure. Discharge of
indebtedness is distinct from termination or suspension of collection
activity under Sec. 1015.400 of this part and is governed by the
Internal Revenue Code. When collection action on a debt is suspended or
terminated, the debt remains delinquent and further collection action
may be pursued at a later date in accordance with the standards set
forth in this subpart. When DOE discharges a debt in full or in part,
further collection action is prohibited. Therefore, DOE will make the
determination that collection action is no longer warranted before
discharging a debt. Before discharging a debt, DOE must terminate debt
collection action.
(b) 31 U.S.C. 3711(i) requires DOE to sell a delinquent non-tax
debt upon termination of collection action if Treasury determines such
a sale is in the best interests of the United States. Since the
discharge of a debt precludes any further collection action (including
the sale of a delinquent debt), DOE may not discharge a debt until the
requirements of 31 U.S.C. 3711(i) have been met.
(c) Upon discharge of an indebtedness, DOE must report the
discharge to the IRS in accordance with the requirements of 26 U.S.C.
6050P and 26 CFR 1.6050P-1. DOE may request Treasury or Treasury-
designated debt collection centers to file such a discharge report to
the IRS on DOE's behalf.
(d) When discharging a debt, DOE must request that litigation
counsel release any liens of record securing the debt.
Subpart E--Referrals to the Department of Justice
Sec. 1010.500 Scope.
This subpart sets forth the standards for referrals to the
Department of Justice. This subpart corresponds to 31 CFR part 904 of
the Treasury Federal Claims Collection Standards.
[[Page 48543]]
Sec. 1015.501 Referrals to the Department of Justice and the
Department of the Treasury's Cross-Servicing Program.
(a) DOE may authorize Treasury to refer a delinquent debt to the
DOJ for litigation in accordance with 31 U.S.C. 3711(g), the DCIA, the
revised Federal Claims Collection Standards (31 CFR parts 900-904), and
other applicable authorities. DOE shall ensure that all of the rights
and protections afforded to the debtor under 31 U.S.C. 3711(e) have
been fulfilled.
(b) As described in Sec. 1015.201(e), under the DCIA (31 U.S.C.
3711(g)), DOE is required to transfer all debts over 180 days
delinquent to Treasury for purposes of debt collection (i.e., cross-
servicing). As part of its regular debt collection procedures, Treasury
will refer debts to the DOJ for litigation on behalf of DOE.
Sec. 1015.502 Prompt referral.
(a) If a debt is not referred to the DOJ through Treasury's cross-
servicing program, DOE shall promptly refer to the DOJ for litigation
debts on which aggressive collection activity has been taken in
accordance with Sec. 1015.200 of this part and that cannot be
compromised, or on which collection activity cannot be suspended or
terminated, in accordance with Sec. Sec. 1015.300 and 1015.400 of this
part. DOE may refer those debts arising out of activities of DOE. Debts
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 Civil Division or other division
responsible for litigating such debts at the DOJ, Washington, DC. Debts
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 DOJ's Nationwide Central Intake
Facility as required by the CCLR instructions. Claims will be referred
as early as possible, consistent with aggressive agency collection
activity and the observance of the standards contained in the Federal
Claims Collection Standards (31 CFR parts 900-904), and, in any event,
well within the period for initiating timely lawsuits against the
debtors. DOE shall make every effort to refer delinquent debts to the
DOJ for litigation within one year of the date such debts last became
delinquent. In the case of guaranteed or insured loans, DOE will make
every effort to refer these delinquent debts to the DOJ for litigation
within one year from the date the loan was presented to DOE for payment
or re-insurance.
(b) The DOJ has exclusive jurisdiction over the debts referred to
it pursuant to this section. DOE shall refrain from having any contact
with the debtor and shall direct all debtor inquiries concerning the
claim to the DOJ. DOE shall notify the DOJ immediately of any payments
credited by DOE to the debtor's account after referral of a debt or
claim under this section. The DOJ shall notify DOE, in a timely manner,
of any payments it receives from the debtor.
Sec. 1015.503 Claims Collection Litigation Report.
(a) Unless excepted by the DOJ, DOE shall complete the CCLR (see
Sec. 1015.301 of this part), accompanied by a signed Certificate of
Indebtedness, to refer all administratively uncollectible claims to the
DOJ for litigation. DOE 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) DOE shall indicate clearly on the CCLR the actions it wishes
the DOJ to take with respect to the referred claim. The CCLR permits
DOE to indicate specifically any of a number of litigative activities
which the DOJ 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) DOE also shall use the CCLR to refer claims to the DOJ to
obtain the DOJ's approval of any proposals to compromise the claims or
to suspend or terminate DOE collection activity.
Sec. 1015.504 Preservation of evidence.
DOE will take care to preserve all files and records that may be
needed by the DOJ to prove its claims in court. DOE ordinarily will
include certified copies of the documents that form the basis for the
claim in the packages referring its claims to the DOJ for litigation.
DOE shall provide originals of such documents immediately upon request
by the DOJ.
Sec. 1015.505 Minimum amount of referrals to the Department of
Justice.
(a) DOE 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 DOJ promptly shall notify DOE if the Attorney General changes this
minimum amount.
(b) DOE shall not refer claims of less than the minimum amount
unless:
(1) Litigation to collect such smaller claims is important to
ensure compliance with DOE'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 DOE
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.
(4) DOE will consult with the Financial Litigation Staff of the
Executive Office for United States Attorneys in the DOJ prior to
referring claims valued at less than the minimum amount.
PART 1018--REFERRAL OF DEBTS TO IRS FOR TAX REFUND OFFSET
0
2. The authority citation for Part 1018 continues to read as follows:
Authority: 31 U.S.C. 3720A; Pub. L. 98-369; 98 Stat. 1153.
PART 1018--[REMOVED]
0
3. Part 1018 is removed.
[FR Doc. 03-20378 Filed 8-13-03; 8:45 am]
BILLING CODE 6450-01-P