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

SUMMARY: This final rule establishes the rules of practice governing

the administrative review process for State agencies challenging food

stamp quality control (QC) claims and is intended to speed the

resolution of the QC claims. This action is necessary to implement

program administrative review requirements mandated by the Hunger

Prevention Act of 1988 and the Omnibus Budget Reconciliation Act of

1993 (Mickey Leland Childhood Hunger Relief Act).

DATES: 1. Effective Date: This rule is effective August 5, 1994.

2. Implementation Date: This rule must be implemented for all QC

billing actions beginning with fiscal year 1986.

FOR FURTHER INFORMATION CONTACT: John Knaus, Chief, Quality Control

Branch, Program Accountability Division, Food Stamp Program, Food and

Nutrition Service, USDA, 3101 Park Center Drive, room 907, Alexandria,

Virginia 22302, (703) 305-2474.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule has been determined to be not significant for

purposes of Executive Order 12866 and, therefore, has not been reviewed

by the Office of Management and Budget.

Executive Order 12372

The Food Stamp Program is listed in the Catalog of Federal Domestic

Assistance under No. 10.551. For the reasons set forth in 7 CFR part

3015, subpart V and related Notice (48 FR 29115), the Food Stamp

Program is excluded from the scope of Executive Order 12372 which

requires intergovernmental consultation with State and local officials.

Executive Order 12778

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This rule is intended to have preemptive effect

with respect to any State or local laws, regulations or policies that

conflict with its provisions or that would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

unless so specified in the ``Effective Date'' section of this preamble.

Prior to any judicial challenge to the provisions of this rule or the

application of its provisions, all applicable administrative procedures

must be exhausted. In the Food Stamp Program the administrative

procedures are as follows: (1) For program benefit recipients--State

administrative procedures issued pursuant to 7 U.S.C. 2020(e)(10) and 7

CFR 273.15; (2) for State agencies--administrative procedures issued

pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for rules related to

non-QC liabilities) or part 283 (for rules related to QC liabilities);

(3) for program retailers and wholesalers--administrative procedures

issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 278.8.

Regulatory Flexibility Act

This action has also been reviewed with regard to the requirements

of the Regulatory Flexibility Act (5 U.S.C. 601-612). William E.

Ludwig, Administrator of the Food and Nutrition Service, has certified

that this rule will not have a significant economic impact on a

substantial number of small entities. Only State and local welfare

agencies will be affected to the extent that they are involved with

appeals of Food Stamp Program quality control claims. The procedures to

appeal quality control claims are being changed by this rule to

streamline and reduce the time and resources State and local welfare

agencies previously devoted to such appeals. Potential and current

participants in the Food Stamp Program will not be affected.

Paperwork Reduction Act

This rulemaking does not contain recordkeeping and reporting

requirements subject to approval by the Office of Management and Budget

under the Paperwork Reduction Act of 1980 (44 U.S.C. chapter 35) and

falls within the exceptions to coverage.

Background

On January 19, 1993, the Department issued a Notice of Proposed

Rulemaking (NPRM) at 58 FR 5188 to implement section 603 of the Hunger

Prevention Act of 1988 (HPA) (Pub. L. 100-435). The HPA amended the

Food Stamp Act of 1977, as amended (the Act) (7 U.S.C. 2011-2032)

regarding the Food Stamp Program's administrative review process for QC

claims (7 U.S.C. 2023(a)). A total of eight comment letters were

received on the proposed rule. One commenter subsequently advised the

Department that it considered its comment letter to be inappropriate to

the subject of the NPRM and withdrew its letter. The following analysis

is based on the remaining seven comment letters.

Since issuance of the proposed regulations on January 19, 1993,

Congress has enacted Chapter 3, Title XIII of the Omnibus Budget

Reconciliation Act of 1993, Pub. L. 103-66 (Mickey Leland Childhood

Hunger Relief Act) (Leland Act) to further streamline the appeals

process for QC claims established under section 16(c) of the Act, 7

U.S.C. 2025(c). Section 13951 of the Leland Act amended sections

13(a)(1), 14(a) and 16(c) of the Act to: (1) Provide that State

agencies will be assessed interest on outstanding QC liabilities if the

administrative appeals process takes more than one year to resolve

these claims; (2) to establish timeframes for the administrative review

process and (3) to provide that an administrative law judge (ALJ) shall

consider a State agency's contention of good cause when considering

whether to waive all or part of a State agency's QC liability.

A full explanation of the rationale of the proposed rule is

contained in its preamble. It is suggested that interested parties

refer to that preamble for additional background information (58 FR

5188). Following is a detailed discussion on the comments received on

the proposed rule, non-discretionary revisions based on the Leland Act

and the provisions of the final rule. The Department has determined

that, with respect to the revisions based upon non-discretionary

provisions of the Leland Act referenced above, notice and comment are

unnecessary since the Department has no discretion with respect to

these provisions. accordingly, such revisions have been made through

this final rule.

Discussion of the Regulations

In the following discussion, we have identified each section of the

regulation being addressed and have interspersed comments and responses

as appropriate. The regulatory language from the NPRM was retained

except where indicated.

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

This section of the NPRM contains the procedures which State

agencies are to follow in appealing the bill for collection from the

Food and Nutrition Service (FNS) for QC claims of $50,000 or more.

Time: In Sec. 283.4(a) of the NPRM, the Department proposed that a

State agency must file a notice of appeal within 10 days of receipt by

certified mail or personal service of the bill for collection from FNS.

Comments: The Department received three comments on this provision.

One commenter stated that the 10-day time span to file the written

notice of appeal was too short and that a 30-day period would be more

reasonable. Two commenters indicated that it was unclear whether the

notice of appeal or the bill for collection must be served by certified

mail or personal service. These commenters questioned if it was FNS'

intent to require that the notice of appeal be filed by certified mail

or personal service.

Response: The Department has considered the comment urging

extension of the 10-day requirement but cannot adopt this suggestion.

Section 13951 of the Leland Act retained the 10-day filing requirement

for the notice of appeal but provides that the filing deadline shall be

extended by the ALJ for cause shown. The Department believes that the

requirements for the content of the notice of appeal are minimal and

should not pose any undue difficulty for the State agency to meet the

10-day filing deadline. If an extension is requested, the request and

cause for such request must be submitted to the ALJ or chief judge

prior to the expiration of the 10-day filing deadline. The Department

has also revised Sec. 283.22(f) to incorporate this provision.

The Department also notes that section 13951(c)(4) of the Leland

Act authorizes the ALJ to extend the deadlines for filing of the appeal

petition, answer, rebuttal and initial decision for cause shown.

The Department has considered the comment concerning the service of

the notice of appeal and has revised this section to clarify that it is

not FNS' intention to require the State agency to file the notice of

appeal by certified mail or personal service. As discussed in the

preamble to the NPRM, the State agency will have 10 days from receipt

of the bill for collection to file a notice of appeal with the Hearing

Clerk. Section 283.22(b) of the NPRM provides that the notice of appeal

is considered to be filed on the date that it is postmarked or, if hand

delivered, the date it is received by the Hearing Clerk. FNS will

continue its policy of issuing the bill for collection either by

certified mail or personal service. Once the State agency receives the

bill for collection, it will have 10 calendar days to file its notice

of appeal, unless an extension is requested prior to the expiration of

the 10-day filing deadline.

Exhaustion of Administrative remedies: The Department has added new

Secs. 283.4(b) and 283.25(b) to clarify that the State agency must

appeal the bill for collection to the ALJ in order to exhaust available

administrative remedies as a prerequisite to seeking judicial review.

While the Department believes it is clear that Congress intended

section 14(a) of the Act to require the State agency to exhaust an

administrative appeal before the ALJ before seeking judicial review,

the rule has been clarified to specifically require such exhaustion.

Thus, the decision of the ALJ is final for purposes of judicial review.

However, as discussed in the preamble regarding Sec. 283.17(c)(3),

either party to the appeal may, at its option, seek reconsideration of

ALJ decision or review by the Judicial Officer. Accordingly,

Secs. 283.4 (b)-(c) of the NPRM have been renumbered as Secs. 283.4

(c)-(d) and Secs. 283.25 (b)-(h) of the NPRM have been renumbered

Secs. 283.25 (c)-(i).

Content of the notice: In Sec. 283.4(c) of the NPRM, the Department

proposed the information which an acceptable notice of appeal must

contain and that failure to file an acceptable notice of appeal would

result in a dismissal of the notice by the ALJ and a waiver of the

opportunity for further review unless the State agency pursues

reconsideration by the ALJ or review by the Judicial Officer.

Comment: The Department received one comment on this provision. The

commenter indicated that there were no provisions for a State to remedy

a technical defect or omission in a notice of appeal.

Response: The Department has considered the comment concerning the

technical defect or omission from the notice of appeal, and has

determined that adoption of this suggestion is unnecessary since the

NPRM contains provisions for a State to remedy a technical defect or

omission in a notice of appeal. As discussed in Sec. 283.4(c)(2) of the

NPRM, if the ALJ dismisses the notice of appeal because the State

agency fails to file an adequate notice, the State agency may remedy

the defect and either request reconsideration by the ALJ or review by

the Judicial Officer in accordance with Secs. 283.17(d) and 283.20 of

the NPRM. These provisions would not apply for failure to file a timely

notice of appeal or request for extensions of time to file. This

section has been renumbered in the final rulemaking as Sec. 283.4(d).

Good Cause: In Sec. 283.4(d) of the NPRM, the Department proposed

that the Secretary's determination concerning good cause be final and

not subject to an appeal to the ALJ.

Comment: The Department received one comment on this provision. The

commenter objected to the fact that FNS' good cause determinations will

not be subject to the appeal process.

Response: Section 13951(c)(4) of the Leland Act deleted the

provision of section 603 of the HPA which provided that the Secretary

retained the authority to waive some or all of a State's QC claim where

the Secretary determined that the State agency had good cause for

failure to meet its error rate goal and that the decision of the

Secretary was not subject to review by the ALJ. The Leland Act requires

that the ALJ, in considering a State agency's appeal of QC liability

consider all grounds for denying the claim, in whole or in part,

including the contention of a State agency that the claim should be

waived, in whole or in part, for good cause. The Department intends to

publish a proposed rulemaking addressing the good cause criteria, as

defined in the Leland Act. The regulation will be used by the Secretary

and/or the Secretary's designee to assess, evaluate and respond to

claims by the State for a good cause waiver of liability in conjunction

with the appeals process. The Department has deleted Sec. 283.4(d) of

the NPRM. Additionally, Sec. 283.5(a) of the NPRM has been amended to

reflect Leland Act changes to good cause.

Receipt of notice of appeal and assignment of docket number: In

Sec. 283.4(e)(iii) of the NPRM, the Department proposed that the

Hearing Clerk would acknowledge timely receipt of the notice of appeal

and advise the State agency that the appeal petition must be filed

within 30 days of service of the Hearing Clerk's letter.

Comment: The Department received one comment on this provision. The

commenter indicated that the 30-day deadline for filing the appeal

petition is too burdensome for States and that a 60-day deadline would

be more appropriate. The commenter believed that the extended time

period would enable States to obtain necessary legal support and to

better develop appropriate arguments in support of the appeal petition.

Response: The Department has revised the deadline for filing the

appeal petition from 30 days to 60 days. Section 13951(c)(4) of the

Leland Act requires that the State agency submit evidence in support of

the appeal not later than 60 days after receiving a notice of the claim

and provides that the ALJ shall extend the 60-day deadline for cause

shown. As previously discussed, Sec. 283.22(f) of this final rule

requires the State agency to file a written request for the extension

prior to the due date for the submission with a showing of cause for

the extension. This provision is in keeping with the legislative intent

of the HPA that the appeals process be streamlined and the appeal

procedures be as expeditious as possible.

Stay of Collection: In Sec. 283.4(f) of the NPRM, the Department

proposed that a timely notice of appeal would automatically stay

collection action on the QC claim. However, interest would continue to

accrue on the outstanding claim.

Comment: The Department received one comment on this provision. The

commenter noted that since the NPRM would allow the Department to seek

review by the Judicial Officer, the final determination of the ALJ may

be delayed beyond the two year period during which interest on a QC

claim would not accrue. The commenter suggested that in order to avoid

the imposition of interest due to a delay that the State agency did not

seek, the accrual of interest should be tolled (suspended) during the

review by the Judicial Officer.

Response: The Department has considered this comment but cannot

adopt this suggestion. Section 13951(a)(2) of the Leland Act provides

that interest on the unpaid claim would accrue either from a date that

is one year after the date the bill is received or the date of the

decision on the administrative appeal, whichever is earlier. The Leland

Act does not allow a suspension of interest beyond the one-year period,

regardless of the reason for the delay in a final administrative

decision.

Content of the Appeal Petition: In Sec. 283.4(g)(3) of the NPRM,

the Department proposed that the State agency must request an oral

hearing and that failure to request that hearing would result in the

forfeiture of the opportunity for an oral hearing. The QC claim would

then be decided using the procedures established under subpart C.

Comment: The Department received one comment on this provision. The

commenter suggested that rather than making an oral hearing an option

for the State agency, the Department should make this a standard

element in the process which the State must request be omitted if the

State wishes an appeal to be decided without oral hearing. The

commenter argued that this change would avoid any misunderstanding on

the part of the State agency or the Department as to whether the State

intended to request an oral hearing.

