Debt Management

Published date17 June 2020
Citation85 FR 36670
Record Number2020-09447
SectionRules and Regulations
CourtCommodity Credit Corporation,Farm Service Agency,Federal Crop Insurance Corporation,Rural Business-cooperative Service,Rural Housing Service,Rural Utilities Service
Federal Register, Volume 85 Issue 117 (Wednesday, June 17, 2020)
[Federal Register Volume 85, Number 117 (Wednesday, June 17, 2020)]
                [Rules and Regulations]
                [Pages 36670-36714]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-09447]
                [[Page 36669]]
                Vol. 85
                Wednesday,
                No. 117
                June 17, 2020
                Part II
                Department of Agriculture
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                Federal Crop Insurance Corporation
                Farm Service Agency
                Commodity Credit Corporation
                Farm Service Agency
                Rural Housing Service
                Rural Business-Cooperative Service
                Rural Utilities Service
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                7 CFR Parts 3, 400, 761, et al.
                Debt Management; Final Rule
                Federal Register / Vol. 85, No. 117 / Wednesday, June 17, 2020 /
                Rules and Regulations
                [[Page 36670]]
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                DEPARTMENT OF AGRICULTURE
                Office of the Secretary
                7 CFR Part 3
                Federal Crop Insurance Corporation
                7 CFR Part 400
                Farm Service Agency
                7 CFR Parts 761, 765, 766, 772, and 792
                Commodity Credit Corporation
                7 CFR Part 1403
                Farm Service Agency
                Rural Housing Service
                Rural Business-Cooperative Service
                Rural Utilities Service
                7 CFR Parts 1951 and 1956
                [Docket ID USDA-2019-0007]
                RIN 0560-AA16
                Debt Management
                AGENCY: Office of the Secretary, Commodity Credit Corporation, Farm
                Service Agency, Federal Crop Insurance Corporation, Rural Housing
                Service, Rural Business-Cooperative Service, and Rural Utilities
                Service, USDA.
                ACTION: Final rule.
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                SUMMARY: The general debt management regulations of the Department of
                Agriculture (USDA) provide that individual USDA agencies may issue
                regulations for their own specific debt collection activities
                principally in recognition that the agencies conducted debt collection
                activities prior to the enactment of the Debt Collection Improvement
                Act of 1996 (DCIA). Many of the provisions of individual agencies are
                redundant to part 3. This rule will eliminate the debt collection
                regulations of the following USDA agencies, and part 3 will be revised
                to include specific provisions used by these agencies: the Commodity
                Credit Corporation (CCC); the Federal Crop Insurance Corporation
                (FCIC), and the Farm Service Agency (FSA). In addition, as required by
                the Federal Civil Penalties Inflation Adjustment Improvements Act of
                2015 (the 2015 Civil Penalties Act), this rule updates the size of
                civil monetary penalties to reflect inflationary adjustments for 2020.
                DATES: Effective: June 17, 2020.
                FOR FURTHER INFORMATION CONTACT: For information, contact Iris
                Roseboro; telephone: (202) 720-6257; email: [email protected].
                Persons with disabilities who require alternative means for
                communication should contact the USDA Target Center at (202) 720-2600
                (voice).
                SUPPLEMENTARY INFORMATION:
                Background
                 The regulations in 7 CFR part 3 (part 3) specify the general
                regulations applicable to debt collection activities of USDA agencies
                and specify the amount of civil penalties that USDA agencies levy as
                authorized by law. Federal agencies are required by several laws to
                collect debts owed to the United States, principally DCIA. Several USDA
                agencies issued debt collection regulations prior to the enactment of
                DCIA and the provisions of 7 CFR 3.1(b) allow individual USDA agencies
                to issue regulations to supplement part 3.
                 The Office of the Chief Financial Officer (OCFO), USDA, is
                reviewing the individual agency regulations and procedures in order to
                ensure that all agencies' individual debt collection policies align
                with government-wide policies, as well as the specific policies of the
                Secretary. For purposes of this review, a ``debt'' is a delinquent
                amount owed to the United States and does not include the entire
                outstanding amount of a loan made by an agency when the borrower is
                making scheduled loan payments as required by the loan agreement. If a
                USDA agency determines that a borrower is delinquent on a loan payment,
                the delinquent amount will be considered to be a ``debt'' for purposes
                of part 3 and the agency will be required to give all due process
                notices prior to proceeding with debt collection actions, including
                administrative offset or salary offset and referral to the Department
                of Treasury for centralized offset. The intent of this review is to
                consolidate the debt collection and settlement regulations of USDA in
                one location to ensure consistency and uniformity in operations of USDA
                agencies. This action is not intended to make any substantive changes
                in USDA policy or procedure or to impose any additional burden on a
                person who is indebted to the United States.
                 The amendments made by this final rule incorporate the results of
                this review by CCC, FSA, the Foreign Agricultural Service (FAS), FCIC,
                the Natural Resources Conservation Service (NRCS), and the Risk
                Management Agency (RMA).
                 FSA's principal debt settlement regulations that supplement part 3
                have been in 7 CFR part 792. In addition, regulations in 7 CFR parts
                1951 and 1956 have been used by FSA in the settlement and adjustments
                of FSA farm loans made under the Consolidated Farm and Rural
                Development Act (ConAct) and debts related to those loans. This rule
                removes 7 CFR part 792 and 7 CFR part 1951, subpart C. Since 7 CFR part
                1956 is also used by the Rural Development of USDA (RD), those
                regulations are not deleted but are amended to state affirmatively that
                they do not apply to loans made by FSA and debts relating to such
                loans. In those limited instances where provisions of 7 CFR parts 792,
                1951, and 1956 will continue to be used because of their specific
                application to FSA debts, the provision has been included in part 3;
                for the provisions that will continue to only be used for Farm Loan
                Programs, the provisions have been included in 7 CFR part 761 as
                subpart F.
                 RD also has debt settlement authority under the ConAct and The
                Housing Act of 1949 (Housing Act). The following list of RD's
                implementing debt settlement regulations authorized by the ConAct and
                the Housing Act that are excepted from part 3 are:
                 7 CFR part 1717, subpart Y;
                 7 CFR part 1752;
                 7 CFR 1782.20;
                 7 CFR 1951.213;
                 7 CFR part 1956;
                 7 CFR part 3550, subpart F;
                 7 CFR 3560.457; and
                 7 CFR 3565.56.
                 Additionally, 7 CFR part 1951, subpart C, RD regulations that
                previously implemented the Debt Collection Improvement Act are being
                replaced by part 3 and therefore are being removed, as stated above.
                 Exceptions are included in the regulation for CCC and FCIC. CCC and
                FCIC are wholly-owned government corporations and each have independent
                settlement authority under their respective authorizing laws.
                Accordingly, while the debt collection regulations for these entities
                have been deleted, provisions have been included in part 3 to recognize
                the ability of these corporations to settle and adjust claims without
                referral to the Department of Justice. In addition, this rule revises
                part 3 to make clear that, in those instances where a debt has been
                incurred by a foreign obligor and is potentially susceptible to the
                bankruptcy or insolvency laws of a foreign jurisdiction, the provisions
                of part 3 are not applicable. Principally, these instances of foreign
                debt collection arise under CCC programs which authorize CCC to make
                payments to entities who have financed exports of US agricultural
                [[Page 36671]]
                products and the foreign obligor does not make full payment to the
                exporter or the exporter's assignee. In these programs, CCC retains the
                right to pursue collection from the obligor, and often these matters
                fall within the jurisdiction of a foreign court.
                 NRCS, FAS, and RMA do not have agency specific debt collection
                regulations and currently follow part 3. Accordingly, no action was
                necessary to delete existing regulations or revise part 3.
                 This rule also revises subpart I of part 3 to update the amount of
                civil monetary penalties that may be levied by USDA agencies to reflect
                inflationary adjustments for 2020 as required by the 2015 Civil
                Penalties Act. As required by the 2015 Civil Penalties Act, the annual
                adjustment was made for inflation based on the Consumer Price Index for
                the month of October 2019 and rounded to the nearest dollar after an
                initial adjustment. The civil monetary penalties are listed according
                to the applicable administering agency.
                Effective Date and Notice and Comment
                 The action taken by this rule: Consolidates at 7 CFR part 3
                existing debt collection regulations used by certain USDA agencies;
                eliminates obsolete debt collection regulations; and adjusts USDA civil
                monetary penalties as required by the 2015 Civil Penalties Act.
                 Because the action to update existing regulations is ministerial
                and the adjustment to civil monetary penalties is required by the 2015
                Civil Penalties Act, USDA finds that there is good cause under 5 U.S.C.
                553(b)(3)(B) that opportunity for prior comment is unnecessary and
                contrary to the public interest and USDA is issuing this revised
                regulation as a final rule.
                 The Office of Management and Budget (OMB) designated this rule as
                not major under the Congressional Review Act, as defined by 5 U.S.C.
                804(2). Therefore, FSA is not required to delay the effective date for
                60 days from the date of publication to allow for Congressional review.
                 Accordingly, this rule is effective upon publication in the Federal
                Register.
                Executive Orders 12866, 13563, 13771, and 13777
                 Executive Order 12866, ``Regulatory Planning and Review,'' and
                Executive Order 13563, ``Improving Regulation and Regulatory Review,''
                direct agencies to assess all costs and benefits of available
                regulatory alternatives and, if regulation is necessary, to select
                regulatory approaches that maximize net benefits (including potential
                economic, environmental, public health and safety effects, distributive
                impacts, and equity). Executive Order 13563 emphasized the importance
                of quantifying both costs and benefits, of reducing costs, of
                harmonizing rules, and of promoting flexibility. The requirements in
                Executive Orders 12866 and 13573 for the analysis of costs and benefits
                apply to rules that are determined to be significant. Executive Order
                13777, ``Enforcing the Regulatory Reform Agenda,'' established a
                federal policy to alleviate unnecessary regulatory burdens on the
                American people.
                 The Office of Management and Budget (OMB) designated this rule as
                not significant under Executive Order 12866, and therefore, OMB has not
                reviewed this rule and an analysis of costs and benefits is not
                required under either Executives Orders 12866 or 13563.
                 Executive Order 13771, ``Reducing Regulation and Controlling
                Regulatory Costs,'' requires that, in order to manage the private costs
                required to comply with Federal regulations, for every new significant
                or economically significant regulation issued, the new costs must be
                offset by the elimination of at least two prior regulations. As this
                rule is designated not significant, it is not subject to Executive
                Order 13771. In a general response to the requirements of Executive
                Order 13777, USDA created a Regulatory Reform Task Force, and USDA
                agencies were directed to remove barriers, reduce burdens, and provide
                better customer service both as part of the regulatory reform of
                existing regulations and as an ongoing approach. USDA reviewed this
                regulation and made changes to improve any provision that was
                determined to be outdated, unnecessary, or ineffective.
                Regulatory Flexibility Act
                 The Regulatory Flexibility Act generally requires an agency to
                prepare a regulatory flexibility analysis of any rule whenever the
                Administrative Procedure Act or any other law requires an agency to
                publish a proposed rule, unless the agency certifies that the rule will
                not have a significant economic impact on a substantial number of small
                entities. This rule is not subject to the Regulatory Flexibility Act
                because USDA is not required by Administrative Procedure Act or any law
                to publish a proposed rule for this rulemaking.
                Environmental Review
                 The action taken by this rule is ministerial in nature in that the
                purpose of the rule is to eliminate obsolete regulations and to
                consolidate current debt collection regulations of three UDSA agencies
                at one USDA-wide regulation. Accordingly, this action does not require
                an analysis under the National Environmental Policy Act (NEPA).
                Executive Order 12372
                 Executive Order 12372, ``Intergovernmental Review of Federal
                Programs,'' requires consultation with State and local officials that
                would be directly affected by proposed Federal financial assistance.
                The objectives of the Executive Order are to foster an
                intergovernmental partnership and a strengthened federalism, by relying
                on State and local processes for State and local government
                coordination and review of proposed Federal financial assistance and
                direct Federal development. For reasons specified in the final rule
                related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June
                24, 1983), the programs and activities within this rule are excluded
                from the scope of Executive Order 12372.
                Executive Order 12988
                 This rule has been reviewed under Executive Order 12988, ``Civil
                Justice Reform.'' This rule will not preempt State or local laws,
                regulations, or policies unless they represent an irreconcilable
                conflict with this rule. The rule will not have retroactive effect.
                Before any judicial action may be brought regarding the provisions of
                this rule, the administrative appeal provisions identified in 7 CFR
                part 3 must be exhausted.
                Executive Order 13132
                 This rule has been reviewed under Executive Order 13132,
                ``Federalism.'' The policies contained in this rule do not have any
                substantial direct effect on States, on the relationship between the
                Federal government and the States, or on the distribution of power and
                responsibilities among the various levels of government, except as
                required by law. Nor does this rule impose substantial direct
                compliance costs on State and local governments. Therefore,
                consultation with the States is not required.
                Executive Order 13175
                 This rule has been reviewed in accordance with the requirements of
                Executive Order 13175, ``Consultation and Coordination with Indian
                Tribal Governments.'' Executive Order 13175 requires Federal agencies
                to consult and coordinate with Tribes on a government-to-government
                basis on
                [[Page 36672]]
                policies that have Tribal implications, including regulations,
                legislative comments, proposed legislation, and other policy statements
                or actions that have substantial direct effects on one or more Indian
                Tribes, on the relationship between the Federal Government and Indian
                Tribes or on the distribution of power and responsibilities between the
                Federal Government and Indian Tribes.
                 The USDA has assessed the impact of this rule on Indian Tribes and
                determined that this rule does not have Tribal implications that
                require Tribal consultation under Executive Order 13175. If a Tribe
                requests consultation, OCFO will work with USDA's Office of Tribal
                Relations to ensure meaningful consultation is provided when changes,
                additions, and modifications identified in this rule are not expressly
                mandated by legislation.
                The Unfunded Mandates Reform Act of 1995
                 Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
                requires Federal agencies to assess the effects of their regulatory
                actions on State, local, and Tribal governments or the private sector.
                Agencies generally must prepare a written statement, including a cost
                benefit analysis, for proposed and final rules with Federal mandates
                that may result in expenditures of $100 million or more in any 1 year
                for State, local, or Tribal governments, in the aggregate, or to the
                private sector. The UMRA generally requires agencies to consider
                alternatives and adopt the more cost effective or least burdensome
                alternative that achieves the objectives of the rule. This rule
                contains no Federal mandates, as defined in Title II of the UMRA, for
                State, local, and Tribal governments or the private sector. Therefore,
                this rule is not subject to the requirements of sections 202 and 205 of
                the UMRA.
                E-Government Act Compliance
                 USDA is committed to complying with the E-Government Act, to
                promote the use of the internet and other information technologies to
                provide increased opportunities for citizen access to Government
                information and services, and for other purposes.
                Federal Assistance Programs
                 This rule does not provide any new Federal Domestic Assistance
                Program nor change any of the USDA programs that are in the Catalog of
                Federal Domestic Assistance. This rule prescribes standards and
                procedures for use by USDA agencies in the collection, compromise,
                suspension, or termination of debts owed to the United States.
                Paperwork Reduction Act
                 This rule does not create any new information collection
                requirements as the agencies affected by this rule will continue to
                conduct debt collection activities in the same manner as before this
                rule. Due to the nature of this rule, the information collection is
                exempted from the Paperwork Reduction Act as specified in 5 CFR
                1320.4(a)(2) because the nature of the information collection
                activities is that the USDA agency is conducting administrative action
                against the individuals or debtors.
                List of Subjects
                7 CFR Part 3
                 Administrative practice and procedure, Claims, Government
                employees, Income taxes, Loan programs-agriculture, Penalties,
                Reporting and recordkeeping requirements, Wages.
                7 CFR Part 400
                 Acreage allotments, Administrative practice and procedure, Claims,
                Crop insurance, Fraud, Government employees, Income taxes,
                Intergovernmental relations, Penalties, Reporting and recordkeeping
                requirements, Wages.
                7 CFR Part 761
                 Accounting, Loan programs-agriculture, Rural areas.
                7 CFR Part 765
                 Agriculture, Agricultural commodities, Credit, Livestock, Loan
                programs-agriculture.
                7 CFR Part 766
                 Agriculture, Agricultural commodities, Credit, Livestock, Loan
                programs-agriculture.
                7 CFR Part 772
                 Agriculture, Loan programs-agriculture, Rural areas.
                7 CFR Part 792
                 Claims, Income taxes.
                7 CFR Part 1403
                 Claims, Income taxes, Loan programs-agriculture.
                7 CFR Part 1951
                 Accounting, Agriculture, Claims, Community facilities, Credit,
                Disaster assistance, Government employees, Grant programs-housing and
                community development, Housing, Income taxes, Loan programs-
                agriculture, Loan programs-housing and community development, Low and
                moderate income housing, Reporting and recordkeeping requirements,
                Rural areas, Wages.
                7 CFR Part 1956
                 Accounting, Business and industry, Claims, Loan programs-
                agriculture, Loan programs-business, Loan programs-housing and
                community development, Reporting and recordkeeping requirements, Rural
                areas.
                 Under the authority of 5 U.S.C. 301, 7 U.S.C. 1506, and 15 U.S.C.
                714b and as discussed in the preamble, USDA amends Title 7 of the Code
                of Federal Regulations as follows:
                0
                1. Revise part 3 to read as follows:
                PART 3--DEBT MANAGEMENT
                Subpart A--General
                Sec.
                3.1 Purpose and scope.
                3.2 Authority.
                3.3 Definitions.
                3.4 Delegations of authority.
                Subpart B--Standards for the Administrative Collection and Compromise
                of Claims
                3.10 Aggressive agency collection activity.
                3.11 Demand for payment.
                3.12 Reporting debts to Credit Reporting Agencies.
                3.14 Suspension or revocation of eligibility for loans and loan
                guarantees, licenses, permits, or privileges.
                3.15 Liquidation of collateral.
                3.16 Collection in installments.
                3.17 Interest, penalties, and administrative costs.
                3.18 Use and disclosure of mailing addresses.
                3.19 Standards for the compromise of claims and debt settlement.
                3.20 Standards for suspending or terminating collection activities.
                3.21 Referrals of debts to Justice.
                3.22 CCC withholding of payment.
                3.23 CCC assignment of payment.
                Subpart C--Referral of Debts to Treasury
                3.30 General requirements.
                3.31 Mandatory referral for cross-servicing.
                3.32 Discretionary referral for cross-servicing.
                3.33 Required certification.
                3.34 Fees.
                Subpart D--Administrative Offset
                3.40 Scope.
                3.41 Procedures for notification of intent to collect by
                administrative offset.
                3.42 Debtor rights to inspect or copy records, submit repayment
                proposals, or request administrative review.
                3.43 Non-centralized administrative offset.
                3.44 Centralized administrative offset.
                3.45 USDA payment authorizing agency offset of pro rata share of
                payments due entity in which debtor participates.
                3.46 Offset against tax refunds.
                3.47 Offset against amounts payable from Civil Service Retirement
                and Disability Fund.
