National Appeals Division Rules of Procedure

DEPARTMENT OF AGRICULTURE

Office of the Secretary

Farm Service Agency

Natural Resources Conservation Service

Rural Business-Cooperative Service

Rural Housing Service

Rural Utilities Service

7 CFR Parts 1, 11, 12, 400, 614, 620, 623, 631, 632, 634, 663, 701,

702, 752, 780, 781, and 1900

National Appeals Division Rules of Procedure

AGENCY: Office of the Secretary, National Appeals Division, USDA.

ACTION: Interim final rule.

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SUMMARY: On May 22, 1995 (60 FR 27044), the National Appeals Division

(NAD) in the Office of the Secretary published a proposed rule to

implement Title II, Subtitle H, of the Federal Crop Insurance Reform

and Department of Agriculture Reorganization Act of 1994, Pub. L. 103-

354, 7 U.S.C. 6991 et seq., by setting forth procedures for program

participant appeals of adverse decisions by United States Department of

Agriculture (USDA) agency officials to NAD. The deadline for receipt of

comments was June 21, 1995. On June 28, 1995 (60 FR 32922) the Office

of the Secretary published an extension of the deadline for receipt of

comments until July 6, 1995. From the period May 22 to July 6, 1995,

forty-six timely public comments were received in response to the

proposed rulemaking. Based on these comments, including concerns

regarding the need for an additional comment period on the proposed

rules and the need for a comment period on USDA agency conforming

rules, but mindful of the immediate need for published rules, the

Secretary now issues these rules on an interim final basis. These rules

also include conforming changes to the former appeal rules of USDA

agencies whose adverse decisions are now subject to NAD review.

DATES: Part 11 of this interim rule is effective January 16, 1996. With

the exception of Sec. 11.9, part 11 of this rule is applicable as to

agency adverse decisions and NAD appeals for which hearings have not

been held. Section 11.9 of this interim rule is applicable immediately

as to all pending requests for Director review and is applicable

retroactively to all requests for Director

[[Page 67299]]

review made on or after October 20, 1994.

Amendments made by this interim rule to all other parts of title 7

of the Code of Federal Regulations are effective January 16, 1996 and

are applicable on January 16, 1996 as to any adverse technical

determinations or decisions made by an applicable agency.

Written comments via letter, facsimile, or Internet are invited

from interested individuals and organizations, and must be received on

or before March 28, 1996.

ADDRESSES: Comments should be sent to L. Benjamin Young, Jr., Office of

the General Counsel, Research and Operations Division, AgBox 1415,

United States Department of Agriculture, Washington, DC 20250-1415; fax

number: 202/720-5837; Internet: [email protected].

FOR FURTHER INFORMATION CONTACT: L. Benjamin Young, Jr. at the above

address or 202/720-4076.

SUPPLEMENTARY INFORMATION:

Classification

This rule has been reviewed under E.O. 12866, and it has been

determined that it is not a ``significant regulatory action'' rule

because it will not have an annual effect on the economy of $100

million or more or adversely and materially affect a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities. This rule will not create any serious inconsistencies or

otherwise interfere with actions taken or planned by another agency. It

will not materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs, or the rights and obligations of

recipients thereof, and does not raise novel legal or policy issues

arising out of legal mandates, the President's priorities, or

principles set forth in E.O. 12866.

Regulatory Flexibility Act

USDA certifies that this rule will not have a significant impact on

a substantial number of small entities as defined in the Regulatory

Flexibility Act, Pub. L. 96-534, as amended (5 U.S.C. 601 et seq.).

Paperwork Reduction Act

USDA has determined that the provisions of the Paperwork Reduction

Act, as amended, 44 U.S.C., chapter 35, do not apply to any collections

of information contained in this rule because any such collections of

information are made during the conduct of administrative action taken

by an agency against specific individuals or entities. 5 CFR

1320.4(a)(2).

Background and Purpose

On December 27, 1994 (see 59 FR 66,517), the Secretary of

Agriculture noticed that the NAD was established pursuant to Title II,

Subtitle H of the Federal Crop Insurance Reform and Department of

Agriculture Reorganization Act of 1994, Public Law No. 103-354, 7

U.S.C. 6991 et seq. (``the Act''). NAD was assigned responsibility for

all administrative appeals formerly handled by the National Appeals

Division of the former Agricultural Stabilization and Conservation

Service (ASCS) and by the National Appeals Staff of the former Farmers

Home Administration (FmHA), appeals arising from decisions of the

former Rural Development Administration (RDA) and the former Soil

Conservation Service (SCS), appeals arising from decisions of the

successor agencies to the foregoing agencies established by the

Secretary, appeals arising from decisions of the Commodity Credit

Corporation (CCC) and the Federal Crop Insurance Corporation (FCIC),

and such other administrative appeals arising from decisions of

agencies and offices of USDA as may in the future be assigned by the

Secretary.

This rule sets forth the jurisdiction of the NAD, and the

procedures appellants and agencies must follow upon appeal of adverse

decisions by covered USDA program ``participants'' as defined in detail

in the new 7 CFR part 11. In addition, since the Act changes existing

formal administrative appeals procedures for some agencies while

allowing participants a choice of pursuing informal appeals with an

agency first or appealing directly to NAD, this rule also makes

conforming amendments to the existing appeal procedures of the USDA

agencies whose adverse decisions will be appealable to NAD under the

new 7 CFR part 11.

For the purposes of convenience, this preamble and the changes to

USDA regulations are divided as follows:

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Item Subject Contact

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I.................. Authentication of Records.............. B. Young 202/720-4076.

II................. NAD Rules of Procedure................. B. Young 202/720-4076.

III................ Natural Resources Conservation Service S. Penn 202/720-6521.

(NRCS) Appeal Rules.

IV................. Commodity Credit Corporation (CCC), A. Grundeman 202/720-4591.

Federal Crop Insurance Corporation

(FCIC), and Farm Service Agency (FSA)

Appeal Rules.

V.................. Rural Business-Cooperative Service A. Grundeman 202/720-4591.

(RBS), Rural Housing Service (RHS),

and Rural Utilities Service (RUS)

Appeal Rules.

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I. Authentication of Records

This rule amends the provisions of USDA regulations regarding

authentication of official records to provide that the Director of NAD

may authenticate documents in NAD records for USDA.

II. NAD Rules of Procedure

Forty-six timely comments were received by July 6, 1995 in response

to the requests for comment on the proposed NAD rule. In response to

these comments, a number of changes have been made to the rules;

however, USDA has opted not to publish the revised rules for an

additional comment period. USDA does recognize the need for further

public comment on these rules. USDA therefore is issuing this rule on

an interim final basis for three specific reasons.

First, a tension exists between the desire of Congress and the USDA

to make this a farmer-friendly appeals process and the necessity of

establishing an appeals procedure that comports with due process and

results in determinations that will withstand scrutiny in the Federal

courts. At the same time, it is important that the appeals procedure

allow for ease of administration by NAD in a time of scarce and

decreasing Federal resources. These problems are reflected in

disagreements among the commenters as to how some of the most detailed

procedures should be implemented. These tensions should not be resolved

presumptively in a final rule. Therefore, promulgation of an interim

rule will allow USDA to receive more feedback

[[Page 67300]]

and make adjustments with the aid of experience.

Second, several commenters expressed concern over the fact that

conforming amendments to individual agency appeal rules were not

published with the proposed rule. Additionally, these conforming

amendments will result in more substantive changes to agency rules than

originally were anticipated by USDA at the time the proposed rules were

published. For example, FSA now has decided to combine appeal

procedures for the former ASCS, the former FmHA, and FCIC programs that

it now administers under the Act. These new agency appeal procedures

will set forth how participants may use the ``informal hearings''

option provided in section 275 of the Act.

Third, legislative changes may occur during consideration of the

Farm Bill in 1996 that will necessitate changes to the NAD rules of

procedure. By publishing this as an interim rule, the USDA establishes

a process for current operations while leaving the rulemaking door open

for timely adoption of rules necessary to implement possible

legislative changes.

The following explanation is given for those sections of the

proposed rule that were heavily commented on or appeared to be

misunderstood:

Sec. 11.1 Definitions.

Adverse decision. Two commenters noted problems with the proposed

definition of ``adverse decision'' with respect to such decisions

resulting from a failure of the agency to act. The proposed rule had by

definition provided that an adverse decision results when an agency

failed to act or make a decision within timeframes prescribed by agency

program regulations. The two commenters noted that in some cases

statutes prescribed timeframes and that in others the regulations

prescribed no timeframes. In the latter case, one of the commenters

suggested that USDA use a ``reasonable'' time in the absence of a

prescribed timeframe. The amended definition provides that an adverse

decision results when an agency fails to act within prescribed

statutory or regulatory timeframes, or, in the case where there are no

such timeframes specified, within a reasonable time.

Agency. All former and current agencies of the USDA whose adverse

decisions are covered by this part have been added in response to a

comment noting the lack of parallel treatment between inclusion of old

and new agency names and the need to assist individuals unfamiliar with

the new names.

USDA also has added language to cover certain programs administered

by RUS because, as one commenter correctly noted, they are former

programs of RDA that by definition in the Act are covered by NAD. This

is accomplished by excluding from NAD purview all RUS programs

authorized under the Rural Electrification Act and the Rural Telephone

Bank Act.

Agency record, case record, and hearing record. Seven commenters

had questions regarding the definitions of ``agency record,'' ``case

record,'' and ``hearing record.'' These definitions were carefully

nested within one another in order to construe the language of the Act

in a logical manner.

Section 278(c) of the Act requires that NAD determinations be made

``based on information from the case record, laws applicable to the

matter at issue, and applicable regulations published in the Federal

Register.'' Section 277(a) of the Act, however, also makes reference to

the fact that the Director and the Hearing Officer are to have access

to the ``case record'' of an adverse decision upon initial filing of an

appeal. Section 278(b) also makes reference to the ``case record'' that

the Director must review as well as the record from the hearing.

Clearly, the ``case record'' in the latter two provisions cannot be the

same ``case record'' referred to in section 278(c), or else NAD

determinations would have to be made without reference to the record

developed in the hearing itself.

USDA faced the task of construing these seemingly contradictory

statutory provisions in a complementary manner. This was done by

creating a definitional framework based upon section 271(4) of the Act

that defines ``case record'' to include ``all the materials maintained

by the Secretary related to an adverse decision.'' As in most cases

where the Secretary is named in a statute, ``Secretary'' here is

interpreted to mean not the person of the Secretary but rather the

Secretary and all subordinate officials of USDA to whom the Secretary

has delegated statutory authority. Construed in this manner, ``case

record'' includes any and all materials held by USDA that relate to an

adverse decision at any given moment during the administrative appeal

process. What the term ``case record'' includes when used in the

statute thus changes based upon the level of the appeal process in

which it is used.