Response: The Department has considered this comment and has

decided not to adopt the suggestion. Section 603 of the HPA provides

that determinations regarding a QC claim shall be made on the record

after an opportunity for an agency hearing. In addition, section

13951(c)(4) of the Leland Act requires that, on the request of the

Secretary or the State agency, the ALJ shall hold an evidentiary

hearing. The Department is retaining the provisions of the NPRM which

require that the State agency notify the Hearing Clerk in its appeal

petition if the State agency desires an oral hearing. The Department

wishes to emphasize that a State agency that waives an oral hearing

would not generally be permitted to later request that an oral hearing

be conducted. The Department will amend Sec. 283.4(g)(3) to cross-

reference Sec. 283.15(a) to clarify those circumstances under which it

would be possible for a State agency to receive an oral hearing if it

had not initially requested the oral hearing in its appeal petition. In

addition, the Department has added Sec. 283.4(i) to provide that if no

hearing had been requested, the appeal would proceed in accordance with

the procedures set forth under subpart C (Summary Procedure for Appeals

of QC Claims of Less than $50,000). In the event that the appeal is

pursued under subpart C, procedures exist under Sec. 283.26(a) to

provide the State agency with an opportunity to request an oral hearing

if the State agency does not believe that the summary procedure is

adequate for handling the appeal and that an oral hearing is necessary.

Section 283.6: Answer

This section of the NPRM contains the procedures that FNS is to

follow in responding to the State agency's appeal petition.

Filling and service: In Sec. 283.6(a) of the NPRM, the Department

proposed that FNS would be allowed 30 days from the date of service of

the State agency's appeal petition to file its answer to that petition.

Comment: The Department received one comment recommending that FNS

be given 60 days in which to file an answer to the State agency's

appeal petition. The commenter also agreed with the provision that

failure to file a timely answer would be considered, for purposes of

the appeal, an admission of the State agency's allegations.

Response: The Department has revised the deadline for FNS to file

an answer to the State agency's appeal petition from 30 days to 60

days. Section 13951(c)(4) of the Leland Act requires that not later

than 60 days after a State agency submits evidence in support of the

appeal, the Secretary shall submit responsive evidence to the ALJ and

provides that the ALJ shall extend the 60-day deadline for cause shown.

As previously discussed, Sec. 283.22(f) of the final rule requires the

Secretary to file a written request for the extension prior to the due

date for the submission with a showing of cause for the request.

Section 283.8: Amendment of Appeal or Answer

This section of the NPRM contains the provision allowing either

party to amend the appeal or answer at any time prior to the other

party filing a motion for a hearing.

Comment: The Department received one comment on this provision. The

commenter noted that the preamble and the regulations do not contain a

timeline in which the motion for a hearing is to be filed. The

commenter suggested that it would be difficult to conclude that both

parties would be knowledgeable if a motion for a hearing was filed with

the appeal petition or the answer to the appeal petition.

Response: The Department is revising this provision to incorporate

section 13951(c)(4) of the Leland Act which requires the State agency

to submit rebuttal evidence to the ALJ, to the extent such evidence

exists, not later than 30 days after the Secretary submits responsive

evidence. The Department is retaining the provision in the NPRM which

allows either party to amend the appeal or answer at any time prior to

the other party filing a motion for a hearing. An amendment following

such a motion would require approval by the ALJ.

The Department wishes to clarify that the motion for a hearing

would not be filed with the appeal or the answer to the appeal. Rather,

as discussed in Sec. 283.15(b), a motion for a hearing is filed by

either party after the completion of all scheduled prehearing actions

(such as discovery) that were agreed upon during the prehearing

conference, scheduling conference or as otherwise established by the

ALJ. The filing of a motion for a hearing advises the ALJ and the other

parties to the appeal that the party has completed all prehearing

activities and is ready to proceed with the hearing. Because the timing

for the filing of the motion for a hearing is dependent upon the

completion of all previously agreed upon prehearing activities, it is

not possible to provide an absolute timeline as to when a motion for a

hearing would be filed.

Section 283.10: Consent Decision

This section of the NPRM contains the provision allowing the

parties to the appeal to mutually agree to end the appeal process prior

to the ALJ issuing an initial decision. The consent decision would not

be subject to review by the Judicial Officer or by the Federal Court.

Comment: The Department received one comment on this provision. The

commenter suggested that this section be modified to state clearly that

the parties may enter into a stipulation as to facts and that this

would not preclude further review of the legal issues. The commenter

was concerned that legal issues would not be considered if the

underlying basis for the legal issues were facts which were not in

dispute.

Response: The Department has considered this comment and has

decided not to adopt it since the concerns of the commenter are

addressed in Sec. 283.11, the pre-hearing conference (and similarly in

Sec. 283.29--scheduling conference). As provided for in Sec. 283.11(c),

one purpose of the ALJ conducting a prehearing conference is to allow

the parties to consider the possibility of obtaining stipulations as to

facts in order to expedite and aid in the disposition of the appeal.

The Department wishes to clarify that the purpose of the consent decree

is to allow the parties to mutually agree to conclude the appeal

process prior to the ALJ issuing an initial decision on the merits of

the appeal. It is similar to settlement of a civil action in court. The

consent decree is not subject to further review by the Judicial Officer

or the Federal court. The appeals process contains prehearing

procedures to allow the parties to enter into a stipulation as to facts

which would not preclude further review of the legal issues.

Furthermore, the Department believes that stipulations as to facts may

be appropriate at any point to further expedite the appeal.

Section 283.11: Prehearing Conference and Procedure

This section of the NPRM contains the procedures for and the

requirements of the prehearing conference.

Reporting: In Sec. 283.11(d) of the NPRM, the Department proposed

that the prehearing conference would not be stenographically reported

unless ordered by the ALJ.

Comment: The Department received one comment on this proposal. The

commenter noted that given the multiplicity of issues to be addressed

at the prehearing conference, any party should be entitled to obtain a

stenographic transcript of a prehearing conference at its own expense.

Response: The Department has considered this comment and has

revised Sec. 283.11(d) to clarify that any party may petition the ALJ

to allow for a stenographic transcript of a prehearing conference at

the petitioner's own expense. A copy of the prehearing transcript must

be made available to the ALJ and the other parties to the appeal at no

cost to the other parties. In response to this comment, the Department

has also revised Sec. 283.15(o) to clarify that the cost of preparing

the hearing transcript and providing one copy of the transcript to the

ALJ and the other parties to the appeal shall be borne by the party

requesting the hearing. The Department further notes that where these

costs are incurred by the State, such costs are eligible for

reimbursement in accordance with part 277 of the Food Stamp Program

regulations.

Section 283.12: Discovery

This section of the NPRM contains the procedures which the parties

to the QC appeal are to follow in pursuing discovery. The ALJ would

establish the scope of and schedule for the completion of discovery.

Comment: The Department received one comment concerning the

organization of Sec. 283.12. The commenter noted that this section was

confusing and that organizational changes would clarify and simplify

this provision.

Response: The Department has considered this comment and has

adopted this suggestion. The Department has made the following changes

from the NPRM: Sec. 283.12(b)(5) (Supplementation of response) has been

renumbered as Sec. 283.12(c); a new Sec. 283.12(d) (Frequency and use

of discovery) has been created and Secs. 283.12(b)(3)(ii) and

283.12(b)(3)(iv) have been moved to this new subsection; a new

Sec. 283.12(e) (Protective Orders) has been created and

Secs. 283.12(b)(3)(iii) and 283.12(b)(8) have been moved to this new

subsection; Sec. 283.12(b)(7) (Failure to respond to discovery) has

been renumbered as Sec. 283.12(f); a new Sec. 283.12(g) (Decision of

the ALJ) has been created and Secs. 283.12(b)(3) (vii) and (viii) have

been moved to this subsection; a new Sec. 283.12(h) (Failure to comply

with an order) has been created and Secs. 283.12(b)(7) (i) and (ii)

have been moved to this new subsection; Sec. 283.12(b)(4)

(Postponements or delays) has been renumbered as Sec. 283.12(i). In

addition, Sec. 283.12(b)(6) (Inclusion in the record) has been moved to

Sec. 283.15(i) and Sec. 238.12(b)(9) (Exchange of witness and rebuttal

witness lists, statements and exhibits) has been moved to

Sec. 283.15(d).

Depositions: In Sec. 283.12(a) of the NPRM, the Department proposed

that the ALJ could order the taking of depositions in order to elicit

testimony which otherwise might not be available at the time of the

hearing.

Comments: The Department received five comments on this provision.

All of the commenters objected to restricting the use of depositions to

those instances in which testimony might not otherwise be available.

One commenter argued that the States' right to due process at the

administrative appeal level was in jeopardy. Another commenter noted

that by categorically prohibiting the use of depositions other than to

preserve testimony, FNS has seriously compromised the States' ability

to challenge error-rate penalty claims. This commenter also argued that

by preventing the ALJ from using discovery depositions as one tool of

litigation management, FNS has compromised the ALJ's ability to preside

over the taking of evidence.

Response: The Department has considered these comments but has not

adopted them. It is the Department's position that the use of

depositions should be restricted to those instances in which the

witness may be unavailable to testify at the hearing. The Department

believes that the discovery procedures provided in the NPRM for

interrogatories, admissions, request for production of documents, and

depositions, as well as the prehearing conference, provide adequate

discovery tools for the parties to prepare for the oral hearing or to

submit cross motions for summary judgment pursuant to Sec. 283.30.

In addition, the Department believes that permitting discovery

depositions would result in substantial costs and delay in the appeals

process. The Department recognizes that a significant goal of the

amendments to the Act by section 603 of the HPA was to create a more

efficient appeals process. The House Report states that an objective of

section 603 of the HPA was to ``streamline[] the appeals process of the

quality control system. * * *'' H.R. Rep. No. 828, 100th Cong., 2d

Sess. 32 (1988). Further, Representative Panetta stated during debate

of the HPA, ``(a) third set of changes aims to speed the resolution of

financial claims against State agencies for excessive error by

streamlining the appeals process and providing for the payment of

interest.'' 134 Cong. Rec. 20,982 (1988). Representative Emerson

reiterated this same intention. 134 Cong. Rec. 20,984 (1988). The

Department believes that restricting the use of depositions to those

instances in which the witness may be unavailable to testify at the

hearing is in keeping with the stated intent of Congress.

Interrogatories and Admissions: In Secs. 283.12(b) (1) and (2) of

the NPRM, the Department proposed that the parties be limited to

fifteen interrogatories and admissions, including subparts, unless

additional questions were authorized by the ALJ.

Comments: The Department received five comments on these

provisions. All of the commenters objected to limiting the number of

interrogatories and admissions. One commenter noted that given the

ALJ's authority to limit discovery, it would be more efficient not to

impose an arbitrary limit on the number of interrogatories and

admissions. The commenter argued that the responding party could

request a protective order from the ALJ if it felt that the requests

were burdensome.

Response: The Department has considered these comments and has

revised Secs. 283.12(b) (1) and (2) to permit twenty-five

interrogatories and admissions, including subparts, unless additional

questions are authorized by the ALJ. The Department continues to

believe that a limit on the number of interrogatories and admissions

available without approval by the ALJ is reasonable given the authority

of the ALJ to authorize an increase in that number. The Department

disagrees that it should be the responsibility of the responding party

to pursue a protective order if the scope of the discovery is

burdensome. Rather, it is reasonable to place the responsibility on the

requesting party to justify why the ALJ should authorize an increase in

the number of interrogatories and admissions. This limit is also

consistent with congressional intent to streamline the appeals process.

Production of Documents: In Sec. 283.12(b)(3) of the NPRM, the

Department proposed that any party to the appeal may serve a request

for the production of documents that are in the possession or control

of another party. The Department also proposed that the requested

documents would be provided upon payment of fees for search and

duplication of the documents.

Comment: The Department received two comments on this provision.

One commenter noted that while the preamble to the NPRM contained a

provision requiring that the requested documents be relevant to the

issues under appeal, the regulatory language did not contain that

requirement. The commenter suggested that the Department adopt the

standard set forth in the Federal Rules of Civil Procedure. The second

commenter opposed the assessment of fees for the production of

documents. The commenter noted that since only governmental agencies

are participating in the review of the QC claim, the Department ought

to forgo the assessment of fees.

Response: The Department has considered the comment concerning the

issue of the relevancy of the documents and has decided to revise

Sec. 283.12(b)(3) to be consistent with Rule 26(b)(1) of the Federal

Rules of Civil Procedure.

The Department has considered the comment concerning the assessment

of fees for the production of documents and has decided not to adopt

it. The Department believes that it is consistent and equitable that

the costs of the search and duplication of documents under a request

for production be borne by the party making the request. State agencies

may submit such costs for reimbursement under 7 CFR part 277.

Postponements or delays: In Sec. 283.12(b)(4) of the NPRM, the

Department proposed that the hearing or other proceedings of the appeal

process would not be postponed or delayed pending a response to or

resolution of issues pertaining to a Freedom of Information Act (FOIA)

request.

Comment: The Department received one comment on this provision. The

commenter strongly disagreed with the proposal that no delays or

postponements of the QC appeal occur pending receipt of documents

requested under FOIA. The commenter argued that documents requested

under FOIA may be crucial to the resolution of the appeal and suggested

that either a timeline should be imposed for furnishing documents

requested under the FOIA or delays/postponements should be accepted as

part of the process.

Response: The Department has considered this comment but has

decided not to adopt it. The Department has established procedures for

the production of documents which would negate the need for a party to

the appeal to pursue document production under the provisions of FOIA.

As provided for in Sec. 283.12(b)(3) of the NPRM, the parties to the

appeal are afforded the opportunity under the discovery process to

request all documents relevant to the issues under appeal or which

would reasonably lead to the discovery of such documents. In addition,

the ALJ will establish the deadline by which all discovery activities

must be completed. While the Department must process the FOIA and

provide all responsive nonprivileged documents, it is inappropriate to

delay or postpone the QC appeal pending action on the FOIA request.

This also furthers congressional intent to streamline the appeals

process. This section has been renumbered in the final rulemaking as

Sec. 283.12(i).

Witnesses and Exhibits: In Sec. 283.12(b)(9)(ii) of the NPRM, the

Department proposed that a witness whose name did not appear on the

list of witnesses would not be permitted to testify at the hearing. In

addition, exhibits which were not provided to the opposing party 15

days prior to the hearing would not be admitted into evidence at the

hearing absent a showing of cause.

