[Federal Register Volume 59, Number 128 (Wednesday, July 6, 1994)]
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[FR Doc No: 94-16003]


  Federal Register / Vol. 59, No. 128 / Wednesday, July 6, 1994 /
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[[Page Unknown]]

[Federal Register: July 6, 1994]


                                                   VOL. 59, NO. 128

                                            Wednesday, July 6, 1994

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272, 275, and 283

[Amdt. No. 348]

 

Food Stamp Program: Hunger Prevention Act of 1988 and Mickey 
Leland Childhood Hunger Relief Act; Rules of Practice; Administrative 
Law Judges

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule establishes the rules of practice governing 
the administrative review process for State agencies challenging food 
stamp quality control (QC) claims and is intended to speed the 
resolution of the QC claims. This action is necessary to implement 
program administrative review requirements mandated by the Hunger 
Prevention Act of 1988 and the Omnibus Budget Reconciliation Act of 
1993 (Mickey Leland Childhood Hunger Relief Act).

DATES: 1. Effective Date: This rule is effective August 5, 1994.
    2. Implementation Date: This rule must be implemented for all QC 
billing actions beginning with fiscal year 1986.

FOR FURTHER INFORMATION CONTACT: John Knaus, Chief, Quality Control 
Branch, Program Accountability Division, Food Stamp Program, Food and 
Nutrition Service, USDA, 3101 Park Center Drive, room 907, Alexandria, 
Virginia 22302, (703) 305-2474.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This final rule has been determined to be not significant for 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by the Office of Management and Budget.

Executive Order 12372

    The Food Stamp Program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.551. For the reasons set forth in 7 CFR part 
3015, subpart V and related Notice (48 FR 29115), the Food Stamp 
Program is excluded from the scope of Executive Order 12372 which 
requires intergovernmental consultation with State and local officials.

Executive Order 12778

    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is intended to have preemptive effect 
with respect to any State or local laws, regulations or policies that 
conflict with its provisions or that would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the ``Effective Date'' section of this preamble. 
Prior to any judicial challenge to the provisions of this rule or the 
application of its provisions, all applicable administrative procedures 
must be exhausted. In the Food Stamp Program the administrative 
procedures are as follows: (1) For program benefit recipients--State 
administrative procedures issued pursuant to 7 U.S.C. 2020(e)(10) and 7 
CFR 273.15; (2) for State agencies--administrative procedures issued 
pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for rules related to 
non-QC liabilities) or part 283 (for rules related to QC liabilities); 
(3) for program retailers and wholesalers--administrative procedures 
issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 278.8.

Regulatory Flexibility Act

    This action has also been reviewed with regard to the requirements 
of the Regulatory Flexibility Act (5 U.S.C. 601-612). William E. 
Ludwig, Administrator of the Food and Nutrition Service, has certified 
that this rule will not have a significant economic impact on a 
substantial number of small entities. Only State and local welfare 
agencies will be affected to the extent that they are involved with 
appeals of Food Stamp Program quality control claims. The procedures to 
appeal quality control claims are being changed by this rule to 
streamline and reduce the time and resources State and local welfare 
agencies previously devoted to such appeals. Potential and current 
participants in the Food Stamp Program will not be affected.

Paperwork Reduction Act

    This rulemaking does not contain recordkeeping and reporting 
requirements subject to approval by the Office of Management and Budget 
under the Paperwork Reduction Act of 1980 (44 U.S.C. chapter 35) and 
falls within the exceptions to coverage.

Background

    On January 19, 1993, the Department issued a Notice of Proposed 
Rulemaking (NPRM) at 58 FR 5188 to implement section 603 of the Hunger 
Prevention Act of 1988 (HPA) (Pub. L. 100-435). The HPA amended the 
Food Stamp Act of 1977, as amended (the Act) (7 U.S.C. 2011-2032) 
regarding the Food Stamp Program's administrative review process for QC 
claims (7 U.S.C. 2023(a)). A total of eight comment letters were 
received on the proposed rule. One commenter subsequently advised the 
Department that it considered its comment letter to be inappropriate to 
the subject of the NPRM and withdrew its letter. The following analysis 
is based on the remaining seven comment letters.
    Since issuance of the proposed regulations on January 19, 1993, 
Congress has enacted Chapter 3, Title XIII of the Omnibus Budget 
Reconciliation Act of 1993, Pub. L. 103-66 (Mickey Leland Childhood 
Hunger Relief Act) (Leland Act) to further streamline the appeals 
process for QC claims established under section 16(c) of the Act, 7 
U.S.C. 2025(c). Section 13951 of the Leland Act amended sections 
13(a)(1), 14(a) and 16(c) of the Act to: (1) Provide that State 
agencies will be assessed interest on outstanding QC liabilities if the 
administrative appeals process takes more than one year to resolve 
these claims; (2) to establish timeframes for the administrative review 
process and (3) to provide that an administrative law judge (ALJ) shall 
consider a State agency's contention of good cause when considering 
whether to waive all or part of a State agency's QC liability.
    A full explanation of the rationale of the proposed rule is 
contained in its preamble. It is suggested that interested parties 
refer to that preamble for additional background information (58 FR 
5188). Following is a detailed discussion on the comments received on 
the proposed rule, non-discretionary revisions based on the Leland Act 
and the provisions of the final rule. The Department has determined 
that, with respect to the revisions based upon non-discretionary 
provisions of the Leland Act referenced above, notice and comment are 
unnecessary since the Department has no discretion with respect to 
these provisions. accordingly, such revisions have been made through 
this final rule.

Discussion of the Regulations

    In the following discussion, we have identified each section of the 
regulation being addressed and have interspersed comments and responses 
as appropriate. The regulatory language from the NPRM was retained 
except where indicated.

 Section 283.4: Filing Appeals for QC Claims of $50,000 or More

    This section of the NPRM contains the procedures which State 
agencies are to follow in appealing the bill for collection from the 
Food and Nutrition Service (FNS) for QC claims of $50,000 or more.
    Time: In Sec. 283.4(a) of the NPRM, the Department proposed that a 
State agency must file a notice of appeal within 10 days of receipt by 
certified mail or personal service of the bill for collection from FNS.
    Comments: The Department received three comments on this provision. 
One commenter stated that the 10-day time span to file the written 
notice of appeal was too short and that a 30-day period would be more 
reasonable. Two commenters indicated that it was unclear whether the 
notice of appeal or the bill for collection must be served by certified 
mail or personal service. These commenters questioned if it was FNS' 
intent to require that the notice of appeal be filed by certified mail 
or personal service.
    Response: The Department has considered the comment urging 
extension of the 10-day requirement but cannot adopt this suggestion. 
Section 13951 of the Leland Act retained the 10-day filing requirement 
for the notice of appeal but provides that the filing deadline shall be 
extended by the ALJ for cause shown. The Department believes that the 
requirements for the content of the notice of appeal are minimal and 
should not pose any undue difficulty for the State agency to meet the 
10-day filing deadline. If an extension is requested, the request and 
cause for such request must be submitted to the ALJ or chief judge 
prior to the expiration of the 10-day filing deadline. The Department 
has also revised Sec. 283.22(f) to incorporate this provision.
    The Department also notes that section 13951(c)(4) of the Leland 
Act authorizes the ALJ to extend the deadlines for filing of the appeal 
petition, answer, rebuttal and initial decision for cause shown.
    The Department has considered the comment concerning the service of 
the notice of appeal and has revised this section to clarify that it is 
not FNS' intention to require the State agency to file the notice of 
appeal by certified mail or personal service. As discussed in the 
preamble to the NPRM, the State agency will have 10 days from receipt 
of the bill for collection to file a notice of appeal with the Hearing 
Clerk. Section 283.22(b) of the NPRM provides that the notice of appeal 
is considered to be filed on the date that it is postmarked or, if hand 
delivered, the date it is received by the Hearing Clerk. FNS will 
continue its policy of issuing the bill for collection either by 
certified mail or personal service. Once the State agency receives the 
bill for collection, it will have 10 calendar days to file its notice 
of appeal, unless an extension is requested prior to the expiration of 
the 10-day filing deadline.
    Exhaustion of Administrative remedies: The Department has added new 
Secs. 283.4(b) and 283.25(b) to clarify that the State agency must 
appeal the bill for collection to the ALJ in order to exhaust available 
administrative remedies as a prerequisite to seeking judicial review. 
While the Department believes it is clear that Congress intended 
section 14(a) of the Act to require the State agency to exhaust an 
administrative appeal before the ALJ before seeking judicial review, 
the rule has been clarified to specifically require such exhaustion. 
Thus, the decision of the ALJ is final for purposes of judicial review. 
However, as discussed in the preamble regarding Sec. 283.17(c)(3), 
either party to the appeal may, at its option, seek reconsideration of 
ALJ decision or review by the Judicial Officer. Accordingly, 
Secs. 283.4 (b)-(c) of the NPRM have been renumbered as Secs. 283.4 
(c)-(d) and Secs. 283.25 (b)-(h) of the NPRM have been renumbered 
Secs. 283.25 (c)-(i).
    Content of the notice: In Sec. 283.4(c) of the NPRM, the Department 
proposed the information which an acceptable notice of appeal must 
contain and that failure to file an acceptable notice of appeal would 
result in a dismissal of the notice by the ALJ and a waiver of the 
opportunity for further review unless the State agency pursues 
reconsideration by the ALJ or review by the Judicial Officer.
    Comment: The Department received one comment on this provision. The 
commenter indicated that there were no provisions for a State to remedy 
a technical defect or omission in a notice of appeal.
    Response: The Department has considered the comment concerning the 
technical defect or omission from the notice of appeal, and has 
determined that adoption of this suggestion is unnecessary since the 
NPRM contains provisions for a State to remedy a technical defect or 
omission in a notice of appeal. As discussed in Sec. 283.4(c)(2) of the 
NPRM, if the ALJ dismisses the notice of appeal because the State 
agency fails to file an adequate notice, the State agency may remedy 
the defect and either request reconsideration by the ALJ or review by 
the Judicial Officer in accordance with Secs. 283.17(d) and 283.20 of 
the NPRM. These provisions would not apply for failure to file a timely 
notice of appeal or request for extensions of time to file. This 
section has been renumbered in the final rulemaking as Sec. 283.4(d).
    Good Cause: In Sec. 283.4(d) of the NPRM, the Department proposed 
that the Secretary's determination concerning good cause be final and 
not subject to an appeal to the ALJ.
    Comment: The Department received one comment on this provision. The 
commenter objected to the fact that FNS' good cause determinations will 
not be subject to the appeal process.
    Response: Section 13951(c)(4) of the Leland Act deleted the 
provision of section 603 of the HPA which provided that the Secretary 
retained the authority to waive some or all of a State's QC claim where 
the Secretary determined that the State agency had good cause for 
failure to meet its error rate goal and that the decision of the 
Secretary was not subject to review by the ALJ. The Leland Act requires 
that the ALJ, in considering a State agency's appeal of QC liability 
consider all grounds for denying the claim, in whole or in part, 
including the contention of a State agency that the claim should be 
waived, in whole or in part, for good cause. The Department intends to 
publish a proposed rulemaking addressing the good cause criteria, as 
defined in the Leland Act. The regulation will be used by the Secretary 
and/or the Secretary's designee to assess, evaluate and respond to 
claims by the State for a good cause waiver of liability in conjunction 
with the appeals process. The Department has deleted Sec. 283.4(d) of 
the NPRM. Additionally, Sec. 283.5(a) of the NPRM has been amended to 
reflect Leland Act changes to good cause.
    Receipt of notice of appeal and assignment of docket number: In 
Sec. 283.4(e)(iii) of the NPRM, the Department proposed that the 
Hearing Clerk would acknowledge timely receipt of the notice of appeal 
and advise the State agency that the appeal petition must be filed 
within 30 days of service of the Hearing Clerk's letter.
    Comment: The Department received one comment on this provision. The 
commenter indicated that the 30-day deadline for filing the appeal 
petition is too burdensome for States and that a 60-day deadline would 
be more appropriate. The commenter believed that the extended time 
period would enable States to obtain necessary legal support and to 
better develop appropriate arguments in support of the appeal petition.
    Response: The Department has revised the deadline for filing the 
appeal petition from 30 days to 60 days. Section 13951(c)(4) of the 
Leland Act requires that the State agency submit evidence in support of 
the appeal not later than 60 days after receiving a notice of the claim 
and provides that the ALJ shall extend the 60-day deadline for cause 
shown. As previously discussed, Sec. 283.22(f) of this final rule 
requires the State agency to file a written request for the extension 
prior to the due date for the submission with a showing of cause for 
the extension. This provision is in keeping with the legislative intent 
of the HPA that the appeals process be streamlined and the appeal 
procedures be as expeditious as possible.
    Stay of Collection: In Sec. 283.4(f) of the NPRM, the Department 
proposed that a timely notice of appeal would automatically stay 
collection action on the QC claim. However, interest would continue to 
accrue on the outstanding claim.
    Comment: The Department received one comment on this provision. The 
commenter noted that since the NPRM would allow the Department to seek 
review by the Judicial Officer, the final determination of the ALJ may 
be delayed beyond the two year period during which interest on a QC 
claim would not accrue. The commenter suggested that in order to avoid 
the imposition of interest due to a delay that the State agency did not 
seek, the accrual of interest should be tolled (suspended) during the 
review by the Judicial Officer.
    Response: The Department has considered this comment but cannot 
adopt this suggestion. Section 13951(a)(2) of the Leland Act provides 
that interest on the unpaid claim would accrue either from a date that 
is one year after the date the bill is received or the date of the 
decision on the administrative appeal, whichever is earlier. The Leland 
Act does not allow a suspension of interest beyond the one-year period, 
regardless of the reason for the delay in a final administrative 
decision.
    Content of the Appeal Petition: In Sec. 283.4(g)(3) of the NPRM, 
the Department proposed that the State agency must request an oral 
hearing and that failure to request that hearing would result in the 
forfeiture of the opportunity for an oral hearing. The QC claim would 
then be decided using the procedures established under subpart C.
    Comment: The Department received one comment on this provision. The 
commenter suggested that rather than making an oral hearing an option 
for the State agency, the Department should make this a standard 
element in the process which the State must request be omitted if the 
State wishes an appeal to be decided without oral hearing. The 
commenter argued that this change would avoid any misunderstanding on 
the part of the State agency or the Department as to whether the State 
intended to request an oral hearing.
    Response: The Department has considered this comment and has 
decided not to adopt the suggestion. Section 603 of the HPA provides 
that determinations regarding a QC claim shall be made on the record 
after an opportunity for an agency hearing. In addition, section 
13951(c)(4) of the Leland Act requires that, on the request of the 
Secretary or the State agency, the ALJ shall hold an evidentiary 
hearing. The Department is retaining the provisions of the NPRM which 
require that the State agency notify the Hearing Clerk in its appeal 
petition if the State agency desires an oral hearing. The Department 
wishes to emphasize that a State agency that waives an oral hearing 
would not generally be permitted to later request that an oral hearing 
be conducted. The Department will amend Sec. 283.4(g)(3) to cross-
reference Sec. 283.15(a) to clarify those circumstances under which it 
would be possible for a State agency to receive an oral hearing if it 
had not initially requested the oral hearing in its appeal petition. In 
addition, the Department has added Sec. 283.4(i) to provide that if no 
hearing had been requested, the appeal would proceed in accordance with 
the procedures set forth under subpart C (Summary Procedure for Appeals 
of QC Claims of Less than $50,000). In the event that the appeal is 
pursued under subpart C, procedures exist under Sec. 283.26(a) to 
provide the State agency with an opportunity to request an oral hearing 
if the State agency does not believe that the summary procedure is 
adequate for handling the appeal and that an oral hearing is necessary.