For purposes of clarity in the rule, a new term needed to be

created to distinguish the ``case record'' presented by the agency to

the Hearing Officer, the record developed by the Hearing Officer in the

hearing (sec. 278(b)) and eventually forwarded to the Director, and the

``case record'' upon which the determination is based. This is

accomplished in the rule by defining documents furnished by the agency

to the Hearing Officer upon the initial filing of the appeal as the

``agency record'' that by rule is deemed admitted as evidence in the

hearing, by defining evidence presented at the hearing, the transcript

of the hearing itself, and post-hearing submissions as the ``hearing

record,'' and finally by explicitly incorporating both the ``agency

record'' and the ``hearing record'' into the definition of ``case

record'' upon which NAD determinations are made. ``Case record''

construed in this fashion also includes ``the request for review, and

such other arguments or information as may be accepted by the

Director'' (sec. 278(b)) in the Director review phase of NAD appeals

because they would be included as materials maintained by the

Secretary.

Director. Three commenters objected to the proposed rule definition

and other provisions that would allow the Director to delegate the

authority of the Director to subordinate individuals within NAD. The

primary rationale for the objections was that this would mean that

someone without the credentials and qualifications required by the

statute for the Director would be exercising the statutory authority of

the Director.

USDA rejected changing this provision for two reasons. First, even

though the authority for certain actions may be delegated, such actions

are still taken in the name of the Director. The Director, in other

words, still exercises the final authority. Second, given the

anticipated volume of appeals to be filed with NAD, it is not practical

or efficient to require that the Director personally perform all

actions specified for the Director by name in the Act.

Division. One commenter suggested that the proposed rule was in

error in specifying that the Division was established by this part

instead of the Act itself. Section 272(a) of the Act provides that

``[t]he Secretary shall establish'' NAD, not that the NAD ``is

established.'' Therefore, action by the Secretary was required to

establish NAD.

Equitable relief. Two commenters suggested that the proposed rule

definition of equitable relief needed to be better defined. USDA chose

not to define equitable relief further because the meaning of such

relief varies from program to program covered under these rules,

depending on the language of the program statutes. The guiding intent

[[Page 67301]]

behind the drafting of these rules was to ensure that they were written

as broadly and flexibly as possible so that they do not need to be

amended each time an agency amends its substantive program regulations.

Ex parte communication. One commenter suggested this definition

needed to include post-hearing requests for Director review and

requests regarding the appealability of adverse decisions. The

definition here was changed to include an oral or written communication

``to any officer or employee of the Division.'' As explained below,

further changes were made regarding ex parte communications to ensure

that the prohibition on such communications covered all NAD proceedings

and employees.

Implement. Three comments were received suggesting changes to this

definition. In combination with Sec. 11.11 of the rule, USDA feels that

this language reflects the statutory definition and need not be

changed.

Participant. One commenter suggested that, rather than defining

``participant'' by listing programs and statutes under which an

individual may not bring an appeal before NAD, a separate list of non-

appealable decisions should be added to the regulation. This approach

was considered, as was listing the programs from which adverse

decisions could be appealed to NAD, but the statutory language did not

support these approaches. ``Adverse decision'' is defined too broadly

in the statute to limit by regulation. Further, nonappealability of

decisions is limited only to matters of general applicability under

section 272(d) of the Act. Conversely, Congress explicitly gave the

Secretary authority to define ``participant'' (sec. 271(9)) and

therefore the approach reflected in the rule was chosen.

Seven substantive comments were made regarding the definition of

``participant'' in the proposed rule. Two commenters suggested that the

definition should be expanded to include the requirement that, for

certain guaranteed loan programs of the former Farmers Home

Administration (FmHA), both the applicant/borrower and the lender

should be required to appeal jointly. Since any decision to deny a

guaranteed loan would affect both the applicant/borrower and the

lender, USDA agrees that both parties must appeal any such adverse

decision and the rule has been revised to reflect this requirement.

However, only the lender will be able to appeal the denial or reduction

of a final loss payment to that lender.

One commenter expressed concern that the language ``right to

participate in'' did not clearly include an applicant. Therefore, USDA

has added ``who has applied for'' to the definition.

One commenter suggested that the wording of the definition

technically could exclude someone from appealing to NAD if, for

example, they had filed a tort claim against USDA. As a ``participant''

in a tort claim, they would not be included as a ``participant'' for

purposes of a NAD appeal. To clarify that this is not the case, USDA

has amended the introductory phrase before the list of programs to

read: ``The term does not include persons whose claim(s) arise

under:''.

Finally, three comments were received from representatives of

reinsured companies, that is, crop insurance companies whose insurance

contracts with producers are reinsured by the FCIC. The reinsured

companies objected to the language including participants affected by

decisions of reinsured companies in the definition of ``participants.''

As originally proposed, the language would have allowed participants to

appeal reinsured company decisions to NAD.

The reinsured companies objected to this language on several

grounds. First, they noted that while FCIC was included in the

definition of ``agency'' in section 271(1) of the Act, reinsured

companies were not. Thus, the proposed rule attempted to include

private companies as government agencies contrary to the language of

the Act. Second, the reinsured companies argued that promulgation of

this language by USDA in the final rule would breach the terms of the

Standard Reinsurance Agreements between USDA and the reinsured

companies, as well as alter the legal terms of reinsured company

policies with thousands of insureds. Third, the number of policy

decisions made by reinsured companies that would be open to appeal to

NAD under the proposed language would overwhelm NAD with thousands of

appeals. Finally, the reinsured companies argued that the intent of the

Act in including FCIC in the definition of ``agency'' was to provide

appeal rights for participants in crop insurance programs for a narrow

range of decisions still committed to FCIC after crop insurance reform,

i.e., decisions regarding yield and coverage that are based on FCIC

actuarial data or decisions where an individual is found ineligible to

participate in the Federal crop insurance program.

In response to these comments, USDA has dropped decisions of

reinsured companies as decisions that participants may appeal under

this part. The exclusion of disputes between reinsured companies and

FCIC from the definition of participant in the final rule also means

that all disputes between reinsured companies and FCIC likewise are

excluded from the jurisdiction of NAD. Contract disputes between

reinsured companies and FCIC will be appealable to the USDA Board of

Contract Appeals as provided in its rules. Non-contract related

decisions of FCIC that are adverse to reinsured companies may be

settled with the agency or by resort to legal action in a court of

competent jurisdiction.

Additional definitions. Two commenters suggested that a definition

for ``mediation'' be added. The use of mediation or other forms of

alternative dispute resolution (ADR) by program participants is a

matter of choice for the participants themselves. Since the type of

mediation or ADR used by a participant and the agency is not a

jurisdictional issue for purposes of determining whether an appeal is

properly before NAD, NAD has no control over whatever means the

participant and agency employ. Accordingly, USDA has declined to

attempt to define mediation or ADR for purposes of this part.

Sec. 11.2 General statement.

No comments were received in response to this section. USDA has

made two changes to this section upon further review. First, language

has been added to reflect the statutory provision that NAD, although

independent, is subject to the general supervision and policy direction

of the Secretary. Second, a statement has been added to make clear that

exhaustion of the procedures for Hearing Officer review of an adverse

decision under this part is required before a program participant may

seek judicial review of an adverse decision. This additional language

does not deprive participants of their right to seek review under any

judicial exceptions to required exhaustion of administrative

procedures.

Sec. 11.3 Applicability.

Six commenters generally contended that the NAD appeal procedures

should apply to appeals arising after October 13, 1994, and not October

20, 1994 as specified in the proposed rule. The commenters' rationale

for the October 13 date is that the Act was effective as of that date.

One commenter also discussed the legal ability of the Department to

make the rule effective retroactively.

USDA has decided to delete the effective date subsection from this

[[Page 67302]]

section because it inaccurately indicated an intent to make this entire

rule retroactive. Instead, the effective date of this rule is

appropriately set forth in the EFFECTIVE DATE section of this Federal

Register document.

Two additional changes have been made to this section. First,

wetland or highly erodible land determinations have been added to the

list of examples of agency adverse decisions to clarify that these

decisions are included.

Second, a new subsection has been added to address confusion,

reflected in some comments, that exists over the jurisdiction of NAD

over agency programs. NAD Hearing Officers are not administrative law

judges. NAD has no jurisdiction over questions of law or the

appropriateness of agency regulations. It simply decides the factual

matter of whether an agency complied with such laws and regulations in

rendering an adverse decision. The limitation added here makes clear

that NAD may not be used by program participants for the purpose of

challenging the validity of USDA regulations issued pursuant to

statutory authority.

Sec. 11.4 Inapplicability of other laws and regulations.

Section 277 of the Act provides an elaborate appeals scheme for

particular programs of USDA, including provisions for hearings, the

issuance of subpoenas, and even ex parte communications. Section

277(a)(2)(A) of the Act in fact explicitly incorporates the definition

of an ex parte communication from the Administrative Procedure Act

(APA) (5 U.S.C. 551(14)) as if the APA stands outside of, and is not

applicable to, NAD proceedings. In view of this statutory language, and

in the absence of Congressional intent otherwise, USDA has concluded

that the provisions of the APA generally applicable to agency

adjudications (5 U.S.C. 554, 555, 556, 557, & 3105) do not apply to NAD

proceedings. Furthermore, because NAD proceedings are not required to

be conducted under 5 U.S.C. 554, USDA also concludes the Equal Access

to Justice Act, 5 U.S.C. 504, does not apply to NAD proceedings.

Ardestani v. I.N.S., 112 S.Ct. 515, 519 (1991).

Another issue is the applicability of the Federal Rules of Evidence

to NAD proceedings. Congress intended that these proceedings be farmer-

friendly so that farmers would not be required to hire attorneys to use

the NAD appeal process. Therefore, USDA concluded that the Federal

Rules of Evidence should not apply to NAD proceedings.

One commenter suggested USDA also should eliminate any ambiguity

with respect to the applicability of the Federal Rules of Civil

Procedure, which was referred to in one respect in what was

Sec. 11.7(a)(2)(vi) of the proposed rule. The situation with respect to

the Rules of Evidence, however, is unique in that attempts have been

made in NAD hearings to apply the Federal Rules of Evidence as

generally accepted rules of evidence, necessitating an explicit

statement of policy in the rules. The same problems have not arisen

with respect to the Federal Rules of Civil Procedure; therefore, USDA

does not feel that it is necessary to state explicitly that those rules

do not apply.

