[Code of Federal Regulations]
[Title 40, Volume 1]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR13.22]

[Page 191-194]
 
                   TITLE 40--PROTECTION OF ENVIRONMENT
 
               CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY
 
PART 13_CLAIMS COLLECTION STANDARDS--Table of Contents
 
                     Subpart C_Administrative Offset
 
Sec. 13.22  Salary offset when EPA is the creditor agency.

    (a) Entitlement to notice, hearing, written response and decision. 
(1) Prior to initiating collection action through salary offset, EPA 
will first provide the employee with the opportunity to pay in full the 
amount owed, unless such notification will compromise the Government's 
ultimate ability to collect the debt.
    (2) Except as provided in paragraph (b) of this section, each 
employee from whom the Agency proposes to collect a debt by salary 
offset under this section is entitled to receive a written notice as 
described in paragraph (c) of this section.
    (3) Each employee owing a debt to the United States which will be 
collected by salary offset is entitled to request a hearing on the debt. 
This request must be filed as prescribed in paragraph (d) of this 
section. The Agency will make appropriate hearing arrangements which are 
consistent with law and regulations. Where a hearing is held, the 
employee is entitled to a written decision on the following issues:
    (i) The determination of the Agency concerning the existence or 
amount of the debt; and
    (ii) The repayment schedule, if it was not established by written 
agreement between the employee and the Agency.
    (b) Exceptions to entitlement to notice, hearing, written response 
and final decision. The procedural requirements of paragraph (a) of this 
section are not applicable to any adjustment of pay arising out of an 
employee's election of coverage or a change in coverage under a Federal 
benefits program (such as health insurance) requiring periodic 
deductions from pay, if the amount to be recovered was accumulated over 
four pay periods or less. However, if the amount to be recovered was 
accumulated over more than four pay periods the full procedures 
prescribed under paragraph (d) of this section will be extended to the 
employee.
    (c) Notification before deductions begin. Except as provided in 
paragraph (b) of this section, deductions will not be made unless the 
employee is first provided with a minimum of 30 calendar days written 
notice. Notice will be sent by certified mail (return receipt 
requested), and must include the following:
    (1) The Agency's determination that a debt is owed, including the 
origin, nature, and amount of the debt;
    (2) The Agency's intention to collect the debt by means of 
deductions from the employee's current disposable pay account;
    (3) The amount, frequency, proposed beginning date and duration of 
the intended deductions. (The proposed beginning date for salary offset 
cannot be earlier than 30 days after the date of notice, unless this 
would compromise the Government's ultimate ability to resolve the debt);
    (4) An explanation of the requirements concerning interest, penalty 
and administrative costs;
    (5) The employee's right to inspect and copy all records relating to 
the debt or to request and receive a copy of such records;
    (6) If not previously provided, the employee's right to enter into a 
written agreement for a repayment schedule differing from that proposed 
by the Agency where the terms of the proposed repayment schedule are 
acceptable to the Agency. (Such an agreement must be in writing and 
signed by both the employee and the appropriate EPA official and will be 
included in the employee's personnel file and documented in the EPA 
payroll system);
    (7) The right to a hearing conducted by a hearing official not under 
the control of the Administrator, if a request is filed;
    (8) The method and time for requesting a hearing;
    (9) That the filing of a request for hearing within 15 days of 
receipt of the original notification will stay the assessment of 
interest, penalty and administrative costs and the commencement of 
collection proceedings;
    (10) That a final decision on the hearing (if requested) will be 
issued at the earliest practical date, but no later than 60 days after 
the filing of the request, unless the employee requests and the hearing 
official grants a delay in the proceedings;
    (11) That knowingly false or frivolous statements, representations 
or evidence may subject the employee to--

[[Page 192]]