Section 283.6: Answer

    This section of the NPRM contains the procedures that FNS is to 
follow in responding to the State agency's appeal petition.
    Filling and service: In Sec. 283.6(a) of the NPRM, the Department 
proposed that FNS would be allowed 30 days from the date of service of 
the State agency's appeal petition to file its answer to that petition.
    Comment: The Department received one comment recommending that FNS 
be given 60 days in which to file an answer to the State agency's 
appeal petition. The commenter also agreed with the provision that 
failure to file a timely answer would be considered, for purposes of 
the appeal, an admission of the State agency's allegations.
    Response: The Department has revised the deadline for FNS to file 
an answer to the State agency's appeal petition from 30 days to 60 
days. Section 13951(c)(4) of the Leland Act requires that not later 
than 60 days after a State agency submits evidence in support of the 
appeal, the Secretary shall submit responsive evidence to the ALJ and 
provides that the ALJ shall extend the 60-day deadline for cause shown. 
As previously discussed, Sec. 283.22(f) of the final rule requires the 
Secretary to file a written request for the extension prior to the due 
date for the submission with a showing of cause for the request.

Section 283.8: Amendment of Appeal or Answer

    This section of the NPRM contains the provision allowing either 
party to amend the appeal or answer at any time prior to the other 
party filing a motion for a hearing.
    Comment: The Department received one comment on this provision. The 
commenter noted that the preamble and the regulations do not contain a 
timeline in which the motion for a hearing is to be filed. The 
commenter suggested that it would be difficult to conclude that both 
parties would be knowledgeable if a motion for a hearing was filed with 
the appeal petition or the answer to the appeal petition.
    Response: The Department is revising this provision to incorporate 
section 13951(c)(4) of the Leland Act which requires the State agency 
to submit rebuttal evidence to the ALJ, to the extent such evidence 
exists, not later than 30 days after the Secretary submits responsive 
evidence. The Department is retaining the provision in the NPRM which 
allows either party to amend the appeal or answer at any time prior to 
the other party filing a motion for a hearing. An amendment following 
such a motion would require approval by the ALJ.
    The Department wishes to clarify that the motion for a hearing 
would not be filed with the appeal or the answer to the appeal. Rather, 
as discussed in Sec. 283.15(b), a motion for a hearing is filed by 
either party after the completion of all scheduled prehearing actions 
(such as discovery) that were agreed upon during the prehearing 
conference, scheduling conference or as otherwise established by the 
ALJ. The filing of a motion for a hearing advises the ALJ and the other 
parties to the appeal that the party has completed all prehearing 
activities and is ready to proceed with the hearing. Because the timing 
for the filing of the motion for a hearing is dependent upon the 
completion of all previously agreed upon prehearing activities, it is 
not possible to provide an absolute timeline as to when a motion for a 
hearing would be filed.

Section 283.10: Consent Decision

    This section of the NPRM contains the provision allowing the 
parties to the appeal to mutually agree to end the appeal process prior 
to the ALJ issuing an initial decision. The consent decision would not 
be subject to review by the Judicial Officer or by the Federal Court.
    Comment: The Department received one comment on this provision. The 
commenter suggested that this section be modified to state clearly that 
the parties may enter into a stipulation as to facts and that this 
would not preclude further review of the legal issues. The commenter 
was concerned that legal issues would not be considered if the 
underlying basis for the legal issues were facts which were not in 
dispute.
    Response: The Department has considered this comment and has 
decided not to adopt it since the concerns of the commenter are 
addressed in Sec. 283.11, the pre-hearing conference (and similarly in 
Sec. 283.29--scheduling conference). As provided for in Sec. 283.11(c), 
one purpose of the ALJ conducting a prehearing conference is to allow 
the parties to consider the possibility of obtaining stipulations as to 
facts in order to expedite and aid in the disposition of the appeal. 
The Department wishes to clarify that the purpose of the consent decree 
is to allow the parties to mutually agree to conclude the appeal 
process prior to the ALJ issuing an initial decision on the merits of 
the appeal. It is similar to settlement of a civil action in court. The 
consent decree is not subject to further review by the Judicial Officer 
or the Federal court. The appeals process contains prehearing 
procedures to allow the parties to enter into a stipulation as to facts 
which would not preclude further review of the legal issues. 
Furthermore, the Department believes that stipulations as to facts may 
be appropriate at any point to further expedite the appeal.

Section 283.11: Prehearing Conference and Procedure

    This section of the NPRM contains the procedures for and the 
requirements of the prehearing conference.
    Reporting: In Sec. 283.11(d) of the NPRM, the Department proposed 
that the prehearing conference would not be stenographically reported 
unless ordered by the ALJ.
    Comment: The Department received one comment on this proposal. The 
commenter noted that given the multiplicity of issues to be addressed 
at the prehearing conference, any party should be entitled to obtain a 
stenographic transcript of a prehearing conference at its own expense.
    Response: The Department has considered this comment and has 
revised Sec. 283.11(d) to clarify that any party may petition the ALJ 
to allow for a stenographic transcript of a prehearing conference at 
the petitioner's own expense. A copy of the prehearing transcript must 
be made available to the ALJ and the other parties to the appeal at no 
cost to the other parties. In response to this comment, the Department 
has also revised Sec. 283.15(o) to clarify that the cost of preparing 
the hearing transcript and providing one copy of the transcript to the 
ALJ and the other parties to the appeal shall be borne by the party 
requesting the hearing. The Department further notes that where these 
costs are incurred by the State, such costs are eligible for 
reimbursement in accordance with part 277 of the Food Stamp Program 
regulations.

Section 283.12: Discovery

    This section of the NPRM contains the procedures which the parties 
to the QC appeal are to follow in pursuing discovery. The ALJ would 
establish the scope of and schedule for the completion of discovery.
    Comment: The Department received one comment concerning the 
organization of Sec. 283.12. The commenter noted that this section was 
confusing and that organizational changes would clarify and simplify 
this provision.
    Response: The Department has considered this comment and has 
adopted this suggestion. The Department has made the following changes 
from the NPRM: Sec. 283.12(b)(5) (Supplementation of response) has been 
renumbered as Sec. 283.12(c); a new Sec. 283.12(d) (Frequency and use 
of discovery) has been created and Secs. 283.12(b)(3)(ii) and 
283.12(b)(3)(iv) have been moved to this new subsection; a new 
Sec. 283.12(e) (Protective Orders) has been created and 
Secs. 283.12(b)(3)(iii) and 283.12(b)(8) have been moved to this new 
subsection; Sec. 283.12(b)(7) (Failure to respond to discovery) has 
been renumbered as Sec. 283.12(f); a new Sec. 283.12(g) (Decision of 
the ALJ) has been created and Secs. 283.12(b)(3) (vii) and (viii) have 
been moved to this subsection; a new Sec. 283.12(h) (Failure to comply 
with an order) has been created and Secs. 283.12(b)(7) (i) and (ii) 
have been moved to this new subsection; Sec. 283.12(b)(4) 
(Postponements or delays) has been renumbered as Sec. 283.12(i). In 
addition, Sec. 283.12(b)(6) (Inclusion in the record) has been moved to 
Sec. 283.15(i) and Sec. 238.12(b)(9) (Exchange of witness and rebuttal 
witness lists, statements and exhibits) has been moved to 
Sec. 283.15(d).
    Depositions: In Sec. 283.12(a) of the NPRM, the Department proposed 
that the ALJ could order the taking of depositions in order to elicit 
testimony which otherwise might not be available at the time of the 
hearing.
    Comments: The Department received five comments on this provision. 
All of the commenters objected to restricting the use of depositions to 
those instances in which testimony might not otherwise be available. 
One commenter argued that the States' right to due process at the 
administrative appeal level was in jeopardy. Another commenter noted 
that by categorically prohibiting the use of depositions other than to 
preserve testimony, FNS has seriously compromised the States' ability 
to challenge error-rate penalty claims. This commenter also argued that 
by preventing the ALJ from using discovery depositions as one tool of 
litigation management, FNS has compromised the ALJ's ability to preside 
over the taking of evidence.
    Response: The Department has considered these comments but has not 
adopted them. It is the Department's position that the use of 
depositions should be restricted to those instances in which the 
witness may be unavailable to testify at the hearing. The Department 
believes that the discovery procedures provided in the NPRM for 
interrogatories, admissions, request for production of documents, and 
depositions, as well as the prehearing conference, provide adequate 
discovery tools for the parties to prepare for the oral hearing or to 
submit cross motions for summary judgment pursuant to Sec. 283.30.
    In addition, the Department believes that permitting discovery 
depositions would result in substantial costs and delay in the appeals 
process. The Department recognizes that a significant goal of the 
amendments to the Act by section 603 of the HPA was to create a more 
efficient appeals process. The House Report states that an objective of 
section 603 of the HPA was to ``streamline[] the appeals process of the 
quality control system. * * *'' H.R. Rep. No. 828, 100th Cong., 2d 
Sess. 32 (1988). Further, Representative Panetta stated during debate 
of the HPA, ``(a) third set of changes aims to speed the resolution of 
financial claims against State agencies for excessive error by 
streamlining the appeals process and providing for the payment of 
interest.'' 134 Cong. Rec. 20,982 (1988). Representative Emerson 
reiterated this same intention. 134 Cong. Rec. 20,984 (1988). The 
Department believes that restricting the use of depositions to those 
instances in which the witness may be unavailable to testify at the 
hearing is in keeping with the stated intent of Congress.
    Interrogatories and Admissions: In Secs. 283.12(b) (1) and (2) of 
the NPRM, the Department proposed that the parties be limited to 
fifteen interrogatories and admissions, including subparts, unless 
additional questions were authorized by the ALJ.
    Comments: The Department received five comments on these 
provisions. All of the commenters objected to limiting the number of 
interrogatories and admissions. One commenter noted that given the 
ALJ's authority to limit discovery, it would be more efficient not to 
impose an arbitrary limit on the number of interrogatories and 
admissions. The commenter argued that the responding party could 
request a protective order from the ALJ if it felt that the requests 
were burdensome.
    Response: The Department has considered these comments and has 
revised Secs. 283.12(b) (1) and (2) to permit twenty-five 
interrogatories and admissions, including subparts, unless additional 
questions are authorized by the ALJ. The Department continues to 
believe that a limit on the number of interrogatories and admissions 
available without approval by the ALJ is reasonable given the authority 
of the ALJ to authorize an increase in that number. The Department 
disagrees that it should be the responsibility of the responding party 
to pursue a protective order if the scope of the discovery is 
burdensome. Rather, it is reasonable to place the responsibility on the 
requesting party to justify why the ALJ should authorize an increase in 
the number of interrogatories and admissions. This limit is also 
consistent with congressional intent to streamline the appeals process.
    Production of Documents: In Sec. 283.12(b)(3) of the NPRM, the 
Department proposed that any party to the appeal may serve a request 
for the production of documents that are in the possession or control 
of another party. The Department also proposed that the requested 
documents would be provided upon payment of fees for search and 
duplication of the documents.
    Comment: The Department received two comments on this provision. 
One commenter noted that while the preamble to the NPRM contained a 
provision requiring that the requested documents be relevant to the 
issues under appeal, the regulatory language did not contain that 
requirement. The commenter suggested that the Department adopt the 
standard set forth in the Federal Rules of Civil Procedure. The second 
commenter opposed the assessment of fees for the production of 
documents. The commenter noted that since only governmental agencies 
are participating in the review of the QC claim, the Department ought 
to forgo the assessment of fees.
    Response: The Department has considered the comment concerning the 
issue of the relevancy of the documents and has decided to revise 
Sec. 283.12(b)(3) to be consistent with Rule 26(b)(1) of the Federal 
Rules of Civil Procedure.
    The Department has considered the comment concerning the assessment 
of fees for the production of documents and has decided not to adopt 
it. The Department believes that it is consistent and equitable that 
the costs of the search and duplication of documents under a request 
for production be borne by the party making the request. State agencies 
may submit such costs for reimbursement under 7 CFR part 277.
    Postponements or delays: In Sec. 283.12(b)(4) of the NPRM, the 
Department proposed that the hearing or other proceedings of the appeal 
process would not be postponed or delayed pending a response to or 
resolution of issues pertaining to a Freedom of Information Act (FOIA) 
request.
    Comment: The Department received one comment on this provision. The 
commenter strongly disagreed with the proposal that no delays or 
postponements of the QC appeal occur pending receipt of documents 
requested under FOIA. The commenter argued that documents requested 
under FOIA may be crucial to the resolution of the appeal and suggested 
that either a timeline should be imposed for furnishing documents 
requested under the FOIA or delays/postponements should be accepted as 
part of the process.
    Response: The Department has considered this comment but has 
decided not to adopt it. The Department has established procedures for 
the production of documents which would negate the need for a party to 
the appeal to pursue document production under the provisions of FOIA. 
As provided for in Sec. 283.12(b)(3) of the NPRM, the parties to the 
appeal are afforded the opportunity under the discovery process to 
request all documents relevant to the issues under appeal or which 
would reasonably lead to the discovery of such documents. In addition, 
the ALJ will establish the deadline by which all discovery activities 
must be completed. While the Department must process the FOIA and 
provide all responsive nonprivileged documents, it is inappropriate to 
delay or postpone the QC appeal pending action on the FOIA request. 
This also furthers congressional intent to streamline the appeals 
process. This section has been renumbered in the final rulemaking as 
Sec. 283.12(i).
    Witnesses and Exhibits: In Sec. 283.12(b)(9)(ii) of the NPRM, the 
Department proposed that a witness whose name did not appear on the 
list of witnesses would not be permitted to testify at the hearing. In 
addition, exhibits which were not provided to the opposing party 15 
days prior to the hearing would not be admitted into evidence at the 
hearing absent a showing of cause.
    Comment: The Department received two comments on this provision. 
The commenters argued that there may be situations where a witness 
identified on an exchanged list is unavailable to testify at the 
hearing. However, the party may have a substitute witness not 
identified on the exchanged list who is available to testify. The party 
should be permitted to amend the list upon a showing of cause.
    One commenter noted that there are circumstances where it is 
unnecessary to exchange documents during the prehearing process because 
those documents are already in the possession of each party through 
their normal course of business. The commenter argued that under this 
circumstance the regulation should require that the parties need only 
identify documents in the possession of the opposing party and notice 
an intention to introduce them at the hearing.
    Response: The Department has considered the comment concerning 
witnesses and has revised the regulations to clarify that it is the 
intent of the Department that in those situations where a party shows 
cause as to the reason a witness's name did not appear on the witness 
list, upon motion and approval by the ALJ, that witness will be 
permitted to testify at the hearing. The Department also wishes to 
clarify that if this situation arises, the other parties to the appeal 
may request a delay in the hearing to allow for an opportunity to 
prepare for this previously unidentified witness.
    The Department has considered the comment concerning the exchange 
of documents and has determined that adoption of this suggestion is 
unnecessary since Sec. 283.11(a)(3) of the NPRM provides the parties 
with the option of either furnishing copies or a list of documents that 
the party anticipates relying upon at the hearing. Since exhibits are 
not necessarily previously existing documents which are in the 
possession of the other party, the Department is retaining the 
provision concerning the exchange of exhibits. This section of the NPRM 
has been moved in the final rulemaking to Sec. 283.15(d).