Sec. 11.5 Informal agency hearings and exhaustion.

This section of the proposed rule drew 29 comments, more than any

other. Some comments suggested that the exhaustion requirement for FSA

county committees was contrary to statute, while others were concerned

because the section did not provide for exhaustion to the FSA state

committee. A number of commenters were confused by the sequence of

events for informal hearings, mediation, and NAD appeals outlined in

this section. Providers of mediation services particularly were

concerned that all appellants be notified of mediation rights, and that

mediation occur at the lowest level of the appeal process. A number of

commenters expressed concern about the inconsistent use of the terms

``informal hearings,'' ``informal appeal,'' and ``informal review.''

With respect to the comments regarding agency notice of adverse

decisions and appeal rights, USDA has determined to handle such notice

outside the parameters of this rule. As a matter of Department policy,

agencies will be expected to notify participants of their appeal rights

and their right to choose mediation or ADR, where available, when they

issue an adverse decision.

In light of the other comments, this section has been revised

significantly. Only the term ``informal review'' will be used

throughout the section. Given this consistent use, USDA finds it

unnecessary to define this term.

Before appealing to NAD, participants may elect to request an

informal review of an adverse decision by the agency. However, in the

case of adverse decisions made by officials under the authority of FSA

county and area committees, participants will be required to undergo

informal review before the county or area committee before appealing

the adverse decision to NAD. After receiving the mandatory informal

review by the county or area committee, the participant then may seek

informal review of that decision by the State committee or appeal

directly to NAD. For purposes of this section, USDA interprets a

decision at each level of agency informal review as a new adverse

decision for purposes of calculating the timeliness of a participant's

appeal to NAD under Sec. 11.6 of the rules.

When a participant requests such mediation, the 30-day period

within which the participant may request a hearing under

Sec. 11.6(b)(1) will stop running until such time as the mediation or

ADR is concluded. Unlike with informal review, however, the conclusion

of mediation is not viewed as a new agency adverse decision. At that

point, the participant will have the balance of the 30-day period to

appeal to NAD, or to seek informal review as outlined above. The 30-day

period will function in effect as a statute of limitations; it will be

up to the agency, not NAD, to raise the jurisdictional issue before NAD

as to the fact that a participant's appeal is untimely.

Treatment of mediation or ADR in this manner means that the

conclusion of mediation or ADR will not be treated as an adverse

decision. Conversely, as indicated above, a decision at each level of

the informal review process will be treated as an adverse decision for

determining when the 30-day period for an appeal to NAD begins to run.

Example

A FSA program participant receives an adverse decision from a

county executive director. He cannot appeal to NAD. He must first

pursue an informal review with the county committee. The county

committee upholds the original adverse decision. Program participant

now has three choices: (1) Within 30 days, choose mediation or ADR;

(2) Within 30 days, appeal to NAD; or (3) Within the lesser of 30

days, or the time period specified in FSA informal review

regulations, request an informal review by the State Committee.

Participant chooses mediation after 10 days. Mediation fails.

Participant has the balance of 20 days (i.e., 30 days minus 10 days)

to appeal to NAD after the conclusion of mediation or he may request

review by the State Committee in accordance with FSA regulations. If

he appeals to NAD, the agency bears the burden of proving

untimeliness of the appeal to NAD, i.e., if the participant took 25

days, 5 days in excess of his remaining 20, to appeal to NAD, the

agency must demonstrate this to NAD. If he requests an informal

review by the State Committee, the participant will have 30 days to

appeal any adverse decision made by the State Committee to NAD.

[[Page 67303]]

Sec. 11.6 Director review of agency determination of appealability and

right of participants to Division hearing.

USDA has revised the format of this section so that it follows the

logical progression from a Director determination of appealability,

where made necessary because of an agency determination that an adverse

decision is not appealable, to the appeal itself.

Section 11.6(a) (Sec. 11.6(b) in the proposed rule) provides the

rules for requesting Director review of the determination of

appealability. Two commenters suggested that the proposed language that

the Director use ``any information he determines necessary'' in making

a determination was too broad. These commenters felt the information to

be considered should be defined, and that the allowance of any

information the Director deemed necessary made the process appear

secretive if the ex parte prohibition did not apply to this stage of

the appeal process.

USDA has revised this subsection to reflect the language of the

statute and not specify anything regarding what information the

Director may or may not use.

Two commenters desired changes in the references to Deputy and

Associate Directors to reflect titles currently used in the NAD

internal structure. USDA has substituted ``subordinate official other

than a Hearing Officer'' in the place of Deputy and Associate Directors

to preserve the flexibility of the Director to organize NAD internally

without reference to regulatorily defined titles. This change also

responds to a comment that requests that the Director be allowed to

delegate this responsibility as far down as possible to accomplish such

a mission efficiently. Hearing Officers were excluded from such

delegation because the delegation of such authority down to Hearing

Officers facially contradicted the statute and could represent a

potential conflict of interest for Hearing Officers who must justify

resource requirements based on the burden of their caseload.

USDA rejected comments suggesting that this delegation is improper

under the statute, or that participants should be given the right to

challenge the credentials of the subordinate reviewing official.

Nothing in the statute requires that the Director personally must

review every request for a determination of appealability that may be

filed. The Director, as in the case of any agency official, remains

ultimately responsible for any decision undertaken by a subordinate.

Therefore, USDA sees no reason why this statute should be read any

differently than any other statute where, absent a specific statutory

prohibition, USDA and other executive branch agencies have allowed for

delegation of decision-making authority by officials whose

qualifications have been set by statute.

With respect to this subsection as proposed, two commenters also

expressed concern that it did not specify the timing for filing an

appeal once the Director reversed an agency determination that an

adverse decision was not appealable. USDA added language in what is now

subsection (b) to specify that the 30 days for appeal of adverse

decisions shall run from the date the participant receives notice of

the adverse decision or receives notice of the Director's determination

that an adverse decision is appealable.

Subsection (b) (Sec. 11.6(c) in the proposed rule) provides rules

for appealing adverse decisions to NAD. In addition to the change noted

above, two additional changes were made to this section. First, seven

commenters suggested that it is inappropriate in any circumstances to

apply a ``should have known'' standard as a deadline for appeals in

cases of agency inaction. They argued that this shifted the burden from

the agency to the participant for policing the agency's failure to

follow its own regulations; one commenter argued that the agency

remained in continuing violation for failure to act within its own

deadlines.

USDA disagrees with these commenters. A failure to act by the

agency at some point becomes ripe for appeal and the statute clearly

also provides that at a point past 30 days from an adverse decision an

appellant loses the right of appeal. USDA finds no intention on the

part of Congress to extend a participant's right of appeal

indefinitely, particularly when agency regulations define a specified

period in which a decision is to be made. However, to add flexibility

to the ``should have known'' standard in the latter situation, USDA has

changed the regulation to require that a participant must request a

hearing within 30 days after the participant ``reasonably'' should have

known that the agency had not acted within the timeframes specified by

program regulations.

The second change made to the proposed rule regarding the request

for a hearing is to require a participant to send a copy of the request

for a hearing to the agency, and allow a participant the option to send

a copy of the adverse decision being appealed to the agency as well. In

either case, failure of the participant to send such copies to the

agency is not jurisdictional and therefore will not be grounds for

dismissal of an appeal.

Agency officials often make many decisions a year with respect to

some individual participants. In such cases, it is not always

immediately apparent which decision a participant has appealed at a

given time. USDA adds this provision to promote efficiency in the

appeals process by encouraging full airings of appeals before the

Hearing Officer. Sending the agency a copy of the decision will

discourage agency requests for Director review because the agency did

not have adequate notice of the appeal or the decision that was being

appealed.

With respect to the language in the proposed Sec. 11.9(c), several

other comments were rejected. Two commenters suggested that, since the

``should have known'' standard is being used, participants should not

be required to exhaust administrative remedies prior to judicial review

when appeals are taken from cases where agencies have failed to act.

The statement added to Sec. 11.2 and discussed above makes clear that

USDA considers exhaustion of an appeal to the Hearing Officer mandatory

prior to seeking judicial review, regardless of the basis for the

appeal.

One commenter suggested that the regulation should state clearly

that a decision becomes final after the 30-day time period for

requesting a hearing is missed and that this timeframe may not be

waived. USDA believes such a provision unnecessary; if a participant

does not request the hearing within 30 days, the participant will not

be allowed to have a hearing. USDA considers the 30-day requirement for

filing an appeal to be jurisdictional in nature; thus, NAD has no

authority under the Act to hear an appeal unless filed within the 30-

day time period as required.

On the other hand, USDA does not view the requirements of section

274 of the Act to be jurisdictional for NAD. That section requires an

agency to provide participants with written notice of the adverse

decision and appeal rights within 10 working days of the adverse

decision. One commenter suggested that the proposed rule be revised to

state that the 30-day timeframe for requesting a hearing does not begin

to run until the participant receives complete appeal rights,

presumably as provided for in section 274. While section 274 of the Act

places a requirement on agencies, it has no bearing on the authority of

NAD to hear an appeal by a participant. To read section 274 literally

as suggested also would mean conversely that a participant achieves no

standing to

[[Page 67304]]

appeal an adverse decision to NAD until the participant receives a

notice of appeal rights. USDA therefore rejects this comment and

instead determines that the time period for requesting an appeal begins

to run on ``the date on which the participant first received notice of

the adverse decision'' as provided in section 276(b) of the Act.

New subsection (c) retains language from the proposed subsection

(a) regarding the requirement for participants to authorize

representation by others in writing to USDA. Eight commenters addressed

both this specific requirement and the requirement in other parts of

this subsection that a participant must ``personally'' request a

Director determination of appealability and an appeal to a Hearing

Officer.

The intention behind this requirement is to ensure that

participants are fully aware of the implications of actions being taken

on their behalf in the appeals process. By requiring that they

personally sign requests for Director review of appealability, requests

for hearing, and requests for Director review of Hearing Officer

determinations (Sec. 11.9(a)), participants will be taking personal

responsibility for such actions when represented by another. Authorized

representatives also will be required to keep participants informed in

order to get their signature authorizing proceeding to each new phase

of a NAD appeal. USDA's concern is to ensure that participants are

giving informed consent to the decisions undertaken in their behalf by

their representatives, and, by requiring execution of a declaration of

representation, that NAD is assured that purported representatives are

who they actually claim to be. While USDA could curb potential abuses

by licensed attorneys by complaints to state bars, USDA has no check on

the actions of representatives who are not attorneys other than through

provisions such as those promulgated here. The burdens imposed on

participants and representatives are light--the language for the

declaration can be obtained from NAD and signed documents can be

submitted by mail or by facsimile transmission.

