[Federal Register Volume 75, Number 100 (Tuesday, May 25, 2010)]
[Rules and Regulations]
[Pages 29183-29189]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-11864]



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  Federal Register / Vol. 75, No. 100 / Tuesday, May 25, 2010 / Rules 
and Regulations  

[[Page 29183]]



DEPARTMENT OF AGRICULTURE

2 CFR Chapter IV

7 CFR Part 3017

RIN 0505-AA11


Office of the Chief Financial Officer; Department of Agriculture 
Implementation of OMB Guidance on Nonprocurement Debarment and 
Suspension

AGENCY: Office of the Chief Financial Officer, USDA.

ACTION: Interim rule.

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

SUMMARY: The Department of Agriculture (USDA) is establishing a new 
part 417 on nonprocurement debarment and suspension at 2 CFR Chapter 4 
that adopts and supplements the Office of Management and Budget (OMB) 
guidance at 2 CFR part 180 as USDA's policies and procedures for 
nonprocurement debarment and suspension. Part 417 of 2 CFR replaces the 
existing USDA implementation of the governmentwide common rule on 
nonprocurement debarment and suspension at 7 CFR part 3017, and 7 CFR 
part 3017 is removed. This action also modifies exclusions from covered 
transactions and codifies a statutory permanent debarment provision. 
This action also finalizes an earlier proposed rule to eliminate an 
appeal to a USDA administrative law judge (ALJ) of a suspension or 
debarment decision. USDA also makes adjustments to its current 
exclusions from covered transactions. Finally, this interim rule 
implements Section 14211 of the Food, Conservation, and Energy Act of 
2008, Public Law 110-246 (7 U.S.C. 2209j), which requires the Secretary 
to debar permanently from participation in USDA programs those 
convicted of having knowingly committed fraud in USDA programs.

DATES: This interim final rule is effective September 22, 2010, unless 
written adverse comments or written notice of intent to submit adverse 
comments are received on or before July 26, 2010.

ADDRESSES: Comments may be submitted by any of the following methods: 
Federal eRulemaking Portal: Go to http://www.regulations.gov, select 
``Department of Agriculture--All'' from the agency drop-down menu, 
select ``Proposed Rules'' from the document type menu, and then click 
``Submit.'' In the document title column, select the proposed rule with 
``2 CFR 417, Implementation of OMB Guidance on Nonprocurement Debarment 
and Suspension'' in the title to submit or view public comments and to 
view supporting and related materials available electronically. 
Information on using Regulations.gov, including instructions for 
accessing documents, submitting comments, and viewing the docket after 
the close of the comment period, is available through the site's ``User 
Tips'' link.
    E-mail: [email protected] or Fax: (202) 690-1529. Include 
Regulatory Information Number (RIN) 0505-AA11 in the subject line of 
the message.
    Postal Mail/Commercial Delivery: Please send four copies of your 
comments (an original and three copies) to Peter Laub, OCFO/CTGPD Room 
3451-S, Stop 9010, 1400 Independence Avenue, SW., Washington, DC 20250-
9010.
    All comments submitted must include the agency name and RIN for 
this rulemaking. All comments received will be posted without change to 
http://www.regulations.gov, including any personal information 
provided.

FOR FURTHER INFORMATION CONTACT: Peter Laub, (202) 720-1554; Fax: (202) 
690-1529, E-mail: [email protected].

SUPPLEMENTARY INFORMATION: 
    Background: On August 31, 2005, OMB issued interim final guidance 
for governmentwide nonprocurement debarment and suspension (70 FR 
51863). This guidance, located at 2 CFR part 180, is substantively the 
same as the common rule but is published in a form that each agency can 
adopt, thus eliminating the need for each agency to publish its 
separate version of the same rule. It also facilitates the ability to 
update governmentwide requirements without each agency having to re-
promulgate its own rules. On November 15, 2006, OMB published a final 
rule adopting the interim final guidance with changes (71 FR 66431).
    USDA's current regulation on nonprocurement debarment and 
suspension is found at 7 CFR part 3017. In accordance with OMB's 
guidance, this rule places USDA's nonprocurement debarment and 
suspension regulations in Title 2 of the CFR, along with other 
agencies' nonprocurement debarment and suspension regulations. The new 
regulation at 2 CFR part 417 adopts the OMB guidelines and includes, 
with few exceptions, the same additions and clarifications that USDA 
made to the governmentwide common rule on this subject issued November 
26, 2003 (68 FR 66534, 66562). In addition to those additions and 
clarifications, USDA is eliminating the ALJ appeal processes for 
suspension and debarment, which were authorized in 7 CFR 3017.765 and 
3017.890, respectively. In 68 FR 66562, USDA stated an intention to 
remove the ALJ appeal. The Department did not receive any adverse 
comments regarding its intention to remove the ALJ appeals. The 
Department decided to remove the appeal to an ALJ to conform to the 
same process as other Federal agencies.
    USDA is replacing the exclusion from covered transaction status for 
nonprocurement transactions currently found in paragraph (i) of 7 CFR 
section 3017.215 with narrower exclusions in paragraphs (a)(8) and (9) 
of 2 CFR section 417.215. The exclusion from covered transaction status 
under 7 CFR 3017.215(i) applied to any transactions below the primary 
tier covered transaction in USDA's export and foreign assistance 
programs, with one exception relating to the Market Access Program. 
USDA is also replacing the exclusion from covered transaction status 
for procurement transactions currently found in subsection (c) of 7 CFR 
3017.220 with narrower exclusions in paragraphs (c) and (d) of 2 CFR 
section 417.220. The exclusion from covered transaction status under 7 
CFR 3017.220(c) applied to any procurement transactions below the 
primary tier covered transaction in USDA's export and foreign 
assistance programs, with the exception of a contract for the 
procurement of ocean transportation in connection with USDA's foreign 
assistance programs.

