[Federal Register Volume 67, Number 211 (Thursday, October 31, 2002)]
[Rules and Regulations]
[Pages 66304-66308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27683]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR 718

RIN 0560-AG80


Equitable Relief From Ineligibility

AGENCIES: Farm Service Agency, Commodity Credit Corporation, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements provisions of section 1613 of the Farm 
Security and Rural Investment Act of 2002 (the 2002 Act) relating to 
relief to participants in certain cases for certain Farm Service Agency 
and Commodity Credit Corporation programs. The relief applies to cases 
where the applicant for

[[Page 66305]]

relief took action to the applicant's detriment based on bad 
information from departmental officials. Also, it covers where the 
applicant simply, but in good faith, failed to fully comply with 
program requirements. The rule also addresses changes in the so-called 
``90-day finality rule'' that applies to some of the same programs. The 
rule is intended to implement a statutory requirement that the Agencies 
provide relief to producers who took action to their detriment based on 
bad information from officials.

EFFECTIVE DATE: October 30, 2002.

FOR FURTHER INFORMATION CONTACT: Dan McGlynn, Production, Emergencies 
and Compliance Division, United States Department of Agriculture 
(USDA), Stop 0517, 1400 Independence Ave, SW., Washington, DC 20250-
0517. Phone: (202) 720-3463. E-mail: [email protected]. Persons 
with disabilities who require alternative means for communication 
(Braille, large print, audio tape, etc.) should contact the USDA Target 
Center at (202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Notice and Comment

    Section 1601(c) of the 2002 Act requires that the regulations 
needed to implement Title I of the 2002 Act are to be promulgated 
without regard to the notice and comment provisions of 5 U.S.C. 553 or 
the Statement of Policy of the Secretary of Agriculture effective July 
24, 1971, (36 FR 13804) relating to notices of proposed rulemaking and 
public participation in rulemaking. These regulations are thus issued 
as final.

Executive Order 12866

    This final rule has been determined to be not significant under 
Executive Order 12866 and has not been reviewed by the Office of 
Management and Budget (OMB).

Federal Assistance Programs

    This rule has a potential impact on all programs listed in the 
Catalog of Federal Domestic Assistance in the Agency Program Index 
under the Department of Agriculture, Farm Service Agency and Natural 
Resources Conservation Service. Other assistance programs are also 
impacted.

Regulatory Flexibility Act

    The Regulatory Flexibility Act is not applicable to this rule 
because neither the Secretary of Agriculture nor CCC are required by 5 
U.S.C. 553 or any other law to publish a notice of proposed rulemaking 
for the subject matter of this rule.

Environmental Assessment

    The environmental impacts of this rule have been considered in 
accordance with the provisions of the National Environmental Policy Act 
of 1969 (NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council 
on Environmental Quality (40 CFR parts 1500-1508), and FSA's 
regulations for compliance with NEPA, 7 CFR part 799. FSA has concluded 
that this rule is categorically excluded from further environmental 
review and documentation as evidenced by the completion of an 
environmental evaluation. No extraordinary circumstances or other 
unforeseeable factors exist which would require preparation of an 
environmental assessment or environmental impact statement. A copy of 
the environmental evaluation is available for inspection and review 
upon request.

Executive Order 12778

    The final rule has been reviewed in accordance with Executive Order 
12778. This final rule preempts State laws that are inconsistent with 
its provisions. Before a judicial action may be brought concerning this 
rule, all administrative remedies must be exhausted.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which require intergovernmental consultation with State and 
local officials. See the notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates

    The provisions of Title II of the Unfunded Mandates Reform Act of 
1995 (UMRA) do not apply to this rule because neither the Secretary of 
Agriculture nor CCC are required by 5 U.S.C. 553 or any other law to 
publish a notice of proposed rulemaking for the subject matter of this 
rule. Also, the rule imposes no mandates as defined in UMRA.

Small Business Regulatory Enforcement Fairness Act of 1996

    Section 1601(c) of the 2002 Act requires that the regulations 
necessary to implement Title I of the 2002 Act must be issued within 90 
days of enactment and that such regulations shall be issued without 
regard to the notice and comment provisions of 5 U.S.C. 553. Section 
1601(c) also requires that the Secretary use the authority in section 
808 of the Small Business Regulatory Enforcement Fairness Act of 1996, 
Pub. L. 104-121 (SBREFA), which allows an agency to forgo SBREFA's 
usual 60-day Congressional Review delay of the effective date of a 
major regulation if the agency finds that there is a good cause to do 
so. Accordingly, this rule is effective upon the date of filing for 
public inspection by the Office of the Federal Register.

