[Federal Register Volume 64, Number 120 (Wednesday, June 23, 1999)]
[Rules and Regulations]
[Pages 33367-33378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15624]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 64, No. 120 / Wednesday, June 23, 1999 /
Rules and Regulations
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DEPARTMENT OF AGRICULTURE
Office of the Secretary
7 CFR Parts 1 and 11
National Appeals Division Rules of Procedure
AGENCY: National Appeals Division, Office of the Secretary, USDA.
ACTION: Final rule.
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SUMMARY: On December 29, 1995, the National Appeals Division (NAD) in
the Office of the Secretary published an interim final rule to
implement Title II, Subtitle H, of the Federal Crop Insurance Reform
and Department of Agriculture Reorganization Act of 1994, by setting
forth procedures for program participant appeals of adverse decisions
by United States Department of Agriculture (USDA) agency officials to
NAD. The deadline for receipt of comments was March 28, 1996. Nineteen
timely public comments were received in response to the interim final
rulemaking.
The Secretary now issues a final rule for the rules of procedure of
NAD and for the technical change regarding authentication of NAD
records by the NAD Director. The interim final rulemaking document also
included conforming changes to the former appeal rules of USDA agencies
whose adverse decisions are now subject to NAD review. This final
rulemaking document does not contain final rules for the conforming
changes. Those final rules will be issued by the respective agencies at
a later date.
DATES: Effective Date: This final rule is effective July 23, 1999.
Applicability Date: This rule applies to all agency adverse
decisions issued after July 23, 1999, all agency adverse decisions on
which timely NAD appeals have not yet been taken, and pending NAD
appeals.
FOR FURTHER INFORMATION CONTACT: L. Benjamin Young, Jr., General Law
Division, Office of the General Counsel, United States Department of
Agriculture, STOP 1415, 1400 Independence Avenue SW, Washington, DC
20250-1415; 202/720-4076; e-mail: [email protected].
SUPPLEMENTARY INFORMATION:
Classification
This final rule has been reviewed under E.O. 12866, and it has been
determined that it is not a ``significant regulatory action'' rule
because it will not have an annual effect on the economy of $100
million or more or adversely and materially affect a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, of State, local, or tribal governments or
communities. This final rule will not create any serious
inconsistencies or otherwise interfere with actions taken or planned by
another agency. It will not materially alter the budgetary impact of
entitlements, grants, user fees, or loan programs, or the rights and
obligations of recipients thereof, and does not raise novel legal or
policy issues arising out of legal mandates, the President's
priorities, or principles set forth in E.O. 12866.
Regulatory Flexibility Act
USDA certifies that this rule will not have a significant impact on
a substantial number of small entities as defined in the Regulatory
Flexibility Act, Pub. L. 96-534, as amended (5 U.S.C. 601 et seq.).
Paperwork Reduction Act
USDA has determined that the provisions of the Paperwork Reduction
Act, as amended, 44 U.S.C., chapter 35, do not apply to any collections
of information contained in this rule because any such collections of
information are made during the conduct of administrative action taken
by an agency against specific individuals or entities. 5 CFR
1320.4(a)(2).
Background and Purpose
On December 27, 1994 (see 59 FR 66517), the Secretary of
Agriculture noticed that the NAD was established pursuant to Title II,
Subtitle H of the Federal Crop Insurance Reform and Department of
Agriculture Reorganization Act of 1994, Pub. L. No. 103-354, 7 U.S.C.
6991 et seq. (``the Reorganization Act''). NAD was assigned
responsibility for all administrative appeals formerly handled by the
National Appeals Division of the former Agriculture Stabilization and
Conservation Service (ASCS) and by the National Appeals Staff of the
former Farmers Home Administration (FmHA), appeals arising from
decisions of the former Rural Development Administration (RDA) and the
former Soil Conservation Service (SCS), appeals arising from decisions
of the successor agencies to the foregoing agencies established by the
Secretary, appeals arising from decisions of the Commodity Credit
Corporation (CCC) and the Federal Crop Insurance Corporation (FCIC),
and such other administrative appeals arising from decisions of
agencies and offices of USDA as may in the future be assigned by the
Secretary.
This final rule sets for the jurisdiction of the NAD, and the
procedures appellants and agencies must follow upon appeal of adverse
decisions by covered USDA program ``participants'' as defined in detail
in 7 CFR part 11.
Response to Comments and Changes to Interim Final Rule
Nineteen comments were received by March 28, 1996 in response to
the request for comments on the interim final NAD rule. In response to
these comments, minor changes have been made to the interim final rule.
Additionally, a few other changes to the interim final rule have been
made to reflect subsequent Congressional and USDA action established in
the Risk Management Agency and to clarify some aspects of the rule as a
result of the application of the interim final rule since it was
promulgated.
The following explanation is given for those sections of the
interim final rule that have been changed. Responses to comments not
addressed in the explanation of changes follow.
Effective Date
The provisions of the interim final rule applicable to NAD Director
review (7 CFR 11.9) were made effective retroactively to October 20,
1994, the date on which the Secretary established NAD. The purpose of
the retroactive application of that section was to provide an
administrative mechanism
[[Page 33368]]
for reconsideration of Director reviews during the transition from the
old to the new appeals system where appellants had not received notice
or copies or agency requests for review of hearing officer decisions.
At this point, USDA has determined that any difficulties with prior
decisions should have been resolved. In order to remove any ambiguity
regarding the finality of Director review decisions, USDA accordingly
is not making Sec. 11.9 of this final rule retroactive.
Section 11.1 Definitions
Agency. Section 194 of the Federal Agriculture Improvement and
Reform Act of 1996, Pub. L. No. 104-127, amended the Reorganization Act
by adding a new section 226A (7 U.S.C. 6933) authorizing the Secretary
to establish an Office of Risk Management to supervise the Federal Crop
Insurance Corporation (FCIC) and other crop insurance-related programs.
The Secretary implemented this provision with Secretary's Memorandum
1010-2 issued on May 3, 1996, which established the Risk Management
Agency (RMA). Since the RMA has taken over FCIC supervisory functions
formerly assigned to the Farm Service Agency (FSA), USDA has added RMA
to the definition of ``agency'' in this final rule.
Given that the Reorganization Act was enacted more than four years
ago, USDA has deleted obsolete references to the former Agricultural
Stabilization and Conservation Service (ASCS), Farmers Home
Administration (FmHA), and Soil Conservation Service (SCS) from the
definition of ``agency.'' However, to ensure any matters that may arise
from those former agencies remain within the jurisdiction of NAD,
appropriate reference has been made to include a ``predecessor'' of a
named agency within the definition of ``agency.''
USDA has deleted the Rural Development Agency (RDA) from the
definition of ``agency'' as that agency no longer exists.
In many States and at the national office level, decisions relating
to programs of the Rural Housing Service (RHS), Rural Business-
Cooperative Service (RBS), and Rural Utilities Service (RUS) may be
issued under the auspices of ``Rural Development.'' Accordingly, USDA
adds Rural Development (RD) to the definition of ``agency'' to avoid
any confusion as to whether such decisions are subject to appeal to
NAD.
Participant. For USDA response to comments and amendments regarding
the participation of parties in NAD proceedings other than the agency
and the appellant, see the preamble text below addressing new
Sec. 11.15 of the rule.
USDA also amends this section to clarify that participants in
proceedings before State Tobacco Marketing Quota Review Committees
(``Tobacco Committees) under section 361, et seq., of the Agricultural
Adjustment Act of 1938, as amended (7 U.S.C. 1361, et seq.) are
excluded from the definition of ``participant'' in Sec. 11.1. In
creating the NAD, Congress repealed several statutory appeal processes
in section 273 of the Reorganization Act, but did not repeal these
statutory appeal and judicial review provisions for decisions of the
Tobacco Committees. Accordingly, in order to construe the statutes
harmoniously, USDA concludes Congress did not intend for NAD review to
supersede the specific statutory review process for decisions of the
Tobacco Committees, and amends the NAD rule to give effect to this
interpretation.
Section 11.4 Inapplicability of Other Laws and Regulations
Three comments were received from the same commenter concerning the
applicability of the provisions of the Administrative Procedure Act
(APA) regarding formal adjudicative proceedings (5 U.S.C. 554-57, 3105)
and the Equal Access to Justice Act (EAJA) (5 U.S.C. 504) to NAD
proceedings. The commenter suggests that 5 U.S.C. 559 requires that the
formal adjudication provisions of the APA apply to NAD proceedings, and
therefore, by its terms, EAJA also applies to NAD proceedings.
