Final Rule

wreier-aviles on DSK5TPTVN1PROD with RULES

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
the denial or removal decision, and
shall be accompanied by all documents
and materials the agency wants the
Director to consider in reviewing the
denial or removal decision. The agency
shall send the original and one copy of
the request for review, including all
accompanying documents and
materials, to the Office of the Director
by overnight courier, for delivery the
next business day. To be timely, a
request for review shall be received at
the Office of the Director no later than
21 calendar days from the date of the
notice to the agency.
(k) The United States Trustee shall
have 21 calendar days from the date of
the agency’s request for review to
submit to the Director a written
response regarding the matters raised in
the agency’s request for review. The
United States Trustee shall provide a
copy of this response to the agency by
overnight courier, for delivery the next
business day.
(l) The Director may seek additional
information from any party in the
manner and to the extent the Director
deems appropriate.
(m) In reviewing the decision to deny
an agency’s application or remove an
agency from the approved list, the
Director shall determine:
(1) Whether the denial or removal
decision is supported by the record; and
(2) Whether the denial or removal
decision constitutes an appropriate
exercise of discretion.
(n) Except as provided in paragraph
(o) of this section, the Director shall
issue a final decision no later than 60
calendar days from the receipt of the
agency’s request for review, unless the
agency agrees to a longer period of time
or the Director extends the deadline.
The Director’s final decision on the
agency’s request for review shall
constitute final agency action.
(o) Whenever the United States
Trustee provides under paragraph (i) of
this section that a decision to remove an
agency from the approved list is
effective immediately, the Director shall
issue a written decision no later than 15
calendar days from the receipt of the
agency’s request for review, unless the
agency agrees to a longer period of time.
The decision shall:
(1) Be limited to deciding whether the
determination that the removal decision
should take effect immediately was
supported by the record and an
appropriate exercise of discretion;
(2) Constitute final agency action only
on the issue of whether the removal
decision should take effect immediately;
and
(3) Not constitute final agency action
on the ultimate issue of whether the

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

agency should be removed from the
approved list; after issuing the decision,
the Director shall issue a final decision
by the deadline set forth in paragraph
(n) of this section.
(p) In reaching a decision under
paragraphs (n) and (o) of this section,
the Director may specify a person to act
as a reviewing official. The reviewing
official’s duties shall be specified by the
Director on a case-by-case basis, and
may include reviewing the record,
obtaining additional information from
the participants, providing the Director
with written recommendations, and
such other duties as the Director shall
prescribe in a particular case.
(q) An agency that files a request for
review shall bear its own costs and
expenses, including counsel fees.
(r) When a decision to remove an
agency from the approved list takes
effect, the agency shall:
(1) Immediately cease providing
counseling services to clients and shall
not provide counseling services to
potential clients;
(2) No later than three business days
after the date of removal, send all
certificates to all clients who completed
counseling services prior to the agency’s
removal from the approved list;
(3) No later than three business days
after the date of removal, return all fees
to clients and potential clients who had
paid for counseling services, but had not
completely received them; and
(4) Transfer any debt repayment plans
that the agency is administering to
another approved agency.
(s) An agency must exhaust all
administrative remedies before seeking
redress in any court of competent
jurisdiction.
Dated: February 14, 2013.
Clifford J. White III,
Director, Executive Office for United States
Trustees.
[FR Doc. 2013–04361 Filed 3–13–13; 8:45 am]
BILLING CODE 4410–40–P

DEPARTMENT OF JUSTICE
28 CFR Part 58
[Docket No EOUST 104]
RIN 1105–AB31

Executive Office for United
States Trustees (‘‘EOUST’’), Justice.
ACTION: Final rule.
AGENCY:

This final rule (‘‘rule’’) sets
forth procedures and criteria United

SUMMARY:

PO 00000

Frm 00027

Fmt 4700

States Trustees shall use when
determining whether applicants seeking
to become and remain approved
providers of a personal financial
management instructional course
(‘‘providers’’) satisfy all prerequisites of
the United States Code, as implemented
under this rule. Under the current law,
individual debtors must participate in
an instructional course concerning
personal financial management
(‘‘instructional course’’ or ‘‘debtor
education’’) before receiving a discharge
of debts. The current law enumerates
mandatory prerequisites and minimum
standards applicants seeking to become
approved providers must meet. Under
this rule, United States Trustees will
approve applicants for inclusion on
publicly available provider lists in one
or more federal judicial districts if an
applicant establishes it meets all the
requirements of the United States Code,
as implemented under this rule. After
obtaining such approval, a provider
shall be authorized to provide an
instructional course in a federal judicial
district during the time the provider
remains approved.
EOUST intends to add to its
regulations governing debtor education
providers, two new provisions not
previously included in the proposed
rule. The first provision will amend
section 58.30(c)(5) to require providers
to notify the United States Trustee of
certain actions pursuant to 11 U.S.C.
111(g)(2) or other consumer protection
statutes, such as an entry of judgment or
mediation award, or the provider’s entry
into a settlement order, consent decree,
or assurance of voluntary compliance.
The second provision will amend
section 58.33(i) to require a provider to
assist an individual with limited
English proficiency by expeditiously
directing the individual to a provider
that can provide instruction in the
language of the individual’s choice.
Because these provisions were not
discussed in the proposed rule
published on November 14, 2008,
EOUST will publish another Notice of
Proposed Rulemaking requesting public
comment with respect to these two
provisions.
Effective Date: This rule is
effective April 15, 2013.

ADDRESSES: EOUST, 441 G Street, NW.,

Suite 6150, Washington, DC, 20530.

FOR FURTHER INFORMATION CONTACT:
Doreen Solomon, Assistant Director for
Oversight on (202) 307–2829 (not a tollfree number), Wendy Tien, Deputy
Assistant Director for Oversight on (202)
307–3698 (not a toll-free number), or
Larry Wahlquist, Office of the General
DATES:

Application Procedures and Criteria for
Approval of Providers of a Personal
Financial Management Instructional
Course by United States Trustees

Sfmt 4700

16159

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

16160

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

Counsel on (202) 307–1399 (not a tollfree number).
SUPPLEMENTARY INFORMATION: On July 5,
2006, EOUST published an interim final
rule entitled Application Procedures
and Criteria for Approval of Nonprofit
Budget and Credit Counseling Agencies
and Approval of Providers of a Personal
Financial Management Instructional
Course by United States Trustees
(‘‘Interim Final Rule’’). 71 FR 38,076
(July 5, 2006). Due to the necessity of
quickly establishing a regulation to
govern the debtor education application
process, EOUST promulgated the
Interim Final Rule rather than a notice
of proposed rulemaking (‘‘proposed
rule’’). On November 14, 2008, at 73 FR
67,435, EOUST published a proposed
rule on this topic in an effort to
maximize public input, rather than
publishing a final rule after publication
of the Interim Final Rule. Before the
comment period closed on January 13,
2009, EOUST received eleven
comments. The comments received and
EOUST’s responses are discussed
below. This rule finalizes the proposed
rule with changes that, in some cases,
reduce the burden on providers while
maintaining adequate protection for
debtors.
This rule implements the debtor
education sections of the Bankruptcy
Abuse Prevention and Consumer
Protection Act of 2005 (‘‘BAPCPA’’),
Public Law 109–8, 119 Stat. 23, 37, 38
(April 20, 2005), which are codified at
11 U.S.C. 111. Effective October 17,
2005, individual debtors under chapters
7, 13, and in some instances chapter 11,
must receive from an approved provider
debtor education before they may
receive a discharge of their debts. 11
U.S.C. 111, 727(a)(11), 1141(d)(3),
1328(g)(1).
Section 111(b) of title 11, United
States Code, governs the approval by
United States Trustees of debtor
education providers for inclusion under
11 U.S.C. 111(a)(1) on publicly available
provider lists in one or more United
States district courts. Section 111 of title
11 provides that, in applicable
jurisdictions, a United States Trustee
may approve an application to become
an approved provider only after the
United States Trustee has thoroughly
reviewed the applicant’s (a)
qualifications, and (b) instructional
course. 11 U.S.C. 111(b)(1). A United
States Trustee has statutory authority to
require an applicant to provide
information with respect to such review.
11 U.S.C. 111(b)(1). EOUST reserves the
right to publish on its public Web site
non-confidential business information
relating to debtor education providers,

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

including contact information, services
provided, language support services
offered, and fees charged for services.
After completing that thorough
review, a United States Trustee may
approve a debtor education provider
only if the provider establishes that it
fully satisfies all requisite standards. 11
U.S.C. 111(b). Among other things, an
applicant must establish it will (a)
provide trained personnel with
adequate experience in providing
effective instruction and services, (b)
provide learning materials and teaching
methodologies designed to assist
debtors in understanding personal
financial management, (c) if applicable,
provide adequate facilities for providing
an instructional course, (d) prepare and
retain reasonable records to permit
evaluation of the effectiveness of an
instructional course, and (e) if a fee is
charged, charge a reasonable fee, and
provide services without regard to
ability to pay the fee. 11 U.S.C.
111(d)(1).
This rule will implement those
statutory requirements. By
accomplishing that, the rule will help
debtors obtain effective instruction from
competent providers. It also will
provide an appropriate mechanism by
which applicants can apply for approval
under section 111 of title 11 to become
approved providers, and will enable
such applicants to attempt to meet their
burden of establishing they should be
approved by United States Trustees
under 11 U.S.C. 111.
Summary of Changes in Final Rule
The final rule modifies the proposed
rule by making it: (1) Less burdensome
on providers; and (2) by providing
technical or clarifying modifications.
The modifications are summarized
according to their classification below.
A parenthetical reference to the
regulatory text has been added to assist
the reader in locating the relevant
provisions of the rule. In addition,
where applicable, a reference to the
comment number, where a more
detailed explanation of these changes is
discussed, is included:
Modifications To Make the Final Rule
Less Burdensome on Providers
• The definition of ‘‘material change’’
has been revised to eliminate staff other
than the provider’s management or
instructors (§ 58.25(b)(22)—comment #
B6).
• A provider may disclose to debtors
that, to the extent the provider is
approved as a nonprofit budget and
credit counseling agency pursuant to 11
U.S.C. 111(c), the United States Trustee
has reviewed those credit counseling

PO 00000

Frm 00028

Fmt 4700

Sfmt 4700

services (§ 58.33(k)(8)—comment #
B23).
• The reference to ‘‘any applicable
law’’ in the prohibition that a provider
take no action to limit debtors from
bringing claims against the provider as
provided in 11 U.S.C. 111(g)(2) has been
deleted (§ 58.33(n)(5)—comment # B25).
• The rule has been revised to add a
rebuttable presumption that a debtor
lacks the ability to pay the instructional
fee if the debtor’s current household
income is less than 150 percent of the
poverty guidelines updated periodically
in the Federal Register by the U.S.
Department of Health and Human
Services under the authority of 42
U.S.C. 9902(2), as adjusted from time to
time, for a household or family of the
size involved in the fee determination
(§ 58.34(b)(1)—comment # B28).
• The United States Trustee is
required to review the basis for the
mandatory fee waiver policy one year
after the effective date of the rule, and
then periodically, but not less
frequently than every four years
(§ 58.34(b)(2)—comment # B28).
• The requirement that, for a provider
to send an instructional certificate to a
debtor’s attorney, the debtor must make
the request in writing to the provider
has been deleted (§ 58.35(a)—comment
# B30).
• The requirement that providers
provide original signatures on
certificates, in recognition of electronic
filing in the bankruptcy courts and the
technology used to generate certificates,
has been deleted (§ 58.35(j)(2)—
comment # B34).
• The prohibition that providers not
file certificates with the court has been
deleted to enable providers to file
certificates with the court should the
Federal Rules of Bankruptcy Procedure
be amended to authorize providers to
file certificates with the court or to
otherwise notify the bankruptcy court of
course completion (§ 58.35(i) of the
proposed rule).
Technical or Clarifying Modifications
• The definition of ‘‘debtor’’ has been
revised to apply only to such debtors
that have sought an instructional course
from an approved provider
(§ 58.25(b)(8)—comment # B2).
• The definition of ‘‘limited English
proficiency’’ has been revised to be
consistent with that used by the Civil
Rights Division of the Department of
Justice (§ 58.25(b)(21)—comment # B5).
• The definition of ‘‘material change’’
has been amended to include a change
in language services provided by the
provider. Providers are already required
to inform the United States Trustee of
the languages they provide when

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
applying for approval. This clarification
emphasizes the importance of notifying
the United States Trustee whenever a
provider adds or removes a language
from its available services
(§ 58.25(b)(22)).
• The rule has been amended to
clarify that providers may not use direct
mail or electronic mail solicitations to
contact debtors, unless the solicitations
include a prominent disclaimer stating,
‘‘This is an advertisement for services,’’
and to refrain from using seals or logos
that may be confused easily with those
used by any federal government agency
(§ 58.33(c)(4)—comment # B14).
• The rule has been amended to
clarify that a provider must disclose its
policy, if any, concerning fees
associated with generating an
instructional certificate prior to
rendering any instructional services
(§ 58.33(k)(1)—comment # B32).
• The rule has been amended to
clarify that approved providers who
publish information on the Internet
concerning their fees must include their
policies enabling debtors to obtain an
instructional course for free or at
reduced rates based upon the debtor’s
lack of ability to pay. This is not an
additional burden on providers as the
proposed rule requires providers to
disclose their fee polices prior to
providing services; the final rule makes
it clear that this requirement includes
Internet based instruction
(§ 58.33(k)(2)).
• The rule has been amended to
clarify that a provider’s duty to disclose
its fee policy before providing services
includes disclosing the provider’s
policy to provide free bilingual
instruction to any limited English
proficient debtor. This is not an
additional burden on providers as the
proposed rule requires providers to
disclose their fee polices prior to
providing services; the final rule makes
it clear that this requirement includes
disclosing providers’ fee policies
regarding services for limited English
proficient individuals (§ 58.33(k)(3)).
• The rule has been amended to
clarify that a provider’s duty to maintain
records regarding limited English
proficiency debtors includes
maintaining records regarding the
methods of delivery of an instructional
course, the types of languages and
methods of delivery requested by
debtors, the number of debtors served,
and the number of referrals made to
other providers. Because the proposed
rule already requires providers to
maintain records regarding the delivery
of services to limited English
proficiency individuals, this is not an
additional burden in the final rule.