Paperwork Reduction Act

    Section 1601(c) of the 2002 Act requires that these regulations be 
promulgated and the programs administered without regard to the 
Paperwork Reduction Act. This means that the information to be 
collected from the public to implement these programs and the burden, 
in time and money, the collection of the information would have on the 
public does not have to be approved by the Office of Management and 
Budget or be subject to the normal requirement for a 60-day public 
comment period.

Government Paperwork Elimination Act

    FSA is committed to compliance with the Government Paperwork 
Elimination Act, and continued pursuit of providing all services 
electronically when practicable. This rule involves no request for a 
program eligibility determination, payment of benefits, agreements, or 
contracts that readily lend themselves to electronic access, 
submission, receipt, or approval. Thus, the Government Paperwork 
Elimination Act does not apply.

Background

    Section 1613 of the Farm Security and Rural Investment Act of 2002 
(2002 Act) addresses relief where bad departmental advice or 
information is given or where a participating producer of an 
``agricultural commodity'' fails to comply fully with program 
requirements but otherwise acts in good faith. Section 1613 provides 
that, under that section, ``agricultural commodity'' means any 
agricultural commodity, food, feed, fiber, or livestock that is subject 
to a ``covered program.'' A ``covered program'' is defined as (1) a 
program administered by the Secretary of Agriculture (Secretary) under 
which price or income support, or production or market loss assistance, 
is provided to producers of ``agricultural commodities;'' and (2) a 
conservation program administered by the Secretary. But, the section 
specifies, ``covered programs'' do not include (1) an agricultural 
credit program carried out under the Consolidated Farm and Rural 
Development Act (7 U.S.C. 1921 et seq.); or (2) the crop insurance 
program carried out under the Federal Crop Insurance Act (7 U.S.C. 1501 
et seq.).

[[Page 66306]]

