P.S. Docket No. AWG 21-524

FINAL DECISION

Introduction
This matter comes before me on Respondent’s oral Motion for Summary Judgment.¹   Under Federal Rule of Civil Procedure 56, summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”  Fed. R. Civ. P. 56(a).  Petitioner does not challenge the validity of the debt, which makes this case ripe for summary judgment.
The case arises under our administrative wage garnishment (AWG) procedures.  In certain cases, the Postal Service may decide to send a nontax debt to the United States Department of the Treasury (“Treasury”) for collection.  These debts may involve any indebtedness to the United States, but primarily involve former employees who owe money to the Postal Service, usually for an overpayment of salary or other similar payroll related issues.  The procedures by which the Postal Service may transfer this debt are set forth in 31 C.F.R. § 285.11.  Also, the Postal Service has a separate agreement with Treasury that governs these debts.  See, e.g., CY2021 Agreement to Certify Federal Nontax Debts for the Centralized Receivables Service, the Cross-Servicing Program, and the Treasury Offset Program (“Treasury Certification Agreement”). 

Procedural History
On October 16, 2019, Petitioner Roslyn Henry was issued USPS Invoice No. 703039011 seeking repayment of $1,730.57 for an overpayment based on overdrawn leave.  The invoice packet mailed to Petitioner included a Notice of Debt Determination informing Petitioner of her available courses of action for responding to the invoice.  There is no record that Petitioner took action to challenge or repay the debt in response to the invoice.
On both December 20, 2019, and January 21, 2020, Petitioner was issued a Notice of Intention to Collect a Debt by Administrative Offset, informing her that her debt billed under Invoice No. 703039011 for $1,730.57 was past due and the Postal Service intended to collect the outstanding debt through referral to Treasury.  Resp. Exh. 7.  The notices explained the process for collection by administrative offset from available federal funds and indicated the intention to collect through such offsets.  Resp. Exh. 9.  The notice explained Petitioner’s available courses of action and alerted Petitioner that the Postal Service would collect the debt by referral to Treasury if Petitioner did not exercise her indicated rights or voluntarily pay the debt within 30 days of her receipt of the notice.
The notice further alerted Petitioner that referral to Treasury might subject her to additional fees and charges, credit bureau reporting, reporting to the IRS as potential taxable income, and forwarding to both a private collection agency (PCA) and the Treasury Offset Program (TOP) for collection.  The significance of this notice is that it offers the debtor an opportunity to resolve the debt with the agency prior to transfer to Treasury.  This means that the debtor can avoid the sometimes-significant collection fees that Treasury adds to these debts.  However, the record reflects that Petitioner took no action to challenge or pay her debt, and the debt was referred to Treasury for collection under the Treasury Certification Agreement on March 18, 2020, with a remaining balance of the full amount originally invoiced: $1,730.57.
Treasury ultimately forwarded Petitioner’s debt to a contracted PCA, Transworld Systems, Inc., for collection on behalf of Treasury and the Postal Service.  On April 5, 2021, Transworld Systems, Inc. issued a Notice of Intent to Initiate Administrative Wage Garnishment Proceedings to Petitioner regarding the referred debt.  The notice informed Petitioner that it was issued regarding the referenced account with Treasury, and indicated the amount sought for collection as $2,249.74, to include the outstanding principal debt amount of $1,730.57 billed by the Postal Service and $519.17 in “potential” Treasury fees.²   The notice explained the statutory and regulatory authority for administrative wage garnishment, and the Petitioner’s rights and available courses of action, including the right to request a hearing.³
Petitioner submitted an AWG hearing request to Treasury, through Transworld Systems, Inc., on or about April 29, 2021.  Pursuant to the Treasury Certification Agreement, Treasury forwarded Petitioner’s non-hardship hearing appeal to the Postal Service for the requested hearing and review.

Discussion
If a former Postal Service employee requests a hearing after receipt of a Notice of Intent to Initiate Administrative Wage Garnishment Proceedings from Treasury, the matter is referred to the Judicial Officer for resolution.  Our review of these debts is largely limited to two issues.  The first is whether the Postal Service complied with due process provisions under the regulations and its obligations under the Treasury Certification Agreement.  This review consists of accepting evidence from the Postal Service that prior to its referral of the debt to Treasury, the Postal Service gave the debtor appropriate notice to the debtor’s “last known address.”  31 C.F.R. § 285.11(e)(1).  The second issue requires us to review whether the debt is valid.  The Postal Service carries the burden of proof on both issues.  Garcia v. United States Postal Service, AWG 21-296, 2022 WL 622380 (January 27, 2022).
If successful, the Postal Service may, with the assistance of Treasury pursuant to its Treasury Certification Agreement, collect both the debt and any related Treasury fees by administrative wage garnishment.  As mentioned previously, the issue of validity of the debt is not in dispute.  Therefore, what remains is for me to decide whether the Postal Service and Treasury complied with the statutory and regulatory notice requirements in this process. 
In preparation for this decision, I asked the parties to address two legal issues.  The first is whether the Postal Service is obligated under 31 C.F.R. § 285.11 and accompanying statutes to give notice of intent to collect a debt by administrative wage garnishment prior to transfer of the debt to Treasury.  The second legal issue is if Treasury is the proper entity to deliver the AWG notice, can it properly delegate that requirement to a third-party contractor.