For the reasons set forth in the preamble to the interim final
rule, it is the position of USDA that Congress did not intend for
either the APA or the EAJA to apply to NAD proceedings. This is the
same position that USDA took with respect to the applicability of the
APA and EAJA when it was addressed in the regulations applicable to
appeals before the former Farmers Home Administration National Appeals
Staff. See 53 FR 26401 (July 12, 1988).
In Lane v. U.S. Dept. of Agriculture, 120 F.3d 106 (8th Cir. 1997),
the court disagreed with the USDA position regarding the applicability
of the APA and EAJA, holding that 5 U.S.C. 559 required application of
both Acts to NAD proceedings. Consequently, USDA will apply the holding
in Lane to NAD appeals which arise within the 8th Circuit. For adverse
decisions arising outside of the 8th Circuit, USDA will continue to
assert the inapplicability of NAD and EAJA, and NAD will not process
EAJA applications filed in such appeals.
By definition, USDA EAJA regulations at 7 CFR part 1, subpart J,
apply to any adjudication that USDA is required to conduct under the
formal adjudication provisions of the APA. 7 CFR 1.183(a)(1)(i).
Accordingly, EAJA applications on 8th Circuit NAD appeals have been
processed by USDA in accordance with the USDA EAJA regulations at 7 CFR
part 1, subpart J, and will continue to be processed in accordance with
those regulations with one change.
Under EAJA, it is the agency, not the adjudicative officer, that is
the final agency decisionmaker on an administrative EAJA application. 5
U.S.C. 504(a)(3). A NAD Hearing Officer clearly falls within the
definition of ``adjudicative officer'' under the USDA EAJA regulations
(7 CFR 1.180(b)); however, the Secretary has delegated to the Judicial
Officer (with the exception of covered proceedings arising before the
Board of Contract Appeals) his authority to review decisions of
adjudicative officers as the final agency decisionmaker under EAJA (7
CFR 1.189). Concurrently with the promulgation of this final rule, the
Secretary by separate memorandum will reassign, from the Judicial
Officer to the NAD Director, his authority to make final agency
determinations under EAJA for initial EAJA determinations rendered by
NAD Hearing Officers. This delegation will apply prospectively to
initial EAJA determinations issued by NAD Hearing Officers after the
date the memorandum is signed.
As the holding of the 8th Circuit in Lane makes apparent, the right
of a NAD appellant under EAJA to recover attorneys fees incurred in NAD
proceedings will not rise or fall on the basis of whether or not USDA
promulgates a regulation accepting or denying the applicability of the
APA and EAJA. Further, as a result of Lane, the statement in the
interim final rule regarding the inapplicability of the APA and EAJA no
longer has universal application.
Accordingly, USDA has determined to remove any references to the
APA or EAJA from the final rule in order to eliminate the issue of
rulemaking from what is a pure matter of statutory construction
involving the relationship of the Reorganization Act, the APA, and
EAJA. The removal of references to the APA and EAJA, however, does not
mean that USDA now finds the APA and EAJA applicable to NAD
proceedings. As indicated above, USDA will continue to assert that the
APA and EAJA do not apply to NAD appeals except where required by
judicial ruling.
[[Page 33369]]
Section 11.5 Informal Review of Adverse Decisions
Section 11.5(a) of the interim final rule provides that a
participant first must seek county or area committee review of any
adverse decision issued at the field service office level by an officer
or employee of FSA, or any employee of such county or area committee.
In the context of the USDA reorganization with the combination of the
former Farmers Home Administration and the Agricultural Stabilization
and Conservation Service into FSA, confusion has surrounded this
provision with respect to its applicability to the former FmHA farm
credit programs. As a result of reorganization, very few farm credit
decisions would come within the scope of this requirement in any case.
Accordingly, to clarify the scope of the provision, language has been
added excepting farm credit programs from its coverage. Any
inconsistency with the interim final rule at 7 CFR part 780 will be
corrected when that rule is finalized but in the meantime NAD will
apply these rules in determining the acceptability of an appeal to NAD
of a farm credit decision by FSA.
Section 11.6 Director Review of Agency Determinations of Appealability
and Right of Participants to Division Hearing
Paragraph (a)(1) of Sec. 11.6 is amended to correct an omission in
the interim final rule that led to a discrepancy between the statement
in the preamble to that rule and the text of that rule. The preamble of
the interim final rule provided that a request for Director review of
an agency determination that a decision is not appealable must be
personally signed by the participant, just as the case with a
participant request for a hearing and request for Director review of a
Hearing Officer determination. However, the language of section
11.6(a)(1) did not expressly state that such requests must be
personally signed. Section 11.6(a)(1) now makes clear that the
participant must personally sign the request for Director review of an
agency determination of non-appealability.
Further, with respect to the need for personal signature for
certain actions, USDA clarifies that the reasonable interpretation of
this requirement is vested in the NAD Hearing Officers or Director in
individual cases. While it is not a statutory jurisdictional
prerequisite for perfecting a timely appeal, it is reasonable to expect
that authorized representatives seeking to file appeals before NAD
would check the rules of the forum for filing requirements. Even though
the requirement is expressed using the term ``personally,'' it also is
reasonable to interpret that term as applying to a responsible officer
or employee of an entity where the definition of ``participant'' in
Sec. 11.1 encompasses an ``entity'' as well as an ``individual.''
Section 11.8 Division Hearings
Section 11.8(b)(6) is ambiguous with respect to the options of a
NAD hearing officer when a party fails to show up at a hearing. Section
11.8(b)(6)(i)(B) states that if the hearing officer elects to cancel
the hearing, he can accept evidence into the record from any party
present and then issue a determination, whereas Sec. 11.8(b)(6)(ii)
suggests that the hearing officer must allow the absent party an
opportunity to respond to any such evidence admitted prior to rendering
a determination. USDA has modified the language of
Sec. 11.8(b)(6)(i)(B) to make the acceptance of evidence clearly
subject to Sec. 11.8(b)(6)(ii) prior to issuing a determination.
Section 11.9 Director Review of Determinations of Hearing Officers
The word ``Associate'' in Sec. 11.9(d)(3) is changed to
``Assistant'' to reflect the curent organization of NAD.
Section 11.15 Participation of Third Parties and Interested Parties in
Division Proceedings
Several commenters, either reinsurance companies or organizations
commenting on behalf of reinsurance companies, requested that
reinsurance companies be notified of and allowed to participate in NAD
proceedings on participant appeals of FCIC decisions where the outcome
of the NAD proceeding would affect policies held by reinsurance
companies. For example, if FCIC declares an insured ineligible for crop
insurance, a reinsurance company may cancel a previously existing
policy as a result of that decision; however, if the insured then
successfully appeals to NAD and the FCIC decision is overturned, the
reinsurance company now will have a policy on its books that it had
thought removed and it may not have received any notice of the NAD
appeal or decision.
One commenter also objected to the change from the proposed rule in
the interim final rule that required a bank holding a guaranteed loan
to jointly appeal with the borrower any adverse decision. The commenter
argued that the borrower was the individual directly affected and thus
should be able to appeal an adverse decision related to a guaranteed
loan independently from the lender.
In addition to the concerns raised by these commenters, NAD also
has experienced difficulties in the appeal process where the interests
of parties other than the appellant and the agency are involved.
Accordingly, a new Sec. 11.15 has been added to the rule to provide
procedures for handling these types of situations involving the
interests of other parties in a NAD appeal.
The new Sec. 11.15 recognizes that there are two types of
situations where parties other than the appellant or the agency may be
interested in participating in NAD proceedings. In the first situation,
a NAD proceeding may in fact result in the adjudication of the rights
of a third party, e.g., an appeal of a tenant involving a payment
shared with a landlord, an appeal by one recipient of a share of a
payment shared by multiple parties, or an appeal by one heir of an
estate. In the second situation, there may be an interested party that
desires to receive notice of and perhaps participate in an appeal
because of the derivative impact the appeal determination will have on
that party, e.g., guaranteed lenders and reinsurance companies.