    Using those definitions, the law provides that the Secretary may 
provide relief to any participant that is determined to be not in 
compliance with the requirements of a covered program, and therefore 
ineligible for a loan, payment, or other benefit under the covered 
program, but only if the participant (1) acting in good faith, relied 
on the action or advice of the Secretary, or an authorized 
representative, to the detriment of the participant; or (2) failed to 
comply fully with the requirements of the covered program, but made a 
good faith effort to do so. In these cases, the statute specifies, the 
Secretary may authorize a participant in a covered program to (1) 
retain loans, payments, or other benefits received under the covered 
program; (2) continue to receive loans, payments, and other benefits 
under the covered program; (3) continue to participate, in whole or in 
part, under any contract executed under the covered program; (4) in a 
conservation program, re-enroll all or part of the land covered by the 
program; and (5) receive such other equitable relief as they determine 
appropriate. Section 1613 also specifies that the Secretary may 
condition the approval of relief under this section on the participant 
agreeing to remedy their failure to meet the program requirement.
    Also, the law provides for special autonomy for State Directors of 
the Department's Farm Service Agency and State Conservationists of the 
Department's Natural Resources and Conservation Service in granting 
equitable relief. In general, section 1613 provides that the 
StateDirector and the State Conservationist, in the case of programs 
administered by their respective offices, may grant relief to a 
participant(subject to certain limitations) if (1) the amount of loans, 
payments, and benefits for which relief will be provided to the 
participant under this special authority is less than $20,000; (2) the 
total amount of loans, payments, and benefits for which relief has been 
previously provided to the participant under this special authority is 
not more than $5,000; and (3) the total amount of loans, payments, and 
benefits for which relief is provided to similarly situated 
participants is not more than $1,000,000, as determined by the 
Secretary. This rule addresses only programs administered through FSA 
and, hence, through State Directors.
    Further, the new law provides that such State Director grants of 
relief (1) shall not require prior approval by the Administrator of the 
Department of Agriculture's Farm Service Agency, or any other officer 
or employee of the Agency or Service; (2) shall be made only after 
consultation with, and the approval of, the Office of General Counsel 
of the Department of Agriculture; and (3) are subject to reversal only 
by the Secretary (who may not delegate the reversal authority). 
Furthermore, the statute specifies that this special State Director 
authority does not apply to the administration of (1) payment 
limitations under (i) sections 1001 through 1001F of the Food Security 
Act of 1985 (7 U.S.C. 1308 et seq.), or (ii) a conservation program 
administered by the Secretary; or to (2) highly erodible land and 
wetland conservation requirements under subtitle B or C of title XII of 
the Food Security Act of 1985 (16 U.S.C. 3811 et seq.). The State 
Director authority, the new law specifies, is in addition to any other 
applicable authority and does not limit other authority provided by law 
or the Secretary. Under the terms of the new law, a discretionary 
decision by the Secretary, the State Director, or the State 
Conservationist under the Section 1613 authority to grant relief in 
cases of bad information or good faith failures to fully comply with 
program rules shall be final, and shall not be subject to review under 
chapter 7 of title 5, United States Code, which provides generally for 
the relief of agency decisions.
    Additionally, the statute requires that, not later than February 1 
of each year, the Secretary shall submit to the Committee on 
Agriculture of the House of Representatives and the Committee on 
Agriculture, Nutrition, and Forestry of the Senate a report that 
describes for the previous calendar year (1) the number of requests to 
the program agencies for ``mis-information'' and ``failure to fully 
comply'' relief (utilizing the Section 1613 authority) and (2) the 
number of requests for equitable relief under section 278(d) of the 
Department of Agriculture Reorganization Act of 1994(7 U.S.C. 6998(d)). 
Also, information must be submitted regarding the disposition of the 
requests. The reference to 7 U.S.C. 6998 (d) involves the authority of 
the Director of the Department's National Appeals Division to grant 
equitable relief under the same standards as those that apply to FSA.
    Section 1613 further states that the authority provided in this 
section is in addition to any other authority provided in that or any 
other Act. Also, section 1613 amends section 281(a) of the Department 
of Agriculture Reorganization Act of 1994 (7 U.S.C. 7001(a)) with 
respect to the ``90-day finality rule'' which exempted two 
determinations from its coverage. One is decisions involving the 
administration of the Consolidated Farm and Rural Development Act, and 
the second, are determinations arising out of conservation programs 
administered by the Natural Resources Conservation Service. Those 
exemptions are reflected in new language in this rule.
    Section 1613 also repeals provisions for equitable relief which 
were contained in 7 U.S.C. 1339a and in 16 U.S.C. 3830. Changes to 
reflect those repeals will be made as needed in other rules. This rule 
is limited to 7 CFR part 718 which governs these issues generally for 
programs administered by the Farm Service Agency of the Department.
    With the exception of the changes in the coverage of the finality 
rule noted above, this rule implements the section 1613 provisions on 
equitable relief in cases involving incorrect information or action by 
FSA and failure to comply provisions as they apply to FSA programs and 
to those programs of the Commodity Credit Corporation that are 
administered through the FSA. Other agencies within the Department, if 
any, to which these provisions apply may issue separate rules in this 
regard. With respect to the special State Director relief provisions, 
such relief is still under the control of the Secretary and subject to 
uniform rules under this part. The rules are broad in that regard and 
do not invade the provisions contemplated by the statute as they have 
been determined to be in this rule.
    Under this rule, the statute is read as applying prospectively 
only. Relief will be allowed only for actions taken by producers to 
their detriment after enactment of the 2002 Act (May 13, 2002). (This 
includes any relief granted under the special State Director 
provisions). Nothing in the statute provides for retroactive 
application of the new rules and it was not understood that such a 
result was intended. A different result, opening old disputes, would be 
chaotic. Presumably, Congress would have specified that such 
retroactively was intended if it meant to have the statute read that 
way. In any event, even if retroactively were allowed, it would be 
rejected because of the unfairness and chaos it would create. Such a 
rejection would be authorized under the provisions of the statute which 
make the granting of any relief under section 1613 discretionary. This 
allows for one uniform set of rules for all types of relief for actions 
in the same time period. Again, this also applies to the State 
Directors. They have the authority to grant relief within the confines 
of the statute, and are not authorized to decide general policy for the 
granting of relief on such matters as the timing of the actions for 
which relief

[[Page 66307]]

may be granted. Obviously it would be improper to have those officials 
have differing interpretations of which decisions fall within the 
general scope of the powers granted them by the statute and, in any 
event, the general exercise of those powers are still subject to the 
supervision of the Secretary under whose authority these rules are 
written.
    The statute as indicated does set certain dollar limits on the 
officials granted the special relief authority. However, the dollar 
limits are not tied, in the words of the statute itself, to a 
particular time period or official. Believing that tying of dollar 
amounts to nonetheless be the intent, given the normal yearly 
orientation of farm programs (as is reflected in the reporting 
requirements of the statute), such a tie has been made in the rule. The 
limits are made yearly limits. Special rules are set out for how the 
computation will be made.
    Obviously, the amounts involved would be prohibitively small among 
the many States. And, the cross-State accounting that would otherwise 
be required would be difficult. Neither that difficulty, nor the odd 
race to grant relief that it might produce, appear to be intended. 
Rather, it appears that this provision was meant to provide a 
substantive change which would otherwise, within reasonable limits, 
short circuit the normal review process that might otherwise be 
required before the producer could enjoy the benefit of relief. Even if 
the statute were to be read as being not limited to a particular year 
or a particular official the additional authority that would be created 
by the rule would be within the general discretion granted the 
Secretary. However, since there will still be dollar limits, the rule 
does require that, in addition to the approval by the Office of the 
General Counsel of the Department, State Directors who use this special 
power must declare in writing their intent to use that authority. They 
must also report the use of the authority so that an accounting can be 
made. Rules issued in this notice cover those matters as well.