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

Rather, the final rule makes clearer what
is expected of providers in terms of
record-keeping for limited English
proficient individuals (§ 58.33(m)(3)).
• The rule has been amended to
clarify that certificates must bear not
only the date, but also the time and the
time zone when the instructional course
was completed by the debtor. This
technical modification does not impose
an additional burden as the proposed
rule requires certificates to contain the
date of completion and including the
time and time zone is a minor
modification to the date on the
certificate (§ 58.35(l)(3)).
• The rule has been amended to
correct non-substantive stylistic,
numbering and typographical errors.
Discussion of Public Comments
EOUST received eleven comments on
the proposed rule. Many of the
comments contained several subcomments. EOUST appreciates the
comments and has considered each
comment carefully. EOUST’s responses
to the comments are discussed below,
either in the ‘‘General Comments’’
section or in the ‘‘Section-by-Section
Analysis.’’
A. General Comments
1. Cost of the Rule to Providers
Comment: EOUST received several
comments that the rule will make it
more expensive for providers to operate
and that they will pass the costs on to
debtors.
Response: EOUST recognizes that the
rule may cause providers to incur
additional costs, but those costs are
minimal. Additionally, the extra costs
for such measures as procedures to
verify a debtor’s identity, and
mandatory disclosure of the provider’s
fee policy, are sufficiently important to
protect consumers to warrant the extra
costs to the provider.
B. Comments on Specific Subsections of
the Proposed Rule
1. Use of the Terms Accreditation and
Certification [§ 58.25(b)(1) and (2)]
Comment: EOUST received one
comment that the rule erroneously uses
the terms accreditation and certification
interchangeably, when accreditation
refers to organizations and certification
refers to individuals. One other
comment recommended an amendment
to section 58.25(b)(2)(i) to accommodate
providers who certify other, unrelated,
providers.
Response: EOUST has reviewed the
rule carefully and found no instances in
which accreditation was used to refer to
individuals and certification was used

PO 00000

Frm 00029

Fmt 4700

Sfmt 4700

16161

to refer to organizations. In a few
instances, a provider representative
must sign a certification attesting to a
particular fact or facts; these instances,
however, do not use the term
erroneously.
No change to the rule is necessary to
permit providers to certify unrelated
providers. Such a business practice is
not permitted under the final rule.
2. Definition of Debtor [§§ 58.25(b)(8)
and 58.33(n)(10)]
Comment: EOUST received one
comment recommending limiting the
restriction on sale of information about
debtors to those debtors who have
received instruction from a provider,
not all persons who have contacted a
provider (§ 58.33(n)(10)).
Response: Providers cannot provide
services to debtors who never seek an
instructional course. Thus, the
definition of ‘‘debtor’’ has been revised
to apply only to such debtors that have
sought an instructional course from an
approved provider. The restriction on
selling information about debtors,
however, applies with equal force to
debtors who seek, but ultimately do not
receive, instructional services from a
particular provider.
3. Definition of Effective Instruction
[§ 58.25(b)(10)]
Comment: EOUST received one
comment seeking the incorporation of a
separate standard that does not
incorporate the criteria set forth in 11
U.S.C. 111(d)(2).
Response: EOUST has reviewed the
statutory criteria, as incorporated in the
definition, and has determined that the
statutory criteria effectively set forth the
standard for evaluating the quality of
instruction.
4. Definition of Legal Advice
[§§ 58.25(b)(20) and 58.33(b)]
Comment: One comment expressed
concern about the rule’s reference to 11
U.S.C. 110(e)(2) when defining legal
advice. Because 11 U.S.C. 110(e)(2)
includes bankruptcy procedures and
rights, and because debtors may ask
instructors bankruptcy-related questions
during an instructional course, the
comment expressed concern that the
very act of instruction could cause
instructors and providers to give ‘‘legal
advice’’ in violation of the rule’s
prohibition.
Response: Because of the differences
among the states concerning the
definition of the unauthorized practice
of law, and the resulting difficulty in
defining ‘‘legal advice,’’ EOUST
concluded the most appropriate
approach is to adopt the definition

E:\FR\FM\14MRR1.SGM

14MRR1

16162

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

Congress provided in 11 U.S.C.
110(e)(2). EOUST is sensitive to the
concern that an instructor’s explanation
of bankruptcy principles to debtors may
be considered ‘‘legal advice,’’ but
interprets 11 U.S.C. 110(e)(2) to mean
that instructors shall not advise debtors
concerning the application of
bankruptcy laws, principles, or
procedures to a particular individual’s
circumstances, and may not describe
how bankruptcy laws, principles, or
procedures would affect a particular
individual’s case. Rather, the instructor
may explain basic bankruptcy
principles and how such procedures are
applied generally.

wreier-aviles on DSK5TPTVN1PROD with RULES

5. Definition of Limited English
Proficiency [§ 58.25(b)(21)]
Comment: EOUST received four
comments seeking revision of this
definition to clarify its meaning.
Response: EOUST concurs that a
technical modification is necessary and
has revised the definition of the term to
match that used by the Civil Rights
Division of the Department of Justice, as
set forth in Notice, Guidance to Federal
Financial Assistance Recipients
Regarding Title VI, Prohibition Against
National Origin Discrimination
Affecting Limited English Proficient
Persons, 67 FR. 41,455 (June 18, 2002).
Though the wording is slightly different,
the meaning of limited English
proficiency is essentially the same, i.e.
individuals who do not speak English as
their primary language or who have
difficulty understanding English.
6. Definition of Material Change
[§ 58.25(b)(22)]
Comment: Three comments stated
that staff changes should be deleted
from the definition of material change
since the requirement is unnecessarily
burdensome; one also sought to
eliminate management from the
definition of material change.
Response: EOUST agrees that this
requirement may be overly burdensome,
as it concerns staffing changes. Not
every change in staff requires EOUST
notification. The purpose of this
requirement is to ensure that EOUST
remains aware of changes in key
personnel. Because the definition of
‘‘material change’’ already specifies
notification for changes in management,
the rule has been modified to change
‘‘staffing’’ to ‘‘instructors’’ and thereby
reduce the burden on providers.
7. Definition of Referral Fees
[§ 58.25(b)(26)]
Comment: One comment stated that
the definition of referral fees contains a
loophole that would allow an entity to

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

charge a referral fee merely by calling it
something else.
Response: EOUST has deleted the
definition of ‘‘locator,’’ eliminating any
concerns that a loophole exists in the
definition of referral fees. The revised
definition of ‘‘referral fees’’ prohibits the
transfer or passage of any money or
other consideration between a provider
and another entity as consideration or in
exchange for the referral of clients for
instructional services.
8. Definition of Relative [§ 58.25(b)(27)]
Comment: EOUST received one
comment requesting that the definition
of ‘‘relative’’ be limited to the second
degree of consanguinity.
Response: No change is necessary.
The requirement does not impose a
material burden on providers
necessitating a change to the rule.
9. Mandatory Duty To Notify—Material
Change [§ 58.30(a)]
Comment: One comment objected to
the need to inform EOUST promptly of
material changes, proposing that
monthly notification is sufficient.
Response: No change is necessary.
Because the material changes requiring
notice to EOUST are specific and
involve matters of public interest and
consumer protection, such as cessation
of the provider’s business, revocation of
a provider’s articles of incorporation, or
suspension of accreditation, EOUST
requires immediate notice.
10. Mandatory Duty To Notify—
Consumer Litigation [§ 58.30(c)]
Comment: One comment observed
that, although 11 U.S.C. 111(g)(2)
confers a private right of action against
nonprofit budget and credit counseling
agencies who violate section 111, the
proposed rule does not require
providers to notify EOUST of such
actions. The comment suggested an
additional mandatory disclosure to
EOUST requiring affirmative
notification of actions pursuant to 11
U.S.C. 111(g)(2) or other consumer
protection statutes.
Response: The proposed change
would enhance consumer protection by
providing EOUST with information
concerning private litigation based on
consumer protection statutes and
government enforcement actions.
EOUST will publish a notice of
proposed rulemaking to solicit public
comments regarding whether EOUST
should require notification of such
actions.

PO 00000

Frm 00030

Fmt 4700

Sfmt 4700

11. Mandatory Duty To Notify—
Inaccurate Information [§ 58.30(e)]
Comment: One comment objected to
the requirement that a provider notify
EOUST of inaccuracies on the list of
approved providers. The comment
suggested that, because EOUST
possesses the information that
comprises the approved list, placing the
burden of notification on the provider is
inappropriate.
Response: A provider is in the best
position to recognize whether the
information about the provider posted
on the list of approved providers is
accurate. Accordingly, the duty to notify
EOUST of any inaccuracies necessarily
rests with the provider. Although
EOUST corrects inaccuracies of which it
becomes aware internally or from other
outside sources, to the extent the
provider is aware of inaccurate
information, the provider must notify
EOUST. No change to the rule is
necessary.
12. Duty To Obtain Prior Consent
[§ 58.31(a)]
Comment: One comment objected to
the requirement that a provider seek
approval of any listed changes other
than the engagement of an independent
contractor. The comment recommended
simple notice for other listed changes.
Response: Because the list of
approved providers constitutes
EOUST’s principal means of conveying
information to the public, and because
debtors and debtors’ counsel rely on the
list of approved providers to locate
providers in their judicial districts who
provide instruction by the various
methods, providers must notify EOUST
of any proposed changes to judicial
districts or methods of delivery.
Furthermore, because United States
Trustees require notice and the
opportunity to comment on a provider’s
fitness to provide instruction in a
judicial district, simple notice is
inadequate. Finally, as discussed below
concerning sections 58.34(a) and
58.34(b), because fees in excess of $50
per debtor are not presumed to be
reasonable, and because 11 U.S.C.
111(d)(1)(E) requires providers who
charge a fee to provide services without
regard to the debtor’s ability to pay the
fee, EOUST must approve changes to a
provider’s fee and fee waiver policy in
advance. Accordingly, no change to this
rule is necessary.
13. Criteria To Become Approved
Providers [§§ 58.32 and 58.33(f)]
Comment: EOUST received one
comment recommending that
instructional curricula should include

E:\FR\FM\14MRR1.SGM

14MRR1

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

wreier-aviles on DSK5TPTVN1PROD with RULES

bankruptcy-specific content to address
the specific hurdles debtors face upon
emerging from bankruptcy.
Response: The detailed substantive
curriculum requirements in section
58.33(f) mandate debtor education
spanning a broad range of financial
matters, including budgeting, financial
management, credit, consumer
information, and coping with financial
crisis. The elements of the curriculum
address the areas of greatest concern to
consumers without posing undue risk
that providers and their instructors will
provide legal advice concerning
bankruptcy or financial regulation to
debtors. As noted elsewhere, EOUST
interprets 11 U.S.C. 110(e)(2) to permit
instructors to explain basic bankruptcy
principles and procedures and their
general application; such matters may
form part of the required debtor
education curriculum.
14. Restrictions on Advertising
[§ 58.33(c)(4)]
Comment: One comment advocated
including two additional ethical rules
concerning direct mail and telephone
advertising. The first would bar
providers from contacting debtors via
outbound telephone calls, unless the
provider already has provided
instructional services to the debtor in
question, and the call is in response to
a request for contact by the debtor or
debtor’s counsel, either directly or
through a contact form or locator
service. The second would bar providers
from using direct mail or electronic mail
solicitations to contact debtors, unless
the solicitations include a prominent
disclaimer stating, ‘‘This is an
advertisement for services,’’ refrain from
using seals or logos that may be
confused easily with those used by any
federal government agency, do not
include certain words (such as ‘‘trustee’’
or ‘‘bankruptcy court’’), and the
solicitation is in response to a request
for contact by the debtor or debtor’s
counsel, either directly or through a
contact form or locator service.
Response: EOUST acknowledges that
some restrictions on advertising and
solicitation are necessary to protect
consumers. However, the first proposed
restriction, which prohibits providers
from contacting debtors unless the
debtor initiates the contact after the
instructional course, forecloses a
substantial body of contact between
debtors and providers. Such a limitation
may be more restrictive of commercial
speech than is necessary to advance the
government’s interest in consumer
protection.
EOUST concurs with the second
proposed restriction. Some types of mail

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

solicitations from providers to recentlyfiled debtors may be confused with
bankruptcy court correspondence, as
they bear barcodes, case numbers, and
other misleading markings, and, on at
least one occasion, bear the words
‘‘Bankruptcy Court’’ on the envelope.
Accordingly, the requirements that mail
solicitations bear a prominent
disclaimer and include only logos, seals,
or similar marks that are substantially
dissimilar to those used by federal
agencies and courts constitute
reasonable restrictions on advertising.
These restrictions minimize consumer
deception arising from the false
impression that the solicitation
constitutes an official court or United
States Trustee Program communication.
These restrictions are narrowly tailored
to advance the government’s interest in
consumer protection and are consistent
with First Amendment principles
governing commercial speech. See, e.g.,
Central Hudson Gas & Elec. Corp. v.
Public Serv. Comm’n, 447 U.S. 557
(1980) (holding that restrictions on
commercial speech must directly
advance an important interest and shall
be no more restrictive of speech than
necessary and recognizing the
constitutionality of regulations
restricting deceptive advertising).
Furthermore, the restrictions on
advertising are not an additional burden
on providers as the proposed rule
requires providers to ‘‘comply with the
United States Trustee’s directions on
approved advertising, including without
limitation those set forth in appendix A
to the application’’ (§ 58.33(n)(7) of the
proposed rule). In that appendix, it
states that approved providers shall not
use the Department of Justice’s seal, the
United States Trustee’s seal, the
Bankruptcy Court’s seal, or any seal of
the United States or a likeness thereof.
Providers have been aware of this
prohibition since the inception of the
debtor education application in 2005.
The final rule clarifies the contours of
this restriction on advertising.
15. Instructor Qualifications
[§ 58.33(d)(1)]
Comment: One comment objected to
the requirement that instructors, rather
than the provider, hold specific
qualifications. The comment suggested
that the listed requirements should
apply to the provider as an entity, rather
than to individual instructors. Another
comment recommended imposing an
additional requirement that instructors
receive credit counseling-specific
training before initial certification and
be required to receive annual continuing
education.