[[Page 29184]]

    The exclusions from covered transaction status in 2 CFR 
417.215(a)(8) and (9) and 417.220(c) and (d) will apply only to USDA's 
foreign assistance programs and two categories of USDA's export 
programs, the export credit guarantee programs and the direct credit 
programs. Furthermore, the exclusions will apply only to lower tier 
transactions that will be implemented outside the United States. In two 
newly added sections, 2 CFR 417.221 and 417.222, USDA explains how the 
exclusions from covered transaction status for its foreign assistance, 
export credit guarantee and direct credit programs will apply. The 
examples of transactions provided in these sections are intended to be 
illustrative but not exhaustive.
    At the current time, USDA is implementing two foreign assistance 
programs, the Food for Progress Program and the McGovern-Dole 
International Food for Education and Child Nutrition Program. USDA also 
has authority to carry out foreign assistance activities under section 
416(b) of the Agricultural Act of 1949. With regard to USDA's foreign 
assistance programs, the vast majority of transactions below the 
primary tier covered transactions are carried out in foreign countries.
    For example, a private voluntary organization receiving a grant 
under the McGovern-Dole International Food for Education and Child 
Nutrition Program might enter into an agreement with a foreign 
subrecipient that would hire a construction company to build a school 
in Afghanistan. In the absence of the exclusions from covered 
transaction status in 2 CFR 417.215(a)(8) and 417.220(c), the private 
voluntary organization would have to insert compliance language into 
its agreement with the subrecipient, which would be a participant in a 
covered transaction at the first lower tier, and require the 
subrecipient to insert appropriate language into its contract with the 
construction company. This contract would most likely be written in the 
foreign language. This would place a tremendous burden on the private 
voluntary organization. Entities in some countries may not have ready 
access to the Excluded Parties List System (EPLS). Furthermore, due to 
language and logistical difficulties, it would be very difficult for 
USDA to monitor compliance by participants in lower tier transactions 
who are located and carrying out activities in foreign countries. The 
exceptions in 2 CFR 417.215(a)(8) and 417.220(c) have been narrowly 
drawn to recognize the realities of foreign transactions and to avoid 
an adverse impact upon the implementation of USDA's foreign assistance 
programs.
    Currently, the only export credit guarantee program operated by 
USDA is the Commodity Credit Corporation (CCC) Export Credit Guarantee 
Program, commonly known as the GSM-102 program. USDA does not currently 
operate a direct credit program. Under the GSM-102 program, CCC 
guarantees repayment of certain loans extended to foreign bank 
obligors. The guarantee itself is originally issued in favor of an 
exporter of U.S. agricultural commodities, and in the vast majority of 
cases, is assigned by such exporter to a U.S. financial institution. 
The currently authorized but dormant direct credit sales program 
authorizes CCC to finance commercial export sales of privately owned 
stocks of commodities.
    For example, under GSM-102, a CCC guarantee would exist in favor of 
a U.S. exporter or U.S. financial institution, as assignee of such 
exporter. At inception, such a guarantee would contemplate a U.S. 
exporter, a foreign importer, a CCC-approved foreign bank, and, in all 
likelihood, an assignee U.S. financial institution. The guarantee would 
extend to certain obligations of the CCC-approved foreign bank. To the 
extent the foreign bank and the importer are considered participants in 
a covered transaction at the first lower tier, then, in the absence of 
an exception, the foreign bank and the importer would each be required 
to adhere to the provisions of 2 CFR 180.300 when entering into a 
covered transaction with another person at the next lower tier. This 
would have the effect of requiring each foreign bank and each importer 
involved in a GSM-102 transaction, with respect to any person with whom 
it enters into a lower tier covered transaction, to check the EPLS, 
collect a certification, or add a clause or condition to the covered 
transaction with that person. Similar concerns would arise with respect 
to the direct credit sales program, in the event it became active.
    It would be difficult in the extreme to monitor compliance by each 
importer participant and foreign bank participant with respect to each 
person with whom it entered into a lower tier covered transaction. More 
importantly, the inability to ensure compliance with such a requirement 
could readily cause U.S. financial institutions to opt out of 
participation in the program. As nearly 100 percent of all GSM-102 
transactions currently involve a U.S. financial institution as assignee 
of the program, such reticence on the part of the U.S. financial 
institutions would effectively cause the demise of the program 
altogether.
    While there will be no covered transactions below the primary tier 
covered transaction in USDA's foreign assistance programs, export 
credit guarantee programs, and direct credit programs, USDA will still 
require primary tier participants in these programs to check the EPLS 
and not to enter into a nonprocurement transaction or a procurement 
contract that is expected to equal or exceed $25,000 at the first lower 
tier with a person who is excluded or disqualified. Complying with this 
requirement will not be impracticable or impose undue hardship upon the 
primary tier participant.
    USDA is also eliminating the exclusion from covered transaction 
status for nonprocurement transactions currently found in subsection 
(j) of 7 CFR 3017.215. This exclusion applied to any transactions under 
USDA's conservation programs, warehouse licensing programs, or programs 
that provide statutory entitlements and make available loans to 
individuals and entities in their capacity as producers of agricultural 
commodities. With regard to USDA's conservation and commodity programs, 
after approximately 20 years, USDA has determined that the interests of 
the United States are not adequately protected if persons who have been 
suspended or debarred are allowed to participate in these programs. 
With respect to USDA's warehouse licensing programs, these would be 
excluded from covered transaction status pursuant to 2 CFR 
417.215(a)(3), which excludes the receipt of licenses, permits, 
certificates, and indemnification under regulatory programs conducted 
in the interest of public health and safety.
    It is important to note that, consistent with its predecessor in 7 
CFR part 3017, this rule excludes from covered transaction status those 
nonprocurement transactions provided as individual benefits, sometimes 
referred to as personal entitlements, which are received without regard 
to an individual's present responsibility. An individual debarred or 
suspended from participation in a covered transaction under this part, 
then, would not be prohibited on that basis from participation in a 
transaction that involves Federal funds but does not have covered 
transaction status under this part. To clarify further, an individual 
debarred or suspended nevertheless remains eligible to participate in a 
USDA transaction excluded from covered transaction status by this rule. 
For instance, based on a criminal conviction in connection