Comment: The Department received two comments on this provision.

The commenters argued that there may be situations where a witness

identified on an exchanged list is unavailable to testify at the

hearing. However, the party may have a substitute witness not

identified on the exchanged list who is available to testify. The party

should be permitted to amend the list upon a showing of cause.

One commenter noted that there are circumstances where it is

unnecessary to exchange documents during the prehearing process because

those documents are already in the possession of each party through

their normal course of business. The commenter argued that under this

circumstance the regulation should require that the parties need only

identify documents in the possession of the opposing party and notice

an intention to introduce them at the hearing.

Response: The Department has considered the comment concerning

witnesses and has revised the regulations to clarify that it is the

intent of the Department that in those situations where a party shows

cause as to the reason a witness's name did not appear on the witness

list, upon motion and approval by the ALJ, that witness will be

permitted to testify at the hearing. The Department also wishes to

clarify that if this situation arises, the other parties to the appeal

may request a delay in the hearing to allow for an opportunity to

prepare for this previously unidentified witness.

The Department has considered the comment concerning the exchange

of documents and has determined that adoption of this suggestion is

unnecessary since Sec. 283.11(a)(3) of the NPRM provides the parties

with the option of either furnishing copies or a list of documents that

the party anticipates relying upon at the hearing. Since exhibits are

not necessarily previously existing documents which are in the

possession of the other party, the Department is retaining the

provision concerning the exchange of exhibits. This section of the NPRM

has been moved in the final rulemaking to Sec. 283.15(d).

Section 283.15: Procedure for Hearing

This section of the NPRM contains the procedures related to the

scheduling and conducting of hearings before the ALJ.

Comment: The Department received one comment concerning the

organization of this section. The commenter suggested that since

Secs. 283.12(b)(6) (Inclusion in the record) and (9) (Exchange of

witness and rebuttal witness lists, statements and exhibits) relate to

the hearing procedures, these two subsections should be moved to

Sec. 283.15.

Response: The Department has considered this comment and has

adopted this suggestion. The Department has made the following changes

from the NPRM: Sec. 283.12(b)(9) has been moved and renumbered as

Sec. 283.15(d) and Sec. 283.15(b)(6) has been moved and renumbered as

Sec. 283.15(i). The remaining sections of 283.15 have been renumbered,

as necessary.

Time and Place: In Sec. 283.15(b) of the NPRM, the Department

proposed that the ALJ shall schedule a hearing upon receipt of a motion

by any party setting forth the issue and stating that the matter is

ready for a hearing.

Comment: The Department received one comment on this provision. The

commenter indicated that this provision could be interpreted as

allowing the ALJ to deny a party's request for a hearing. The commenter

suggested that this section be revised to clarify that this section

pertains only to the scheduling of a hearing. The commenter also noted

that this section suggests that a hearing is permitted only if material

facts are disputed and suggested that this section should be revised to

permit the ALJ to hear oral arguments on legal issues even if there are

no material facts in dispute.

Response: Section 13951(c)(4) of the Leland Act requires that the

ALJ decide the appeal within 60 days after receipt of rebuttal evidence

by the State agency, or, if no rebuttal evidence is submitted, within

90 days after the State submits the notice of appeal and evidence in

support of the appeal. Given these statutory deadlines, the ALJ shall

establish at the prehearing conference the dates by which the parties

must complete prehearing activities. The parties would, following

completion of such activities, file a motion stating that they are

ready for hearing. The Leland Act authorizes the ALJ to extend certain

statutory deadlines for cause shown. The Department anticipates that

the ALJ may extend procedural deadlines for cause shown to accommodate

the completion of prehearing and posthearing activities as is shown to

be necessary. As previously discussed, Sec. 283.22(f) of the final rule

requires the parties to file a written request for an extension prior

to the due date with a showing of cause for the extension requested.

The Department has considered the comment concerning the motion for

a hearing and has determined that a revision to this provision is

unnecessary, other than to eliminate the requirement to set forth the

issues within the motion. The Department believes that the issues will

be adequately framed by the prehearing procedures. Upon filing for a

motion for hearing, an oral hearing will be scheduled within the

statutory time frames provided by the Leland Act, unless an extension

has been requested and granted by the ALJ or the ALJ has extended the

time frames sua sponte.

The Department has considered the comment concerning the ALJ

conducting an oral hearing on the legal issues when there are no

material facts in dispute. The Department has not adopted this

suggestion. The Department wishes to clarify that the purpose of the

oral hearing is to present the facts which are in dispute. If it is

determined or agreed at prehearing or otherwise that there are no

material facts in dispute, then the appropriate course of action would

be to pursue resolution of the remaining legal issues utilizing the

procedures established under subpart C--Summary Procedure for Appeals

of QC Claims of Less than $50,000. These legal issues should be the

basis for cross motions for summary judgment. In view of the comment

received, the Department has revised Sec. 283.31(d) to allow the ALJ to

request oral argument, if necessary, in those instances when a

stipulation of all material facts has been entered by the parties to

the appeal.

Time and Place: In Sec. 283.15(b) of the NPRM, the Department

proposed that the hearing before the ALJ shall be held at the

Department of Agriculture, Washington, DC.

Comment: The Department received two comments on this provision.

Both commenters objected to the hearings being held exclusively in

Washington, DC and suggested that the ALJ should determine the location

of the hearing taking into account the convenience of the parties and

their witnesses.

Response: The Department has considered this comment and has

revised Sec. 283.15(b) to permit the ALJ to hold the hearing at a

location more convenient to the parties and their witnesses upon a

showing of unusual or extraordinary circumstances. The Department has

determined that budgetary constraints will not be considered an unusual

or extraordinary circumstance since these costs are eligible for

reimbursement, in part, in accordance with part 277 of the Food Stamp

Program regulations. The Department believes that requiring a showing

of unusual or extraordinary circumstances takes into consideration such

burdens of the parties while also preserving the efficiency of the

appeals process.

Order of appearance: In Sec. 283.15(f) of the NPRM, the Department

proposed that FNS would have the burden of proving, by a preponderance

of the evidence, the QC claim against the State and that the State

agency would have the burden of proving, by a preponderance of the

evidence, the facts upon which it bases its appeal.

Comment: The Department received one comment on this provision. The

commenter argued that contrary to the intent of Congress, the proposed

rule shifted the burden of proof to the States. The commenter suggested

that this section be modified to require that FNS, and not the States,

bear the burden of proving its error-rate penalty claim against the

State. This burden of proof would be required for all factual matters

put in issue.

Response: The Department has considered this comment and has

determined that a revision to this provision is unnecessary.

The Department, however, wishes to reiterate that it has the

ultimate burden of persuasion, by a preponderance of the evidence, of

the QC error rate claim against the State throughout the appeals

process. Nothing in the NPRM or this final rule changes that burden.

However, if the Department makes a prima facia case, the burden of

going forward with the evidence upon which the State bases its appeal

shifts to the State agency. The State must prove any evidence offered

to meet this burden of going forward by a preponderance. It is well

settled that a fact can never be proven by something less than a

preponderance of the evidence. This section has been renumbered in the

final rulemaking as Sec. 283.15(g).

Objections: In Sec. 283.15(h) of the NPRM, the Department proposed

that at the hearing any party may object to a ruling by the ALJ and

that any objection not made to the ALJ could not be raised if there

were a subsequent review by the Judicial Officer.

Comment: The Department received one comment on this provision. The

commenter noted that there appeared to be some confusion of intent

between the preamble and the regulatory language. The commenter

questioned if it was the intent of the Department to limit materials

presented to the Judicial Officer.

Response: The Department has considered this comment and wishes to

clarify that the review by the Judicial Officer shall be based on

decisions rendered by the ALJ. The ALJ must have been provided the

opportunity to render a decision on an issue before that issue can be

appealed to the Judicial Officer. If a party to the appeal fails to

raise an objection to the ALJ, that objection cannot be raised with the

Judicial Officer since the ALJ had not rendered a decision on that

objection. This section has been renumbered in the final rulemaking as

Sec. 283.15(j).

Official Records or documents: In Sec. 283.15(j) of the NPRM, the

Department proposed that official government records or documents could

be admitted into evidence without the production of the person who

prepared the document. The party could either submit the officially

published document or a certified copy of the document. The

Department's Office of General Counsel would prepare the certification

for FNS and other Departmental records.

Comment: The Department received one comment on this provision. The

commenter noted that this procedure was too cumbersome since it

apparently would require that States go to the USDA General Counsel to

certify each and every FNS document, including policy statements.

Response: The Department has considered this comment and wishes to

clarify that State agencies would only be required to request that the

USDA General Counsel certify FNS documents if such documents are not

officially published documents. The Department also wishes to clarify

that official records or documents may include official State

government records or documents. In similar fashion, for unpublished

State documents, any necessary certification would be provided by State

personnel having the legal authority to make such certification. This

section has been renumbered in the final rulemaking as Sec. 283.15(l).

Section 283.17: Post-Hearing Procedures

This section of the NPRM contains the procedures which will be

followed at the completion of the hearing before the ALJ. This section

includes the requirements for post-hearing submissions by the parties

to the appeal as well as the issuance of the ALJ decision.

ALJ's initial decision: In Sec. 283.17(c)(1) of the NPRM, the

Department proposed that the ALJ would issue a decision on the appeal

within a reasonable period of time after the termination of the time

allowed for filing of proposed findings of fact, conclusions of law,

orders, and any briefs in support thereof.

Section 13951(c)(4) of the Leland Act requires that the ALJ decide

the appeal within 60 days after receipt of rebuttal evidence by the

State agency, or, if no rebuttal evidence is submitted, within 90 days

after the State submits the notice of appeal and evidence in support of

the appeal. The Department has revised Secs. 283.17(c)(1) and 283.32(a)

to incorporate this legislative provision. As previously discussed,

Sec. 283.22(f) of the final rule requires the State agency to file a

written request for the extension prior to the due date for the

submission with a showing of cause for the extension.

ALJ's Initial decision. In Sec. 283.17(c)(3) of the NPRM, the

Department proposed that no decision would be final for purposes of

judicial review except a final decision of the Judicial Officer upon

appeal.

Comment: The Department received one comment on this provision. The

commenter noted that if the decision of the ALJ is adverse to the State

agency, judicial review by the Federal court should not be precluded

because the State agency did not seek review by the Judicial Officer.

Response: The Department has considered this comment and has

revised the final rule to provide that the initial decision of the ALJ

is considered final for purposes of judicial review. However, this

would not preclude FNS, or any other party to the appeal, from seeking

either reconsideration by the ALJ or review by the Judicial Officer.

Motion for Reconsideration: In Sec. 283.17(d)(3) of the NPRM, the

Department proposed that a response to the motion for reconsideration

would be allowed only upon the request of the ALJ.

Comment: The Department received two comments on this provision.

The commenters argued that a response to a motion for reconsideration

should be the standard procedure rather than at the discretion of the

ALJ.

Response: The Department has considered this comment and has

revised Sec. 283.17(d)(3) to provide that the other parties to the

appeal shall respond within 10 days of receipt of the brief or written

materials filed by the party requesting reconsideration unless an

extension has been requested and granted by the ALJ or the ALJ has

extended the time frame sua sponte.

Motion for Reconsideration: In Sec. 283.17(d)(4) of the NPRM, the

Department proposed that the parties to the appeal could not pursue a

motion for reconsideration if the initial ALJ decision had been revised

based upon a previous motion for reconsideration.

Comment: The Department received one comment on this provision. The

commenter noted that other agencies permit a party to file a motion for

reconsideration at any time, as of right, on the basis of material

error, new evidence, or substantially changed circumstances.

Response: The Department has considered this comment but has

decided not to adopt it. The Department believes that with the

modification to Sec. 283.17(d)(3) allowing all parties to the appeal to

respond to the initial motion for reconsideration, any further requests

for review of the ALJ's decision should be made to the Judicial

Officer.

Section 283.18: Motions and Requests

This section of the NPRM contains the procedures related to the

filing of motions and requests with the ALJ or the Judicial Officer.

Response to motions and requests: In Sec. 283.18(d) of the NPRM,

the Department proposed that a party have 20 days to respond to a

motion or request and that the party initiating the motion or request

not be permitted to reply to the response of the other party unless

ordered to do so by the ALJ.

Comment: The Department received one comment on this provision. The

commenter argued that by not being permitted to file a reply brief, the

party initiating the motion or request is disadvantaged since the

initiating party would not have access to arguments raised in response

to the motion or request. The commenter recommended that one response

be allowed each party after the initial motion and response.

Response: The Department has considered this comment but has

decided not to adopt it. This provision is in keeping with the

congressional intent that the appeal process be streamlined and that

the appeal procedures be as expeditious as possible. Since the ALJ can

direct sua sponte that a reply be filed either to clarify issues or

upon motion in those instances where a party believes that a reply is

necessary, the Department believes that restricting the number of

responses to a motion or request which may be filed would not be

disadvantage to the party initiating the motion or request.

The Department has also revised the 20-day time frame to respond to

a motion or request in order to address the statutory deadlines

established by section 13951(c)(4) of the Leland Act for the completion

of the appeals process. Given these deadlines, the Department has

shortened the 20-day time frame to 10 days unless an extension has been

requested and granted by the ALJ or the ALJ has extended such time

frame sua sponte.

Section 283.20: Review by the Judicial Officer

This section of the NPRM contains the procedures for appealing the

initial ALJ decision to the Department's Judicial Officer.

Filing of review petition: In Sec. 283.20(a) of the NPRM, the

Department proposed that within 30 days of receipt of the initial ALJ

decision, any party to the appeal may seek Judicial Officer review.

Comments: The Department received four comments on this provision.

