[Congressional Record Volume 143, Number 69 (Thursday, May 22, 1997)]
[Senate]
[Page S5006]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LUGAR:
  S. 782. A bill to amend the Department of Agriculture Reorganization 
Act of 1994 to remove the provision that prevents the recovery of an 
amount disbursed as a result of an erroneous decision made by a State, 
county, or area committee; to the Committee on Agriculture, Nutrition, 
and Forestry.


              THE USDA'S FINALITY RULE REPEAL ACT OF 1997

 Mr. LUGAR. Mr. President, I introduce legislation to repeal an 
outdated agricultural law that has cost taxpayers millions of dollars 
over the last several years.
  Historically, as part of its statutory mandate to support farmers' 
income, the Department of Agriculture made payments to farmers for the 
planting of certain crops and in cases of natural disaster. In the 
process of carrying out this mission, USDA sometimes mistakenly 
overpaid farmers.
  A provision of the 1990 farm bill, known as the finality rule or the 
90-day rule, allowed farmers to keep these overpayments if they were 
not discovered within 90 days of the payment or application for farm 
program benefits. Repayment is required in cases of fraud or 
misrepresentation involving the farmer.
  Whatever its merits in 1990, changes in farm policy and new evidence 
indicate that the finality rule should be repealed. At the time of the 
1990 farm bill, to be eligible for farm program payments, it was 
necessary for the county or State USDA office to determine that farmers 
were actively engaged in farming and that their operations were 
structured properly. Farmers often relied on these determinations 
before deciding which crops to plant, the size of the plantings, and 
how to structure their farming operation for the crop year.
  However, the landmark reforms in the 1996 farm bill eliminated these 
justifications for the finality rule. Under the 1996 farm bill, farm 
payments are no longer linked to the planting decisions of farmers and 
the structure of the farming operation is unlikely to change. Today, 
payments are made based on a formula which does not vary from one year 
to the next.
  The finality rule does not only apply to farm program payments. It 
applies to most types of payments received by farmers including 
disaster relief assistance. But these disaster payments have been 
dramatically scaled back in recent years. In 1994, Congress passed the 
Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act which largely eliminated disaster assistance 
payments for most major crops. Instead of disaster aid, farmers were 
encouraged to buy crop insurance.
  A recent report from the General Accounting Office provides further 
evidence that the finality rule should be repealed. According to GAO, 
from November 1990 through September 1996, USDA applied the finality 
rule to 10,694 cases in which the overpayments were not discovered 
within the 90-day time-frame. The rule allowed farmers to keep $4.2 
million in overpayments. Nearly 90 percent of the overpayments involved 
crop disaster initiatives or old-style farm programs which no longer 
exist.
  GAO also looked closely at finality rule payments in fiscal years 
1995 and 1996. Even though the justification for the finality rule was 
to prevent farmers from having to repay large amounts of money years 
after the money was paid, GAO found that most of the overpayments 
involved small sums and were discovered within 9 months or less. 
According to GAO, in the years studied, 86 percent of the finality rule 
cases involved $500 or less. In addition, 59 percent had overpayments 
amounting to 10 percent or less of the correct payment amounts, and 
two-thirds were discovered within 9 months of the date of payment or 
the filing of a program application. It should be noted that while most 
of the overpayments were small, a few large overpayments accounted for 
the bulk of the dollar value of the overpayments. An examination of the 
GAO data indicate that the finality rule, in its application, has not 
served its original stated purpose.
  Mr. President, the U.S. Department of Agriculture agrees that the 
finality rule should be repealed. In those limited number of cases in 
which repayment would work a hardship on the farmer, the very cases 
that finality rule was supposed to assist, USDA has indicated that it 
would use existing procedures already in place for debt collection in 
hardship cases.
  In summary, Mr. President, the finality rule was largely designed for 
programs which have been dramatically altered, it generally does not 
serve the hardship cases for which it was designed, and it can be 
replaced by other existing procedures designed for hardship cases. The 
Department of Agriculture and the General Accounting Office support its 
repeal. It is time to remove this outdated law from the books. I urge 
my colleagues to support this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 782

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. RECOVERY OF AMOUNTS BASED ON ERRONEOUS DECISIONS 
                   OF STATE, COUNTY, AND AREA COMMITTEES.

       Section 281 of the Department of Agriculture Reorganization 
     Act of 1994 (7 U.S.C. 7001) is amended--
       (1) by striking subsection (a); and
       (2) by redesignating subsections (b) and (c) as subsections 
     (a) and (b), respectively.
                                 ______