A newly
proposed rule by the U.S. Environmental Protection Agency (EPA) would give the agency the authority to cut into the paychecks of those who owe it a debt, such as a fine or penalty for an alleged environmental violation. EPA would be allowed to garnish up to 15 percent of the “disposable pay” of delinquent debtors who do not work for the federal government via a process known as administrative wage garnishment – all without a court order.
Presently, EPA does not use administrative wage garnishment (AWG) to collect federal debt. Relying on the
Debt Collection Improvement Act, the agency seeks to amend its regulations to implement AWG as a debt collection tool, maintaining that it does not need to first obtain a court judgment before garnishing a private citizen’s wages.
A
wage garnishment is a legal procedure that requires a person’s employer to withhold a certain amount of money from his/her paycheck and then to send that money directly to the person’s creditor to pay off a debt. Wage garnishment can negatively affect credit, reputation, and the ability to receive a loan or open a bank account.
EPA is accepting public comment until Sept. 2 on this controversial change to its debt collection procedures, which would significantly expand the agency’s power.
Background
In 1996, Congress passed the Debt Collection Improvement Act (DCIA), giving federal agencies greater authority and more tools, like administrative wage garnishment, to recover delinquent debt. The U.S. Treasury took the lead in writing rules to implement the AWG and other tools under the DCIA. Some DCIA-authorized debt collection tools are mandatory, but the usage of AWG is discretionary. To date, the use of DCIA wage garnishment authority has largely been confined to federal agencies that offer direct payments or loans to citizens, as opposed to a means of collecting agency-imposed fines and penalties.
Those who may find themselves the target of a garnishment proceeding must be given notice of their alleged debt and an opportunity to have a hearing to dispute the debt. According to the U.S. Treasury, and as noted in the preamble to EPA’s proposed rule, “federal agencies must either prescribe their own conforming regulations for the conduct of AWG hearings consistent with the … Treasury Final Rule or adopt Treasury’s AWG regulations, 31 CFR 285.11, without change by reference.”
Flawed Procedures
EPA has the flexibility to establish and implement effective collection strategies that suit its needs, provided those strategies meet all statutory and regulatory requirements. However, EPA’s proposed rule would identically incorporate by reference U.S. Treasury’s existing regulations on wage garnishment, including the hearing procedures. The practical implications of EPA adopting the U.S. Treasury’s existing AWG regulations, without change, could deprive the public of the right to a fair and impartial hearing because—
- It would allow EPA to decide unilaterally whether a debtor will get a chance to present his/her defense to EPA at a face-to-face oral proceeding. The agency may, instead, choose to review the case on a paper record, without listening to the debtor.
- It would grant EPA the sole discretion to decide where any hearing would be heard; assuming the agency even allows such a proceeding to take place.
- It would make the accused guilty until proven innocent by putting the ultimate burden of convincing the hearing official by a preponderance of the evidence of the correctness of the debtor’s position.
Although the Department of Treasury and some other federal agencies operate under these rules, extending the identical procedures to EPA proceedings would threaten the public’s due process and private property rights – given the high costs of environmental violations, the debate surrounding notoriously unclear requirements, and EPA’s recent record of employee misconduct – as further explained below.
Stakes are High, Motives Seemingly Misplaced
Environmental rules are complex and difficult to understand. With fines of up to $37,500 per day per violation, civil penalties can reach into the millions of dollars. And every four years, EPA adjusts civil penalties for inflation. What is more, under most programs, strict liability may impose daily penalties without regard to fault. And the regulated community often faces a long lag time between the inspection date and the date of enforcement action, which can wrack up huge fines and make interpretation of the data more difficult.
The precipitous garnishment of wages by EPA could quickly bankrupt small businesses or individual landowners. In one month’s time, a landowner could be liable for millions in penalties.
Even more troubling, recent reports show that EPA’s wage garnishment proposal would do little to bring about a cleaner environment or solve delinquency problems. According to the American Action Forum’s analysis of EPA’s enforcement data, a majority of EPA fines for individuals involve paperwork infractions – not environmental contamination – including fines for failing to file notifications or reports with EPA. And as for a delinquency problem, the report shows that people generally pay their fines on time.
Ambiguous Rules at Issue
EPA has been collecting more and more fines in recent years and finding itself in the hot seat for hitting individual landowners with massive penalties for building on their own rural property without a federal Clean Water Act permit. With the controversial rulemaking to redefine “waters of the United States” as a backdrop, AGC is concerned that EPA’s proposed debt collection plans would compound the challenges for small businesses that are trying to navigate the poorly defined terms, inconsistent findings process, and ambiguous parameters inherent to many key national environmental programs – like the CWA Section 404 dredge-and-fill program.
The threat of wage garnishment may unfairly compel anyone who is accused of violating an environmental rule to agree to costly settlements to end the disputed claims (and avoid wracking up ruinous penalties for each day the alleged violation continues). The alternative would be to go through lengthy and costly litigation to challenge EPA’s authority, also facing fines that the agency could garnish from your wages, while meeting the burden of proving that EPA acted arbitrarily or capriciously. Because, for example, the definition of “water of the United States” remains ill-defined, this is a very high hurdle.
EPA Under Microscope for Misconduct
Recent news and ongoing criticism of agency overreach and mismanagement have created a climate of cynicism and mistrust. “While we recognize the government’s legitimate interest in efficiently and effectively pursuing delinquent debt, EPA’s new wage garnishment procedures provide an agency prone to regulatory abuses with even more power over Americans,” Senators David Vitter (R-La.), Mike Enzi (R-Wyo.), and John Barrasso (R-Wyo.) wrote
a letter to the EPA Administrator in clear opposition to the rule. The letter cites the agency’s mismanagement of its own personnel and resources.
The proposal under consideration was initially introduced alongside a “direct final rule” (meaning it would have become law if EPA
had not received adverse comment). The final regulations were quickly rescinded following outrage
among conservative groups and lawmakers, who decried the measure as an unwarranted government intrusion into the lives of ordinary individuals. But the agency remains intent moving forward with the proposal using the standard public notice and comment process.
AGC plans to voice its opposition to EPA’s proposal by the Sept. 2 comment deadline. AGC also will be examining possibilities for Congressional action that would prohibit the EPA from implementing the wage garnishment rule.
Please share your perspectives on this matter with AGC’s Leah Pilconis at pilconisl@agc.org.