[[Page 29185]]

with the performance of a grant related to another Federal agency's 
program, an individual may be debarred from participation in all 
covered transactions governmentwide. Despite being debarred, however, 
the individual would remain eligible to participate in a USDA 
transaction excluded from covered transaction status here, such as the 
receipt of individual or household benefits under the USDA's 
Supplemental Nutrition Assistance Program (SNAP, formerly the Food 
Stamp Program). This particular exemption is also consistent with that 
established in Section 1(c) of Executive Order 12549, Debarment and 
Suspension, the basis for the governmentwide nonprocurement debarment 
and suspension authorities codified here, which specifically ``does not 
cover * * * benefits to an individual as a personal entitlement.'' 
Examples of other noncovered transactions, for purposes of 
nonprocurement debarment and suspension, include participation as an 
authorized retailer in SNAP or as a retail vendor in the Special 
Supplemental Nutrition Program for Women, Infants, and Children (WIC), 
because exclusion under this part is superseded by other law, i.e., 
comprehensive statutory disqualification provisions are in place for 
these entities that would conflict with the application of this part.
    In addition, this rule codifies at 2 CFR 417.865(b) the Secretary's 
recently enacted statutory authority to debar permanently a specific 
class of participants involved in USDA programs. Section 14211(b)(2) of 
the Food, Conservation, and Energy Act of 2008, Public Law 110-246 (7 
U.S.C. 2209j), directs the Secretary to debar permanently from 
subsequent participation in USDA programs an ``individual, 
organization, corporation, or other entity'' convicted of a felony for 
``knowingly defrauding'' the USDA related to any of its programs. While 
a conviction may be imposed by a State, local, or Federal jurist, the 
underlying crime must encompass a fraud committed with knowledge by the 
defendant. Permanent debarment is also statutorily limited--extending 
only to a felon's future participation in USDA programs.
    Section 14211(b)(2) limits the effect of permanent debarments 
imposed by the Secretary using this authority, stating that they 
``shall not apply with respect to participation in domestic food 
assistance programs (as defined by the Secretary).'' In view of the 
definitional discretion afforded the Secretary, this rule includes an 
inclusive rather than exhaustive list of those domestic food assistance 
programs. We note that the listed programs encompass benefits provided 
under domestic food assistance programs to individuals or households 
participating in and receiving benefits under those listed programs. In 
contrast, the rule provides that a business, organization, corporation, 
etc., debarred by the Secretary using this authority would be 
prohibited from participation in the listed programs. Thus, for 
example, the Secretary could use the authority in Sec.  417.865(b) to 
debar from future participation in USDA programs a day care home 
provider convicted of knowingly defrauding the USDA while participating 
in the Child and Adult Care Food Program. As an individual, the day 
care home provider and her household would remain eligible to 
participate in USDA's domestic food assistance programs as recipients--
for example, receiving benefits under the Supplemental Nutrition 
Assistance Programs. Conversely, WIC retail vendors and other 
nonbeneficiary entities in the domestic food assistance programs are 
not considered participants and are therefore subject to permanent 
debarment under Sec.  417.865(b).
    In light of the new 2 CFR part 417, USDA is removing 7 CFR part 
3017, which is the current location for USDA's nonprocurement debarment 
and suspension regulations.