These two different types of situations require separate
procedures. Thus, in the first type where the actual rights of a third
party are being adjudicated, USDA has termed such a party a ``third
party'' and provided a new Sec. 11.15(a) to provide for the
participation of a ``third party.'' After an appellant files an appeal,
if the agency, appellant, of NAD itself identifies a third party whose
rights will be adjudicated in an appeal, NAD will issue a notice of the
appeal to the third party and provide such party with an opportunity to
participate fully as a party in the NAD proceeding. Participation will
include the right to seek Director review of the determination of the
Hearing Officer. USDA believes the participation of a third party under
Sec. 11.15 also gives the third party the right to seek judicial review
of the final NAD determination. If the third party receiving notice
declines to participate, he will be bound by the final NAD
determination as if he had participated. The intent of this provision
is to include all parties in the initial NAD appeal and prevent a
secondary appeal by a third party who did not receive notice of the
appeal, but who is adversely affected by the agency implementation of
the NAD determination of appeal, and who thus would then be entitled to
an appeal of his own that could lead to a contradictory result.
For example, the agency determines a recipient sharing in a payment
with two
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other parties is entitled to 25% of the payment, and the recipient
appeals. NAD determines that the agency decision was erroneous, and the
agency implements by according the appellant 50% of the payment. The
first NAD determination would not be binding as to the other two
recipients, thus giving rise to secondary appeals, unless the other two
recipients had notice and opportunity to participate in the first
appeal.
In the second type of situation, new Sec. 11.15(b) provides for the
participation of guaranteed lenders and crop reinsurers as ``interested
parties'' in an appeal where the actual rights of such interested
parties under a USDA program are not being adjudicated (i.e., the
appeal would not lead to an agency implementation decision that would
give rise to NAD appeal rights for them), but such parties would be
impacted by the outcome. Interested parties are not entitled under this
new provision to request Director review of a hearing officer
determination. It also is the position of USDA that such participation
of an ``interested party'' does not give rise to a right by such
``interested party'' to judicial review of the final NAD determination.
In light of these changes, USDA is striking the requirement in the
definition of ``participant'' in Sec. 11.1 of the interim final rule
that guaranteed lenders jointly appeal to NAD with borrowers.
With respect to the comments suggesting that reinsurers should be
notified of NAD appeals taken by insureds, that topic should be
addressed in agency rules and not the rules pertaining to NAD itself.
NAD does not have the resources, capability, or function to carry out
that mission.
Other Comments
As indicated above, the other CFR sections amended by the interim
final rule and that are not a part of this final rule will be issued as
final rules at a later date. Comments received on those rules are not
addressed below except to the extent that they are related to a
provision of 7 CFR part 11. Comments related to other parts of the
interim final rule, or other agency rules (such as those for
mediation), will be referred to the appropriate parties for further
consideration.
Crop Insurance Issues
One commenter expressed concern that the revision of 7 CFR part
400, subpart J, in the interim final rule eliminated the rights of
appeal previously contained in 7 CFR 400.92. The commenter questioned
whether the more general language of the interim final rule provided
for appeal rights coextensive to those in 7 CFR 400.92.
Except with respect to the provision for notification to the
reinsurance company in 7 CFR 400.92(f), USDA believes that the
specified rights of appeal outlined in 7 CFR 400.92 are covered by the
NAD appeal regulations contained in this final rule. Further, the
notification issue has been dealt with partially in this final rule by
providing reinsurance companies the right to participate in NAD appeals
as detailed above.
One reinsurance commenter also expressed the view that if allowed
to participate in a NAD appeal it also should be allowed to request
Director review of a hearing officer's decision. The comment reflected
a concern that the agency would not timely request Director review of a
hearing officer's decision and thus leave the reinsurer at risk. USDA
does not adopt this recommendation because only program participants
receiving adverse decisions from an agency have a statutory right to
appeal under the NAD statute; since a reinsurer is not the recipient of
the adverse decision, it may not be a NAD appellant able to request
hearings and Director review. However, as interested parties, USDA is
allowing reinsurers to participate in the hearing and Director review
process.
One commenter on behalf of crop insurers suggested that the interim
final rule be revised to allow reinsurance companies to appeal to NAD
where a matter would not be subject to appeal to the Agriculture Board
of Contract Appeals (AGBCA). The NAD process was established as a forum
primarily for producer appeals, not as a forum for contractual and
quasi-contractual matters. USDA at this time does not perceive a gap
between a reinsurance company's right of appeal to the AGBCA and the
availability of participant appeals to NAD by recipients of FCIC or RMA
adverse decisions; therefore, a safety provision in this NAD final rule
to cover appeals not taken by the AGBCA is neither required nor
appropriate.
Mediation
Several commenters addressed issues regarding mediation. The
mediation process between participants and agencies is not the subject
of this final rule. Mediation is relevant to this rule only with
respect to the determination of when a participant's right to appeal to
NAD begins to toll. Comments regarding the length of time agencies
allow for mediation to be requested and the length of time they permit
for mediation to continue therefore are outside the scope of this rule
and are not addressed herein.
Section 11.5(c)(1) of the interim final rule provides that a
participant request for mediation or alternative dispute resolution
(ADR) stops the running of the 30-day period after an adverse decision
in which a participant may appeal that decision. Once mediation or ADR
has concluded, this provision provides that the participant then has
the remaining balance of the 30 days to appeal. Finding this process
prone to confusion, four commenters suggested that the termination of
mediation without settlement should in some way be construed as a new
adverse decision with a full 30 days to seek NAD review of the
decision. This suggestion does not comport with the concept of
mediation. First of all, the mediator is not an agency decisionmaker
and the results of the mediator's work is not therefore an agency
decision. Second, mediation does not result in decisions; it results
either in a mutually acceptable solution to all parties or a
termination of the mediation with no resolution of the dispute. The NAD
statute does not provide for a new 30-day period for a NAD appeal to
begin at the conclusion of the mediation process.
One of the commenters, however, suggested that agencies issue a new
adverse decision at the conclusion of mediation, with a notice of
appeal rights. This adverse decision would replace the initial adverse
determination and start the 30-day clock running anew for a NAD appeal.
Such a mandate on USDA program agencies is beyond the scope of this
final rule.
Three commenters suggested that Sec. 11.5 of the rule provide that
agencies notify participants of the balance of time remaining for
appeal at the conclusion of mediation. Two commenters suggested that it
would be inappropriate for the mediator to perform this task for
reasons of liability and impartiality.
USDA agrees that it would be inappropriate to require the mediator
to provide such notice; however, USDA does not adopt the suggestion
that agencies should be required to give such notice. Agency notices to
participants of appeal rights are beyond the scope of this final rule.
One commenter suggested that participants be billed for their share
of the costs of medication. That subject is beyond the scope of this
final rule.
Required Informal Agency Review
One commenter suggested that the required informal review by a
county or area committee as a prerequisite to a NAD appeal, as set
forth in Sec. 11.5(a),
[[Page 33371]]
should be dropped because it results in additional costs and delays for
participants. USDA declines to remove this provision.
Notification of Appeal Rights for Adverse Decisions Determined Non-
Appealable
One commenter suggested that agencies be required to provide
participants with notice of appeal rights to NAD under Sec. 11.6(a) of
agency determinations that an adverse decision is not appealable. USDA
agrees that information on such appeal rights should be given by
agencies when a decision is issued with a statement that it is not
appealable. As with other notice requirements, however, USDA does not
mandate this requirement on agencies in this final rule.
``Reasonably Should Have Known''
One commenter objected to the requirement in Sec. 11.6(b)(1) that a
participant must request an appeal within 30 days after ``the
participant reasonably should have known that the agency had not acted
within the timeframes specified by agency program regulations''. The
commenter suggested that the agency should have specified timeframes to
respond to participant requests, application, or inquiries; that
participants should be notified of agency deadlines so that they can
monitor them and know when to appeal; and that, alternatively, that if
an agency fails to respond by deadlines, participant requests or
applications should be automatically approved.
The purpose of the above-quoted phrase in Sec. 11.6(b)(1) is to
bring finality to agency decisions and programs by requiring appellants
to appeal within 30 days of an agency missing a deadline specified in
published agency regulations. Participants are deemed to have knowledge
of published laws and regulations. If a regulation states that the
agency will act on a given application in 60 days, a participant may
not rest on his or her rights for a year before appealing to NAD
because the agency never acted on the applications. Requiring an agency
to specify timeframes for all actions in regulations, or to notify
participants of such timeframes, is beyond the scope of this rule and
the mission of NAD. Finally, USDA by general rule cannot establish
automatic award of applications for failure to act on them where
contrary to statute or principles of sovereign immunity.