List of Subjects in 7 CFR Part 718

    Agriculture, Disaster assistance, Government employees, Price 
support programs, Rural areas.


    Accordingly, 7 CFR part 718 is amended as set forth below:

PART 718--PROVISIONS APPLICABLE TO MULTIPLE PROGRAMS

    1. The authority for part 718 is revised to read as follows:

    Authority: 7 U.S.C. 1311 et seq.; 7 U.S.C. 1501 et seq; 7 U.S.C. 
1921 et seq.; 7 U.S.C. 7201 et seq.; 7 U.S.C. 7996; 15 U.S.C. 714b; 
Pub. L. 107-171.
    2. Subpart D is added to read as follows:
Subpart D--Equitable Relief From Ineligibility
Sec.
718.301 Applicability.
718.302 Definitions and abbreviations.
718.303 Reliance on incorrect actions or information.
718.304 Failure to fully comply.
718.305 Forms of relief.
718.306 Finality.
718.307 Special relief approval authority for State Executive 
Directors.


Sec.  718.301  Applicability.

    (a) This subpart is applicable to programs administered by the Farm 
Service Agency under chapters VII and XIV of this title, except for an 
agricultural credit program carried out under the Consolidated Farm and 
Rural Development Act (7 U.S.C. 1921 et seq.). Administration of this 
subpart shall be under the supervision of the Deputy Administrator, 
except that such authority shall not limit the exercise of authority 
allowed State Executive Directors of the Farm Service agency as 
provided for in Sec.  718.307.
    (b) Sections 718.303, 718.304, and 718.307 do not apply where the 
action for which relief is requested occurred before May 13, 2002. In 
such cases, authority that was effective prior to May 13, 2002, may be 
applied.
    (c) Section 718.306 does not apply to a function performed under 
either section 376 of the Consolidated Farm and Rural Development Act 
(7U.S.C. 1921 et seq.), or a conservation program administered by the 
Natural Resources Conservation Service of the United States Department 
of Agriculture.


Sec.  718.302  Definitions and abbreviations.

    In addition to the definitions provided in Sec.  718.2 of this 
part, the following terms apply to this subpart:
    Agricultural commodity means any agricultural commodity, food, 
feed, fiber, or livestock that is subject to a covered program.
    Covered program means a program specified in Sec.  718.301 of this 
subpart.
    FSA means the Farm Service Agency of the United States Department 
of Agriculture.
    OGC means the Office of the General Counsel of the United States 
Department of Agriculture.
    SED means, for activities within a particular state, the State 
Executive Director of the United States Department of Agriculture, FSA, 
for that state.


Sec.  718.303  Reliance on incorrect actions or information.

    (a) Notwithstanding any other law, action or inaction by a 
participant in a covered program that is to the detriment of the 
participant, and that is based upon good faith reliance on the action 
or advice of an authorized representative of a County or State FSA 
Committee, may be approved by the Administrator, FSA or the Executive 
Vice President, CCC, as applicable, or their designee, as meeting the 
requirements of the program, and benefits may be extended or payments 
made in accordance with Sec.  718.305.
    (b) This section applies only to a participant who relied upon the 
action of, or information provided by, a county or State FSA committee 
or an authorized representative of such committee and the participant 
acted, or failed to act, as a result of the Agency action or 
information. This part does not apply to cases where the participant 
had sufficient reason to know that the action or information upon which 
they relied was improper or erroneous or where the participant acted in 
reliance on their own misunderstanding or misinterpretation of program 
provisions, notices or information.


Sec.  718.304  Failure to fully comply.

    (a) Under a covered program, when the failure of a participant to 
fully comply with the terms and conditions of a program authorized by 
this chapter precludes the providing of payments or benefits, relief 
may be authorized in accordance with Sec.  718.305 if the participant 
made a good faith effort to comply fully with the requirements of the 
covered program.
    (b) This section only applies to participants who are determined by 
the FSA approval official to have made a good faith effort to comply 
fully with the terms and conditions of the program and rendered 
substantial performance.


Sec.  718.305  Forms of relief.