Executive Order 12866 ``Regulatory Planning and Review''

    OMB has determined this rule to be ``Nonsignificant.''

Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b))

    This regulatory action will not have a significant, adverse impact 
on a substantial number of small entities.

Unfunded Mandates Act of 1995 (Sec. 202, Pub. L. 104-4)

    This regulatory action does not contain a Federal mandate that will 
result in the expenditure by State, local, and Tribal governments, in 
aggregate, or by the private sector of $100 million or more in any one 
year.

Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35)

    This regulatory action will not impose any additional reporting or 
recordkeeping requirements under the Paperwork Reduction Act.

Federalism (Executive Order 13132)

    This regulatory action does not have Federalism implications, as 
set forth in Executive Order 13132. It will not have substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.

List of Subjects

2 CFR Part 417

    Debarment and suspension (nonprocurement), Grant programs 
(Agriculture).

7 CFR Part 3017

    Debarment and suspension (nonprocurement), Grant programs 
(Agriculture).

0
For the reasons stated in the preamble, under the authority 2 CFR 
180.20, USDA establishes 2 CFR Chapter IV and amends 7 CFR Chapter XXX 
as follows:

TITLE 2--GRANTS AND AGREEMENTS

0
1. Add Chapter IV, consisting of part 417, to Subchapter B to read as 
follows:

Chapter IV--Department of Agriculture

PART 417--NONPROCUREMENT DEBARMENT AND SUSPENSION

Sec.
417.10 What does this part do?
417.20 Does this part apply to me?
417.30 What policies and procedures must I follow?
Subpart A--General
417.137 Who in the USDA may grant an exception to let an excluded 
person participate in a covered transaction?
Subpart B--Covered Transactions
417.215 Which nonprocurement transactions, in addition to those 
listed in 2 CFR 180.215, are not covered transactions?
417.220 Are any procurement contracts included as covered 
transactions?
417.221 How would the exclusions from coverage for the USDA's 
foreign assistance programs apply?
417.222 How would the exclusions from coverage for the USDA's export 
credit guarantee and direct credit programs apply?
Subpart C--Responsibilities of Participants Regarding Transactions
417.332 What methods must I use to pass down requirements to 
participants in lower-tier covered transactions with whom I intend 
to do business?
Subpart D--Responsibilities of USDA Officials Regarding Transactions
417.437 What method do I use to communicate to a participant the 
requirements described in the OMB guidance at 2 CFR 180.435?

[[Page 29186]]

Subpart E--[Reserved]
Subpart F--[Reserved]
Subpart G--Suspension
417.755 When will I know whether the USDA suspension is continued or 
terminated?
Subpart H--Debarment
417.800 What are the USDA causes for debarment?
417.865 How long may my debarment last?
417.870 When do I know if the USDA debarring official debars me?
Subpart I--Definitions
417.930 Debarring official (USDA supplement to governmentwide 
definition at 2 CFR 180.930).
417.1010 Suspending official (USDA supplement to governmentwide 
definition at 2 CFR 180.1010).
Subpart J--[Reserved]

    Authority: 5 U.S.C. 301; Pub. L. 101-576, 104 Stat. 2838; Sec. 
2455, Pub. L. 103-355, 108 Stat. 3327 (31 U.S.C. 6101 note); 7 
U.S.C. 2209j; E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 12698 (3 
CFR, Comp., p. 235); 7 CFR 2.28.


Sec.  417.10  What does this part do?

    This part adopts the OMB guidance in Subparts A through I of 2 CFR 
part 180, as supplemented by this part, as the USDA policies and 
procedures for nonprocurement debarment and suspension. It thereby 
gives regulatory effect for the USDA to the OMB guidance, as 
supplemented by this part. This part satisfies the requirements in 
section 3 of Executive Order 12549, ``Debarment and Suspension'' (3 CFR 
1986 Comp., p. 189), Executive Order 12689, ``Debarment and 
Suspension'' (3 CFR 1989 Comp., p. 235) and 31 U.S.C. 6101 note 
(Section 2455, Pub. L. 103-355, 108 Stat. 3327).