``Adverse Decision''
Two commenters suggested that Sec. 11.8(b) should be revised to
allow participants 30 days to appeal upon receiving a written decision
from the agency including: a clear statement of the adverse decision, a
citation of the regulatory basis for the adverse decision, a
notification of appeal rights, notification of the proper agency from
which to appeal the adverse decision, notification of the proper
reviewing officer to whom the appeal must be sent, and notification of
mediation rights. One of the commenters further suggested that the
definition of ``adverse decision'' be changed to ``adverse final
decision'' so that preliminary adverse letters to participants--which a
given agency may not regard as starting the 30-day clock--will not
start the 30-day clock until the adverse decision is made officially by
the agency.
These suggestions by the commenters appear to reflect several
concerns. First, one commenter takes issue with our view, stated in the
preamble to the interim final rule, that the requirement fro notice of
an agency adverse decision in Sec. 274 of the Reorganization Act is not
a prerequisite for NAD jurisdiction. Placing the requirement for a
written decision in Sec. 11.8(b)(1), as suggested, implicitly would
provide that notice and allow the participant a fair amount of time to
develop his or her appeal. Second, there is a concern that agencies
will seek to trigger the 30-day clock with oral decisions that
participants will not understand as triggering their appeal rights.
Third, agencies often do not view some actions as the adverse decisions
for which appeal rights run and thus participants may prematurely
appeal. Fourth, the suggested required content for an adverse decision
is needed for the written determinations so that participants
understand all their rights and clearly understand what the adverse
decision is and the basis therefor.
USDA declines to adopt these suggestions for several reasons. While
well-intentioned, these suggestions would be a triumph of form over
substance spawning unnecessary litigation over who got what notice
when. First and foremost, USDA interprets the statute to provide a
clear intent on the part of Congress to afford participants the right
to appeal de facto decisions rendered by an agency failure to act. The
definition of ``adverse decision'' in section 271(1) of the
Reorganization Act expressly includes ``the failure of an agency to
issue a decision or otherwise act on the request or right of the
participant.'' To require a written decision from the agency before a
participant may appeal essentially stops a participant's ability to
appeal agency inaction, contrary to Congressional intent.
Second, if an administrative decision adversely affects a
participant, it is an adverse decision subject to appeal under the
statute regardless of whether the agency has sent out the formal letter
with formal appeal rights. Each agency subject to NAD jurisdiction
handles decisions in various ways and to attempt to specify that only
``final'' adverse decisions will count does not provide for an
efficient NAD appeals process. (This, of course, does not mean that an
agency may not recall and re-issue an earlier decision, in which case
the 30-day clock begins to run anew).
Finally, with respect to the fairness of the appeal by providing
the basis therefore, USDA sees no intent on the part of Congress to
allow agencies to hold up the processing of appeals by failing to
provide the basis for the decision. Section 11.8(c)(ii) in fact is
written to require the agency to provide NAD with a copy of the adverse
decision and a written explanation, including regulatory and statutory
citation, once an appeal is filed in the event the participant was
unable to get that information beforehand. If the agency does not
furnish the information at that point, it merely runs the danger of
losing the appeal for lack of information. At least, however, the
participant has gotten his appeal before NAD whereas requiring the
agency to provide that information to the participant before he or she
may appeal to NAD effectively would prevent the participant from even
filing an appeal.
Copies of Agency Record
Two commenters suggested changes to Secs. 11.8(a) and 11.8(b)(1) to
require agencies to notify an appellant of the appellant's right to an
agency record after the appellant has filed an appeal, to require the
agency to provide the hearing officer with a copy of the agency file to
be placed automatically in the record, to require the agency to provide
a copy of the agency record upon request, and to provide specific
procedures for how an appellant could obtain the agency record. One
commenter also suggested adding language to Sec. 11.8(c)(5)(ii) to
require the agency to present similar information, as well as
additional information on the basis of the decision, at the hearing
itself.
USDA declines to adopt these comments. They are either already
covered specifically in the cited sections of the rule or else are
covered within the language of the rule in a way that allows
flexibility for agency and NAD response. Appellants are placed on
notice of their
[[Page 33372]]
right to request and receive copies of the agency record by this final
rule itself and a further requirement for agencies to provide such
notice is beyond the scope of this rule. Further, requiring the agency
to present such information at the hearing runs contrary to the
statutory requirement that the appellant must prove the agency decision
erroneous. This places the burden of going forward in the appeal on the
appellant. If the agency fails to provide an adequate response to the
appellant by failing to provide informataton, it runs the risk of
losing the appeal.
Notice of Director Review
Section 11.9(b) requires the Director to notify all parties of
receipt of a request for Director review and section 11.9(c) requires a
party to submit responses to a request for Director review within 5
business days of receiving a copy of the request for Director review.
One commenter suggested clarifying how the Director is to provide
notification under Sec. 11.9(b), and suggested inserting the word
``their'' in Sec. 11.9(c) presumably to distinguish the running of the
5 business days from the receipt of the Director review itself by the
Division from the 5 business days from receipt of a copy by the other
parties. USDA declines to adopt either of these comments. The method of
notification should remain within the discretion of the Director and
Sec. 11.9(c) is clear without further amendment.
Basis for Determinations
Three commenters suggested removal or revision of the phrase ``and
with the generally applicable interpretations of such laws and
regulations'' in Sec. 11.10(b) to reflect that generally applicable
interpretations of laws and regulations should not be the sole basis
for agency adverse decisions. These commenters were concerned that
Sec. 11.10(b) is inconsistent with the principle that adverse decisions
must be based on regulations promulgated in accordance with notice-and-
comment rulemaking procedures. For the reasons set forth in explanation
of Sec. 11.10(b) in the preamble to the interim final rule, USDA finds
this language appropriate and declines to remove it as requested in the
comments. Further, USDA notes that inclusion of this language does not
reflect an intent to bind NAD to arbitrary interpretations of statutes
or regulations by agency officials. Any unpublished, generally
applicable interpretations of laws and regulations may be relied upon
only to the extent permitted by the APA and interpretations thereof by
relevant caselaw. NAD is bound to decide appeals in accordance with
law; therefore, if an interpretation is not permissible under the APA,
then NAD cannot rely upon that interpretation to sustain an agency
decision.
Reconsideration
One commenter suggested that appellants be given 15 days, instead
of 10 days, to request the Director to reconsider his determination
under Sec. 11.11. USDA declines to change this provision.
Section 11.11 was added to the interim final rule to reflect the
inherent authority of a decisionmaker under general principles of law
to review his or her decisions to correct errors. These are errors
(such as citation to the wrong dates, wrong amounts, wrong regulations,
or wrong statutes), not changes of interpretations or opinions, and as
such should be quickly detectable upon reading the determination and
reviewing the record. A request for reconsideration under this
provision should not require a great deal of time for research, and
rarely should require additional time for gathering information and
evidence since this is not another step in the appeal process.
Implementation
One commenter suggested that Sec. 11.12(a) was vague about how
implementation would occur, thus allowing agencies to obstruct the
implementation process. The commenter suggested amending Sec. 11.12(a)
to incorporate the implementation language from the old National
Appeals Staff rules of procedure (7 CFR 1900.59(d) (1-1-95)) that
provided that implementation meant the taking of the next step by the
agency that would be required by agency regulations if no adverse
action had occurred.
USDA indicated in the preamble to the interim final rule its
position that implementation meant taking the next step. However, that
interpretation of implementation comes from the farm credit appeals
system that is now under the auspices of NAD. NAD also reviews
decisions related to farm programs, disaster assistance, soil and water
conservation programs, and crop insurance. Given the variety of
programs now covered by NAD that were not subject to the ``next step''
rule, USDA declines to adopt any express guidance regarding
implementation at this time until experience with a unified appeals
process provides a clear picture of what uniform implementation rule
would work for all agencies under the jurisdiction of NAD.
Discrimination Complaints
One commenter suggested that NAD develop a process for
consolidating program appeals with related civil rights complaints.