                [[Page 36673]]
                Subpart E--Administrative Wage Garnishment
                3.50 Purpose.
                3.51 Scope.
                3.52 Definitions.
                3.53 Procedures.
                Subpart F--Administrative Reviews for Administrative Offset,
                Administrative Wage Garnishment, and Disclosure to Credit Reporting
                Agencies
                3.60 Applicability.
                3.61 Presiding employee.
                3.62 Procedures.
                Subpart G--Federal Salary Offset
                3.70 Scope.
                3.71 Definitions.
                3.72 Coordinating offset with another Federal agency.
                3.73 Determination of indebtedness.
                3.74 Notice requirements before offset.
                3.75 Request for a hearing.
                3.76 Result if employee fails to meet deadlines.
                3.77 Hearing.
                3.78 Written decision following a hearing.
                3.79 Review of USDA records related to the debt.
                3.80 Written agreement to repay debts as alternative to salary
                offset.
                3.81 Procedures for salary offset: when deductions may begin.
                3.82 Procedures for salary offset: types of collection.
                3.83 Procedures for salary offset: methods of collection.
                3.84 Procedures for salary offset: imposition of interest,
                penalties, and administrative costs.
                3.85 Non-waiver of rights.
                3.86 Refunds.
                3.87 Agency regulations.
                Subpart H--Cooperation with the Internal Revenue Service
                3.90 Reporting discharged debts to the Internal Revenue Service.
                Subpart I--Adjusted Civil Monetary Penalties
                3.91 Adjusted civil monetary penalties.
                 Authority: 5 U.S.C. 301; 7 U.S.C. 1506, 1981, 1981a, 1981d, and
                2008h; 15 U.S.C. 714b; 31 U.S.C. 3701, 3711, 3716-18, and 3720B; and
                31 CFR parts 285 and 901-904.
                Subpart A--General
                Sec. 3.1 Purpose and scope.
                 (a)(1) The regulations in this part prescribe standards and
                procedures for use by USDA agencies in the collection, compromise,
                suspension, or termination of debts owed to the United States.
                 (2) The regulations in this part apply to all debts of the United
                States subject to collection by USDA agencies, except as otherwise
                specified in this part or by statute.
                 (3) The regulations in this part do not preclude the Secretary from
                collection, compromise, suspension, or termination of debts as
                otherwise authorized by law. In such cases the laws and implementing
                regulations that are specifically applicable to claims collection
                activities of a particular agency generally will take precedence over
                this part.
                 (b) USDA agencies may issue regulations to supplement this part in
                order to meet the specific requirements of individual programs.
                 (c) The regulations of this part will not apply to:
                 (1) Collection of debts owed government travel card contractors by
                USDA employees;
                 (2) Collection of debts owed by individual Food Stamp Program
                recipients for whom debt collection procedures are provided under Sec.
                273.18 of this title.
                 (3) Collection of debts owed by foreign governments and, sovereign
                institutions of foreign governments.
                 (4) Actions pursuant to the FSA FLP Debt Settlement regulations in
                part 761, subpart F, of this title are authorized under the
                Consolidated Farm and Rural Development Act (ConAct), which are
                independent of the DCIA are excepted from this part.
                 (5) Actions pursuant to the following RD Debt Settlement
                regulations authorized under the ConAct and the Housing Act, which are
                independent of the DCIA are excepted from this part:
                 (i) 7 CFR part 1717, subpart Y;
                 (ii) 2 CFR part 175;
                 (iii) 7 CFR 1782.20;
                 (iv) 7 CFR 1951.213;
                 (v) 7 CFR part 1956;
                 (vi) 7 CFR part 3550, subpart F;
                 (vii) 7 CFR 3560.457; and
                 (viii) 7 CFR 3565.56.
                Sec. 3.2 Authority.
                 (a) Generally, the regulations in this part are issued under the
                Debt Collection Act of 1982, as amended by the Debt Collection
                Improvement Act of 1996 (DCIA) (31 U.S.C. 3701, 3711-3720) and the
                Federal Claims Collection Standards (FCCS) issued pursuant to the DCIA
                by Treasury and Justice (31 CFR parts 901-904) that prescribe
                government-wide standards for administrative collection, compromise,
                suspension, or termination of agency collection action, disclosure of
                debt information to credit reporting agencies, referral of claims to
                private collection contractors for resolution, and referral to Justice
                for litigation to collect debts owed the government. The regulations
                under this part also are issued under Treasury regulations implementing
                DCIA (31 CFR part 285) and related statutes and regulations governing
                the offset of Federal salaries (5 U.S.C. 5512 and 5514; 5 CFR part 550,
                subpart K) and administrative offset of tax refunds (31 U.S.C. 3720A).
                 (b) With respect to agency specific provisions of this part, the
                following authorities are applicable:
                 (1) The Commodity Credit Corporation (CCC): section 4 of the
                Commodity Credit Corporation Charter Act (15 U.S.C. 714b).
                 (2) The Farm Service Agency (FSA): sections 331, 331A, 331D, and
                373 of the Consolidated Farm and Rural Development Act (ConAct) (7
                U.S.C. 1981, 1981a, 1981d, and 2008h).
                 (3) The Federal Crop Insurance Corporation (FCIC): section 506(j)
                of the Federal Crop Insurance Act (7 U.S.C. 1506(j)).
                Sec. 3.3 Definitions.
                 For the purpose of this part, except as where otherwise
                specifically provided, the term or terms:
                 Account means a record of transactions involving the debt, claim,
                or loan for a particular person or entity, including the name, address,
                taxpayer identification number, other information necessary to
                establish the person's or entity's identity, the balance, status,
                history of the debt, and program under which the debt or claim arose.
                 Administrative charges means the additional costs of processing
                delinquent debts against the debtor, to the extent such costs are
                attributable to the delinquency. Such costs include, but are not
                limited to, costs incurred in obtaining a credit report, costs of
                employing commercial firms to locate debtor, costs of employing
                contractors for collection services, and costs of selling collateral or
                property to satisfy the debt.
                 Administrative offset means withholding funds payable by the United
                States (including funds payable by the United States on behalf of a
                State government) to, or held by the United States for, a person to
                satisfy a debt. This definition is consistent with 31 U.S.C.
                3701(a)(1).
                 Agency means an agency, office, or corporation within USDA subject
                to the authority or general supervision of the Secretary.
                 Borrower and debtor have the same meaning and refer to a person who
                owes a delinquent, nontax debt to the United States.
                 Carrier means a person or other entity, including but not limited
                to railroads, motor carriers, ocean carriers or inter-modal marketing
                companies, that provide transportation or other transportation-related
                services for compensation.
                 CCC means Commodity Credit Corporation.
                [[Page 36674]]
                 Centralized administrative offset means referral of a debt to the
                Treasury Offset Program (TOP) to collect debts that creditor agencies
                have certified pursuant to 31 U.S.C. 3716(c), 3720A(a), and applicable
                regulations for offset of payments made to a debtor by Federal agencies
                other than USDA. Centralized offset also includes offset of payments
                made by States pursuant to 31 U.S.C. 3716(h) and 31 CFR 285.6.
                 CFO means Chief Financial Officer.
                 Civil monetary penalties are assessed for violations and failures
                to comply with various program requirements. The management and
                settlement of these debts are specified in this part, and the
                applicable laws and program specific regulations.
                 Claim and debt have the same meaning and refer to an amount of
                money, funds, or property that has been determined by an agency
                official to be owed to the United States from any person, organization,
                or entity, except another Federal agency.
                 Compromise means the settlement or forgiveness of a debt under 31
                U.S.C. 3711, in accordance with standards specified in FCCS and
                applicable federal law.
                 Contracting officer has the same meaning as in 41 U.S.C. 7101.
                 Credit reporting agencies (also known as credit bureaus) means
                major credit reporting agencies that have signed agreements with
                agencies to receive and integrate credit information (data) from
                voluntary subscribers (Federal agencies and private sector entities)
                into their respective databases for the purpose of generating credit
                reports for sale to purchasers of credit data.
                 Creditor agency means a Federal agency or USDA agency to which a
                debtor owes a debt, including a debt collection center when acting on
                behalf of a creditor agency in matters pertaining to collection of the
                debt.
                 Cross-servicing means the centralized collection of Federal debt
                and the various collection actions taken by Treasury on behalf of a
                Federal agency in accordance with the provisions of 31 U.S.C. 3711, 31
                U.S.C. 3720D, 31 CFR part 285, and other Treasury regulations. Cross-
                servicing includes, but is not limited to, the use of debt collection
                centers and private collection contractors.
                 Day means calendar day unless otherwise specified.
                 DCIA means the Debt Collection Improvement Act of 1996.
                 Debt means an amount of money, funds, or property that has been
                determined by an agency official to be owed to the United States from
                any person, organization, or entity, except another Federal agency.
                 Debt collection center means the Treasury or other government
                agency or division, designated by the Secretary of the Treasury with
                authority to collect debt on behalf of creditor agencies in accordance
                with 31 U.S.C. 3711(g).
                 Debt record means the account, register, balance sheet, file,
                ledger, data file, or similar record of debts owed to any Federal
                agency with respect to which collection action is being pursued.
                 Debtor means a person who owes a delinquent, nontax debt to the
                United States.
                 Delinquent means a debt that has not been paid by the date
                specified in the agency'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, or as otherwise defined by program specific statutes or
                regulations.
                 Discharged debt means any debt, or part thereof, that an agency has
                determined is uncollectible and has closed out or, in the case of FSA
                FLP, means the amount of debt that was discharged through bankruptcy
                proceedings where no further collection actions may be taken on that
                debt.
                 Disposable pay means that part of the debtor's compensation
                (including, but not limited to, salary, bonuses, commissions, and
                vacation pay) from an employer remaining after the deduction of health
                insurance premiums and any amounts required by law to be withheld
                including social security taxes and other withholding taxes, but not
                including any amount withheld pursuant to a court order.
                 Federal agency means any department or entity within the Executive
                branch of the government that is not a USDA agency.
                 Financial statement means a statement of financial condition at a
                given date that accurately reflects the debtor's assets, liabilities,
                income, and expenses.
                 Fiscal Service means the United States Department of the Treasury's
                Bureau of the Fiscal Service.
                 Foreign debt means debt owed by a sovereign or non-sovereign
                entity, when the debt is subject to adjudication in a non-U.S.
                jurisdiction.
                 FSA FLP means the Farm Loan Programs of FSA.
                 Government or Federal government means the government of the United
                States, unless otherwise specified.
                 Justice means the United States Department of Justice.
                 Late payment interest rate means the amount of interest charged on
                delinquent debts and claims in cases where the annual rate of interest
                is not established by a promissory note. Unless otherwise provided by
                the law, regulation, contract, or agreement that established the debt,
                the late payment interest rate will be equal to the higher of the
                Prompt Payment Act interest rate or the standard late payment rate
                prescribed by 31 U.S.C. 3717, as of the date the debt became
                delinquent. Interest on delinquent debts will accrue on a daily basis.
                 NAD means the USDA National Appeals Division.
                 Non-centralized administrative offset means an agreement between a
                USDA creditor agency and a payment authorizing agency to offset the
                payments made by the payment authorizing agency to satisfy a USDA debt.
                The creditor agency and paying agency can be the same.
                 Offset means withholding funds payable by the United States to or
                held by the United States for a person to satisfy a debt owed by the
                payee.
                 OGC means the USDA Office of the General Counsel.
                 Payee means a person who is due a payment from a payment
                authorizing agency and includes a person who is entitled to all or part
                of a payment.
                 Payment authorizing agency means a Federal agency or USDA agency
                that is authorized to disburse payments to a recipient.
                 Penalty charge or penalty interest means the additional penalty
                amount charged on delinquent debts as specified in 31 U.S.C. 3717(e)(2)
                and Sec. 3.17(d).
                 Person means an individual, corporation, partnership, association,
                organization, State or local government, or any other type of public or
                private entity other than a Federal agency.
                 Private Collection Agency means any organization or corporation
                that specializes in debt collection is known as a collection agency or
                debt collector.
                 Recoupment means a special method for adjusting debts arising under
                the same transaction or occurrence, such as obligations arising under
                the same contract.
                 Reviewing officer means a person designated by a creditor agency as
                responsible for conducting a hearing or providing documentary review on
                the existence of the debt and the propriety of an administrative
                collection action.
                 Salary offset means the deduction of money from the current pay
                account of a present or former Government employee as specified in 5
                U.S.C. 5514
                [[Page 36675]]
                to satisfy a debt that person owes the Government.
                 Secretary means the Secretary of Agriculture, unless otherwise
                specified.
                 Settlement or debt settlement means, for the purposes of this part
                only, the final disposition or resolution of a debt or claim that
                results in cancellation of any remaining balance owed and reporting of
                the canceled amount to the IRS as specified in Sec. 3.90, and
                applicable IRS requirements.
                 Tax Identification Number or TIN means the identification number
                required on tax returns and other documents submitted to the Internal
                Revenue Service; that is, an individual's social security number (SSN)
                or employer identification number (EIN).
                 TOP means Treasury Offset Program, which is a centralized offset
                program that collects delinquent debts owed to Federal agencies and
                states.
                 Treasury means the United States Department of the Treasury.
                 USDA means the United States Department of Agriculture.
                 Withholding of payment means the action taken to temporarily
                prevent the payment of some or all amounts to a debtor under one or
                more contracts or programs.
                Sec. 3.4 Delegations of authority.
                 The head of an agency is authorized to exercise any or all of the
                functions provided by this part with respect to programs for which the
                head of the agency has delegated responsibility and may delegate and
                authorize the redelegation of any of the functions vested in the head
                of the agency by this part, except as otherwise provided by this part.
                Subpart B--Standards for the Administrative Collection and
                Compromise of Claims
                Sec. 3.10 Aggressive agency collection activity.
                 An agency will aggressively collect all debts arising out of
                activities of, or referred or transferred for collection services to,
                that agency. Collection activities will be undertaken promptly with
                follow-up action taken as necessary.
                Sec. 3.11 Demand for payment.
                 (a) Generally, debt collection is initiated with a written demand
                for payment to the debtor unless an applicable agreement or instrument
                (including a post-delinquency payment agreement) provides otherwise
                (such as providing USDA an immediate right to collect upon
                delinquency). 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 the agency to resolve the debt. The specific content,
                timing, and number of demand letters will depend upon the type and
                amount of the debt and the debtor's response, if any, to the agency's
                letters or telephone calls. Where statutes or agency regulations are
                specific as to the requirements for demand letters, an agency will
                follow its own procedures in formulating demand letters. Generally, one
                demand letter should suffice. In determining the timing of the demand
                letter(s), an agency will give due regard to the need to refer debts
                promptly to Justice for litigation, in accordance with 31 CFR 904.1.
                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.
                 (b) In demand letters, the USDA creditor agency will inform the
                debtor:
                 (1) The nature and amount of the debt; and the facts giving rise to
                the debt;
                 (2) How interest, penalties, and administrative costs are added to
                the debt, the date by which payment must be made to avoid such charges,
                and that such assessments must be made unless excused in accordance
                with Sec. 3.17;
                 (3) The date by which payment should be made to avoid the enforced
                collection actions described in paragraph (b)(6) of this section;
                 (4) Of any willingness to discuss alternative payment arrangements
                and how the debtor may enter into a written agreement to repay the debt
                under terms acceptable to the agency (see Sec. 3.16);
                 (5) The name, address, telephone number and email address
                (optional) of a contact person or office;
                 (6) The intent to enforce collection if the debtor fails to pay or
                otherwise resolve the debt, by taking one or more of the following
                actions:
                 (i) Offset the debtor's USDA payments and refer the debtor's debt
                to TOP for offset against other Federal payments, including income tax
                refunds, in accordance with subpart D of this part;
                 (ii) Refer the debt to a private collection agency.
                 (iii) Report the debt to a credit reporting agency in accordance
                with Sec. 3.12;
                 (iv) Refer the debt to Treasury in accordance with subpart E of
                this part for possible collection by garnishing the debtor's wages
                through administrative wage garnishment;
                 (v) Refer the debt to Justice in accordance with Sec. 3.21 to
                initiate litigation to collect the debt;
                 (vi) Refer the debt to Treasury for collection in accordance with
                subpart C of this part;
                 (7) How the debtor may inspect and copy records related to the
                debt;
                 (8) How the debtor may request an administrative review of the
                determination that the debtor owes a debt and present evidence that the
                debt is not delinquent or legally enforceable (see subpart F of this
                part);
                 (9) How a debtor who is a Federal employee subject to Federal
                salary offset may request a hearing (see subpart G of this part);
                 (10) How a debtor may request a waiver of the debt, if applicable;
                 (11) How the debtor's spouse may claim his or her share of a joint
                income tax refund by filing Form 8379 with the Internal Revenue Service
                (see http://www.irs.gov);
                 (12) How the debtor may exercise other statutory or regulatory
                rights and remedies available to the debtor;
                 (13) That certain debtors may be ineligible for government loans,
                guarantees, and insurance (see Sec. 3.14);
                 (14) If applicable, the intention to suspend or revoke licenses,
                permits, or privileges (see Sec. 3.14); and
                 (15) That the debtor must advise the creditor agency of the filing
                of any bankruptcy proceedings of the debtor or of another person liable
                for the debt being collected.
                 (16) The debtor's right to appeal the determination in accordance
                with applicable appeal procedures;
                 (17) The debtor's right to present evidence that all or part of the
                debt is not past-due or not legally enforceable.
                 (c) A USDA creditor agency may omit from a demand letter one or
                more of the provisions contained in paragraphs (b)(6) through (17) of
                this section if the USDA creditor agency, in consultation with OGC,
                determines that any provision is not legally required given the
                collection remedies to be applied to a particular debt. In the case of
                foreign debt that is subject to insolvency or bankruptcy proceedings
                outside the United States, a USDA creditor agency may, in lieu of a
                demand letter, submit such documentation necessary to establish its
                claim as a creditor.
                 (d) Agencies will exercise care to ensure that demand letters are
                mailed or delivered (as applicable for the program) on the same day
                that they are dated. There is no prescribed format for demand letters.
                Agencies will utilize demand letters and procedures that will lead to
                the earliest practicable determination of whether the debt can
                [[Page 36676]]
                be resolved administratively or must be referred for litigation.
                 (e) Agencies will respond promptly to communications from debtors,
                within 30 days of receipt whenever feasible, and will advise debtors
                who dispute debts to furnish available evidence to support their
                contentions.
                 (f) Prior to the initiation of the demand process or at any time
                during or after completion of the demand process, if an agency
                determines to pursue, or is required to pursue, administrative offset,
                the procedures applicable to offset must be followed (see subpart D of
                this part). The availability of funds or money for debt satisfaction by
                administrative offset, and the agency's determination to pursue
                collection by administrative offset, will release the agency from the
                necessity of further compliance with paragraphs (a), (b), and (c) of
                this section.
                 (g) Prior to referring a debt for litigation under 31 CFR part 904,
                agencies will advise each debtor determined to be liable for the debt
                that, unless the debt can be collected administratively, litigation may
                be initiated. This notification complies with Executive Order 12988 (58
                FR 51735, October 4, 1993) and may be given as part of a demand letter
                under paragraph (b) of this section or in a separate document.
                Litigation counsel for the government will be advised that this notice
                has been given. In general, only one agency should service a debt at a
                time; that is, agencies should not simultaneously refer a debt to both
                Treasury and Justice for collection.