Sec.  417.20  Does this part apply to me?

    Through this part, pertinent portions of the OMB guidance in 
Subparts A through I of 2 CFR part 180 (see table at 2 CFR 180.100(b)) 
apply to you if you are a:
    (a) Participant or principal in a ``covered transaction'' (see 
Subpart B of 2 CFR part 180 and the definition of ``nonprocurement 
transaction'' at 2 CFR 180.970, as supplemented by Sec. Sec.  417.215 
and 417.220 of this part);
    (b) Respondent in a USDA debarment and suspension action;
    (c) USDA debarment or suspension official; or
    (d) USDA grants officer, agreements officer, or other official 
authorized to enter into any type of nonprocurement transaction that is 
a covered transaction.


Sec.  417.30  What policies and procedures must I follow?

    The USDA policies and procedures that you must follow are the 
policies and procedures specified in this regulation and each 
applicable section of the OMB guidance in Subparts A through I of 2 CFR 
part 180, as that section is supplemented by the section in this part 
with the same section number. The contracts that are covered 
transactions, for example, are specified by section 220 of the OMB 
guidance (i.e., 2 CFR 180.220) as supplemented by section 220 in this 
part (i.e., Sec.  417.220). For any section of OMB guidance in Subparts 
A through I of 2 CFR part 180 that has no corresponding section in this 
part, USDA policies and procedures are those in the OMB guidance.

Subpart A--General


Sec.  417.137  Who in the USDA may grant an exception to let an 
excluded person participate in a covered transaction?

    Within the USDA, a debarring official may grant an exception to let 
an excluded person participate in a covered transaction as provided 
under 2 CFR 180.135.

Subpart B--Covered Transactions


Sec.  417.210  Which nonprocurement transactions are covered 
transactions?

    All nonprocurement transactions, as defined in Sec.  417.970, are 
covered transactions unless listed in Sec.  417.215.


Sec.  417.215  Which nonprocurement transactions, in addition to those 
listed in 2 CFR 180.215, are not covered transactions?

    (a) Transactions not covered. In addition to the nonprocurement 
transactions listed in 2 CFR 180.215, the following nonprocurement 
transactions are not covered transactions:
    (1) An entitlement or mandatory award required by a statute, 
including a lower tier entitlement or mandatory award that is required 
by a statute.
    (2) The export or substitution of Federal timber governed by the 
Forest Resources Conservation and Shortage Relief Act of 1990, 16 
U.S.C. 620 et seq. (The ``Export Act''), which prevents a debarred 
person from entering into any contract for the purchase of unprocessed 
timber from Federal lands. See 16 U.S.C. 620d(d)(1)(A).
    (3) The receipt of licenses, permits, certificates, and 
indemnification under regulatory programs conducted in the interest of 
public health and safety, and animal and plant health and safety.
    (4) The receipt of official grading and inspection services, animal 
damage control services, public health and safety inspection services, 
and animal and plant health and safety inspection services.
    (5) If the person is a State or local government, the provision of 
official grading and inspection services, animal damage control 
services, animal and plant health and safety inspection services.
    (6) The receipt of licenses, permits, or certificates under 
regulatory programs conducted in the interest of ensuring fair trade 
practices.
    (7) Permits, licenses, exchanges and other acquisitions of real 
property, rights of way, and easements under natural resource 
management programs.
    (8) Any transaction to be implemented outside the United States 
that is below the primary tier covered transaction in a USDA foreign 
assistance program.
    (9) Any transaction to be implemented outside the United States 
that is below the primary tier covered transaction in a USDA export 
credit guarantee program or direct credit program.
    (b) Limited requirement to check EPLS. Notwithstanding the fact 
that transactions to be implemented outside the United States that are 
below the primary tier covered transaction in a USDA foreign assistance 
program, export credit guarantee program or direct credit program are 
not covered transactions, pursuant to paragraphs (a)(8) and (9) of this 
section, primary tier participants under these programs must check the 
EPLS prior to entering into any transaction with a person at the first 
lower tier and shall not enter into such a transaction if the person is 
excluded or disqualified under the EPLS.
    (c) Exception. A cause for suspension or debarment under Sec.  
180.700 or 180.800 of this title (as supplemented by Sec.  417.800) may 
be based on the actions of a person with respect to a procurement or 
nonprocurement transaction under a USDA program even if such 
transaction has been excluded from covered transaction status by this 
section or Sec.  417.220.


Sec.  417.220  Are any procurement contracts included as covered 
transactions?