USDA declines to adopt this suggestion. The rights and remedies
available to NAD appellants under USDA statutes and regulations are
much different than those available to individuals asserting
discrimination claims against USDA under civil rights laws of
governmentwide applicability. USDA already has a separate
administrative process for review of discrimination complaints. NAD
does not have the ability or capacity to undertake consolidated civil
rights appeals that exceed the scope of the purpose for which it was
established.
List of Subjects
7 CFR Part 1
Administrative practice and procedure, Agriculture, Reporting and
recordkeeping requirements.
7 CFR Part 11
Administrative practice and procedure, Agriculture, Agricultural
commodities, Crop insurance, Ex parte communications, Farmers, Federal
aid programs, Guaranteed loans, Insured loans, Loan programs, Price
support programs, Soil conservation.
For the reasons set out in the preamble, Title 7 of the Code of
Federal Regulations is amended as set forth below.
PART 1--ADMINISTRATIVE REGULATIONS
1. The authority citation for part 1 continues to read as follows:
Authority: 5 U.S.C. 301 and 552. Appendix A also issued under 7
U.S.C. 2244; 31 U.S.C. 9701, and 7 CFR 2.75(a)(6)(xiii).
2. Section 1.20 is revised to read as follows:
Sec. 1.20 Authentication.
When a request is received for an authenticated copy of a document
which the agency determines to make available to the requesting party,
the agency shall cause a correct copy to be prepared and sent to the
Office of the General Counsel which shall certify the same and cause
the seal of the Department to be affixed, except that the Hearing Clerk
in the Office of Administrative Law Judges may authenticate copies of
documents in the records of the Hearing Clerk and that the Director of
the National Appeals Division may authenticate copies of documents in
the records of the National Appeals Division.
[[Page 33373]]
PART 11--NATIONAL APPEALS DIVISION RULES OF PROCEDURE
Part 11 is revised to read as follows:
PART 11--NATIONAL APPEALS DIVISION RULES OF PROCEDURE
Sec.
11.1 Definitions.
11.2 General statement.
11.3 Applicability.
11.4 Inapplicability of other laws and regulations.
11.5 Informal review of adverse decisions.
11.6 Director review of agency determination of appealability and
right of participants to Division hearing.
11.7 Ex parte communications.
11.8 Division hearings.
11.9 Director review of determinations of Hearings Officers.
11.10 Basis for determinations.
11.11 Reconsideration of Director determinations.
11.12 Effective date and implementation of final determinations of
the Division.
11.13 Judicial review.
11.14 Filing of appeals and computation of time.
11.15 Participation of third parties and interested parties in
Division proceedings.
Authority: 5 U.S.C. 301; Title II, Subtitle H, Pub. L. 103-354,
108 Stat. 3228 (7 U.S.C. 6991 et seq.); Reorganization Plan No. 2 of
1953 (5 U.S.C. App.).
Sec. 11.1 Definitions.
For purposes of this part:
Adverse decision means an administrative decision made by an
officer, employee, or committee of an agency that is adverse to a
participant. The term includes a denial of equitable relief by an
agency or the failure of an agency to issue a decision or otherwise act
on the request or right of the participant within timeframes specified
by agency program statutes or regulations or within a reasonable time
if timeframes are not specified in such statutes or regulations. The
term does not include a decision over which the Board of Contract
Appeals has jurisdiction.
Agency means:
(1) The Commodity Credit Corporation (CCC);
(2) The Farm Service Agency (FSA);
(3) The Federal Crop Insurance Corporation (FCIC);
(4) The Natural Resources Conservation Service (NRCS);
(5) The Risk Management Agency (RMA);
(6) The Rural Business-Cooperative Service (RBS);
(7) Rural Development (RD);
(8) The Rural Housing Service (RHS);
(9) The Rural Utilities Service (RUS) (but not for programs
authorized by the Rural Electrification Act of 1936 or the Rural
Telephone Bank Act, 7 U.S.C. 901 et seq.);
(10) A State, county, or area committee established under section
8(b)(5) of the Soil Conservation and Domestic Allotment Act (16 U.S.C.
590h (b)(5)); and
(11) Any predecessor or successor agency to the above-named
agencies, and any other agency or office of the Department which the
Secretary may designate.
Agency record means all the materials maintained by an agency
related to an adverse decision which are submitted to the Division by
an agency for consideration in connection with an appeal under this
part, including all materials prepared or reviewed by the agency during
its consideration and decisionmaking process, but shall not include
records or information not related to the adverse decision at issue.
All materials contained in the agency record submitted to the Division
shall be deemed admitted as evidence for purposes of a hearing or a
record review under Sec. 11.8.
Agency representative means any person, whether or not an attorney,
who is authorized to represent the agency in an administrative appeal
under this part.
Appeal means a written request by a participant asking for review
by the National Appeals Division of an adverse decision under this
part.
Appellant means any participant who appeals an adverse decision in
accordance with this part. Unless separately set forth in this part,
the term ``appellant'' includes an authorized representative.
Authorized representative means any person, whether or not an
attorney, who is authorized in writing by a participant, consistent
with Sec. 11.6(c), to act for the participant in an administrative
appeal under this part. The authorized representative may act on behalf
of the participant except when the provisions of this part require
action by the participant or appellant personally.
Case record means all the materials maintained by the Secretary
related to an adverse decision: The case record includes both the
agency record and the hearing record.
Days means calendar days unless otherwise specified.
Department means the United States Department of Agriculture
(USDA).
Director means the Director of the Division or a designee of the
Director.
Division means the National Appeals Division established by this
part.
Equitable relief means relief which is authorized under section 326
of the Food and Agriculture Act of 1962 (7 U.S.C. 1339a) and other laws
administered by the agency.
Ex parte communication means an oral or written communication to
any officer or employee of the Division with respect to which
reasonable prior notice to all parties is not given, but it shall not
include requests for status reports, or inquiries on Division
procedure, in reference to any matter or proceeding connected with the
appeal involved.
Hearing, except with respect to Sec. 11.5, means a proceeding
before the Division to afford a participant the opportunity to present
testimony or documentary evidence or both in order to have a previous
determination reversed and to show why an adverse determination was in
error.
Hearing Officer means an individual employed by the Division who
conducts the hearing and determines appeals of adverse decisions by any
agency.
Hearing record means all documents, evidence, and other materials
generated in relation to a hearing under $11.8.
Implement means the taking of action by an agency of the Department
in order fully and promptly to effectuate a final determination of the
Division.
Participant means any individual or entity who has applied for, or
whose right to participate in or receive, a payment, loan, loan
guarantee, or other benefit in accordance with any program of an agency
to which the regulations in this part apply is affected by a decision
of such agency. The term does not include persons whose claim(s) arise
under:
(1) Programs subject to various proceedings provided for in 7 CFR
part 1;
(2) Programs governed by Federal contracting laws and regulations
(appealable under other rules and to other forums, including to the
Department's Board of Contract Appeals under 7 CFR part 24);
(3) The Freedom of Information Act (appealable under 7 CFR part 1,
subpart A);
(4) Suspension and debarment disputes, including, but not limited
to, those falling within the scope of 7 CFR parts 1407 and 3017;
(5) Export programs administered by the Commodity Credit
Corporation;
(6) Disputes between reinsured companies and the Federal Crop
Insurance Corporation;
(7) Tenant grievances or appeals prosecutable under the provisions
of 7 CFR part 1944, subpart L, under the multi-family housing program
carried out by RHS;
(8) Personnel, equal employment opportunity, and other similar
disputes
[[Page 33374]]
with any agency or office of the Department which arise out of the
employment relationship;
(9) The Federal Tort Claims Act, 28 U.S.C. 2671 et seq., or the
Military Personnel and Civilian Employees Claims Act of 1964, 31 U.S.C.
3721;
(10) Discrimination complaints prosecutable under the
nondiscrimination regulations at 7 CFR parts 15, 15a, 15b, 15e, and
15f; or
(11) Section 361, et seq., of the Agricultural Adjustment Act of
1938, as amended (7 U.S.C. 1361, et seq.) involving Tobacco Marketing
Quota Review Committees.
Record review means an appeal considered by the Hearing Officer in
which the Hearing Officer's determination is based on the agency record
and other information submitted by the appellant and the agency,
including information submitted by affidavit or declaration.