                 (h) When an agency learns that a bankruptcy petition has been filed
                with respect to a debtor, before proceeding with further collection
                action, the agency will immediately request legal advice from OGC
                concerning the impact of the Bankruptcy Code on any pending or
                contemplated collection activities. Unless the agency is advised 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 must stop immediately. The agency should
                take the following steps:
                 (1) After requesting legal advice, a proof of claim must be filed
                in most cases with the bankruptcy court or the Trustee. Agencies 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 the agency is a secured creditor, it may request relief from
                the automatic stay regarding its security, subject to the provisions
                and requirements of 11 U.S.C. 362.
                 (3) Offset is stayed in most cases by the automatic stay. However,
                agencies may request legal advice from OGC to determine whether their
                payments to the debtor and payments of other agencies available for
                offset may be frozen by the agency until relief from the automatic stay
                can be obtained from the bankruptcy court. Agencies also may request
                legal advice from OGC to determine whether recoupment is available.
                Sec. 3.12 Reporting of debts to Credit Reporting Agencies.
                 (a) In demand letters to debtors sent in accordance with Sec.
                3.11, agencies will inform debtors:
                 (1) The intent of the agency to report the delinquent debt to
                credit reporting agencies after 60 days;
                 (2) The specific information to be transmitted (that is, name,
                address, and taxpayer identification number, information about the
                debt);
                 (3) The actions which may be taken by the debtor to prevent the
                reporting (that is, repayment in full or a repayment agreement); and
                 (4) The rights of the debtor to request review of the existence of
                the debt in accordance with subpart F of this part.
                 (b) Disclosure of delinquent consumer debts must be consistent with
                the requirements of 31 U.S.C. 3711(e), the Privacy Act of 1974 (5
                U.S.C. 552a), the Bankruptcy Code, and 31 CFR 901.4.
                 (c) When an agency has given a debtor any of the notices required
                by this part and an opportunity for administrative review under subpart
                F of this part, the agency need not duplicate such notice and review
                opportunities before reporting the delinquent debt to credit reporting
                agencies.
                 (d) Agencies will not disclose a delinquent debt to a credit
                reporting agency if a debtor requests review under subpart F of this
                part until a final determination is made by a reviewing official that
                upholds the agency intent to disclose.
                Sec. 3.14 Suspension or revocation of eligibility for loans and loan
                guarantees, licenses, permits, or privileges.
                 (a) Agencies are not permitted to extend financial assistance in
                the form of a loan, loan guarantee, or loan insurance to any person
                delinquent on a nontax debt owed to a Federal agency, except as
                otherwise authorized by law or upon waiver of application of this
                section by the USDA Chief Financial Officer (CFO) or Deputy CFO. This
                prohibition does not apply to disaster loans. Agencies may extend
                credit after the delinquency has been resolved. The Secretary of the
                Treasury may exempt classes of debts from this prohibition and has
                prescribed standards defining when a ``delinquency'' is ``resolved''
                for purposes of this prohibition. See 31 CFR 285.13 (Barring Delinquent
                Debtors from Obtaining Federal Loans or Loan Insurance or Guarantees).
                 (b) Similarly, agencies also are not permitted to extend financial
                assistance (either directly or indirectly) in the form of grants,
                loans, or loan guarantees to judgment debtors who have a judgment lien
                placed against their property until the judgment is satisfied, unless
                the agency grants a waiver in accordance with agency regulations. See
                31 U.S.C. 3720B.
                 (c) In non-bankruptcy cases, agencies pursuing the collection of
                statutory penalties, forfeitures, or other types of claims must
                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 the agency's regulations or governing
                procedures. The debtor will be advised in the agency's written demand
                for payment of the agency's ability to suspend or revoke licenses,
                permits, or privileges.
                 (d) Any agency making, guaranteeing, insuring, acquiring, or
                participating in, loans must consider suspending or disqualifying any
                lender, contractor, or broker from doing further business with the
                agency or engaging in programs sponsored by the agency 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 USDA or another Federal agency. Failure to pay a single
                substantial debt, or a number of outstanding debts (including
                disallowed costs and overrun payments, but not including sums owed to
                the government under the Internal Revenue Code or as specified in the
                appropriations provisions regarding outstanding tax debt in sections
                745 and 746 of Division E of the Consolidated Appropriations Act, 2016
                (Pub. L. 114-113) and successor provisions of law) owed to any Federal
                agency or instrumentality is grounds for non-procurement suspension or
                debarment if the debt is uncontested and the debtor's legal
                administrative remedies for review of the debt are exhausted. See 2 CFR
                180.800(c)(3).
                 (e) The failure of any surety to honor its obligations in
                accordance with 31 U.S.C. 9305 will be reported to Treasury. Treasury
                will forward to all interested agencies notification that a surety's
                certificate of authority to do
                [[Page 36677]]
                business with the government has been revoked.
                 (f) The suspension or revocation of licenses, permits, or
                privileges also may extend to USDA programs or activities that are
                administered by the States on behalf of the government, to the extent
                that they affect the government's ability to collect money or funds
                owed by debtors. Therefore, States that manage USDA activities,
                pursuant to approval from the agencies, will ensure that appropriate
                steps are taken to safeguard against issuing licenses, permits, or
                privileges to debtors who fail to pay their debts to the government.
                 (g) In bankruptcy cases, before advising the debtor of an agency's
                intention to suspend or revoke licenses, permits, or privileges,
                agencies may request legal advice from OGC concerning the impact of the
                Bankruptcy Code, particularly 11 U.S.C. 362 and 525, which may restrict
                such action.
                Sec. 3.15 Liquidation of collateral.
                 (a) In accordance with applicable laws and regulations, agencies
                may liquidate security or collateral through a sale 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 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 an agency learns that a bankruptcy petition has been filed
                with respect to a debtor, the agency may request legal advice from OGC
                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. 3.16 Collection in installments.
                 (a) Whenever feasible, agencies will 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, agencies may accept payment in regular installments.
                Agencies will obtain financial statements from debtors (or a similar
                statement from foreign debtors) who represent that they are unable to
                pay in one lump sum and independently verify such representations
                whenever possible (see 31 CFR 902.2(g) for methods of verification).
                Agencies that agree to accept payments in regular installments will
                obtain a legally enforceable written agreement from the debtor that
                specifies all 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 will bear a
                reasonable relation to the size of the debt and the debtor's ability to
                pay. If possible, the installment payments will be sufficient in size
                and frequency to liquidate the debt in 3 years or less.
                 (c) Security for deferred payments will be obtained in appropriate
                cases. Agencies may accept installment payments notwithstanding the
                refusal of the debtor to execute a written agreement or to give
                security, at the agency's option.
                Sec. 3.17 Interest, penalties, and administrative costs.
                 (a) Except as provided in paragraphs (g) and (h) of this section,
                agencies will charge interest, penalties, and administrative costs on
                debts owed to the United States as specified in 31 U.S.C. 3717. If not
                included in the agency's demand notice, an agency will mail or deliver
                a written notice to the debtor, at the debtor's most recent address
                available to the agency, explaining the agency's requirements
                concerning these charges except where these requirements are included
                in a contractual or repayment agreement. These charges will continue to
                accrue until the debt is paid in full or otherwise resolved through
                compromise, termination, or waiver of the charges.
                 (b) Agencies will charge interest on debts owed the United States
                except as otherwise required by law and as provided in paragraph (i) of
                this section for debts owed to CCC and FSA. In charging such interest,
                agencies will apply the following provisions:
                 (1) Interest will accrue from the date of delinquency, or as
                otherwise provided by law.
                 (2) Unless otherwise established in a contract, repayment
                agreement, or by law, the rate of interest charged will be the rate
                established annually by the Secretary of the Treasury in accordance
                with 31 U.S.C. 3717. Pursuant to 31 U.S.C. 3717, an agency may charge a
                higher rate of interest if it reasonably determines that a higher rate
                is necessary to protect the rights of the United States. The agency
                must document the reason(s) for its determination that the higher rate
                is necessary.
                 (3) The rate of interest, as initially charged, will remain fixed
                for the duration of the indebtedness. When a debtor defaults on a
                repayment agreement and requests to enter into a new agreement, the
                agency may require payment of interest at a new rate that reflects the
                current value of funds to the Treasury at the time the new agreement is
                executed. Interest will not be compounded, that is, interest will 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 will be added to the principal under the new
                repayment agreement.
                 (c) Agencies will assess administrative costs incurred for
                processing and handling delinquent debts. The calculation of
                administrative costs will be based on actual costs incurred or upon
                estimated costs as determined by the assessing agency.
                 (d) Unless otherwise established in a contract, repayment
                agreement, or by law, agencies will charge a penalty, as specified in
                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
                will accrue from the date of delinquency.
                 (e) Agencies 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 guarantees. 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
                will be computed annually. Agencies may 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 the agency will be applied first to outstanding penalties,
                second to administrative charges (when applicable), third to interest,
                and last to principal, except as otherwise required by law.
                 (g) Agencies will waive the collection of interest and
                administrative charges imposed pursuant to this section (that is, this
                does not apply to interest or administrative penalties determined by
                [[Page 36678]]
                an applicable agreement or instrument such as a loan contract) on the
                portion of the debt that is paid within 30 days after the date on which
                interest began to accrue. Agencies may extend this 30-day period on a
                case-by-case basis. In addition, agencies may waive interest,
                penalties, and administrative costs charged under this section, in
                whole or in part, without regard to the amount of the debt, either
                under the criteria specified in the Federal standards for the
                compromise of debts (31 CFR part 902), or if the agency determines that
                collection of these charges is against equity and good conscience or is
                not in the interest of the United States.
                 (h) Agencies are authorized to impose interest and related charges
                on debts not subject to 31 U.S.C. 3717, in accordance with common law.
                Agencies will consult OGC before imposing interest and related charges
                under common law for any debt.
                 (i)(1) For debts resulting from CCC loans made in accordance with
                chapter XIV of this title:
                 (i) Late payment interest will begin to accrue from the date on
                which a claim is established. In addition, an additional charge of 3
                percent per year will be assessed on a portion of a debt that remains
                unpaid 60 days after the date on which a claim was established. Such
                rate will be assessed retroactively from the date of claim
                establishment and apply on a daily basis and will continue to be used
                until the delinquent debt has been paid.
                 (ii) Penalty charges, administrative costs and interest will
                continue to accrue if a debtor makes a request for appeal as provided
                by any agency or USDA-wide appeal regulation Collection by offset will
                continue during the appeal process unless prohibited by statute. If the
                debtor ultimately wins an appeal and the debt is found to be incorrect,
                CCC will credit the debtor's debt for the amount of penalty charges,
                administrative costs, and interest that has accrued from the date such
                charges were initiated on the portion determined in the appeal to not
                be due.
                 (2) Late payment interest provisions of this section do not apply
                to FSA and CCC debts owed by Federal agencies and State and local
                governments. Interest on debts owed by such entities will be assessed
                at the rate of interest charged by the U.S. Treasury for funds borrowed
                by CCC on the day the debt became delinquent.
                 (3) Late payment interest, penalty charges, and administrative
                costs may be waived by FSA or CCC in full or in part, if it is
                determined by the agency that such action is in the Government's
                interest.
                 (4) The provisions of this section do not apply to CCC foreign
                debt.
                Sec. 3.18 Use and disclosure of mailing addresses.
                 (a) When attempting to locate a debtor in order to collect or
                compromise a debt under this part or 31 CFR parts 902 through 904 or
                other authority, agencies may send a request to Treasury to obtain a
                debtor's mailing address from the records of the Internal Revenue
                Service (IRS).
                 (b) Agencies are authorized to 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. 3.19 Standards for the compromise of claims and debt settlement.
                 (a) An agency will follow the standards specified in 31 CFR part
                902 for the compromise of debts pursuant to 31 U.S.C. 3711 arising out
                of the activities of, or referred or transferred for collection
                services to, that agency, except where otherwise authorized or required
                by law.
                 (b) For FSA FLP debts, the first instance of debt cancellation is
                exempt from the monetary limits established in 31 CFR 902.1.
                 (c) For CCC debts, CCC will, in exercising its authority pursuant
                to section 4 of the CCC Charter Act (15 U.S.C. 714b) to make final and
                conclusive settlement and adjustment of any CCC claims, follow the
                standards specified in 31 CFR 902.2, 902.3, 902.4, 902.6, and 902.7,
                for the compromise of debts owed to CCC, to the maximum extent
                practicable. In addition to the bases for the compromise of debts
                specified in 31 CFR 902.2, CCC may compromise a debt when the approving
                official with the authority to compromise the debt has determined that
                such action is in the interest of CCC.
                Sec. 3.20 Standards for suspending or terminating collection
                activities.
                 (a) An agency will follow the standards specified in 31 CFR part
                903 for the suspension or termination of collection activity pursuant
                to 31 U.S.C. 3711, except where otherwise authorized or required by
                law.
                 (b) CCC will, in exercising its authority pursuant to section 4 of
                the CCC Charter Act (15 U.S.C. 714b) to make final and conclusive
                settlement and adjustment of any CCC claims, follow the standards
                specified in 31 CFR 903.2, 903.3, 903.4, and 903.5(c) and (d), for the
                suspension or termination of collection activities with regard to debts
                owed to CCC, to the maximum extent practicable. In addition to the
                bases for the termination of collection activities specified in 31 CFR
                903.3, CCC may terminate collection activities when the approving
                official with the authority to terminate collection activities with
                regard to the debt has determined that such action is in the interest
                of CCC.
                Sec. 3.21 Referrals of debts to Justice.
                 An agency will promptly refer to Justice for litigation debts on
                which aggressive collection activity has been taken in accordance with
                this part, and that cannot be compromised by the agency or on which
                collection activity cannot be suspended or terminated in accordance
                with 31 CFR parts 902 and 903. Agencies will follow the procedures
                specified in 31 CFR part 904 in making such referrals. Agencies will
                consult with OGC on all debts which are to be collected in foreign
                jurisdictions to determine how and if a referral to Justice will take
                place.
                Sec. 3.22 CCC withholding of payment.
                 (a) CCC may temporarily withhold issuance of payment of some or all
                amounts to a debtor under one or more contracts or programs.
                Withholding of a payment prior to the completion of an applicable
                offset procedure may be made from amounts payable to a debtor by CCC to
                ensure that the interests of CCC and the United States will be
                protected as provided in this section.
                 (b) A payment may be withheld to protect the interests of CCC or
                the United States if CCC determines that:
                 (1) There has been a serious breach of contract or violation of
                program requirements and the withholding action is considered necessary
                to protect the financial interests of CCC;
                 (2) There is substantial evidence of violations of criminal or
                civil fraud laws and criminal prosecution or civil fraud action is of
                primary importance to program operations of CCC;
                 (3) Prior experience with the debtor indicates that collection will
                be difficult if amounts payable to the debtor are not withheld;
                 (4) There is doubt that the debtor will be financially able to pay
                a judgment on the claim of CCC;
                 (5) The facts available to CCC are insufficient to determine the
                amount to be offset or the proper payee;
                 (6) A judgement on a claim of CCC has been obtained; or
                 (7) Such action has been requested by Justice.
                Sec. 3.23 CCC assignment of payment.
                 (a) No amounts payable to a debtor by CCC will be paid to an
                assignee of the
                [[Page 36679]]
                debt until amounts owed by the debtor have been collected and applied
                to the debt.
                 (b) A payment that is assigned as specified in part 1404 of this
                title by execution of any CCC assignment form will be subject to offset
                for any debt owed to CCC, or any USDA agency, or any other Federal
                agency, any IRS notice of levy, or any judgment in favor of the United
                States, without regard to the date notice of assignment was accepted by
                CCC.
                 (c) Except as provided in 7 CFR 1404.6(b), any indebtedness owed by
                the assignor to CCC will be offset from any payment which is owed by
                CCC if such indebtedness was entered on the debt record of the
                applicable USDA office prior to the date of the filing Forms CCC-251
                (Notice of Assignment) and CCC-252 (Instrument of Assignment).
                Subpart C--Referral of Debts to Treasury
                Sec. 3.30 General requirements.
                 (a) Agencies are required by law to transfer delinquent, nontax,
                legally enforceable debts to Treasury for collection through cross-
                servicing and through centralized administrative offset with the
                exception of foreign debt that is exempt from cross-servicing per the
                Debt Collection Improvement Act of 1996. Additionally, USDA will
                transfer debts to Treasury for collection through administrative wage
                garnishment. Agencies need not make duplicate referrals to Treasury for
                all these purposes; a debt may be referred simultaneously for purposes
                of collection by cross-servicing, centralized administrative offset,
                and administrative wage garnishment where applicable. However, in some
                instances a debt exempt from collection via cross-servicing may be
                subject to collection by centralized administrative offset so
                simultaneous referrals are not always the norm. This subpart specifies
                the rules applicable to the transfer of debts to Treasury for
                collection by cross-servicing. Rules for transfer to Treasury for
                centralized administrative offset are specified in subpart D of this
                part, and for administrative wage garnishment in subpart E of this
                part.
                 (b) When debts are referred or transferred to Treasury, or
                Treasury-designated debt collection centers under the authority of 31
                U.S.C. 3711(g), Treasury will service, collect, or compromise the
                debts, or Treasury will suspend or terminate the collection action, in
                accordance with the statutory requirements and authorities applicable
                to the collection of such debts.
                 (c) In cases where a debtor has more than one FSA FLP loan that has
                been referred to cross-servicing and Treasury accepts an agreement to
                compromise or adjust one loan, or several loans, but not all of the
                debt, cancellation of any loan balances remaining on the compromised or
                adjusted debt will not be processed for the debtor until:
                 (1) All payments have been received as agreed; and
                 (2) All loans referred to the cross-servicing program for that
                debtor have been returned to FSA, with or without payment agreements.
                Sec. 3.31 Mandatory referral for cross-servicing.
                 (a) Agencies will transfer to Treasury any legally enforceable
                nontax debt in excess of $25, or combination of debts less than $25
                that exceeds $25 (in the case of a debtor whose taxpayer identification
                number (TIN) is unknown the applicable threshold is $100), that has or
                have been delinquent for a period of 180 days in accordance with 31 CFR
                285.12 so that Treasury may take appropriate action on behalf of the
                creditor agency to collect or compromise, or to suspend or terminate
                collection, of the debt, including use of debt collection centers and
                private collection contractors to collect the debt or terminate
                collection action. Agencies that transfer delinquent debts to Fiscal
                Service for the purposes of debt collection and that rely on Fiscal
                Service to submit the transferred debts for administrative offset on
                the agency's behalf must transfer the debts to Fiscal Service no later
                than 120 days after the debts become delinquent in order to satisfy the
                120-day notice requirement for purposes of administrative offset in
                accordance with 31 CFR 285.12(c)(1). For accounting and reporting
                purposes, the debt remains on the books and records of the agency which
                transferred the debt.
                 (b) The requirement of paragraph (a) of this section does not apply
                to any debt that:
                 (1) Is in litigation or foreclosure (see 31 CFR 285.12 (d)(2) for
                definition);
                 (2) Will be disposed of under an approved asset sale program (see
                31 CFR 285.12(d)(3)(i) for definition);
                 (3) Has been referred to a private collection contractor for a
                period of time acceptable to Treasury;
                 (4) Is at a debt collection center for a period of time acceptable
                to Treasury;
                 (5) Will be collected under administrative offset procedures within
                3 years after the debt first became delinquent;
                 (6) Is exempt from this requirement based on a determination by the
                Secretary of the Treasury that exemption for a certain class of debt is
                in the interest of the United States. Federal agencies may request that
                the Secretary of the Treasury exempt specific classes of debts. Any
                such request by an agency must be sent to the Fiscal Assistant
                Secretary of the Treasury by the USDA CFO.