    (a) Covered transactions under this part:
    (1) Do not include any procurement contracts awarded directly by a 
Federal agency; but
    (2) Do include some procurement contracts awarded by non-Federal 
participants in nonprocurement covered transactions (see appendix to 
this part).

[[Page 29187]]

    (b) Specifically, a contract for goods or services is a covered 
transaction if any of the following applies:
    (1) The contract is awarded by a participant in a nonprocurement 
transaction that is covered under Sec.  417.210, and the amount of the 
contract is expected to equal or exceed $25,000.
    (2) The contract requires the consent of a USDA official. In that 
case, the contract, regardless of the amount, always is a covered 
transaction, and it does not matter who awarded it. For example, it 
could be a subcontract awarded by a contractor at a tier below a 
nonprocurement transaction, as shown in the appendix to this part.
    (3) The contract is for federally-required audit services.
    (c) Any procurement contract to be implemented outside the United 
States that is below the primary tier covered transaction in a USDA 
foreign assistance program is not a covered transaction, 
notwithstanding the provisions in paragraphs (a) and (b) of this 
section.
    (d) Any procurement contract to be implemented outside the United 
States that is below the primary tier covered transaction in a USDA 
export credit guarantee program or direct credit program is not a 
covered transaction, notwithstanding the provisions in paragraphs (a) 
and (b) of this section.
    (e) Notwithstanding the fact that procurement contracts to be 
implemented outside the United States that are below the primary tier 
covered transaction in a USDA foreign assistance program, export credit 
guarantee program or direct credit program are not covered 
transactions, pursuant to paragraphs (c) and (d) of this section, 
primary tier participants under these programs must check the EPLS 
prior to entering into any procurement contract that is expected to 
equal or exceed $25,000 with a person at the first lower tier and shall 
not enter into such a procurement contract if the person is excluded or 
disqualified under the EPLS.


Sec.  417.221  How would the exclusions from coverage for the USDA's 
foreign assistance programs apply?

    The primary tier covered transaction would be the food aid grant 
agreement entered into between USDA and a program participant, such as 
a U.S. private voluntary organization. USDA would have to check the 
EPLS before entering into the food aid grant agreement to ensure that 
the U.S. private voluntary organization that would be the primary tier 
participant is not excluded or disqualified. A transaction at the first 
lower tier might be a subrecipient agreement between the U.S. private 
voluntary organization and a foreign subrecipient of the commodities 
that were provided under the food aid grant agreement. Pursuant to 
Sec.  417.215(a)(8), this nonprocurement transaction would not be a 
covered transaction. In addition, a transaction at the first lower tier 
might be a procurement contract entered into between the U.S. private 
voluntary organization and a foreign entity to provide supplies or 
services that are expected to equal or exceed $25,000 in value and that 
are needed by such organization to implement activities under the food 
aid grant agreement. Pursuant to Sec.  417.220(c), this procurement 
contract would not be a covered transaction. However, pursuant to 
Sec. Sec.  417.215(b) and 417.220(e), the U.S. private voluntary 
organization would be prohibited from entering into, at the first lower 
tier, an agreement with a subrecipient or a procurement contract that 
is expected to equal or exceed $25,000 with an entity that appears on 
the EPLS as excluded or disqualified.


Sec.  417.222  How would the exclusions from coverage for USDA's export 
credit guarantee and direct credit programs apply?

