Sec. 1.1912  Collection by administrative offset.

    (a) Collection by administrative offset will be undertaken in 
accordance with these regulations on all claims which are liquidated or 
certain in amount, in every instance in which such collection is 
determined to be feasible and not otherwise prohibited.
    (1) Whether collection by administrative offset is feasible is a 
determination to be made by the agency on a case-by-case basis, in the 
exercise of sound discretion. The Commission will consider not only 
whether administrative offset can be accomplished practically, but also 
whether offset is best suited to further and protect all of the 
Government's interest. In appropriate circumstances, the Commission may 
give due consideration to the debtor's financial condition and is not 
required to use offset in every instance in which there is an available 
source of funds. The Commission may also consider whether offset would 
tend to substantially interfere with or defeat the purposes of the 
program authorizing the payments against which offset is contemplated. 
For example, under a grant program in which payments are made in advance 
of the grantee's performance, offset will normally be inappropriate. 
This concept generally does not apply, however, where payment is in the 
form of reimbursement.
    (2) [Reserved]
    (b) Before the offset is made, a debtor shall be provided with the 
following: Written notice of the nature and amount of the debt, and the 
agency's intention to collect by offset; opportunity to inspect and copy 
agency records pertaining to the debt; opportunity to obtain review 
within the agency of the determination of indebtedness; and opportunity 
to enter into a written agreement with the agency to repay the debt.
    (1) The Commission will exercise sound judgment in determining 
whether to accept a repayment agreement in lieu of offset. The 
determination will weigh the Government's interest in collecting the 
debt against fairness to the debtor. If the debt is delinquent and the 
debtor has not disputed its existence or amount, the Commission will 
normally accept a repayment agreeement in lieu of offset only if the 
debtor is able to establish that offset would result in undue financial 
hardship or would be against equity and good conscience.
    (2) In cases where the procedural requirements specified in 
paragraph (b) of this section have previously been provided to the 
debtor in connection with the same debt under some other statutory or 
regulatory authority, such as pursuant to a notice of audit disallowance 
or pursuant to 47 U.S.C. 503, 504 and 47 CFR 1.80, the agency is not 
required to duplicate those requirements before taking administrative 
offset.
    (3) The Commission may not initiate administrative offset to collect 
a debt under 31 U.S.C. 3716 more than 10 years after the Government's 
right to collect the debt first accrued, unless facts material to the 
Government's right to collect the debt were not known and could not 
reasonably have been known by the official or officials of the 
Government who were charged with the responsibility to discover and 
collect such debts. When the debt first accrued is to be determined 
according to existing law regarding the accrual of debts, such as under 
28 U.S.C. 2415.
    (4) The Commission is not authorized by 31 U.S.C. 3716 to use 
administrative offset with respect to:
    (i) Debts owed by any State or local Government;
    (ii) Debts arising under or payments made under the Social Security 
Act, the Internal Revenue Code of 1954, or the tariff laws of the United 
States; or

[[Page 286]]

    (iii) Any case in which collection of the claim or type of claim by 
administrative offset is explicitly provided for or prohibited by 
another statute.
    (5) The Commission may effect administrative offset against a 
payment to be made to a debtor prior to completion of the procedures 
required by paragraph (b) of this section if:
    (i) Failure to take the offset would substantially prejudice the 
Government's ability to collect the debt, and
    (ii) The time before the payment is to be made does not reasonably 
permit the completion of those procedures.

Such prior offset must be promptly followed by the completion of those 
procedures. Amounts recovered by offset but later found not to be owed 
to the Government shall be promptly refunded.
    (6) The Commission will obtain credit reports on delinquent accounts 
to identify opportunities for administrative offset of amounts due to a 
delinquent debtor when other collection techniques have been 
unsuccessful.
    (c) Type of hearing or review. (1) For purposes of this section, 
whenever the Commission is required to provide a hearing or review 
within the agency, it shall provide the debtor with a reasonable 
opportunity for an oral hearing when:
    (i) Any applicable statute authorizes or requires the agency to 
consider waiver of the indebtedness involved, the debtor requests waiver 
of the indebtedness, and the waiver determination turns on an issue of 
credibility or veracity; or
    (ii) 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.

Unless otherwise required by law, an oral hearing under this section is 
not required to be a formal evidentiary-type hearing, although the 
Commission will carefully document all significant matters discussed at 
the hearing.
    (2) The section does not require an oral hearing with respect to 
debt collection systems in which determinations of indebtedness or 
waiver rarely involve 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. In administering such a 
system, the agency is not required to sift through all of the requests 
received in order to accord oral hearings in those few cases which may 
involve issues of credibility or veracity.
    (3) In those cases where an oral hearing is not required by this 
section, the agency will make its determination on the request for 
waiver or reconsideration based upon a ``paper hearing,'' that is, a 
review of the written record.
    (d) Appropriate use will be made of the cooperative efforts of other 
agencies in affecting collection by administrative offset. Generally, 
the Commission will not refuse to comply with requests from other 
agencies to initiate administrative offset to collect debts owed to the 
United States unless the requesting agency has not complied with the 
applicable provisions of these standards or the offset otherwise 
contrary to law.
    (e) Collection by offset against a judgment obtained by a debtor 
against the United States shall be accomplished in accordance with 31 
U.S.C. 3728.
    (f) Whenever the creditor agency is not the agency which is 
responsible for making the payment against which administrative offset 
is sought, the latter agency shall not initiate the requested offset 
until it has been provided by the creditor agency with an appropriate 
written certification that the debtor owes a debt (including the amount) 
and full compliance with the provisions of this section has taken place.
    (g) When collecting multiple debts by administrative offset, the 
Commission will apply the recovered amounts to those debts in accordance 
with the best interest of the United States, as determined by the facts 
and circumstances of the particular case, paying special attention to 
applicable statutes of limitation.