    (i) Disciplinary procedures under 5 U.S.C. chapter 75 or any other 
applicable statutes or regulations;
    (ii) Criminal penalties under 18 U.S.C. 286, 287, 1001 and 1002 or 
other applicable statutory authority; or
    (iii) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority;
    (12) Any other rights and remedies available under statutes or 
regulations governing the program for which the collection is being 
made; and
    (13) That amounts paid or deducted for the debt, except 
administrative costs and penalty charges where the entire debt is not 
waived or terminated, which are later waived or found not owed to the 
United States will be promptly refunded to the employee.
    (d) Request for hearing. An employee may request a hearing by filing 
a written request directly with the Director, Financial Management 
Division (2734R) , U.S. Environmental Protection Agency, 1200 
Pennsylvania Ave., NW., Washington, DC 20460. The request must state the 
bases upon which the employee disputes the proposed collection of the 
debt. The request must be signed by the employee and be received by EPA 
within 15 days of the employee's receipt of the notification of proposed 
deductions. The employee should submit in writing all facts, evidence 
and witnesses which support his/her position to the Director, Financial 
Management Division, within 15 days of the date of the request for a 
hearing. The Director, Financial Management Division, will arrange for 
the services of a hearing official not under the control of the 
Administrator and will provide the hearing official with all documents 
relating to the claim.
    (e) Requests for hearing made after time expires. Late requests for 
a hearing may be accepted if the employee can show that the delay in 
filing the request for a hearing was due to circumstances beyond the 
employee's control.
    (f) Form of hearing, written response and final decision. (1) 
Normally, a hearing will consist of the hearing official making a 
decision based upon a review of the claims file and any materials 
submitted by the debtor. However, in instances where the hearing 
official determines that the validity of the debt turns on an issue of 
veracity or credibility which cannot be resolved through review of 
documentary evidence, the hearing official at his discretion may afford 
the debtor an opportunity for an oral hearing. Such oral hearings will 
consist of an informal conference before a hearing official in which the 
employee and the Agency will be given the opportunity to present 
evidence, witnesses and argument. If desired, the employee may be 
represented by an individual of his/her choice. The Agency shall 
maintain a summary record of oral hearings provided under these 
procedures.
    (2) Written decisions provided after a request for hearing will, at 
a minimum, state the facts evidencing the nature and origin of the 
alleged debt; and the hearing official's analysis, findings and 
conclusions.
    (3) The decision of the hearing official is final and binding on the 
parties.
    (g) Request for waiver. In certain instances, an employee may have a 
statutory right to request a waiver of overpayment of pay or allowances, 
e.g., 5 U.S.C. 5584 or 5 U.S.C. 5724(i). When an employee requests 
waiver consideration under a right authorized by statute, further 
collection on the debt will be suspended until a final administrative 
decision is made on the waiver request. However, where it appears that 
the Government's ability to recover the debt may be adversely affected 
because of the employee's resignation, termination or other action, 
suspension of recovery is not required. During the period of the 
suspension, interest, penalty charges and administrative costs will not 
be assessed against the debt. The Agency will not duplicate, for 
purposes of salary offset, any of the procedures already provided the 
debtor under a request for waiver.
    (h) Method and source of collection. A debt will be collected in a 
lump-sum or by installment deductions at established pay intervals from 
an employee's current pay account, unless the employee and the Agency 
agree to alternative arrangements for payment. The alternative payment 
schedule must be in writing, signed by both the employee and the 
Administrator and

[[Page 193]]