PO 00000

Frm 00031

Fmt 4700

Sfmt 4700

16163

Response: The instructor qualification
requirements are meant to ensure that
each instructor possesses sufficient
expertise in financial matters to provide
substantive instruction to consumers.
Accordingly, inexperienced instructors
either must complete a financial course
of study or must work a minimum of six
months in a related area to ensure they
are qualified to serve as instructors.
Based upon experience administering
the Interim Final Rule and its
interactions with providers, EOUST
concluded the requirements set forth in
this rule are sufficient to ensure that
instructors will be qualified to provide
the statutorily mandated instruction to
debtors. Accordingly, no change to the
rule is necessary.
16. Verification of Identity [§ 58.33(d)(3)
and (e)(2)]
Comment: EOUST received comments
concerning identity verification. One
expressed the opinion that verification
of debtor identity in the context of
Internet and telephone instruction is
impossible, and another sought further
guidance concerning the appropriate
means of identity verification.
Response: Establishing an
individual’s identity in the context of
telephone and Internet instruction may
pose difficulties. This does not,
however, obviate identity verification
requirements. Indeed, many providers
already have implemented effective
identity verification procedures. For inperson instruction, an individual may
present his or her driver’s license, or
similar photo identification, to establish
his or her identity. Because the
instructor is physically present and can
confirm that the photo in the driver’s
license matches the debtor, this
identification procedure is sufficient for
in-person instruction. In the case of
Internet and telephone instruction the
individual is not in the instructor’s
physical presence and additional
measures are necessary to confirm the
individual’s identity. In such cases,
providers successfully have requested
that debtors supply their mothers’
maiden names, or other information
known specifically to the individual
debtors, to confirm identity.
17. Learning Materials and
Methodologies [§ 58.33(f) and (g)]
Comment: One comment
recommended that the rule incorporate
the National Standards for Adult
Financial Literacy Education,
established by the commenter, as the
substantive standard for personal
financial instruction. The commenter
also recommended a clarification that

E:\FR\FM\14MRR1.SGM

14MRR1

16164

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

‘‘learning materials’’ should be ‘‘written
learning materials.’’
Response: No change to the rule is
necessary. EOUST declines to adopt
standards established by one source as
the substantive standard for instruction
by all providers.
18. Course Procedures—Length of Time
[§ 58.33(g)(1)(i)]
Comment: EOUST received one
comment that requiring ‘‘a minimum’’
of two hours for an instructional course
emphasizes the time actually spent in
class rather than the topics covered and
the knowledge transferred to the debtor.
The commenter suggested replacing the
word ‘‘minimum’’ with
‘‘approximately.’’
Response: No change is necessary.
Based upon experience administering
the Interim Final Rule and its
interactions with providers, EOUST has
determined that two hours, at a
minimum, are necessary to cover all the
substantive topics set forth in 11 U.S.C.
§ 111(d)(1) and 28 CFR § 58.33(f).

wreier-aviles on DSK5TPTVN1PROD with RULES

19. Course Procedures—When Course Is
‘‘Complete’’ [§ 58.33(g)]
Comment: One comment sought
clarification about when Internet
instruction is ‘‘complete’’ and suggested
that completion should be defined
specifically. The comment noted that, in
the case of Internet instruction,
providers and debtors are uncertain
whether instruction is considered
complete when the debtor finishes the
online course, or whether further
interaction with an instructor is
necessary.
Response: Unlike budget and credit
counseling, which, by statute, require
client-specific counseling with respect
to credit and financial problems and
development of a plan to address each
individual client’s financial problems,
post-bankruptcy personal financial
management instruction does not
require individualized counseling and
the development of a personalized plan.
Accordingly, the instruction is
‘‘complete’’ (1) when the debtor has
finished an instructional course that
complies with the provisions of 11
U.S.C. 111(d) and the other provisions
of this rule, and that EOUST has
approved; (2) after the debtor has
established his or her identity as
described in this rule; and (3) after the
debtor has taken any test required by the
provider, and if the debtor failed to
obtain at least a 70 percent passing
grade, received follow-up instruction
from the provider; the scope of the
follow-up instruction is left to the
discretion of the provider.

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

20. Course Procedures—Telephonically
Present [§ 58.33(g)(3)(i)]
Comment: One comment sought
clarification regarding the meaning of
the term ‘‘present’’ for telephone-based
courses.
Response: The requirement that an
instructor is telephonically present to
instruct and interact with debtors does
not require the instructor to provide live
course instruction on the telephone, but
requires that the instructor be present to
respond to debtor inquiries.
21. Course Procedures—Internet
Providers [§ 58.33(g)(4)(i)]
Comment: One comment objected to
the application of § 58.33(g)(3)(v) to
Internet course providers, noting that it
does not obtain telephone numbers from
its Internet clients.
Response: To the extent instruction
takes place by Internet, the provider
may satisfy this requirement by
providing direct communication from
an instructor by electronic mail, live
chat, or telephone.
22. Special Needs [§ 58.33(j)]
Comment: One comment stated that
‘‘special needs’’ should be a defined
term.
Response: The term ‘‘special needs’’ is
in the public vernacular and commonly
refers to people with disabilities. No
further clarification is necessary.
23. Mandatory Disclosures [§ 58.33(k)]
Comment: EOUST received several
comments concerning the number of
mandatory disclosures. One comment
stated that the number of mandatory
disclosures is excessive and should be
reduced to avoid confusing debtors; the
comment suggested deleting paragraphs
58.33(k)(4) and (5) as unnecessary, and
allowing paragraphs (6) and (9) to be
given during the instructional session
rather than before, at the instructor’s
discretion.
EOUST also received a comment
recommending that, to the extent a
provider also is approved as a nonprofit
budget and credit counseling agency
pursuant to 11 U.S.C. 111(c), the
provider be able to state that the United
States Trustee has reviewed those
services.
Response: While EOUST recognizes
that the disclosures are numerous, they
are necessary to protect consumers.
Paragraphs (4) and (5) provide debtors
with essential information concerning
the qualifications of the course
instructor and inform debtors who
otherwise may be unaware that
providers may not charge or receive
referral fees. These disclosures allow
debtors to make informed decisions

PO 00000

Frm 00032

Fmt 4700

Sfmt 4700

concerning the choice of provider by
giving debtors complete information
before they engage the provider.
Paragraphs (6) and (9) inform consumers
that the provider must provide a
certificate promptly and the certificate
will be provided only if the consumer
completes the instruction. These
disclosures are particularly important to
eliminate misunderstandings between
the provider and debtor and make clear
to debtors that they must complete
instruction before receiving a certificate.
Though the proposed rule did not
prohibit providers from informing
debtors that they were, if applicable,
also approved credit counseling
agencies, the rule did not expressly
allow it either. To reduce a restriction
on providers, paragraph (k)(8) has been
revised to permit a provider to disclose
that, to the extent that provider is also
approved as a nonprofit budget and
credit counseling agency pursuant to 11
U.S.C. 111(c), the United States Trustee
has reviewed those credit counseling
services.
24. Recordkeeping Requirements
[§ 58.33(m)]
Comment: EOUST received several
comments concerning recordkeeping
requirements. A number of comments
objected that the recordkeeping
requirement was burdensome. One
objected to the requirement in section
58.33(m)(3) that Internet instructional
course providers assess the language
debtors use in daily life. Another
comment objected to the requirement
that providers maintain records
concerning the provision of free or
reduced-fee services on a voluntary
basis.
Response: Certain recordkeeping
requirements, such as the requirement
to maintain records concerning the
numbers of debtors who seek
instruction in languages other than
English, are necessary to advance the
underlying purpose of the statute and to
assist EOUST in ensuring that
instructional services are available to
the broadest range of consumers.
Accordingly, the final rule retains most
recordkeeping requirements regarding
all debtors but has limited this
requirement concerning prohibiting
bundling or tying agreements as to
debtors who seek but ultimately do not
receive instructional services from a
particular provider. In those instances,
the broad reference to ‘‘debtors’’ does
not advance a legitimate regulatory
objective. Accordingly, the definition of
‘‘debtors’’ has been revised to conform
to 11 U.S.C. 101(13), to the extent that
the individual has sought an

E:\FR\FM\14MRR1.SGM

14MRR1

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
instructional course from an approved
provider.
The requirement that providers retain
hard copies of signed certificates for two
years has been deleted. The final rule no
longer requires providers to provide
original signatures on certificates in
recognition of electronic filing in the
bankruptcy courts and the technology
used to generate certificates. Copies of
such certificates shall be retained for
180 days from the date of issuance.

wreier-aviles on DSK5TPTVN1PROD with RULES

25. Additional Minimum Requirements
[§ 58.33(n)(5)]
Comment: Two comments regarding
provider obligations objected to the
rule’s requirement that providers take
no action to limit debtors from bringing
claims against providers ‘‘under any
applicable law, including but not
limited to 11 U.S.C. § 111(g)(2).’’ The
comment expressed the opinion that the
phrase ‘‘any applicable law’’ exceeds
the scope of 11 U.S.C. § 111(g)(2).
Response: To reduce the burden on
providers, the rule has been amended to
strike the reference to ‘‘any applicable
law.’’
26. Advertising [§ 58.33(n)(7) and (n)(9)]
Comment: EOUST received one
comment suggesting that the phrase
‘‘approval does not endorse or assure
the quality of a Provider’s services’’
should be deleted. The comment
claimed advertising is protected speech
and that the quoted phrase raises doubts
in the mind of the consumer concerning
the meaning of approval. The comment
also objected to the restrictions on
commercial advertising during the
instructional course on First
Amendment grounds.
Response: This disclaimer is
necessary to inform consumers that,
although the provider is approved to
issue instructional course certificates,
such approval does not constitute a
government guarantee or endorsement
of the quality of the provider’s services.
This disclaimer protects consumers who
otherwise might infer that approval
means all provider actions
automatically carry the approval or
endorsement of the federal government.
In addition, after obtaining approval, a
provider may change its business
practices or employ unqualified
instructors, and EOUST may not learn
of these changes in quality immediately.
Finally, advertising constitutes
commercial speech and is subject to
regulations that directly advance a
substantial governmental interest,
provided there exists a reasonable fit
between the regulations and the
governmental interest. As EOUST has a
substantial interest in ensuring that the

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

public is not misled regarding the
meaning of provider approval, and as
the disclaimer is narrowly tailored to
advance EOUST’s interest without
otherwise controlling or otherwise
limiting the content of a provider’s
advertisements, the disclaimer is
reasonable.
For the same reasons, the limitation
on commercial advertising during the
instructional course constitutes a
reasonable time, place, and manner
restriction on speech.
27. Fees [§ 58.34(a)]
Comment: EOUST received numerous
comments regarding the determination
of reasonable fees. Comments spanned
suggestions for the dollar amount of a
reasonable fee, ranging from $60 to
$100, to suggestions that the proposed
$50 reasonable fee is unreasonable and
should be adjusted for regional
variations. A number of comments
stated that the establishment of a fixed
reasonable fee runs afoul of the market
economy, and that competition will
keep fees low while taking regional
variations and cost changes into
account. One comment expressed the
concern that the proposed reasonable
fee and fee waiver requirements would
render it unable to cover the costs of
providing instruction.
Response: EOUST has considered
carefully the comments concerning both
the amount of a reasonable fee and the
policies underlying the establishment of
a fixed fee, both in the context of the
policies underlying the statute and the
experiences of approved providers since
passage of the Interim Final Rule, and
has determined: (a) Fees in excess of
$50 per person are not presumptively
reasonable; (b) EOUST shall review the
amount of the presumptively reasonable
fee one year after the effective date of
the rule, and then periodically, but not
less frequently than every four years; (c)
providers may request permission to
charge a larger fee, which EOUST will
consider on a case-by-case basis; and (d)
whether a provider charges fees for an
instructional session per individual or
per couple is within the business
discretion of the provider.
EOUST acknowledges that local
variations in income, cost of living,
overhead, inflation, and other factors
may influence and lead to inter-provider
differences in determining the
reasonableness of instructional course
fees. However, based on EOUST’s
experience with approved providers, the
$50 presumptively reasonable fee
adequately incorporates the costs
associated with complying with the
statute and rule, taking into account the
increasing prevalence of telephone and

PO 00000

Frm 00033

Fmt 4700

Sfmt 4700

16165

Internet instruction, both of which have
lower costs than in-person instruction,
and the prevalence of group instruction
in the post-bankruptcy course setting.
The rule permits providers to exceed the
presumptively reasonable fee after
receiving approval from EOUST by
demonstrating, at a minimum, that its
costs for delivering the instructional
services justify the requested fee. The
provider bears the burden of
establishing that its proposed fee is
reasonable. Such requests may occur at
the time of the provider’s annual reapplication for approval to provide
instructional services, or at any other
time the provider deems necessary.
Providers that have previously
submitted requests to charge more than
$50, and have been granted permission
to do so, will not be required to
resubmit such requests if the provider
continues to charge that fee in the same
amount. Of course, any new requests
must be submitted to EOUST for
approval.
28. Fee Waivers [§ 58.34(b)]
Comment: EOUST received numerous
comments concerning the requirement
that providers offer instructional
services at a reduced cost, or waive the
fee entirely, for debtors who are
financially unable to pay. The proposed
rule requires providers to waive or
reduce fees for debtors whose income is
less than 150 percent of the poverty
guidelines updated periodically in the
Federal Register by the U.S. Department
of Health and Human Services under
the authority of 42 U.S.C. 9902(2), as
adjusted from time to time, for a
household or family of the size involved
in the fee determination (the ‘‘poverty
level’’).
While one comment expressed
concern that the association between the
poverty level and the determination of
a debtor’s ability to pay necessitated
further study and assessment of
financial impact on the providers, one
comment objected to the use of 150
percent of the poverty level as a
mandatory fee waiver requirement and
suggested that 100 percent of the
poverty level was appropriate. Another
comment suggested permitting or
implementing a schedule of discounts
for debtors whose incomes fall below
the poverty level, but who can afford to
pay some amount, while yet another
comment suggested not only that a
debtor should bear the burden of
demonstrating inability to pay, but that
a debtor should affirmatively request the
fee waiver.
Response: Based on these comments
and EOUST’s existing fee waiver data,
EOUST has revised the rule to reduce