Required Notice under 31 CFR § 285.11
Treasury’s recent seizure of Ms. Henry’s tax return occurred pursuant to 31 U.S.C. § 3716, and the collection notice submitted by the Postal Service complied with that statute, therefore the seizure of the tax return was proper.  Resp. Exh. 7 at 3; supra note 3.  However, unlike administrative offset, wage garnishment is a more invasive collection procedure, and it requires that a separate notice be sent to the debtor prior to exercise of that option.  See, e.g., Weiss v. United States Postal Service, AO 20-360, 2021 WL 2414584 (May 17, 2021).  The regulations that govern administrative wage garnishment are located at 31 C.F.R. § 285.11.  To take advantage of the collection remedy of administrative wage garnishment, the “agency” must send to the debtor a notice that complies with the regulations before initiating wage garnishment.  The regulatory notice provisions are as follows:
(e) Notice requirements.
(1) At least 30 days before the initiation of garnishment proceedings, the agency shall mail, by first class mail, to the debtor's last known address a written notice informing the debtor of:
(i) The nature and amount of the debt;
(ii) The intention of the agency to initiate proceedings to collect the debt through deductions from pay until the debt and all accumulated interest, penalties and administrative costs are paid in full; and
(iii) An explanation of the debtor's rights, including those set forth in paragraph (e)(2) of this section, and the time frame within which the debtor may exercise his or her rights.
(2) The debtor shall be afforded the opportunity:
(i) To inspect and copy agency records related to the debt;
(ii) To enter into a written repayment agreement with the agency under terms agreeable to the agency; and
(iii) For a hearing in accordance with paragraph (f) of this section concerning the existence or the amount of the debt or the terms of the proposed repayment schedule under the garnishment order. However, the debtor is not entitled to a hearing concerning the terms of the proposed repayment schedule if these terms have been established by written agreement under paragraph (e)(2)(ii) of this section.
(3) The agency will retain evidence of service indicating the date of mailing of the notice.
31 C.F.R. § 285.11(e).  The collection letter submitted by the Postal Service makes no mention that the debtor’s pay may be subject to administrative wage garnishment.  31 C.F.R. § 285.11(e)(1)(ii).  Nor did the notice reference the above regulation at all.  However, my review does not end there.
The Postal Service correctly argues that the term “agency” is defined within the same regulation in a much broader fashion than to apply just to the Postal Service in this instance.  Pursuant to § 285.11(b)(1), the AWG regulatory provisions apply to “any Federal 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.”  See 31 C.F.R. § 285.11(b)(1)(emphasis added).  Section 285.11(c) defines “Agency”, as used in this regulatory section, as “either the agency that administers the program that gave rise to the debt or the agency that pursues recovery of the debt.”  31 C.F.R. § 285.11(c)(emphasis added).  This definition clearly permits Treasury to initiate an AWG notice rather than just the creditor agency.  While the regulation does permit the creditor agency to issue that notice, it does not require it to do so.  Accordingly, the AWG notice in this case meets the regulatory and statutory requirements for notice.

Delegation of Notice to Third Party Contractor
However, this case was triggered by a notice sent from a Treasury third-party contractor seeking to exercise administrative wage garnishment.  Resp. Exh. 8.  The notice was not sent by the agency directly.  While I agree with the Postal Service that there is nothing in the AWG statute or in Treasury’s implementing regulations that precludes such delegation of the responsibility for sending an AWG due process notice by a contractor, the question is whether such authority is implied in or otherwise permitted by the statute.  In general, express statutory authority is not required for delegation of authority by an agency if it is not inconsistent with the statute. See Nat'l Ass'n of Psychiatric Treatment Ctrs. for Children v. Mendez, 857 F. Supp. 85, 91 (1994).  In its supplemental brief, the Postal Service argues that “neither delegation of general collection activity nor generation of due process notices is inconsistent with the [Debt Collection Act] or [Debt Collection Improvement Act]. In fact, as set forth above, such delegation is entirely consistent with the laws and implementing regulations.  See 31 U.S.C. § 3718; 31 C.F.R. § 901.5.”  I agree. 
However, the Debt Collection Act statutes are even more clear on the issue.  Section 3701 of Title 31 defines the term “private collection contractor” as a private entity under contract with an agency to collect a nontax debt, such as the debt at issue in this case.  31 U.S.C. §3701(f).  The collection agency here is under contract with Treasury as the collection agency.  Further, section 3711 expressly authorizes the use of such private collection contractors in these circumstances.  31 U.S.C. § 3711(g)(4)(B).  Accordingly, it is logical to conclude that along with the delegation of collection of the debt, the delegation itself includes the ability to send required statutory and regulatory notices on behalf of the agency.  Therefore, I find that Treasury’s delegation of this notice requirement to the private collection contractor was proper under the statutes and implementing regulations.

Conclusion
As the Postal Service has met its burden of proof, Respondent’s Motion for Summary Judgment is GRANTED.

ORDER

The Petition is DENIED. 
The Postal Service may collect the remaining debt of $1,159.28 plus associated Treasury fees by administrative wage garnishment or as otherwise permitted by federal law.