Finally, four commenters felt that it was inappropriate for an

appellant to state why the adverse decision is wrong because it was too

early in the process to state a position or it may lead some

participants to think that they need an attorney to bring an appeal.

USDA disagrees. The word ``wrong'' was used here precisely to avoid any

requirement that a participant state why a decision was ``erroneous''

or ``did not conform to published law or regulation'' or similar

language. Those latter variations could be interpreted as legalistic,

but USDA believes that at this initial stage the participant at least

can tell NAD what is wrong with the decision that causes one to appeal

it. This initial position is not binding, but rather provides NAD with

a little bit more information that will allow for efficient

administration of appeals. For example, if a participant feels

discriminated against in the administration of a program, a statement

to this effect at this stage may allow NAD to direct that person to the

appropriate forum of USDA for consideration of civil rights complaints.

Sec. 11.7 Ex parte communications.

The proposed rule included a paragraph on ex parte communications

in Sec. 11.7(a) under the section regarding Division hearings. Two

commenters expressed concerns in response to this proposed paragraph,

the proposed definition of ex parte communication, and the proposed

subsection on Director review of agency determinations of

nonappealability, suggesting that the ex parte prohibition should apply

to more than just the hearing phase of the NAD appeal process. One of

these commenters also noted that the ex parte prohibition also should

apply to all employees of the Division.

Initially, USDA drafted the proposed regulation in parallel to the

statute that stated the ex parte prohibition in the section of the Act

on hearings. After reviewing the comments and the statutory language,

and in order to foster a perception of fairness and equal treatment in

the NAD appeals process, USDA has determined to apply the ex parte

prohibition from the point at which the appeal is filed under section

Sec. 11.6(b) through the issuance of a final determination by the

Director under Sec. 11.9.

To do this, a new Sec. 11.7 was created to make clear that the ex

parte prohibition applies to more than just the hearing phase of the

NAD process, and that it applies to any officer or employee of the

Division. However, USDA rejected the comment that suggested that the ex

parte prohibition apply to requests for Director review of

appealability. The Director should be entitled to greater flexibility

in contacting the agency and the USDA Office of the General Counsel to

obtain information useful in making determinations as to whether

particular adverse decisions are matters of general applicability.

Additionally, the ex parte prohibition does not apply to Director

reconsideration under Sec. 11.11 unless the Director decides to grant

the request for reconsideration.

Sec. 11.8 Division hearings.

Proposed Sec. 11.7 has been renumbered Sec. 11.8. The majority of

comments on this section involved the perceived onerous burden on

appellants of virtually requiring verbatim transcripts of hearings, the

allegedly unreasonable time deadlines that could be set more flexibly

by the Hearing Officer, the requirements for sending various notices to

the appellant, the need for allowing good cause exceptions for

absences, the need for actual documents to be submitted to Hearing

Officers to make the hearing more efficient, the need to stress

telephone hearings, the wisdom of continuing current NAD practice of

telephonic pre-hearing conferences, the need to give additional parties

the right to participate in the appeal, the need to reduce or waive the

perceived unreasonable requirement that the requesting party pay for

costs of witness travel and subsistence fees, and the ambiguity of the

use of the word ``personally.''

A number of changes have been made in response to comments and upon

further reflection by USDA. The changes, or rejection of comments, are

described below:

--Proposed Sec. 11.7(a)(1) (now Sec. 11.8(a)(1)) is revised to require

the agency to provide the appellant a copy of the agency record upon

request of the appellant; this requirement is a restatement of that

requirement already included in the proposed rule at Sec. 11.7(b)(1)

that also has been amended as Sec. 11.8(b)(1) in the final rule to

require that such record be furnished to the appellant within 10 days

of agency receipt of request for the record rather than ``promptly'' as

proposed;

--A Hearing Officer will be required to obtain the concurrence of the

Director prior to issuing a subpoena;

--Comments suggesting that an appellant have access to his or her

entire file under this part were rejected, but the definition of

``agency record'' was expanded above;

--The requirement that a request for subpoena be submitted 14 days

ahead of the hearing was retained but a requirement that such a

subpoena must be issued 7 days prior to the hearing was added;

--Parties requesting a subpoena will have to pay only the

``reasonable'' travel and subsistence costs of a witness; USDA rejected

all comments suggesting that the requirement that a party pay for all

witnesses subpoenaed be deleted or that USDA should pay for such

witnesses where the appellant was unable to pay;

[[Page 67305]]

USDA also limited its payment for the costs associated with the

appearance of a USDA employee to such situations where an employee's

role as a witness arises out of his or her performance of official

duties;

--The requirement for submission of certain documents to the Hearing

Officer 28 days prior to the hearing is deleted; instead, the Hearing

Officer may set a ``reasonable'' deadline for submission of such

documents;

--The required pre-hearing submission of documents is limited to those

documents not contained in the agency record that the appellant plans

on introducing at the hearing;

--The amount of time for the Hearing Officer's notice of the date,

time, and place of the hearing is reduced from 21 days to 14 days prior

to the hearing, and the Hearing Officer also may take into account the

convenience of the agency in picking a hearing site;

--A pre-hearing conference will be required and will be conducted by

telephone unless otherwise agreed to by all parties and the Hearing

Officer;

--The notice of the right to obtain the official record shall go to all

parties, and all parties shall have the same participation rights in

the actual hearing;

--The text of the proposed paragraph Sec. 11.7(c)(4)(iii) is deleted

and replaced with new text in Sec. 11.8(c)(5)(iii) that makes a tape

recording by the Division the official record of the proceeding unless

a party requests a verbatim transcript, in which case that party must

furnish a certified copy of the transcript to the Hearing Officer for

the purpose of constituting the official record and must allow other

parties to purchase that transcript from the transcription service;

--The authority of the Hearing Officer to cancel a hearing in the

absence of a party is limited to such cases where the absent party

fails to appear without good cause;

--The ability of the Hearing Officer to add additional evidence to the

record in the absence of a party at a hearing is clarified;

--The section clarifies that a notice of determination must be sent by

the Hearing Officer to the individual participant appealing the adverse

decision, i.e. the ``named'' appellant, as well as the authorized

representative of that person; and

--The Hearing Officer shall send, with the notice of determination, a

copy of the procedures for a request for filing for Director review

under Sec. 11.9.

Sec. 11.9 Director review of determinations of Hearing Officers.

Fifteen commenters submitted comments on this section, which

appeared as Sec. 11.8 in the proposed rule. Some of these comments,

such as those objecting to the use of the word ``personally,'' the

request for the procedures of this section to be sent to the appellant

with the Hearing Officer notice of determination, and the extension of

the ex parte prohibition to Director review, have been handled as

described above.

One comment suggesting that the agency head be allowed to delegate

his or her authority to request Director review was rejected. On this

point, USDA's position is that an agency request for Director review

should only be exercised where the Hearing Officer has issued a

determination that clearly is not supported by a preponderance of the

evidence or is contrary to law. To avoid flooding NAD with agency

requests for review, retaining the agency head, or the person acting in

such capacity, as the only person allowed to request review assures

that only the most meritorious and serious NAD decisions will be

forwarded by an agency for Director review.

A number of comments concerned the perceptions that all parties are

not able to respond to requests for Director review, that the Director

is not addressing all arguments in the rush to meet the statutory

deadlines for issuing determinations, and that no provision is made for

how new evidence introduced at this stage is to be handled. In response

to these concerns, a number of changes were made.

First, a request for Director review shall include specific reasons

why the appellant believes the Hearing Officer's determination is

wrong. Given the limited time period for agency response and the

limited time period for Director review, the appellant should be

required to do something more than simply submit a copy of the Hearing

Officer's determination with a note saying that they appeal. As

explained above, the term ``wrong'' is used specifically to avoid

legalistic connotations. USDA simply asks that appellants express in

their own terms what they find wrong with determinations. However,

agencies here are held to a higher standard in order to assure

efficient use of NAD resources. Agencies in their requests must state

specific reasons why the determination of the Hearing Officer is

erroneous, including citation of statutes or regulations that the

agency believes the determination violates.

Second, USDA has added language requiring that a party seeking

Director review of the Hearing Officer's determination submit a copy of

the request for review simultaneously to all other parties to the

appeal. A new subsection also provides those non-submitting parties 5

days from receipt of the request for Director review to submit written

responses to the request. Added language makes clear that the Director

may consider such responses in reaching a determination. However, if

new evidence is submitted in such a request, new language authorizes

the Director to remand all or a portion of the determination to the

Hearing Officer for consideration of that new evidence. USDA rejected

the comment that such a remanded determination should go back to a new

Hearing Officer. The Hearing Officer making the original determination

has the best knowledge of the case to make an efficient consideration

of new evidence in the absence of some credible evidence of personal

bias.

Third, the deadlines set by the Act for the Director to issue a

final determination or to remand to the Hearing Officer may be

unrealistic at any given time because of caseload or the complexities

of a particular appeal. Although USDA believes the failure to meet

these deadlines does not deprive the Director of jurisdiction to reach

a determination or issue a remand order, it fully intends to follow

such deadlines to the extent possible in order to deliver fairly

considered determinations of the Director that will withstand judicial

review. Hastily rendered determinations that fail to develop an

adequate decision for judicial review do not benefit either USDA or

appellants. Therefore, while USDA has added no provision affirmatively

authorizing the Director to extend the period for issuance of

determinations, USDA recognizes that it may be necessary for the

Director to do so in individual cases in order to facilitate a fair and

equitable resolution of the appeal. Equitable, in this sense, refers to

equal participation in and consideration of parties' submissions in the

Director review process.

Finally, the Director will review the determination of the Hearing

Officer to determine whether the Hearing Officer's determination is

supported by substantial evidence. If any additional information

submitted in the Director review process is used as a basis for the

Director's final determination, the Director shall note the reasons for

use of such new information in the final determination.

With respect to this section, one commenter also suggested that if

a Hearing Officer does not have the power to reverse a denial of

equitable relief (in

[[Page 67306]]

effect, to award equitable relief) then this part should provide a

shortcut past the Hearing Officer to the Director. The position of USDA

is that the statute provides the Director with authority in appropriate

cases to award equitable relief, and that no different procedural steps

are required to implement that authority. However, a record developed

by a Hearing Officer is necessary for the Director to determine whether

such relief is appropriate.

Sec. 11.10 Basis for determinations.