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

16166

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

the burden on providers while still
maintaining adequate protection for
debtors. EOUST acknowledges that
standardization may not take into
account local differences, and may have
a disparate impact on providers located
in geographic areas of concentrated low
income. Although a provider may apply
to EOUST to increase its instructional
fee, such fee increases ultimately shift
the fee burden to those debtors more
able to pay.
Furthermore, a mandatory fee waiver
for debtors with income at below 150
percent of the poverty level likely
would result in a substantial increase in
the number of fee waivers granted.
Although some commentators urged
EOUST to adopt rigid criteria requiring
providers to offer services without
charge, such an inflexible rule would be
inconsistent with similar court practices
concerning waiver of court filing fees for
in forma pauperis debtors that do not
require the wholesale waiver of filing
fees for all debtors with incomes below
a certain income level. Under BAPCPA,
debtors earning less than 150 percent of
the poverty level are eligible to apply for
a waiver of the court filing fee and the
court determines whether an eligible
debtor has the ability to pay the filing
fee. Not all debtors who are eligible for
a waiver of the filing fee apply, and not
all debtors who apply are eligible.
Fewer than two percent of debtors
ultimately obtain a waiver of court filing
fees. In comparison, based on available
data from 2005, approximately 30
percent of chapter 7 debtors are eligible
to apply for a waiver of the court filing
fee. If EOUST were to require providers
to adopt a mandatory fee waiver policy
with respect to all such debtors, some
providers could suffer severe financial
losses that would render them unable to
provide services, reducing capacity to
serve the overall debtor population. As
of July 2009, according to self-reporting
by approved debtor education
providers, without the proposed
mandatory fee waiver, 12.2 percent of
certificates were issued at no cost, with
another 13.9 percent issued at reduced
cost.
In response to these concerns, EOUST
has adopted a rebuttable presumption of
a mandatory fee waiver or fee reduction
policy for debtors whose income is less
than the poverty level, based on the in
forma pauperis standard set forth in 28
U.S.C. § 1930(f)(1). Under this rebuttable
presumption policy, instead of waiving
the fee entirely, a provider may charge
a debtor a reduced fee if the provider
determines that the debtor does, in fact,
have the ability to pay some of the fee;
the amount may be determined using a
sliding scale, of the provider’s design,

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

that takes into account the debtor’s
financial circumstances. If the provider
determines that the debtor has the
ability to pay some of the fee, there is
no minimum amount by which the
provider should reduce the fee; the
amount of fee reduction is entirely
dependent upon the debtor’s ability to
pay as determined by the debtor’s
financial circumstances. This rebuttable
presumption satisfies the statutory
mandate that instructional services be
provided without regard to a debtor’s
ability to pay the fee while taking into
account the provider’s need to generate
sufficient income from fees to cover
operational costs. Accordingly, this
policy establishes a uniform, objective
standard by which providers, debtors,
and EOUST can evaluate debtor
entitlement to a fee waiver or a fee
reduction depending on each particular
debtor’s ability to pay. The provider
makes the determination of whether to
grant the fee waiver or fee reduction
when the provider provides instruction
to the debtor; the provider need not
consult with EOUST before making its
determination. EOUST will review a
provider’s fee waiver policies and
statistics during the provider’s annual
review or during a quality of service
review. Finally, because the poverty
level is updated periodically and takes
into account the debtor’s household
size, this policy accounts for nationwide
changes in the cost of living over time.
Establishing a presumptively
mandatory but rebuttable fee waiver or
fee reduction policy for debtors whose
household income falls below 150
percent of the poverty level recognizes
providers’ need to generate sufficient
income from fees to cover operational
costs in light of the statutory mandate.
To the extent a provider believes the fee
waiver policy set forth in the rule
adversely impacts its financial viability,
the provider may apply to EOUST to
increase its fee. The provider shall
demonstrate that its costs of delivering
instructional services (including
opportunity costs associated with
waived or foregone fees) justify the
proposed fee. The rates of both full and
partial fee waivers based on debtor
income levels, and the mechanisms by
which providers implement the
rebuttable presumption, are subject to
EOUST scrutiny during the annual
application review for each approved
provider and during quality of service
reviews to assess compliance with 11
U.S.C. 111 and this final rule.
To permit EOUST to periodically
evaluate the cost and business impact of
this mandatory fee waiver policy on
debtors and providers, and determine
whether providers are applying the

PO 00000

Frm 00034

Fmt 4700

Sfmt 4700

mandatory fee waiver policy uniformly
and fairly, the rule has been amended to
add a new section, § 58.34(b)(2),
requiring the United States Trustee to
review the basis for the mandatory fee
waiver policy one year after the effective
date of the rule, and then periodically,
but not less frequently than every four
years. When reviewing the basis for the
mandatory fee waiver or fee reduction
policy, EOUST may consider the impact
on both providers and debtors by
evaluating data from providers
concerning the instructional fees,
increases to such fees, and rates of total
and partial fee waiver. By retaining the
mandatory, objective fee waiver policy
but requiring its periodic review,
EOUST advances the statutory mandate
that instructional services be provided
without regard to the debtor’s ability to
pay, while enabling EOUST to revisit
the objective standard in light of
provider operational costs and impact
on debtors. The reasonableness of
provider determinations will continue
to be subject to EOUST oversight during
the application process, during on-site
reviews, and in the course of resolving
specific complaints.
29. Certificates—Bundling [§ 58.34(d)]
Comment: One comment
recommended revising this provision to
permit providers who also offer credit
counseling to offer a discount to credit
counseling clients who return to the
provider for post-bankruptcy
instruction. The comment
recommended new language to read, ‘‘A
provider shall not combine a debtor’s
purchase of an instructional course with
the purchase of any other service offered
by the provider.’’
Response: EOUST does not prohibit
the practice of discounting postbankruptcy instructional course fees for
credit counseling clients who return to
take the instructional course as long as
the provider does not require the client
to purchase both courses. The rule’s
prohibition against linking services does
not prohibit credit counseling agencies
from offering a discount to debtors who
wish to return for post-bankruptcy
instruction. No change to the rule is
necessary.
30. Delivery of Certificates—to Whom
[§ 58.35(a)]
Comment: EOUST received several
comments concerning delivery of
certificates to a debtor’s attorney. The
proposed rule required a debtor to
authorize, in writing, the delivery of the
instructional certificate to the debtor’s
attorney. The comments expressed the
opinion that requiring a debtor to
provide written consent to a provider is

E:\FR\FM\14MRR1.SGM

14MRR1

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
inefficient, particularly when the debtor
receives instruction by telephone or
Internet. In such instances, the
comments stated, mail transmission of
written consent to a provider delays the
delivery of the certificate. Rather than
requiring written consent, the rule
should permit the debtor to authorize
verbally the provider to send the
certificate to the debtor’s attorney.
Response: EOUST agrees that written
consent to deliver a certificate to a
debtor’s attorney is unnecessary and
unduly impedes the efficiency of
telephone and Internet instruction.
Accordingly, the rule has been revised
to permit verbal authorization to send a
certificate to a debtor’s attorney. In the
case of Internet instruction, electronic
mail authorization or an electronic
affirmation (such as a radio button or a
box on a Web page) is sufficient.

wreier-aviles on DSK5TPTVN1PROD with RULES

31. Delivery of Certificates—Time
[§ 58.35(b)]
Comment: Several comments objected
to the requirement that a provider
deliver the certificate to a debtor within
three business days of completion of the
instructional course. One comment
suggested that the rule specify that
‘‘delivery’’ means transmission, not
receipt.
Response: The requirement that a
provider send the certificate to a debtor
within three business days accords the
provider adequate time and is
commercially reasonable. The term
‘‘deliver’’ has been changed to ‘‘send’’ to
encompass a wide range of transmission
methods. To the extent a provider is
unable to send the certificate within the
specified time because of extenuating
circumstances, such as problems with
generating or printing the certificate,
illness of the instructor, or other
circumstances beyond the provider’s
control, EOUST can evaluate such
incidents on a case-by-case basis.
32. Certificates—Fees [§§ 58.33(k)(1)
and 58.35]
Comment: Several comments objected
to permitting providers to charge
separate fees for certificates; other
comments sought clarification
concerning the type of consent
providers must obtain before charging
additional fees for certificates. One
comment sought clarification in the case
of telephone and Internet instruction,
and suggested that clients be able to
consent verbally or electronically in
such cases.
Response: EOUST concludes that the
rule should not have specific
instructions for circumstances that arise
infrequently as most providers do not
charge a separate fee for the issuance of

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

the certificate. Accordingly, the rule has
been amended to strike the specific and
additional instructions for providers
that charge separate fees for certificates.
Instead, the final rule requires the
general disclosures to include
disclosure of all fees, including any
additional fees for certificates. This is
not an additional burden on providers
as the proposed rule, and Interim Final
Rule, already require providers to
disclose their fee policy before
rendering services.
33. Certificates—Issuance [§ 58.35(h)]
Comment: One comment objected to
the proposed rule on the grounds that
certificate issuance is a purely
administrative function, and entities
operating under the authority of an
approved provider, in addition to
providers, should be permitted to issue
certificates.
Response: The certificate avers that
the instructor has provided the
represented instruction to the debtor.
Accordingly, the requirement that only
approved providers generate certificates,
and not subsidiary or related but
unapproved entities, serves quality
control and consumer protection
functions. Accordingly, no change to the
rule is necessary.
34. Certificates—Original Signature
[§ 58.35(j)(2)]
Comment: Several comments objected
to the requirement that certificates
generated for electronic filing must be
generated in paper form as well and
must bear the original signature of the
instructor. The comments criticized the
requirement as expensive and timeconsuming, and noted that the rule
contains precautions against creation of
forged or fraudulent certificates.
Response: EOUST agrees and has
reduced the burden on providers by
deleting the requirement that, when a
certificate is generated for electronic
filing with the court, the provider must
provide the debtor a paper certificate
bearing the instructor’s original
signature as well.
35. Certificates—Information [§ 58.35(l)]
Comment: Two comments sought
revisions concerning information on the
certificate. One comment recommended
a revision to the rule specifically
authorizing providers to verify the
judicial district in which the debtor’s
bankruptcy case is pending via PACER
or other court records, to minimize
debtor error. Another comment objected
to the requirement that the certificate
bear the instructor’s name.
Response: No change to the rule is
necessary. Nothing in the rule or 11

PO 00000

Frm 00035

Fmt 4700

Sfmt 4700

16167

U.S.C. 111(d) prohibits instructors or
providers from accessing public records,
to the extent authorized, to verify the
judicial district in which the debtor’s
bankruptcy case is pending, or from
requesting that debtors bring a copy of
a court document to the instructional
course. Furthermore, the requirement
that the certificate bear the instructor’s
name is necessary to permit EOUST to
confirm the quality of instruction by a
particular instructor.
36. Certificates—Legal Name
[§ 58.35(m)]
Comment: EOUST received several
comments concerning the display of two
names on the certificate when a third
party (such as an attorney-in-fact acting
under a valid power of attorney)
completes instruction on behalf of the
debtor. The comments expressed doubt
that a certificate can display two names
rather than one. Several comments
expressed the opinion that, rather than
leaving open the possibility that a third
party can complete the course on behalf
of the debtor under certain
circumstances, the rule expressly
should prohibit third parties from taking
instruction on behalf of debtors.
EOUST also received one comment
recommending an amendment to the
rule permitting the provider to ‘‘affix
debtor’s name as it appears on debtor’s
bankruptcy filing.’’
Response: Certificates may display
more than one name (e.g., John Doe, as
Attorney-In-Fact for Jane Doe). No
clarification is necessary to permit such
a display, and the display of both names
removes the need for providers to
engage in legal analysis concerning the
proper party to list on the certificate,
while providing full disclosure to courts
and other parties concerning the
debtor’s participation in instruction.
Furthermore, EOUST declines to
prohibit third parties from completing
instruction on behalf of a debtor under
appropriate circumstances, such as
under a valid power of attorney
sufficient to authorize the individual to
file a bankruptcy petition on behalf of
a client. To the extent state law
authorizes powers of attorney, EOUST
does not object to the completion of
instruction by duly authorized
attorneys-in-fact on behalf of debtors.
No change to the rule is necessary to
permit providers to affix a debtor’s
name as it appears on the debtor’s
bankruptcy filing. The debtor bears the
burden of providing the provider with
the proper name.
37. Appeals [§ 58.36]
Comment: One comment sought
clarification concerning several aspects

E:\FR\FM\14MRR1.SGM

14MRR1

16168

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

wreier-aviles on DSK5TPTVN1PROD with RULES

of the appeal process. First, the
comment requested inclusion of a
specific statement that interim
directives removing a provider from the
approved list are rare and should be
used only in extraordinary
circumstances. Second, the comment
also requested clarification that the
appeal period begins to run upon the
provider’s receipt of the United States
Trustee’s removal decision, rather than
from the date the United States Trustee
made the decision. Finally, the
comment sought to limit the authority of
the Director to extend its review period
due to exigent circumstances.
Response: No change to the rule is
necessary. First, by their nature, the
specifically enumerated circumstances
permitting interim directives ensure that
only in limited circumstances will the
United States Trustee remove a provider
from the approved list pursuant to the
interim directive procedure. Second, the
rule provides that, to be timely, appeal
documents shall be received not later
than 21 calendar days from the date of
the notice to the provider. The rule is
unambiguous. The Director shall receive
the documents within 21 calendar days
of the date of the notice, even if the
provider does not have 21 calendar days
to respond. The rule also requires the
United States Trustee to deliver removal
documents to the provider by overnight
courier to avoid loss of time and
prejudice to the provider. Finally, the
Director will generally not extend the
deadline to issue a final decision unless
the provider agrees to the extension of
time. However, there may be
circumstances where the Director needs
to extend the deadline but the provider
unreasonably declines to extend the
deadline. In such instances, the Director
must have the authority to extend the
deadline to ensure that a thorough and
fair consideration of the provider’s
request for review has occurred before
issuing a final decision.
38. Appeals—Return of Client Fees
[§ 58.36(q)(3)]
Comment: One comment
recommended extending the time for
providers removed from the list of
approved providers to explain why they
require additional time to complete
refunds to debtors. The comment also
recommended changing the criteria for
debtors eligible to receive a return of
fees to those who had ‘‘substantially’’
received instruction, rather than those
who had ‘‘completely’’ received
instruction.
Response: No change to the rule is
necessary. EOUST will consider prompt
and reasonable requests for extension of
time and the rule already provides for