The commenters objected to this provision arguing that the HPA

prohibits Secretarial review of decisions made by the ALJ. The

commenters recommended that the Department delete this provision.

Response: The Department has considered these comments but has

decided not to adopt the recommendation to forgo Secretarial review of

the initial ALJ decision. As discussed under Sec. 283.17(c)(3), the

Department has revised the regulations to provide that the initial

decision of the ALJ shall be considered final for purposes of judicial

review. However, this would not preclude any party to the appeal from

seeing reconsideration by the ALJ or review by the Department's

Judicial Officer within 30 days of the ALJ's decision.

It is the Department's position that the specific incorporation of

section 557 of the Administrative Procedure Act (APA) (5 U.S.C. 557) by

section 603 of the HPA necessarily means that the Secretary is

authorized to review ALJ decisions. Indeed, the APA expressly provides

that an agency action can be final for purposes of the APA, and thus

for purposes of judicial review, even though it is subject to

reconsideration or appeal to a higher authority within the agency. 5

U.S.C. 704. This interpretation is consistent with both the expressed

statutory language and legislative history of section 603 of the HPA.

See Memorandum for Alan C. Raul, General Counsel, U.S. Department of

Agriculture, from Douglas R. Cox, Deputy Assistant Attorney General,

Office of Legal Counsel, U.S. Department of Justice (February 20,

1991).

The Department has also determined that review by the Secretary of

issues raised on appeal is a more efficient process for resolving

disputes concerning initial ALJ decisions that if such issues were

brought to the federal courts without providing the Secretary the

opportunity to review and, if necessary, revise such decisions. The

Secretary has delegated to the Judicial Officer the authority to act as

the final deciding officer in adjudicatory proceedings subject to 5

U.S.C. 556 and 557. Section 283.20 will permit the Judicial Officer, on

behalf of the Secretary, to address the party's objections to the

initial ALJ decision, to apply expertise on the issues under review,

exercise informed discretion, and create a more concise record for any

subsequent judicial review. This procedure will also ensure that there

is continuity in the decisions which are rendered for cases involving

similar issues.

Submission of briefs: In Sec. 283.20(h)(i) of the NPRM, the

Department proposed that if the Judicial Officer determined that there

were reasonable grounds that additional evidence which is material was

not presented to the ALJ, the Judicial Officer shall remand the matter

back to the ALJ for disposition.

Comment: The Department received one comment on this provision. The

commenter questioned if it was the Department's intent to limit

materials presented to the Judicial Officer.

Response: The Department has considered this comment and wishes to

clarify that the Judicial Officer reviews the record created before the

ALJ. However, if a party to the appeal can persuade the Judicial

Officer that there are reasonable grounds why material evidence was not

presented to the ALJ, the Judicial Officer shall remand the matter back

to the ALJ for further consideration.

Section 283.30: Cross Motions for Summary Judgment

This section of the NPRM contains the procedures which are to be

followed if the appeal is being pursued under subpart C--Summary

Procedures for Appeal of QC Claims of Less than $50,000.

Comment: The Department received one comment on this provision. The

commenter expressed a concern that the 35 page limitation on the brief

accompanying the motion for summary judgment and the 15 page reply

brief limitation were too restricted and recommended that a higher page

limit be established.

Response: The Department considered this comment but decided not to

adopt it. The Department believes that given the authority of the ALJ

to increase the size of the brief and reply brief, the page limitations

are reasonable. These page limits are consistent with congressional

intent to streamline the appeals process. The Department has also made

changes to subpart C to conform to the timeframes specified in the

Leland Act.

Implementation

In accordance with section 701(b)(5)(c) of the HPA, the amendments

to section 14 of the Act are effective and must be implemented for all

QC billing actions beginning with Fiscal Year 1986.

List of Subjects

7 CFR Part 272

Administrative practice and procedures, Food stamps, Reporting and

recordkeeping requirements.

7 CFR Part 275

Administrative practice and procedures, Food stamps, Reporting and

recordkeeping requirements.

7 CFR Part 283

Administrative practice and procedures, claims, Food stamps,

Government procedures, and penalties.

For the reasons set out in the preamble, 7 CFR parts 272 and 275

are amended and 7 CFR part 283 is added as follows:

1. The authority citation for parts 272 and 275 continues to read

as follows:

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

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

2. In Sec. 272.1, a new paragraph (g)(135) is added in numerical

order to read as follows:

Sec. 272.1 General terms and conditions.

* * * * *

(g) Implementation. * * *

(135) Amendment No. 348. The provisions of Amendment No. 348 are

effective August 5, 1994 and must be implemented for all QC billing

actions beginning with Fiscal Year 1986.

PART 275--PERFORMANCE REPORTING SYSTEM

3. Section 275.23 is amended by revising paragraph (e)(5)(iii) to

read as follows:

Sec. 272.23 Determination of State Agency Program Performance.

* * * * *

(e) * * *

(5) * * *

(iii) Whenever a State is assessed for an excessive payment error

rate, the State shall have the right to request an appeal in accordance

with procedures set forth in part 283 of this chapter.

* * * * *

4. 7 CFR part 283 is added to read as follows:

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

Subpart A--General

Sec.

283.1 Meaning of words.

283.2 Scope and applicability.

283.3 Definitions.

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

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

283.5 Motion to dismiss.

283.6 Answer.

283.7 Procedures upon failure to file an answer.

283.8 Rebuttal or amendment of appeal or answer.

283.9 Withdrawal of appeal.

283.10 Consent decision.

283.11 Prehearing conference and procedure.

283.12 Discovery.

283.13 Subpoenas.

283.14 Fees of witnesses.

283.15 Procedure for hearing.

283.16 Consolidation of issues.

283.17 Post-hearing procedure.

283.18 Motions and requests.

283.19 ALJs.

283.20 Review by the Judicial Officer.

283.21 Ex parte communications.

283.22 Form; filing; service; proof of service; computation of

time; and extensions of time.

283.23 Procedural matters.

Subpart C--Summary Procedure for Appeals of QC Claims of Less Than

$50,000

283.24 Incorporation of procedures by reference.

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

283.26 Request that appeals be handled under procedures in subpart

B for appeals of QC claims of $50,000 or more.

283.27 Procedures upon failure to file an answer.

283.28 Discovery.

283.29 Scheduling conference.

283.30 Cross motions for summary judgment.

283.31 Review of the record.

283.32 ALJ's initial decision.

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

Subpart A--General

Sec. 283.1 Meaning of words.

As used in this part, words in the singular form shall be deemed to

import the plural, and vice versa, as the case may require.

Sec. 283.2 Scope and applicability.

The rules of practice in this part, shall be applicable to appeals

by State agencies of Food and Nutrition Service quality control (QC)

claims for Fiscal Year (``FY'') 1986 and subsequent fiscal years

pursuant to sections 14(a) and 16(c) of the Food Stamp Act of 1977, as

amended, 7 U.S.C. 2023(a) and 2025(c).

Sec. 283.3 Definitions.

As used in this part, the terms as defined in the Food Stamp Act of

1977, as amended, 7 U.S.C. 2011-2032 (``Act''), and in the regulations,

standards, instructions or orders issued thereunder, shall apply with

equal force and effect. In addition, and except as may be provided

otherwise in this section:

Administrator means the Administrator, Food and Nutrition Service,

U.S. Department of Agriculture (``USDA'').

ALJ means any Administrative Law Judge in USDA appointed pursuant

to 5 U.S.C. 3105 or detailed to the USDA pursuant to 5 U.S.C. 3344 and

assigned to the appeal.

Appeal means the appeal to the ALJ.

Ex parte communication means an oral or written communication not

on the public record with respect to which reasonable prior notice to

all parties is not given, but it shall not include procedural matters.

Filing. A pleading or other document allowed or required to be

filed in accordance with this part shall be considered filed when

postmarked, if mailed, or when received, if hand delivered.

FNS means the Food and Nutrition Service, USDA.

Hearing means that part of the appeal which involves the submission

of evidence before the ALJ for the record in the appeal.

Hearing Clerk means the Hearing Clerk, USDA, Washington, DC 20250.

Judicial Officer means an official of the USDA delegated authority

by the Secretary of Agriculture, pursuant to the Act of April 4, 1940

(7 U.S.C. 450c-459g) and Reorganization Plan No. 2 of 1953 (5 U.S.C.

1970 ed., Appendix, P. 550), as amended by Public Law 97-35, title I,

sec. 125, 95 Stat. 357, 369 (1981) (7 U.S.C. 2201 note), to perform the

adjudicating function involved (7 CFR 2.35(a)), or the Secretary of

Agriculture if the authority so delegated is exercised by the

Secretary.

OC claim means a claim made pursuant to 7 U.S.C. 2025(c).

Secretary means the Secretary of the USDA.

State agency means:

(1) The agency of State government, including the local offices

thereof, which is responsible for the administration of the federally

aided public assistance programs within the State, and in those States

where such assistance programs are operated on a decentralized basis,

it includes the counterpart local agencies which administer such

assistance programs for the State agency; and

(2) The Indian tribal organization of any Indian tribe determined

by the Secretary to be capable of effectively administering a Food

Stamp Program in accordance with the Food Stamp Act of 1977, as

amended, 7 U.S.C. 2011-2032.

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

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

(a) Time. A State agency may appeal the bill for collection from

FNS for a QC claim of $50,000 or more for a food stamp QC error rate in

excess of the tolerance level. A State agency shall file a written

notice of appeal, in accordance with this subpart, within 10 days of

receipt of the bill for collection from FNS for a QC claim of $50,000

or more. The State agency may request an extension to the 10-day filing

requirement in accordance with Sec. 283.22(f). FNS shall issue the bill

for collection by certified mail or personal service.

(b) Exhaustion of administrative remedies. The State agency must

appeal the bill for collection to the ALJ, pursuant to this subpart,

and exhaust the available administrative remedies before filing suit in

the Federal District Courts.

(c) Filing. The notice of appeal shall be filed with the Hearing

Clerk in accordance with Sec. 283.22(b).

(c) Content of the notice. (1) A notice of appeal, in order to be

considered acceptable, must contain the following information:

(i) A brief and clear statement that it is an appeal from a QC

claim of $50,000 or more identifying the period the claim covers, the

date and amount of the bill for collection, and the date of receipt of

the bill for collection;

(ii) Identification of the State agency as the appellant and FNS as

the appellee;

(iii) A statement that the notice of appeal is filed pursuant to

section 14(a) of the Food Stamp Act;

(iv) A copy of the bill for collection which constitutes the basis

for the filing of the notice of appeal shall be attached to the notice.

(2) Failure to file an acceptable notice of appeal may result in a

challenge by FNS to the notice, dismissal of the notice by the ALJ and

a waiver of the opportunity for further appeal or review by the

Judicial Officer unless the State agency pursues the options as

discussed in Secs. 283.17(d) and 283.20.

(e) Receipt of notice of appeal and assignment of docket number.

Upon receipt of a notice of appeal, the Hearing Clerk shall assign the

appeal a docket number. The Hearing Clerk shall:

(1) Send the State agency a letter which shall include the

following information:

(i) Advice that the notice of appeal has been received and the date

of receipt;

(ii) The docket number assigned to the appeal and instructions that

all future communications related to the appeal shall reference the

docket number, and;

(iii) Advice that the State agency must file and serve its appeal

petition, as set forth in Sec. 283.22, not later than 60 days after

receiving a notice of the claim. Failure to file a timely appeal

petition may result in a waiver of further appeal rights.

(2) Send FNS a copy of the notice of appeal and a copy of the

letter to the State agency.

(f) Stay of collection. The filing of a timely notice of appeal

shall automatically stay the action of FNS to collect the QC claim

asserted against the State agency until a decision is reached on the

acceptability of the appeal, and in the case of an acceptable appeal,

until a final administrative determination has been issued. However,

interest will accrue on the outstanding claim amount during the stay as

provided in section 13(a)(1) of the Food Stamp Act of 1977, as amended

(7 U.S.C. 2022(a)(1)).

(g) Content of the appeal petition. The appeal petition shall

include:

(1) A brief statement of the allegations of fact and provisions of

law that constitute the basis for the appeal including a statement as

to whether a factual basis for good cause relief exists;

(2) The nature of the relief sought, and;

(3) A request for an oral hearing, if desired by the State agency.

Failure to request an oral hearing will result in a forfeiture of the

opportunity for such a hearing, except as provided in Sec. 283.15(a).

(h) FNS answer. Upon service of the State agency appeal petition,

FNS shall:

(1) File an answer, in accordance with Sec. 283.6, not later than

60 days after the State agency submits its appeal petition and;

(2) Advise the Hearing Clerk if FNS wishes to have an oral hearing.

(i) Oral hearing not requested. If no oral hearing has been

requested, the appeal shall proceed in accordance with the procedures

set forth under subpart C of this part.

Sec. 283.5 Motion to dismiss.

(a) Filing of motion to dismiss. Prior to or at the same time as

filing the answer, FNS may file a motion to dismiss. The appeal may be

challenged on the basis that the notice of appeal was not filed within

10 days or as that time may have been extended by the ALJ, the appeal

petition was not filed in accordance with Sec. 283.4, or that the

appeal petition is substantially incomplete and could not be quickly

and easily cured by amendment. The motion must be accompanied by clear

and convincing proof of any of these factors alleged as grounds for

dismissal.

(b) Service of motion to dismiss. FNS shall serve the State agency

with a copy of the motion to dismiss. The State agency will have 10

days from date of service to submit objections to the motion.

(c) Ruling on a motion to dismiss. The ALJ will rule on the motion

to dismiss before any further action proceeds on the basis of the

merits of the appeal. The basis of the ruling will be clearly

documented and will become part of the official record. If the ALJ

denies the motion, FNS shall file its answer in accordance with

Sec. 283.6 within 60 days of service of the ALJ's ruling, unless there

is a motion for reconsideration filed pursuant to Sec. 283.17(d) or

review by the Judicial Officer is sought pursuant to Sec. 283.20.