Secretary means the Secretary of Agriculture.
Sec. 11.2 General statement.
(a) This part sets forth procedures for proceedings before the
National Appeals Division within the Department. The Division is an
organization within the Department, subject to the general supervision
of and policy direction by the Secretary, which is independent from all
other agencies and offices of the Department, including Department
officials at the state and local level. The Director of the Division
reports directly to the Secretary of Agriculture. The authority of the
Hearing Officers and the Director of the Division, and the
administrative appeal procedures which must be followed by program
participants who desire to appeal an adverse decision and by the agency
which issued the adverse decision, are included in this part.
(b) Pursuant to section 212(e) of the Federal Crop Insurance Reform
and Department of Agriculture Reorganization Act of 1994, Pub. L. 103-
354 (the Act), 7 U.S.C. 6912(e), program participants shall seek review
of an adverse decision before a Hearing Officer of the Division, and
may seek further review by the Director, under the provisions of this
part prior to seeking judicial review.
Sec. 11.3 Applicability.
(a) Subject matter. The regulations contained in this part are
applicable to adverse decisions made by an agency, including, for
example, those with respect to:
(1) Denial of participation in, or receipt of benefits under, any
program of an agency;
(2) Compliance with program requirements;
(3) The making or amount of payments or other program benefits to a
participant in any program of an agency; and
(4) A determination that a parcel of land is a wetland or highly
erodible land.
(b) Limitation. The procedures contained in this part may not be
used to seek review of statutes or USDA regulations issued under
Federal Law.
Sec. 11.4 Inapplicability of other laws and regulations.
(a) Reserved.
(b) The Federal Rules of Evidence, 28 U.S.C. App., shall not apply
to proceedings under this part.
Sec. 11.5 Informal review of adverse decisions.
(a) Required informal review of FSA adverse decisions. Except with
respect to farm credit programs, a participant must seek an informal
review of an adverse decision issued at the field service office level
by an officer or employee of FSA, or by any employee of a county or
area committee established under section 8(b)(5) of the Soil
Conservation and Domestic Allotment Act, 16 U.S.C. 590h(b)(5), before
NAD will accept an appeal of a FSA adverse decision. Such informal
review shall be done by the county or area committee with
responsibility for the adverse decision at issue. The procedures for
requesting such an informal review before FSA are found in 7 CFR part
780. After receiving a decision upon review by a county or area
committee, a participant may seek further informal review by the State
FSA committee or may appeal directly to NAD under Sec. 11.6(b).
(b) Optional informal review. With respect to adverse decisions
issued at the State office level of FSA and adverse decisions of all
other agencies, a participant may request an agency informal review of
an adverse decision of that agency prior to appealing to NAD.
Procedures for requesting such an informal review are found at 7 CFR
part 780 (FSA), 7 CFR part 614 (NRCS), 7 CFR part 1900, subpart B
(RUS), 7 CFR part 1900, subpart B (RBS), and 7 CFR part 1900, subpart B
(RHS).
(c) Mediation. A participant also shall have the right to utilize
any available alternative dispute resolution (ADR) or mediation
program, including any mediation program available under title V of the
Agricultural Credit Act of 1987, 7 U.S.C. 5101 et seq., in order to
attempt to seek resolution of an adverse decision of an agency prior to
a NAD hearing. If a participant:
(1) Requests mediation or ADR prior to filing an appeal with NAD,
the participant stops the running of the 30-day period during which a
participant may appeal to NAD under Sec. 11.6(b)(1), and will have the
balance of days remaining in that period to appeal to NAD once
mediation or ADR has concluded.
(2) Requests mediation or ADR after having filed an appeal to NAD
under Sec. 11.6(b), but before the hearing, the participant will be
deemed to have waived his right to have a hearing within 45 days under
Sec. 11.8(c)(1) but shall have a right to have a hearing within 45 days
after conclusion of mediation or ADR.
Sec. 11.6 Director review of agency determination of appealability and
right of participants to Division hearing.
(a) Director review of agency determination of appealability. (1)
Not later than 30 days after the date on which a participant receives a
determination from an agency that an agency decision is not appealable,
the participant must submit a written request personally signed by the
participant to the Director to review the determination in order to
obtain such review by the Director.
(2) The Director shall determined whether the decision is adverse
to the individual participant and thus appealable or is a matter of
general applicability and thus not subject to appeal, and will issue a
final determination notice that upholds or reverses the determination
of the agency. This final determination is not appealable. If the
Director reverses the determination of the agency, the Director will
notify the participant and the agency of that decision and inform the
participant of his or her right to proceed with an appeal.
(3) The Director may delegate his or her authority to conduct a
review under this paragraph to any subordinate official of the Division
other than a Hearing Officer. In any case in which such review is
conducted by such a subordinate official, the subordinate official's
determination shall be considered to be the determination of the
Director and shall be final and not appealable.
(b) Appeals of adverse decisions. (1) To obtain a hearing under
Sec. 11.8, a participant personally must request such hearing not later
than 30 days after the date on which the participant first received
notice of the adverse decision or after the date on which the
participant receives notice of the Director's determination that a
decision is appealable. In the case of the failure
[[Page 33375]]
of an agency to act on the request or right of a recipient, a
participant personally must request such hearing not later than 30 days
after the participant knew or reasonably should have known that the
agency had not acted within the timeframes specified by agency program
regulations, or, where such regulations specify no timeframes, not
later than 30 days after the participant reasonably should have known
of the agency's failure to act.
(2) A request for a hearing shall be in writing and personally
signed by the participant, and shall include a copy of the adverse
decision to be reviewed, if available, along with a brief statement of
the participant's reasons for believing that the decision, or the
agency's failure to act, was wrong. The participant also shall send a
copy of the request for a hearing to the agency, and may send a copy of
the adverse decision to be reviewed to the agency, but failure to do
either will not constitute grounds for dismissal of the appeal. Instead
of a hearing, the participant may request a record review.
(c) If a participant is represented by an authorized
representative, the authorized representative must file a declaration
with NAD, executed in accordance with 28 U.S.C. 1746, stating that the
participant has duly authorized the declarant in writing to represent
the participant for purposes of a specified adverse decision or
decisions, and attach a copy of the written authorization to the
declaration.
Sec. 11.7 Ex parte communications.
(a)(1) At no time between the filing of an appeal and the issuance
of a final determination under this part shall any officer or employee
of the Division engage in ex parte communications regarding the merits
of the appeal with any person having any interest in the appeal pending
before the Division, including any person in an advocacy or
investigative capacity. This prohibition does not apply to:
(i) Discussions of procedural matters related to an appeal; or
(ii) Discussions of the merits of the appeal where all parties to
the appeal have been given notice and an opportunity to participate.
(2) In the case of a communication described in paragraph
(a)(1)(ii) of this section, a memorandum of any such discussion shall
be included in the hearing record.
(b) No interested person shall make or knowingly cause to be made
to any officer or employee of the Division an ex parte communication
relevant to the merits of the appeal.
(c) If any officer or employee of the Division receives an ex parte
communication in violation of this section, the one who receives the
communication shall place in the hearing record:
(1) All such written communications;
(2) Memoranda stating the substance of all such oral
communications; and
(3) All written responses to such communications, and memoranda
stating the substance of any oral responses thereto.
(d) Upon receipt of a communication knowingly made or knowingly
caused to be made by a party in violation of this section the Hearing
Officer or Director may, to the extent consistent with the interests of
justice and the policy of the underlying program, require the party to
show cause why such party's claim or interest in the appeal should not
be dismissed, denied, disregarded, or otherwise adversely affected on
account of such violation.
Sec. 11.8 Division hearings.
(a) General rules. (1) The Director, the Hearing Officer, and the
appellant shall have access to the agency record of any adverse
decision appealed to the Division for a hearing. Upon request by the
appellant, the agency shall provide the appellant a copy of the agency
record.
(2) The Director and Hearing Officer shall have the authority to
administer oaths and affirmations, and to require, by subpoena, the
attendance of witnesses and the production of evidence. A Hearing
Officer shall obtain the concurrence of the Director prior to issuing a
subpoena.
(i) A subpoena requiring the production of evidence may be
requested and issued at any time while the case is pending before the
Division.
