Final rules on debt collection (2010)

On April 16, 2010, the Commission published final rules and their explanation and justification in the Federal Register implementing statutory and regulatory provisions regarding the collection of delinquent debts owed to the United States Government. The final rules also integrate existing regulations regarding the collection of debts arising solely from the Administrative Fine program into the new rules.

Background

The Commission is promulgating new rules to implement the Debt Collection Improvement Act of 1996 (DCIA), which governs the federal government’s debt collection activities and mandates that all nontax debts or claims owed to the United States that have been delinquent for a period of more than 180 days shall be referred to the U.S. Department of the Treasury or a Treasury-designated collection center for appropriate action to collect or terminate collection of the claim or debt.

The Federal Claims Collection Standards (FCCS), which were promulgated by the U.S. Department of the Treasury and the U.S. Department of Justice, prescribe the standards that federal agencies must use in the administrative collection, offset, compromise and suspension or termination of collection activity for civil claims of money, funds or property. 31 CFR 900-904. The FCCS clarifies and simplifies federal debt collection procedures and prescribes the steps that an agency must take before initiating debt collection to ensure that individuals’ rights are protected, which include notifying the debtor of the debt and the consequences of failing to resolve the debt.

The Commission published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on February 24, 2010, requesting comment on the proposed rules. (See the April 2010 Record). The comment period closed on March 26, 2010, and the Commission received one comment on the proposed rules.

Collection of administrative debts

The Commission is adding new part 8 and new subpart C to 11 CFR Part 111 to provide for debt collection. Together, both parts are designed to cover all types of debt that the Commission must collect. The regulations in part 8 cover only those debts that are either owed to the U.S. government by current or former Commission employees, or arise from the provision of goods or services by contractors or vendors doing business with the Commission. New 11 CFR 8.3 states that the Commission will collect the claims or debts covered by 11 CFR part 8 in accordance with the DCIA, the FCCS and certain other Treasury regulations governing debt collection. The new rules also state that the Commission will refer all debts to the Treasury Department that are more than 180 days delinquent and may, at its discretion, transfer delinquent debts prior to the end of the 180 day period. 11 CFR 8.3(c).

Additionally, the Commission’s final rules provide for instances where a debtor has sought bankruptcy protection, which may require the Commission to take different action pursuant to bankruptcy law. 11 CFR 8.4.

The Commission shall also assess interest, penalties and administrative costs on debts owed to the United States, in accordance with federal law. The final rules state that the Commission shall waive collection of interest and administrative costs on debts that are paid within 30 days after the date on which interest begins to accrue. The final rules also provide that the Commission may, at its discretion, waive collection of interest, penalties or administrative costs on any debt, and sets out the criteria for waiver. 11 CFR 8.5.

Collection of debts arising from enforcement and administration of the campaign finance laws

The Commission’s final rules remove 11 CFR 111.45, which governed debt collection with respect to the Administrative Fine program. Instead, the new regulations at 11 CFR part 111, subpart C, now govern the Commission’s collection of debts arising from compliance matters, administrative fines, alternative dispute resolution, repayments of public funds and court judgments arising from the Commission’s enforcement of the campaign finance laws. The new regulations cover the collection of debts only, and will be invoked only after the completion of existing Commission processes during which respondents or other parties have had a full and fair opportunity to demonstrate that no civil penalty or repayment should be imposed. See 11 CFR parts 111 and 9038, and 9008.11-9008.15.

Like new 11 CFR part 8, the new regulations at 11 CFR part 111, subpart C, state that the Commission will collect claims or debts covered by the new regulations in accordance with the DCIA, the FCCS and certain other Treasury regulations governing debt collection, and will refer debts to the Treasury Department that have been delinquent for more than 180 days and may, at its discretion, transfer delinquent debts prior to the end of the 180 day period. 11 CFR 111.52.

The new regulations at 11 CFR part 111, subpart C, also contain the same provisions governing the impact of bankruptcy law on debt collection and assessment and waiver of interest, penalties and administrative costs contained in new 11 CFR part 8, discussed above. 11 CFR 111.54 and 111.55.

The new regulations also note that nothing in new 11 CFR part 111, subpart C, precludes the Commission from filing suit in court to enforce compliance with a conciliation agreement, seek a civil money penalty, petition the court for a contempt order or otherwise exercise its authority to enforce or administer the Federal Election Campaign Act, the Presidential Election Campaign Fund Act or the Presidential Primary Matching Payment Account Act. 11 CFR 111.53.

Additional information

The Final Rules and Explanation and Justification were transmitted to Congress on April 12, 2010, and published in the Federal Register on April 16, 2010. The Federal Register notice is available on the Commission’s website at http://www.fec.gov/law/cfr/ej_compilation/2010/notice_2010-10.pdf. The rules are effective on May 17, 2010.