[Federal Register: January 22, 2004 (Volume 69, Number 14)]
[Rules and Regulations]
[Page 2999-3000]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22ja04-2]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Part 1951
RIN 0570-AA52
Debt Collection Improvement Act--Treasury Offset and Cross
Servicing
AGENCY: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: This action amends the regulations governing the servicing of
Rural Business-Cooperative Service (RBS) loan and grant programs by
adding a section to clarify that any amounts paid by RBS on account of
the liabilities of a guaranteed loan borrower will constitute a Federal
debt owing to RBS by the guaranteed loan borrower. RBS may use all
remedies available to it, including offset under the Debt Collection
Improvement Act (DCIA), to collect the debt from the borrower.
EFFECTIVE DATE: This rule is effective on January 22, 2004.
FOR FURTHER INFORMATION CONTACT: Bill Hagy, Deputy Administrator, Rural
Business-Cooperative Service, USDA, Stop 3220, Room 5050, 1400
Independence Ave. SW., Washington, DC 20250-3250, Telephone (202) 720-
7287, or internet e-mail bill.hagy@usda.gov.
SUPPLEMENTARY INFORMATION:
Classification
This rule has been reviewed under Executive Order 12866 and has
been determined to be a nonsignificant regulatory action by the Office
of Management and Budget (OMB).
This rule is not published for notice and comment because it
implements statutory and regulatory provisions that are binding on the
RBS. Since RBS does not have discretion in this matter, public comment
would not be able to affect the provisions of the rule. Therefore, the
rule is published as final and effective upon publication.
Programs Affected
The Catalog of Federal Domestic Assistance Program number assigned
to this program is: 10.768, Business and Industrial Loans.
Paperwork Reduction Act
There are no reporting or record keeping requirements associated
with this rule.
Environmental Impact Statement
It is the determination of the Secretary that this action is not a
major Federal action significantly affecting the environment.
Therefore, in accordance with the National Environmental Policy Act of
1969, an Environmental Impact Statement is not required.
Executive Order 12988
This rule has been reviewed in accordance with E.O. 12988, Civil
Justice Reform. In accordance with this rule: (1) All State and local
laws and regulations that are in conflict with this rule will be
preempted; (2) no retroactive effect will be given to this rule; and
(3) administrative proceedings in accordance with 7 CFR part 11 must be
exhausted before bringing suit in court challenging action taken under
this rule unless those regulations specifically allow bringing suit at
an earlier time.
The Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal Governments and
the private sector. Under section 202 of the UMRA, USDA must prepare a
written statement, including a cost benefit analysis, for proposed and
final rules with ``Federal mandates'' that may result in expenditures
to State, local or tribal Governments, in the aggregate, or to the
private sector, of $100 million or more in any one year. When such a
statement is needed for a rule, section 205 of UMRA generally requires
USDA to identify and consider a reasonable number of regulatory
alternatives and adopt the least costly, more cost effective, or least
burdensome alternative that achieves the objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and tribal
Governments or the private sector. Therefore, this rule is not subject
to the requirements of sections 202 and 205 of UMRA.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the undersigned has determined and certified by signature of this
document that this rule will not have a significant
[[Page 3000]]
economic impact on a substantial number of small entities. The
Regulatory Flexibility Act is intended to encourage Federal Agencies to
utilize innovative administrative procedures in dealing with
individuals, small businesses, small organizations, and small
governmental bodies that would otherwise be unnecessarily adversely
affected by Federal regulations. The provisions included in this rule
will not impact a substantial number of small entities to a greater
extent than large entities. Therefore, no regulatory flexibility
analysis under the Regulatory Flexibility Act is necessary.
Executive Order 13132, Federalism
The policies contained in this rule do not have any substantial
direct effect on States, the relationship between the National
Government and the States, or the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on State and local
Governments. Therefore, consultation with the States is not required.
Discussion
This rule clarifies the policy of the RBS concerning the statutory
mandate imposed on the Agency by the Debt Collection Improvement Act of
1996 (104 Pub. L. 134) (DCIA).
Section 3701 of 31 U.S.C. defines ``claim'' or ``debt'' in part to
include funds owed on account of loans guaranteed by the Government.
This rule puts the guarantee borrower on notice that RBS will attempt
to collect from them through Treasury Offset and any other available
remedies when a final loss claim is paid to a guaranteed lender. It
provides that a debt for purposes of the DCIA is established upon
payment of a loss claim to the original guarantee-lender.
The Debt Collection Act of 1982 (Act) (97 Pub. L. 365) provides for
the use of administrative, salary and Internal Revenue Service (IRS)
offsets by Government Agencies to collect delinquent Federal debts. Any
money that is or may become payable from the United States to an
individual or entity indebted to RBS may be offset for the collection
of a debt owed to RBS. In addition, money may be collected from the
debtor's retirement payments for delinquent amounts owed to RBS if the
debtor is an employee or retiree of a Federal Agency, the U.S. Postal
Service, the Postal Rate Commission, or a member of the U.S. Armed
Forces or the Reserve. Current regulations published for RBS programs
in title 7 of the Code of Federal Regulations do not expressly discuss
at what point a debt to the Federal Government is established for
purposes of the remedies available under the DCIA; this rulemaking
expressly provides that the debt is created at the time the loss claim
is paid to the guaranteed lender.
This rule is consistent with the Act and clarifies that, in cases
of guaranteed loans, a Federal debt is established when a guaranteed
loss claim is paid. The loss claim paid may or may not be a final loss
claim for purposes of this rule. Accordingly, if several claims are
paid over time, separate debts are created accordingly. RBS will
exercise all remedies available for collection, including those
provided by the Debt Collection Improvement Act of 1996. RBS has
already implemented a practice of referring debts arising from direct
loans to the U.S. Department of the Treasury.
The Agency is in the process of revising the applicable forms to
include the applicant's certification and acknowledgment that any
amounts paid by RBS on account of liabilities of the guaranteed loan
borrower will constitute a Federal debt to RBS on the part of the
borrower. The forms will provide direct notice to interested applicants
of RBS' debt collection policy and memorialize their understanding and
acknowledgment of RBS' collection policy.
RBS loan officials will provide notification to the B&I guaranteed
borrower of their applicable rights and potential collection actions by
sending a 60 day due process letter.
List of Subjects in 7 CFR Part 1951
Accounting, Account servicing, Credit, Debt collection, Loan
programs--agriculture, Low and moderate income housing loans--
servicing, Offsets of Federal payments.
0
Accordingly, chapter VXIII, title 7, Code of Federal Regulations, is
amended as follows:
PART 1951--SERVICING AND COLLECTIONS
0
1. The authority citation for part 1951 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1932 Note; 7 U.S.C. 1989; 31
U.S.C. 3716; 42 U.S.C. 1480.
Subpart C--Offsets of Federal Payments to USDA Agency Borrowers
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2. Section 1951.133 is added to read as follows:
Sec. 1951.133 Establishment of Federal Debt.
Any amounts paid by RBS on account of liabilities of a business and
industry (B&I) program guaranteed loan borrower will constitute a
Federal debt owing to RBS by the B&I guaranteed loan borrower. In such
case, the RBS may use all remedies available to it, including offset
under the Debt Collection Improvement Act of 1996 (DCIA), to collect
the debt from the borrower. Interest charges will be established at the
note rate of the guaranteed loan on the date a loss claim is paid. RBS
may, at its option, refer such debt in all or part to the Department of
the Treasury, before a final loss claim is determined.
Dated: January 14, 2004.
John Rosso,
Administrator, Rural Business-Cooperative Service.
[FR Doc. 04-1261 Filed 1-21-04; 8:45 am]