[Federal Register Volume 72, Number 181 (Wednesday, September 19, 2007)]
[Rules and Regulations]
[Pages 53424-53426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18205]


-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Department of the Navy

32 CFR Part 756

[USN-2006-0040]
RIN 0703-AA80


Nonappropriated-Fund Claims Regulations

AGENCY: Department of the Navy, DoD.

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: This rule reflects administrative changes to the regulations 
concerning the administrative processing of non-appropriated funds. The 
revisions will ensure the proper administrative processing and 
consideration of claims on behalf of and against the United States. 
This rule is being published by the Department of the Navy (DoN) for 
guidance and interest of the public in accordance with 5 U.S.C. 
552(a)(1).

DATES: This rule is effective September 19, 2007. Comments must be 
received by November 19, 2007.

ADDRESSES: You may submit comments, identified by docket number and/or 
Regulatory Information Number (RIN) and title, by any of the following 
methods: Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the instructions for submitting comments.

[[Page 53425]]

    Mail: Federal Docket Management System Office, 1160 Defense 
Pentagon, Washington, DC 20301-1160.
    Instructions: All submissions received must include the agency name 
and docket number or RIN for this Federal Register document. The 
general policy for comments and other submissions from members of the 
public is to make these submissions available for public viewing on the 
Internet at http://regulations.gov as they are received without change, 
including any personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Mr. Dan Fields, Head, Tort Claims 
Branch, Claims and Tort Litigation Division (Code 15), Office of the 
Judge Advocate General, 1322 Patterson Avenue, SE., Washington Navy 
Yard, DC 20374, telephone 202-685-4600.

SUPPLEMENTARY INFORMATION: Executive Order 12866, ``Regulatory Planning 
and Review.'' It has been determined that the changes to 32 CFR part 
756 are not considered a ``significant regulatory action.'' The rule 
does not:
    (1) Have an annual affect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector in the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs, or the rights and obligations of the 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
this Executive Order.
    Unfunded Mandates Reform Act (Sec. 202, Pub. L. 104-4). It has been 
certified that 32 CFR part 756 does not contain Federal Mandates that 
result in expenditures by State, local and tribal governments, in 
aggregate, or by the private sector, of $100 million or more in any one 
year.
    Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601). 
It has been determined that this rule is not subject to the Regulatory 
Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, 
have a significant economic impact on a substantial number of small 
entities. This rule implements the processing of the proper 
administrative processing and consideration of claims on behalf of and 
against the United States, and does not economically impact the Federal 
government's relations with the private sector.
    Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 
35). This rule does not impose collection of information requirements 
for purposes of the Paperwork Reduction Act (44 U.S.C. Chapter 35, 5 
CFR part 1320).
    Executive Order 13132, ``Federalism''. It has been certified that 
32 CFR part 756 does not have federalism implications as set forth in 
Executive Order 13132. This rule does not have substantial direct 
effects on:
    (1) The States;
    (2) The relationship between the National Government and the 
States; or
    (3) The distribution of power and responsibilities among the 
various levels of Government.

List of Subjects in 32 CFR Part 756

    Claims.

0
Accordingly, 32 CFR part 756 is amended to read as follows:

PART 756--PROCEDURES FOR PROCESSING CLAIMS INVOLVING NON-
APPROPRIATED FUND ACTIVITIES AND THEIR EMPLOYEES

0
1. The authority citation for part 756 is revised to read as follows:

    Authority: 5 U.S.C. 301, 10 U.S.C. 5013 and 5148.


0
2. The heading for part 756 is revised to read as set forth above.

0
3. Section 756.1 is revised to read as follows:


Sec.  756.1  Scope.

    This part explains how to settle claims for and against the United 
States for property damage, personal injury, or death arising out of 
the operation of non-appropriated fund activities (NAFI).\1\
---------------------------------------------------------------------------

    \1\ DoD Directive 5515.6 establishes policy governing the 
administrative processing of claims arising out of the operation of 
non-appropriated fund activities.

0
4. Section 756.2 is amended by revising paragraph (c) to read as 
follows:


Sec.  756.2  Definitions.

* * * * *
    (c) Employees of NAFIs. Personnel employed by NAFIs whose salaries 
are paid from non-appropriated funds.

0
5. Revise Sec.  756.4 to read as follows:


Sec.  756.4  Responsibility.

    (a) All claims resulting from NAFIs should be submitted to the 
command having cognizance over the NAFI involved. The claim will then 
be forwarded to the Tort Claims Unit (TCU) Norfolk located at the 
following address: Department of the Navy, Office of the Judge Advocate 
General, Tort Claims Unit Norfolk, 9620 Maryland Avenue, Suite 100, 
Norfolk, VA 23511-2989.
    (b) The TCU Norfolk has cognizance over all DoN claims. Normally, 
the TCU Norfolk has primary responsibility for the negotiation and 
settlement of NAFI claims. This is because NAFIs are Federal agencies 
within the meaning of the Federal Tort Claims Act (FTCA) if the NAFI is 
charged with an essential function of the DoN and if the degree of 
control and supervision by the Navy is more than casual or perfunctory. 
Compare United States v. Holcombe, 277 F.2d 143 (4th Cir. 1960) and 
Scott v. United States, 226 F. Supp. 846, (D. Ga. 1963). Consequently, 
to the extent sovereign immunity is waived by the FTCA, 28 U.S.C. 
1346(b), 2671-2672, 2674-2680, the United States remains ultimately 
liable for payment of NAFI claims.

0
6. Section 756.5 is revised to read as follows:


Sec.  756.5  Investigation.