Section 283.15: Procedure for Hearing

    This section of the NPRM contains the procedures related to the 
scheduling and conducting of hearings before the ALJ.
    Comment: The Department received one comment concerning the 
organization of this section. The commenter suggested that since 
Secs. 283.12(b)(6) (Inclusion in the record) and (9) (Exchange of 
witness and rebuttal witness lists, statements and exhibits) relate to 
the hearing procedures, these two subsections should be moved to 
Sec. 283.15.
    Response: The Department has considered this comment and has 
adopted this suggestion. The Department has made the following changes 
from the NPRM: Sec. 283.12(b)(9) has been moved and renumbered as 
Sec. 283.15(d) and Sec. 283.15(b)(6) has been moved and renumbered as 
Sec. 283.15(i). The remaining sections of 283.15 have been renumbered, 
as necessary.
    Time and Place: In Sec. 283.15(b) of the NPRM, the Department 
proposed that the ALJ shall schedule a hearing upon receipt of a motion 
by any party setting forth the issue and stating that the matter is 
ready for a hearing.
    Comment: The Department received one comment on this provision. The 
commenter indicated that this provision could be interpreted as 
allowing the ALJ to deny a party's request for a hearing. The commenter 
suggested that this section be revised to clarify that this section 
pertains only to the scheduling of a hearing. The commenter also noted 
that this section suggests that a hearing is permitted only if material 
facts are disputed and suggested that this section should be revised to 
permit the ALJ to hear oral arguments on legal issues even if there are 
no material facts in dispute.
    Response: Section 13951(c)(4) of the Leland Act requires that the 
ALJ decide the appeal within 60 days after receipt of rebuttal evidence 
by the State agency, or, if no rebuttal evidence is submitted, within 
90 days after the State submits the notice of appeal and evidence in 
support of the appeal. Given these statutory deadlines, the ALJ shall 
establish at the prehearing conference the dates by which the parties 
must complete prehearing activities. The parties would, following 
completion of such activities, file a motion stating that they are 
ready for hearing. The Leland Act authorizes the ALJ to extend certain 
statutory deadlines for cause shown. The Department anticipates that 
the ALJ may extend procedural deadlines for cause shown to accommodate 
the completion of prehearing and posthearing activities as is shown to 
be necessary. As previously discussed, Sec. 283.22(f) of the final rule 
requires the parties to file a written request for an extension prior 
to the due date with a showing of cause for the extension requested.
    The Department has considered the comment concerning the motion for 
a hearing and has determined that a revision to this provision is 
unnecessary, other than to eliminate the requirement to set forth the 
issues within the motion. The Department believes that the issues will 
be adequately framed by the prehearing procedures. Upon filing for a 
motion for hearing, an oral hearing will be scheduled within the 
statutory time frames provided by the Leland Act, unless an extension 
has been requested and granted by the ALJ or the ALJ has extended the 
time frames sua sponte.
    The Department has considered the comment concerning the ALJ 
conducting an oral hearing on the legal issues when there are no 
material facts in dispute. The Department has not adopted this 
suggestion. The Department wishes to clarify that the purpose of the 
oral hearing is to present the facts which are in dispute. If it is 
determined or agreed at prehearing or otherwise that there are no 
material facts in dispute, then the appropriate course of action would 
be to pursue resolution of the remaining legal issues utilizing the 
procedures established under subpart C--Summary Procedure for Appeals 
of QC Claims of Less than $50,000. These legal issues should be the 
basis for cross motions for summary judgment. In view of the comment 
received, the Department has revised Sec. 283.31(d) to allow the ALJ to 
request oral argument, if necessary, in those instances when a 
stipulation of all material facts has been entered by the parties to 
the appeal.
    Time and Place: In Sec. 283.15(b) of the NPRM, the Department 
proposed that the hearing before the ALJ shall be held at the 
Department of Agriculture, Washington, DC.
    Comment: The Department received two comments on this provision. 
Both commenters objected to the hearings being held exclusively in 
Washington, DC and suggested that the ALJ should determine the location 
of the hearing taking into account the convenience of the parties and 
their witnesses.
    Response: The Department has considered this comment and has 
revised Sec. 283.15(b) to permit the ALJ to hold the hearing at a 
location more convenient to the parties and their witnesses upon a 
showing of unusual or extraordinary circumstances. The Department has 
determined that budgetary constraints will not be considered an unusual 
or extraordinary circumstance since these costs are eligible for 
reimbursement, in part, in accordance with part 277 of the Food Stamp 
Program regulations. The Department believes that requiring a showing 
of unusual or extraordinary circumstances takes into consideration such 
burdens of the parties while also preserving the efficiency of the 
appeals process.
    Order of appearance: In Sec. 283.15(f) of the NPRM, the Department 
proposed that FNS would have the burden of proving, by a preponderance 
of the evidence, the QC claim against the State and that the State 
agency would have the burden of proving, by a preponderance of the 
evidence, the facts upon which it bases its appeal.
    Comment: The Department received one comment on this provision. The 
commenter argued that contrary to the intent of Congress, the proposed 
rule shifted the burden of proof to the States. The commenter suggested 
that this section be modified to require that FNS, and not the States, 
bear the burden of proving its error-rate penalty claim against the 
State. This burden of proof would be required for all factual matters 
put in issue.
    Response: The Department has considered this comment and has 
determined that a revision to this provision is unnecessary.
    The Department, however, wishes to reiterate that it has the 
ultimate burden of persuasion, by a preponderance of the evidence, of 
the QC error rate claim against the State throughout the appeals 
process. Nothing in the NPRM or this final rule changes that burden. 
However, if the Department makes a prima facia case, the burden of 
going forward with the evidence upon which the State bases its appeal 
shifts to the State agency. The State must prove any evidence offered 
to meet this burden of going forward by a preponderance. It is well 
settled that a fact can never be proven by something less than a 
preponderance of the evidence. This section has been renumbered in the 
final rulemaking as Sec. 283.15(g).
    Objections: In Sec. 283.15(h) of the NPRM, the Department proposed 
that at the hearing any party may object to a ruling by the ALJ and 
that any objection not made to the ALJ could not be raised if there 
were a subsequent review by the Judicial Officer.
    Comment: The Department received one comment on this provision. The 
commenter noted that there appeared to be some confusion of intent 
between the preamble and the regulatory language. The commenter 
questioned if it was the intent of the Department to limit materials 
presented to the Judicial Officer.
    Response: The Department has considered this comment and wishes to 
clarify that the review by the Judicial Officer shall be based on 
decisions rendered by the ALJ. The ALJ must have been provided the 
opportunity to render a decision on an issue before that issue can be 
appealed to the Judicial Officer. If a party to the appeal fails to 
raise an objection to the ALJ, that objection cannot be raised with the 
Judicial Officer since the ALJ had not rendered a decision on that 
objection. This section has been renumbered in the final rulemaking as 
Sec. 283.15(j).
    Official Records or documents: In Sec. 283.15(j) of the NPRM, the 
Department proposed that official government records or documents could 
be admitted into evidence without the production of the person who 
prepared the document. The party could either submit the officially 
published document or a certified copy of the document. The 
Department's Office of General Counsel would prepare the certification 
for FNS and other Departmental records.
    Comment: The Department received one comment on this provision. The 
commenter noted that this procedure was too cumbersome since it 
apparently would require that States go to the USDA General Counsel to 
certify each and every FNS document, including policy statements.
    Response: The Department has considered this comment and wishes to 
clarify that State agencies would only be required to request that the 
USDA General Counsel certify FNS documents if such documents are not 
officially published documents. The Department also wishes to clarify 
that official records or documents may include official State 
government records or documents. In similar fashion, for unpublished 
State documents, any necessary certification would be provided by State 
personnel having the legal authority to make such certification. This 
section has been renumbered in the final rulemaking as Sec. 283.15(l).

Section 283.17: Post-Hearing Procedures

    This section of the NPRM contains the procedures which will be 
followed at the completion of the hearing before the ALJ. This section 
includes the requirements for post-hearing submissions by the parties 
to the appeal as well as the issuance of the ALJ decision.
    ALJ's initial decision: In Sec. 283.17(c)(1) of the NPRM, the 
Department proposed that the ALJ would issue a decision on the appeal 
within a reasonable period of time after the termination of the time 
allowed for filing of proposed findings of fact, conclusions of law, 
orders, and any briefs in support thereof.
    Section 13951(c)(4) of the Leland Act requires that the ALJ decide 
the appeal within 60 days after receipt of rebuttal evidence by the 
State agency, or, if no rebuttal evidence is submitted, within 90 days 
after the State submits the notice of appeal and evidence in support of 
the appeal. The Department has revised Secs. 283.17(c)(1) and 283.32(a) 
to incorporate this legislative provision. As previously discussed, 
Sec. 283.22(f) of the final rule requires the State agency to file a 
written request for the extension prior to the due date for the 
submission with a showing of cause for the extension.
    ALJ's Initial decision. In Sec. 283.17(c)(3) of the NPRM, the 
Department proposed that no decision would be final for purposes of 
judicial review except a final decision of the Judicial Officer upon 
appeal.
    Comment: The Department received one comment on this provision. The 
commenter noted that if the decision of the ALJ is adverse to the State 
agency, judicial review by the Federal court should not be precluded 
because the State agency did not seek review by the Judicial Officer.
    Response: The Department has considered this comment and has 
revised the final rule to provide that the initial decision of the ALJ 
is considered final for purposes of judicial review. However, this 
would not preclude FNS, or any other party to the appeal, from seeking 
either reconsideration by the ALJ or review by the Judicial Officer.
    Motion for Reconsideration: In Sec. 283.17(d)(3) of the NPRM, the 
Department proposed that a response to the motion for reconsideration 
would be allowed only upon the request of the ALJ.
    Comment: The Department received two comments on this provision. 
The commenters argued that a response to a motion for reconsideration 
should be the standard procedure rather than at the discretion of the 
ALJ.
    Response: The Department has considered this comment and has 
revised Sec. 283.17(d)(3) to provide that the other parties to the 
appeal shall respond within 10 days of receipt of the brief or written 
materials filed by the party requesting reconsideration unless an 
extension has been requested and granted by the ALJ or the ALJ has 
extended the time frame sua sponte.
    Motion for Reconsideration: In Sec. 283.17(d)(4) of the NPRM, the 
Department proposed that the parties to the appeal could not pursue a 
motion for reconsideration if the initial ALJ decision had been revised 
based upon a previous motion for reconsideration.
    Comment: The Department received one comment on this provision. The 
commenter noted that other agencies permit a party to file a motion for 
reconsideration at any time, as of right, on the basis of material 
error, new evidence, or substantially changed circumstances.
    Response: The Department has considered this comment but has 
decided not to adopt it. The Department believes that with the 
modification to Sec. 283.17(d)(3) allowing all parties to the appeal to 
respond to the initial motion for reconsideration, any further requests 
for review of the ALJ's decision should be made to the Judicial 
Officer.

Section 283.18: Motions and Requests

    This section of the NPRM contains the procedures related to the 
filing of motions and requests with the ALJ or the Judicial Officer.
    Response to motions and requests: In Sec. 283.18(d) of the NPRM, 
the Department proposed that a party have 20 days to respond to a 
motion or request and that the party initiating the motion or request 
not be permitted to reply to the response of the other party unless 
ordered to do so by the ALJ.
    Comment: The Department received one comment on this provision. The 
commenter argued that by not being permitted to file a reply brief, the 
party initiating the motion or request is disadvantaged since the 
initiating party would not have access to arguments raised in response 
to the motion or request. The commenter recommended that one response 
be allowed each party after the initial motion and response.
    Response: The Department has considered this comment but has 
decided not to adopt it. This provision is in keeping with the 
congressional intent that the appeal process be streamlined and that 
the appeal procedures be as expeditious as possible. Since the ALJ can 
direct sua sponte that a reply be filed either to clarify issues or 
upon motion in those instances where a party believes that a reply is 
necessary, the Department believes that restricting the number of 
responses to a motion or request which may be filed would not be 
disadvantage to the party initiating the motion or request.
    The Department has also revised the 20-day time frame to respond to 
a motion or request in order to address the statutory deadlines 
established by section 13951(c)(4) of the Leland Act for the completion 
of the appeals process. Given these deadlines, the Department has 
shortened the 20-day time frame to 10 days unless an extension has been 
requested and granted by the ALJ or the ALJ has extended such time 
frame sua sponte.