    (a) The Administrator of FSA, Executive Vice President of CCC, or 
their designee, may authorize a participant in a covered program to:
    (1) Retain loans, payments, or other benefits received under the 
covered program;
    (2) Continue to receive loans, payments, and other benefits under 
the covered program;
    (3) Continue to participate, in whole or in part, under any 
contract executed under the covered program;

[[Page 66308]]

    (4) In the case of a conservation program, re-enroll all or part of 
the land covered by the program; and
    (5) Receive such other equitable relief as determined to be 
appropriate.
    (b) As a condition of receiving relief under this subpart, the 
participant may be required to remedy their failure to meet the program 
requirement, or mitigate its affects.


Sec.  718.306  Finality.

    (a) A determination by a State or county FSA committee made on or 
after October 13, 1994, becomes final and binding 90 days from the date 
the application for benefits has been filed, and supporting 
documentation required to be supplied by the producer as a condition 
for eligibility for the particular program has been filed, unless one 
of the following conditions exist:
    (1) The participant has requested an administrative review of the 
determination in accordance with part 780 of this chapter;
    (2) The determination was based on misrepresentation, false 
statement, fraud, or willful misconduct by or on behalf of the 
participant;
    (3) The determination was modified by the Administrator, FSA, or in 
the case of CCC programs conducted under Chapter XIV of this title, the 
Executive Vice President, CCC; or
    (4) The participant had reason to know that the determination was 
erroneous.
    (b) Should an erroneous determination become final under the 
provisions of this section, it shall only be effective through the year 
in which the error was found and communicated to the participant.


Sec.  718.307  Special relief approval authority for State Executive 
Directors.

    (a) General nature of the special authority. Notwithstanding 
provisions in this subpart providing supervision and relief authority 
to other officials, an SED without further review by other officials 
(other than the Secretary) may grant relief to a participant under the 
provisions of Sec. Sec.  718.303 and 718.304 as if the SED were the 
final arbiter within the agency of such matters so long as:
    (1) The program matter with respect to which the relief is sought 
is a program matter in a covered program which is operated within the 
State under the control of the SED;
    (2) The total amount of relief which will be provided to the person 
(that is, to the individual or entity that applies for the relief) by 
that SED under this special authority for errors during that year is 
less than $20,000 (including in that calculation, any loan amount or 
other benefit of any kind payable for that year and any other year);
    (3) The total amount of such relief which has been previously 
provided to the participant using this special authority for errors in 
that year, as calculated above, is not more than $5,000;
    (4) The total amount of loans, payments, and benefits of any kind 
for which relief is provided to similarly situated participants by the 
SED (or the SED's predecessor) for errors for any year under the 
authority provided in this section, as calculated above, is not more 
than $1,000,000.
    (b) Report of the exercise of the power. A grant of relief shall be 
considered to be under this section and subject to the special finality 
provided in this section only if the SED grants the relief in writing 
when granting the relief to the party who will receive the benefit of 
such relief and only if, in that document, the SED declares that they 
are exercising that power. The SED must report the exercise of that 
power to the Deputy Administrator so that a full accounting may be made 
in keeping with the limitations of this section. Absent such a report, 
relief will not be considered to have been made under this section.
    (c) Additional limits on the authority. The authority provided 
under this section does not extend to:
    (1) The administration of payment limitations under part 1400 of 
this chapter (Sec. Sec.  1001 to 1001F of 7 U.S.C. 1308 et seq.);
    (2) The administration of payment limitations under a conservation 
program administered by the Secretary; or
    (3) Highly erodible land and wetland conservation requirements 
under subtitles B or C of Title XII of the Food Security Act of 1985 
(16 U.S.C. 3811 et seq.) as administered under 7 CFR part 12.
    (d) Relief may not be provided by the SED under this section until 
a written opinion or written acknowledgment is obtained from OGC that 
grounds exist for determination that the program participant has, in 
good faith, detrimentally relied on the guidance or actions of an 
authorized FSA representative in accordance with the provisions of this 
subpart, or that the producer otherwise failed, in good faith, to fully 
comply with the requirements of the program and that the granting of 
the relief is within the lawful authority of the SED.
    (e) Relation to other authorities. The authority provided under 
this section is in addition to any other applicable authority that may 
allow relief. Generally, the SED may, without consultation other than 
with OGC, decide all matters under $20,000 but those decisions shall 
not be subject to modification within the Farm Service Agency to the 
extent provided for under the rules of this section.

    Signed in Washington, DC, on October 28, 2002.
James R. Little,
Administrator, Farm Service Agency, and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 02-27683 Filed 10-30-02; 8:45 am]
BILLING CODE 3410-05-P