(d) Dismissal of appeal. If the ALJ finds the basis for the motion

to have merit, the appeal may be dismissed. The initial decision of the

ALJ shall become final and effective 30 days after service in

accordance with Sec. 283.17(c)(2) unless either party pursues the

options as discussed in Secs. 283.17(d) and 283.20.

(e) Waiver. Failure to file for dismissal of the appeal by the time

the answer is required to be filed will result in waiver of the right

to request dismissal.

Sec. 283.6 Answer.

(a) Filing and service. Not later than 60 days after the State

agency submits its appeal petition, or within 60 days following service

of a ruling in accordance with Sec. 283.5, FNS shall file an answer

signed by the FNS Administrator or authorized representative or the

attorney of record in the appeal. The attorney may file an appearance

of record prior to or simultaneously with the filing of the answer.

(b) Contents. The answer shall clearly admit, deny, or explain each

of the allegations of the appeal petition and shall:

(1) Clearly set forth any defense asserted by FNS; or

(2) State that FNS admits all the facts alleged in the appeal

petition; or

(3) State that FNS admits the jurisdictional allegations of the

appeal petition and neither admits nor denies the remaining allegations

and consents to the issuance of an order without further procedure.

(c) Default. Failure to file a timely answer shall be deemed, for

purposes of the appeal, an admission of the allegations in the appeal

petition and failure to deny or otherwise respond to an allegation of

the appeal petition shall be deemed for purposes of the appeal, an

admission of said allegation, unless FNS and the State agency have

agreed to a consent decision pursuant to Sec. 283.10.

Sec. 283.7 Procedures upon failure to file an answer.

The failure by FNS to file an answer shall constitute a waiver of

hearing. Upon such failure to file, the State agency shall file a

proposed decision, along with a motion for adoption thereof, both of

which shall be served upon FNS by the State agency. Within 10 days

after service of such motion and proposed decision, FNS may file

objections thereto. If the ALJ finds that meritorious objections have

been filed, the State agency's motion shall be denied with supporting

reasons. If meritorious objections are not filed, the ALJ shall issue

an initial decision without further procedures or hearing. Copies of

the initial decision or denial of the State agency's motion shall be

served on each of the parties and shall be included as part of the

official record. Where the decision as proposed by the State agency is

adopted as the ALJ's initial decision, such decision of the ALJ shall

become final and effective 30 days after service in accordance with

Sec. 283.17(c)(2) unless reconsideration or review by the Judicial

Officer is sought as discussed in Secs. 283.17(d) and 283.20.

Sec. 283.8 Rebuttal or amendment of appeal or answer.

(a) Not later than 30 days after FNS submits an answer in

accordance with Sec. 283.6, the State agency may submit rebuttal

evidence.

(b) At any time prior to the filing of a motion for a hearing

pursuant to Sec. 283.15(b), the appeal petition or the answer may be

amended without prior authorization by the ALJ. Thereafter, such an

amendment may only be made as authorized by the ALJ upon a showing of

cause.

Sec. 283.9 Withdrawal of appeal.

At any time before the ALJ files an initial decision, the State

agency may withdraw its appeal and agree to pay the full amount of the

claim. By withdrawing an appeal, the State agency waives all

opportunity to appeal or seek further administrative or judicial review

on the claim or related matters.

Sec. 283.10 Consent decision.

At any time before the ALJ files an initial decision, FNS and the

State agency may agree to entry of a consent decision. Such decision

shall be filed in the form of a decision signed by the parties with

appropriate space for signature by the ALJ and shall contain an

admission of at least the jurisdictional facts, consent to the issuance

of the agreed decision without further procedure and such other

admissions or statements as may be agreed between the parties. The ALJ

shall enter such decision without further procedures, unless an error

is apparent on the face of the document. Such decision shall be final

and shall take effect 30 days after the date of the delivery or service

of such decision and is not subject to further administrative or

judicial.

Sec. 283.11 Prehearing conference and procedure.

(a) Time and place. The ALJ shall direct the parties or their

counsel to participate in a prehearing conference at any reasonable

time prior to the hearing. The prehearing conference shall be held at

the U.S. Department of Agriculture, Washington, DC. Reasonable notice

of the time, place of the prehearing conference and if personal

attendance will be necessary shall be given. Prehearing conferences may

be conducted telephonically. The ALJ shall order each of the parties to

furnish at the prehearing conference or at another time prior to the

hearing the following:

(1) An outline of the appeal or defense;

(2) The legal theories upon which the party will rely;

(3) Copies of or a list of documents that the party anticipates

relying upon at the hearing; and

(4) A list of witnesses who will testify on behalf of the party. At

the discretion of the party furnishing such list of witnesses, the

names of the witnesses need not be furnished if they are otherwise

identified in some meaningful way, such as a short statement of the

type of evidence they will offer.

(b) Procedures. The ALJ shall not order any of the foregoing

procedures that a party can show are inappropriate or unwarranted under

the circumstances of the particular appeal.

(c) Matters to be considered. At the prehearing conference, the

following matters shall be considered:

(1) The simplification of issues;

(2) The necessity of amendments to pleadings;

(3) The possibility of obtaining stipulations of facts and of the

authenticity, accuracy, and admissibility of documents, which will

avoid unnecessary proof;

(4) The limitation of the number of expert or other witnesses;

(5) Negotiation, compromise, or settlement of issues;

(6) The exchange of copies of proposed exhibits;

(7) The nature of and the date by which discovery, as provided in

Sec. 283.12, must be completed;

(8) The identification of documents or matters of which official

notice may be requested;

(9) A schedule to be followed by the parties for the completion of

the actions decided at the conference; and

(10) Such other matters as may expedite and aid in the disposition

of the appeal.

(d) Reporting. (1) A prehearing conference will not be

stenographically reported unless so directed by the ALJ.

(2) Any party to the appeal may, upon motion, request the ALJ to

allow for a stenographic transcript of a prehearing conference. The

party requesting the transcript shall bear the transcription cost of

producing the transcript and the duplication cost for one transcript

provided to the ALJ and to the other parties to the appeal.

(e) Order. Actions taken as a result of a conference shall be

reduced to an appropriate written order, unless the ALJ concludes that

a stenographic report, if available, shall suffice, or, in the event

the conference takes place within 7 days of the beginning of the

hearing, the ALJ elects to make a statement on the record at the

hearing summarizing the actions taken.

Sec. 283.12 Discovery.

(a) Dispositions.--(1) Motion for taking deposition. Only upon a

finding by the ALJ that a deposition is necessary to preserve testimony

as provided in this subparagraph, upon the motion of a party to the

appeal, the ALJ may, at any time after the filing of the answer, order

the taking of testimony by deposition. The motion shall set forth:

(i) The name and address of the proposed deponent;

(ii) The name and address of the person (referred to hereafter in

this section as the ``officer'') qualified under the regulations in

this part to take depositions, before whom the proposed examination is

to be made;

(iii) The proposed time and place of the examination, which shall

be at least 15 days after the date of service of the motion; and

(iv) The reasons why such deposition should be taken, which shall

be solely for the purpose of eliciting testimony which otherwise might

not be available at the time of the hearing, for use as provided in

accordance with paragraph (a)(7) of this section.

(2) ALJ's order for taking depositions. If the ALJ finds that the

testimony may not otherwise be available at the hearing, the taking of

the deposition may be ordered. The order shall be served upon the

parties, and shall state:

(i) The time and place of the examination;

(ii) The name of the officer before whom the examination is to be

made; and

(iii) The name of the deponent. The officer and the time and place

need not be the same as those suggested in the motion.

(3) Qualifications of officer. The deposition shall be made before

an officer authorized by the law of the United States or by the law of

the place of the examination to administer oaths, or before an officer

authorized by the Secretary to administer oaths.

(4) Procedure on examination. (i) The deponent shall be examined

under oath or affirmation and shall be subject to cross-examination.

Objections to questions or documents shall be in the short form,

stating the grounds of objections relied upon. The questions

propounded, together with all objections made (but not including

argument or debate), shall be recorded verbatim. In lieu of oral

examination, parties may transmit written questions to the officer

prior to the examination and the officer shall propound such questions

to the deponent.

(ii) The party taking the deposition shall arrange for the

examination of the witness either by oral examination, or by written

questions upon agreement of the parties or as directed by the ALJ. If

the examination is conducted by means of written questions, copies of

the questions shall be served upon the other party to the appeal and

filed with the officer at least 10 days prior to the date set for the

examination unless otherwise agreed, and the other party may serve

cross questions and file them with the officer at any time prior to the

time of the examination.

(iii) The parties may stipulate in writing or the ALJ may upon

motion order that a deposition be taken by telephone. A deposition

taken by telephone is to be taken at the place where the deponent is to

answer questions propounded to the deponent.

(iv) The parties may stipulate in writing or the ALJ may upon

motion order that a deposition be recorded by other than stenographic

means. The stipulation or the order shall designate the manner of

recording, preserving and filing of the deposition, and may include

other provisions to assure that the recorded testimony is accurate and

trustworthy.

(5) Certification by the officer. The officer shall certify on the

deposition that the deponent was duly sworn and that the deposition is

a true record of the deponent's testimony. The officer shall then

securely seal the deposition, together with one copy thereof (unless

there are more than two parties in the appeal, in which case there

should be another copy for each additional party), in an envelope and

mail the same by registered or certified mail to the Hearing Clerk.

(6) Corrections to the transcript. (i) At any time prior to the

hearing, any party may file a motion proposing corrections to the

transcript of the deposition.

(ii) Unless a party files such a motion in the manner prescribed,

the transcript shall be presumed to be a true, correct, and complete

transcript of the testimony given in the deposition proceeding and to

contain an accurate description or reference to all exhibits in

connection therewith, and shall be deemed to be certified correct

without further procedure.

(iii) At any time prior to the use of the deposition in accordance

with paragraph (a)(7) of this section and after consideration of any

objections filed thereto, the ALJ may issue an order making any

corrections in the transcript which the ALJ finds are warranted, and

these corrections shall be entered onto the original transcript by the

Hearing Clerk (without obscuring the original text).

(7) Use of depositions. A deposition ordered and taken in

accordance with the provisions of this section may be used in an appeal

under these rules if the ALJ finds that the evidence is otherwise

admissible and

(i) That the witness is deceased;

(ii) That the witness is unable to attend or testify because of

age, sickness, infirmity, or imprisonment;

(iii) That the party offering the deposition has endeavored to

procure the attendance of the witness by subpoena, but has been unable

to do so; or

(iv) That such exceptional circumstances exist as to make it

desirable, in the interests of justice, to allow the deposition to be

used. If the party upon whose motion the deposition was taken refuses

to offer it in evidence, any other party may offer the deposition or

any part thereof in evidence. If only part of a deposition is offered

in evidence by a party, any other party may require the introduction of

any other part which is relevant be considered with the part

introduced, and any party may introduce any other parts.

(b) Interrogatories, requests for admissions and requests for

production of documents--(1) Interrogatories. A party may submit

written interrogatories to any other party to an appeal. The time for

submitting and responding to written interrogatories shall be set by

the ALJ at the pre-hearing conference, but in no event shall the time

for response be less than 20 days from the date of service or within

such time as determined upon motion to the ALJ. The number of

interrogatories submitted by each party shall not exceed twenty-five

questions including subparts, unless additional interrogatories are

authorized by the ALJ. Each interrogatory should be answered separately

and fully in writing, unless it is objected to, in which event the

reasons for objection should be stated in lieu of an answer. The

answers are to be signed under penalty of perjury by the person making

them. Objections shall be signed by the attorney of record in the

appeal or by the responding party's authorized representative.

(2) Request for admissions. A party may submit a written request

for admission of the truth of any matters relevant to the appeal to any

other party to the appeal. The time for submitting a written request

for admission shall be set by the ALJ at the pre-hearing conference.

The number of admissions contained in a request submitted by a party

shall not exceed twenty-five unless additional admissions are

authorized by the ALJ. The matter is admitted unless, within 20 days

after service thereof, or within such time as determined upon motion to

the ALJ, the party to whom the request is directed serves upon the

party requesting the admission a written answer or objection addressed

to the matter signed by the party, counsel or designated

representative. If objection is made, the reasons therefor should be

stated. The answer should specifically deny the matter or set forth in

detail why the answering party cannot truthfully admit or deny the

matter. An answering party may not give lack of information or

knowledge as a reason for the failure to admit or deny unless it is

stated that reasonable inquiry has been made and that the information

known or readily obtainable is insufficient to enable the party to

admit or deny. A party who considers that a matter for which an

admission has been requested presents a genuine issue for hearing may

not, on that ground alone, object to the request; the party may deny

the matter or set forth reasons why the matter cannot be admitted or

denied.

(3) Request for production of documents. (i) Any party may serve

upon any other party to the appeal a request for production of

documents which are in the possession or control of the party upon whom

the request is served. The time for service and response to such a

request shall be set by the ALJ at the pre-hearing conference. Upon

payment of fees for search and duplication of documents, any party to

the appeal may obtain copies of such documents.

(ii) Parties may request production of any documents regarding any

matter, not privileged, which is relevant to the subject matter

involved in the pending action. Grounds for objection will not exist if

the information sought appears reasonably calculated to lead to the

discovery of admissible evidence.

(iii) If such documents include privileged information or

information the disclosure of which is proscribed by the Food Stamp Act

of 1977, as amended, such documents need not be produced.

(c) Supplementation of response. A party who knows or later learns

that a response is incorrect is under a duty to correct such response

as soon as possible. A party who has responded to a request for

discovery with a response that was complete when made is under a duty

to supplement the response to include information thereafter acquired.