Section 283.20: Review by the Judicial Officer

    This section of the NPRM contains the procedures for appealing the 
initial ALJ decision to the Department's Judicial Officer.
    Filing of review petition: In Sec. 283.20(a) of the NPRM, the 
Department proposed that within 30 days of receipt of the initial ALJ 
decision, any party to the appeal may seek Judicial Officer review.
    Comments: The Department received four comments on this provision. 
The commenters objected to this provision arguing that the HPA 
prohibits Secretarial review of decisions made by the ALJ. The 
commenters recommended that the Department delete this provision.
    Response: The Department has considered these comments but has 
decided not to adopt the recommendation to forgo Secretarial review of 
the initial ALJ decision. As discussed under Sec. 283.17(c)(3), the 
Department has revised the regulations to provide that the initial 
decision of the ALJ shall be considered final for purposes of judicial 
review. However, this would not preclude any party to the appeal from 
seeing reconsideration by the ALJ or review by the Department's 
Judicial Officer within 30 days of the ALJ's decision.
    It is the Department's position that the specific incorporation of 
section 557 of the Administrative Procedure Act (APA) (5 U.S.C. 557) by 
section 603 of the HPA necessarily means that the Secretary is 
authorized to review ALJ decisions. Indeed, the APA expressly provides 
that an agency action can be final for purposes of the APA, and thus 
for purposes of judicial review, even though it is subject to 
reconsideration or appeal to a higher authority within the agency. 5 
U.S.C. 704. This interpretation is consistent with both the expressed 
statutory language and legislative history of section 603 of the HPA. 
See Memorandum for Alan C. Raul, General Counsel, U.S. Department of 
Agriculture, from Douglas R. Cox, Deputy Assistant Attorney General, 
Office of Legal Counsel, U.S. Department of Justice (February 20, 
1991).
    The Department has also determined that review by the Secretary of 
issues raised on appeal is a more efficient process for resolving 
disputes concerning initial ALJ decisions that if such issues were 
brought to the federal courts without providing the Secretary the 
opportunity to review and, if necessary, revise such decisions. The 
Secretary has delegated to the Judicial Officer the authority to act as 
the final deciding officer in adjudicatory proceedings subject to 5 
U.S.C. 556 and 557. Section 283.20 will permit the Judicial Officer, on 
behalf of the Secretary, to address the party's objections to the 
initial ALJ decision, to apply expertise on the issues under review, 
exercise informed discretion, and create a more concise record for any 
subsequent judicial review. This procedure will also ensure that there 
is continuity in the decisions which are rendered for cases involving 
similar issues.
    Submission of briefs: In Sec. 283.20(h)(i) of the NPRM, the 
Department proposed that if the Judicial Officer determined that there 
were reasonable grounds that additional evidence which is material was 
not presented to the ALJ, the Judicial Officer shall remand the matter 
back to the ALJ for disposition.
    Comment: The Department received one comment on this provision. The 
commenter questioned if it was the Department's intent to limit 
materials presented to the Judicial Officer.
    Response: The Department has considered this comment and wishes to 
clarify that the Judicial Officer reviews the record created before the 
ALJ. However, if a party to the appeal can persuade the Judicial 
Officer that there are reasonable grounds why material evidence was not 
presented to the ALJ, the Judicial Officer shall remand the matter back 
to the ALJ for further consideration.

Section 283.30: Cross Motions for Summary Judgment

    This section of the NPRM contains the procedures which are to be 
followed if the appeal is being pursued under subpart C--Summary 
Procedures for Appeal of QC Claims of Less than $50,000.
    Comment: The Department received one comment on this provision. The 
commenter expressed a concern that the 35 page limitation on the brief 
accompanying the motion for summary judgment and the 15 page reply 
brief limitation were too restricted and recommended that a higher page 
limit be established.
    Response: The Department considered this comment but decided not to 
adopt it. The Department believes that given the authority of the ALJ 
to increase the size of the brief and reply brief, the page limitations 
are reasonable. These page limits are consistent with congressional 
intent to streamline the appeals process. The Department has also made 
changes to subpart C to conform to the timeframes specified in the 
Leland Act.

Implementation

    In accordance with section 701(b)(5)(c) of the HPA, the amendments 
to section 14 of the Act are effective and must be implemented for all 
QC billing actions beginning with Fiscal Year 1986.

List of Subjects

7 CFR Part 272

    Administrative practice and procedures, Food stamps, Reporting and 
recordkeeping requirements.

7 CFR Part 275

    Administrative practice and procedures, Food stamps, Reporting and 
recordkeeping requirements.

7 CFR Part 283

    Administrative practice and procedures, claims, Food stamps, 
Government procedures, and penalties.

    For the reasons set out in the preamble, 7 CFR parts 272 and 275 
are amended and 7 CFR part 283 is added as follows:
    1. The authority citation for parts 272 and 275 continues to read 
as follows:

    Authority: 7 U.S.C. 2011-2032.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

    2. In Sec. 272.1, a new paragraph (g)(135) is added in numerical 
order to read as follows:


Sec. 272.1  General terms and conditions.

* * * * *
    (g) Implementation. * * *
    (135) Amendment No. 348. The provisions of Amendment No. 348 are 
effective August 5, 1994 and must be implemented for all QC billing 
actions beginning with Fiscal Year 1986.

PART 275--PERFORMANCE REPORTING SYSTEM

    3. Section 275.23 is amended by revising paragraph (e)(5)(iii) to 
read as follows:


Sec. 272.23  Determination of State Agency Program Performance.

* * * * *
    (e) * * *
    (5) * * *
    (iii) Whenever a State is assessed for an excessive payment error 
rate, the State shall have the right to request an appeal in accordance 
with procedures set forth in part 283 of this chapter.
* * * * *
    4. 7 CFR part 283 is added to read as follows:

PART 283--APPEALS OF QUALITY CONTROL (``QC'') CLAIMS

Subpart A--General

Sec.
283.1  Meaning of words.
283.2  Scope and applicability.
283.3  Definitions.

Subpart B--Appeals of QC Claims of $50,000 or More

283.4  Filing appeals for QC claims of $50,000 or more.
283.5  Motion to dismiss.
283.6  Answer.
283.7  Procedures upon failure to file an answer.
283.8  Rebuttal or amendment of appeal or answer.
283.9  Withdrawal of appeal.
283.10  Consent decision.
283.11  Prehearing conference and procedure.
283.12  Discovery.
283.13  Subpoenas.
283.14  Fees of witnesses.
283.15  Procedure for hearing.
283.16  Consolidation of issues.
283.17  Post-hearing procedure.
283.18  Motions and requests.
283.19  ALJs.
283.20  Review by the Judicial Officer.
283.21  Ex parte communications.
283.22  Form; filing; service; proof of service; computation of 
time; and extensions of time.
283.23  Procedural matters.
Subpart C--Summary Procedure for Appeals of QC Claims of Less Than 
$50,000
283.24  Incorporation of procedures by reference.
283.25  Filing Appeals for QC claims of less than $50,000.
283.26  Request that appeals be handled under procedures in subpart 
B for appeals of QC claims of $50,000 or more.
283.27  Procedures upon failure to file an answer.
283.28  Discovery.
283.29  Scheduling conference.
283.30  Cross motions for summary judgment.
283.31  Review of the record.
283.32  ALJ's initial decision.

    Authority: 7 U.S.C. 2011-2032.

Subpart A--General


Sec. 283.1  Meaning of words.

    As used in this part, words in the singular form shall be deemed to 
import the plural, and vice versa, as the case may require.


Sec. 283.2  Scope and applicability.

    The rules of practice in this part, shall be applicable to appeals 
by State agencies of Food and Nutrition Service quality control (QC) 
claims for Fiscal Year (``FY'') 1986 and subsequent fiscal years 
pursuant to sections 14(a) and 16(c) of the Food Stamp Act of 1977, as 
amended, 7 U.S.C. 2023(a) and 2025(c).


Sec. 283.3  Definitions.

    As used in this part, the terms as defined in the Food Stamp Act of 
1977, as amended, 7 U.S.C. 2011-2032 (``Act''), and in the regulations, 
standards, instructions or orders issued thereunder, shall apply with 
equal force and effect. In addition, and except as may be provided 
otherwise in this section:
    Administrator means the Administrator, Food and Nutrition Service, 
U.S. Department of Agriculture (``USDA'').
    ALJ means any Administrative Law Judge in USDA appointed pursuant 
to 5 U.S.C. 3105 or detailed to the USDA pursuant to 5 U.S.C. 3344 and 
assigned to the appeal.
    Appeal means the appeal to the ALJ.
    Ex parte communication means an oral or written communication not 
on the public record with respect to which reasonable prior notice to 
all parties is not given, but it shall not include procedural matters.
    Filing. A pleading or other document allowed or required to be 
filed in accordance with this part shall be considered filed when 
postmarked, if mailed, or when received, if hand delivered.
    FNS means the Food and Nutrition Service, USDA.
    Hearing means that part of the appeal which involves the submission 
of evidence before the ALJ for the record in the appeal.
    Hearing Clerk means the Hearing Clerk, USDA, Washington, DC 20250.
    Judicial Officer means an official of the USDA delegated authority 
by the Secretary of Agriculture, pursuant to the Act of April 4, 1940 
(7 U.S.C. 450c-459g) and Reorganization Plan No. 2 of 1953 (5 U.S.C. 
1970 ed., Appendix, P. 550), as amended by Public Law 97-35, title I, 
sec. 125, 95 Stat. 357, 369 (1981) (7 U.S.C. 2201 note), to perform the 
adjudicating function involved (7 CFR 2.35(a)), or the Secretary of 
Agriculture if the authority so delegated is exercised by the 
Secretary.
    OC claim means a claim made pursuant to 7 U.S.C. 2025(c).
    Secretary means the Secretary of the USDA.
    State agency means:
    (1) The agency of State government, including the local offices 
thereof, which is responsible for the administration of the federally 
aided public assistance programs within the State, and in those States 
where such assistance programs are operated on a decentralized basis, 
it includes the counterpart local agencies which administer such 
assistance programs for the State agency; and
    (2) The Indian tribal organization of any Indian tribe determined 
by the Secretary to be capable of effectively administering a Food 
Stamp Program in accordance with the Food Stamp Act of 1977, as 
amended, 7 U.S.C. 2011-2032.

Subpart B--Appeals of QC Claims of $50,000 or More


Sec. 283.4  Filing appeals for QC claims of $50,000 or more.

    (a) Time. A State agency may appeal the bill for collection from 
FNS for a QC claim of $50,000 or more for a food stamp QC error rate in 
excess of the tolerance level. A State agency shall file a written 
notice of appeal, in accordance with this subpart, within 10 days of 
receipt of the bill for collection from FNS for a QC claim of $50,000 
or more. The State agency may request an extension to the 10-day filing 
requirement in accordance with Sec. 283.22(f). FNS shall issue the bill 
for collection by certified mail or personal service.
    (b) Exhaustion of administrative remedies. The State agency must 
appeal the bill for collection to the ALJ, pursuant to this subpart, 
and exhaust the available administrative remedies before filing suit in 
the Federal District Courts.
    (c) Filing. The notice of appeal shall be filed with the Hearing 
Clerk in accordance with Sec. 283.22(b).
    (c) Content of the notice. (1) A notice of appeal, in order to be 
considered acceptable, must contain the following information:
    (i) A brief and clear statement that it is an appeal from a QC 
claim of $50,000 or more identifying the period the claim covers, the 
date and amount of the bill for collection, and the date of receipt of 
the bill for collection;
    (ii) Identification of the State agency as the appellant and FNS as 
the appellee;
    (iii) A statement that the notice of appeal is filed pursuant to 
section 14(a) of the Food Stamp Act;
    (iv) A copy of the bill for collection which constitutes the basis 
for the filing of the notice of appeal shall be attached to the notice.
    (2) Failure to file an acceptable notice of appeal may result in a 
challenge by FNS to the notice, dismissal of the notice by the ALJ and 
a waiver of the opportunity for further appeal or review by the 
Judicial Officer unless the State agency pursues the options as 
discussed in Secs. 283.17(d) and 283.20.
    (e) Receipt of notice of appeal and assignment of docket number. 
Upon receipt of a notice of appeal, the Hearing Clerk shall assign the 
appeal a docket number. The Hearing Clerk shall:
    (1) Send the State agency a letter which shall include the 
following information:
    (i) Advice that the notice of appeal has been received and the date 
of receipt;
    (ii) The docket number assigned to the appeal and instructions that 
all future communications related to the appeal shall reference the 
docket number, and;
    (iii) Advice that the State agency must file and serve its appeal 
petition, as set forth in Sec. 283.22, not later than 60 days after 
receiving a notice of the claim. Failure to file a timely appeal 
petition may result in a waiver of further appeal rights.
    (2) Send FNS a copy of the notice of appeal and a copy of the 
letter to the State agency.
    (f) Stay of collection. The filing of a timely notice of appeal 
shall automatically stay the action of FNS to collect the QC claim 
asserted against the State agency until a decision is reached on the 
acceptability of the appeal, and in the case of an acceptable appeal, 
until a final administrative determination has been issued. However, 
interest will accrue on the outstanding claim amount during the stay as 
provided in section 13(a)(1) of the Food Stamp Act of 1977, as amended 
(7 U.S.C. 2022(a)(1)).
    (g) Content of the appeal petition. The appeal petition shall 
include:
    (1) A brief statement of the allegations of fact and provisions of 
law that constitute the basis for the appeal including a statement as 
to whether a factual basis for good cause relief exists;
    (2) The nature of the relief sought, and;
    (3) A request for an oral hearing, if desired by the State agency. 
Failure to request an oral hearing will result in a forfeiture of the 
opportunity for such a hearing, except as provided in Sec. 283.15(a).
    (h) FNS answer. Upon service of the State agency appeal petition, 
FNS shall:
    (1) File an answer, in accordance with Sec. 283.6, not later than 
60 days after the State agency submits its appeal petition and;
    (2) Advise the Hearing Clerk if FNS wishes to have an oral hearing.
    (i) Oral hearing not requested. If no oral hearing has been 
requested, the appeal shall proceed in accordance with the procedures 
set forth under subpart C of this part.


Sec. 283.5  Motion to dismiss.