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

the return of fees for anyone who has
paid for services but not received them.
Executive Order 12866
This rule has been drafted and
reviewed in accordance with Executive
Order 12866, ‘‘Regulatory Planning and
Review,’’ section 1(b), The Principles of
Regulation. The Department has
determined that this rule is a
‘‘significant regulatory action’’ and,
accordingly, this rule has been reviewed
by the Office of Management and
Budget (‘‘OMB’’).
The Department has also assessed
both the costs and benefits of this rule
as required by section 1(b)(6) and has
made a reasoned determination that the
benefits of this regulation justify its
costs. The costs considered in this
regulation include the required costs for
the submission of an application. Costs
considered also include the cost of
establishing and maintaining the
approved list in each federal judicial
district. In an effort to minimize the
burden on applicants, the application
keeps the number of items on the
application to a minimum.
The costs to an applicant of
submitting an application will be
minimal. The anticipated costs are the
photocopying and mailing of the
requested records, along with the
salaries of the employees who complete
the applications. Based upon the
available information, experience with
the instructional course industry, and
informal communications with
providers, EOUST anticipates that this
cost for submitting an application
should equal approximately $500 per
application for providers. This cost is
not new. It is the same cost that
providers incurred when applying
under the Interim Final Rule.
Although providers may charge a fee
for providing the financial management
instructional course, providers must
provide the instructional course without
regard to a debtor’s ability to pay the fee
in accordance with 11 U.S.C.
111(d)(1)(E). Based upon the available
information, current practice of many
providers, experience with the
instructional course industry, and
informal communications with
providers, $50 is presumed to be a
reasonable fee for an instructional
course. This rule does not prevent
providers from charging more than $50.
It requires providers to notify EOUST of
any additional charge prior to
implementing the additional fee and
justify the additional cost to obtain
EOUST approval for the increased fee.
The amount presumed to be
reasonable for instructional course fees
will be reviewed one year after the

PO 00000

Frm 00036

Fmt 4700

Sfmt 4700

effective date of this rule, and then
periodically, but not less frequently
than every four years. The amount
presumed to be reasonable will be
published by notice in the Federal
Register and identified on the EOUST
Web site. In addition, all providers must
waive or reduce the fee if the debtor
demonstrates a lack of ability to pay the
fee, which shall be presumed if the
debtor’s current household income is
less than 150 percent of the poverty
level, as adjusted from time to time, for
a household or family of the size
involved in the fee determination. A
provider may rebut this presumption if
the provider determines, based on
financial information provided by the
debtor in connection with instructional
services, that the debtor is able to pay
the fee in a reduced amount. Please refer
to the Regulatory Flexibility Act section
for a discussion on fees, fee waivers and
fee reductions.
Additionally, providers will incur de
minimus recordkeeping costs. For
instance, a provider will be required to
maintain various records, such as
records on which it relied in submitting
its application; copies of the semiannual reports; records on instruction
provided in languages other than
English; fees, fee waiver and fee
reduction statistics; complaints; and
records enabling the provider to issue
replacement certificates. All of these
records combined should not equal
more than a few pages or megabytes of
information. Moreover, the increased
specificity in this rule regarding records
retention requirements reduce the
burden on providers because the Interim
Final Rule required providers to
maintain records, but did not specify
which records needed to be kept, nor for
how long. With implementation of this
rule, providers no longer need to keep
every record for an unspecified amount
of time in case such records are
requested during an annual review or
quality of service review.
The number of applicants that will
ultimately apply is unknown, though
EOUST currently has approved
approximately 270 providers. The
annual hour burden on providers is
estimated to be ten hours. This estimate
is based on consultations with
individuals in the instructional course
industry, and experience with providers
who completed the initial applications.
EOUST consulted with the Federal
Trade Commission and with the Internal
Revenue Service in drafting this rule
and concludes that the rule does not
have an adverse effect upon either
agency.
The benefits of this rule include the
development of standards that increase

E:\FR\FM\14MRR1.SGM

14MRR1

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
consumer protections, such as a limit on
the presumption of reasonable fees, and
the requirement that providers give
adequate disclosures concerning
providers’ policies. These disclosures
include notifying debtors that they may
qualify for reduced or free services to
further the BAPCPA’s requirement that
services be provided without regard to
ability to pay the fee. This rule also
provides for greater supervision by the
United States Trustee to ensure
providers deliver effective instruction to
debtors concerning personal financial
management. Additionally, this rule
assists in reducing fraud by requiring
providers to identify debtors before
providing an instructional course and
corresponding certificate of completion.
Another benefit of this rule is clarifying
that providers who cannot provide
instruction in the debtor’s language
shall expeditiously direct the debtor to
a provider who can provide services in
the debtor’s language. These benefits
justify the rule’s costs in complying
with Congress’ mandate that a list of
approved providers be established.
Public Law 109–8, § 106(e)(1).

wreier-aviles on DSK5TPTVN1PROD with RULES

Executive Order 13132
This rule will not have a substantial
direct effect on the States, on the
relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Therefore, in
accordance with Executive Order 13132,
it is determined that this rule does not
have sufficient federalism implications
to warrant the preparation of a
Federalism Assessment.
Paperwork Reduction Act
The information collection
requirements contained in this rule have
been approved by OMB in accordance
with the Paperwork Reduction Act of
1995, 44 U.S.C. 3501 to 3520, and
assigned OMB control number 1105–
0085 for form EOUST–DE1, the
‘‘Application for Approval as a Provider
of a Personal Financial Management
Instructional Course.’’ The Department
notes that full notice and comment
opportunities were provided to the
general public through the Paperwork
Reduction Act process, and that the
application and associated requirements
were modified to take into account the
concerns of those who commented in
this process.
Regulatory Flexibility Act
In accordance with the Regulatory
Flexibility Act, 5 U.S.C. 605(b), the
Director has reviewed this rule and, by
approving it, certifies that although it

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

will affect a substantial number of small
entities, the rule will not have a
significant economic impact upon them.
This rule sets forth guidance
concerning the reasonable fee a provider
may charge (a presumptively reasonable
fee of $50), and the criteria for
determining fee waiver eligibility
(presumed eligibility at household
income of 150 percent of the poverty
level). EOUST sought to establish formal
guidance concerning fees, fee waivers
and fee reductions based on a debtor’s
‘‘ability to pay the fee’’ using objective
criteria, taking into account the
potential financial impact on the
agencies as well as the needs of clients.
11 U.S.C. 111(d)(1)(E).
After carefully evaluating the
financial management instructional
course industry, EOUST based its fee
guidance on current industry practice.
Over 90 percent of approved providers
charge $50 or less. According to a U.S.
Government Accountability Office
(‘‘GAO’’) report in 2007, the mean fee
for providers among all providers was
$43. See U.S. Gov’t Accountability
Office, GAO–07–203, Bankruptcy
Reform: Value of Credit Counseling
Requirement is Not Clear 30 (2007) (the
‘‘GAO Report’’). As of 2011, the mean
fee for providers among all providers is
$42. Among the ten largest providers (by
certificate volume), nearly all charge
$50 or less in fees. Only two of the ten
largest providers charge more than $50
(one of the providers in question
charges $50, but increases the fee to $75
for telephone instruction; the other
provider charges $55, but increases the
fee to $59 for telephone instruction).
Four of the ten largest providers charge
substantially less than $50: one charges
$25; one charges $24; one charges $19;
and the other charges $14.95. According
to EOUST records, fee policies have not
changed among the ten largest providers
since 2006.
In 2011, EOUST took a random
sampling of ten providers that were not
among the ten largest providers to
determine these providers’ fees. Of these
ten providers, one charges $50; one
charges $40; one charges $37.50; one
charges $35; four charge $25; one
charges $9; and one is free of charge.
Accordingly, a $50 presumptively
reasonable fee not only strikes an
appropriate balance between the
financial condition of debtors and the
financial viability of approved
providers, but is generally equivalent to
the general practice in the debtor
education industry. Thus, establishing a
presumptively reasonable fee of $50
does not impose a significant economic
impact on providers. Rather, it
embodies a fee structure that

PO 00000

Frm 00037

Fmt 4700

Sfmt 4700

16169

encompasses that already widespread in
the industry.
Regarding fee waivers, similar to the
requirement to charge ‘‘reasonable’’ fees,
the requirement to waive fees when a
client cannot pay is mandated by
statute. 11 U.S.C. 111(d)(1)(E). With
respect to the development of the fee
waiver standard, the GAO undertook a
study concerning, among other things,
the incidence of fee waivers based on
ability to pay. The GAO noted that the
Interim Final Rule did not provide
specific guidance on the criteria
providers should use to determine a
client’s ability to pay. See GAO Report
at 29–32. The GAO noted variations in
the rate of fee waivers and
recommended that EOUST adopt clearer
guidance to providers to reduce
uncertainty among providers concerning
appropriate fee waiver criteria, to
improve transparency concerning
EOUST’s assessment of fee waiver
policies, and to increase the availability
of fee waivers by setting clear minimum
benchmarks for ability to pay. Id. at 32,
40–41.
Among the ten largest providers, six
use household income at or below 150
percent of the poverty level as the
threshold for determining eligibility for
a fee waiver. Two providers consider
the debtor’s income and whether the
debtor was granted a court fee waiver;
one provider uses 100 percent of
poverty level; and one provider assesses
the debtor’s housing status and
existence of severe hardship. In 2011,
EOUST took a random sampling of ten
providers that were not among the ten
largest providers to determine these
providers’ fee waiver policies. Half of
the providers use the 150 percent of
poverty level standard; one provider
uses the in forma pauperis or pro bono
standard without specifying 150
percent; two providers use 100 percent
of the poverty level; one provider uses
200 percent of the poverty level; and
one provider does not charge a fee for
its instructional course.
In the proposed rule, EOUST
proposed a bright-line standard
establishing entitlement to a fee waiver
for debtors with household income
equal to or less than 150 percent of the
poverty level. That standard was based
on the in forma pauperis standard set
forth in 28 U.S.C. 1930(f)(1), which
permits the bankruptcy court to waive
filing fees for eligible individuals. The
proposed rule standard did not grant
debtors the discretion to determine
whether clients otherwise were able to
pay the fees.
Subsequently, EOUST received and
considered comments to the proposed
rule. EOUST agreed that

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

16170

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

implementation of the proposed
standardized fee waiver raised some
policy concerns. Because
standardization fails to take into
account local differences, disparate
impact on providers may result when
providers located in geographic areas of
concentrated low income individuals
are required to grant fee waivers at a
higher rate than those in more affluent
areas. Although a provider may apply to
EOUST to increase its fee by
demonstrating that its costs of
delivering services (including
opportunity costs associated with
waived or reduced fees) justify the
proposed fee, increases in fees
ultimately shift the fee burden to those
debtors more able to pay. As of July
2009, according to self-reporting by
approved debtor education providers,
without the proposed mandatory fee
waiver, 12.2 percent of certificates were
issued at no cost, with another 13.9
percent issued at reduced cost. In
comparison, based on available data
from 2005, approximately 30 percent of
chapter 7 debtors were eligible to apply
for a waiver of the court filing fee
pursuant to the 150 percent in forma
pauperis standard. Based on this
analysis, EOUST concluded that if
providers were subject to a mandatory
fee waiver policy with respect to all
such debtors based on the in forma
pauperis standard, some providers
might suffer financial losses that would
render them unable to provide services,
reducing capacity to serve the overall
debtor population.
Accordingly, EOUST revised this rule
to include a rebuttable presumption to
the objective fee waiver standard. In
adopting the presumption, EOUST seeks
to balance the need for an objective fee
waiver standard and complying with 11
U.S.C. 111(d)(1)(E) with providers’ need
to collect adequate fees for services
provided. Under the rebuttable
presumption, a debtor with household
income equal to or less than 150 percent
of the poverty level is presumptively
entitled to a fee waiver, but the provider
may determine, based on information it
receives from the debtor, that the debtor
actually is able to pay the fee in part. In
that case, the provider may charge the
debtor a reduced fee, taking into
account the debtor’s actual ability to
pay. This rebuttable presumption
balances the need for an objective fee
waiver standard, consumer protection,
and the need to ensure provider
compliance with the Bankruptcy Code
with the providers’ need to collect
adequate fees.
Additionally, although EOUST
considered indexing fee waivers to
debtor income, EOUST determined that

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

such an indexing system fails to take
into account the variation in ability to
pay for debtors at the same income
level. For example, two debtors may
have income at 150 percent of the
poverty level, but one debtor lives in a
rent-free home and has few expenses
while the other has significant expenses,
such as accumulated medical debts or
child support payments. An inflexible
indexing standard does not take into
account the individual’s actual ability to
pay the fee, as set forth in 11 U.S.C.
111(d)(1)(E). EOUST concluded that
each provider should determine each
debtor’s eligibility based on the debtor’s
individual financial circumstances.
Unfunded Mandates Reform Act of
1995
This rule does not require the
preparation of an assessment statement
in accordance with the Unfunded
Mandates Reform Act of 1995, 2 U.S.C.
1531. This rule does not include a
federal mandate that may result in the
annual expenditure by State, local, and
tribal governments, in the aggregate, or
by the private sector, of more than the
annual threshold established by the Act
($100 million). Therefore, no actions
were deemed necessary under the
provisions of the Unfunded Mandates
Reform Act of 1995.
Small Business Regulatory Enforcement
Fairness Act of 1996
This rule is not a major rule as
defined by section 804 of the Small
Business Regulatory Enforcement
Fairness Act of 1996, 5 U.S.C. 801 et
seq. This rule will not result in an
annual effect on the economy of $100
million or more; a major increase in
costs or prices; or significant adverse
effects on competition, employment,
investment, productivity, and
innovation; or on the ability of United
States-based companies to compete with
foreign-based companies in domestic
and export markets.
Privacy Act Statement
Section 111 of title 11, United States
Code, authorizes the collection of this
information. The primary use of this
information is by the United States
Trustee to approve providers of a
personal financial management
instructional course. The United States
Trustee will not share this information
with any other entity unless authorized
under the Privacy Act, 5 U.S.C. 552a et
seq. EOUST has published a System of
Records Notice that delineates the
routine use exceptions authorizing
disclosure of information. 71 FR 59,818,
59,827 (Oct. 11, 2006), JUSTICE/UST–

PO 00000

Frm 00038

Fmt 4700

Sfmt 4700

005, Credit Counseling and Debtor
Education Files and Associated Records.
Public Law 104–134 (April 26, 1996)
requires that any person doing business
with the federal government furnish a
Social Security Number or Tax
Identification Number. This is an
amendment to section 7701 of title 31,
United States Code. Furnishing the
Social Security Number, as well as other
data, is voluntary, but failure to do so
may delay or prevent action on the
application.
List of Subjects in 28 CFR Part 58
Administrative practice and
procedure, Bankruptcy, Credit and
debts.
Accordingly, for the reasons set forth
in the preamble, Part 58 of chapter I of
title 28 of the Code of Federal
Regulations is amended as follows:
PART 58—[AMENDED]
1. The authority citation for Part 58
continues to read as follows:

■

Authority: 5 U.S.C. 301, 552; 11 U.S.C.
109(h), 111, 521(b), 727(a)(11), 1141(d)(3),
1202, 1302, 1328(g), 28 U.S.C. 509, 510, 586,
589b.