A party is under a duty to supplement responses with respect to any

question directly addressed to:

(1) The identity and location of persons having knowledge of

discoverable matters, and

(2) The identity of each person expected to be called as an expert

witness at the hearing, the subject matter on which such expert(s) is

expected to testify, and the substance of the testimony.

(d) Frequency and use of discovery. The ALJ shall limit, upon

motion of a party, the frequency or extent of discovery if the ALJ

determines that:

(1) The discovery sought is unreasonably cumulative or duplicative,

or is obtainable from some other source that is more convenient, less

burdensome, or less expensive;

(2) The party seeking discovery has had ample opportunity by

discovery in the action to obtain the information sought; or

(3) The discovery is unduly burdensome or expensive, taking into

account the needs of the case, the amount in controversy, limitations

on the parties' resources, and the importance of the issues at stake in

the litigation.

(e) Protective orders--(1) Request for protective order. A party

served with such a request may file a motion for a protective order

before the date on which a response to the discovery request is due,

stating why discovery should be limited or should not be required.

(2) Issuance of protective order. In issuing a protective order,

the ALJ may make any order which justice requires to protect a party or

person from annoyance, embarrassment, oppression or undue burden or

expense, including one or more of the following:

(i) That discovery not be had;

(ii) That the discovery may be had only through a method of

discovery other than that requested;

(iii) That certain matters not be inquired into, or that the scope

of discovery be limited to certain matters;

(iv) That discovery be conducted with no one present except persons

designated by the ALJ; and

(v) That the contents of discovery or evidence be sealed.

(f) Failure to respond to discovery--(1) Motions to compel. If a

deponent fails to respond or gives an evasive or incomplete answer to a

question propounded at a deposition pursuant to paragraph (a) of this

section or a party fails to respond or gives evasive or incomplete

answers to written interrogatories or admissions, or fails to respond,

in full or in part, to a request for production of documents served

pursuant to paragraph (b) of this section, the party seeking discovery

may apply for an order compelling an answer by filing and serving a

motion on all parties and deponents.

(2) Filing motion to compel. (i) Such motion must be filed within

20 days following the service of the unresponsive answer upon

deposition or within 20 days after expiration of the period allowed for

answers to interrogatories or production of documents.

(ii) On matters related to an oral examination, the proponent of

the question may complete or adjourn the examination before he applies

for an order.

(3) Responding to motion to compel. A response to the motion may be

filed in accordance with Sec. 283.18(d).

(g) Decision of the ALJ. (1) The ALJ may grant a motion to compel

production or deny a motion for a protective order only if the ALJ

finds that the discovery sought is necessary for the expeditious, fair,

and reasonable consideration of the issues; it is not unduly costly or

burdensome; it will not unduly delay the proceeding; and the

information sought is not privileged.

(2) The initial decision of the ALJ regarding the motion to compel

the production of privileged documents or the motion for a protective

order shall become final and effective 10 days after service unless

either party pursues the options as discussed in Secs. 283.17(d) and

283.20.

(h) Failure to comply with an order. (1) If a party or other

witness refuses to be sworn or refuses to answer any question after

being directed to do so by order of the ALJ, such refusal may subject

the refusing party to proceedings to compel compliance with the ALJ's

order in the appropriate United States district court.

(2) If any party or other person refuses to obey an order made

under this section requiring an answer to designated questions or

production of documents, the ALJ may order that the matters regarding

which questions were asked or the contents of the document or documents

or any other designated facts should be taken to be established for the

purposes of the proceeding in accordance with the claim of the party

obtaining the order.

(i) Postponements or delays. No hearing, proceeding or other matter

under this part shall be postponed or otherwise delayed pending the

response or resolution of issues pertaining to a request for

information pursuant to the Freedom of Information Act, 5 U.S.C. 552.

Sec. 283.13 Subpoenas.

(a) Issuance of subpoenas. The attendance and testimony of

witnesses and the production of documentary evidence from any place in

the United States on behalf of any party to the appeal may be required

by subpoena at the designated place of hearing. Except for cause shown,

requests for subpoenas shall be filed at least 15 days prior to the

date of the hearing. Subpoenas shall be issued by the ALJ, over the

facsimile signature of the Secretary, upon a reasonable showing by the

applicant of the grounds, necessity and reasonable scope thereof.

(b) Service of subpoenas. (1) When the ALJ issues a subpoena under

this section, the party who requested such subpoena shall serve all

other parties with a copy of the subpoena, notice of the names and

addresses of the individuals subpoenaed and specify any documents

required to be produced.

(2) Subpoenas may be served:

(i) By a U.S. Marshal or deputy marshal,

(ii) By any other person who is not less than 18 years of age, or

(iii) By registering and mailing a copy of the subpoena addressed

to the person to be served at the last known principal place of

business or residence.

(3) Proof of service may be made:

(i) By the return of service on the subpoena by the U.S. Marshal or

deputy marshal,

(ii) If served by an employee of the Department, by a certificate

stating that he personally served the subpoena upon the person named

therein,

(iii) If served by another person, by an affidavit of such person

stating that he personally served the subpoena upon the person named

therein, or

(iv) If service was by registered mail, by an affidavit made by the

person mailing the subpoena that it was mailed as provided herein and

by the signed return post-office receipt. Where the subpoena is issued

on behalf of the Secretary and service is by mail, the return receipt

without an affidavit or certificate of mailing shall be sufficient

proof of service.

(4) In making personal service, the person making service shall

leave a copy of the subpoena with the person subpoenaed, or, if such

person is not immediately available, with any other responsible person

authorized to accept service residing or employed at the place of

residence or business of the person subpoenaed.

(5) The original of the subpoena, bearing or accompanied by the

required proof of service, shall be returned to the official who issued

the same. The party at whose request the subpoena is issued shall be

responsible for the service thereof.

Sec. 283.14 Fees of witnesses.

Witnesses summoned under these rules shall be paid the same fees

and expenses that are paid witnesses in the courts of the United

States. Fees shall be paid by the party at whose request the witness

appears. Current Federal, State, or local government employees shall

not be eligible to receive witness fees.

Sec. 283.15 Procedure for hearing.

(a) Request for hearing. A party may request a hearing on the facts

by including such request in its Appeal Petition or Answer, whichever

is appropriate. Failure to request a hearing within the time specified

shall constitute a waiver of the opportunity for such a hearing, except

as provided for under Sec. 283.4(i). In the event FNS denies any

material facts and fails to request a hearing, the matter may be set

down for hearing on motion of the State agency or upon the ALJ's own

motion.

(b) Time and place. If any material issue of fact is joined by the

pleadings, the ALJ, upon motion of any party, stating that the matter

is ready for hearing, shall set a time for the hearing, as soon as

feasible thereafter, with due regard for the public interest and the

convenience and necessity of the State agency and FNS. The hearing

shall be held at the U.S. Department of Agriculture, Washington, DC.

Upon a showing of unusual or extraordinary circumstances, the ALJ may

order that the hearing be held at another location. The ALJ shall file

a notice stating the time and place of the hearing. If any change in

the time of the hearing is made, the ALJ shall file a notice of such

change, which notice shall be served upon the parties, unless it is

made during the course of an oral hearing and made a part of the

transcript or actual notice given to the parties.

(c) Appearances. The parties may appear in person or by attorney of

record in the appeal or by any other designated representative. Any

person who appears as attorney or as a party's designated

representative must conform to the standards of ethical conduct

required by practitioners before the courts of the United States.

(d) Exchange of witness and rebuttal witness lists, statements and

exhibits. (1) Witness and rebuttal witness lists, copies of prior

statements of proposed witnesses, and copies of proposed hearing

exhibits, including copies of any written statements or depositions

that a party intends to offer in lieu of live testimony in accordance

with Sec. 283.12(a)(7), shall be exchanged at least 15 days in advance

of the hearing or at such other time as may be set by the ALJ.

(2) A witness whose name does not appear on the witness list shall

not be permitted to testify and exhibits which were not provided to the

opposing party as provided above shall not be admitted into evidence at

the hearing absent a showing of cause and as authorized by the ALJ.

(e) Deparment of attorney or representative. (1) Whenever an ALJ

finds that a person acting as attorney or designated representative for

any party to the appeal is guilty of unethical or contumacious conduct

in, or in connection with an appeal, the ALJ may order that such person

be precluded from further acting as attorney or representative in the

appeal. Review by the Judicial Officer may be taken on any such order,

but no appeal of the QC claim shall be delayed or suspended pending

disposition of the debarment review by the Judicial Officer. Provided,

however, that the ALJ shall suspend the appeal of the QC claim for a

reasonable time for the purpose of enabling the party to obtain another

attorney or representative.

(2) Whenever it is found, after notice and opportunity for hearing,

that a person who is acting or who has acted as attorney or

representative for another person in any proceeding before the U.S.

Department of Agriculture, is unfit to act as such counsel because of

such unethical or contumacious conduct, such person will be precluded

from acting as the attorney or representative in any or all proceedings

before the Department as found to be appropriate.

(f) Failure to appear. (1) If FNS or the State agency, after being

duly notified, fails to appear at the hearing without cause, that party

shall be deemed to have waived the opportunity for an oral hearing and

to have admitted any facts which may be presented at the hearing. Such

failure by either party shall also constitute an admission of all the

material allegations of fact contained in any pleadings submitted by

the other party. The party who appears shall have the option of whether

to follow the procedure under Sec. 283.7 or to present evidence, in

whole or in part, in the form of declarations or by oral testimony

before the ALJ.

(2) Failure to appear at a hearing shall not be deemed to be a

waiver of the right to be served with a copy of the ALJ's initial

decision, to file a motion for reconsideration pursuant to

Sec. 283.17(d) or to seek review by the Judicial Officer in accordance

with Sec. 283.20.

(g) Order of proceeding. Except as may be decided otherwise by the

ALJ, FNS shall proceed first at the hearing. FNS has the burden of

proving, by a preponderance of the evidence, the QC claim against the

State agency for a QC error rate in excess of the tolerance level. The

State agency will proceed second and must prove, by a preponderance of

the evidence, the facts upon which it bases its appeal.

(h) Evidence. (1) The testimony of witnesses at a hearing shall be

on oath or affirmation and subject to cross-examination.

(2) Upon a finding of cause, the ALJ may order that any witness be

examined separately and apart from all other witnesses except those who

may be parties to the appeal or whose presence is shown by a party to

be essential to the presentation of the party's cause.

(3) After a witness called by either party has testified on direct

examination, any other party may request and obtain the production of

any statement, or part thereof, of such witness in the possession of

the opposing party which relates to the subject matter as to which the

witness has testified. Such production shall be made according to the

procedures and subject to the definitions and limitations prescribed in

the Jencks Act (18 U.S.C. 3500).

(4) Evidence which is immaterial, irrelevant, or unduly

repetitious, or which is not of the sort upon which responsible persons

are accustomed to rely, shall be excluded by order of the ALJ insofar

as practicable.

(i) Inclusion in the record. At the oral hearing or as ordered by

the ALJ, depositions to the extent deemed admissible, written

interrogatories, written requests for admission and respective

responses may be offered in evidence by the party at whose instance

they were taken. If not offered by such party, they may be offered in

whole or in part by any other party. If only part of a deposition,

written interrogatory, written request for admission or response

thereto is offered in evidence by a party, any other party may require

that all of it, which is relevant to the part introduced, be offered,

and any party may introduce any other parts. Such depositions, written

interrogatories, written requests for admission and respective

responses thereto shall be admissible in evidence subject to such

objections as to relevancy, materiality or competency of the testimony

as were noted at the time of their taking or are made at the time they

are offered in evidence.

(j) Objections. (1) If a party objects to the admission of any

evidence or to the limitation of the scope of any examination or cross

examination or to any other ruling by the ALJ, the party shall state

briefly the grounds of such objection, whereupon an automatic exception

will follow if the objection is overruled by the ALJ.

(2) Only objections made before the ALJ may be subsequently relied

upon on review by the Judicial Officer.

(k) Exhibits. Four copies of each exhibit shall be filed with the

ALJ. However, where there are more than two parties in the appeal, an

additional copy shall be filed for each additional party. A true copy

of an exhibit may be substituted for the original.

(l) Official records or documents. An official government record or

document or entry therein, if admissible for any purpose, shall be

admissible in evidence without the production of the person who made or

prepared the same, and shall be prima facie evidence of the relevant

facts stated therein. Such record or document shall be evidenced by an

official publication thereof or by a copy certified by a person having

legal authority to make such certification.

(m) Official notice. Official notice shall be taken of such matters

as are judicially noticed by the courts of the United States and of any

other matter of technical, scientific, or commercial fact of

established character. Provided, that the parties shall be given

adequate opportunity to show that such facts are erroneously noticed.

(n) Offer of proof. Whenever evidence is excluded by the ALJ, the

party offering such evidence may make an offer of proof, which shall be

included in the transcript. The offer of proof shall consist of a brief

statement describing the evidence excluded. If the evidence consists of

a brief oral statement, it shall be included in the transcript in toto.

If the evidence consists of a document or other exhibit, it shall be

marked for identification and inserted in the hearing record. In either

event, if the Judicial Officer, upon review, determines that the ALJ's

ruling excluding the evidence was erroneous and prejudicial, the

evidence shall be considered a part of the transcript and hearing

record. If the Judicial Officer determines that the ALJ's ruling

excluding the evidence was erroneous and prejudicial, and that it would

inappropriate to have such evidence considered a part of the hearing

record without reopening the hearing, the Judicial Officer may direct

that the hearing be reopened to permit the taking of such evidence or

for any other purpose in connection with the excluded evidence.

(o) Transcript. Hearings shall be recorded and transcribed

verbatim. The party requesting the hearing shall bear the transcription

cost of producing the transcript and the duplication cost for one

transcript provided to the ALJ and to the other parties to the appeal.

Sec. 283.16 Consolidation of issues.