    (a) Filing of motion to dismiss. Prior to or at the same time as 
filing the answer, FNS may file a motion to dismiss. The appeal may be 
challenged on the basis that the notice of appeal was not filed within 
10 days or as that time may have been extended by the ALJ, the appeal 
petition was not filed in accordance with Sec. 283.4, or that the 
appeal petition is substantially incomplete and could not be quickly 
and easily cured by amendment. The motion must be accompanied by clear 
and convincing proof of any of these factors alleged as grounds for 
dismissal.
    (b) Service of motion to dismiss. FNS shall serve the State agency 
with a copy of the motion to dismiss. The State agency will have 10 
days from date of service to submit objections to the motion.
    (c) Ruling on a motion to dismiss. The ALJ will rule on the motion 
to dismiss before any further action proceeds on the basis of the 
merits of the appeal. The basis of the ruling will be clearly 
documented and will become part of the official record. If the ALJ 
denies the motion, FNS shall file its answer in accordance with 
Sec. 283.6 within 60 days of service of the ALJ's ruling, unless there 
is a motion for reconsideration filed pursuant to Sec. 283.17(d) or 
review by the Judicial Officer is sought pursuant to Sec. 283.20.
    (d) Dismissal of appeal. If the ALJ finds the basis for the motion 
to have merit, the appeal may be dismissed. The initial decision of the 
ALJ shall become final and effective 30 days after service in 
accordance with Sec. 283.17(c)(2) unless either party pursues the 
options as discussed in Secs. 283.17(d) and 283.20.
    (e) Waiver. Failure to file for dismissal of the appeal by the time 
the answer is required to be filed will result in waiver of the right 
to request dismissal.


Sec. 283.6  Answer.

    (a) Filing and service. Not later than 60 days after the State 
agency submits its appeal petition, or within 60 days following service 
of a ruling in accordance with Sec. 283.5, FNS shall file an answer 
signed by the FNS Administrator or authorized representative or the 
attorney of record in the appeal. The attorney may file an appearance 
of record prior to or simultaneously with the filing of the answer.
    (b) Contents. The answer shall clearly admit, deny, or explain each 
of the allegations of the appeal petition and shall:
    (1) Clearly set forth any defense asserted by FNS; or
    (2) State that FNS admits all the facts alleged in the appeal 
petition; or
    (3) State that FNS admits the jurisdictional allegations of the 
appeal petition and neither admits nor denies the remaining allegations 
and consents to the issuance of an order without further procedure.
    (c) Default. Failure to file a timely answer shall be deemed, for 
purposes of the appeal, an admission of the allegations in the appeal 
petition and failure to deny or otherwise respond to an allegation of 
the appeal petition shall be deemed for purposes of the appeal, an 
admission of said allegation, unless FNS and the State agency have 
agreed to a consent decision pursuant to Sec. 283.10.


Sec. 283.7  Procedures upon failure to file an answer.

    The failure by FNS to file an answer shall constitute a waiver of 
hearing. Upon such failure to file, the State agency shall file a 
proposed decision, along with a motion for adoption thereof, both of 
which shall be served upon FNS by the State agency. Within 10 days 
after service of such motion and proposed decision, FNS may file 
objections thereto. If the ALJ finds that meritorious objections have 
been filed, the State agency's motion shall be denied with supporting 
reasons. If meritorious objections are not filed, the ALJ shall issue 
an initial decision without further procedures or hearing. Copies of 
the initial decision or denial of the State agency's motion shall be 
served on each of the parties and shall be included as part of the 
official record. Where the decision as proposed by the State agency is 
adopted as the ALJ's initial decision, such decision of the ALJ shall 
become final and effective 30 days after service in accordance with 
Sec. 283.17(c)(2) unless reconsideration or review by the Judicial 
Officer is sought as discussed in Secs. 283.17(d) and 283.20.


Sec. 283.8  Rebuttal or amendment of appeal or answer.

    (a) Not later than 30 days after FNS submits an answer in 
accordance with Sec. 283.6, the State agency may submit rebuttal 
evidence.
    (b) At any time prior to the filing of a motion for a hearing 
pursuant to Sec. 283.15(b), the appeal petition or the answer may be 
amended without prior authorization by the ALJ. Thereafter, such an 
amendment may only be made as authorized by the ALJ upon a showing of 
cause.


Sec. 283.9  Withdrawal of appeal.

    At any time before the ALJ files an initial decision, the State 
agency may withdraw its appeal and agree to pay the full amount of the 
claim. By withdrawing an appeal, the State agency waives all 
opportunity to appeal or seek further administrative or judicial review 
on the claim or related matters.


Sec. 283.10  Consent decision.

    At any time before the ALJ files an initial decision, FNS and the 
State agency may agree to entry of a consent decision. Such decision 
shall be filed in the form of a decision signed by the parties with 
appropriate space for signature by the ALJ and shall contain an 
admission of at least the jurisdictional facts, consent to the issuance 
of the agreed decision without further procedure and such other 
admissions or statements as may be agreed between the parties. The ALJ 
shall enter such decision without further procedures, unless an error 
is apparent on the face of the document. Such decision shall be final 
and shall take effect 30 days after the date of the delivery or service 
of such decision and is not subject to further administrative or 
judicial.


Sec. 283.11  Prehearing conference and procedure.

    (a) Time and place. The ALJ shall direct the parties or their 
counsel to participate in a prehearing conference at any reasonable 
time prior to the hearing. The prehearing conference shall be held at 
the U.S. Department of Agriculture, Washington, DC. Reasonable notice 
of the time, place of the prehearing conference and if personal 
attendance will be necessary shall be given. Prehearing conferences may 
be conducted telephonically. The ALJ shall order each of the parties to 
furnish at the prehearing conference or at another time prior to the 
hearing the following:
    (1) An outline of the appeal or defense;
    (2) The legal theories upon which the party will rely;
    (3) Copies of or a list of documents that the party anticipates 
relying upon at the hearing; and
    (4) A list of witnesses who will testify on behalf of the party. At 
the discretion of the party furnishing such list of witnesses, the 
names of the witnesses need not be furnished if they are otherwise 
identified in some meaningful way, such as a short statement of the 
type of evidence they will offer.
    (b) Procedures. The ALJ shall not order any of the foregoing 
procedures that a party can show are inappropriate or unwarranted under 
the circumstances of the particular appeal.
    (c) Matters to be considered. At the prehearing conference, the 
following matters shall be considered:
    (1) The simplification of issues;
    (2) The necessity of amendments to pleadings;
    (3) The possibility of obtaining stipulations of facts and of the 
authenticity, accuracy, and admissibility of documents, which will 
avoid unnecessary proof;
    (4) The limitation of the number of expert or other witnesses;
    (5) Negotiation, compromise, or settlement of issues;
    (6) The exchange of copies of proposed exhibits;
    (7) The nature of and the date by which discovery, as provided in 
Sec. 283.12, must be completed;
    (8) The identification of documents or matters of which official 
notice may be requested;
    (9) A schedule to be followed by the parties for the completion of 
the actions decided at the conference; and
    (10) Such other matters as may expedite and aid in the disposition 
of the appeal.
    (d) Reporting. (1) A prehearing conference will not be 
stenographically reported unless so directed by the ALJ.
    (2) Any party to the appeal may, upon motion, request the ALJ to 
allow for a stenographic transcript of a prehearing conference. The 
party requesting the transcript shall bear the transcription cost of 
producing the transcript and the duplication cost for one transcript 
provided to the ALJ and to the other parties to the appeal.
    (e) Order. Actions taken as a result of a conference shall be 
reduced to an appropriate written order, unless the ALJ concludes that 
a stenographic report, if available, shall suffice, or, in the event 
the conference takes place within 7 days of the beginning of the 
hearing, the ALJ elects to make a statement on the record at the 
hearing summarizing the actions taken.


Sec. 283.12  Discovery.

    (a) Dispositions.--(1) Motion for taking deposition. Only upon a 
finding by the ALJ that a deposition is necessary to preserve testimony 
as provided in this subparagraph, upon the motion of a party to the 
appeal, the ALJ may, at any time after the filing of the answer, order 
the taking of testimony by deposition. The motion shall set forth:
    (i) The name and address of the proposed deponent;
    (ii) The name and address of the person (referred to hereafter in 
this section as the ``officer'') qualified under the regulations in 
this part to take depositions, before whom the proposed examination is 
to be made;
    (iii) The proposed time and place of the examination, which shall 
be at least 15 days after the date of service of the motion; and
    (iv) The reasons why such deposition should be taken, which shall 
be solely for the purpose of eliciting testimony which otherwise might 
not be available at the time of the hearing, for use as provided in 
accordance with paragraph (a)(7) of this section.
    (2) ALJ's order for taking depositions. If the ALJ finds that the 
testimony may not otherwise be available at the hearing, the taking of 
the deposition may be ordered. The order shall be served upon the 
parties, and shall state:
    (i) The time and place of the examination;
    (ii) The name of the officer before whom the examination is to be 
made; and
    (iii) The name of the deponent. The officer and the time and place 
need not be the same as those suggested in the motion.
    (3) Qualifications of officer. The deposition shall be made before 
an officer authorized by the law of the United States or by the law of 
the place of the examination to administer oaths, or before an officer 
authorized by the Secretary to administer oaths.
    (4) Procedure on examination. (i) The deponent shall be examined 
under oath or affirmation and shall be subject to cross-examination. 
Objections to questions or documents shall be in the short form, 
stating the grounds of objections relied upon. The questions 
propounded, together with all objections made (but not including 
argument or debate), shall be recorded verbatim. In lieu of oral 
examination, parties may transmit written questions to the officer 
prior to the examination and the officer shall propound such questions 
to the deponent.
    (ii) The party taking the deposition shall arrange for the 
examination of the witness either by oral examination, or by written 
questions upon agreement of the parties or as directed by the ALJ. If 
the examination is conducted by means of written questions, copies of 
the questions shall be served upon the other party to the appeal and 
filed with the officer at least 10 days prior to the date set for the 
examination unless otherwise agreed, and the other party may serve 
cross questions and file them with the officer at any time prior to the 
time of the examination.
    (iii) The parties may stipulate in writing or the ALJ may upon 
motion order that a deposition be taken by telephone. A deposition 
taken by telephone is to be taken at the place where the deponent is to 
answer questions propounded to the deponent.
    (iv) The parties may stipulate in writing or the ALJ may upon 
motion order that a deposition be recorded by other than stenographic 
means. The stipulation or the order shall designate the manner of 
recording, preserving and filing of the deposition, and may include 
other provisions to assure that the recorded testimony is accurate and 
trustworthy.
    (5) Certification by the officer. The officer shall certify on the 
deposition that the deponent was duly sworn and that the deposition is 
a true record of the deponent's testimony. The officer shall then 
securely seal the deposition, together with one copy thereof (unless 
there are more than two parties in the appeal, in which case there 
should be another copy for each additional party), in an envelope and 
mail the same by registered or certified mail to the Hearing Clerk.
    (6) Corrections to the transcript. (i) At any time prior to the 
hearing, any party may file a motion proposing corrections to the 
transcript of the deposition.
    (ii) Unless a party files such a motion in the manner prescribed, 
the transcript shall be presumed to be a true, correct, and complete 
transcript of the testimony given in the deposition proceeding and to 
contain an accurate description or reference to all exhibits in 
connection therewith, and shall be deemed to be certified correct 
without further procedure.
    (iii) At any time prior to the use of the deposition in accordance 
with paragraph (a)(7) of this section and after consideration of any 
objections filed thereto, the ALJ may issue an order making any 
corrections in the transcript which the ALJ finds are warranted, and 
these corrections shall be entered onto the original transcript by the 
Hearing Clerk (without obscuring the original text).
    (7) Use of depositions. A deposition ordered and taken in 
accordance with the provisions of this section may be used in an appeal 
under these rules if the ALJ finds that the evidence is otherwise 
admissible and
    (i) That the witness is deceased;
    (ii) That the witness is unable to attend or testify because of 
age, sickness, infirmity, or imprisonment;
    (iii) That the party offering the deposition has endeavored to 
procure the attendance of the witness by subpoena, but has been unable 
to do so; or
    (iv) That such exceptional circumstances exist as to make it 
desirable, in the interests of justice, to allow the deposition to be 
used. If the party upon whose motion the deposition was taken refuses 
to offer it in evidence, any other party may offer the deposition or 
any part thereof in evidence. If only part of a deposition is offered 
in evidence by a party, any other party may require the introduction of 
any other part which is relevant be considered with the part 
introduced, and any party may introduce any other parts.
    (b) Interrogatories, requests for admissions and requests for 
production of documents--(1) Interrogatories. A party may submit 
written interrogatories to any other party to an appeal. The time for 
submitting and responding to written interrogatories shall be set by 
the ALJ at the pre-hearing conference, but in no event shall the time 
for response be less than 20 days from the date of service or within 
such time as determined upon motion to the ALJ. The number of 
interrogatories submitted by each party shall not exceed twenty-five 
questions including subparts, unless additional interrogatories are 
authorized by the ALJ. Each interrogatory should be answered separately 
and fully in writing, unless it is objected to, in which event the 
reasons for objection should be stated in lieu of an answer. The 
answers are to be signed under penalty of perjury by the person making 
them. Objections shall be signed by the attorney of record in the 
appeal or by the responding party's authorized representative.
    (2) Request for admissions. A party may submit a written request 
for admission of the truth of any matters relevant to the appeal to any 
other party to the appeal. The time for submitting a written request 
for admission shall be set by the ALJ at the pre-hearing conference. 
The number of admissions contained in a request submitted by a party 
shall not exceed twenty-five unless additional admissions are 
authorized by the ALJ. The matter is admitted unless, within 20 days 
after service thereof, or within such time as determined upon motion to 
the ALJ, the party to whom the request is directed serves upon the 
party requesting the admission a written answer or objection addressed 
to the matter signed by the party, counsel or designated 
representative. If objection is made, the reasons therefor should be 
stated. The answer should specifically deny the matter or set forth in 
detail why the answering party cannot truthfully admit or deny the 
matter. An answering party may not give lack of information or 
knowledge as a reason for the failure to admit or deny unless it is 
stated that reasonable inquiry has been made and that the information 
known or readily obtainable is insufficient to enable the party to 
admit or deny. A party who considers that a matter for which an 
admission has been requested presents a genuine issue for hearing may 
not, on that ground alone, object to the request; the party may deny 
the matter or set forth reasons why the matter cannot be admitted or 
denied.
    (3) Request for production of documents. (i) Any party may serve 
upon any other party to the appeal a request for production of 
documents which are in the possession or control of the party upon whom 
the request is served. The time for service and response to such a 
request shall be set by the ALJ at the pre-hearing conference. Upon 
payment of fees for search and duplication of documents, any party to 
the appeal may obtain copies of such documents.
    (ii) Parties may request production of any documents regarding any 
matter, not privileged, which is relevant to the subject matter 
involved in the pending action. Grounds for objection will not exist if 
the information sought appears reasonably calculated to lead to the 
discovery of admissible evidence.
    (iii) If such documents include privileged information or 
information the disclosure of which is proscribed by the Food Stamp Act 
of 1977, as amended, such documents need not be produced.
    (c) Supplementation of response. A party who knows or later learns 
that a response is incorrect is under a duty to correct such response 
as soon as possible. A party who has responded to a request for 
discovery with a response that was complete when made is under a duty 
to supplement the response to include information thereafter acquired. 
A party is under a duty to supplement responses with respect to any 
question directly addressed to:
    (1) The identity and location of persons having knowledge of 
discoverable matters, and
    (2) The identity of each person expected to be called as an expert 
witness at the hearing, the subject matter on which such expert(s) is 
expected to testify, and the substance of the testimony.
    (d) Frequency and use of discovery. The ALJ shall limit, upon 
motion of a party, the frequency or extent of discovery if the ALJ 
determines that:
    (1) The discovery sought is unreasonably cumulative or duplicative, 
or is obtainable from some other source that is more convenient, less 
burdensome, or less expensive;
    (2) The party seeking discovery has had ample opportunity by 
discovery in the action to obtain the information sought; or
    (3) The discovery is unduly burdensome or expensive, taking into 
account the needs of the case, the amount in controversy, limitations 
on the parties' resources, and the importance of the issues at stake in 
the litigation.
    (e) Protective orders--(1) Request for protective order. A party 
served with such a request may file a motion for a protective order 
before the date on which a response to the discovery request is due, 
stating why discovery should be limited or should not be required.
    (2) Issuance of protective order. In issuing a protective order, 
the ALJ may make any order which justice requires to protect a party or 
person from annoyance, embarrassment, oppression or undue burden or 
expense, including one or more of the following:
    (i) That discovery not be had;
    (ii) That the discovery may be had only through a method of 
discovery other than that requested;
    (iii) That certain matters not be inquired into, or that the scope 
of discovery be limited to certain matters;
    (iv) That discovery be conducted with no one present except persons 
designated by the ALJ; and
    (v) That the contents of discovery or evidence be sealed.
    (f) Failure to respond to discovery--(1) Motions to compel. If a 
deponent fails to respond or gives an evasive or incomplete answer to a 
question propounded at a deposition pursuant to paragraph (a) of this 
section or a party fails to respond or gives evasive or incomplete 
answers to written interrogatories or admissions, or fails to respond, 
in full or in part, to a request for production of documents served 
pursuant to paragraph (b) of this section, the party seeking discovery 
may apply for an order compelling an answer by filing and serving a 
motion on all parties and deponents.
    (2) Filing motion to compel. (i) Such motion must be filed within 
20 days following the service of the unresponsive answer upon 
deposition or within 20 days after expiration of the period allowed for 
answers to interrogatories or production of documents.
    (ii) On matters related to an oral examination, the proponent of 
the question may complete or adjourn the examination before he applies 
for an order.
    (3) Responding to motion to compel. A response to the motion may be 
filed in accordance with Sec. 283.18(d).
    (g) Decision of the ALJ. (1) The ALJ may grant a motion to compel 
production or deny a motion for a protective order only if the ALJ 
finds that the discovery sought is necessary for the expeditious, fair, 
and reasonable consideration of the issues; it is not unduly costly or 
burdensome; it will not unduly delay the proceeding; and the 
information sought is not privileged.
    (2) The initial decision of the ALJ regarding the motion to compel 
the production of privileged documents or the motion for a protective 
order shall become final and effective 10 days after service unless 
either party pursues the options as discussed in Secs. 283.17(d) and 
283.20.
    (h) Failure to comply with an order. (1) If a party or other 
witness refuses to be sworn or refuses to answer any question after 
being directed to do so by order of the ALJ, such refusal may subject 
the refusing party to proceedings to compel compliance with the ALJ's 
order in the appropriate United States district court.
    (2) If any party or other person refuses to obey an order made 
under this section requiring an answer to designated questions or 
production of documents, the ALJ may order that the matters regarding 
which questions were asked or the contents of the document or documents 
or any other designated facts should be taken to be established for the 
purposes of the proceeding in accordance with the claim of the party 
obtaining the order.
    (i) Postponements or delays. No hearing, proceeding or other matter 
under this part shall be postponed or otherwise delayed pending the 
response or resolution of issues pertaining to a request for 
information pursuant to the Freedom of Information Act, 5 U.S.C. 552.