                 (7) Is foreign debt; or
                 (8) Is FSA FLP debt in which case the delinquent loan servicing
                procedures and appeals process required by the ConAct will apply,
                including the deferral for cross-servicing until all security has been
                liquidated, and FSA concludes its review of any pending debt settlement
                application from the debtor.
                 (c) A debt is considered 180 days delinquent for purposes of this
                section if it is 180 days past due and is legally enforceable. A debt
                is past due if it has not been paid by the date specified in the
                agency's initial written demand for payment or applicable agreement or
                instrument (including a post-delinquency payment agreement) unless
                other satisfactory payment arrangements have been made. A debt is
                legally enforceable if there has been a final agency determination that
                the debt, in the amount stated, is due and there are no legal bars to
                collection action. Where, for example, a debt is the subject of a
                pending administrative review process required by law or regulation and
                collection action during the review process is prohibited, the debt is
                not considered legally enforceable for purposes of mandatory transfer
                to Treasury and is not to be transferred even if the debt is more than
                180 days past due. When a final agency determination is made after an
                administrative appeal or review process (including administrative
                review under subpart F of this part), the creditor agency must transfer
                such debt to Treasury, if more than 180 days delinquent, within 30 days
                after the date of the final decision.
                Sec. 3.32 Discretionary referral for cross-servicing.
                 Agencies will consider referring legally enforceable nontax debts
                that are less than 180 days delinquent to Treasury or to Treasury-
                designated ``debt collection centers'' in accordance with 31 CFR 285.12
                to accomplish efficient, cost effective debt collection if no USDA
                payments will be available to collect the debt through administrative
                offset under Sec. 3.43.
                [[Page 36680]]
                Sec. 3.33 Required certification.
                 Agencies referring delinquent debts to Treasury for collection via
                cross-servicing must certify, in writing, that:
                 (a) The debts being transferred are valid and legally enforceable;
                 (b) There are no legal bars to collection; and
                 (c) The agency has complied with all prerequisites to a particular
                collection action under the laws, regulations or policies applicable to
                the agency, unless the agency and Treasury agree that Treasury will do
                so on behalf of the agency.
                Sec. 3.34 Fees.
                 Federal agencies operating Treasury-designated debt collection
                centers are authorized to charge a fee for services rendered regarding
                referred or transferred debts. The fee may be paid out of amounts
                collected and may be added to the debt as an administrative cost.
                Subpart D--Administrative Offset
                Sec. 3.40 Scope.
                 (a) This subpart specifies the procedures to be used by agencies in
                collecting debts by administrative offset.
                 (b) This subpart does not apply to:
                 (1) Debts arising under the Social Security Act, except as provided
                in 42 U.S.C. 404;
                 (2) Payments made under the Social Security Act, except as provided
                for in 31 U.S.C. 3716(c) (see 31 CFR 285.4, Federal Benefit Offset);
                 (3) Debts arising under, or payments made under, the Internal
                Revenue Code (except for offset of tax refunds) or the tariff laws of
                the United States;
                 (4) Offsets against Federal salaries (such offsets are covered by
                subpart F of this part);
                 (5) Offsets under 31 U.S.C. 3728 against a judgment obtained by a
                debtor against the United States;
                 (6) Offsets or recoupments under common law, State law, or Federal
                laws specifically prohibiting offsets or recoupments of particular
                types of debts;
                 (7) Offsets in the course of judicial proceedings, including
                bankruptcy;
                 (8) Intracontractual offsets to satisfy contract debts taken by a
                contracting officer under the Contract Disputes Act, 41 U.S.C. 7101-
                7109; or
                 (9) Foreign Debt.
                 (c) 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.
                 (d) In bankruptcy cases, agencies may request legal advice from OGC
                concerning the impact of the Bankruptcy Code, particularly 11 U.S.C.
                106, 362, and 553 on pending or contemplated collections by offset.
                Sec. 3.41 Procedures for notification of intent to collect by
                administrative offset.
                 (a) Prior to initiation of collection by administrative offset, a
                creditor agency must:
                 (1) Send the debtor a written Notice of Intent to Collect by
                Administrative Offset, by mail or hand-delivery, of the type and amount
                of the debt, the intention of the agency to use non-centralized
                administrative offset (which includes a USDA administrative offset) to
                collect the debt 30 days after the date of the Notice, the name of the
                Federal agency or USDA agency from which the creditor agency wishes to
                collect in the case of a non-centralized administrative offset, the
                intent to refer the debt to Treasury for collection through centralized
                administrative offset (including possible offset of tax refunds) 60
                days after the date of the Notice if the debt is not satisfied by
                offset within USDA or by agreement with another Federal agency, and an
                explanation of the debtor's rights under 31 U.S.C. 3716; and
                 (2) Give the debtor the opportunity:
                 (i) To inspect and copy agency records related to the debt;
                 (ii) For a review within the agency of the determination of
                indebtedness in accordance with subpart F of this part; and
                 (iii) To make a written agreement to repay the debt.
                 (b) The procedures specified in paragraph (a) of this section are
                not required when:
                 (1) The offset is in the nature of a recoupment;
                 (2) The debt arises under a contract subject to the Contracts
                Disputes Act;
                 (3) In the case of a non-centralized administrative offset, the
                agency first learns of the existence of the amount owed by the debtor
                when there is insufficient time before payment would be made to the
                debtor/payee to allow for prior notice and an opportunity for review.
                When prior notice and an opportunity for review are omitted, the agency
                will give the debtor such notice and an opportunity for review as soon
                as practicable and will promptly refund any money ultimately found not
                to have been owed to the government; or
                 (4) The agency previously has given a debtor any of the notice and
                review opportunities required under this part, with respect to a
                particular debt (see, for example, Sec. 3.11). With respect to loans
                paid on an installment basis, notice and opportunity to review under
                this part may only be provided once for the life of the loan upon the
                occurrence of the first delinquent installment. Subsequently, if an
                agency elects this option, credit reporting agencies may be furnished
                periodically with updates as to the current or delinquent status of the
                loan account and the borrower may receive notice of referral to TOP for
                delinquent installments without further opportunity for review. Any
                interest accrued or any installments coming due after the offset is
                initiated also would not require a new notice and opportunity to
                review.
                 (c) The Notice of Intent to Collect by Administrative Offset will
                be included as part of a demand letter issued under Sec. 3.11 to
                advise the debtor of all debt collection possibilities that the agency
                may employ.
                Sec. 3.42 Debtor rights to inspect or copy records, submit repayment
                proposals, or request administrative review.
                 (a) A debtor who intends to inspect or copy agency or USDA records
                with respect to the debt must notify the creditor agency in writing
                within 30 days of the date of the Notice of Intent to Collect by
                Administrative Offset. In response, the agency must notify the debtor
                of the location, time, and any other conditions, consistent with part
                1, subpart A, of this title, for inspecting and copying, and that the
                debtor may be liable for reasonable copying expenses. A decision by the
                agency under this paragraph will not be subject to review under subpart
                F of this part or by NAD under part 11 of this title.
                 (b) The debtor may, in response to the Notice of Intent to Collect
                by Administrative Offset, propose to the creditor agency a written
                agreement to repay the debt as an alternative to administrative offset.
                Any debtor who wishes to do this must submit a written proposal for
                repayment of the debt, which must be received by the creditor agency
                within 30 days of the date of the Notice of Intent to Collect by
                Administrative Offset or 15 days after the date of a decision adverse
                to the debtor under subpart F of this part. In response, the creditor
                agency must notify the debtor in writing whether the proposed agreement
                is acceptable. In exercising its discretion, the creditor agency must
                balance the government's interest in collecting the debt against
                fairness to the debtor. A decision by the agency under this paragraph
                will not be subject to review under subpart F of this part or by NAD
                under part 11 of this title. For proposed agreements to pay delinquent
                amounts owed on FSA FLP
                [[Page 36681]]
                loans, the proposed payments in the agreement must cure the delinquency
                before the next loan installment is due, or within 90 days, whichever
                is sooner.
                 (c) A debtor must request an administrative review of the debt
                under subpart F of this part within 30 days of the date of the Notice
                of Intent to Collect by Administrative Offset for purposes of a
                proposed collection by non-centralized administrative offset and within
                60 days of the date of the Notice of Intent to Collect by
                Administrative Offset for purposes of a proposed collection by referral
                to Treasury for centralized offset against other Federal payments that
                would include tax refunds.
                Sec. 3.43 Non-centralized administrative offset.
                 (a) In cooperation with the Federal agency certifying or
                authorizing payments to the debtor, a creditor agency may make a
                request directly to a payment authorizing agency to offset a payment
                due a debtor to collect a delinquent debt from, for example, a Federal
                employee's lump sum payment upon leaving government service in order to
                pay an unpaid advance. Unless prohibited by law, when centralized
                administrative offset is not available or appropriate, past due,
                legally enforceable nontax delinquent debts may be collected through
                non-centralized administrative offset.
                 (b) A non-centralized administrative offset may start 31 days after
                the date of the Notice of Intent to Collect by Administrative Offset,
                any time after the final determination in an administrative review
                conducted under subpart F of this part upholds the creditor agency's
                decision to offset, or any time after the creditor agency notifies the
                debtor that its repayment proposal submitted under Sec. 3.42(b) is not
                acceptable if the 30-day period for the debtor to request review of the
                Notice has expired, unless the creditor agency makes a determination
                under Sec. 3.41(b)(3) that immediate action to effectuate the offset
                is necessary.
                 (c) A payment authorizing agency may conduct a non-centralized
                administrative offset only after certification by a creditor agency
                that:
                 (1) The debtor has been provided notice and opportunity for review
                as specified in Sec. 3.41; and
                 (2) The payment authorizing agency has received written
                certification from the creditor agency that the debtor owes the past
                due, legally enforceable delinquent debt in the amount stated, and that
                the creditor agency has fully complied with its regulations concerning
                administrative offset.
                 (d) Payment authorizing agencies will comply with offset requests
                by creditor agencies to collect debts owed to the United States, unless
                the offset would not be in the interest of the United States with
                respect to the program of the payment authorizing agency or would
                otherwise be contrary to law. Appropriate use should be made of the
                cooperative efforts of other agencies in effecting collection by
                administrative offset.
                 (e) When collecting multiple debts by non-centralized
                administrative offset, agencies will apply the recovered amounts to
                those debts in accordance with the interests of the United States, as
                determined by the facts and circumstances of the particular case,
                particularly the applicable statute of limitations.
                 (f) Debts arising from the shipment of commodities procured by CCC
                are subject to the following:
                 (1) Debts due CCC from a carrier for overcharges will be offset
                against amounts due to the carrier under freight bills involving
                shipments if:
                 (i) The carrier, without reasonable justification, has declined
                payment of the debt or has failed to pay the debt after being given a
                reasonable opportunity to make payment; and
                 (ii) The periods of limitation as specified in 49 U.S.C. 11705(f)
                or 49 U.S.C. 14705(f) have not expired;
                 (2) Debts due to CCC from a carrier for loss or damage will be
                offset against amounts due to the carrier under freight bills involving
                shipments if:
                 (i) Timely demand for payment was made on the carrier;
                 (ii) The carrier has declined payment of the debt without
                reasonable justification or has ignored the debt; and
                 (iii) The periods of limitation as specified in 49 U.S.C. 11706(e)
                or 49 U.S.C. 14706(e) have not expired; and
                 (3) Any overcharge, loss, or damage debt due to CCC on which the
                applicable period of limitation has expired may be offset against any
                amounts owed by CCC to the carrier which are subject to limitation.
                Sec. 3.44 Centralized administrative offset.
                 (a)(1) Except as provided in paragraph (a)(2) of this section,
                after the notice and review opportunity requirements of Sec. 3.41 are
                met, an agency will refer debts which are over 120 days delinquent to
                Fiscal Service for collection through centralized administrative TOP 61
                days after the date of the Notice of Intent to Collect by
                Administrative Offset provided in accordance with Sec. 3.41. If the
                debtor requests review under subpart F of this part, referral of the
                debt must occur within 30 days of the final decision upholding the
                agency decision to offset the debt if the debt is more than 120 days
                delinquent.
                 (2) For FSA FLP and Rural Development debt:
                 (i) The delinquent loan servicing procedures and timeframes
                required by the ConAct will be followed; and.
                 (ii) Offsets will not occur during any moratorium required by the
                ConAct.
                 (b) After the notice and review opportunity requirements of Sec.
                3.41 are met, and administrative review under subpart F of this part is
                not sought or is unsuccessful on the part of the debtor, an agency may
                refer a debt that is less than 120 days delinquent.
                 (c) Agencies will refer debts to Treasury for collection in
                accordance with Treasury procedures specified in 31 CFR 285.5.
                 (d) The agencies will ensure that:
                 (1) The names and TINs of debtors who owe debts referred to
                Treasury under this section will 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
                Defense, the United States Postal Service, other government
                corporations, and disbursing officials of the United States designated
                by 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 authorizing agency must offset a payment to satisfy the debt.
                 (2) Any USDA official serving as a Federal disbursing official for
                purposes of effecting centralized administrative offset under this
                section, or Fiscal Service on behalf of the disbursing official, must
                notify a debtor or payee in writing that an offset has occurred to
                satisfy, in part or in full, a past due, legally enforceable delinquent
                debt. The notice must include the information specified in paragraph
                (d)(4) of this section.
                 (3) As described in 31 CFR 285.5(g)(1) and (2), any USDA official
                serving as a Federal disbursing official for purposes of centralized
                administrative offset under this section, or Fiscal Service on behalf
                of the disbursing official, will furnish a warning notice to a payee or
                debtor prior to beginning offset of recurring payments. Such warning
                notice will include the information specified in paragraph (d)(4) of
                this section.
                 (4) The notice will 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 the creditor agency requesting the offset,
                and a contact point
                [[Page 36682]]
                within the creditor agency who will respond to questions regarding the
                offset.
                 (5) The priorities for collecting multiple payments owed by a payee
                or debtor will be those specified in 31 CFR 285.5(f)(3).
                Sec. 3.45 USDA payment authorizing agency offset of pro rata share of
                payments due entity in which debtor participates.
                 (a) A USDA payment authorizing agency, to satisfy either a non-
                centralized or centralized administrative offset under Sec. Sec. 3.43
                and 3.44, may offset:
                 (1) A debtor's pro rata share of USDA payments due any entity in
                which the debtor participates, either directly or indirectly, as
                determined by the creditor agency or the payment authorizing agency or:
                 (2) USDA payments due any entity that the debtor has established,
                or reorganized, transferred ownership of, or changed in some other
                manner the operation of, for the purpose of avoiding payment on the
                claim or debt, as determined by the creditor agency or the payment
                authorizing agency.
                 (b) Prior to exercising the authority of this section to offset any
                portion of a payment due an entity, the creditor agency must have
                provided notice to that entity in accordance with Sec. 3.41 of its
                intent to offset payments to the entity in satisfaction of the debt of
                an individual debtor participating in that entity.
                Sec. 3.46 Offset against tax refunds.
                 USDA will take action to effect administrative offset against tax
                refunds due to debtors under 26 U.S.C. 6402 in accordance with the
                provisions of 31 U.S.C. 3720A through referral for centralized
                administrative offset under Sec. 3.44.
                Sec. 3.47 Offset against amounts payable from Civil Service
                Retirement and Disability Fund.
                 Upon providing the Office of Personnel Management (OPM) written
                certification that a debtor has been afforded the procedures provided
                in Sec. 3.41, creditor agencies 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 through 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.
                Subpart E--Administrative Wage Garnishment
                Sec. 3.50 Purpose.
                 This subpart provides USDA procedures for use of administrative
                wage garnishment to garnish a debtor's disposable pay to satisfy
                delinquent nontax debt owed to USDA creditor agencies.
                Sec. 3.51 Scope.
                 (a) This subpart applies to any agency that administers a program
                that gives rise to a delinquent nontax debt owed to the United States
                and to any agency that pursues recovery of such debt.
                 (b) This subpart will apply notwithstanding any provision of State
                law.
                 (c) Nothing in this subpart precludes the compromise of a debt or
                the suspension or termination of collection action in accordance with
                the provisions of this part or other applicable law.
                 (d) The receipt of payments pursuant to this subpart does not
                preclude an agency from pursuing other debt collection remedies under
                this part. An agency may pursue such debt collection remedies
                separately or in conjunction with administrative wage garnishment.
                 (e) This subpart does not apply to the collection of delinquent
                nontax debt owed to the United States from the wages of Federal
                employees from their Federal employment. Federal pay is subject to the
                salary offset procedures of subpart G of this part.
                 (f) Nothing in this subpart requires agencies to duplicate notices
                or administrative proceedings required by contract or other laws or
                regulations, or other provisions of this part.
                 (g) This subpart does not apply to foreign debt.
                Sec. 3.52 Definitions.
                 As used in this subpart the following definitions will apply:
                 Disposable pay means that part of the debtor's compensation
                (including, but not limited to, salary, bonuses, commissions, and
                vacation pay) from an employer remaining after the deduction of health
                insurance premiums and any amounts required by law to be withheld. For
                purposes of this section, ``amounts required by law to be withheld''
                include amounts for deductions such as social security taxes and
                withholding taxes, but do not include any amount withheld pursuant to a
                court order.
                 Employer means a person or entity that employs the services of
                others and that pays their wages or salaries. The term employer
                includes, but is not limited to, State and local governments, but does
                not include an agency of the Federal government.
                 Garnishment means the process of withholding amounts from an
                employee's disposable pay and the paying of those amounts to a creditor
                in satisfaction of a withholding order.
                 Withholding order means any order for withholding or garnishment of
                pay issued by an agency, or judicial or administrative body. For
                purposes of this section, the terms ``wage garnishment order'' and
                ``garnishment order'' have the same meaning as ``withholding order.''
                Sec. 3.53 Procedures.
                 (a) USDA has determined to pursue administrative wage garnishment
                of USDA debtors by referral of nontax legally enforceable debts to
                Treasury for issuance of garnishment orders by Treasury or its
                contractors.
                 (b) As specified in Sec. 3.11, agencies must notify debtors of
                their intent to pursue garnishment of their disposable pay through
                referral of the debt to Treasury for issuance of an administrative wage
                garnishment order and provide debtors with the opportunity for review
                of the existence of the debt under subpart F of this part within 60
                days of the date of the demand letter.
                 (c) Upon expiration of the 60-day period for review, or upon
                completion of a review under subpart F of this part that upholds the
                agency's determination of the debt, USDA will transfer the debt for
                collection through administrative wage garnishment as well as other
                means through cross-servicing or centralized administrative offset.
                 (d) If Treasury elects to pursue collection through administrative
                wage garnishment, Treasury, or its contractor, will notify the debtor
                of its intent to initiate garnishment proceedings and provide the
                debtor with the opportunity to inspect and copy agency records related
                to the debt, enter into a repayment agreement, or request a hearing as
                to the existence or amount of the debt or the terms of the proposed
                repayment schedule under the proposed garnishment order, in accordance
                with 31 CFR 285.11.
                 (e) If the debtor requests a hearing at any time, Treasury will
                forward the request to the USDA creditor agency to which the debt is
                owed, and the creditor agency will contact the Office of the CFO (OCFO)
                for selection of a hearing official. The issuance of proposed
                garnishment orders by Treasury will not be subject to appeal to NAD
                under part 11 of this title. Hearings will be conducted in accordance
                with 31 CFR 285.11(f).