    (a) Export credit guarantee program. In the case of the export 
credit guarantee program, the primary tier covered transaction would be 
the guarantee issued by the USDA to a U.S. exporter. The U.S. exporter 
usually assigns the guarantee to a U.S. financial institution, and this 
would create another primary tier covered transaction between USDA and 
the U.S. financial institution. USDA would have to check the EPLS 
before issuing a guarantee or accepting a guarantee assignment to 
ensure that the U.S. exporter or financial institution that would be 
the primary tier participant is not excluded or disqualified. A 
transaction at the first lower tier under the export credit guarantee 
program might be a payment obligation of a foreign bank to the U.S. 
exporter to pay on behalf of the importer for the exported U.S. 
commodities that are covered by the guarantee. Similarly, a transaction 
at the first lower tier might be a payment obligation of a foreign bank 
under an instrument, such as a loan agreement or letter of credit, to 
the U.S. financial institution assigned the guarantee, which has paid 
the exporter for the exported U.S. commodities and, in so doing, issued 
a loan to the foreign bank, which the foreign bank is obligated to 
repay on deferred payment terms. Pursuant to Sec.  417.215(a)(9), these 
nonprocurement transactions would not be covered transactions. In 
addition, a transaction at the first lower tier under the export credit 
guarantee program might be a procurement contract (i.e., a contract for 
the purchase and sale of goods) that is expected to equal or exceed 
$25,000 entered into between the U.S. exporter and the foreign importer 
for the U.S. commodities, the payment for which is covered by the 
guarantee. Pursuant to Sec.  417.220(d), this procurement contract 
would not be a covered transaction. However, pursuant to Sec. Sec.  
417.215(b) and 417.220(e), the U.S. exporter or U.S. financial 
institution would be prohibited from entering into, at the first lower 
tier, an agreement with an importer (or intervening purchaser) or 
foreign bank or a procurement contract that is expected to equal or 
exceed $25,000 with an entity that appears on the EPLS as excluded or 
disqualified.
    (b) Direct credit program. In the case of the direct credit 
program, the primary tier covered transaction would be the financing 
agreement between the USDA and the U.S. exporter. USDA purchases the 
exporter's account receivable in a particular transaction pursuant to 
the financing agreement. On occasion, such transaction may contemplate 
a payment obligation of a U.S. or foreign bank to make the required 
payments. USDA would have to check the EPLS before entering into a 
financing agreement or accepting such a payor to ensure that the U.S. 
exporter or the bank, if any, that would be the primary tier 
participant is not excluded or disqualified. A transaction at the first 
lower tier might be a payment obligation of the importer to pay the 
exporter for the exported U.S. commodities that are covered by the 
financing agreement. Pursuant to Sec.  417.215(a)(9), this 
nonprocurement transaction would not be a covered transaction. In 
addition, a transaction at the first lower tier might be a procurement 
contract that is expected to equal or exceed $25,000 entered into 
between the U.S. exporter and the foreign importer for the U.S. 
commodities, the payment for which is covered by the financing 
agreement. Pursuant to Sec.  417.220(d), this procurement contract 
would not be a covered transaction. However, pursuant to Sec. Sec.  
417.215(b) and 417.220(e), the U.S. exporter would be prohibited from 
entering into, at the first lower tier, an agreement with an importer 
(or intervening purchaser) or bank, or a procurement contract that is 
expected to equal or exceed $25,000 with an entity that appears on the 
EPLS as excluded or disqualified.

[[Page 29188]]

Subpart C--Responsibilities of Participants Regarding Transactions


Sec.  417.332  What methods must I use to pass down requirements to 
participants in lower tier covered transactions with whom I intend to 
do business?

    You as a participant must include a term or condition in lower tier 
covered transactions requiring lower tier participants to comply with 
Subpart C of the OMB guidance in 2 CFR part 180, as supplemented by 
Subpart C of this part.

Subpart D--Responsibilities of Department of Agriculture Officials 
Regarding Transactions


Sec.  417.437  What method do I use to communicate to a participant the 
requirements described in the OMB guidance at 2 CFR 180.435?

    To communicate to a participant the requirements described in 2 CFR 
180.435, you must include a term or condition in the transaction that 
requires the participant's compliance with Subpart C of 2 CFR part 180, 
as supplemented by Subpart C of this part, and requires the participant 
to include a similar term or condition in lower tier covered 
transactions.

Subpart E--[Reserved]

Subpart F--[Reserved]

Subpart G--Suspension


Sec.  417.755  When will I know whether the USDA suspension is 
continued or terminated?

    The suspending official must make a written decision whether to 
continue, modify, or terminate your suspension within 45 days of 
closing the official record. The official record closes upon the 
suspending official's receipt of final submissions, information and 
findings of fact, if any. The suspending official may extend that 
period for good cause. However, the record will remain open for the 
full 30 days, as called for in Sec.  180.725, even when you make a 
submission before the 30 days expire.

Subpart H--Debarment


Sec.  417.800  What are the USDA causes for debarment?

    A Federal agency may debar a person for--
    (a) Conviction of or civil judgment for--
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, tax 
evasion, receiving stolen property, making false claims, or obstruction 
of justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects your 
present responsibility;
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as--
    (1) A willful failure to perform in accordance with the terms of 
one or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory 
performance of one or more public agreements or transactions; or
    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction;
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
March 1, 1989, or a procurement debarment by any Federal agency taken 
pursuant to 48 CFR part 9, subpart 9.4, before August 25, 1995;
    (2) Knowingly doing business with an ineligible person, except as 
permitted under Sec.  180.135;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec.  180.640 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of the provisions of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701); or
    (d) Any other cause of so serious or compelling a nature that it 
affects your present responsibility.


Sec.  417.865  How long may my debarment last?