2. Sections 58.25 through 58.27 are
revised to read as follows:

■

§ 58.25

Definitions.

(a) The following definitions apply to
§§ 58.25 through and including 58.36 of
this Part, as well as the applications and
other materials providers submit in an
effort to establish they meet the
requirements necessary to become an
approved provider of a personal
financial management instructional
course.
(b) These terms shall have these
meanings:
(1) The term ‘‘accreditation’’ means
the recognition or endorsement that an
accrediting organization bestows upon a
provider because the accrediting
organization has determined the
provider meets or exceeds all the
accrediting organization’s standards;
(2) The term ‘‘accrediting
organization’’ means either an entity
that provides accreditation to providers
or provides certification to instructors,
provided, however, that an accrediting
organization shall:
(i) Not be a provider or affiliate of any
provider; and
(ii) Be deemed acceptable by the
United States Trustee;
(3) The term ‘‘affiliate’’ means:
(i) Every entity that is an affiliate of
the provider, as the term ‘‘affiliate’’ is
defined in 11 U.S.C. 101(2), except that
the word ‘‘provider’’ shall be substituted

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
for the word ‘‘debtor’’ in 11 U.S.C.
101(2);
(ii) Each of a provider’s officers and
each of a provider’s directors; and
(iii) Every relative of a provider’s
officers and every relative of a
provider’s directors;
(4) The term ‘‘application’’ means the
application and related forms, including
appendices, approved by the Office of
Management and Budget as form
EOUST–DE1, Application for Approval
as a Provider of a Personal Financial
Management Instructional Course, as it
shall be amended from time to time;
(5) The term ‘‘approved list’’ means
the list of providers currently approved
by a United States Trustee under 11
U.S.C. 111 as currently published on the
United States Trustee Program’s Internet
site, which is located on the United
States Department of Justice’s Internet
site;
(6) The term ‘‘approved provider’’
means a provider currently approved by
a United States Trustee under 11 U.S.C.
111 as an approved provider of a
personal financial management
instructional course eligible to be
included on one or more lists
maintained under 11 U.S.C. 111(a)(1);
(7) The term ‘‘certificate’’ means the
document an approved provider shall
provide to a debtor after the debtor
completes an instructional course, if the
approved provider does not notify the
appropriate bankruptcy court in
accordance with the Federal Rules of
Bankruptcy Procedure that a debtor has
completed the instructional course;
(8) The term ‘‘debtor’’ shall have the
meaning given that term in 11 U.S.C.
101(13), to the extent that individual
has sought an instructional course from
an approved provider;
(9) The term ‘‘Director’’ means the
person designated or acting as the
Director of the Executive Office for
United States Trustees;
(10) The term ‘‘effective instruction’’
means the actual receipt of an
instructional course by a debtor from an
approved provider, and all other
applicable services, rights, and
protections specified in:
(i) 11 U.S.C. 111; and
(ii) this part;
(11) The term ‘‘entity’’ shall have the
meaning given that term in 11 U.S.C.
101(15);
(12) The terms ‘‘fee’’ and ‘‘fee policy’’
each mean the aggregate of all fees an
approved provider charges debtors for
providing an instructional course,
including the fees for any materials; ‘‘fee
policy’’ shall also mean the objective
criteria the provider uses in determining
whether to waive or reduce any fee,
contribution, or payment;

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

(13) The term ‘‘final decision’’ means
the written determination issued by the
Director based upon the review of the
United States Trustee’s decision either
to deny a provider’s application or to
remove an approved provider from the
approved list;
(14) The term ‘‘financial benefit’’
means any interest equated with money
or its equivalent, including, but not
limited to, stocks, bonds, other
investments, income, goods, services, or
receivables;
(15) The term ‘‘governmental unit’’
shall have the meaning given that term
in 11 U.S.C. 101(27);
(16) The term ‘‘independent
contractor’’ means a person or entity
who provides any goods or services to
an approved provider other than as an
employee and as to whom the approved
provider does not:
(i) Direct or control the means or
methods of delivery of the goods or
services being provided;
(ii) Make financial decisions
concerning the business aspects of the
goods or services being provided; and
(iii) Have any common employees;
(17) The term ‘‘instructional course’’
means a course in personal financial
management that is approved by the
United States Trustee under 11 U.S.C.
111 and this part, including the learning
materials and methodologies in
§ 58.33(f), which is to be taken and
completed by the debtor after the filing
of a bankruptcy petition and before
receiving a discharge under 11 U.S.C.
727(a)(11), 1141(d)(3) or 1328(g)(1);
(18) The term ‘‘instructor’’ means an
individual who teaches, presents or
explains substantive instructional
course materials to debtors, whether
provided in person, by telephone, or
through the Internet;
(19) The term ‘‘languages offered’’
means every language other than
English in which an approved provider
offers an instructional course;
(20) The term ‘‘legal advice’’ shall
have the meaning given that term in 11
U.S.C. 110(e)(2);
(21) The term ‘‘limited English
proficiency’’ refers to individuals who:
(i) Do not speak English as their
primary language; and
(ii) Have a limited ability to read,
write, speak, or understand English;
(22) The term ‘‘material change’’
means, alternatively, any change:
(i) In the name, structure, principal
contact, management, instructors,
physical location, instructional course,
fee policy, language services, or method
of delivery of an approved provider; or
(ii) That renders inapplicable,
inaccurate, incomplete, or misleading
any statement a provider previously
made:

PO 00000

Frm 00039

Fmt 4700

Sfmt 4700

16171

(A) In its application or related
materials; or
(B) To the United States Trustee;
(23) The term ‘‘method of delivery’’
means one or more of the three methods
by which an approved provider can
provide some component of an
instructional course to debtors,
including:
(i) ‘‘In person’’ delivery, which
applies when a debtor primarily
receives an instructional course at a
physical location with an instructor
physically present in that location, and
with the instructor providing oral and/
or written communication to the debtor
at the facility;
(ii) ‘‘Telephone’’ delivery, which
applies when a debtor primarily
receives an instructional course by
telephone; and
(iii) ‘‘Internet’’ delivery, which
applies when a debtor primarily
receives an instructional course through
an Internet Web site;
(24) The term ‘‘notice’’ in § 58.36
means the written communication from
the United States Trustee to a provider
that its application to become an
approved provider has been denied or to
an approved provider that it is being
removed from the approved list;
(25) The term ‘‘provider’’ shall mean
any entity that is applying under this
part for United States Trustee approval
to be included on a publicly available
list in one or more United States district
courts, as authorized by 11 U.S.C.
111(a)(1), and shall also mean,
whenever appropriate, an approved
provider;
(26) The term ‘‘referral fees’’ means
money or any other valuable
consideration paid or transferred
between an approved provider and
another entity in return for that entity,
directly or indirectly, identifying,
referring, securing, or in any other way
encouraging any debtor to receive an
instructional course from the approved
provider;
(27) The term ‘‘relative’’ shall have
the meaning given that term in 11 U.S.C.
101(45);
(28) The term ‘‘request for review’’
means the written communication from
a provider to the Director seeking
review of the United States Trustee’s
decision either to deny the provider’s
application or to remove the provider
from the approved list;
(29) The term ‘‘state’’ means state,
commonwealth, district, or territory of
the United States;
(30) The term ‘‘United States Trustee’’
means, alternatively:
(i) The Executive Office for United
States Trustees;

E:\FR\FM\14MRR1.SGM

14MRR1

16172

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

(ii) A United States Trustee appointed
under 28 U.S.C. 581;
(iii) A person acting as a United States
Trustee;
(iv) An employee of a United States
Trustee; or
(v) Any other entity authorized by the
Attorney General to act on behalf of the
United States under this part.

wreier-aviles on DSK5TPTVN1PROD with RULES

§ 58.26 Procedures all providers shall
follow when applying to become approved
providers.

(a) A provider applying to become an
approved provider shall obtain an
application, including appendices, from
the United States Trustee.
(b) The provider shall complete the
application, including its appendices,
and attach the required supporting
documents requested in the application.
(c) The provider shall submit the
original of the completed application,
including completed appendices and
the required supporting documents, to
the United States Trustee at the address
specified on the application form.
(d) The application shall be signed by
a representative of the provider who is
authorized under applicable law to sign
on behalf of the applying provider.
(e) The signed application, completed
appendices, and required supporting
documents shall be accompanied by a
writing, signed by the signatory of the
application and executed on behalf of
the signatory and the provider,
certifying the application does not:
(1) Falsify, conceal, or cover up by
any trick, scheme or device a material
fact;
(2) Make any materially false,
fictitious, or fraudulent statement or
representation; or
(3) Make or use any false writing or
document knowing the same to contain
any materially false, fictitious, or
fraudulent statement or entry.
(f) The United States Trustee shall not
consider an application, and it may be
returned if:
(1) It is incomplete;
(2) It fails to include the completed
appendices or all of the required
supporting documents; or
(3) It is not accompanied by the
certification identified in the preceding
subsection.
(g) The United States Trustee shall not
consider an application on behalf of a
provider, and it shall be returned if:
(1) It is submitted by any entity other
than the provider; or
(2) Either the application or the
accompanying certification is executed
by any entity other than a representative
of the provider who is authorized under
applicable law to sign on behalf of the
provider.

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

(h) By the act of submitting an
application, a provider consents to the
release and disclosure of its name,
contact information, and nonconfidential business information
relating to the services it provides on
the approved list should its application
be approved.

approved, such renewal period shall
begin to run from the later of:
(a) The day after the expiration date
of the immediately preceding approval
period; or
(b) The actual date of approval of such
renewal by the United States Trustee.

§ 58.27 Automatic expiration of providers’
status as approved providers.

§ 58.30 Mandatory duty of approved
providers to notify United States Trustees
of material changes.

(a) Except as provided in § 58.28(c), if
an approved provider was not an
approved provider immediately prior to
the date it last obtained approval to be
an approved provider, such an approved
provider shall cease to be an approved
provider six months from the date on
which it was approved unless the
United States Trustee approves an
additional one year period.
(b) Except as provided in § 58.28(c), if
an approved provider was an approved
provider immediately prior to the date
it last obtained approval to be an
approved provider, such a provider
shall cease to be an approved provider
one year from the date on which it was
last approved to be an approved
provider unless the United States
Trustee approves an additional one year
period.
■ 3. Sections 58.28 through 58.36 are
added and read as follows:
§ 58.28 Procedures all approved providers
shall follow when applying for approval to
act as an approved provider for an
additional one year period.

(a) To be considered for approval to
act as an approved provider for an
additional one year term, an approved
provider shall reapply by complying
with all the requirements specified for
providers under 11 U.S.C. 111, and
under this part.
(b) Such a provider shall apply no
later than 45 days prior to the expiration
of its six month probationary period or
annual period to be considered for
approval for an additional one year
period, unless a written extension is
granted by the United States Trustee.
(c) An approved provider that has
complied with all prerequisites for
applying to act as an approved provider
for an additional one year period may
continue to operate as an approved
provider while its application is under
review by the United States Trustee, so
long as either the application for an
additional one year period is timely
submitted, or a provider receives a
written extension from the United States
Trustee.
§ 58.29 Renewal for an additional one year
period.

If an approved provider’s application
for an additional one year period is

PO 00000

Frm 00040

Fmt 4700

Sfmt 4700

(a) An approved provider shall
immediately notify the United States
Trustee in writing of any material
change.
(b) An approved provider shall
immediately notify the United States
Trustee in writing of any failure by the
approved provider to comply with any
standard or requirement specified in 11
U.S.C. 111, this part, or the terms under
which the United States Trustee
approved it to act as an approved
provider.
(c) An approved provider shall
immediately notify the United States
Trustee in writing of any of the
following events:
(1) Cessation of business by the
approved provider or by any office of
the provider, or withdrawal from any
federal judicial district(s) where the
approved provider is approved;
(2) Any investigation of, or any
administrative or judicial action brought
against, the approved provider by any
governmental unit;
(3) Any action by a governmental unit
or a court to suspend or revoke the
approved provider’s articles of
incorporation, or any license held by the
approved provider, or any authorization
necessary to engage in business; or
(4) A suspension, or action to
suspend, any accreditation held by the
approved provider, or any withdrawal
by the approved provider of any
application for accreditation, or any
denial of any application of the
approved provider for accreditation; or
(5) [reserved].
(d) A provider shall notify the United
States Trustee in writing if any of the
changes identified in paragraphs (a)
through (c) of this section occur while
its application to become an approved
provider is pending before the United
States Trustee.
(e) An approved provider whose name
or other information appears incorrectly
on the approved list shall immediately
submit a written request to the United
States Trustee asking that the
information be corrected.

E:\FR\FM\14MRR1.SGM

14MRR1

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
§ 58.31 Mandatory duty of approved
providers to obtain prior consent of the
United States Trustee before taking certain
actions.

(a) By accepting the designation to act
as an approved provider, a provider
agrees to obtain approval from the
United States Trustee, prior to making
any of the following changes:
(1) The engagement of an independent
contractor to provide an instructional
course;
(2) Any increase in the fees received
from debtors for an instructional course
or a change in the provider’s fee policy;
(3) Expansion into additional federal
judicial districts;
(4) Any changes to the method of
delivery the approved provider employs
to provide an instructional course; or
(5) Any changes in the approved
provider’s instructional course.
(b) A provider applying to become an
approved provider shall also obtain
approval from the United States Trustee
before taking any action specified in
paragraph (a) of this section. It shall do
so by submitting an amended
application. The provider’s amended
application shall be accompanied by a
contemporaneously executed writing,
signed by the signatory of the
application, that makes the
certifications specified in § 58.26(e).
(c) An approved provider shall not
transfer or assign its United States
Trustee approval to act as an approved
provider.

wreier-aviles on DSK5TPTVN1PROD with RULES

§ 58.32 Continuing requirements for
becoming and remaining approved
providers.