                [[Page 36683]]
                 (f) OCFO will provide a copy of the hearing official's final
                decision to Treasury for implementation with respect to the subject
                garnishment order.
                Subpart F--Administrative Reviews for Administrative Offset,
                Administrative Wage Garnishment, and Disclosure to Credit Reporting
                Agencies
                Sec. 3.60 Applicability.
                 (a) This section establishes consolidated administrative review
                procedures for debts subject to administrative offset, administrative
                wage garnishment, and disclosure to credit reporting agencies, under
                subparts D and E of this part. A hearing or review under this section
                will satisfy the required opportunity for administrative review by the
                agency of the determination of a debt for both administrative offset
                and administrative wage garnishment that is required before transfer to
                Treasury for collection or collection by the agency through non-
                centralized administrative offset.
                 (b) For debt collection proceedings initiated by FSA, CCC, FCIC,
                the Rural Housing Service, the Rural Business-Cooperative Service, the
                Risk Management Agency, the Natural Resources Conservation Service,
                Rural Development, and the Rural Utilities Service (but not for
                programs authorized by the Rural Electrification Act of 1936 or the
                Rural Telephone Bank Act, 7 U.S.C. 901-950cc-2), part 11 of this title
                will be applicable and not the provisions of this subpart.
                Sec. 3.61 Presiding employee.
                 An agency reviewing officer may be an agency employee, or the
                agency may provide for reviews to be done by another agency through an
                interagency agreement. No agency employee may act as a reviewing
                officer for the consideration of collection by administrative offset in
                a matter for which the employee was a contracting officer or a debt
                management officer.
                Sec. 3.62 Procedures.
                 (a) A debtor who receives a Notice of Intent to Collect by
                Administrative Offset, Notice of Disclosure to Credit Reporting
                Agencies, or Notice of Intent to Collect by Administrative Wage
                Garnishment, or more than one of the above simultaneously, may request
                administrative review of the agency's determination that the debt
                exists and the amount of the debt. Any debtor who wishes to do this
                must submit a written explanation of why the debtor disagrees and
                requests review. The request must be received by the creditor agency
                within 60 days of the date of the notice in the case of a Notice of
                Intent to Collect by Administrative Offset that includes referral to
                Treasury for offset against other Federal payments including tax
                refunds and 30 days in the case of all other notices.
                 (b) In response, the creditor agency must notify the debtor in
                writing whether the review will be by documentary review or by hearing.
                An oral hearing is not necessary with respect to debt collection
                systems in which a determination of indebtedness rarely involves issues
                of credibility or veracity and the agency has determined that review of
                the written record is ordinarily an adequate means to correct prior
                mistakes. The agency will provide the debtor with a reasonable
                opportunity for an oral hearing when the debtor requests
                reconsideration of the debt and the agency determines that the question
                of the indebtedness cannot be resolved by review of the documentary
                evidence, for example, when the validity of the debt turns on an issue
                of credibility or veracity. If the debtor requests a hearing, and the
                creditor agency decides to conduct a documentary review, the agency
                must notify the debtor of the reason why a hearing will not be granted.
                The agency must also advise the debtor of the procedures to be used in
                reviewing the documentary record, or of the date, location and
                procedures to be used if review is by a hearing.
                 (c) An oral hearing may, at the debtor's option, be conducted
                either in-person or by telephone conference. All travel expenses
                incurred by the debtor in connection with an in-person hearing will be
                borne by the debtor. All telephonic charges incurred during the hearing
                will be the responsibility of the agency.
                 (d) After the debtor requests a hearing, the hearing official will
                notify the debtor of:
                 (1) The date and time of a telephonic hearing;
                 (2) The date, time, and location of an in-person oral hearing; or
                 (3) The deadline for the submission of evidence for a documentary
                review.
                 (e) Unless otherwise arranged by mutual agreement between the
                debtor and the agency, evidenced in writing, any documentary review or
                hearing will be conducted not less than 10 days and no more than 45
                days after receipt of the request for review.
                 (f) Unless otherwise arranged by mutual agreement between the
                debtor and the agency, evidenced in writing, a documentary review or
                hearing will be based on agency records plus other relevant documentary
                evidence which may be submitted by the debtor within 10 days after the
                request for review is received.
                 (g) The hearing procedure will consist of:
                 (1) Hearings will be as informal as possible and will be conducted
                by a reviewing officer in a fair and expeditious manner. The reviewing
                officer need not use the formal rules of evidence with regard to the
                admissibility of evidence or the use of evidence once admitted.
                However, clearly irrelevant material should not be admitted, whether or
                not any party objects. Any party to the hearing may offer exhibits,
                such as copies of financial records, telephone memoranda, or
                agreements, provided the opposing party is notified at least 5 days
                before the hearing.
                 (2) The agency will have the burden of going forward to prove the
                existence or amount of the debt.
                 (i) Thereafter, if the debtor disputes the existence or amount of
                the debt, the debtor must prove by a preponderance of the evidence that
                no debt exists or that the amount of the debt is incorrect.
                 (ii) In addition, the debtor may present evidence that repayment
                would cause a financial hardship to the debtor or that collection of
                the debt may not be pursued due to operation of law.
                 (3) Witnesses must testify under oath or affirmation.
                 (4) Debtors may represent themselves or may be represented at their
                own expense by an attorney or other person.
                 (5) The substance of all significant matters discussed at the
                hearing must be recorded. No official record or transcript of the
                hearing need be created, but if a debtor requested that a transcript be
                made, it will be at the debtor's expense.
                 (h) In the absence of good cause shown, a debtor who fails to
                appear at a hearing scheduled pursuant to paragraph (d) of this section
                will be deemed as not having timely filed a request for a hearing.
                 (i) The determination will be made:
                 (1) Within no more than 30 days after the hearing or receipt of
                documentation for the documentary review, the reviewing officer will
                issue a written decision to the debtor and the agency, including the
                supporting rationale for the decision. The deadline for issuance of the
                decision may be extended by the reviewing officer for good cause for no
                more than 30 days.
                 (2) The written decision will include:
                 (i) A summary of the facts presented;
                 (ii) The hearing official's findings, analysis and conclusions; and
                 (iii) Resolution of any significant procedural matter which was in
                dispute before or during the hearing or documentary review.
                [[Page 36684]]
                 (j) The reviewing officer's decision constitutes final agency
                action for purposes of judicial review under the Administrative
                Procedure Act (5 U.S.C. 701-703) as to the following issues:
                 (1) All issues of fact relating to the basis of the debt (including
                the existence of the debt and the propriety of administrative offset),
                in cases where the debtor previously had not been afforded due process;
                and
                 (2) The existence of the debt and the propriety of administrative
                offset, in cases where the debtor previously had been afforded due
                process as to issues of fact relating to the basis of the debt.
                 (k) The reviewing officer will promptly distribute copies of the
                decision to the USDA CFO, the agency CFO (if any), the agency debt
                management officer, the debtor, and the debtor's representative, if
                any.
                Subpart G--Federal Salary Offset
                 Authority: 5 U.S.C. 5514; and 5 CFR part 550, subpart K.
                Sec. 3.70 Scope.
                 (a) The provisions of this subpart specify USDA procedures for the
                collection of a Federal employee's pay by salary offset to satisfy
                certain valid and past due debts owed the government.
                 (b) This subpart applies to:
                 (1) Current USDA employees and employees of other agencies who owe
                debts to USDA; and
                 (2) Current USDA employees who owe debts to other agencies.
                 (c) This subpart does not apply to debts owed by FSA county
                executive directors or non-Federal county office employees. For debts
                owed by FSA county executive directors or non-Federal county office
                employees to CCC or FSA, the salaries of these employees are subject to
                administrative offset not to exceed 15 percent of the employee's
                disposable pay. CCC and FSA will follow the notification requirements
                and procedures for collection by administrative offset as specified in
                31 CFR part 285 and 31 U.S.C. 3716.
                 (d) This subpart does not apply to debts or claims arising under
                the Internal Revenue Code of 1986 (26 U.S.C. 1-8023); the tariff laws
                of the United States; or to any case where collection of a debt by
                salary offset is explicitly provided for or prohibited by another law
                (for example travel advances in 5 U.S.C. 5705 or employee training
                expense in 5 U.S.C. 4108).
                 (e) This subpart identifies the types of salary offset available to
                USDA, as well as certain rights provided to the employee, which include
                a written notice before deductions begin and the opportunity to
                petition for a hearing and to receive a written decision if a hearing
                is granted. The rights provided by this section do not extend to:
                 (1) Any adjustment to pay arising out of an employee's election of
                coverage or a change in coverage under a Federal benefits program
                requiring periodic deductions from pay, if the amount to be recovered
                was accumulated over four pay periods or less;
                 (2) A routine intra-agency adjustment of pay that is made to
                correct an overpayment of pay attributable to clerical or
                administrative errors or delays in processing pay documents, if the
                overpayment occurred within the four pay periods preceding the
                adjustment and, at the time of such adjustment, or as soon thereafter
                as practical, the individual is provided written notice of the nature
                and the amount of the adjustment and point of contact for contesting
                such adjustment; or
                 (3) Any adjustment to collect a debt amounting to $50 or less, if,
                at the time of such adjustment, or as soon thereafter as practical, the
                individual is provided written notice of the nature and the amount of
                the adjustment and a point of contact for contesting such adjustment.
                 (f) These regulations do not preclude an employee from:
                 (1) Requesting waiver of an erroneous overpayment under 5 U.S.C.
                5584, 10 U.S.C. 2774, or 32 U.S.C. 716;
                 (2) Requesting waiver of any other type of debt, if waiver is
                available by law; or
                 (3) Questioning the amount or validity of a debt, in the manner
                prescribed by this part.
                 (g) Nothing in these regulations precludes the compromise,
                suspension or termination of collection actions where appropriate under
                USDA regulations contained elsewhere.
                Sec. 3.71 Definitions.
                 As used in this subpart the following definitions will apply:
                 Disposable pay means that part of current basic pay, special pay,
                incentive pay, retired pay, retainer pay, or in the case of an employee
                not entitled to basic pay, other authorized pay remaining after the
                deduction of any amount required by law to be withheld (other than
                deductions to execute garnishment orders in accordance with 5 CFR parts
                581 and 582). Among the legally required deductions that must be
                applied first to determine disposable pay are levies pursuant to the
                Internal Revenue Code (title 26, United States Code) and deductions
                described in 5 CFR 581.105(b) through (f).
                 Salary offset means a reduction of a debt by offset(s) from the
                disposable pay of an employee without his or her consent.
                 Waiver means the cancellation, remission, forgiveness, or non-
                recovery of a debt owed by an employee to an agency as permitted or
                required by 5 U.S.C. 5584, 10 U.S.C. 2774, or 32 U.S.C. 716, 5 U.S.C.
                8346(b), or any other law.
                Sec. 3.72 Coordinating offset with another Federal agency.
                 (a) When USDA is owed a debt by an employee of another agency, the
                other agency will not initiate the requested offset until USDA provides
                the agency with a written certification that the debtor owes USDA a
                debt (including the amount and basis of the debt and the due date of
                the payment) and that USDA has complied with these regulations.
                 (b) USDA may use salary offset against one of its employees who is
                indebted to another agency, if requested to do so by that agency. Such
                a request must be accompanied by;
                 (1) A certification by the requesting agency that the person owes
                the debt (including the amount and basis of the debt and the due date
                of the payment).
                 (2) That the agency has complied with its regulations required by 5
                U.S.C. 5514 and 5 CFR part 550, subpart K.
                 (c) Debts may be referred to Treasury under Sec. 3.44 for
                collection through salary offset in accordance with 31 CFR 285.7.
                Sec. 3.73 Determination of indebtedness.
                 (a) In determining that an employee is indebted to USDA and that 31
                CFR parts 900 through 904 have been satisfied and that salary offset is
                appropriate, USDA will review the debt to make sure that it is valid
                and past due.
                 (b) If USDA determines that any of the requirements of paragraph
                (a) of this section have not been met, no determination of indebtedness
                will be made and salary offset will not proceed until USDA is assured
                that the requirements have been met.
                Sec. 3.74 Notice requirements before offset.
                 Except as provided in paragraph (b) of this section, salary offset
                will not be made unless USDA first provides the employee with a minimum
                of 30 days written notice. This Notice of Intent to Offset Salary will
                state:
                 (a) That USDA has reviewed the records relating to the debt and has
                determined that a debt is owed, the amount of the debt, and the facts
                giving rise to the debt;
                 (b) USDA's intention to collect the debt by means of deduction from
                the
                [[Page 36685]]
                employee's current disposable pay until the debt and all accumulated
                interest are paid in full;
                 (c) The approximate beginning date, frequency, and amount of the
                intended deduction (stated as a fixed dollar amount or as a percentage
                of pay, not to exceed 15 percent of disposable pay), and the intention
                to continue the deductions until the debt is paid in full or otherwise
                resolved;
                 (d) An explanation of USDA requirements concerning interest,
                penalties and administrative costs; unless such payments are waived in
                accordance with 31 U.S.C. 3717 and Sec. 3.17;
                 (e) The employee's right to inspect and copy USDA records relating
                to the debt;
                 (f) The employee's right to enter into a written agreement with
                USDA for a repayment schedule differing from that proposed by USDA, so
                long as the terms of the repayment schedule proposed by the employee
                are agreeable to USDA;
                 (g) The employee's right to a hearing conducted by a hearing
                official on USDA's determination of the debt, the amount of the debt,
                or percentage of disposable pay to be deducted each pay period, so long
                as a petition is filed by the employee as prescribed by USDA;
                 (h) That the timely filing of a petition for hearing will stay the
                collection proceedings;
                 (i) That a final decision on the hearing will be issued at the
                earliest practical date, but not later than 60 days after the filing of
                the petition requesting the hearing, unless the employee requests, and
                the hearing officer grants, a delay in the proceedings;
                 (j) That any knowingly false or frivolous statements,
                representations, or evidence may subject the employee to:
                 (1) Disciplinary procedures appropriate under 5 U.S.C. chapter 75,
                5 CFR part 752, or any other applicable laws or regulations;
                 (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or
                any other applicable statutory authority; or
                 (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or
                any other applicable statutory authority;
                 (k) Any other rights and remedies available to the employee under
                laws or regulations governing the program for which the collection is
                being made;
                 (l) That amounts paid on or deducted for the debt which are later
                waived or found not owed to the United States will be promptly refunded
                to the employee, unless there are applicable contractual or statutory
                provisions to the contrary;
                 (m) The method and time period for requesting a hearing; and
                 (n) The name and address of an official of USDA to whom
                communications must be directed.
                Sec. 3.75 Request for a hearing.
                 (a) Except as provided in paragraph (c) of this section, an
                employee must file a petition to request a hearing that is received by
                USDA not later than 30 days from the date of the USDA notice described
                in Sec. 3.74, if an employee wants a hearing concerning:
                 (1) The existence or amount of the debt; or
                 (2) USDA's proposed salary offset schedule (including percentage).
                 (b) The petition must be signed by the employee and must identify
                and explain with reasonable specificity and brevity the facts, evidence
                and witnesses which the employee believes support his or her position.
                If the employee objects to the percentage of disposable pay to be
                deducted from each check, the petition must state the objection and the
                reasons for it.
                 (c) If the employee files a petition for a hearing later than the
                30 days as described in paragraph (a) of this section, the hearing
                officer may accept the request if the employee can show that the delay
                was because of circumstances beyond his or her control or because of
                failure to receive notice of the filing deadline (unless the employee
                has actual notice of the filing deadline).
                Sec. 3.76 Result if employee fails to meet deadlines.
                 An employee will not be granted a hearing and will have his or her
                disposable pay offset as specified in USDA's offset schedule if the
                employee:
                 (a) Fails to file a petition for a hearing as prescribed in Sec.
                3.75; or
                 (b) Is scheduled to appear and fails to appear at the hearing.
                Sec. 3.77 Hearing.
                 (a) If an employee timely files a petition for a hearing under
                Sec. 3.75, USDA will select the time, date, and location for the
                hearing.
                 (b) A hearing will not be held and Federal salary offset will not
                be pursued if the cost of the hearing is greater than the delinquent
                debt.
                 (c)(1) Hearings will be conducted by the hearing official
                designated in accordance with 5 CFR 550.1107; and
                 (2) Rules of evidence will not be adhered to, but the hearing
                official will consider all evidence that he or she determines to be
                relevant to the debt that is the subject of the hearing and weigh it
                accordingly, given all of the facts and circumstances surrounding the
                debt.
                 (d) USDA will have the burden of going forward to prove the
                existence of the debt.
                 (e) The employee requesting the hearing will bear the ultimate
                burden of proof.
                 (f) The evidence presented by the employee must prove that no debt
                exists or cast sufficient doubt such that reasonable minds could differ
                as to the existence of the debt.
                Sec. 3.78 Written decision following a hearing.
                 Written decisions provided after a hearing will include:
                 (a) A statement of the facts presented at the hearing to support
                the nature and origin of the alleged debt and those presented to refute
                the debt;
                 (b) The hearing officer's analysis, findings, and conclusions,
                considering all the evidence presented and the respective burdens of
                the parties, in light of the hearing;
                 (c) The amount and validity of the alleged debt determined as a
                result of the hearing;
                 (d) The payment schedule (including percentage of disposable pay),
                if applicable;
                 (e) The determination that the amount of the debt at this hearing
                is the final agency action on this matter regarding the existence and
                amount of the debt for purposes of executing salary offset under 5
                U.S.C. 5514. However, even if the hearing official determines that a
                debt may not be collected by salary offset, but the creditor agency
                finds that the debt is still valid, the creditor agency may still
                pursue collection of the debt by other means authorized by this part;
                and
                 (f) Notice that the final determination by the hearing official
                regarding the existence and amount of a debt is subject to referral to
                Treasury under Sec. 3.33 in the same manner as any other delinquent
                debt.
                Sec. 3.79 Review of USDA records related to the debt.
                 (a) Notification by employee. An employee who intends to inspect or
                copy USDA records related to the debt must send a letter to USDA
                stating his or her intention. The letter must be received by USDA
                within 30 days of the date of the Notice of Intent to Offset Salary.
                 (b) USDA response. In response to the timely notice submitted by
                the debtor as described in paragraph (a) of this section, USDA will
                notify the employee of the location and time when the employee may
                inspect and copy USDA records related to the debt.
                [[Page 36686]]
                Sec. 3.80 Written agreement to repay debts as alternative to salary
                offset.
                 (a)(1) The employee may propose, in response to a Notice of Intent
                to Offset Salary, a written agreement to repay the debt as an
                alternative to salary offset. Any employee who wishes to do this must
                submit a proposed written agreement to repay the debt that is received
                by USDA within 30 days of the date of the Notice of Intent to Offset
                Salary or 15 days after the date of a hearing decision issued under
                Sec. 3.78.
                 (2) For FSA FLP debt, an alternative repayment agreement submitted
                after a hearing decision must include a payment schedule similar to the
                payment schedule in the hearing decision and include payment amounts
                that are at least equal to the payment amounts in the hearing decision.