will be documented in the Agency's files.
    (i) Limitation on amount of deduction. The size and frequency of 
installment deductions generally will bear a reasonable relation to the 
size of the debt and the employee's ability to pay. However, the amount 
deducted for any period may not exceed 15 percent of the disposable pay 
from which the deduction is made, unless the employee has agreed in 
writing to the deduction of a greater amount. If possible, the 
installment payments will be in amounts sufficient to liquidate the debt 
in three years or less. Installment payments of less than $25 normally 
will be accepted only in the most unusual circumstances.
    (j) Duration of deduction. If the employee is financially unable to 
pay a debt in a lump-sum or the amount of the debt exceeds 15 percent of 
disposable pay, collection will be made in installments. Installment 
deductions will be made over the period of active duty or employment 
except as provided in paragraph (a)(1) of this section.
    (k) When deductions may begin. (1) Deductions to liquidate an 
employee's debt will begin on the date stated in the Agency's notice of 
intention to collect from the employee's current pay unless the debt has 
been repaid or the employee has filed a timely request for hearing on 
issues for which a hearing is appropriate.
    (2) If the employee has filed a timely request for hearing with the 
Agency, deductions will begin after the hearing official has provided 
the employee with a final written decision indicating the amount owed 
the Government. Following the decision by the hearing official, the 
employee will be given 30 days to repay the amount owed prior to 
collection through salary offset, unless otherwise provided by the 
hearing official.
    (l) Liquidation from final check. If the employee retires, resigns, 
or the period of employment ends before collection of the debt is 
completed, the remainder of the debt will be offset from subsequent 
payments of any nature due the employee (e.g., final salary payment, 
lump-sum leave, etc.).
    (m) Recovery from other payments due a separated employee. If the 
debt cannot be liquidated by offset from any final payment due the 
employee on the date of separation, EPA will liquidate the debt, where 
appropriate, by administrative offset from later payments of any kind 
due the former employee (e.g., retirement pay). Such administrative 
offset will be taken in accordance with the procedures set forth in 
Sec. 13.20.
    (n) Employees who transfer to another Federal agency. If an EPA 
employee transfers to another Federal agency prior to repaying a debt 
owed to EPA, the following action will be taken:
    (1) The appropriate debt-claim form specified by the Office of 
Personnel Management (OPM) will be completed and certified to the new 
paying office by EPA. EPA will certify: That the employee owes a debt; 
the amount and the basis for the debt; the date on which payment is due; 
the date the Government's rights to collect the debt first accrued; and 
that EPA's regulations implementing 5 U.S.C. 5514 have been approved by 
OPM.
    (2) The new paying agency will be advised of the amount which has 
already been collected, the number of installments and the commencement 
date for the first installment, if other than the next officially 
established pay period. EPA will also identify to the new paying agency 
the actions it has taken and the dates of such actions.
    (3) EPA will place or will arrange to have placed in the employee's 
official personnel file the information required by paragraphs (n) (1) 
and (2) of this section.
    (4) Upon receipt of the official personnel file from EPA, the new 
paying agency will resume collection from the employee's current pay 
account and will notify both the employee and EPA of the resumption.
    (o) Interest, penalty and administrative cost. EPA will assess 
interest and administrative costs on debts collected under these 
procedures. The following guidelines apply to the assessment of these 
costs on debts collected by salary offset:
    (1) A processing and handling charge will be assessed on debts 
collected through salary offset under this section. Where offset begun 
prior to the

[[Page 194]]

employee's receipt of the 30-day written notice of the proposed offset, 
processing and handling costs will only be assessed after the expiration 
of the 30-day notice period and after the completion of any hearing 
requested under paragraph (d) of this section or waiver consideration 
under paragraph (g) of this section.
    (2) Interest will be assessed on all debts not collected within 30 
days of either the date of the notice where the employee has not 
requested a hearing within the allotted time, completion of a hearing 
pursuant to paragraph (d) of this section, or completion of waiver 
consideration under paragraph (g) of this section, whichever is later. 
Interest will continue to accrue during the period of the recovery.
    (3) Deductions by salary offset normally begin prior to the time for 
assessment of a penalty. Therefore, a penalty charge will not be 
assessed unless deductions occur more than 120 days from the date of 
notice to the debtor and penalty assessments have not been suspended 
because of waiver consideration by EPA.
    (p) Non-waiver of right by payment. An employee's payment under 
protest of all or any portion of a debt does not waive any rights which 
the employee may have under either these procedures or any other 
provision of law.
    (q) Refunds. EPA will promptly refund to the employee amounts paid 
or deducted pursuant to this section, the recovery of which is 
subsequently waived or otherwise found not owing to the United States. 
Refunds do not bear interest unless specifically authorized by law.
    (r) Time limit for commencing recovery by salary setoff. EPA will 
not initiate salary offset to collect a debt more than 10 years after 
the Government's right to collect the debt first accrued, unless facts 
material to the right to collect the debt were not known and could not 
have been known through the exercise of reasonable care by the 
Government official responsible for discovering and collecting such 
debts.