Similar issues involved in appeals by two or more State agencies

may be consolidated upon motion by the State agencies, FNS, or at the

discretion of the ALJ if it is decided that consolidation would help to

promote administrative efficiency.

(a) Disposition of consolidated issues. If the ALJ orders

consolidation, the issues consolidated will be considered first. If a

hearing has been requested by any of the parties that have had issues

consolidated, arguments on the consolidated issues will be heard before

arguments on dissimilar issues. The ALJ will take the information into

consideration along with arguments on other issues in preparing initial

decisions for QC appeals in which some issues have been consolidated.

(b) Initial decision. (1) If the ALJ decides the evidence and

arguments by the State agencies on the consolidated issues cannot be

overcome by the evidence presented by FNS and are sufficient to grant

the relief requested by a State agency or all State agencies in which

the issue is involved, the ALJ shall prepare an initial decision as

provided in Sec. 283.17(c).

(2) FNS may file a motion for reconsideration pursuant to

Sec. 283.17(d) or seek review by the Judicial Officer in accordance

with Sec. 283.20.

Sec. 283.17 Post-hearing procedure.

(a) Corrections to transcript. (1) At any time, but not later than

the time fixed for filing proposed findings of fact, conclusions of

law, order and briefs, any party may file a motion proposing

corrections to the transcript.

(2) Unless a party files such a motion in the matter prescribed,

the transcript shall be presumed to be a true, correct, and complete

transcript of the testimony given at the hearing and to contain an

accurate description or reference to all exhibits received in evidence

and made part of the hearing record. The transcript shall be deemed to

be certified without further action by the ALJ.

(3) At any time prior to the filing of the ALJ's initial decision

and after consideration of any objections filed as to the transcript,

the ALJ may issue an order making any corrections in the transcript

that the ALJ finds are warranted. Such corrections shall be entered

into the original transcript by the Hearing Clerk (without obscuring

the original text).

(b) Proposed findings of fact, conclusions of law, order, and

briefs. The parties may file proposed findings of fact, conclusions of

law and orders based solely upon the record and on officially noticed

matters, and briefs in support thereof. briefs may be filed at the

discretion of the ALJ. The ALJ shall announce at the hearing the time

within which these documents may be filed.

(c) ALJ's initial decision. (1) The ALJ shall decide the appeal not

later than 60 days after receipt of rebuttal evidence submitted by the

State agency or, if the State agency does not submit rebuttal evidence,

not later than 90 days after the State agency submits the notice of

appeal and evidence in support of the appeal. In accordance with

Sec. 283.22(f), the ALJ may, upon motion or sua sponte, extend this

deadline for cause shown.

(2) The ALJ shall prepare, upon the basis of the record and

officially noticed matters, and shall file, an initial decision which

shall include a decision on a request for good cause relief, a copy of

which shall be served upon each of the parties.

(3) Such initial decision shall be considered final for purposes of

judicial review without further proceedings, unless there is a motion

for reconsideration filed pursuant to Sec. 283.17(d) or review by the

Judicial Officer is sought pursuant to Sec. 283.20.

(4) If no motion for reconsideration or review by the Judicial

Officer is filed, the initial decision shall constitute the final

notice of determination for purposes of judicial review and shall

become effective 30 day after service.

(d) Motion for reconsideration. (1) Except as provided in paragraph

(d)(4) of this section, any party may file a motion for reconsideration

of the initial decision within 30 days of service of the initial

decision. If served by mail, the time for filing a motion for

reconsideration will be 5 days longer in accordance with Sec. 283.22.

(2) Every such motion must set forth the mattes claimed to have

been erroneously decided and the basis of the alleged errors. Such

motion shall be accompanied by a supporting brief.

(3) Responses to such motions shall be filed in accordance with

Sec. 283.18(d).

(4) No party may file a motion for reconsideration of an initial

decision that has been revised in response to a previous motion for

reconsideration.

(5) The ALJ may dispose of a motion for reconsideration by denying

it or by issuing a revised initial decision.

(6) If the ALJ denies a motion for reconsideration, the initial

decision shall constitute the final notice of determination for

purposes of judicial review and shall become effective 30 days after

service unless review by the Judicial Officer is sought in accordance

with Sec. 283.20.

(7) If the ALJ issues a revised initial decision, that decision

shall constitute the final notice of determination for purposes of

judicial review and shall become effective 30 days after service unless

review by the Judicial Officer is sought in accordance with

Sec. 283.20.

Sec. 283.18 Motions and requests.

(a) Filing. All motions and requests shall be filed with the

Hearing Clerk, and served upon all the parties by the moving or

requesting party, except motions and requests made on the record during

the oral hearing. The ALJ assigned to the appeal or the Chief Judge

shall rule upon all motions and requests filed or made prior to seeking

review of the ALJ's initial decision pursuant to Sec. 283.20, except

motions directly relating to such review. Thereafter, the Judicial

Officer shall rule on any motions and requests as well as the motions

directly relating to the review of the ALJ's initial decision.

(b) Time for filing. Any motion or request may be filed at any

time, except that:

(1) Motions to dismiss pursuant to Sec. 283.5 must be filed within

the time allowed for filing an answer; and

(2) Motions for reconsideration must be filed within 30 days of

service of the ALJ's initial decision pursuant to Sec. 283.17(d).

(c) Contents. All written motions and requests shall state the

particular order, ruling, or action desired and the grounds therefor.

(d) Response to motions and requests. Within 10 days after service

of any written motion or request or within such shorter or longer

period as may be fixed by the ALJ or Judicial Officer, an opposing

party may file a response to the motion or request. The moving party

shall have no right to reply to the response; however, the ALJ or

Judicial Officer may order that a reply be filed.

(e) Certification to the Judicial Officer. The submission or

certification of any motion, request, objection, or other question to

the Judicial Officer prior to the seeking of review pursuant to

Sec. 283.20 shall be made by and in the discretion of the ALJ. The ALJ

may either rule upon or certify the motion, request, objection, or

other question to the Judicial Officer, but not both.

Sec. 283.19 ALJs.

(a) Assignment. No ALJ shall be assigned to serve in any appeal

who:

(1) Has any pecuniary interest in any matter or business involved

in the appeal,

(2) Is related by blood or marriage to any party in the appeal, or

(3) Has any conflict of interest which might impair the ALJ's

objectivity in the appeal.

(b) Disqualification of ALJ. (1) Any party to the appeal may, by

motion, request that the ALJ withdraw from the appeal on one or more of

the grounds set out in paragraph (a) of this section. Such motion shall

set forth with particularity the alleged grounds for disqualification.

The ALJ may then either rule upon or certify the motion to the Judicial

Officer, but not both.

(2) The ALJ may withdraw from any appeal for any reason deemed by

the ALJ to be disqualifying.

(c) Powers. (1) Subject to review as provided elsewhere in this

part, the ALJ, in any assigned appeal, shall have the power to:

(i) Rule upon motions and requests;

(ii) Set the time and place of a pre-hearing conference and the

time of the hearing, adjourn the hearing from time to time, and change

the time of the hearing;

(iii) Administer oaths and affirmations;

(iv) Regulate the scope and timing of discovery;

(v) Issue and enforce subpoenas as authorized under 7 U.S.C.

2023(a) and these rules;

(vi) Summon and examine witnesses and receive evidence at the

hearing;

(vii) Appoint expert witnesses in accordance with the provisions of

Rule 706 of the Federal Rules of Evidence;

(viii) Admit or exclude evidence;

(ix) Hear oral argument on facts or law;

(x) Upon motion of a party, decide cases, in whole or in part, by

non-oral hearing procedures under subpart C of this part where there is

no disputed material issue of fact;

(xi) Perform all acts and take all measures necessary for the

maintenance of order, including the exclusion of contumacious counsel

or other persons;

(xii) Take all other actions authorized under the Act and these

rules, including the extension of time upon motion of a party or sua

sponte for cause shown.

(2) The ALJ may not rule upon the validity of Federal statutes or

regulations.

(d) Who may act in the absence of the ALJ. In case of the absence

of the ALJ or the ALJ's inability to act, the powers and duties to be

performed by the ALJ under these rules of practice in connection with

any assigned appeal may, without abatement of the appeal, unless

otherwise directed by the Chief Judge, be assigned to any other ALJ.

Sec. 283.20 Review by the Judicial Officer.

(a) Filing of review petition. (1) Within 30 days after service of

the ALJ's initial decision, or any part thereof, any party may seek

Judicial Officer review of such decision by filing a review petition

with the Hearing Clerk. However, if another party files a motion for

reconsideration under Sec. 283.17(d), consideration of the review

petition shall be stayed automatically pending resolution of the motion

for reconsideration. If a motion for reconsideration is timely filed, a

review petition may be filed within 30 days after the ALJ denies the

motion or issues a revised initial decision, whichever applies.

(2) As provided in Sec. 283.15(h), objections made before the ALJ

regarding evidence or regarding a limitation on examination or cross-

examination or other ruling may be relied upon in a Judicial Officer

review.

(3) Each issue set forth in the review petition, and the arguments

thereon, shall be plainly and concisely stated; and shall contain

detailed citations to the record, statutes, regulations or authorities

being relied upon in support thereof. A brief in support may be filed

simultaneously with the review petition.

(b) Response to review petition. Within 30 days after service of a

copy of a review petition and any brief in support thereof, any other

party to the proceedings may file a response in support of or in

opposition to the review petition and in such response any relevant

issue, not presented in the review petition, may be raised.

(c) Transmittal of the record. (1) Whenever a review petition of an

ALJ's initial decision is filed and a response thereto has been filed

or time for filing a response has expired, the Hearing Clerk shall

transmit to the Judicial Officer the record of the appeal.

(2) Such record shall include: The pleadings; motions and requests

filed and rulings thereon; the transcript of the testimony taken at the

hearing, together with the exhibits filed in connection therewith; any

documents or papers filed in connection with a prehearing conference;

such proposed findings of fact, conclusions of law, orders, and briefs

in support thereof, as may have been filed in connection with the

appeal; the ALJ's initial decision; the motion for reconsideration of

the ALJ's initial decision; the ALJ's initial decision on the motion

for reconsideration and the review petition, and such briefs in support

thereof and responses thereto as may have been filed.

(d) Oral argument. A party filing a review petition may request,

within the prescribed time for filing such review petition, an

opportunity for oral argument before the Judicial Officer. Within the

time allowed for filing a response, the responding party may file a

request for such oral argument. Failure to make such request to appear

before the Judicial Officer, within the prescribed time period, shall

be deemed a waiver of the opportunity for oral argument. There is no

right to appear personally before the Judicial Officer. The Judicial

Officer may grant, refuse, or limit any request for oral argument. Oral

argument shall not be transcribed unless so ordered in advance by the

Judicial Officer for cause shown upon request of a party or upon the

Judicial Officer's own motion.

(e) Scope of argument. Argument to be heard by the Judicial Officer

on review, whether oral or on brief, shall be limited to the issues

raised in the review petition to the Judicial Officer or in the

response to such petition, except that if the Judicial Officer

determines that additional issues should be argued, the parties shall

be given reasonable notice of such determination, so as to permit

adequate preparation on all issues to be argued.

(f) Notice of argument; postponement. The Hearing Clerk shall

advise all parties of the time and place at which oral argument will be

heard. A request for postponement of the argument must be made by

motion filed within a reasonable time in advance of the date fixed for

argument.

(g) Order of argument. The appellant is entitled to commence and

conclude the argument.

(h) Submission of briefs. By agreement of the parties, a review may

be submitted for decision on the briefs, but the Judicial Officer may

direct that the review be argued orally.

(i) Additional evidence. If any party demonstrates to the

satisfaction of the Judicial Officer that additional evidence not

presented to the ALJ is material, not cumulative, and that there were

reasonable grounds for the failure to present such evidence to the ALJ,

the Judicial Officer shall remand the matter to the ALJ for

consideration of such additional evidence.

(j) Decision of the Judicial Officer on review. (1) As soon as

practicable after the receipt of the record from the Hearing Clerk, or,

in case oral argument was had, as soon as practicable thereafter, the

Judicial Officer, upon the basis of the record and any matter of which

official notice is taken, shall rule on the review.

(2) The Judicial Officer may adopt, reduce, reverse, compromise,

remand or approve settlement of any claim initially decided by the ALJ

under this part.

(3) The Judicial Officer shall promptly serve each party to the

appeal with a copy of the ruling of the Judicial Officer which shall be

considered the final determination and contain a statement describing

the right to seek judicial review.

(4) Judicial review must be sought within 30 days of service of the

final notice of determination by the Judicial Officer pursuant to 7

U.S.C. 2023(a).

Sec. 283.21 Ex parte communications.

(a) ALJ; Judicial Officer. At no time prior to the issuance of the

final decision shall the ALJ or Judicial Officer discuss ex parte the

merits of the appeal or review with any person who is connected with

the appeal or review in an advocative or in an investigative capacity,

or with any representative of such person. However, procedural matters

shall not be included within this limitation; and furthermore, the ALJ

or Judicial Officer may discuss the merits of the case with such a

person if all parties to the appeal or review, or their attorneys have

been given notice and an opportunity to participate. A memorandum of

such discussion shall be included in the record.

(b) Parties; interested persons. No party or other interested

person shall make or knowingly cause to be made to the ALJ or Judicial

Officer an ex parte communication relevant to the merits of the appeal

or review.

(c) Procedure. If the ALJ or Judicial Officer receives an ex parte

communication in violation of this section, the one who receives the

communication shall place in the public record of the appeal or review:

(1) All such written communications;

(2) Memoranda stating the substance of all such oral

communications; and

(3) Copies of all written responses, and memoranda stating the

substance of all oral responses thereto.

(4) Upon receipt of a communication knowingly made or knowingly

caused to be made by a party in violation of this section, the ALJ or

Judicial Officer may, to the extent consistent with the interests of

justice and the policy of the underlying statute, require the party to

show cause why its claim or interest in the appeal or review should not

be dismissed, denied, disregarded or otherwise adversely affected on

account of such violation.