One commenter cited this section (proposed Sec. 11.9) as the

appropriate place for stating that NAD is bound by prior findings of

fact by an agency or NAD with respect to a particular appellant in

another matter. While it is not the intention of USDA to implement NAD

as part of a formal legal system based on large bodies of caselaw, USDA

agrees that a Hearing Officer should not issue a contrary factual

determination regarding the same appellant in a different matter where

that factual determination was directly addressed in the other matter.

Two commenters suggested in essence that the basis of

determinations should be limited to issues raised by the decision of

the agency and that the Hearing Officer or Director may not decide

adversely to the appellant on issues not decided adversely to the

appellant by the agency. USDA finds nothing in the statute to support

anything other than a de novo review of agency decisions by NAD. The

parties or NAD may raise any new issue as long as it conforms to the

facts and law and regulations.

Four commenters expressed concern that the language ``generally

applicable interpretations'' in what is now Sec. 11.10(b) of the rule

would make agency handbooks, manuals, and directives binding in a way

that permits wholesale violations of the Act. These commenters point to

section 278(c) of the Act that the commenters assert was enacted

specifically to prevent agencies from using such materials by reference

only to statutes and ``regulations published in the Federal Register''

as the basis for NAD determinations.

USDA uses this language here to make clear again that NAD is not a

forum for appellants to challenge agency statutes, regulations, or the

generally applicable interpretations of those statutes and regulations.

Some generally applicable interpretations actually may have been

published once as a notice in the Federal Register, others may be based

on caselaw interpreting a particular program provision in a particular

Federal court jurisdiction or state court jurisdiction for programs in

which state law is the applicable law. Still other generally applicable

statements may be based on the previous advice of the Office of the

General Counsel regarding a statute or regulation that constitutes the

official legal position of USDA. In any of these described cases, for

example, NAD could not ignore the generally applicable statements and

base its determinations on legal interpretations that it is not

authorized by the Act to make.

Sec. 11.11 Reconsideration of Hearing Officer or Director

determinations.

Upon further review, USDA has determined that the Director has

limited inherent authority to reconsider final determinations of the

Director even though provisions for such authority have not been

specifically stated in the Act. Therefore, this new section sets forth

standards for reconsideration of a Director's final determination.

Sec. 11.12 Effective date and implementation of final determinations

of the Division.

Several commenters suggested that this section needed more

clarification as to the applicable dates, or, alternatively, that the

Hearing Officer or Director should state what those dates are in the

final determination. USDA finds further amendment of this section

unnecessary at this time, given the variety of programs appealable to

NAD and the responsibility of agencies for implementation of NAD and

program decisions.

It is the position of USDA with respect to implementation, however,

that: (1) Implementation of a NAD decision only requires an agency to

move to the next step of agency consideration of a benefit or

application; (2) in keeping with the language of the Act, the

applicable date of the decision is the date of the decision of the body

from which the NAD appeal is brought; and (3) agencies, in accord with

their regulations, may consider changes in the condition of the

participant in the implementation of any NAD final determination.

Sec. 11.13 Judicial review.

Two commenters suggested that appeals arising from an agency's

failure to act should be excluded from this exhaustion requirement.

USDA finds no support in the Act for such an exception. One commenter

also suggested an amendment to include judicially recognized exceptions

to the administrative exhaustion requirement. Since those exceptions

are part of common law, and are thus changeable and subject to

conflicting judicial interpretation, USDA finds inappropriate the

addition of such exceptions to the regulation.

Sec. 11.14 Filing of appeals and computation of time.

Two commenters expressed concerns that individuals residing in

different time zones would have less time to appeal if Eastern time was

used as a defining time for submission of filings required by this

rule. In response, USDA has changed the deadline to 5:00 p.m. local

time at the office of the Division to which the filing is submitted.

Common practice now is for NAD or the agency, in its notice of appeal

rights, to specify regional NAD offices where documents are to be

submitted. USDA's change in this provision is acknowledgement of that

practice and permits flexibility. However, USDA does not think that

this permits participants on the East Coast to evade the purposes of

this rule by filing documents with West Coast NAD offices in order to

meet the 5:00 p.m. deadline.

III. Natural Resources Conservation Service (NRCS) Appeal Rules

This portion of the interim-final rule sets forth the regulations

for the handling of program participant requests for mediation or

informal hearings of adverse technical determinations and decisions

made by NRCS officials. Specifically, this rule amends part 614 to

implement section 275 of the Act which requires NRCS to afford

participants the opportunity for an informal hearing or mediation

(where available), when requested, before they file an appeal of

adverse decisions with NAD.

These procedures are applicable to requests for mediation or

informal hearings within the following program areas:

(1) Highly erodible land conservation.

(2) Wetland Conservation.

(3) Wetland Technical determinations, including wetland technical

determinations made by NRCS officials not related to a request for USDA

program benefits.

(4) Conservation Reserve Program.

(5) Wetlands Reserve Program.

(6) Great Plains Conservation Program.

(7) Rural Abandoned Mine Program.

(8) Colorado River Basin Salinity Control Program.

(9) Resource Conservation and Development Program.

(10) Emergency Wetland Reserve Program.

(11) Agricultural Water Quality Incentives Program.

(12) Environmental Easement Program.

[[Page 67307]]

(13) Forestry Incentives Program.

(14) Water Bank Program.

(15) Long term cost-sharing agreements under Public Law 83-566 and

Public Law 78-534 watershed projects.

(16) Any other program which subsequently incorporates these

procedures through reference to this part within its program

regulations.

Part 614 as revised establishes two major categories of decisions

made by NRCS officials for which landowners and participants may seek

reconsideration or appeal: 1) those technical determinations of NRCS

officials that may be appealed to NAD after appeal to the FSA county or

area committees established under section 8(b)(5) of the Soil

Conservation and Domestic Allotment Act (16 U.S.C 590h(b)(5)); and 2)

other decisions made by NRCS.

The current regulations in 7 CFR part 614 were published as a final

rule on July 24, 1986, pursuant to Title XII of the Food Security Act

of 1985, P.L. 99-198, 16 U.S.C. 3801 et seq. (Title XII). Those

regulations set forth the procedures under which an owner or operator

could seek reconsideration of, or appeal from, certain decisions made

by NRCS officials regarding eligibility for participation in the

Conservation Reserve Program, as authorized by Subtitle D of Title XII,

or regarding the applicability of the compliance requirements of the

highly erodible land and wetland conservation provisions of subtitles B

and C of title XII, respectively.

The Reorganization Act specified that, until such time as an

adverse decision is referred to the NAD for consideration, FSA county

or area committees established under section 8(b)(5) of the Soil

Conservation and Domestic Allotment Act (16 U.S.C 590h(b)(5)) would

have jurisdiction over any appeal resulting from adverse technical

determinations made under Title XII, including an adverse decision

involving technical determinations made by NRCS. Thus the subject

matter of the current part 614 has been incorporated into subpart B of

the revised part 614 which sets forth the informal appeal process for

appeals of title XII technical determinations made by NRCS to FSA

county committees as required by the Reorganization Act.

Subpart C of the revised part 614 consolidates appeal procedures

for all other existing NRCS programs in part 614. Appeals for the

following additional programs are now also covered by part 614: 7 CFR

Part 623, Emergency Wetland Reserve Program; 7 CFR Part 631, Great

Plains Conservation Program; 7 CFR Part 632, Rural Abandoned Mine

Program; 7 CFR Part 634, Rural Clean Water Program; 7 CFR Part 663,

Wellton-Mohawk Irrigation Improvement Program, and 7 CFR Part 702,

Colorado River Basin Salinity Control Program; 7 CFR Part 701 subpart-

Forestry Incentives Program; and 7 CFR Part 752, Water Bank program.

Subpart A of part 614 includes general provisions applicable to

informal appeals under both subparts B and C.

Appeal provisions for 7 CFR parts 12, 620, 623, 631, 632, 634, 663,

701, 702, and 752 are revised to make reference to part 614 for NRCS

appeal procedures.

IV. Commodity Credit Corporation (CCC), Federal Crop Insurance

Corporation (FCIC), and Farm Service Agency (FSA) Appeal Rules

The interim final rule makes amendments to 7 CFR parts 400 and 780

to maintain and revise the informal appeals process for adverse

decisions of the FSA regarding Federal crop insurance, CCC, and FSA

programs. The procedures for appeals under both parts will be

consolidated in part 780. The revised part 780 sets forth regulations

for requesting informal hearings or mediation in accordance with

section 275 of the Act.

Part 780 includes procedures for the handling of appeals of NRCS

technical determinations to FSA county and area committees.

Part 780 also includes procedures for the mandatory appeal of

certain FSA adverse decisions to such committees as required by 7 CFR

11.5(a) of the NAD rules of procedure.

This rule also amends part 781 to conform the hearing procedures to

that of part 780.

V. Rural Housing Service (RHS), Rural Business-Cooperative Service

(RBS), and Rural Utilities Service (RUS) Appeal Rules

7 CFR part 1900, subpart B currently contains rules for appeals of

decisions of the former Farmers Home Administration (FmHA). Either by

the Act or by delegation of the Secretary, the FmHA programs covered by

part 1900, subpart B were divided among RHS, RBS, and RUS. This rule

amends part 1900, subpart B to set forth rules for requesting informal

appeals or mediation of adverse decisions concerning direct loans, loan

guarantees, and grants under the following programs: RUS Water and

Waste Disposal Facility Loans and Grants Program, RHS Housing and

Community Facilities Loan Programs, and RBS Loan, Grant, and Guarantee

Programs and the Intermediary Relending Program.

List of Subjects

7 CFR Part 1

Administrative practice and procedure, Agriculture, Reporting and

recordkeeping requirements.

7 CFR Part 11

Administrative practice and procedure, Agriculture, Agricultural

commodities, Crop insurance, Ex parte communications, Farmers, Federal

aid programs, Guaranteed loans, Insured loans, Loan programs, Price

support programs, Soil conservation.

7 CFR Part 12

Administrative practice and procedure, Agriculture, Soil

conservation, Wetlands.

7 CFR Part 400

Administrative practice and procedure, Agriculture, Agricultural

commodities, Crop insurance.

7 CFR Part 614

Administrative practice and procedure, Agriculture, Soil

conservation, Wetlands.

7 CFR Part 620

Administrative practice and procedure, Agriculture, Soil

conservation, Wetlands.

7 CFR Part 623

Administrative practice and procedure, Agriculture, Soil

conservation, Wetlands.

7 CFR Part 631

Administrative practice and procedure, Agriculture, Soil

conservation.

7 CFR Part 632

Administrative practice and procedure, Mines, Rural areas, Soil

conservation.