Sec. 283.13  Subpoenas.

    (a) Issuance of subpoenas. The attendance and testimony of 
witnesses and the production of documentary evidence from any place in 
the United States on behalf of any party to the appeal may be required 
by subpoena at the designated place of hearing. Except for cause shown, 
requests for subpoenas shall be filed at least 15 days prior to the 
date of the hearing. Subpoenas shall be issued by the ALJ, over the 
facsimile signature of the Secretary, upon a reasonable showing by the 
applicant of the grounds, necessity and reasonable scope thereof.
    (b) Service of subpoenas. (1) When the ALJ issues a subpoena under 
this section, the party who requested such subpoena shall serve all 
other parties with a copy of the subpoena, notice of the names and 
addresses of the individuals subpoenaed and specify any documents 
required to be produced.
    (2) Subpoenas may be served:
    (i) By a U.S. Marshal or deputy marshal,
    (ii) By any other person who is not less than 18 years of age, or
    (iii) By registering and mailing a copy of the subpoena addressed 
to the person to be served at the last known principal place of 
business or residence.
    (3) Proof of service may be made:
    (i) By the return of service on the subpoena by the U.S. Marshal or 
deputy marshal,
    (ii) If served by an employee of the Department, by a certificate 
stating that he personally served the subpoena upon the person named 
therein,
    (iii) If served by another person, by an affidavit of such person 
stating that he personally served the subpoena upon the person named 
therein, or
    (iv) If service was by registered mail, by an affidavit made by the 
person mailing the subpoena that it was mailed as provided herein and 
by the signed return post-office receipt. Where the subpoena is issued 
on behalf of the Secretary and service is by mail, the return receipt 
without an affidavit or certificate of mailing shall be sufficient 
proof of service.
    (4) In making personal service, the person making service shall 
leave a copy of the subpoena with the person subpoenaed, or, if such 
person is not immediately available, with any other responsible person 
authorized to accept service residing or employed at the place of 
residence or business of the person subpoenaed.
    (5) The original of the subpoena, bearing or accompanied by the 
required proof of service, shall be returned to the official who issued 
the same. The party at whose request the subpoena is issued shall be 
responsible for the service thereof.


Sec. 283.14  Fees of witnesses.

    Witnesses summoned under these rules shall be paid the same fees 
and expenses that are paid witnesses in the courts of the United 
States. Fees shall be paid by the party at whose request the witness 
appears. Current Federal, State, or local government employees shall 
not be eligible to receive witness fees.


Sec. 283.15  Procedure for hearing.

    (a) Request for hearing. A party may request a hearing on the facts 
by including such request in its Appeal Petition or Answer, whichever 
is appropriate. Failure to request a hearing within the time specified 
shall constitute a waiver of the opportunity for such a hearing, except 
as provided for under Sec. 283.4(i). In the event FNS denies any 
material facts and fails to request a hearing, the matter may be set 
down for hearing on motion of the State agency or upon the ALJ's own 
motion.
    (b) Time and place. If any material issue of fact is joined by the 
pleadings, the ALJ, upon motion of any party, stating that the matter 
is ready for hearing, shall set a time for the hearing, as soon as 
feasible thereafter, with due regard for the public interest and the 
convenience and necessity of the State agency and FNS. The hearing 
shall be held at the U.S. Department of Agriculture, Washington, DC. 
Upon a showing of unusual or extraordinary circumstances, the ALJ may 
order that the hearing be held at another location. The ALJ shall file 
a notice stating the time and place of the hearing. If any change in 
the time of the hearing is made, the ALJ shall file a notice of such 
change, which notice shall be served upon the parties, unless it is 
made during the course of an oral hearing and made a part of the 
transcript or actual notice given to the parties.
    (c) Appearances. The parties may appear in person or by attorney of 
record in the appeal or by any other designated representative. Any 
person who appears as attorney or as a party's designated 
representative must conform to the standards of ethical conduct 
required by practitioners before the courts of the United States.
    (d) Exchange of witness and rebuttal witness lists, statements and 
exhibits. (1) Witness and rebuttal witness lists, copies of prior 
statements of proposed witnesses, and copies of proposed hearing 
exhibits, including copies of any written statements or depositions 
that a party intends to offer in lieu of live testimony in accordance 
with Sec. 283.12(a)(7), shall be exchanged at least 15 days in advance 
of the hearing or at such other time as may be set by the ALJ.
    (2) A witness whose name does not appear on the witness list shall 
not be permitted to testify and exhibits which were not provided to the 
opposing party as provided above shall not be admitted into evidence at 
the hearing absent a showing of cause and as authorized by the ALJ.
    (e) Deparment of attorney or representative. (1) Whenever an ALJ 
finds that a person acting as attorney or designated representative for 
any party to the appeal is guilty of unethical or contumacious conduct 
in, or in connection with an appeal, the ALJ may order that such person 
be precluded from further acting as attorney or representative in the 
appeal. Review by the Judicial Officer may be taken on any such order, 
but no appeal of the QC claim shall be delayed or suspended pending 
disposition of the debarment review by the Judicial Officer. Provided, 
however, that the ALJ shall suspend the appeal of the QC claim for a 
reasonable time for the purpose of enabling the party to obtain another 
attorney or representative.
    (2) Whenever it is found, after notice and opportunity for hearing, 
that a person who is acting or who has acted as attorney or 
representative for another person in any proceeding before the U.S. 
Department of Agriculture, is unfit to act as such counsel because of 
such unethical or contumacious conduct, such person will be precluded 
from acting as the attorney or representative in any or all proceedings 
before the Department as found to be appropriate.
    (f) Failure to appear. (1) If FNS or the State agency, after being 
duly notified, fails to appear at the hearing without cause, that party 
shall be deemed to have waived the opportunity for an oral hearing and 
to have admitted any facts which may be presented at the hearing. Such 
failure by either party shall also constitute an admission of all the 
material allegations of fact contained in any pleadings submitted by 
the other party. The party who appears shall have the option of whether 
to follow the procedure under Sec. 283.7 or to present evidence, in 
whole or in part, in the form of declarations or by oral testimony 
before the ALJ.
    (2) Failure to appear at a hearing shall not be deemed to be a 
waiver of the right to be served with a copy of the ALJ's initial 
decision, to file a motion for reconsideration pursuant to 
Sec. 283.17(d) or to seek review by the Judicial Officer in accordance 
with Sec. 283.20.
    (g) Order of proceeding. Except as may be decided otherwise by the 
ALJ, FNS shall proceed first at the hearing. FNS has the burden of 
proving, by a preponderance of the evidence, the QC claim against the 
State agency for a QC error rate in excess of the tolerance level. The 
State agency will proceed second and must prove, by a preponderance of 
the evidence, the facts upon which it bases its appeal.
    (h) Evidence. (1) The testimony of witnesses at a hearing shall be 
on oath or affirmation and subject to cross-examination.
    (2) Upon a finding of cause, the ALJ may order that any witness be 
examined separately and apart from all other witnesses except those who 
may be parties to the appeal or whose presence is shown by a party to 
be essential to the presentation of the party's cause.
    (3) After a witness called by either party has testified on direct 
examination, any other party may request and obtain the production of 
any statement, or part thereof, of such witness in the possession of 
the opposing party which relates to the subject matter as to which the 
witness has testified. Such production shall be made according to the 
procedures and subject to the definitions and limitations prescribed in 
the Jencks Act (18 U.S.C. 3500).
    (4) Evidence which is immaterial, irrelevant, or unduly 
repetitious, or which is not of the sort upon which responsible persons 
are accustomed to rely, shall be excluded by order of the ALJ insofar 
as practicable.
    (i) Inclusion in the record. At the oral hearing or as ordered by 
the ALJ, depositions to the extent deemed admissible, written 
interrogatories, written requests for admission and respective 
responses may be offered in evidence by the party at whose instance 
they were taken. If not offered by such party, they may be offered in 
whole or in part by any other party. If only part of a deposition, 
written interrogatory, written request for admission or response 
thereto is offered in evidence by a party, any other party may require 
that all of it, which is relevant to the part introduced, be offered, 
and any party may introduce any other parts. Such depositions, written 
interrogatories, written requests for admission and respective 
responses thereto shall be admissible in evidence subject to such 
objections as to relevancy, materiality or competency of the testimony 
as were noted at the time of their taking or are made at the time they 
are offered in evidence.
    (j) Objections. (1) If a party objects to the admission of any 
evidence or to the limitation of the scope of any examination or cross 
examination or to any other ruling by the ALJ, the party shall state 
briefly the grounds of such objection, whereupon an automatic exception 
will follow if the objection is overruled by the ALJ.
    (2) Only objections made before the ALJ may be subsequently relied 
upon on review by the Judicial Officer.
    (k) Exhibits. Four copies of each exhibit shall be filed with the 
ALJ. However, where there are more than two parties in the appeal, an 
additional copy shall be filed for each additional party. A true copy 
of an exhibit may be substituted for the original.
    (l) Official records or documents. An official government record or 
document or entry therein, if admissible for any purpose, shall be 
admissible in evidence without the production of the person who made or 
prepared the same, and shall be prima facie evidence of the relevant 
facts stated therein. Such record or document shall be evidenced by an 
official publication thereof or by a copy certified by a person having 
legal authority to make such certification.
    (m) Official notice. Official notice shall be taken of such matters 
as are judicially noticed by the courts of the United States and of any 
other matter of technical, scientific, or commercial fact of 
established character. Provided, that the parties shall be given 
adequate opportunity to show that such facts are erroneously noticed.
    (n) Offer of proof. Whenever evidence is excluded by the ALJ, the 
party offering such evidence may make an offer of proof, which shall be 
included in the transcript. The offer of proof shall consist of a brief 
statement describing the evidence excluded. If the evidence consists of 
a brief oral statement, it shall be included in the transcript in toto. 
If the evidence consists of a document or other exhibit, it shall be 
marked for identification and inserted in the hearing record. In either 
event, if the Judicial Officer, upon review, determines that the ALJ's 
ruling excluding the evidence was erroneous and prejudicial, the 
evidence shall be considered a part of the transcript and hearing 
record. If the Judicial Officer determines that the ALJ's ruling 
excluding the evidence was erroneous and prejudicial, and that it would 
inappropriate to have such evidence considered a part of the hearing 
record without reopening the hearing, the Judicial Officer may direct 
that the hearing be reopened to permit the taking of such evidence or 
for any other purpose in connection with the excluded evidence.
    (o) Transcript. Hearings shall be recorded and transcribed 
verbatim. The party requesting the hearing shall bear the transcription 
cost of producing the transcript and the duplication cost for one 
transcript provided to the ALJ and to the other parties to the appeal.