(d) Decision. To the extent consistent with the interests of

justice and the policy of the underlying statute, a violation of this

section shall be sufficient grounds for a decision adverse to the party

who knowingly commits a violation of this section or who knowingly

causes such a violation to occur.

Sec. 283.22 Form; filing; service; proof of service; computation of

time; and extensions of time.

(a) Form. (1) The original and two copies of all papers in a

proceeding conducted under this subpart shall be filed with the Hearing

Clerk.

(2) Every pleading and paper filed in the proceeding shall contain

a caption setting forth the title of the action, the docket number

assigned by the Hearing Clerk, and a descriptive title (e.g., Motion

for Extension of Time).

(3) Every pleading and paper shall be signed by and contain the

address and telephone number of the representative for the party on

whose behalf the paper was filed.

(b) Filing. Papers are considered filed when they are postmarked,

or, received, if hand delivered. Date of mailing may be established by

a certificate from the party or representative or by proof that the

document was sent by certified or registered mail.

(c) Service. A party filing a document with the ALJ shall, at the

time of filing, serve a copy of such document on every other party.

Service upon any party of any document shall be made by delivering or

mailing a copy to the party's last known address. When a party is

represented by an attorney or designated representative, service shall

be made upon such attorney or representative in lieu of the actual

party.

(d) Proof of service. A certificate of the person serving the

document by personal delivery or by mail, setting forth the date, time

and manner of service, shall be proof of service.

(e) Computation of time.

(1) In computing any period of time under this part or in an order

issued thereunder, the time begins with the day following the act,

event, or default, and includes the last day of the period, unless it

is a Saturday, Sunday or legal holiday observed by the Federal

Government, in which event it includes the next business day.

(2) When a document has been served by mail, an additional five

days will be added to the time permitted for any response.

(f) Extensions of time. Requests for extensions of time shall be

submitted to the ALJ, Chief Judge or the Judicial Officer prior to the

expiration of the original due date. The time for the filing of any

document or paper required or authorized under the rules in this part

may be extended by the ALJ, Chief Judge or the Judicial Officer, if, in

the judgment of the ALJ, Chief Judge or the Judicial Officer, there is

cause for the extension. In instances where the time permits notice of

the request for extension, time shall be given to the other party to

submit views concerning the request.

Sec. 283.23 Procedural matters.

(a) Communications from Hearing Clerk. In order to expedite the

appeal process, the Hearing Clerk may develop form letters and

transmittal forms to be used for notices, service of papers, requests

for information, and all other communications between the Hearing

Clerk's Office and the parties.

(b) Representation. All parties may be represented by attorneys or

by designated representatives. Attorneys or designated representatives

appearing for the parties shall file formal notices of appearances and

withdrawals with the Hearing Clerk.

Subpart C--Summary Procedure for Appeals of QC Claims of Less Than

$50,000

Sec. 283.24 Incorporation of procedures by reference.

Except as otherwise provided, the following procedures detailed in

subpart B of this part shall apply to appeals of QC claims of less than

$50,000: Secs. 283.5 Motion to Dismiss; 283.6 Answer; 283.8 Rebuttal or

Amendment of Appeal or Answer; 283.9 Withdrawal of Appeal; 283.10

Consent Decision; 283.18 Motions and Requests; 283.19 ALJ's; 283.20

Review by the Judicial Officer; 283.21 Ex Parte Communications; 283.22

Filings; Service; Extensions of Time; and Computations of Time; and

283.23 Procedural Matters.

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

(a) Time. A State agency may appeal the bill for collection from

FNS for a QC claim of less than $50,000 for a food stamp QC error rate

in excess of the tolerance level. A State agency must file a written

notice of appeal, in accordance with this section, within 10 days of

receipt of the bill for collection from FNS for a QC claim of less than

$50,000. The State agency may request an extension to the 10-day filing

requirement in accordance with Sec. 283.22(f). FNS shall issue the bill

for collection by certified mail or personal service.

(b) Exhaustion of administrative remedies. The State agency must

appeal the bill for collection to the ALJ, pursuant to this subpart,

and exhaust the available administrative remedies before filing suit in

the Federal District Courts.

(c) Filing. The notice of appeal shall be filed with the Hearing

Clerk.

(d) Content of the notice of appeal. (1) A notice of appeal, in

order to be considered acceptable must contain the following

information:

(i) A brief and clear statement that it is an appeal from a QC

claim of less than $50,000 identifying the period the claim covers, the

date and amount of the bill for collection, and the date of receipt of

the bill for collection;

(ii) Identification of the State agency as the appellant and FNS as

the appellee;

(iii) A statement that the notice of appeal is filed pursuant to

section 14(a) of the Food Stamp Act;

(iv) A true copy of the bill for collection which constitutes the

basis for the filing of the notice of appeal shall be attached to the

notice.

(2) Failure to file an acceptable notice of appeal may result in a

challenge by FNS to the notice and dismissal of the notice by the ALJ

and a waiver of the opportunity for further appeal or review by the

Judicial Officer unless the State agency pursues the options as

discussed in Secs. 283.17(d) and 283.20.

(e) Receipt of notice of appeal and assignment of docket number.

Upon receipt of a notice of appeal, the Hearing Clerk shall assign the

appeal a docket number. The Hearing Clerk shall:

(1) Send the State agency a letter which shall include the

following information:

(i) Advise that the notice of appeal has been received and the date

of receipt;

(ii) The docket number assigned to the appeal and instructions that

all future communications related to the appeal shall reference the

docket number, and;

(iii) That the State agency must file and serve its appeal

petition, as set forth in Sec. 283.22 not later than 60 days after

receiving a notice of the claim. Failure to file a timely appeal

petition may result in a waiver of further appeal rights.

(2) Send FNS a copy of the notice of appeal and a copy of the

letter to the State agency.

(f) Stay of collection. The filing of a timely notice of appeal

shall automatically stay the action of FNS to collect the QC claim

asserted against the State agency until a decision is reached on the

acceptability of the appeal, and in the case of an acceptable appeal,

until a final administrative determination has been issued. However,

interest will accrue on the outstanding claim amount during the stay as

provided in section 13(a)(1) of the Food Stamp Act of 1977, as amended

(7 U.S.C. 2022(a)(1)).

(g) Content of appeal petition. The appeal petition shall include:

(1) A brief statement of the allegations of fact and provisions of

law that constitute the basis for the appeal including a statement as

to whether a factual basis for good cause relief exists, and

(2) The nature of the relief sought.

(h) FNS answer. Upon service of the State agency appeal petition,

FNS shall file an answer, pursuant to Sec. 283.6, not later than 60

days after the State agency submits its appeal petition.

Sec. 283.26 Request that appeals be handled under procedures in

subpart B for appeals of QC claims of $50,000 or more.

(a) If, after the filing of its appeal petition, the State agency

does not believe that the summary procedure provided in this subpart is

adequate for handling the appeal and that an oral hearing is necessary,

the State agency may file, no later than the date established for the

conclusion of any discovery pursuant to Sec. 283.29, a motion that its

appeal be handled under the procedures in subpart B of this part.

(b) The motion shall specify why the State agency believes that the

summary procedure is inadequate and what harm will result if an oral

hearing is not held.

(c) FNS will have 10 days from service of the State agency's motion

that the appeal be handled under subpart B of this part to submit

arguments either in support of or against the State agency's position.

(d) The ALJ will review the State agency's motion and the

information submitted by FNS and decide which procedures shall be used

in the appeal.

Sec. 283.27 Procedures upon failure to file an answer.

The failure by FNS to file an answer shall constitute a waiver of

the opportunity to file a cross motion for summary judgment pursuant to

Sec. 283.30. Upon such failure to file, the State agency shall file a

proposed decision, along with a motion for adoption thereof, both of

which shall be served upon FNS by the State agency. Within 10 days

after service of such motion and proposed decision, FNS may file with

the Hearing Clerk objections thereto. If the ALJ finds that meritorious

objections have been filed, the State agency's motion shall be denied

with supporting reasons. If meritorious objections are not filed, the

ALJ shall issue an initial decision without further procedures. Copies

of the decision or denial of State agency's motion shall be served on

each of the parties and shall be included as part of the official

record. Where the decision as proposed by the State agency is adopted

as the ALJ's initial decision, such decision of the ALJ shall become

final and effective 30 days after service unless reconsideration or

review by the Judicial Officer is sought as discussed in

Secs. 283.17(d) and 283.20.

Sec. 283.28 Discovery.

Upon motion and as ordered by the ALJ, written interrogatories,

written requests for admissions and written requests for the production

of documents, may be served by any party to the appeal upon any other

party and used in accordance with Sec. 283.12(b).

Sec. 283.29 Scheduling conference.

(a) Time and place. The ALJ shall direct the parties or their

counsel to attend a scheduling conference following the filing of a

notice of appeal pursuant to Sec. 283.25. The scheduling conference

shall be held at the U.S. Department of Agriculture, Washington, DC.

Reasonable notice of the time and place of the scheduling conference

shall be given. The ALJ may order each of the parties to furnish at the

scheduling conference the following:

(1) An outline of the appeal or defense;

(2) The legal theories upon which the party will rely;

(3) Copies of or a list of documents that the party anticipates

relying upon;

(b) Procedures. The ALJ shall not order any of the foregoing

procedures that a party can show are inappropriate or unwarranted under

the circumstances of the particular appeal.

(c) Scheduling conference. At the scheduling conference, the

following matters shall be considered:

(1) The simplification of issues;

(2) The necessity of amendments to pleadings;

(3) Stipulations of facts and of the authenticity, accuracy, and

admissibility of documents;

(4) Negotiation, compromise, or settlement of issues;

(5) The exchange of copies of proposed exhibits;

(6) The nature of and the date by which discovery, as provided in

Sec. 283.28, must be completed;

(7) The identification of documents or matters of which official

notice may be requested;

(8) A schedule to be followed by the parties for the filing of

cross-motions for summary judgment and completion of other actions

decided at the conference; and

(9) Such other matters as may expedite and aid in the disposition

of the appeal.

(d) Reporting. A scheduling conference will not be stenographically

reported unless so directed by the ALJ.

(e) Attendance at scheduling conference. In the event the ALJ

concludes that personal attendance by the ALJ and the parties or

counsel at a scheduling conference is unwarranted or impractical, but

decides that a conference would expedite the appeal, the ALJ may

conduct such conference by telephone.

(f) Order. Actions taken as a result of a conference shall be

reduced to an appropriate written order, unless the ALJ concludes that

a stenographic report shall suffice.

Sec. 283.30 Cross motions for summary judgment.

Appeals filed pursuant to this subpart shall be determined upon

cross motions for summary judgment unless the matter is heard under

subpart B of this part in accordance with Sec. 283.26. Cross motions

for summary judgment shall be filed by the parties along with the

appeal petition and answer or in accordance with the schedule

established by the ALJ pursuant to Sec. 283.29. Motions for summary

judgment shall address the issues raised by the pleadings and may be

supported by declarations. Motions and accompanying briefs in support

of summary judgment shall not exceed 35 pages excluding exhibits unless

otherwise authorized by the ALJ. Reply briefs may be filed by the

parties in accordance with the schedule established by the ALJ. Reply

briefs may not exceed 15 pages in length, excluding exhibits.

Sec. 283.31 Review of the Record.

(a) The ALJ shall review the cross motions for summary judgment,

briefs, reply briefs and supporting materials submitted by both FNS and

the State agency.

(b) If the ALJ decides that additional information or briefing is

required from a party, a request for such information or briefing shall

be submitted to such party with a copy to the other party. The request

shall identify the additional information or specific issues to be

addressed and shall specify the date(s) by which such information or

briefing must be provided. Upon receipt of such additional information

or briefing, the ALJ shall provide the other party an opportunity to

submit responsive information or briefing.

(c) If the party to whom a request for additional information or

briefing is made fails to submit the information or brief the issue(s)

as requested, the ALJ may decide the appeal based on the existing

record.

(d) If the ALJ decides that oral argument is necessary on legal

issues, the ALJ shall set a time for the oral arguments as soon as

feasible thereafter, with due regard for the public interest and the

convenience and necessity of the State agency and FNS. The oral

arguments shall be held at the U.S. Department of Agriculture,

Washington, DC. Upon a showing of unusual or extraordinary

circumstances, the ALJ may order that the argument be held at another

location. The ALJ shall file a notice stating the time and place of the

oral arguments. If any change in the time of the oral arguments is

made, the ALJ shall file a notice of such change, which notice shall be

served upon the parties, unless it is made during the course of the

oral arguments and made a part of the transcript or actual notice given

to the parties.

(e) Oral argument shall not be transcribed unless so ordered in

advance by the ALJ for cause shown upon request of a party or upon the

ALJ's own motion.

Sec. 283.32 ALJ's initial decision.

(a) The ALJ shall decide the appeal not later than 60 days after

receipt of rebuttal evidence submitted by the State agency pursuant to

Sec. 283.8 or, if the State agency does not submit rebuttal evidence,

not later than 90 days after the State agency submits the notice of

appeal and evidence in support of the appeal. The ALJ may extend this

deadline for cause shown.

(b) The ALJ shall prepare, upon the basis of the record, and shall

file an initial decision which shall include a decision on a request

for good cause relief, a copy of which shall be served upon each of the

parties.

(c) Such initial decision shall constitute the final notice of

determination for purposes of judicial review without further

proceedings, unless there is a motion for reconsideration filed

pursuant to Sec. 283.17(d) or review by the Judicial Officer is sought

pursuant to Sec. 283.20.

Dated: June 22, 1994.

William E. Ludwig,

Administrator, Food and Nutrition Service.

[FR Doc. 94-16003 Filed 7-5-94; 8:45 am]

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