                 (b) USDA will notify the employee whether the employee's proposed
                written agreement for repayment is acceptable. USDA may accept a
                repayment agreement instead of proceeding by offset. In making this
                determination, USDA will balance the USDA interest in collecting the
                debt against hardship to the employee. If the debt is delinquent and
                the employee has not disputed its existence or amount, USDA will accept
                a repayment agreement, instead of offset, for good cause such as, if
                the employee is able to establish that offset would result in undue
                financial hardship or would be against equity and good conscience. For
                FSA FLP debt, a decision by USDA under this paragraph is not subject to
                review by NAD under part 11 of this title.
                Sec. 3.81 Procedures for salary offset: when deductions may begin.
                 (a) Deductions to liquidate an employee's debt will be by the
                method and in the amount stated in USDA's Notice of Intent to Offset
                Salary to collect from the employee's current pay.
                 (b) If the employee filed a petition for a hearing with USDA before
                the expiration of the period provided for in Sec. 3.75, then
                deductions will begin after the hearing officer has provided the
                employee with a hearing, and a final written decision has been rendered
                in favor of USDA.
                 (c) If an employee retires or resigns before collection of the
                amount of the indebtedness is completed, the remaining indebtedness
                will be collected according to the procedures for administrative offset
                (see subpart D of this part).
                Sec. 3.82 Procedures for salary offset: types of collection.
                 A debt will be collected in a lump-sum or in installments.
                Collection will be by lump-sum collection unless the employee is
                financially unable to pay in one lump-sum, or if the amount of the debt
                exceeds 15 percent of disposable pay for an ordinary pay period. In
                these cases, deduction will be by installments, as specified in Sec.
                3.83.
                Sec. 3.83 Procedures for salary offset: methods of collection.
                 (a) General. A debt will be collected by deductions at officially-
                established pay intervals from an employee's current pay account,
                unless the employee and USDA agree to alternative arrangements for
                repayment under Sec. 3.80.
                 (b) Installment deductions. Installment deductions will be made
                over a period not greater than the anticipated period of employment.
                The size and frequency of installment deductions 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 will 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 payment will be sufficient in size and
                frequency to liquidate the debt in no more than 3 years. Installment
                payments of less than $25 per pay period or $50 a month will be
                accepted only in the most unusual circumstances.
                 (c) Sources of deductions. USDA will make deductions only from
                basic pay, special pay, incentive pay, retired pay, retainer pay, or in
                the case of an employee not entitled to basic pay, other authorized
                pay.
                Sec. 3.84 Procedures for salary offset: imposition of interest,
                penalties, and administrative costs.
                 Interest, penalties and administrative costs will be charged in
                accordance with Sec. 3.17.
                Sec. 3.85 Non-waiver of rights.
                 So long as there are no statutory or contractual provisions to the
                contrary, no employee payment (or all or portion of a debt) collected
                under these regulations will be interpreted as a waiver of any rights
                that the employee may have under 5 U.S.C. 5514.
                Sec. 3.86 Refunds.
                 USDA will refund promptly to the appropriate individual amounts
                offset under these regulations when:
                 (a) A debt is waived or otherwise found not owed to the United
                States (unless expressly prohibited by law or regulation); or
                 (b) USDA is directed by an administrative or judicial order to
                refund amounts deducted from the employee's current pay.
                Sec. 3.87 Agency regulations.
                 USDA agencies may issue regulations or policies not inconsistent
                with OPM regulations (5 CFR part 550, subpart K) and regulations in
                this subpart governing the collection of a debt by salary offset.
                Subpart H--Cooperation With the Internal Revenue Service
                 Authority: 26 U.S.C. 61; 31 U.S.C. 3720A.
                Sec. 3.90 Reporting discharged debts to the Internal Revenue Service.
                 When USDA discharges a debt, whether for the full value or less, it
                will report the discharge to the Internal Revenue Service (IRS) in
                accordance with current IRS instructions.
                Subpart I--Adjusted Civil Monetary Penalties
                 Authority: 28 U.S.C. 2461 note.
                Sec. 3.91 Adjusted civil monetary penalties.
                 (a) In general--(1) Adjustments. The Secretary will adjust the
                civil monetary penalties, listed in paragraph (b) of this section, to
                take account of inflation as mandated by the Federal Civil Penalties
                Inflation Adjustment Act Improvements Act of 2015, as amended.
                 (2) Timing. Any increase in the dollar amount of a civil monetary
                penalty listed in paragraph (b) of this section applies only to
                violations occurring after June 17, 2020.
                 (3) Illustrative purposes. The descriptions of the civil monetary
                penalties listed in paragraph (b) of this section are for illustrative
                purposes only. This section does not amend, interpret, implement, or
                alter in any way the statutory provisions in which the civil monetary
                penalties listed in paragraph (b) of this section are set. Moreover,
                the descriptions of the civil monetary penalties listed in paragraph
                (b) of this section do not necessarily contain a complete description
                of the circumstances (for example, requirements regarding the ``state
                of mind'' of the violator(s), requirements regarding the type of law or
                issuance violated, etc.) under which the penalties are assessed.
                Persons should consult the statutory text in which the civil monetary
                penalties are set and any implementing regulations to make
                applicability determinations.
                [[Page 36687]]
                 (b) Penalties--(1) Agricultural Marketing Service. (i) Civil
                penalty for improper record keeping codified at 7 U.S.C. 136i-1(d),
                has: A maximum of $964 in the case of the first offense, and a minimum
                of $1,872 in the case of subsequent offenses, except that the penalty
                will be less than $1,872 if the Secretary determines that the person
                made a good faith effort to comply.
                 (ii) Civil penalty for a violation of the unfair conduct rule under
                the Perishable Agricultural Commodities Act, in lieu of license
                revocation or suspension, codified at 7 U.S.C. 499b(5), has a maximum
                of $5,246.
                 (iii) Civil penalty for violation of the licensing requirements
                under the Perishable Agricultural Commodities Act, codified at 7 U.S.C.
                499c(a), has a maximum of $1,675 for each such offense and not more
                than $418 for each day it continues, or a maximum of $418 for each
                offense if the Secretary determines the violation was not willful.
                 (iv) Civil penalty in lieu of license suspension under the
                Perishable Agricultural Commodities Act, codified at 7 U.S.C. 499h(e),
                has a maximum penalty of $3,348 for each violative transaction or each
                day the violation continues.
                 (v) Civil penalty for a violation of the Export Apple Act, codified
                at 7 U.S.C. 586, has a minimum of $151 and a maximum of $15,300.
                 (vi) Civil penalty for a violation of the Export Grape and Plum
                Act, codified at 7 U.S.C. 596, has a minimum of $293 and a maximum of
                $29,276.
                 (vii) Civil penalty for a violation of an order issued by the
                Secretary under the Agricultural Adjustment Act, reenacted with
                amendments by the Agricultural Marketing Agreement Act of 1937,
                codified at 7 U.S.C. 608c(14)(B), has a maximum of $2,928. Each day the
                violation continues is a separate violation.
                 (viii) Civil penalty for failure to file certain reports under the
                Agricultural Adjustment Act, reenacted by the Agricultural Marketing
                Agreement Act of 1937, codified at 7 U.S.C. 610(c), has a maximum of
                $293.
                 (ix) Civil penalty for a violation of a seed program under the
                Federal Seed Act, codified at 7 U.S.C. 1596(b), has a minimum of $100
                and a maximum of $1,996.
                 (x) Civil penalty for failure to collect any assessment or fee for
                a violation of the Cotton Research and Promotion Act, codified at 7
                U.S.C. 2112(b), has a maximum of $2,928.
                 (xi) Civil penalty for failure to pay, collect, or remit any
                assessment or fee for a violation of a program under the Potato
                Research and Promotion Act, codified at 7 U.S.C. 2621(b)(1), has a
                minimum of $1,312 and a maximum of $12,104.
                 (xii) Civil penalty for failure to obey a cease and desist order
                under the Potato Research and Promotion Act, codified at 7 U.S.C.
                2621(b)(3), has a maximum of $1,312. Each day the violation continues
                is a separate violation.
                 (xiii) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Egg
                Research and Consumer Information Act, codified at 7 U.S.C. 2714(b)(1),
                has a minimum of $1,517 and a maximum of $15,174.
                 (xiv) Civil penalty for failure to obey a cease and desist order
                under the Egg Research and Consumer Information Act, codified at 7
                U.S.C. 2714(b)(3), has a maximum of $1,517. Each day the violation
                continues is a separate violation.
                 (xv) Civil penalty for failure to remit any assessment or fee or
                for a violation of a program under the Beef Research and Information
                Act, codified at 7 U.S.C. 2908(a)(2), has a maximum of $11,837.
                 (xvi) Civil penalty for failure to remit any assessment or for a
                violation of a program regarding wheat and wheat foods research,
                codified at 7 U.S.C. 3410(b), has a maximum of $2,928.
                 (xvii) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Floral
                Research and Consumer Information Act, codified at 7 U.S.C. 4314(b)(1),
                has a minimum of $1,378 and a maximum of $13,777.
                 (xviii) Civil penalty for failure to obey a cease and desist order
                under the Floral Research and Consumer Information Act, codified at 7
                U.S.C. 4314(b)(3), has a maximum of $1,378. Each day the violation
                continues is a separate violation.
                 (xix) Civil penalty for violation of an order under the Dairy
                Promotion Program, codified at 7 U.S.C. 4510(b), has a maximum of
                $2,547.
                 (xx) Civil penalty for pay, collect, or remit any assessment or fee
                or for a violation of the Honey Research, Promotion, and Consumer
                Information Act, codified at 7 U.S.C. 4610(b)(1), has a minimum of $765
                and a maximum of $7,846.
                 (xxi) Civil penalty for failure to obey a cease and desist order
                under the Honey Research, Promotion, and Consumer Information Act,
                codified at 7 U.S.C. 4610(b)(3), has a maximum of $785. Each day the
                violation continues is a separate violation.
                 (xxii) Civil penalty for a violation of a program under the Pork
                Promotion, Research, and Consumer Information Act of 1985, codified at
                7 U.S.C. 4815(b)(1)(A)(i), has a maximum of $2,368.
                 (xxiii) Civil penalty for failure to obey a cease and desist order
                under the Pork Promotion, Research, and Consumer Information Act of
                1985, codified at 7 U.S.C. 4815(b)(3)(A), has a maximum of $1,184. Each
                day the violation continues is a separate violation.
                 (xxiv) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Watermelon
                Research and Promotion Act, codified at 7 U.S.C. 4910(b)(1), has a
                minimum of $1,184 and a maximum of $11,837.
                 (xxv) Civil penalty for failure to obey a cease and desist order
                under the Watermelon Research and Promotion Act, codified at 7 U.S.C.
                4910(b)(3), has a maximum of $1,184. Each day the violation continues
                is a separate violation.
                 (xxvi) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Pecan
                Promotion and Research Act of 1990, codified at 7 U.S.C. 6009(c)(1),
                has a minimum of $1,928 and a maximum of $19,268.
                 (xxvii) Civil penalty for failure to obey a cease and desist order
                under the Pecan Promotion and Research Act of 1990, codified at 7
                U.S.C. 6009(e), has a maximum of $1,926.
                 (xxviii) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Mushroom
                Promotion, Research, and Consumer Information Act of 1990, codified at
                7 U.S.C. 6107(c)(1), has a minimum of $937 and a maximum of $9,365.
                 (xxix) Civil penalty for failure to obey a cease and desist order
                under the Mushroom Promotion, Research, and Consumer Information Act of
                1990, codified at 7 U.S.C. 6107(e), has a maximum of $937. Each day the
                violation continues is a separate violation.
                 (xxx) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of the Lime Research, Promotion,
                and Consumer Information Act of 1990, codified at 7 U.S.C. 6207(c)(1),
                has a minimum of $937 and a maximum of $9,365.
                 (xxxi) Civil penalty for failure to obey a cease and desist order
                under the Lime Research, Promotion, and Consumer Information Act of
                1990, codified at 7 U.S.C. 6207(e), has a maximum of $937. Each day the
                violation continues is a separate violation.
                [[Page 36688]]
                 (xxxii) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Soybean
                Promotion, Research, and Consumer Information Act, codified a 7 U.S.C.
                6307(c)(1)(A), has a maximum of $1,928.
                 (xxxiii) Civil penalty for failure to obey a cease and desist order
                under the Soybean Promotion, Research, and Consumer Information Act,
                codified at 7 U.S.C. 6307(e), has a maximum of $9,593. Each day the
                violation continues is a separate violation.
                 (xxxiv) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Fluid Milk
                Promotion Act of 1990, codified at 7 U.S.C. 6411(c)(1)(A), has a
                minimum of $937 and a maximum of $9,365, or in the case of a violation
                that is willful, codified at 7 U.S.C. 6411(c)(1)(B), has a minimum of
                $18,405 and a maximum of $187,296.
                 (xxxv) Civil penalty for failure to obey a cease and desist order
                under the Fluid Milk Promotion Act of 1990, codified at 7 U.S.C.
                6411(e), has a maximum of $9,639. Each day the violation continues is a
                separate violation.
                 (xxxvi) Civil penalty for knowingly labeling or selling a product
                as organic except in accordance with the Organic Foods Production Act
                of 1990, codified at 7 U.S.C. 6519(c), has a maximum of $18,730.
                 (xxxvii) Civil penalty for failure to pay, collect, or remit any
                assessment or fee or for a violation of a program under the Fresh Cut
                Flowers and Fresh Cut Greens Promotion and Information Act of 1993,
                codified at 7 U.S.C. 6808(c)(1)(A)(i), has a minimum of $883 and a
                maximum of $8,831.
                 (xxxviii) Civil penalty for failure to obey a cease and desist
                order under the Fresh Cut Flowers and Fresh Cut Greens Promotion and
                Information Act of 1993, codified at 7 U.S.C. 6808(e)(1), has a maximum
                of $8,831. Each day the violation continues is a separate violation.
                 (xxxix) Civil penalty for a violation of a program under the Sheep
                Promotion, Research, and Information Act of 1994, codified at 7 U.S.C.
                7107(c)(1)(A), has a maximum of $1,722.
                 (xl) Civil penalty for failure to obey a cease and desist order
                under the Sheep Promotion, Research, and Information Act of 1994,
                codified at 7 U.S.C. 7107(e), has a maximum of $860. Each day the
                violation continues is a separate violation.
                 (xli) Civil penalty for a violation of an order or regulation
                issued under the Commodity Promotion, Research, and Information Act of
                1996, codified at 7 U.S.C. 7419(c)(1), has a minimum of $1,625 and a
                maximum of $16,257 for each violation.
                 (xlii) Civil penalty for failure to obey a cease and desist order
                under the Commodity Promotion, Research, and Information Act of 1996,
                codified at 7 U.S.C. 7419(e), has a minimum of $1,625 and a maximum of
                $16,257. Each day the violation continues is a separate violation.
                 (xliii) Civil penalty for a violation of an order or regulation
                issued under the Canola and Rapeseed Research, Promotion, and Consumer
                Information Act, codified at 7 U.S.C. 7448(c)(1)(A)(i), has a maximum
                of $1,625 for each violation.
                 (xliv) Civil penalty for failure to obey a cease and desist order
                under the Canola and Rapeseed Research, Promotion, and Consumer
                Information Act, codified at 7 U.S.C. 7448(e), has a maximum of $8,128.
                Each day the violation continues is a separate violation.
                 (xlv) Civil penalty for violation of an order or regulation issued
                under the National Kiwifruit Research, Promotion, and Consumer
                Information Act, codified at 7 U.S.C. 7468(c)(1), has a minimum of $813
                and a maximum of $8,128 for each violation.
                 (xlvi) Civil penalty for failure to obey a cease and desist order
                under the National Kiwifruit Research, Promotion, and Consumer
                Information Act, codified at 7 U.S.C. 7468(e), has a maximum of $813.
                Each day the violation continues is a separate violation.
                 (xlvii) Civil penalty for a violation of an order or regulation
                under the Popcorn Promotion, Research, and Consumer Information Act,
                codified at 7 U.S.C. 7487(a), has a maximum of $1,625 for each
                violation.
                 (xlviii) Civil penalty for certain violations under the Egg
                Products Inspection Act, codified at 21 U.S.C. 1041(c)(1)(A), has a
                maximum of $9,365 for each violation.
                 (xlix) Civil penalty for violation of an order or regulation issued
                under the Hass Avocado Promotion, Research, and Information Act of
                2000, codified at 7 U.S.C. 7807(c)(1)(A)(i), has a minimum of $1,478
                and a maximum of $14,790 for each violation.
                 (l) Civil penalty for failure to obey a cease and desist order
                under the Hass Avocado Promotion, Research, and Information Act of
                2000, codified at 7 U.S.C. 7807(e)(1), has a maximum of $14,790 for
                each offense. Each day the violation continues is a separate violation.
                 (li) Civil penalty for violation of certain provisions of the
                Livestock Mandatory Reporting Act of 1999, codified a 7 U.S.C.
                1636b(a)(1), has a maximum of $15,300 for each violation.
                 (lii) Civil penalty for failure to obey a cease and desist order
                under the Livestock Mandatory Reporting Act of 1999, codified a 7
                U.S.C. 1636b(g)(3), has a maximum of $15,300 for each violation. Each
                day the violation continues is a separate violation.
                 (liii) Civil penalty for failure to obey an order of the Secretary
                issued pursuant to the Dairy Product Mandatory Reporting program,
                codified at 7 U.S.C. 1637b(c)(4)(D)(iii), has a maximum of $14,790 for
                each offense.
                 (liv) Civil penalty for a willful violation of the Country of
                Origin Labeling program by a retailer or person engaged in the business
                of supplying a covered commodity to a retailer, codified at 7 U.S.C.
                1638b(b)(2), has a maximum of $1,188 for each violation.
                 (lv) Civil penalty for violations of the Dairy Research Program,
                codified at 7 U.S.C. 4535 and 4510(b), has a maximum of $2,547 for each
                violation.
                 (lvi) Civil penalty for a packer or swine contractor violation,
                codified at 7 U.S.C. 193(b), has a maximum of $29,270.
                 (lvii) Civil penalty for a livestock market agency or dealer
                failure to register, codified at 7 U.S.C. 203, has a maximum of $1,995
                and not more than $100 for each day the violation continues.
                 (lviii) Civil penalty for operating without filing, or in violation
                of, a stockyard rate schedule, or of a regulation or order of the
                Secretary made thereunder, codified at 7 U.S.C. 207(g), has a maximum
                of $1,996 and not more than $100 for each day the violation continues.
                 (lix) Civil penalty for a stockyard owner, livestock market agency,
                or dealer, who engages in or uses any unfair, unjustly discriminatory,
                or deceptive practice or device in connection with determining whether
                persons should be authorized to operate at the stockyards, or with
                receiving, marketing, buying, or selling on a commission basis or
                otherwise, feeding, watering, holding, delivery, shipment, weighing, or
                handling of livestock, codified at 7 U.S.C. 213(b), has a maximum of
                $29,270.
                 (lx) Civil penalty for a stockyard owner, livestock market agency,
                or dealer, who knowingly fails to obey any order made under the
                provisions of 7 U.S.C. 211, 212, or 213, codified at 7 U.S.C. 215(a),
                has a maximum of $1,996.
                 (lxi) Civil penalty for live poultry dealer violations, codified at
                7 U.S.C. 228b-2(b), has a maximum of $85,150.
                [[Page 36689]]
                 (lxii) Civil penalty for a violation, codified at 7 U.S.C. 86(c),
                has a maximum of $286,049.