    (a) If the debarring official decides to debar you, your period of 
debarment will be based on the seriousness of the cause(s) upon which 
your debarment is based. Generally, debarment should not exceed 3 
years. However, if circumstances warrant, the debarring official may 
impose a longer period of debarment.
    (b) In determining the period of debarment, the debarring official 
may consider the factors in 2 CFR 180.860. If a suspension has preceded 
your debarment, the debarring official must consider the time you were 
suspended.
    (c) If the debarment is for a violation of the provisions of the 
Drug-Free Workplace Act of 1988, your period of debarment may not 
exceed 5 years.
    (d) The Secretary shall permanently debar from participation in 
USDA programs any individual, organization, corporation, or other 
entity convicted of a felony for knowingly defrauding the United States 
in connection with any program administered by USDA.
    (1) Reduction. If the Secretary considers it appropriate s/he may 
reduce a debarment under this subsection to a period of not less than 
10 years.
    (2) Exemption. A debarment under this subsection shall not apply 
with regard to participation in USDA domestic food assistance programs. 
For purposes of this paragraph, participation in a domestic food 
assistance program does not include acting as an authorized retail food 
store in the Supplemental Nutrition Assistance Program (SNAP), the 
Special Supplemental Nutrition Assistance Program for Women, Infants, 
and Children (WIC), or as a nonbeneficiary entity in any of the 
domestic food assistance programs. The programs include:
    (i) Special Nutrition Assistance Program, 7 U.S.C. 2011, et seq.;
    (ii) Food Distribution Program on Indian Reservations, 7 U.S.C. 
2013(b);
    (iii) National School Lunch Program, 42 U.S.C. 1751, et seq.;
    (iv) Summer Food Service Program for Children, 42 U.S.C. 1761; 
Child and Adult Care Food Program, 42 U.S.C. 1766;
    (v) Special Milk Program for Children, 42 U.S.C. 1772; School 
Breakfast Program, 42 U.S.C. 1773;
    (vi) Special Supplemental Nutrition Program for Women, Infants, and 
Children, 42 U.S.C. 1786;
    (vii) Commodity Supplemental Food Program, 42 U.S.C. 612c note;
    (viii) WIC Farmers Market Nutrition Program, 42 U.S.C. 1786;
    (ix) Senior Farmers' Market Nutrition Program, 7 U.S.C. 3007; and
    (x) Emergency Food Assistance Program, 7 U.S.C. 7501, et. seq.

[[Page 29189]]

Sec.  417.870  When do I know if the USDA debarring official debars me?

    (a) The debarring official must make a written decision whether to 
debar within 45 days of closing the official record. The official 
record closes upon the debarring official's receipt of final 
submissions, information and findings of fact, if any. The debarring 
official may extend that period for good cause. However, the record 
will remain open for the full 30 days, as called for in Sec.  180.820, 
even when you make a submission before the 30 days expire.
    (b) The debarring official sends you written notice, pursuant to 
Sec.  180.615, that the official decided, either:
    (1) Not to debar you; or
    (2) To debar you. In this event, the notice:
    (i) Refers to the Notice of Proposed Debarment;
    (ii) Specifies the reasons for your debarment;
    (iii) States the period of your debarment, including the effective 
dates; and
    (iv) Advises you that your debarment is effective for covered 
transactions and contracts that are subject to the Federal Acquisition 
Regulation (48 CFR chapter 1), throughout the Executive Branch of the 
Federal Government unless an agency head or an authorized designee 
grants an exception.

Subpart I--Definitions


Sec.  417.930  Debarring official (USDA supplement to governmentwide 
definition at 2 CFR 180.930).

    (a) Debarring official means an agency official who is authorized 
to impose debarment. The debarring official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) The head of an organizational unit within USDA (e.g., 
Administrator, Food and Nutrition Service), who has been delegated 
authority in 7 CFR part 2 to carry out a covered transaction, is 
delegated authority to act as the debarring official in connection with 
such transaction. This authority to act as a debarring official may not 
be redelegated below the head of the organizational unit, except that, 
in the case of the Forest Service, the Chief may redelegate the 
authority to act as a debarring official to the Deputy Chief for the 
National Forest System or an Associate Deputy Chief for the National 
Forest System.


Sec.  417.1010  Suspending official (USDA supplement to governmentwide 
definition at 2 CFR 180.1010).

    (a) Suspending official means an agency official who is authorized 
to impose suspension. The suspending official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) The head of an organizational unit within USDA (e.g., 
Administrator, Food and Nutrition Service), who has been delegated 
authority in 7 CFR part 2 of this title to carry out a covered 
transaction, is delegated authority to act as the suspending official 
in connection with such transaction. This authority to act as a 
suspending official may not be redelegated below the head of the 
organizational unit, except that, in the case of the Forest Service, 
the Chief may redelegate the authority to act as a suspending official 
to the Deputy Chief for the National Forest System or an Associate 
Deputy Chief for the National Forest System.

Subpart J--[Reserved]

TITLE 7--AGRICULTURE

0
2. Remove 7 CFR part 3017.

    Dated: March 24, 2010.

    Issued at Washington, DC.
Thomas J. Vilsack,
Secretary.
[FR Doc. 2010-11864 Filed 5-24-10; 8:45 am]
BILLING CODE 3410-90-P