(a) To become an approved provider,
a provider must affirmatively establish,
to the satisfaction of the United States
Trustee, that the provider at the time of
approval:
(1) Satisfies every requirement of this
part; and
(2) Provides effective instruction to its
debtors.
(b) To remain an approved provider,
an approved provider shall affirmatively
establish, to the satisfaction of the
United States Trustee, that the approved
provider:
(1) Has satisfied every requirement of
this part;
(2) Has provided effective instruction
to its debtors; and
(3) Will continue to satisfy both
paragraphs (b)(1) and (2) of this section
in the future.
§ 58.33 Minimum qualifications providers
shall meet to become and remain approved
providers.

To meet the minimum qualifications
set forth in § 58.32, and in addition to
the other requirements set forth in this

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

part, providers and approved providers
shall comply with paragraphs (a)
through (n) of this section on a
continuing basis:
(a) Compliance with all laws. A
provider shall comply with all
applicable laws and regulations of the
United States and each state in which
the provider provides an instructional
course including, without limitation, all
laws governing licensing and
registration.
(b) Prohibition on legal advice. A
provider shall not provide legal advice.
(c) Ethical standards. A provider
shall:
(1) Ensure no member of the board of
directors or trustees, officer or
supervisor is a relative of an employee
of the United States Trustee, a trustee
appointed under 28 U.S.C. 586(a)(1) for
any federal judicial district where the
provider is providing or is applying to
provide an instructional course, a
federal judge in any federal judicial
district where the provider is providing
or is applying to provide an
instructional course, or a federal court
employee in any federal judicial district
where the provider is providing or is
applying to provide an instructional
course;
(2) Not enter into any referral
agreement or receive any financial
benefit that involves the provider
paying to or receiving from any entity or
person referral fees for the referral of
debtors to or by the provider; and
(3) Not enter into agreements
involving an instructional course that
create a conflict of interest; and
(4) Not contact any debtor utilizing
the United States Postal Service, or
other mail carrier, or electronic mail for
the purpose of soliciting debtors to
utilize the provider’s instructional
course, unless:
(i) Any such solicitations include the
phrase ‘‘This is an advertisement for
services’’ or ‘‘This is a solicitation;’’
(ii) Prominently displayed at the
beginning of each page of the
solicitation;
(iii) In a font size larger than or equal
to the largest font size otherwise used in
the solicitation;
(iv) Any such solicitations include
only logos, seals, or similar marks that
are substantially dissimilar to the logo,
seal, or similar mark of any agency or
court of the United States government,
including but not limited to the United
States Trustee Program.
(d) Instructor training, certification
and experience. A provider shall:
(1) Use only instructors who possess
adequate experience providing an
instructional course, which shall mean
that each instructor either:

PO 00000

Frm 00041

Fmt 4700

Sfmt 4700

16173

(i) Holds one of the certifications
listed below and who has complied
with all continuing education
requirements necessary to maintain that
certification:
(A) Certified as a Certified Financial
Planner;
(B) Certified as a credit counselor by
an accrediting organization;
(C) Registered as a Registered
Financial Consultant; or
(D) Certified as a Certified Public
Accountant; or
(ii) Has successfully completed a
course of study or worked a minimum
of six months in a related area such as
personal finance, budgeting, or credit or
debt management. A course of study
must include training in personal
finance, budgeting, or credit or debt
management. An instructor shall also
receive annual continuing education in
the areas of personal finance, budgeting,
or credit or debt management;
(2) Demonstrate adequate experience,
background, and quality in providing an
instructional course, which shall mean
that, at a minimum, the provider shall
either:
(i) Have experience in providing an
instructional course for the two years
immediately preceding the relevant
application date; or
(ii) For each office providing an
instructional course, employ at least one
supervisor who has met the
qualifications in paragraph (d)(2)(i) of
this section for no fewer than two of the
five years preceding the relevant
application date; and
(iii) If offering any component of an
instructional course by a telephone or
Internet method of delivery, use only
instructors who, in addition to all other
requirements, demonstrate sufficient
experience and proficiency in providing
such an instructional course by those
methods of delivery, including
proficiency in employing verification
procedures to ensure the person
receiving the instructional course is the
debtor, and to determine whether the
debtor has completely received an
instructional course.
(e) Use of the telephone and the
Internet to deliver a component of an
instructional course. A provider shall:
(1) Not provide any debtor a
diminished instructional course because
the debtor receives any portion of the
instructional course by telephone or
Internet;
(2) Confirm the identity of the debtor
before commencing an instructional
course by telephone or Internet by:
(i) Obtaining one or more unique
personal identifiers from the debtor and
assigning an individual access code,

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

16174

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

user ID, or password at the time of
enrollment;
(ii) Requiring the debtor to provide
the appropriate access code, user ID, or
password, and also one or more of the
unique personal identifiers during the
course of delivery of the instructional
course; and
(iii) Employing adequate means to
measure the time spent by the debtor to
complete the instructional course.
(f) Learning materials and
methodologies. A provider shall provide
learning materials to assist debtors in
understanding personal financial
management and that are consistent
with 11 U.S.C. 111, and this part, which
include written information and
instruction on all of the following
topics:
(1) Budget development, which
consists of the following:
(i) Setting short-term and long-term
financial goals, as well as developing
skills to assist in achieving these goals;
(ii) Calculating gross monthly income
and net monthly income; and
(iii) Identifying and classifying
monthly expenses as fixed, variable, or
periodic;
(2) Money management, which
consists of the following:
(i) Keeping adequate financial
records;
(ii) Developing decision-making skills
required to distinguish between wants
and needs, and to comparison shop for
goods and services;
(iii) Maintaining appropriate levels of
insurance coverage, taking into account
the types and costs of insurance; and
(iv) Saving for emergencies, for
periodic payments, and for financial
goals;
(3) Wise use of credit, which consists
of the following:
(i) Identifying the types, sources, and
costs of credit and loans;
(ii) Identifying debt warning signs;
(iii) Discussing appropriate use of
credit and alternatives to credit use; and
(iv) Checking a credit rating;
(4) Consumer information, which
consists of the following:
(i) Identifying public and nonprofit
resources for consumer assistance; and
(ii) Identifying applicable consumer
protection laws and regulations, such as
those governing correction of a credit
record and protection against consumer
fraud; and
(5) Coping with unexpected financial
crisis, which consists of the following:
(i) Identifying alternatives to
additional borrowing in times of
unanticipated events; and
(ii) Seeking advice from public and
private service agencies for assistance.
(g) Course procedures.

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

(1) Generally, a provider shall:
(i) Ensure the instructional course
contains sufficient learning materials
and teaching methodologies so that the
debtor receives a minimum of two hours
of instruction, regardless of the method
of delivery of the course;
(ii) Use its best efforts to collect from
each debtor a completed course
evaluation at the end of the
instructional course. At a minimum, the
course evaluation shall include the
information contained in Appendix E of
the application to evaluate the
effectiveness of the instructional course;
(2) For an instructional course
delivered in person, the provider shall:
(i) Ensure that an instructor is present
to instruct and interact with debtors;
and
(ii) Limit class size to ensure an
effective presentation of the
instructional course materials;
(3) For instructional courses delivered
by the telephone, the provider shall:
(i) Ensure an instructor is
telephonically present to instruct and
interact with debtors;
(ii) Provide learning materials to
debtors before the telephone
instructional course session;
(iii) Incorporate tests into the
curriculum that support the learning
materials, ensure completion of the
course, and measure comprehension;
(iv) Ensure review of tests prior to the
completion of the instructional course;
and
(v) Ensure direct oral communication
from an instructor by telephone or in
person with all debtors who fail to
complete the test in a satisfactory
manner or who receive less than a 70
percent score;
(4) For instructional courses delivered
through the Internet, the provider shall:
(i) Comply with § 58.33(g)(3)(iii), (iv),
and (v); provided, however, that to the
extent instruction takes place by
Internet, the provider may comply with
§ 58.33(g)(3)(v) by ensuring direct
communication from an instructor by
electronic mail, live chat, or telephone;
and
(ii) Respond to a debtor’s questions or
comments within one business day.
(h) Services to hearing and hearingimpaired debtors. A provider shall
furnish toll-free telephone numbers for
both hearing and hearing-impaired
debtors whenever telephone
communication is required. The
provider shall provide telephone
amplification, sign language services, or
other communication methods for
hearing-impaired debtors.
(i) [reserved].
(j) Services to debtors with special
needs. A provider that provides any

PO 00000

Frm 00042

Fmt 4700

Sfmt 4700

portion of its instructional course in
person shall comply with all federal,
state and local laws governing facility
accessibility. A provider shall also
provide or arrange for communication
assistance for debtors with special needs
who have difficulty making their service
needs known.
(k) Mandatory disclosures to debtors.
Prior to providing any information to or
obtaining any information from a
debtor, and prior to delivering an
instructional course, a provider shall
disclose:
(1) The provider’s fee policy,
including any fees associated with
generation of the certificate;
(2) The provider’s policies enabling
debtors to obtain an instructional course
for free or at reduced rates based upon
the debtor’s lack of ability to pay. To the
extent an approved provider publishes
information concerning its fees on the
Internet, such fee information must
include the provider’s policies enabling
debtors to obtain an instructional course
for free or at reduced rates based upon
the debtor’s lack of ability to pay;
(3) The provider’s policy to provide
free bilingual instruction or professional
interpreter assistance to any limited
English proficient debtor;
(4) The instructors’ qualifications;
(5) The provider’s policy prohibiting
it from paying or receiving referral fees
for the referral of debtors;
(6) The provider’s obligation to
provide a certificate to the debtor
promptly upon the completion of an
instructional course;
(7) The fact that the provider might
disclose debtor information to the
United States Trustee in connection
with the United States Trustee’s
oversight of the provider, or during the
investigation of complaints, during onsite visits, or during quality of service
reviews;
(8) The fact that the United States
Trustee has reviewed only the
provider’s instructional course (and, if
applicable, its services as a credit
counseling agency pursuant to 11 U.S.C.
111(c)), and the fact that the United
States Trustee has neither reviewed nor
approved any other services the
provider provides to debtors; and
(9) The fact that a debtor will only
receive a certificate if the debtor
completes an instructional course.
(l) Complaint Procedures. A provider
shall employ complaint procedures that
adequately respond to debtors’
concerns.
(m) Provider records. A provider shall
prepare and retain records that enable
the United States Trustee to evaluate
whether the provider is providing
effective instruction and acting in

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
compliance with all applicable laws and
this part. All records, including
documents bearing original signatures,
shall be maintained in either hard copy
form or electronically in a format widely
available commercially. Records that the
provider shall prepare and retain for a
minimum of two years, and permit
review of by the United States Trustee
upon request, shall include:
(1) Upon the filing of an application
for probationary approval, all
information requested by the United
States Trustee as an estimate, projected
to the end of the probationary period, in
the form requested by the United States
Trustee;
(2) After probationary or annual
approval, and for so long as the provider
remains on the approved list, semiannual reports of historical data (for the
periods ending June 30 and December
31 of each year), of the type and in the
form requested by the United States
Trustee; these reports shall be submitted
within 30 days of the end of the
applicable periods specified in this
paragraph;
(3) Records concerning the delivery of
services to debtors with limited English
proficiency and special needs, and to
hearing-impaired debtors, including
records:
(i) Of the number of such debtors, and
the methods of delivery used with
respect to such debtors;
(ii) Of which languages are offered or
requested, and the type of language
support used or requested by such
debtors (e.g., bilingual instructor, inperson or telephone interpreter,
translated Web instruction);
(iii) Detailing the provider’s provision
of services to such debtors; and
(iv) Supporting any justification if the
provider did not provide services to
such debtors, including the number of
debtors not served, the languages
involved, and the number of referrals
provided;
(4) Records concerning the delivery of
an instructional course to debtors for
free or at reduced rates based upon the
debtor’s lack of ability to pay, including
records of the number of debtors for
whom the provider waived all of its fees
under § 58.34(b)(1)(i), the number of
debtors for whom the provider waived
all or part of its fees under
§ 58.34(b)(1)(ii), and the number of
debtors for whom the provider
voluntarily waived all or part of its fees
under § 58.34(c);
(5) Records of complaints and the
provider’s responses thereto;
(6) Records that enable the provider to
verify the authenticity of certificates
their debtors file in bankruptcy cases;
and

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

(7) Records that enable the provider to
issue replacement certificates.
(n) Additional minimum
requirements. A provider shall:
(1) Provide records to the United
States Trustee upon request;
(2) Cooperate with the United States
Trustee by allowing scheduled and
unscheduled on-site visits, complaint
investigations, or other reviews of the
provider’s qualifications to be an
approved provider;
(3) Cooperate with the United States
Trustee by promptly responding to
questions or inquiries from the United
States Trustee;
(4) Assist the United States Trustee in
identifying and investigating suspected
fraud and abuse by any party
participating in the instructional course
or bankruptcy process;
(5) Take no action that would limit,
inhibit, or prevent a debtor from
bringing an action or claim for damages
against a provider, as provided in 11
U.S.C. 111(g)(2);
(6) Refer debtors seeking an
instructional course only to providers
that have been approved by a United
States Trustee to provide such services;
(7) Comply with the United States
Trustee’s directions on approved
advertising, including without
limitation those set forth in Appendix A
to the application;
(8) Not disclose or provide to a credit
reporting agency any information
concerning whether a debtor has
received or sought instruction
concerning personal financial
management from a provider;
(9) Not expose the debtor to
commercial advertising as part of or
during the debtor’s receipt of an
instructional course, and never market
or sell financial products or services
during the instructional course
provided, however, this provision does
not prohibit a provider from generally
discussing all available financial
products and services;
(10) Not sell information about any
debtor to any third party without the
debtor’s prior written permission;
(11) Comply with the requirements
elsewhere in this part concerning fees
for the instructional course and fee
waiver policies; and
(12) Comply with the requirements
elsewhere in this part concerning
certificates.
§ 58.34 Minimum requirements to become
and remain approved providers relating to
fees.