7 CFR Part 634

Administrative practice and procedure, Agriculture, Soil

conservation, Water resources, Water pollution control.

7 CFR Part 663

Administrative practice and procedure, Irrigation, Soil

conservation, Water resources.

7 CFR Part 701

Administrative practice and procedure, Agriculture, Environmental

protection, Forests and forest products, Soil conservation, Wetlands.

[[Page 67308]]

7 CFR Part 702

Administrative practice and procedure, Agriculture, Soil

conservation, Water resources.

7 CFR Part 752

Administrative practice and procedure, Agriculture, Soil

Conservation, Water bank program, Water resources.

7 CFR Part 780

Administrative practice and procedure, Agriculture, Agricultural

commodities, Crop insurance, Ex parte communications, Farmers, Federal

aid programs, Loan programs, Price support programs, Soil conservation,

Wetlands.

7 CFR Part 781

Administrative practice and procedure, Agriculture, Farmers.

7 CFR Part 1900

Administrative practice and procedure, Agriculture, Business,

Community development, Farmers, Federal aid programs, Guaranteed loans,

Housing, Insured loans, Loan programs, Rural areas, Utilities.

For the reasons set out in the preamble, Title 7 of the Code of

Federal Regulations is amended as set forth below:

PART 1--ADMINISTRATIVE REGULATIONS

1. The authority citation for part 1 continues to read as follows:

Authority: 5 U.S.C. 301 and 552. Appendix A also issued under 7

U.S.C. 2244; 31 U.S.C. 9701, and 7 CFR 2.75(a)(6)(xiii).

2. Section 1.20 is revised to read as follows:

Sec. 1.20 Authentication.

When a request is received for an authenticated copy of a document

which the agency determines to make available to the requesting party,

the agency shall cause a correct copy to be prepared and sent to the

Office of the General Counsel which shall certify the same and cause

the seal of the Department to be affixed, except that the Hearing Clerk

in the Office of Administrative Law Judges may authenticate copies of

documents in the records of the Hearing Clerk and that the Director of

the National Appeals Division may authenticate copies of documents in

the records of the National Appeals Division.

PART 11--NATIONAL APPEALS DIVISION RULES OF PROCEDURE

Part 11 is added to read as follows:

PART 11--NATIONAL APPEALS DIVISION RULES OF PROCEDURE

Sec.

11.1 Definitions.

11.2 General statement.

11.3 Applicability.

11.4 Inapplicability of other laws and regulations.

11.5 Informal review of adverse decisions.

11.6 Director review of agency determination of appealability and

right of participants to Division hearing.

11.7 Ex parte communications.

11.8 Division hearings.

11.9 Director review of determinations of Hearing Officers.

11.10 Basis for determinations.

11.11 Reconsideration of Director determinations.

11.12 Effective date and implementation of final determinations of

the Division.

11.13 Judicial review.

11.14 Filing of appeals and computation of time.

Authority: 5 U.S.C. 301; Title II, Subtitle H, Pub. L. 103-354,

108 Stat. 3228 (7 U.S.C. 6991 et seq.); Reorganization Plan No. 2 of

1953 (5 U.S.C. App.).

Sec. 11.1 Definitions.

For purposes of this part:

Adverse decision means an administrative decision made by an

officer, employee, or committee of an agency that is adverse to a

participant. The term includes a denial of equitable relief by an

agency or the failure of an agency to issue a decision or otherwise act

on the request or right of the participant within timeframes specified

by agency program statutes or regulations or within a reasonable time

if timeframes are not specified in such statutes or regulations. The

term does not include a decision over which the Board of Contract

Appeals has jurisdiction.

Agency means:

(1) The Agricultural Stabilization and Conservation Service (ASCS);

(2) The Commodity Credit Corporation (CCC);

(3) The Farm Service Agency (FSA);

(4) The Farmers Home Administration (FmHA);

(5) The Federal Crop Insurance Corporation (FCIC);

(6) The Natural Resources Conservation Service (NRCS);

(7) The Rural Business-Cooperative Service (RBS);

(8) The Rural Development Administration (RDA);

(9) The Rural Housing Service (RHS);

(10) The Rural Utilities Service (RUS) (but not for programs

authorized by the Rural Electrification Act of 1936 and the Rural

Telephone Bank Act, 7 U.S.C. 901 et seq.);

(11) The Soil Conservation Service (SCS);

(12) A State, county, or area committee established under section

8(b)(5) of the Soil Conservation and Domestic Allotment Act (16 U.S.C.

590h(b)(5)); and

(13) Any successor agency to the above-named agencies, and any

other agency or office of the Department which the Secretary may

designate.

Agency record means all the materials maintained by an agency

related to an adverse decision which are submitted to the Division by

an agency for consideration in connection with an appeal under this

part, including all materials prepared or reviewed by the agency during

its consideration and decision-making process, but shall not include

records or information not related to the adverse decision at issue.

All materials contained in the agency record submitted to the Division

shall be deemed admitted as evidence for purposes of a hearing or a

record review under Sec. 11.8.

Agency representative means any person, whether or not an attorney,

who is authorized to represent the agency in an administrative appeal

under this part.

Appeal means a written request by a participant asking for review

by the National Appeals Division of an adverse decision under this

part.

Appellant means any participant who appeals an adverse decision in

accordance with this part. Unless separately set forth in this part,

the term ``appellant'' includes an authorized representative.

Authorized representative means any person, whether or not an

attorney, who is authorized in writing by a participant, consistent

with Sec. 11.6(c), to act for the participant in an administrative

appeal under this part. The authorized representative may act on behalf

of the participant except when the provisions of this part require

action by the participant or appellant personally.

Case record means all the materials maintained by the Secretary

related to an adverse decision. The case record includes both the

agency record and the hearing record.

Days means calendar days unless otherwise specified.

Department means the United States Department of Agriculture

(USDA).

Director means the Director of the Division or a designee of the

Director.

Division means the National Appeals Division established by this

part.

Equitable relief means relief which is authorized under section 326

of the Food and Agriculture Act of 1962 (7 U.S.C. 1339a) and other laws

administered by the agency.

[[Page 67309]]

Ex parte communication means an oral or written communication to

any officer or employee of the Division with respect to which

reasonable prior notice to all parties is not given, but it shall not

include requests for status reports, or inquiries on Division

procedure, in reference to any matter or proceeding connected with the

appeal involved.

Hearing, except with respect to Sec. 11.5, means a proceeding

before the Division to afford a participant the opportunity to present

testimony or documentary evidence or both in order to have a previous

determination reversed and to show why an adverse determination was in

error.

Hearing Officer means an individual employed by the Division who

conducts the hearing and determines appeals of adverse decisions by any

agency.

Hearing record means all documents, evidence, and other materials

generated in relation to a hearing under Sec. 11.8.

Implement means the taking of action by an agency of the Department

in order fully and promptly to effectuate a final determination of the

Division.

Participant means any individual or entity who has applied for, or

whose right to participate in or receive, a payment, loan, loan

guarantee, or other benefit in accordance with any program of an agency

to which the regulations in this part apply is affected by a decision

of such agency. With respect to guaranteed loans made by FSA, both the

borrower and the lender jointly must appeal an adverse decision except

that the denial or reduction of a final loss payment to a lender shall

be appealed by the lender only. The term does not include persons whose

claim(s) arise under:

(1) Programs subject to various proceedings provided for in 7 CFR

part 1;

(2) Programs governed by Federal contracting laws and regulations

(appealable under other rules and to other forums, including to the

Department's Board of Contract Appeals under 7 CFR part 24);

(3) The Freedom of Information Act (appealable under 7 CFR part 1,

subpart A);

(4) Suspension and debarment disputes, including, but not limited

to, those falling within the scope of 7 CFR parts 1407 and 3017;

(5) Export programs administered by the Commodity Credit

Corporation;

(6) Disputes between reinsured companies and the Federal Crop

Insurance Corporation;

(7) Tenant grievances or appeals prosecutable under the provisions

of 7 CFR part 1944, subpart L, under the multi-family housing program

carried out by RHS;

(8) Personnel, equal employment opportunity, and other similar

disputes with any agency or office of the Department which arise out of

the employment relationship;

(9) The Federal Tort Claims Act, 28 U.S.C. 2671 et seq., or the

Military Personnel and Civilian Employees Claims Act of 1964, 31 U.S.C.

3721; or

(10) Discrimination complaints prosecutable under the

nondiscrimination regulations at 7 CFR parts 15, 15a, 15b, and 15e.

Record review means an appeal considered by the Hearing Officer in

which the Hearing Officer's determination is based on the agency record

and other information submitted by the appellant and the agency,

including information submitted by affidavit or declaration.

Secretary means the Secretary of Agriculture.

Sec. 11.2 General statement.

(a) This part sets forth procedures for proceedings before the

National Appeals Division within the Department. The Division is an

organization within the Department, subject to the general supervision

of and policy direction by the Secretary, which is independent from all

other agencies and offices of the Department, including Department

officials at the state and local level. The Director of the Division

reports directly to the Secretary of Agriculture. The authority of the

Hearing Officers and the Director of the Division, and the

administrative appeal procedures which must be followed by program

participants who desire to appeal an adverse decision and by the agency

which issued the adverse decision, are included in this part.

(b) Pursuant to section 212(e) of the Federal Crop Insurance Reform

and Department of Agriculture Reorganization Act of 1994, Public Law

103-354 (the Act), 7 U.S.C. 6912(e), program participants shall seek

review of an adverse decision before a Hearing Officer of the Division,

and may seek further review by the Director, under the provisions of

this part prior to seeking judicial review.

Sec. 11.3 Applicability.

(a) Subject matter. The regulations contained in this part are

applicable to adverse decisions made by an agency, including, for

example, those with respect to:

(1) Denial of participation in, or receipt of benefits under, any

program of an agency;

(2) Compliance with program requirements;

(3) The making or amount of payments or other program benefits to a

participant in any program of an agency; and

(4) A determination that a parcel of land is a wetland or highly

erodible land.

(b) Limitation. The procedures contained in this part may not be

used to seek review of statutes or USDA regulations issued under

Federal law.

Sec. 11.4 Inapplicability of other laws and regulations.

The provisions of the Administrative Procedure Act generally

applicable to agency adjudications (5 U.S.C. 554, 555, 556, 557, &

3105) are not applicable to proceedings under this part. The Equal

Access to Justice Act, as amended, 5 U.S.C. 504, does not apply to

these proceedings. The Federal Rules of Evidence, 28 U.S.C. App., shall

not apply to these proceedings.

Sec. 11.5 Informal review of adverse decisions.