(ii) An appellant or an agency, acting through any appropriate
official, may request the issuance of a subpoena requiring the
attendance of a witness by submitting such a request in writing at
least 14 days before the scheduled date of a hearing. The Director or
Hearing Officer shall issue a subpoena at least 7 days prior to the
scheduled date of a hearing.
(iii) A subpoena shall be issued only if the Director or a Hearing
Officer determined that:
(A) For a subpoena of documents, the appellant or the agency has
established that production of documentary evidence is necessary and is
reasonably calculated to lead to information which would affect the
final determination or is necessary to fully present the case before
the Division; or
(B) For a subpoena of a witness, the appellant or the agency has
established that either a representative of the Department or a private
individual possesses information that is pertinent and necessary for
disclosure of all relevant facts which could impact the final
determination, that the information cannot be obtained except through
testimony of the person, and that the testimony cannot be obtained
absent issuance of a subpoena.
(iv) The party requesting issuance of a subpoena shall arrange for
service. Service of a subpoena upon a person named therein may be made
by registered or certified mail, or in person. Personal service shall
be made by personal delivery of a copy of the subpoena to the person
named therein by any person who is not a party and who is not less than
18 years of age. Proof of service shall be made by filing with the
Hearing Officer or Director who issued the subpoena a statement of the
date and manner of service and of the names of the persons served,
certified by the person who made the service in person or by return
receipts for certified or registered mail.
(v) A party who requests that a subpoena be issued shall be
responsible for the payment of any reasonable travel and subsistence
costs incurred by the witness in connection with his or her appearance
and any fees of a person who serves the subpoena in person. The
Department shall pay the costs associated with the appearance of a
Department employee whose role as a witness arises out of his or her
performance of official duties, regardless of which party requested the
subpoena. The failure to make payment of such charges on demand may be
deemed by the Hearing Officer or Director as sufficient ground for
striking the testimony of the witness and the evidence the witness has
produced.
(vi) If a person refuses to obey a subpoena, the Director, acting
through the Office of the General Counsel of the Department and the
Department of Justice, may apply to the United States District Court in
the jurisdiction where that person resides to have the subpoena
enforced as provided in the Federal Rules of Civil Procedure (28 U.S.C.
App.).
(3) Testimony required by subpoena pursuant to paragraph (a)(2) of
this section may, at the discretion of the Director or a Hearing
Officer, be presented at the hearing either in person or
telephonically.
(b) Hearing procedures applicable to both record review and
hearings. (1) Upon the filing of an appeal under this part of an
adverse decision by any
[[Page 33376]]
agency, the agency promptly shall provide the Division with a copy of
the agency record. If requested by the applicant prior to the hearing,
a copy of such agency record shall be provided to the appellant by the
agency within 10 days of receipt of the request by the agency.
(2) The Director shall assign the appeal to a Hearing Officer and
shall notify the appellant and agency of such assignment. The notice
also shall advise the appellant and the agency of the documents
required to be submitted under paragraph (c)(2) of this section, and
notify the appellant of the option of having a hearing by telephone.
(3) The Hearing Officer will receive evidence into the hearing
record without regard to whether the evidence was known to the agency
officer, employee, or committee making the adverse decision at the time
the adverse decision was made.
(c) Procedures applicable only to hearings. (1) Upon a timely
request for a hearing under Sec. 11.6(b), an appellant has the right to
have a hearing by the Division on any adverse decision within 45 days
after the date of receipt of the request for the hearing by the
Division.
(2) The Hearing Officer shall set a reasonable deadline for
submission of the following documents:
(i) By the appellant;
(A) A short statement of why the decision is wrong;
(B) A copy of any document not in the agency record that the
appellant anticipates introducing at the hearing; and
(C) A list of anticipated witnesses and brief descriptions of the
evidence such witnesses will offer.
(ii) By the agency:
(A) A copy of the adverse decision challenged by the appellant;
(B) A written explanation of the agency's position, including the
regulatory or statutory basis therefor;
(C) A copy of any document not in the agency record that the agency
anticipates introducing at the hearing; and
(D) A list of anticipated witnesses and brief descriptions of the
evidence such witnesses will offer.
(3) Not less than 14 days prior to the hearing, the Division must
provide the appellant, the authorized representative, and the agency a
notice of hearing specifying the date, time, and place of the hearing.
The hearing will be held in the State of residence of the appellant, as
determined by the Hearing Officer, or at a location that is otherwise
convenient to the appellant, the agency, and the Division. The notice
also shall notify all parties of the right to obtain an official record
of the hearing.
(4) Pre-hearing conference. Whenever appropriate, the Hearing
Officer shall hold a pre-hearing conference in order to attempt to
resolve the dispute or to narrow the issues involved. Such pre-hearing
conference shall be held by telephone unless the Hearing Officer and
all parties agree to hold such conference in person.
(5) Conduct of the hearing. (i) A hearing before a Hearing Officer
will be in person unless the appellant agrees to a hearing by
telephone.
(ii) The hearing will be conducted by the Hearing Officer in the
manner determined by the Division most likely to obtain the facts
relevant to the matter or matters at issue. The Hearing Officer will
allow the presentation of evidence at the hearing by any party without
regard to whether the evidence was known to the officer, employee, or
committee of the agency making the adverse decision at the time the
adverse decision was made. The Hearing Officer may confine the
presentation of facts and evidence to pertinent matters and exclude
irrelevant, immaterial, or unduly repetitious evidence, information, or
questions. Any party shall have the opportunity to present oral and
documentary evidence, oral testimony of witnesses, and arguments in
support of the party's position; controvert evidence relied on by any
other party; and question all witnesses. When appropriate, agency
witnesses requested by the appellant will be made available at the
hearing. Any evidence may be received by the Hearing Officer without
regard to whether that evidence could be admitted in judicial
proceedings.
(iii) An official record shall be made of the proceedings of every
hearing. This record will be made by an official tape recording by the
Division. In addition, either party may request that a verbatim
transcript be made of the hearing proceedings and that such transcript
shall be made the official record of the hearing. The party requesting
a verbatim transcript shall pay for the transcription service, shall
provide a certified copy of the transcript to the Hearing Officer free
of charge, and shall allow any other party desiring to purchase a copy
of the transcript to order it from the transcription service.
(6) Absence of parties. (i) If at the time scheduled for the
hearing either the appellant or the agency representative is absent,
and no appearance is made on behalf of such absent party, or no
arrangements have been made for rescheduling the hearing, the Hearing
Officer has the option to cancel the hearing unless the absent party
has good cause for the failure to appear. If the Hearing Officer elects
to cancel the hearing, the Hearing Officer may:
(A) Treat the appeal as a record review and issue a determination
based on the agency record as submitted by the agency and the hearing
record developed prior to the hearing date;
(B) Accept evidence into the hearing record submitted by any party
present at the hearing (subject to paragraph (c)(6)(ii) of this
section), and then issue a determination; or
(C) Dismiss the appeal.
(ii) When a hearing is cancelled due to the absence of a party, the
Hearing Officer will add to the hearing record any additional evidence
submitted by any party present, provide a copy of such evidence to the
absent party or parties, and allow the absent party or parties 10 days
to provide a response to such additional evidence for inclusion in the
hearing record
(iii) Where an absent party has demonstrated good cause for the
failure to appear, the Hearing Officer shall reschedule the hearing
unless all parties agree to proceed without a hearing.
(7) Post-hearing procedure. The Hearing Officer will leave the
hearing record open after the hearing for 10 days, or for such other
period of time as the Hearing Officer shall establish, to allow the
submission of information by the appellant or the agency, to the extent
necessary to respond to new facts, information, arguments, or evidence
presented or raised at the hearing. Any such new information will be
added by the Hearing Office to the hearing record and sent to the other
party or parties by the submitter of the information. The Hearing
Officer, in his or her discretion, may permit the other party or
parties to respond to this post-hearing submission.
(d) Interlocutory review. Interlocutory review by the Director of
rulings of a Hearing Officer are not permitted under the procedures of
this part.
(e) Burden of proof. The appellant has the burden of proving that
the adverse decision of the agency was erroneous by a preponderance of
the evidence.