Sec. 283.16  Consolidation of issues.

    Similar issues involved in appeals by two or more State agencies 
may be consolidated upon motion by the State agencies, FNS, or at the 
discretion of the ALJ if it is decided that consolidation would help to 
promote administrative efficiency.
    (a)  Disposition of consolidated issues. If the ALJ orders 
consolidation, the issues consolidated will be considered first. If a 
hearing has been requested by any of the parties that have had issues 
consolidated, arguments on the consolidated issues will be heard before 
arguments on dissimilar issues. The ALJ will take the information into 
consideration along with arguments on other issues in preparing initial 
decisions for QC appeals in which some issues have been consolidated.
    (b)  Initial decision. (1) If the ALJ decides the evidence and 
arguments by the State agencies on the consolidated issues cannot be 
overcome by the evidence presented by FNS and are sufficient to grant 
the relief requested by a State agency or all State agencies in which 
the issue is involved, the ALJ shall prepare an initial decision as 
provided in Sec. 283.17(c).
    (2) FNS may file a motion for reconsideration pursuant to 
Sec. 283.17(d) or seek review by the Judicial Officer in accordance 
with Sec. 283.20.


Sec. 283.17  Post-hearing procedure.

    (a) Corrections to transcript. (1) At any time, but not later than 
the time fixed for filing proposed findings of fact, conclusions of 
law, order and briefs, any party may file a motion proposing 
corrections to the transcript.
    (2) Unless a party files such a motion in the matter prescribed, 
the transcript shall be presumed to be a true, correct, and complete 
transcript of the testimony given at the hearing and to contain an 
accurate description or reference to all exhibits received in evidence 
and made part of the hearing record. The transcript shall be deemed to 
be certified without further action by the ALJ.
    (3) At any time prior to the filing of the ALJ's initial decision 
and after consideration of any objections filed as to the transcript, 
the ALJ may issue an order making any corrections in the transcript 
that the ALJ finds are warranted. Such corrections shall be entered 
into the original transcript by the Hearing Clerk (without obscuring 
the original text).
    (b) Proposed findings of fact, conclusions of law, order, and 
briefs. The parties may file proposed findings of fact, conclusions of 
law and orders based solely upon the record and on officially noticed 
matters, and briefs in support thereof. briefs may be filed at the 
discretion of the ALJ. The ALJ shall announce at the hearing the time 
within which these documents may be filed.
    (c) ALJ's initial decision. (1) The ALJ shall decide the appeal not 
later than 60 days after receipt of rebuttal evidence submitted by the 
State agency or, if the State agency does not submit rebuttal evidence, 
not later than 90 days after the State agency submits the notice of 
appeal and evidence in support of the appeal. In accordance with 
Sec. 283.22(f), the ALJ may, upon motion or sua sponte, extend this 
deadline for cause shown.
    (2) The ALJ shall prepare, upon the basis of the record and 
officially noticed matters, and shall file, an initial decision which 
shall include a decision on a request for good cause relief, a copy of 
which shall be served upon each of the parties.
    (3) Such initial decision shall be considered final for purposes of 
judicial review without further proceedings, unless there is a motion 
for reconsideration filed pursuant to Sec. 283.17(d) or review by the 
Judicial Officer is sought pursuant to Sec. 283.20.
    (4) If no motion for reconsideration or review by the Judicial 
Officer is filed, the initial decision shall constitute the final 
notice of determination for purposes of judicial review and shall 
become effective 30 day after service.
    (d) Motion for reconsideration. (1) Except as provided in paragraph 
(d)(4) of this section, any party may file a motion for reconsideration 
of the initial decision within 30 days of service of the initial 
decision. If served by mail, the time for filing a motion for 
reconsideration will be 5 days longer in accordance with Sec. 283.22.
    (2) Every such motion must set forth the mattes claimed to have 
been erroneously decided and the basis of the alleged errors. Such 
motion shall be accompanied by a supporting brief.
    (3) Responses to such motions shall be filed in accordance with 
Sec. 283.18(d).
    (4) No party may file a motion for reconsideration of an initial 
decision that has been revised in response to a previous motion for 
reconsideration.
    (5) The ALJ may dispose of a motion for reconsideration by denying 
it or by issuing a revised initial decision.
    (6) If the ALJ denies a motion for reconsideration, the initial 
decision shall constitute the final notice of determination for 
purposes of judicial review and shall become effective 30 days after 
service unless review by the Judicial Officer is sought in accordance 
with Sec. 283.20.
    (7) If the ALJ issues a revised initial decision, that decision 
shall constitute the final notice of determination for purposes of 
judicial review and shall become effective 30 days after service unless 
review by the Judicial Officer is sought in accordance with 
Sec. 283.20.


Sec. 283.18  Motions and requests.

    (a) Filing. All motions and requests shall be filed with the 
Hearing Clerk, and served upon all the parties by the moving or 
requesting party, except motions and requests made on the record during 
the oral hearing. The ALJ assigned to the appeal or the Chief Judge 
shall rule upon all motions and requests filed or made prior to seeking 
review of the ALJ's initial decision pursuant to Sec. 283.20, except 
motions directly relating to such review. Thereafter, the Judicial 
Officer shall rule on any motions and requests as well as the motions 
directly relating to the review of the ALJ's initial decision.
    (b) Time for filing. Any motion or request may be filed at any 
time, except that:
    (1) Motions to dismiss pursuant to Sec. 283.5 must be filed within 
the time allowed for filing an answer; and
    (2) Motions for reconsideration must be filed within 30 days of 
service of the ALJ's initial decision pursuant to Sec. 283.17(d).
    (c) Contents. All written motions and requests shall state the 
particular order, ruling, or action desired and the grounds therefor.
    (d) Response to motions and requests. Within 10 days after service 
of any written motion or request or within such shorter or longer 
period as may be fixed by the ALJ or Judicial Officer, an opposing 
party may file a response to the motion or request. The moving party 
shall have no right to reply to the response; however, the ALJ or 
Judicial Officer may order that a reply be filed.
    (e) Certification to the Judicial Officer. The submission or 
certification of any motion, request, objection, or other question to 
the Judicial Officer prior to the seeking of review pursuant to 
Sec. 283.20 shall be made by and in the discretion of the ALJ. The ALJ 
may either rule upon or certify the motion, request, objection, or 
other question to the Judicial Officer, but not both.


Sec. 283.19  ALJs.

    (a) Assignment. No ALJ shall be assigned to serve in any appeal 
who:
    (1) Has any pecuniary interest in any matter or business involved 
in the appeal,
    (2) Is related by blood or marriage to any party in the appeal, or
    (3) Has any conflict of interest which might impair the ALJ's 
objectivity in the appeal.
    (b) Disqualification of ALJ. (1) Any party to the appeal may, by 
motion, request that the ALJ withdraw from the appeal on one or more of 
the grounds set out in paragraph (a) of this section. Such motion shall 
set forth with particularity the alleged grounds for disqualification. 
The ALJ may then either rule upon or certify the motion to the Judicial 
Officer, but not both.
    (2) The ALJ may withdraw from any appeal for any reason deemed by 
the ALJ to be disqualifying.
    (c) Powers. (1) Subject to review as provided elsewhere in this 
part, the ALJ, in any assigned appeal, shall have the power to:
    (i) Rule upon motions and requests;
    (ii) Set the time and place of a pre-hearing conference and the 
time of the hearing, adjourn the hearing from time to time, and change 
the time of the hearing;
    (iii) Administer oaths and affirmations;
    (iv) Regulate the scope and timing of discovery;
    (v) Issue and enforce subpoenas as authorized under 7 U.S.C. 
2023(a) and these rules;
    (vi) Summon and examine witnesses and receive evidence at the 
hearing;
    (vii) Appoint expert witnesses in accordance with the provisions of 
Rule 706 of the Federal Rules of Evidence;
    (viii) Admit or exclude evidence;
    (ix) Hear oral argument on facts or law;
    (x) Upon motion of a party, decide cases, in whole or in part, by 
non-oral hearing procedures under subpart C of this part where there is 
no disputed material issue of fact;
    (xi) Perform all acts and take all measures necessary for the 
maintenance of order, including the exclusion of contumacious counsel 
or other persons;
    (xii) Take all other actions authorized under the Act and these 
rules, including the extension of time upon motion of a party or sua 
sponte for cause shown.
    (2) The ALJ may not rule upon the validity of Federal statutes or 
regulations.
    (d) Who may act in the absence of the ALJ. In case of the absence 
of the ALJ or the ALJ's inability to act, the powers and duties to be 
performed by the ALJ under these rules of practice in connection with 
any assigned appeal may, without abatement of the appeal, unless 
otherwise directed by the Chief Judge, be assigned to any other ALJ.


Sec. 283.20  Review by the Judicial Officer.

    (a) Filing of review petition. (1) Within 30 days after service of 
the ALJ's initial decision, or any part thereof, any party may seek 
Judicial Officer review of such decision by filing a review petition 
with the Hearing Clerk. However, if another party files a motion for 
reconsideration under Sec. 283.17(d), consideration of the review 
petition shall be stayed automatically pending resolution of the motion 
for reconsideration. If a motion for reconsideration is timely filed, a 
review petition may be filed within 30 days after the ALJ denies the 
motion or issues a revised initial decision, whichever applies.
    (2) As provided in Sec. 283.15(h), objections made before the ALJ 
regarding evidence or regarding a limitation on examination or cross-
examination or other ruling may be relied upon in a Judicial Officer 
review.
    (3) Each issue set forth in the review petition, and the arguments 
thereon, shall be plainly and concisely stated; and shall contain 
detailed citations to the record, statutes, regulations or authorities 
being relied upon in support thereof. A brief in support may be filed 
simultaneously with the review petition.
    (b) Response to review petition. Within 30 days after service of a 
copy of a review petition and any brief in support thereof, any other 
party to the proceedings may file a response in support of or in 
opposition to the review petition and in such response any relevant 
issue, not presented in the review petition, may be raised.
    (c) Transmittal of the record. (1) Whenever a review petition of an 
ALJ's initial decision is filed and a response thereto has been filed 
or time for filing a response has expired, the Hearing Clerk shall 
transmit to the Judicial Officer the record of the appeal.
    (2) Such record shall include: The pleadings; motions and requests 
filed and rulings thereon; the transcript of the testimony taken at the 
hearing, together with the exhibits filed in connection therewith; any 
documents or papers filed in connection with a prehearing conference; 
such proposed findings of fact, conclusions of law, orders, and briefs 
in support thereof, as may have been filed in connection with the 
appeal; the ALJ's initial decision; the motion for reconsideration of 
the ALJ's initial decision; the ALJ's initial decision on the motion 
for reconsideration and the review petition, and such briefs in support 
thereof and responses thereto as may have been filed.
    (d) Oral argument. A party filing a review petition may request, 
within the prescribed time for filing such review petition, an 
opportunity for oral argument before the Judicial Officer. Within the 
time allowed for filing a response, the responding party may file a 
request for such oral argument. Failure to make such request to appear 
before the Judicial Officer, within the prescribed time period, shall 
be deemed a waiver of the opportunity for oral argument. There is no 
right to appear personally before the Judicial Officer. The Judicial 
Officer may grant, refuse, or limit any request for oral argument. Oral 
argument shall not be transcribed unless so ordered in advance by the 
Judicial Officer for cause shown upon request of a party or upon the 
Judicial Officer's own motion.
    (e) Scope of argument. Argument to be heard by the Judicial Officer 
on review, whether oral or on brief, shall be limited to the issues 
raised in the review petition to the Judicial Officer or in the 
response to such petition, except that if the Judicial Officer 
determines that additional issues should be argued, the parties shall 
be given reasonable notice of such determination, so as to permit 
adequate preparation on all issues to be argued.
    (f) Notice of argument; postponement. The Hearing Clerk shall 
advise all parties of the time and place at which oral argument will be 
heard. A request for postponement of the argument must be made by 
motion filed within a reasonable time in advance of the date fixed for 
argument.
    (g) Order of argument. The appellant is entitled to commence and 
conclude the argument.
    (h) Submission of briefs. By agreement of the parties, a review may 
be submitted for decision on the briefs, but the Judicial Officer may 
direct that the review be argued orally.
    (i) Additional evidence. If any party demonstrates to the 
satisfaction of the Judicial Officer that additional evidence not 
presented to the ALJ is material, not cumulative, and that there were 
reasonable grounds for the failure to present such evidence to the ALJ, 
the Judicial Officer shall remand the matter to the ALJ for 
consideration of such additional evidence.
    (j) Decision of the Judicial Officer on review. (1) As soon as 
practicable after the receipt of the record from the Hearing Clerk, or, 
in case oral argument was had, as soon as practicable thereafter, the 
Judicial Officer, upon the basis of the record and any matter of which 
official notice is taken, shall rule on the review.
    (2) The Judicial Officer may adopt, reduce, reverse, compromise, 
remand or approve settlement of any claim initially decided by the ALJ 
under this part.
    (3) The Judicial Officer shall promptly serve each party to the 
appeal with a copy of the ruling of the Judicial Officer which shall be 
considered the final determination and contain a statement describing 
the right to seek judicial review.
    (4) Judicial review must be sought within 30 days of service of the 
final notice of determination by the Judicial Officer pursuant to 7 
U.S.C. 2023(a).


Sec. 283.21  Ex parte communications.

    (a) ALJ; Judicial Officer. At no time prior to the issuance of the 
final decision shall the ALJ or Judicial Officer discuss ex parte the 
merits of the appeal or review with any person who is connected with 
the appeal or review in an advocative or in an investigative capacity, 
or with any representative of such person. However, procedural matters 
shall not be included within this limitation; and furthermore, the ALJ 
or Judicial Officer may discuss the merits of the case with such a 
person if all parties to the appeal or review, or their attorneys have 
been given notice and an opportunity to participate. A memorandum of 
such discussion shall be included in the record.
    (b) Parties; interested persons. No party or other interested 
person shall make or knowingly cause to be made to the ALJ or Judicial 
Officer an ex parte communication relevant to the merits of the appeal 
or review.
    (c) Procedure. If the ALJ or Judicial Officer receives an ex parte 
communication in violation of this section, the one who receives the 
communication shall place in the public record of the appeal or review:
    (1) All such written communications;
    (2) Memoranda stating the substance of all such oral 
communications; and
    (3) Copies of all written responses, and memoranda stating the 
substance of all oral responses thereto.
    (4) Upon receipt of a communication knowingly made or knowingly 
caused to be made by a party in violation of this section, the ALJ or 
Judicial Officer may, to the extent consistent with the interests of 
justice and the policy of the underlying statute, require the party to 
show cause why its claim or interest in the appeal or review should not 
be dismissed, denied, disregarded or otherwise adversely affected on 
account of such violation.
    (d) Decision. To the extent consistent with the interests of 
justice and the policy of the underlying statute, a violation of this 
section shall be sufficient grounds for a decision adverse to the party 
who knowingly commits a violation of this section or who knowingly 
causes such a violation to occur.