(a) Required informal review of FSA adverse decisions. A

participant must seek an informal review of an adverse decision issued

at the field service office level by an officer or employee of FSA, or

by any employee of a county or area committee established under section

8(b)(5) of the Soil Conservation and Domestic Allotment Act, 16 U.S.C.

590h(b)(5), before NAD will accept an appeal of an FSA adverse

decision. Such informal review shall be done by the county or area

committee with responsibility for the adverse decision at issue. The

procedures for requesting such an informal review before FSA are found

in 7 CFR part 780. After receiving a decision upon review by a county

or area committee, a participant may seek further informal review by

the State FSA committee or may appeal directly to NAD under

Sec. 11.6(b).

(b) Optional informal review. With respect to adverse decisions

issued at the State office level of FSA and adverse decisions of all

other agencies, a participant may request an agency informal review of

an adverse decision of that agency prior to appealing to NAD.

Procedures for requesting such an informal review are found at 7 CFR

part 780 (FSA), 7 CFR part 614 (NRCS), 7 CFR part 1900, subpart B

(RUS), 7 CFR part 1900, subpart B (RBS), and 7 CFR part 1900, subpart B

(RHS).

(c) Mediation. A participant also shall have the right to utilize

any available alternative dispute resolution (ADR) or mediation

program, including any mediation program available under title

[[Page 67310]]

V of the Agriculture Credit Act of 1987, 7 U.S.C. 5101 et seq., in

order to attempt to seek resolution of an adverse decision of an agency

prior to a NAD hearing. If a participant:

(1) Requests mediation or ADR prior to filing an appeal with NAD,

the participant stops the running of the 30-day period during which a

participant may appeal to NAD under Sec. 11.6(b)(1), and will have the

balance of days remaining in that period to appeal to NAD once

mediation or ADR has concluded.

(2) Requests mediation or ADR after having filed an appeal to NAD

under Sec. 11.6(b), but before the hearing, the participant will be

deemed to have waived his right to have a hearing within 45 days under

Sec. 11.8(c)(1) but shall have the right to have a hearing within 45

days after conclusion of mediation or ADR.

Sec. 11.6 Director review of agency determination of appealability and

right of participants to Division hearing.

(a) Director review of agency determination of appealability. (1)

Not later than 30 days after the date on which a participant receives a

determination from an agency that an agency decision is not appealable,

the participant must submit a written request to the Director to review

the determination in order to obtain such review by the Director.

(2) The Director shall determine whether the decision is adverse to

the individual participant and thus appealable or is a matter of

general applicability and thus not subject to appeal, and will issue a

final determination notice that upholds or reverses the determination

of the agency. This final determination is not appealable. If the

Director reverses the determination of the agency, the Director will

notify the participant and the agency of that decision and inform the

participant of his or her right to proceed with an appeal.

(3) The Director may delegate his or her authority to conduct a

review under this subsection to any subordinate official of the

Division other than a Hearing Officer. In any case in which such review

is conducted by such a subordinate official, the subordinate official's

determination shall be considered to be the determination of the

Director and shall be final and not appealable.

(b) Appeals of adverse decisions. (1) To obtain a hearing under

Sec. 11.8, a participant personally must request such hearing not later

than 30 days after the date on which the participant first received

notice of the adverse decision or after the date on which the

participant receives notice of the Director's determination that a

decision is appealable. In the case of the failure of an agency to act

on the request or right of a recipient, a participant personally must

request such hearing not later than 30 days after the participant knew

or reasonably should have known that the agency had not acted within

the timeframes specified by agency program regulations, or, where such

regulations specify no timeframes, not later than 30 days after the

participant reasonably should have known of the agency's failure to

act.

(2) A request for a hearing shall be in writing and personally

signed by the participant, and shall include a copy of the adverse

decision to be reviewed, if available, along with a brief statement of

the participant's reasons for believing that the decision, or the

agency's failure to act, was wrong. The participant also shall send a

copy of the request for a hearing to the agency, and may send a copy of

the adverse decision to be reviewed to the agency, but failure to do

either will not constitute grounds for dismissal of the appeal. Instead

of a hearing, the participant may request a record review.

(c) If a participant is represented by an authorized

representative, the authorized representative must file a declaration

with NAD, executed in accordance with 28 U.S.C. 1746, stating that the

participant has duly authorized the declarant in writing to represent

the participant for purposes of a specified adverse decision or

decisions, and attach a copy of the written authorization to the

declaration.

Sec. 11.7 Ex parte communications.

(a)(1) At no time between the filing of an appeal and the issuance

of a final determination under this part shall any officer or employee

of the Division engage in ex parte communications regarding the merits

of the appeal with any person having any interest in the appeal pending

before the Division, including any person in an advocacy or

investigative capacity. This prohibition does not apply to:

(i) Discussions of procedural matters related to an appeal; or

(ii) Discussions of the merits of the appeal where all parties to

the appeal have been given notice and an opportunity to participate.

(2) In the case of a communication described in paragraph

(a)(1)(ii) of this section, a memorandum of any such discussion shall

be included in the hearing record.

(b) No interested person shall make or knowingly cause to be made

to any officer or employee of the Division an ex parte communication

relevant to the merits of the appeal.

(c) If any officer or employee of the Division receives an ex parte

communication in violation of this section, the one who receives the

communication shall place in the hearing record:

(1) All such written communications;

(2) Memoranda stating the substance of all such oral

communications; and

(3) All written responses to such communications, and memoranda

stating the substance of any oral responses thereto.

(d) Upon receipt of a communication knowingly made or knowingly

caused to be made by a party in violation of this section the Hearing

Officer or Director may, to the extent consistent with the interests of

justice and the policy of the underlying program, require the party to

show cause why such party's claim or interest in the appeal should not

be dismissed, denied, disregarded, or otherwise adversely affected on

account of such violation.

Sec. 11.8 Division hearings.

(a) General rules. (1) The Director, the Hearing Officer, and the

appellant shall have access to the agency record of any adverse

decision appealed to the Division for a hearing. Upon request by the

appellant, the agency shall provide the appellant a copy of the agency

record.

(2) The Director and Hearing Officer shall have the authority to

administer oaths and affirmations, and to require, by subpoena, the

attendance of witnesses and the production of evidence. A Hearing

Officer shall obtain the concurrence of the Director prior to issuing a

subpoena.

(i) A subpoena requiring the production of evidence may be

requested and issued at any time while the case is pending before the

Division.

(ii) An appellant or an agency, acting through any appropriate

official, may request the issuance of a subpoena requiring the

attendance of a witness by submitting such a request in writing at

least 14 days before the scheduled date of a hearing. The Director or

Hearing Officer shall issue a subpoena at least 7 days prior to the

scheduled date of a hearing.

(iii) A subpoena shall be issued only if the Director or a Hearing

Officer determines that:

(A) For a subpoena of documents, the appellant or the agency has

established that production of documentary evidence is necessary and is

reasonably calculated to lead to information which would affect the

final determination or

[[Page 67311]]

is necessary to fully present the case before the Division; or

(B) For a subpoena of a witness, the appellant or the agency has

established that either a representative of the Department or a private

individual possesses information that is pertinent and necessary for

disclosure of all relevant facts which could impact the final

determination, that the information cannot be obtained except through

testimony of the person, and that the testimony cannot be obtained

absent issuance of a subpoena.

(iv) The party requesting issuance of a subpoena shall arrange for

service. Service of a subpoena upon a person named therein may be made

by registered or certified mail, or in person. Personal service shall

be made by personal delivery of a copy of the subpoena to the person

named therein by any person who is not a party and who is not less than

18 years of age. Proof of service shall be made by filing with the

Hearing Officer or Director who issued the subpoena a statement of the

date and manner of service and of the names of the persons served,

certified by the person who made the service in person or by return

receipts for certified or registered mail.

(v) A party who requests that a subpoena be issued shall be

responsible for the payment of any reasonable travel and subsistence

costs incurred by the witness in connection with his or her appearance

and any fees of a person who serves the subpoena in person. The

Department shall pay the costs associated with the appearance of a

Department employee whose role as a witness arises out of his or her

performance of official duties, regardless of which party requested the

subpoena. The failure to make payment of such charges on demand may be

deemed by the Hearing Officer or Director as sufficient ground for

striking the testimony of the witness and the evidence the witness has

produced.

(vi) If a person refuses to obey a subpoena, the Director, acting

through the Office of the General Counsel of the Department and the

Department of Justice, may apply to the United States District Court in

the jurisdiction where that person resides to have the subpoena

enforced as provided in the Federal Rules of Civil Procedure (28 U.S.C.

App.).

(3) Testimony required by subpoena pursuant to paragraph (a)(2) of

this section may, at the discretion of the Director or a Hearing

Officer, be presented at the hearing either in person or

telephonically.

(b) Hearing procedures applicable to both record review and

hearings. (1) Upon the filing of an appeal under this part of an

adverse decision by any agency, the agency promptly shall provide the

Division with a copy of the agency record. If requested by the

appellant prior to the hearing, a copy of such agency record shall be

provided to the appellant by the agency within 10 days of receipt of

the request by the agency.

(2) The Director shall assign the appeal to a Hearing Officer and

shall notify the appellant and agency of such assignment. The notice

also shall advise the appellant and the agency of the documents

required to be submitted under paragraph (c)(2) of this section, and

notify the appellant of the option of having a hearing by telephone.

(3) The Hearing Officer will receive evidence into the hearing

record without regard to whether the evidence was known to the agency

officer, employee, or committee making the adverse decision at the time

the adverse decision was made.

(c) Procedures applicable only to hearings. (1) Upon a timely

request for a hearing under Sec. 11.6(b), an appellant has the right to

have a hearing by the Division on any adverse decision within 45 days

after the date of receipt of the request for the hearing by the

Division.

(2) The Hearing Officer shall set a reasonable deadline for

submission of the following documents:

(i) By the appellant:

(A) A short statement of why the decision is wrong;

(B) A copy of any document not in the agency record that the

appellant anticipates introducing at the hearing; and

(C) A list of anticipated witnesses and brief descriptions of the

evidence such witnesses will offer.

(ii) By the agency:

(A) A copy of the adverse decision challenged by the appellant;

(B) A written explanation of the agency's position, including the

regulatory or statutory basis therefor;

(C) A copy of any document not in the agency record that the agency

anticipates introducing at the hearing; and

(D) A list of anticipated witnesses and brief descriptions of the

evidence such witnesses will offer.

(3) Not less than 14 days prior to the hearing, the Division must

provide the appellant, the authorized representative, and the agency a

notice of hearing specifying the date, time, and place of the hearing.