                 (lxiii) Civil penalty for failure to comply with certain provisions
                of the U.S. Warehouse Act, codified at 7 U.S.C. 254, has a maximum of
                $36,975 per violation if an agricultural product is not involved in the
                violation.
                 (2) Animal and Plant Health Inspection Service. (i) Civil penalty
                for a violation of the imported seed provisions of the Federal Seed
                Act, codified at 7 U.S.C. 1596(b), has a minimum of $100 and a maximum
                of $1,996.
                 (ii) Civil penalty for a violation of the Animal Welfare Act,
                codified at 7 U.S.C. 2149(b), has a maximum of $11,883, and knowing
                failure to obey a cease and desist order has a civil penalty of $1,782.
                 (iii) Civil penalty for any person that causes harm to, or
                interferes with, an animal used for the purposes of official inspection
                by USDA, codified at 7 U.S.C. 2279e(a), has a maximum of $14,790.
                 (iv) Civil penalty for a violation of the Swine Health Protection
                Act, codified at 7 U.S.C. 3805(a), has a maximum of $29,726.
                 (v) Civil penalty for any person that violates the Plant Protection
                Act (PPA), or that forges, counterfeits, or, without authority from the
                Secretary, uses, alters, defaces, or destroys any certificate, permit,
                or other document provided for in the PPA, codified a 7 U.S.C.
                7734(b)(1), has a maximum of the greater of: $73,950 in the case of any
                individual (except that the civil penalty may not exceed $1,479 in the
                case of an initial violation of the PPA by an individual moving
                regulated articles not for monetary gain), $369,749 in the case of any
                other person for each violation, $594,129 for all violations
                adjudicated in a single proceeding if the violations do not include a
                willful violation, and $1,188,259 for all violations adjudicated in a
                single proceeding if the violations include a willful violation; or
                twice the gross gain or gross loss for any violation, forgery,
                counterfeiting, unauthorized us, defacing, or destruction of a
                certificate, permit, or other document provided for in the PPA that
                results in the person deriving pecuniary gain or causing pecuniary loss
                to another.
                 (vi) Civil penalty for any person (except as provided in 7 U.S.C.
                8309(d)) that violates the Animal Health Protection Act (AHPA), or that
                forges, counterfeits, or, without authority from the Secretary, uses,
                alters, defaces, or destroys any certificate, permit, or other document
                provided under the AHPA, codified at 7 U.S.C. 8313(b)(1), has a maximum
                of the greater of: $70,972 in the case of any individual, except that
                the civil penalty may not exceed $1,420 in the case of an initial
                violation of the AHPA by an individual moving regulated articles not
                for monetary gain, $354,860 in the case of any other person for each
                violation, $594,129 for all violations adjudicated in a single
                proceeding if the violations do not include a willful violation, and
                $1,188,259 for all violations adjudicated in a single proceeding if the
                violations include a willful violation; or twice the gross gain or
                gross loss for any violation, forgery, counterfeiting, unauthorized
                use, defacing, or destruction of a certificate, permit, or other
                document provided under the AHPA that results in the person's deriving
                pecuniary gain or causing pecuniary loss to another person.
                 (vii) Civil penalty for any person that violates certain
                regulations under the Agricultural Bioterrorism Protection Act of 2002
                regarding transfers of listed agents and toxins or possession and use
                of listed agents and toxins, codified at 7 U.S.C. 8401(i)(1), has a
                maximum of $354,860 in the case of an individual and $709,721 in the
                case of any other person.
                 (viii) Civil penalty for violation of the Horse Protection Act,
                codified at 15 U.S.C. 1825(b)(1), has a maximum of $5,856.
                 (ix) Civil penalty for failure to obey Horse Protection Act
                disqualification, codified at 15 U.S.C. 1825(c), has a maximum of
                $11,444.
                 (x) Civil penalty for knowingly violating, or, if in the business
                as an importer or exporter, violating, with respect to terrestrial
                plants, any provision of the Endangered Species Act of 1973, any permit
                or certificate issued thereunder, or any regulation issued pursuant to
                section 9(a)(1)(A) through (F), (a)(2)(A) through (D), (c), (d) (other
                than regulations relating to record keeping or filing reports), (f), or
                (g), as specified at 16 U.S.C. 1540(a)(1), has a maximum of $53,525 for
                each violation.
                 (xi) Civil penalty for knowingly violating, or, if in the business
                as an importer or exporter, violating, with respect to terrestrial
                plants, any other regulation under the Endangered Species Act of 1973,
                as specified at 16 U.S.C. 1540(a)(1), has a maximum of $25,632 for each
                violation.
                 (xii) Civil penalty for violating, with respect to terrestrial
                plants, the Endangered Species Act of 1973, or any regulation, permit,
                or certificate issued thereunder, as specified at 16 U.S.C. 1540(a)(1),
                has a maximum of $1,351 for each violation.
                 (xiii) Civil penalty for knowingly and willfully violating 49
                U.S.C. 80502 with respect to the transportation of animals by any rail
                carrier, express carrier, or common carrier (except by air or water), a
                receiver, trustee, or lessee of one of those carriers, or an owner or
                master of a vessel, codified at 49 U.S.C. 80502(d), has a minimum of
                $168 and a maximum of $860.
                 (xiv) Civil penalty for a violation of the Commercial
                Transportation of Equine for Slaughter Act, 7 U.S.C. 1901 note, and its
                implementing regulations in 9 CFR part 88, as specified in 9 CFR 88.6,
                has a maximum of $812. Each horse transported in violation of 9 CFR
                part 88 is a separate violation.
                 (xv) Civil penalty for knowingly violating section 3(d) or 3(f) of
                the Lacey Act Amendments of 1981, or for violating any other provision
                provided that, in the exercise of due care, the violator should have
                known that the plant was taken, possessed, transported, or sold in
                violation of any underlying law, treaty, or regulation, has a maximum
                of $26,615 for each violation, as specified in 16 U.S.C. 3373(a)(1)
                (but if the plant has a market value of less than $356, and involves
                only the transportation, acquisition, or receipt of a plant taken or
                possessed in violation of any law, treaty, or regulation of the United
                States, any Indian tribal law, any foreign law, or any law or
                regulation of any State, the penalty will not exceed the maximum
                provided for violation of said law, treaty, or regulation, or $26,615,
                whichever is less).
                 (xvi) Civil penalty for violating section 3(f) of the Lacey Act
                Amendments of 1981, as specified in 16 U.S.C. 3373(a)(2), has a maximum
                of $665.
                 (3) Food and Nutrition Service. (i) Civil penalty for violating a
                provision of the Food and Nutrition Act of 2008 (Act), or a regulation
                under the Act, by a retail food store or wholesale food concern,
                codified at 7 U.S.C. 2021(a) and (c), has a maximum of $118,826 for
                each violation.
                 (ii) Civil penalty for trafficking in food coupons, codified at 7
                U.S.C. 2021(b)(3)(B), has a maximum of $42,819 for each violation,
                except that the maximum penalty for violations occurring during a
                single investigation is $77,106.
                 (iii) Civil penalty for the sale of firearms, ammunitions,
                explosives, or controlled substances for coupons, codified at 7 U.S.C.
                2021(b)(3)(C), has a maximum of $38,553 for each violation, except that
                the maximum penalty for violations occurring during a single
                investigation is $77,106.
                [[Page 36690]]
                 (iv) Civil penalty for any entity that submits a bid to supply
                infant formula to carry out the Special Supplemental Nutrition Program
                for Women, Infants and Children and discloses the amount of the bid,
                rebate, or discount practices in advance of the bid opening or for any
                entity that makes a statement prior to the opening of bids for the
                purpose of influencing a bid, codified at 42 U.S.C. 1786(h)(8)(H)(i),
                has a maximum of $181,484,308.
                 (v) Civil penalty for a vendor convicted of trafficking in food
                instruments, codified at 42 U.S.C. 1786(o)(1)(A) and 42 U.S.C.
                1786(o)(4)(B), has a maximum of $15,692 for each violation, except that
                the maximum penalty for violations occurring during a single
                investigation is $62,767.
                 (vi) Civil penalty for a vendor convicted of selling firearms,
                ammunition, explosive, or controlled substances in exchange for food
                instruments, codified at 42 U.S.C. 1786(o)(1)(B) and 42 U.S.C.
                1786(o)(4)(B), has a maximum of $15,306 for each violation, except that
                the maximum penalty for violations occurring during a single
                investigation is $62,767.
                 (4) Food Safety and Inspection Service. (i) Civil penalty for
                certain violations under the Egg Products Inspection Act, codified at
                21 U.S.C. 1041(c)(1)(A), has a maximum of $9,365 for each violation.
                 (ii) [Reserved]
                 (5) Forest Service. (i) Civil penalty for willful disregard of the
                prohibition against the export of unprocessed timber originating from
                Federal lands, codified at 16 U.S.C. 620d(c)(1)(A), has a maximum of
                $963,837 per violation or three times the gross value of the
                unprocessed timber, whichever is greater.
                 (ii) Civil penalty for a violation in disregard of the Forest
                Resources Conservation and Shortage Relief Act or the regulations that
                implement such Act regardless of whether such violation caused the
                export of unprocessed timber originating from Federal lands, codified
                in 16 U.S.C. 620d(c)(2)(A)(i), has a maximum of $144,576 per violation.
                 (iii) Civil penalty for a person that should have known that an
                action was a violation of the Forest Resources Conservation and
                Shortage Relief Act or the regulations that implement such Act
                regardless of whether such violation caused the export of unprocessed
                timber originating from Federal lands, codified at 16 U.S.C.
                620d(c)(2)(A)(ii), has a maximum of $96,384 per violation.
                 (iv) Civil penalty for a willful violation of the Forest Resources
                Conservation and Shortage Relief Act or the regulations that implement
                such Act regardless of whether such violation caused the export of
                unprocessed timber originating from Federal lands, codified in 16
                U.S.C. 620d(c)(2)(A)(iii), has a maximum of $963,837.
                 (v) Civil penalty for a violation involving protections of caves,
                codified at 16 U.S. C. 4307(a)(2), has a maximum of $21,065.
                 (6) [Reserved]
                 (7) Federal Crop Insurance Corporation. (i) Civil penalty for any
                person who willfully and intentionally provides any false or inaccurate
                information to the Federal Crop Insurance Corporation or to an approved
                insurance provider with respect to any insurance plan or policy that is
                offered under the authority of the Federal Crop Insurance Act, or who
                fails to comply with a requirement of the Federal Crop Insurance
                Corporation, codified in 7 U.S.C. 1515(h)(3)(A), has a maximum of the
                greater of: The amount of the pecuniary gain obtained as a result of
                the false or inaccurate information or the noncompliance; or $12,502.
                 (ii) [Reserved]
                 (8) Rural Housing Service. (i) Civil penalty for a violation of
                section 536 of Title V of the Housing Act of 1949, codified in 42
                U.S.C. 1490p(e)(2), has a maximum of $204,891 in the case of an
                individual, and a maximum of $2,048,915 in the case of an applicant
                other than an individual.
                 (ii) Civil penalty for equity skimming under section 543(a) of the
                Housing Act of 1949, codified in 42 U.S.C. 1490s(a)(2), has a maximum
                of $36,975.
                 (iii) Civil penalty under section 543b of the Housing Act of 1949
                for a violation of regulations or agreements made in accordance with
                Title V of the Housing Act of 1949, by submitting false information,
                submitting false certifications, failing to timely submit information,
                failing to maintain real property in good repair and condition, failing
                to provide acceptable management for a project, or failing to comply
                with applicable civil rights laws and regulations, codified in 42
                U.S.C. 1490s(b)(3)(A), has a maximum of the greater of: Twice the
                damages USDA, guaranteed lender, or project that is secured for a loan
                under Title V, suffered or would have suffered as a result of the
                violation; or $73,950 per violation.
                 (9) [Reserved]
                 (10) Commodity Credit Corporation. (i) Civil penalty for willful
                failure or refusal to furnish information, or willful furnishing of
                false information under of section 156 of the Federal Agricultural
                Improvement and Reform Act of 1996, codified at 7 U.S.C. 7272(g)(5),
                has a maximum of $16,257 for each violation.
                 (ii) Civil penalty for willful failure or refusal to furnish
                information or willful furnishing of false data by a processor,
                refiner, or importer of sugar, syrup and molasses under section 156 of
                the Federal Agriculture Improvement and Reform Act of 1996, codified at
                7 U.S.C. 7272(g)(5), has a maximum of $16,257 for each violation.
                 (iii) Civil penalty for filing a false acreage report that exceeds
                tolerance under section 156 of the Federal Agriculture Improvement and
                Reform Act of 1996, codified at 7 U.S.C. 7272(g)(5), has a maximum of
                $16,257 for each violation.
                 (iv) Civil penalty for knowingly violating any regulation of the
                Secretary of the Commodity Credit Corporation pertaining to flexible
                marketing allotments for sugar under section 359h(b) of the
                Agricultural Adjustment Act of 1938, codified at 7 U.S.C. 1359hh(b),
                has a maximum of $11,883 for each violation.
                 (v) Civil penalty for knowing violation of regulations promulgated
                by the Secretary pertaining to cotton insect eradication under section
                104(d) of the Agricultural Act of 1949, codified at 7 U.S.C. 1444a(d),
                has a maximum of $14,638 for each offense.
                 (11) Office of the Secretary. (i) Civil penalty for making,
                presenting, submitting or causing to be made, presented or submitted, a
                false, fictitious, or fraudulent claim as defined under the Program
                Fraud Civil Remedies Act of 1986, codified at 31 U.S.C. 3802(a)(1), has
                a maximum of $11,666.
                 (ii) Civil penalty for making, presenting, submitting or causing to
                be made, presented or submitted, a false, fictitious, or fraudulent
                written statement as defined under the Program Fraud Civil Remedies Act
                of 1986, codified at 31 U.S.C. 3802(a)(2), has a maximum of $11,666.
                PART 400--GENERAL ADMINISTRATIVE REGULATIONS
                0
                2. The authority citation for part 400 continues to read as follows:
                 Authority: 7 U.S.C.1506(l), 1506(o).
                Subpart K [Removed and Reserved]
                0
                3. Remove and reserve subpart K, consisting of Sec. Sec. 400.115
                through 400.142.
                [[Page 36691]]
                PART 761--FARM LOAN PROGRAMS; GENERAL PROGRAM ADMINISTRATION
                0
                4. The authority citation for part 761 continues to read as follows:
                 Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
                Subpart A--General Provisions
                0
                5. Amend Sec. 761.1 by adding paragraphs (e), (f), and (g) to read as
                follows:
                Sec. 761.1 Introduction.
                * * * * *
                 (e) Part 3 of this title and 31 CFR part 285 describe the policies
                and procedures the Agency will follow for non-centralized offset
                (including administrative offset) and referral to Treasury for
                centralized offset (TOP), Federal salary offset, Administrative Wage
                Garnishment, and collection through Treasury's private collection
                agencies (cross-servicing). Supplemental provisions for FLP purposes
                are described in part 761, subpart F of this title.
                 (f) Part 3 of this title and 31 CFR parts 900-904 describe the
                policies and procedures the Agency will follow for debt settlement
                authorities pursuant to the Federal Claims Collection Standards.
                Supplemental provisions for FLP purposes are described in part 761,
                subpart F of this title.
                 (g) Part 761, subpart F of this title describes the debt settlement
                policies and procedures for FLP debt pursuant to the Act.
                0
                6. Amend Sec. 761.2 as follows:
                0
                a. In paragraph (a), add in alphabetical order abbreviations for
                ``ARA'', ``FCCS'', and ``OIG''; and
                0
                b. In paragraph (b):
                0
                i. Revise the definition for ``Adjustment'';
                0
                ii. Add in alphabetical order a definition for ``Alternative repayment
                agreement'';
                0
                iii. Revise the definitions of ``Cancellation'' and ``Debt
                forgiveness''; and
                0
                iv. Add in alphabetical order a definition for ``Hearing official''.
                 The additions and revisions read as follows:
                Sec. 761.2 Abbreviations and definitions.
                * * * * *
                 (a) * * *
                 ARA Alternative Repayment Agreement.
                * * * * *
                 FCCS Federal Claims Collection Standards.
                * * * * *
                 OIG Office of the Inspector General, USDA.
                * * * * *
                 (b) * * *
                 Adjustment means the settlement of an FLP debt for less than the
                total amount owed. The adjusted amount is collected through a series of
                payments that are scheduled over time. An adjustment is not a final
                settlement until all scheduled payments have been made. After applying
                all payments pursuant to the adjustment agreement, any remaining
                balance is canceled. The amount canceled is reported to the IRS
                pursuant to Sec. 3.90 of this title and applicable IRS requirements.
                * * * * *
                 Alternative repayment agreement is a written repayment agreement
                accepted by both the borrower and the Agency as specified in Sec. Sec.
                3.42(b) and 3.80 of this title. The agreement may allow for payments to
                be made from the borrower to the Agency as an alternative to collecting
                the payment amounts through administrative offset, or Federal salary
                offset.
                * * * * *
                 Cancellation means the final resolution of an FLP debt without
                receiving payment in full. Any amounts still owed, after applying
                payments in accordance with approved adjustment and compromise
                agreements, is canceled. The amount canceled is reported to the IRS
                pursuant to Sec. 3.90 of this title and applicable IRS requirements.
                * * * * *
                 Debt forgiveness means the reduction or termination of a debt under
                the Act in a manner that results in a loss to the Agency, through:
                 (i)(A) Writing down or writing off a debt pursuant to 7 U.S.C.
                2001;
                 (B) Cancellation of remaining amounts owed after compromising,
                adjusting, reducing, or charging off a debt or claim pursuant to 7
                U.S.C. 1981;
                 (C) Paying a loss pursuant to 7 U.S.C. 2005 on a FLP loan
                guaranteed by the Agency;
                 (D) Discharging a debt as a result of bankruptcy; or
                 (E) Releases of liability which result in a loss to the Agency.
                 (ii) Debt forgiveness does not include:
                 (A) Debt reduction through a conservation contract;
                 (B) Any writedown provided as part of the resolution of a
                discrimination complaint against the Agency;
                 (C) Prior debt forgiveness that has been repaid in its entirety;
                 (D) Consolidation, rescheduling, reamortization, or deferral of a
                loan; and
                 (E) Forgiveness of a YL debt due to circumstances beyond the
                borrower's control.
                * * * * *
                 Hearing official. For the purposes of salary offset, the hearing
                official is an Administrative Law Judge of the USDA or another
                individual not under the supervision or control of the USDA. For the
                purposes of administrative wage garnishment, the hearing official is
                selected pursuant to part 3, subpart E of this title.
                * * * * *
                0
                7. Add Subpart F to read as follows:
                Subpart F--Farm Loan Programs Debt Settlement
                Sec.
                761.401 Purpose.
                761.402 Abbreviations and definitions.
                761.403 General.
                761.404 Eligibility.
                761.405 Application.
                761.406 Types of debt settlement.
                761.407 Failure to pay.
                761.408 Administrator authority.
                Sec. 761.401 Purpose.
                 (a) This subpart describes the Agency's policies for debt
                settlement as authorized by the Consolidated Farm and Rural Development
                Act (CONACT) (7 U.S.C. 1921, 7 U.S.C. 1981, 1981a, 1981d, and 2008h).