(f) Timing of issuance of determination. The Hearing Officer will
issue a notice of the determination on the appeal to the named
appellant, the authorized representative, and the agency not later than
30 days after a hearing or the closing date of the hearing record in
cases in which the Hearing Officer receives additional evidence from
the agency or appellant after a hearing. In the case of a record
review, the Hearing Officer will issue a notice of determination within
45 days
[[Page 33377]]
of receipt of the appellant's request for a record review. Upon the
Hearing Officer's request, the Director may establish an earlier or
later deadline. A notice of determination shall be accompanied by a
copy of the procedures for filing a request for Director review under
Sec. 11.9. If the determination is not appealed to the Director for
review under Sec. 11.9, the notice provided by the Hearing Officer
shall be considered to be a notice of a final determination under this
part.
Sec. 11.9 Director review of determinations of Hearing Officers.
(a) Requests for Director review. (1) Not later than 30 days after
the date on which an appellant receives the determination of a Hearing
Officer under Sec. 11.8, the appellant must submit a written request,
signed personally by the named appellant, to the Director to review the
determination in order to be entitled to such review by the Director.
Such request shall include specific reasons why the appellant believes
the determination is wrong.
(2) Not later than 15 business days after the date on which an
agency receives the determination of a Hearing Officer under Sec. 11.8,
the head of the agency may make a written request that the Director
review the determination. Such request shall include specific reasons
why the agency believes the determination is wrong, including citations
of statutes or regulations that the agency believes the determination
violates. Any such request may be made by the head of an agency only,
or by a person acting in such capacity, but not by any subordinate
officer of such agency.
(3) A copy of a request for Director review submitted under this
paragraph shall be provided simultaneously by the submitter to each
party to the appeal.
(b) Notification of parties. The Director promptly shall notify all
parties of receipt of a request for review.
(c) Responses to request for Director review. Other parties to an
appeal may submit written responses to a request for Director review
within 5 business days from the date of receipt of a copy of the
request for review.
(d) Determination of Director. (1) The Director will conduct a
review of the determination of the Hearing Officer using the agency
record, the hearing record, the request for review, any responses
submitted under paragraph (c) of this section, and such other arguments
or information as may be accepted by the Director, in order to
determine whether the decision of the Hearing Officer is supported by
substantial evidence. Based on such review, the Director will issue a
final determination notice that upholds, reverses, or modifies the
determination of the Hearing Officer. The Director's determination upon
review of a Hearing Officer's decision shall be considered to be the
final determination under this part and shall not be appealable.
However, if the Director determines that the hearing record is
inadequate or that new evidence has been submitted, the Director may
remand all or a portion of the determination to the Hearing Officer for
further proceedings to complete the hearing record or, at the option of
the Director, to hold a new hearing.
(2) The Director will complete the review and either issue a final
determination or remand the determination not later than--
(i) 10 business days after receipt of the request for review, in
the case of a request by the head of an agency; or
(ii) 30 business days after receipt of the request for review, in
the case of a request by an appellant.
(3) In any case or any category of cases, the Director may delegate
his or her authority to conduct a review under this section to any
Deputy or Assistant Directors of the Division. In any case in which
such review is conducted by a Deputy or Assistant Director under
authority delegated by the Director, the Deputy or Assistant Director's
determination shall be considered to be the determination of the
Director under this part and shall be final and not appealable.
(e) Equitable relief. In reaching a decision on an appeal, the
Director shall have the authority to grant equitable relief under this
part in the same manner and to the same extent as such authority is
provided an agency under applicable laws and regulations.
Sec. 11.10 Basis for determinations.
(a) In making a determination, the Hearing Officers and the
Director are not bound by previous findings of facts on which the
agency's adverse decision was based.
(b) In making a determination on the appeal, Hearing Officers and
the Director shall ensure that the decision is consistent with the laws
and regulations of the agency, and with the generally applicable
interpretations of such laws and regulations.
(c) All determinations of the Hearing Officers and the Director
must be based on information from the case record, laws applicable to
the matter at issue, and applicable regulations published in the
Federal Register and in effect on the date of the adverse decision or
the date on which the acts that gave rise to the adverse decision
occurred, whichever date is appropriate under the applicable agency
program laws and regulations.
Sec. 11.11 Reconsideration of Director determinations.
(a) Reconsideration of a determination of the Director may be
requested by the appellant or the agency within 10 days of receipt of
the determination. The Director will not consider any request for
reconsideration that does not contain a detailed statement of a
material error of fact made in the determination, or a detailed
explanation of how the determination is contrary to statute or
regulation, which would justify reversal or modification of the
determination.
(b) The Director shall issue a notice to all parties as to whether
a request for reconsideration meets the criteria in paragraph (a) of
this section. If the request for reconsideration meets such criteria,
the Director shall include a copy of the request for reconsideration in
the notice to the non-requesting parties to the appeal. The non-
requesting parties shall have 5 days from receipt of such notice from
the Director to file a response to the request for reconsideration with
the Director.
(c) The Director shall issue a decision on the request for
reconsideration within 5 days of receipt of responses from the non-
requesting parties. If the Director's decision upon reconsideration
reverses or modifies the final determination of the Director rendered
under Sec. 11.9(d), the Director's decision on reconsideration will
become the final determination of the Director under Sec. 11.9(d) for
purposes of this part.
Sec. 11.12 Effective date and implementation of final determinations
of the Division.
(a) On the return of a case to an agency pursuant to the final
determination of the Division, the head of the agency shall implement
the final determination not later than 30 days after the effective date
of the notice of the final determination.
(b) A final determination will be effective as of the date of
filing of an application, the date of the transaction or event in
question, or the date of the original adverse decision, whichever is
applicable under the applicable agency program statutes or regulations.
Sec. 11.13 Judicial review.
(a) A final determination of the Division shall be reviewable and
enforceable by any United States District Court of competent
jurisdiction in accordance with chapter 7 of title 5, United States
Code.
(b) An appellant may not seek judicial review of any agency adverse
decision appealable under this part without
[[Page 33378]]
receiving a final determination from the Division pursuant to the
procedures of this part.
Sec. 11.14 Filing of appeals and computation of time.
(a) An appeal, a request for Director Review, or any other document
will be considered ``filed'' when delivered in writing to the Division,
when postmarked, or when a complete facsimile copy is received by the
Division.
(b) Whenever the final date for any requirement of this part falls
on a Saturday, Sunday, Federal holiday, or other day on which the
Division is not open for the transaction of business during normal
working hours, the time for filing will be extended to the close of
business on the next working day.
(c) The time for filing an appeal, a request for Director review,
or any other document expires at 5:00 p.m. local time at the office of
the Division to which the filing is submitted on the last day on which
such filing may be made.
Sec. 11.15 Participation of third parties and interested parties in
Division proceedings.
In two situations, parties other than the appellant or the agency
may be interested in participating in Division proceedings. In the
first situation, a Division proceeding may in fact result in the
adjudication of the rights of a third party, e.g., an appeal of a
tenant involving a payment shared with a landlord, an appeal by one
recipient of a portion of a payment shared by multiple parties, an
appeal by one heir of an estate. In the second situation, a party may
desire to receive notice of and perhaps participate in an appeal
because of the derivative impact the appeal determination will have on
that party, e.g., guaranteed lenders and reinsurance companies. The
provisions in this section set forth rules for the participation of
such third and interested parties.
(a) Third parties. When an appeal is filed, the Division shall
notify any potential third party whose rights may be adjudicated of its
right to participate as an appellant in the appeal. This includes the
right to seek Director review of the Hearing Officer determination.
Such third parties may be identified by the Division itself, by an
agency, or by the original appellant. The Division shall issue one
notice to the third party of its right to participate, and if such
party declines to participate, the Division determination will be
binding as to that third party as if it had participated. For purposes
of this part, a third party includes any party for which a
determination of the Division could lead to an agency action on
implementation that would be adverse to the party thus giving such
party a right to a Division appeal.
(b) Interested parties. With respect to a participant who is a
borrower under a guaranteed loan or an insured under a crop insurance
program, the respective guaranteed lender or reinsurance company having
an interest in a participant's appeal under this part may participate
in the appeal as an interested party, but such participation does not
confer the status of an appellant upon the guaranteed lender or
reinsurance company such that it may request Director review of a final
determination of the Division.
Done at Washington, D.C., this 14th day of June 1999.
Dan Glickman,
Secretary of Agriculture.
[FR Doc. 99-15624 Filed 6-22-99; 8:45 am]
BILLING CODE 3410-01-M