Sec. 283.22  Form; filing; service; proof of service; computation of 
time; and extensions of time.

    (a) Form. (1) The original and two copies of all papers in a 
proceeding conducted under this subpart shall be filed with the Hearing 
Clerk.
    (2) Every pleading and paper filed in the proceeding shall contain 
a caption setting forth the title of the action, the docket number 
assigned by the Hearing Clerk, and a descriptive title (e.g., Motion 
for Extension of Time).
    (3) Every pleading and paper shall be signed by and contain the 
address and telephone number of the representative for the party on 
whose behalf the paper was filed.
    (b) Filing. Papers are considered filed when they are postmarked, 
or, received, if hand delivered. Date of mailing may be established by 
a certificate from the party or representative or by proof that the 
document was sent by certified or registered mail.
    (c) Service. A party filing a document with the ALJ shall, at the 
time of filing, serve a copy of such document on every other party. 
Service upon any party of any document shall be made by delivering or 
mailing a copy to the party's last known address. When a party is 
represented by an attorney or designated representative, service shall 
be made upon such attorney or representative in lieu of the actual 
party.
    (d) Proof of service. A certificate of the person serving the 
document by personal delivery or by mail, setting forth the date, time 
and manner of service, shall be proof of service.
    (e) Computation of time.
    (1) In computing any period of time under this part or in an order 
issued thereunder, the time begins with the day following the act, 
event, or default, and includes the last day of the period, unless it 
is a Saturday, Sunday or legal holiday observed by the Federal 
Government, in which event it includes the next business day.
    (2) When a document has been served by mail, an additional five 
days will be added to the time permitted for any response.
    (f) Extensions of time. Requests for extensions of time shall be 
submitted to the ALJ, Chief Judge or the Judicial Officer prior to the 
expiration of the original due date. The time for the filing of any 
document or paper required or authorized under the rules in this part 
may be extended by the ALJ, Chief Judge or the Judicial Officer, if, in 
the judgment of the ALJ, Chief Judge or the Judicial Officer, there is 
cause for the extension. In instances where the time permits notice of 
the request for extension, time shall be given to the other party to 
submit views concerning the request.


Sec. 283.23  Procedural matters.

    (a) Communications from Hearing Clerk. In order to expedite the 
appeal process, the Hearing Clerk may develop form letters and 
transmittal forms to be used for notices, service of papers, requests 
for information, and all other communications between the Hearing 
Clerk's Office and the parties.
    (b) Representation. All parties may be represented by attorneys or 
by designated representatives. Attorneys or designated representatives 
appearing for the parties shall file formal notices of appearances and 
withdrawals with the Hearing Clerk.

Subpart C--Summary Procedure for Appeals of QC Claims of Less Than 
$50,000


Sec. 283.24  Incorporation of procedures by reference.

    Except as otherwise provided, the following procedures detailed in 
subpart B of this part shall apply to appeals of QC claims of less than 
$50,000: Secs. 283.5 Motion to Dismiss; 283.6 Answer; 283.8 Rebuttal or 
Amendment of Appeal or Answer; 283.9 Withdrawal of Appeal; 283.10 
Consent Decision; 283.18 Motions and Requests; 283.19 ALJ's; 283.20 
Review by the Judicial Officer; 283.21 Ex Parte Communications; 283.22 
Filings; Service; Extensions of Time; and Computations of Time; and 
283.23 Procedural Matters.


Sec. 283.25  Filing appeals for QC claims of less than $50,000.

    (a) Time. A State agency may appeal the bill for collection from 
FNS for a QC claim of less than $50,000 for a food stamp QC error rate 
in excess of the tolerance level. A State agency must file a written 
notice of appeal, in accordance with this section, within 10 days of 
receipt of the bill for collection from FNS for a QC claim of less than 
$50,000. The State agency may request an extension to the 10-day filing 
requirement in accordance with Sec. 283.22(f). FNS shall issue the bill 
for collection by certified mail or personal service.
    (b) Exhaustion of administrative remedies. The State agency must 
appeal the bill for collection to the ALJ, pursuant to this subpart, 
and exhaust the available administrative remedies before filing suit in 
the Federal District Courts.
    (c) Filing. The notice of appeal shall be filed with the Hearing 
Clerk.
    (d) Content of the notice of appeal. (1) A notice of appeal, in 
order to be considered acceptable must contain the following 
information:
    (i) A brief and clear statement that it is an appeal from a QC 
claim of less than $50,000 identifying the period the claim covers, the 
date and amount of the bill for collection, and the date of receipt of 
the bill for collection;
    (ii) Identification of the State agency as the appellant and FNS as 
the appellee;
    (iii) A statement that the notice of appeal is filed pursuant to 
section 14(a) of the Food Stamp Act;
    (iv) A true copy of the bill for collection which constitutes the 
basis for the filing of the notice of appeal shall be attached to the 
notice.
    (2) Failure to file an acceptable notice of appeal may result in a 
challenge by FNS to the notice and dismissal of the notice by the ALJ 
and a waiver of the opportunity for further appeal or review by the 
Judicial Officer unless the State agency pursues the options as 
discussed in Secs. 283.17(d) and 283.20.
    (e) Receipt of notice of appeal and assignment of docket number. 
Upon receipt of a notice of appeal, the Hearing Clerk shall assign the 
appeal a docket number. The Hearing Clerk shall:
    (1) Send the State agency a letter which shall include the 
following information:
    (i) Advise that the notice of appeal has been received and the date 
of receipt;
    (ii) The docket number assigned to the appeal and instructions that 
all future communications related to the appeal shall reference the 
docket number, and;
    (iii) That the State agency must file and serve its appeal 
petition, as set forth in Sec. 283.22 not later than 60 days after 
receiving a notice of the claim. Failure to file a timely appeal 
petition may result in a waiver of further appeal rights.
    (2) Send FNS a copy of the notice of appeal and a copy of the 
letter to the State agency.
    (f) Stay of collection. The filing of a timely notice of appeal 
shall automatically stay the action of FNS to collect the QC claim 
asserted against the State agency until a decision is reached on the 
acceptability of the appeal, and in the case of an acceptable appeal, 
until a final administrative determination has been issued. However, 
interest will accrue on the outstanding claim amount during the stay as 
provided in section 13(a)(1) of the Food Stamp Act of 1977, as amended 
(7 U.S.C. 2022(a)(1)).
    (g) Content of appeal petition. The appeal petition shall include:
    (1) A brief statement of the allegations of fact and provisions of 
law that constitute the basis for the appeal including a statement as 
to whether a factual basis for good cause relief exists, and
    (2) The nature of the relief sought.
    (h) FNS answer. Upon service of the State agency appeal petition, 
FNS shall file an answer, pursuant to Sec. 283.6, not later than 60 
days after the State agency submits its appeal petition.


Sec. 283.26  Request that appeals be handled under procedures in 
subpart B for appeals of QC claims of $50,000 or more.

    (a) If, after the filing of its appeal petition, the State agency 
does not believe that the summary procedure provided in this subpart is 
adequate for handling the appeal and that an oral hearing is necessary, 
the State agency may file, no later than the date established for the 
conclusion of any discovery pursuant to Sec. 283.29, a motion that its 
appeal be handled under the procedures in subpart B of this part.
    (b) The motion shall specify why the State agency believes that the 
summary procedure is inadequate and what harm will result if an oral 
hearing is not held.
    (c) FNS will have 10 days from service of the State agency's motion 
that the appeal be handled under subpart B of this part to submit 
arguments either in support of or against the State agency's position.
    (d) The ALJ will review the State agency's motion and the 
information submitted by FNS and decide which procedures shall be used 
in the appeal.


Sec. 283.27  Procedures upon failure to file an answer.

    The failure by FNS to file an answer shall constitute a waiver of 
the opportunity to file a cross motion for summary judgment pursuant to 
Sec. 283.30. Upon such failure to file, the State agency shall file a 
proposed decision, along with a motion for adoption thereof, both of 
which shall be served upon FNS by the State agency. Within 10 days 
after service of such motion and proposed decision, FNS may file with 
the Hearing Clerk objections thereto. If the ALJ finds that meritorious 
objections have been filed, the State agency's motion shall be denied 
with supporting reasons. If meritorious objections are not filed, the 
ALJ shall issue an initial decision without further procedures. Copies 
of the decision or denial of State agency's motion shall be served on 
each of the parties and shall be included as part of the official 
record. Where the decision as proposed by the State agency is adopted 
as the ALJ's initial decision, such decision of the ALJ shall become 
final and effective 30 days after service unless reconsideration or 
review by the Judicial Officer is sought as discussed in 
Secs. 283.17(d) and 283.20.


Sec. 283.28  Discovery.

    Upon motion and as ordered by the ALJ, written interrogatories, 
written requests for admissions and written requests for the production 
of documents, may be served by any party to the appeal upon any other 
party and used in accordance with Sec. 283.12(b).


Sec. 283.29  Scheduling conference.

    (a) Time and place. The ALJ shall direct the parties or their 
counsel to attend a scheduling conference following the filing of a 
notice of appeal pursuant to Sec. 283.25. The scheduling conference 
shall be held at the U.S. Department of Agriculture, Washington, DC. 
Reasonable notice of the time and place of the scheduling conference 
shall be given. The ALJ may order each of the parties to furnish at the 
scheduling conference the following:
    (1) An outline of the appeal or defense;
    (2) The legal theories upon which the party will rely;
    (3) Copies of or a list of documents that the party anticipates 
relying upon;
    (b) Procedures. The ALJ shall not order any of the foregoing 
procedures that a party can show are inappropriate or unwarranted under 
the circumstances of the particular appeal.
    (c) Scheduling conference. At the scheduling conference, the 
following matters shall be considered:
    (1) The simplification of issues;
    (2) The necessity of amendments to pleadings;
    (3) Stipulations of facts and of the authenticity, accuracy, and 
admissibility of documents;
    (4) Negotiation, compromise, or settlement of issues;
    (5) The exchange of copies of proposed exhibits;
    (6) The nature of and the date by which discovery, as provided in 
Sec. 283.28, must be completed;
    (7) The identification of documents or matters of which official 
notice may be requested;
    (8) A schedule to be followed by the parties for the filing of 
cross-motions for summary judgment and completion of other actions 
decided at the conference; and
    (9) Such other matters as may expedite and aid in the disposition 
of the appeal.
    (d) Reporting. A scheduling conference will not be stenographically 
reported unless so directed by the ALJ.
    (e) Attendance at scheduling conference. In the event the ALJ 
concludes that personal attendance by the ALJ and the parties or 
counsel at a scheduling conference is unwarranted or impractical, but 
decides that a conference would expedite the appeal, the ALJ may 
conduct such conference by telephone.
    (f) Order. Actions taken as a result of a conference shall be 
reduced to an appropriate written order, unless the ALJ concludes that 
a stenographic report shall suffice.


Sec. 283.30  Cross motions for summary judgment.

    Appeals filed pursuant to this subpart shall be determined upon 
cross motions for summary judgment unless the matter is heard under 
subpart B of this part in accordance with Sec. 283.26. Cross motions 
for summary judgment shall be filed by the parties along with the 
appeal petition and answer or in accordance with the schedule 
established by the ALJ pursuant to Sec. 283.29. Motions for summary 
judgment shall address the issues raised by the pleadings and may be 
supported by declarations. Motions and accompanying briefs in support 
of summary judgment shall not exceed 35 pages excluding exhibits unless 
otherwise authorized by the ALJ. Reply briefs may be filed by the 
parties in accordance with the schedule established by the ALJ. Reply 
briefs may not exceed 15 pages in length, excluding exhibits.


Sec. 283.31  Review of the Record.

    (a) The ALJ shall review the cross motions for summary judgment, 
briefs, reply briefs and supporting materials submitted by both FNS and 
the State agency.
    (b) If the ALJ decides that additional information or briefing is 
required from a party, a request for such information or briefing shall 
be submitted to such party with a copy to the other party. The request 
shall identify the additional information or specific issues to be 
addressed and shall specify the date(s) by which such information or 
briefing must be provided. Upon receipt of such additional information 
or briefing, the ALJ shall provide the other party an opportunity to 
submit responsive information or briefing.
    (c) If the party to whom a request for additional information or 
briefing is made fails to submit the information or brief the issue(s) 
as requested, the ALJ may decide the appeal based on the existing 
record.
    (d) If the ALJ decides that oral argument is necessary on legal 
issues, the ALJ shall set a time for the oral arguments as soon as 
feasible thereafter, with due regard for the public interest and the 
convenience and necessity of the State agency and FNS. The oral 
arguments shall be held at the U.S. Department of Agriculture, 
Washington, DC. Upon a showing of unusual or extraordinary 
circumstances, the ALJ may order that the argument be held at another 
location. The ALJ shall file a notice stating the time and place of the 
oral arguments. If any change in the time of the oral arguments is 
made, the ALJ shall file a notice of such change, which notice shall be 
served upon the parties, unless it is made during the course of the 
oral arguments and made a part of the transcript or actual notice given 
to the parties.
    (e) Oral argument shall not be transcribed unless so ordered in 
advance by the ALJ for cause shown upon request of a party or upon the 
ALJ's own motion.


Sec. 283.32  ALJ's initial decision.

    (a) The ALJ shall decide the appeal not later than 60 days after 
receipt of rebuttal evidence submitted by the State agency pursuant to 
Sec. 283.8 or, if the State agency does not submit rebuttal evidence, 
not later than 90 days after the State agency submits the notice of 
appeal and evidence in support of the appeal. The ALJ may extend this 
deadline for cause shown.
    (b) The ALJ shall prepare, upon the basis of the record, and shall 
file an initial decision which shall include a decision on a request 
for good cause relief, a copy of which shall be served upon each of the 
parties.
    (c) Such initial decision shall constitute the final notice of 
determination for purposes of judicial review without further 
proceedings, unless there is a motion for reconsideration filed 
pursuant to Sec. 283.17(d) or review by the Judicial Officer is sought 
pursuant to Sec. 283.20.

    Dated: June 22, 1994.
William E. Ludwig,
Administrator, Food and Nutrition Service.
[FR Doc. 94-16003 Filed 7-5-94; 8:45 am]
BILLING CODE 3410-30-U-M