                 (b) FLP debts that cannot be debt settled using CONACT debt
                settlement authority such as when a borrower has received previous debt
                forgiveness on another direct loan made under the CONACT, will be
                processed as specified in 31 U.S.C. chapter 37 and 31 CFR parts 900
                through 904.
                Sec. 761.402 Abbreviations and definitions.
                 (a) Abbreviations and definitions for terms used in this subpart
                are provided in 7 CFR part 3 and Sec. 761.2.
                 (b) Definitions used only in this subpart include:
                 (1) Third party converter means an individual or entity who:
                 (i) Is in possession of agency security property, or money from the
                sale of security, in relation to a loan or other debt that the
                individual or entity was not liable for; or
                 (ii) Assists, or participates knowingly or unknowingly, in the
                transportation or sale of agency security, in relation to a loan or
                other debt that the individual or entity was not liable for; or
                 (iii) Assists, or participates knowingly or unknowingly, in
                temporarily or permanently relocating or concealing the location of
                agency security property, or money from the sale of agency security, in
                relation to a loan or other debt that the individual or entity was not
                liable for.
                [[Page 36692]]
                 (2) [Reserved]
                Sec. 761.403 General.
                 (a) The Agency will settle debts that result from, except as
                otherwise specified in this section:
                 (1)(i) Farm Ownership loans (part 764, subpart D of this chapter),
                including down payment loans (764, subpart E of this chapter);
                 (ii) Operating loans (part 764, subpart G of this chapter),
                including microloans part 764 of this chapter), and youth loans (part
                764, subpart H of this chapter);
                 (iii) Emergency loans (part 764, subpart I of this chapter);
                 (iv) Conservation loans (part 764, subpart F of this chapter);
                 (v) Economic Emergency loans (serviced under parts 761 through 767
                of this chapter); softwood timber loans; Soil and Water loans;
                Individual Recreation Loans; Irrigation and Drainage loans; and Shift-
                in-land-use (Grazing Association) loans;
                 (2) Costs associated with servicing a borrower's account including,
                but not limited to, Uniform Commercial Code filing fees, surveys,
                appraisals, protective advances, and liquidation expenses;
                 (3) Debts reduced to judgment;
                 (4) Non-Program Loans;
                 (5) Amounts the Agency is authorized to recapture through
                agreements such as the Shared Appreciation Agreement (part 766, subpart
                E of this chapter);
                 (6) Loss claims paid on guaranteed loans (part 762 of this
                chapter);
                 (7) Unauthorized assistance;
                 (8) Amounts the Agency may collect from third party converters, or
                other individuals or entities having possession of security for FLP
                loans or monies obtained through the sale of FLP loan security; and
                 (9) Debt returned to the Agency from the Treasury cross-servicing
                program.
                 (b) The debtor's signature is not required to process some debt
                settlement actions. These cases include, but are not limited to, debts
                discharged in bankruptcy and debts returned from Treasury's cross-
                servicing program with amounts still owing when no further collection
                can be taken.
                 (c) FSA will not engage in settlement of a debt if:
                 (1) Foreclosure of security has been initiated and is pending with
                Justice, unless Justice has advised FSA that it does not object to the
                settlement; or
                 (2) Debts that have been referred to Justice for a judgment, or a
                judgement has been obtained by the United States Attorney or Justice,
                unless Justice closes its file and releases the judgement back to FSA
                for continued servicing; or
                 (3) The debtor's account is involved in a fiscal irregularity
                investigation in which final action has not been taken or the account
                shows evidence that a shortage may exist and an investigation will be
                requested; or
                 (d) The Agency will consider settlement of a debt only when:
                 (1) All security has been liquidated and the proceeds, less any
                prior lien amounts, have been applied to the debt; or the Agency
                received a lump sum payment equal to the security's current market
                value, less any prior lien amounts, and
                 (2) Payment is received based on the Agency's determination of the
                amount the borrower can pay to resolve the remaining balance owed on
                the unsecured debt.
                 (3) The lump sum payment made under paragraph (d)(1) of this
                section for the security's market value may be submitted by the
                borrower, an individual authorized to act for the borrower pursuant to
                a power of attorney document or court order, or an individual who is
                not an obligor on the debt but who has an ownership interest in the
                security.
                 (e) If an FLP loan has been accelerated and all security has been
                liquidated, and the agency has approved an adjustment debt settlement
                offer in accordance with this subpart, voluntary payments and
                involuntary payments (such as offsets) will be applied in the following
                order, as applicable:
                 (1) Recoverable costs and protective advances plus interest;
                 (2) Loan principal;
                 (3) Deferred non-capitalized interest;
                 (4) Accrued deferred interest; and
                 (5) Interest accrual to date of payment.
                 (f) Settlement of FLP debt referred to Treasury's cross-servicing
                program and returned to the Agency as uncollectible will not be
                processed for the borrower until all FLP debts referred to the cross-
                servicing program for that borrower have been returned, with or without
                payment agreements.
                Sec. 761.404 Eligibility.
                 (a) A borrower is eligible for debt settlement if the borrower:
                 (1) Meets the requirements for the particular type of debt
                settlement under this part; and
                 (2) Submits a complete application for debt settlement as specified
                in Sec. 761.405.
                 (b) All parties liable for the debt must submit a complete
                application with the following exceptions:
                 (1) The applicable information required in Sec. 761.405 can be
                provided by the administrator or executor of the Estate, heir, or other
                authorized person who can sign the debt settlement application; or
                compiled by FSA staff when a signature cannot be obtained.
                 (2) The debt may be settled when the borrower has no known assets
                or income from which collection can be made, has disappeared and cannot
                be located without undue expense, and there is no security remaining
                for the debt.
                 (3) In cases where the full amount of the unsecured debt cannot be
                collected in a reasonable time by legal action or through enforced
                collection proceedings, the Agency may consider a debt settlement offer
                submitted by a borrower without requiring a complete application. When
                evaluating these offers, the Agency will consider the likelihood of the
                debtor obtaining a larger income or additional assets, including
                inheritance prospects within 5 years, from which legal or enforced
                collection could be made.
                 (c) A borrower is not eligible for debt settlement if:
                 (1) The borrower is indebted on another active FLP loan that the
                borrower cannot or will not debt settle; or
                 (2) The debt has been referred to the OIG, OGC, or Justice because
                of suspected civil or criminal violation, unless investigation was
                declined or advice was provided that the debt can be canceled,
                compromised, or adjusted.
                Sec. 761.405 Application.
                 (a) A borrower requesting debt settlement must submit complete and
                accurate information from which the Agency can make a full
                determination of the borrower's financial circumstances and repayment
                ability. Except for the situations listed in Sec. 761.404(b), each
                liable party, must submit the following:
                 (1) One completed original debt settlement application on the
                applicable Agency form signed by all parties liable for the debt;
                 (2) A current financial statement;
                 (3) A cash flow projection for the next production or earnings
                period;
                 (4) Verification of employment or other earned income, including
                verification of a nondebtor spouse's income which will be included as
                available to pay family living expenses;
                 (5) Verification of assets including, but not limited to, cash,
                checking accounts, savings accounts, certificates of deposit,
                individual retirement accounts, retirement and pension funds, mutual
                funds, stocks, bonds, and accounts receivable;
                 (6) Verification of debts greater than $1,000;
                 (7) Copies of complete Federal income tax returns for the previous
                3 years; and
                [[Page 36693]]
                 (8) Any other items requested by the Agency to evaluate the
                debtor's financial condition.
                 (b) [Reserved]
                Sec. 761.406 Types of debt settlement.
                 (a) Compromise. The Agency may compromise a debt owed to the Agency
                if the requirements of this subpart are met and:
                 (1) The borrower pays a lump sum as a compromise for the remaining
                unsecured debt; and
                 (2) The amount is reasonable based on the Agency's determination of
                what the borrower can pay to settle the debt.
                 (b) Adjustment. The Agency may settle a debt owed to the Agency
                through an adjustment agreement if the requirements of this subpart are
                met and:
                 (1) The borrower agrees to pay the adjustment amount for a period
                of time not to exceed 5 years; and
                 (2) The amount is reasonable based on the Agency's determination of
                what the borrower can pay to settle the debt; and
                 (3) The borrower provides documentation that funds are, or will be,
                available to pay the adjustment offer through its term.
                 (c) Cancellation. The Agency may cancel a debt owed to the Agency
                if the requirements of this subpart are met and the application and
                supporting documents indicate that the borrower is unable to pay a
                compromise or adjustment offer.
                Sec. 761.407 Failure to pay.
                 (a) Failure to pay any compromise amount approved by FSA by the
                date agreed will result in cancellation of the compromise agreement.
                 (b) Failure to pay debt adjustment amounts approved by FSA by the
                dates agreed will result in cancellation of the adjustment agreement.
                 (c) A debtor who has entered into an agreement under this subpart
                may request that FSA extend a repayment date for 90 days. The debtor
                must provide information that supports the basis for the request at the
                time the request is made.
                 (d) If a debtor is delinquent under the terms of an adjustment
                agreement and FSA determines the debtor is likely to be financially
                unable to meet the terms of the agreement, the existing agreement may
                be cancelled and the debtor may be allowed to apply for a different
                type of settlement more consistent with the debtor's repayment ability.
                 (e) If an agreement is cancelled, any payments received will be
                retained as payments on the debt owed.
                Sec. 761.408 Administrator authority.
                 On an individual case basis, the Agency may consider granting an
                exception to any requirement of this part if:
                 (a) The exception is not inconsistent with the authorizing statute
                or other applicable law; and
                 (b) The Agency's financial interest would be adversely affected by
                acting in accordance with this part and granting an exception would
                resolve or eliminate the adverse effect upon its financial interest.
                PART 765--FARM LOAN PROGRAMS, DIRECT LOAN SERVICING--REGULAR
                0
                8. The authority citation for part 765 continues to read as follows:
                 Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
                Subpart D--Borrower Payments
                Sec. 765.155 [Amended]
                0
                9. Amend Sec. 765.155 in paragraph (d) by removing the words ``attempt
                to settle the debt in accordance with subpart B of 7 CFR part 1956''
                and adding the words ``service the debt in accordance with part 761,
                subpart F of this chapter'' in their place.
                Subpart I--Transfer of Security and Assumption of Debt
                0
                10. Amend Sec. 765.406 by revising paragraph (b)(3) to read as
                follows:
                Sec. 765.406 Release of transferor from liability.
                * * * * *
                 (b) * * *
                 (3) If an outstanding balance will remain and all of the
                transferor's security has been transferred, the transferor may pay the
                remaining balance or request debt settlement in accordance with part
                761 subpart F of this chapter. If the transferor does not resolve the
                debt by paying the remaining balance or submitting a debt settlement
                offer that is acceptable to the Agency, the Agency will service the
                debt in accordance with part 3 of this title using all applicable
                collection tools including, but not limited to, administrative offset,
                AWG, cross-servicing, Federal salary offset, and TOP.
                * * * * *
                PART 766--FARM LOAN PROGRAMS, DIRECT LOAN SERVICING--SPECIAL
                0
                11. The authority citation for part 766 continues to read as follows:
                 Authority: 5 U.S.C. 301 and 7 U.S.C. 1989.
                Subpart C--Loan Servicing Programs
                Sec. 766.101 [Amended]
                0
                12. Amend Sec. 766.101 as follows:
                0
                a. In paragraph (b)(1), remove the words ``(Appendix A to this
                subpart)'';
                0
                b. In paragraph (b)(2), remove the phrase ``FSA-2510'' and add the
                phrase ``FSA-2510 (Appendix A to this subpart) or FSA-2510-IA'' in its
                place;
                0
                c. In paragraph (b)(3), remove the words ``(Appendix C to this
                subpart)''; and
                0
                d. In paragraph (d)(2), remove the phrase ``FSA-2510'' and add the
                phrase ``FSA-2510 or FSA-2510-IA'' in its place.
                Sec. 766.102 [Amended]
                0
                13. Amend Sec. 766.102 in paragraph (c) by removing the words
                ``subpart B of 7 CFR part 1956'' and adding the words ``part 761,
                subpart F of this chapter'' in their place.
                Sec. 766.103 [Amended]
                0
                14. Revise Sec. 766.103 in paragraph (b) introductory text by removing
                the phrase ``FSA-2510'' and adding the phrase ``FSA-2510 or FSA-2510-
                IA'' in its place.
                0
                15. Revise appendix A to subpart C to read as follows:
                Appendix A to Subpart C of Part 766--FSA-2510, Notice of Availability
                of Loan Servicing to Borrowers Who Are 90 Days Past Due
                 This appendix contains the notification (form letter) that the Farm
                Service Agency will send to borrowers who are at least 90 days past due
                on their loan payments. It provides information about the loan
                servicing that is available to the borrower. As stated below on the
                notification, the borrower is to respond within 60 days from receiving
                the notification (see Sec. 766.101(b)(2) and (d)(2) for the
                requirements). The notification is provided here as required by 7
                U.S.C. 1981d.
                BILLING CODE 3410-KS-P
                [[Page 36694]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.001
                [[Page 36695]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.002
                [[Page 36696]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.003
                [[Page 36697]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.004
                [[Page 36698]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.005
                [[Page 36699]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.006
                [[Page 36700]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.007
                [[Page 36701]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.008
                [[Page 36702]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.009
                [[Page 36703]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.010
                0
                 16. Revise appendix B to subpart C to read as follows:
                Appendix B to Subpart C of Part 766--FSA-2510-IA, Notice of
                Availability of Loan Servicing to Borrowers Who Are 90 Days Past Due
                (For Use in Iowa Only)
                 This appendix contains the notification (form letter) that the
                Farm Service Agency will send to borrowers with loans in Iowa who
                are at least 90 days past due on their loan payments. It provides
                information about the loan servicing that is available to the
                borrower. As stated below on the notification, the borrower is to
                respond within 60 days from receiving the notification (see Sec.
                766.101(b)(2) and (d)(2) for the requirements). The notification is
                provided here as required by 7 U.S.C. 1981d.
                [[Page 36704]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.011
                [[Page 36705]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.012
                [[Page 36706]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.013
                [[Page 36707]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.014
                [[Page 36708]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.015
                [[Page 36709]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.016
                [[Page 36710]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.017
                [[Page 36711]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.018
                [[Page 36712]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.019
                [[Page 36713]]
                [GRAPHIC] [TIFF OMITTED] TR17JN20.020
                BILLING CODE 3410-KS-C
                Appendix C to Subpart C of Part 766 [Removed]
                0
                17. Remove appendix C to subpart C.
                Subpart H--Loan Liquidation
                Sec. 766.352 [Amended]
                0
                18. Amend Sec. 766.352 in paragraph (a)(5) by removing the words
                ``subpart B of 7 CFR part 1956'' and adding the words ``part 761,
                subpart F of this chapter and part 3 of this title'' in their place.
                Sec. 766.353 [Amended]
                0
                19. Amend Sec. 766.353 in paragraph (a)(8) by removing the words
                ``subpart B of 7 CFR part 1956 before or in conjunction with the'' and
                adding the words ``part 761, subpart F of this chapter before, or in
                conjunction with, the'' in their place.
                0
                20. Amend Sec. 766.354 by revising paragraph (a)(6) to read as
                follows:
                Sec. 766.354 Voluntary conveyance of chattel.
                 (a) * * *
                 (6) Complete debt settlement application in accordance with part
                761, subpart F of this chapter before, or in conjunction with, the
                voluntary conveyance offer if the value of the property to be conveyed
                is less than the FLP debt.
                * * * * *
                0
                21. Amend Sec. 766.357 by revising paragraphs (b)(5) and (c)(3) to
                read as follows:
                Sec. 766.357 Involuntary liquidation of real property and chattel.
                * * * * *
                 (b) * * *
                 (5) If an unpaid balance on the FLP loan remains after the
                foreclosure sale of the property, the Agency will service the account
                in accordance with part 761, subpart F of this chapter and part 3 of
                this title.
                 (c) * * *
                 (3) If an unpaid balance on the FLP loan remains after the sale of
                the repossessed property, the Agency will service the account in
                accordance with part 761, subpart F of this chapter and part 3 of this
                title.
                PART 772--FARM LOAN PROGRAMS, SERVICING MINOR PROGRAM LOANS
                0
                22. The authority citation for part 772 continues to read as follows:
                 Authority: 5 U.S.C. 301, 7 U.S.C. 1989, 25 U.S.C. 490.
                0
                23. Amend Sec. 772.9 by revising paragraph (c) to read as follows:
                Sec. 772.9 Releases.
                * * * * *
                 (c) Servicing of debt not satisfied through liquidation. Balances
                remaining after the sale or liquidation of the security will be
                serviced in accordance with part 761, subpart F of this chapter and
                part 3 of this title.
                0
                24. Revise Sec. 772.13 to read as follows:
                Sec. 772.13 Delinquent account servicing.
                 (a) AMP loans. If the borrower does not make arrangements to cure
                the default after notice by the Agency and is not eligible for
                reamortization in accordance with Sec. 772.14, the Agency will
                liquidate the account in accordance with Sec. 772.16. Delinquent AMP
                loans will be serviced in accordance with part 761, subpart F of this
                chapter and part 3 of this title.
                 (b) IMP loans. Delinquent IMP loans will be serviced in accordance
                with part 761, subpart F of this chapter and part 3 of this title.
                [[Page 36714]]
                PART 792--[REMOVED]
                0
                25. Under the authority of 31 U.S.C. 3717, remove part 792.
                PART 1403--[REMOVED]
                0
                26. Under the authority of 15 U.S.C. 714b, remove part 1403.
                PART 1951--SERVICING AND COLLECTIONS
                0
                27. The authority citation for part 1951 continues to read as follows:
                 Authority: 5 U.S.C. 301; 7 U.S.C 1932 note; 7 U.S.C. 1989; 31
                U.S.C. 3716; 42 U.S.C. 1480.
                Subpart C [Removed and Reserved]
                0
                28. Remove and reserve subpart C, consisting of Sec. Sec. 1951.101
                through 1951.150.
                PART 1956--DEBT SETTLEMENT
                0
                29. The authority citation for part 1956 continues to read as follows:
                 Authority: 5 U.S.C. 301; and 7 U.S.C. 1989.
                Subpart B--Debt Settlement--Farm Loan Programs and Multi-Family
                Housing
                0
                30. Amend Sec. 1956.51 in the first sentence by removing the words
                ``the Farm Credit loan programs of the Farm Service Agency (FSA) and''
                and adding a sentence at the end of the section.
                 The addition reads as follows.
                Sec. 1956.51 Purpose.
                 * * * The provisions of this subpart do not apply to any program
                administered by the Farm Service Agency as of June 17, 2020.
                Subpart C--Debt Settlement--Community and Business Programs
                0
                31. Amend Sec. 1956.101 by adding a sentence at the end of the section
                to read as follows.
                Sec. 1956.101 Purpose.
                 * * * The provisions of this subpart do not apply to any program
                administered by the Farm Service Agency as of June 17, 2020.
                Robert Johansson,
                Chairman, Federal Crop Insurance Corporation Board.
                Stephen L. Censky,
                Vice Chairman, Commodity Credit Corporation, and Deputy Secretary of
                Agriculture.
                [FR Doc. 2020-09447 Filed 6-16-20; 8:45 am]
                BILLING CODE 3410-KS-P
                

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