    Claims arising out of the operation of NAFIs, in and outside the 
United States, shall be investigated in accordance with the procedures 
for investigating similar claims against appropriated fund activities. 
The Manual of the Judge Advocate General (JAGMAN), Chapter II \2\ 
provides guidance in conducting an investigation of an incident or 
event likely to result in claims or civil litigation against or for DoN 
or the United States.
---------------------------------------------------------------------------

    \2\ JAGMAN Chapter II (JAG Instruction 5800.7E) is available at 
the Web site of the Navy Judge Advocate General's Corps at http://www.jag.navy.mil.

0
7. Section 756.6 is revised to read as follows:


Sec.  756.6  Negotiation.

    (a) General. Claims from NAFIs should be processed primarily 
through procedures, regulations, and statutes applicable to similar 
appropriated fund activity claims.
    (b) When the NAFI is insured. When a NAFI is insured, the insurer 
or the contracted third-party claims administrator (TPA) will normally 
conduct negotiations with claimants. The TCU Norfolk shall monitor the 
negotiations conducted by the insurer or TPA. Monitoring is normally 
limited to ascertaining that someone has been assigned to negotiate, to 
obtain periodic status reports, and to close files on settled claims. 
Any dissatisfaction with the insurer's or TPA's handling of the 
negotiations should be referred directly to the Judge Advocate General 
(Claims and Tort Litigation) for appropriate action. If requested by 
the insurer or

[[Page 53426]]

TPA, the TCU Norfolk may conduct negotiations. If TCU Norfolk 
negotiates a final settlement, however, request for payment will be 
forwarded to the insurer or TPA for payment. Concurrence by the insurer 
or TPA in the amount of the settlement is not necessary.
    (c) When the NAFI is not insured. When there is no private 
commercial insurer and the NAFI has made no independent arrangements 
for negotiations, the TCU Norfolk is responsible for conducting 
negotiations. When an appropriate settlement is negotiated by the Navy, 
the recommended award will be forwarded to the NAFI for payment from 
non-appropriated funds.

0
8. Section 756.7 is revised to read as follows:


Sec.  756.7  Payment.

    (a) Claims that can be settled for less than 1,500.00. A claim not 
covered by insurance (or not paid by the insurer), that can be settled 
for $1,500.00 or less, may be adjudicated by the TCU Norfolk or single-
service authority and forwarded to the commanding officer of the 
activity concerned or designee for payment out of funds available to 
the commanding officer. The TCU Norfolk or single-service authority 
will obtain the required release from the claimant.
    (b) Claims that cannot be settled for less than $1,500.00. A claim 
negotiated by the Navy, not covered by insurance, that is for more than 
$1,500.00 will be forwarded to the appropriate non-appropriated fund 
headquarters command for payment from its non-appropriated funds.
    (c) When payment is possible under another statute. In some cases, 
neither the NAFI nor its insurer may be legally responsible. In those 
instances when there is no negligence, and payment is authorized under 
some other statute, such as the Foreign Claims Act, 10 U.S.C. 2734-
2736, the claim may be considered for payment from appropriated funds 
or may be referred to the TCU Norfolk for appropriate action.
    (d) Other claims. A NAFI's private insurance policy is usually not 
available to cover losses that result from some act or omission of a 
mere participant in a non-appropriated fund activity. In the event the 
NAFI declines to pay the claim, the file shall be forwarded to the TCU 
Norfolk for determination.

0
9. Section 756.8 is revised to read as follows:


Sec.  756.8  Denial.

    Claims resulting from non-appropriated fund activities may be 
denied only by the TCU Norfolk. The denial will begin the six-month 
limitation on filing suit against the United States for claims filed 
under the FTCA. Denial of a claim shall be in writing and in accordance 
with subparts A and B of part 750 of this chapter, as appropriate. The 
TCU Norfolk should not deny claims that have initially been processed 
and negotiated by a non-appropriated fund activity, its insurer, or 
TPA, until the activity or its insurer has clearly stated in writing 
that it does not intend to pay the claim and has elected to defend the 
claim in court.

0
10. Section 756.9 is revised to read as follows:


Sec.  756.9  Claims by employees.

    (a) Property. Claims by employees of NAFIs for loss, damage, or 
destruction of personal property incident to their employment shall be 
processed and adjudicated in accordance with subparts A or B of part 
751 of this chapter, as appropriate. The claims will then be forwarded 
to the appropriate NAFI for payment from non-appropriated funds.
    (b) Personal injury or death. (1) Personal injury or death of 
citizens or permanent residents of the United States employed anywhere, 
or foreign nationals employed within the United States. Compensation is 
provided by the Longshore and Harbor Workers' Compensation Act (33 
U.S.C. 901-950) for employees of NAFIs who have suffered injury or 
death arising out of, and in the course of, their employment (5 U.S.C. 
8171). That Act is the exclusive basis for Government liability for 
such injuries or deaths that are covered (5 U.S.C. 8173). A claim 
should first be made under that Act if there is a substantial 
possibility the injury or death is covered under the Act's provisions.
    (2) Personal injury or death of foreign nationals employed outside 
of the continental United States. Employees who are not citizens or 
permanent residents, and who are employed outside the continental 
United States, may be protected by private insurance of the NAFI or by 
other arrangements. When a non-appropriated fund activity has elected 
not to obtain insurance coverage or to make other arrangements, 
compensation is separately provided by Federal statute, military 
regulations, and agreements with foreign countries. See 5 U.S.C. 8172, 
DoD 1401.1-M, Personnel Policy Manual for Non-appropriated Fund 
Instrumentalities and BUPERINST 5300.10A, NAF Personnel Manual.

    Dated: September 10, 2007.
T.M. Cruz,
Lieutenant, Judge Advocate General's Corps, U.S. Navy, Federal Register 
Liaison Officer.
 [FR Doc. E7-18205 Filed 9-18-07; 8:45 am]
BILLING CODE 3810-FF-P