(a) If a fee for, or relating to, an
instructional course is charged by a
provider, such fee shall be reasonable:
(1) A fee of $50 or less for an
instructional course is presumed to be

PO 00000

Frm 00043

Fmt 4700

Sfmt 4700

16175

reasonable and a provider need not
obtain prior approval of the United
States Trustee to charge such a fee;
(2) A fee exceeding $50 for an
instructional course is not presumed to
be reasonable and a provider must
obtain prior approval from the United
States Trustee to charge such a fee. The
provider bears the burden of
establishing that its proposed fee is
reasonable. At a minimum, the provider
must demonstrate that its cost for
delivering the instructional course
justifies the fee. A provider that
previously received permission to
charge a higher fee need not reapply for
permission to charge that fee during the
provider’s annual review. Any new
requests for permission to charge more
than previously approved, however,
must be submitted to EOUST for
approval; and
(3) The United States Trustee shall
review the amount of the fee set forth in
paragraphs (a)(1) and (2) of this section
one year after the effective date of this
part and then periodically, but not less
frequently than every four years, to
determine the reasonableness of the fee.
Fee amounts and any revisions thereto
shall be determined by current costs,
using a method of analysis consistent
with widely accepted accounting
principles and practices, and calculated
in accordance with the provisions of
federal law as applicable. Fee amounts
and any revisions thereto shall be
published in the Federal Register.
(b)(1) A provider shall waive the fee
in whole or in part whenever a debtor
demonstrates a lack of ability to pay the
fee.
(i) A debtor presumptively lacks the
ability to pay the fee if the debtor’s
household current income is less than
150 percent of the poverty guidelines
updated periodically in the Federal
Register by the U.S. Department of
Health and Human Services under the
authority of 42 U.S.C. 9902(2), as
adjusted from time to time, for a
household or family of the size involved
in the fee determination.
(ii) The presumption shall be
rebutted, and the provider may charge
the debtor a reduced fee, if the provider
determines, based on income
information the debtor submits to the
provider, that the debtor is able to pay
the fee in a reduced amount. Nothing in
this subsection requires an provider to
charge a fee to debtors whose household
income exceeds the amount set forth in
paragraph (b)(1)(i) of this section, or
who are able to demonstrate ability to
pay based on income as described in
this subsection.
(iii) A provider shall disclose its fee
policy, including the criteria on which

E:\FR\FM\14MRR1.SGM

14MRR1

16176

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations

it relies in determining a debtor’s
eligibility for reduced fees, and the
provider’s policy for collecting fees
pursuant to paragraph (b)(1)(ii) of this
section, in accordance with
§ 58.33(k)(2).
(2) The United States Trustee shall
review the basis for the mandatory fee
waiver policy set forth in paragraph
(b)(1) of this section one year after the
effective date of this part and then
periodically, but not less frequently
than every four years, to determine the
impact of that fee waiver policy on
debtors and providers. Any revisions to
the mandatory fee waiver policy set
forth in paragraph (b)(1) of this section
shall be published in the Federal
Register.
(c) Notwithstanding the requirements
of paragraph (b) of this section, a
provider also may waive fees based
upon other considerations, including,
but not limited to:
(1) The debtor’s net worth;
(2) The percentage of the debtor’s
income from government assistance
programs;
(3) Whether the debtor is receiving
pro bono legal services in connection
with a bankruptcy case; or
(4) If the combined current monthly
income, as defined in 11 U.S.C.
101(10A), of the debtor and his or her
spouse, when multiplied times twelve,
is equal to or less than the amounts set
forth in 11 U.S.C. 707(b)(7).
(d) A provider shall not require a
debtor to purchase an instructional
course in connection with the purchase
of any other service offered by the
provider.
(e) A provider who is also a chapter
13 standing trustee may only provide
the instructional course to debtors in
cases in which the trustee is appointed
to serve and may not charge any fee to
those debtors for the instructional
course. A standing chapter 13 trustee
may not require debtors in cases
administered by the trustee to obtain the
instructional course from the trustee.
Employees and affiliates of the standing
trustee are also bound by the restrictions
in this section.

wreier-aviles on DSK5TPTVN1PROD with RULES

§ 58.35 Minimum requirements to become
and remain approved providers relating to
certificates.

(a) An approved provider shall send
a certificate only to the debtor who took
and completed the instructional course,
except that an approved provider shall
instead send a certificate to the attorney
of a debtor who took and completed an
instructional course if the debtor
specifically directs the provider to do
so. In lieu of sending a certificate to the
debtor or the debtor’s attorney, an

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

approved provider may notify the
appropriate bankruptcy court in
accordance with the Federal Rules of
Bankruptcy Procedure that a debtor has
completed the instructional course.
(b) An approved provider shall send
a certificate to a debtor, or notify the
appropriate bankruptcy court in
accordance with the Federal Rules of
Bankruptcy Procedure, that a debtor has
completed the instructional course no
later than three business days after the
debtor completed an instructional
course and after completion of a debtor
course evaluation form that evaluates
the effectiveness of the instructional
course. The approved provider shall not
withhold the issuance of a certificate or
notice of course completion to the
appropriate bankruptcy court because of
a debtor’s failure to submit an
evaluation form, though the provider
should make reasonable effort to ensure
that debtors complete and submit course
evaluation forms.
(c) If a debtor has completed
instruction, a provider may not
withhold certificate issuance or notice
of course completion to the appropriate
bankruptcy court for any reason,
including, without limitation, a debtor’s
failure to obtain a passing grade on a
quiz, examination, or test. A provider
may not consider instructional services
incomplete based solely on the debtor’s
failure to pay the fee. Although a test
may be incorporated into the
curriculum to evaluate the effectiveness
of the course and to ensure that the
course has been completed, the
approved provider cannot deny a
certificate to a debtor or notice of course
completion to the appropriate
bankruptcy court if the debtor has
completed the course as designed.
(d) An approved provider shall issue
certificates only in the form approved
by the United States Trustee, and shall
generate the form using the Certificate
Generating System maintained by the
United States Trustee, except under
exigent circumstances with notice to the
United States Trustee.
(e) An approved provider shall have
sufficient computer capabilities to issue
certificates from the United States
Trustee’s Certificate Generating System.
(f) An approved provider shall issue
a certificate, or provide notice of course
completion to the appropriate
bankruptcy court in accordance with the
Federal Rules of Bankruptcy Procedure,
with respect to each debtor who
completes an instructional course.
Spouses receiving an instructional
course jointly shall each receive a
certificate or notice of course
completion to the appropriate

PO 00000

Frm 00044

Fmt 4700

Sfmt 4700

bankruptcy court shall be made for both
individuals.
(g) An approved provider shall issue
a replacement certificate to a debtor
who requests one.
(h) Only an authorized officer,
supervisor or employee of an approved
provider shall issue a certificate, or
provide notice of course completion to
the appropriate bankruptcy court, and
an approved provider shall not transfer
or delegate authority to issue a
certificate or provide notice of course
completion to any other entity.
(i) An approved provider shall
implement internal controls sufficient to
prevent unauthorized issuance of
certificates.
(j) An approved provider shall ensure
the signature affixed to a certificate is
that of an officer, supervisor or
employee authorized to issue the
certificate, in accordance with
paragraph (h) of this section, which
signature shall be either:
(1) An original signature; or
(2) In a format approved for electronic
filing with the court (most typically in
the form /s/ name of instructor).
(k) An approved provider shall affix
to the certificate the exact name under
which the approved provider is
incorporated or organized.
(l) An approved provider shall
identify on the certificate:
(1) The specific federal judicial
district requested by the debtor;
(2) Whether an instructional course
was provided in person, by telephone or
via the Internet;
(3) The date and time (including the
time zone) when instructional services
were completed by the debtor; and
(4) The name of the instructor that
provided the instructional course.
(m) An approved provider shall affix
the debtor’s full, accurate name to the
certificate. If the instructional course is
obtained by a debtor through a duly
authorized representative, the certificate
shall also set forth the name of the legal
representative and legal capacity of that
representative.
§ 58.36 Procedures for obtaining final
provider action on United States Trustees’
decisions to deny providers’ applications
and to remove approved providers from the
approved list.

(a) The United States Trustee shall
remove an approved provider from the
approved list whenever an approved
provider requests its removal in writing.
(b) The United States Trustee may
issue a decision to remove an approved
provider from the approved list, and
thereby terminate the approved
provider’s authorization to provide an
instructional course, at any time.

E:\FR\FM\14MRR1.SGM

14MRR1

wreier-aviles on DSK5TPTVN1PROD with RULES

Federal Register / Vol. 78, No. 50 / Thursday, March 14, 2013 / Rules and Regulations
(c) The United States Trustee may
issue a decision to deny a provider’s
application or to remove a provider
from the approved list whenever the
United States Trustee determines that
the provider has failed to comply with
the standards or requirements specified
in 11 U.S.C. 111, this part, or the terms
under which the United States Trustee
designated it to act as an approved
provider, including, but not limited to,
finding any of the following:
(1) If any entity has suspended or
revoked the provider’s license to do
business in any jurisdiction; or
(2) Any United States district court
has removed the provider under 11
U.S.C. 111(e).
(d) The United States Trustee shall
provide to the provider in writing a
notice of any decision either to:
(1) Deny the provider’s application; or
(2) Remove the provider from the
approved list.
(e) The notice shall state the reason(s)
for the decision and shall reference any
documents or communications relied
upon in reaching the denial or removal
decision. To the extent authorized by
law, the United States Trustee shall
provide to the provider copies of any
such documents that were not supplied
to the United States Trustee by the
provider. The notice shall be sent to the
provider by overnight courier, for
delivery the next business day.
(f) Except as provided in paragraph
(h) of this section, the notice shall
advise the provider that the denial or
removal decision shall become final
agency action, and unreviewable, unless
the provider submits in writing a
request for review by the Director no
later than 21 calendar days from the
date of the notice to the provider.
(g) Except as provided in paragraph
(h) of this section, the decision to deny
a provider’s application or to remove a
provider from the approved list shall
take effect upon:
(1) The expiration of the provider’s
time to seek review from the Director, if
the provider fails to timely seek review
of a denial or removal decision; or
(2) The issuance by the Director of a
final decision, if the provider timely
seeks such review.
(h) The United States Trustee may
provide that a decision to remove a
provider from the approved list is
effective immediately and deny the
provider the right to provide an
instructional course whenever the
United States Trustee finds any of the
factors set forth in paragraphs (c)(1) or
(2) of this section.
(i) A provider’s request for review
shall be in writing and shall fully
describe why the provider disagrees

VerDate Mar<15>2010

14:57 Mar 13, 2013

Jkt 229001

with the denial or removal decision, and
shall be accompanied by all documents
and materials the provider wants the
Director to consider in reviewing the
denial or removal decision. The
provider shall send the original and one
copy of the request for review, including
all accompanying documents and
materials, to the Office of the Director
by overnight courier, for delivery the
next business day. To be timely, a
request for review shall be received at
the Office of the Director no later than
21 calendar days from the date of the
notice to the provider.
(j) The United States Trustee shall
have 21 calendar days from the date of
the provider’s request for review to
submit to the Director a written
response regarding the matters raised in
the provider’s request for review. The
United States Trustee shall provide a
copy of this response to the provider by
overnight courier, for delivery the next
business day.
(k) The Director may seek additional
information from any party in the
manner and to the extent the Director
deems appropriate.
(l) In reviewing the decision to deny
a provider’s application or to remove a
provider from the approved list, the
Director shall determine:
(1) Whether the denial or removal
decision is supported by the record; and
(2) Whether the denial or removal
decision constitutes an appropriate
exercise of discretion.
(m) Except as provided in paragraph
(n) of this section, the Director shall
issue a final decision no later than 60
calendar days from the receipt of the
provider’s request for review, unless the
provider agrees to a longer period of
time or the Director extends the
deadline. The Director’s final decision
on the provider’s request for review
shall constitute final agency action.
(n) Whenever the United States
Trustee provides under paragraph (h) of
this section that a decision to remove a
provider from the approved list is
effective immediately, the Director shall
issue a written decision no later than 15
calendar days from the receipt of the
provider’s request for review, unless the
provider agrees to a longer period of
time. The decision shall:
(1) Be limited to deciding whether the
determination that the removal decision
should take effect immediately was
supported by the record and an
appropriate exercise of discretion;
(2) Constitute final agency action only
on the issue of whether the removal
decision should take effect immediately;
and
(3) Not constitute final agency action
on the ultimate issue of whether the

PO 00000

Frm 00045

Fmt 4700

Sfmt 4700

16177

provider should be removed from the
approved list; after issuing the decision,
the Director shall issue a final decision
by the deadline set forth in paragraph
(m) of this section.
(o) In reaching a decision under
paragraphs (m) or (n) of this section, the
Director may specify a person to act as
a reviewing official. The reviewing
official’s duties shall be specified by the
Director on a case-by-case basis, and
may include reviewing the record,
obtaining additional information from
the participants, providing the Director
with written recommendations, and
such other duties as the Director shall
prescribe in a particular case.
(p) A provider that files a request for
review shall bear its own costs and
expenses, including counsel fees.
(q) When a decision to remove a
provider from the approved list takes
effect, the provider shall:
(1) Immediately cease providing an
instructional course to debtors;
(2) No later than three business days
after the date of removal, send all
certificates to all debtors who completed
an instructional course prior to the
provider’s removal from the approved
list; and
(3) No later than three business days
after the date of removal, return all fees
to debtors who had paid for an
instructional course, but had not
completely received the instructional
course.
(r) A provider must exhaust all
administrative remedies before seeking
redress in any court of competent
jurisdiction.
Dated: February 14, 2013.
Clifford J. White III,
Director, Executive Office for United States
Trustees.
[FR Doc. 2013–04364 Filed 3–13–13; 8:45 am]
BILLING CODE 4410–40–P

DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[Docket No. USCG–2013–0128]
RIN 1625–AA00

Safety Zone; M/V XIANG YUN KOU and
MODU NOBLE DISCOVERER;
Resurrection Bay, Seward, AK
Coast Guard, DHS.
Temporary final rule.

AGENCY:
ACTION:

The Coast Guard is
establishing a temporary safety zone in
the navigable waters, from surface to

SUMMARY:

E:\FR\FM\14MRR1.SGM

14MRR1