The hearing will be held in the State of residence of the appellant, as

determined by the Hearing Officer, or at a location that is otherwise

convenient to the appellant, the agency, and the Division. The notice

also shall notify all parties of the right to obtain an official record

of the hearing.

(4) Pre-hearing conference. Whenever appropriate, the Hearing

Officer shall hold a pre-hearing conference in order to attempt to

resolve the dispute or to narrow the issues involved. Such pre-hearing

conference shall be held by telephone unless the Hearing Officer and

all parties agree to hold such conference in person.

(5) Conduct of the hearing. (i) A hearing before a Hearing Officer

will be in person unless the appellant agrees to a hearing by

telephone.

(ii) The hearing will be conducted by the Hearing Officer in the

manner determined by the Division most likely to obtain the facts

relevant to the matter or matters at issue. The Hearing Officer will

allow the presentation of evidence at the hearing by any party without

regard to whether the evidence was known to the officer, employee, or

committee of the agency making the adverse decision at the time the

adverse decision was made. The Hearing Officer may confine the

presentation of facts and evidence to pertinent matters and exclude

irrelevant, immaterial, or unduly repetitious evidence, information, or

questions. Any party shall have the opportunity to present oral and

documentary evidence, oral testimony of witnesses, and arguments in

support of the party's position; controvert evidence relied on by any

other party; and question all witnesses. When appropriate, agency

witnesses requested by the appellant will be made available at the

hearing. Any evidence may be received by the Hearing Officer without

regard to whether that evidence could be admitted in judicial

proceedings.

(iii) An official record shall be made of the proceedings of every

hearing. This record will be made by an official tape recording by the

Division. In addition, either party may request that a verbatim

transcript be made of the hearing proceedings and that such transcript

shall be made the official record of the hearing. The party requesting

a verbatim transcript shall pay for the transcription service, shall

provide a certified copy of the transcript to the Hearing Officer free

of charge, and shall allow any other party desiring to purchase a copy

of the transcript to order it from the transcription service.

(6) Absence of parties. (i) If at the time scheduled for the

hearing either the appellant or the agency representative is absent,

and no appearance is made on behalf of such absent party, or no

arrangements have been made for rescheduling the hearing, the Hearing

[[Page 67312]]

Officer has the option to cancel the hearing unless the absent party

has good cause for the failure to appear. If the Hearing Officer elects

to cancel the hearing, the Hearing Officer may:

(A) Treat the appeal as a record review and issue a determination

based on the agency record as submitted by the agency and the hearing

record developed prior to the hearing date;

(B) Accept evidence into the hearing record submitted by any party

present at the hearing, and then issue a determination; or

(C) Dismiss the appeal.

(ii) When a hearing is cancelled due to the absence of a party, the

Hearing Officer will add to the hearing record any additional evidence

submitted by any party present, provide a copy of such evidence to the

absent party or parties, and allow the absent party or parties 10 days

to provide a response to such additional evidence for inclusion in the

hearing record.

(iii) Where an absent party has demonstrated good cause for the

failure to appear, the Hearing Officer shall reschedule the hearing

unless all parties agree to proceed without a hearing.

(7) Post-hearing procedure. The Hearing Officer will leave the

hearing record open after the hearing for 10 days, or for such other

period of time as the Hearing Officer shall establish, to allow the

submission of information by the appellant or the agency, to the extent

necessary to respond to new facts, information, arguments, or evidence

presented or raised at the hearing. Any such new information will be

added by the Hearing Officer to the hearing record and sent to the

other party or parties by the submitter of the information. The Hearing

Officer, in his or her discretion, may permit the other party or

parties to respond to this post-hearing submission.

(d) Interlocutory review. Interlocutory review by the Director of

rulings of a Hearing Officer are not permitted under the procedures of

this part.

(e) Burden of proof. The appellant has the burden of proving that

the adverse decision of the agency was erroneous by a preponderance of

the evidence.

(f) Timing of issuance of determination. The Hearing Officer will

issue a notice of the determination on the appeal to the named

appellant, the authorized representative, and the agency not later than

30 days after a hearing or the closing date of the hearing record in

cases in which the Hearing Officer receives additional evidence from

the agency or appellant after a hearing. In the case of a record

review, the Hearing Officer will issue a notice of determination within

45 days of receipt of the appellant's request for a record review. Upon

the Hearing Officer's request, the Director may establish an earlier or

later deadline. A notice of determination shall be accompanied by a

copy of the procedures for filing a request for Director review under

Sec. 11.9. If the determination is not appealed to the Director for

review under Sec. 11.9, the notice provided by the Hearing Officer

shall be considered to be a notice of a final determination under this

part.

Sec. 11.9 Director review of determinations of Hearing Officers.

(a) Requests for Director review. (1) Not later than 30 days after

the date on which an appellant receives the determination of a Hearing

Officer under Sec. 11.8, the appellant must submit a written request,

signed personally by the named appellant, to the Director to review the

determination in order to be entitled to such review by the Director.

Such request shall include specific reasons why the appellant believes

the determination is wrong.

(2) Not later than 15 business days after the date on which an

agency receives the determination of a Hearing Officer under Sec. 11.8,

the head of the agency may make a written request that the Director

review the determination. Such request shall include specific reasons

why the agency believes the determination is wrong, including citations

of statutes or regulations that the agency believes the determination

violates. Any such request may be made by the head of an agency only,

or by a person acting in such capacity, but not by any subordinate

officer of such agency.

(3) A copy of a request for Director review submitted under this

paragraph (a) shall be provided simultaneously by the submitter to each

party to the appeal.

(b) Notification of parties. The Director promptly shall notify all

parties of receipt of a request for review.

(c) Responses to request for Director review. Other parties to an

appeal may submit written responses to a request for Director review

within 5 business days from the date of receipt of a copy of the

request for review.

(d) Determination of Director. (1) The Director will conduct a

review of the determination of the Hearing Officer using the agency

record, the hearing record, the request for review, any responses

submitted under paragraph (c) of this section, and such other arguments

or information as may be accepted by the Director, in order to

determine whether the decision of the Hearing Officer is supported by

substantial evidence. Based on such review, the Director will issue a

final determination notice that upholds, reverses, or modifies the

determination of the Hearing Officer. The Director's determination upon

review of a Hearing Officer's decision shall be considered to be the

final determination under this part and shall not be appealable.

However, if the Director determines that the hearing record is

inadequate or that new evidence has been submitted, the Director may

remand all or a portion of the determination to the Hearing Officer for

further proceedings to complete the hearing record or, at the option of

the Director, to hold a new hearing.

(2) The Director will complete the review and either issue a final

determination or remand the determination not later than--

(i) 10 business days after receipt of the request for review, in

the case of a request by the head of an agency; or

(ii) 30 business days after receipt of the request for review, in

the case of a request by an appellant.

(3) In any case or any category of cases, the Director may delegate

his or her authority to conduct a review under this section to any

Deputy or Associate Directors of the Division. In any case in which

such review is conducted by a Deputy or Associate Director under

authority delegated by the Director, the Deputy or Associate Director's

determination shall be considered to be the determination of the

Director under this part and shall be final and not appealable.

(e) Equitable relief. In reaching a decision on an appeal, the

Director shall have the authority to grant equitable relief under this

part in the same manner and to the same extent as such authority is

provided an agency under applicable laws and regulations.

Sec. 11.10 Basis for determinations.

(a) In making a determination, the Hearing Officers and the

Director are not bound by previous findings of facts on which the

agency's adverse decision was based.

(b) In making a determination on the appeal, Hearing Officers and

the Director shall ensure that the decision is consistent with the laws

and regulations of the agency, and with the generally applicable

interpretations of such laws and regulations.

(c) All determinations of the Hearing Officers and the Director

must be based on information from the case record, laws applicable to

the matter at issue, and applicable regulations published in the

Federal Register and in effect on the date of the adverse decision or

the date on which the acts that gave rise to the

[[Page 67313]]

adverse decision occurred, whichever date is appropriate under the

applicable agency program laws and regulations.

Sec. 11.11 Reconsideration of Director determinations.

(a) Reconsideration of a determination of the Director may be

requested by the appellant or the agency within 10 days of receipt of

the determination. The Director will not consider any request for

reconsideration that does not contain a detailed statement of a

material error of fact made in the determination, or a detailed

explanation of how the determination is contrary to statute or

regulation, which would justify reversal or modification of the

determination.

(b) The Director shall issue a notice to all parties as to whether

a request for reconsideration meets the criteria in paragraph (a) of

this section. If the request for reconsideration meets such criteria,

the Director shall include a copy of the request for reconsideration in

the notice to the non-requesting parties to the appeal. The non-

requesting parties shall have 5 days from receipt of such notice from

the Director to file a response to the request for reconsideration with

the Director.

(c) The Director shall issue a decision on the request for

reconsideration within 5 days of receipt of responses from the non-

requesting parties. If the Director's decision upon reconsideration

reverses or modifies the final determination of the Director rendered

under Sec. 11.9(d), the Director's decision on reconsideration will

become the final determination of the Director under Sec. 11.9(d) for

purposes of this part.

Sec. 11.12 Effective date and implementation of final determinations

of the Division.

(a) On the return of a case to an agency pursuant to the final

determination of the Division, the head of the agency shall implement

the final determination not later than 30 days after the effective date

of the notice of the final determination.

(b) A final determination will be effective as of the date of

filing of an application, the date of the transaction or event in

question, or the date of the original adverse decision, whichever is

applicable under the applicable agency program statutes or regulations.

Sec. 11.13 Judicial review.

(a) A final determination of the Division shall be reviewable and

enforceable by any United States District Court of competent

jurisdiction in accordance with chapter 7 of title 5, United States

Code.

(b) An appellant may not seek judicial review of any agency adverse

decision appealable under this part without receiving a final

determination from the Division pursuant to the procedures of this

part.

Sec. 11.14 Filing of appeals and computation of time.

(a) An appeal, a request for Director review, or any other document

will be considered ``filed'' when delivered in writing to the Division,

when postmarked, or when a complete facsimile copy is received by the

Division.

(b) Whenever the final date for any requirement of this part falls

on a Saturday, Sunday, Federal holiday, or other day on which the

Division is not open for the transaction of business during normal

working hours, the time for filing will be extended to the close of

business on the next working day.

(c) The time for filing an appeal, a request for Director review,

or any other document expires at 5:00 p.m. local time at the office of

the Division to which the filing is submitted on the last day on which

such filing may be made.

PART 12--HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION

1. The authority citation for part 12 continues to read as follows:

Authority: 16 U.S.C. 3801 et seq.

2. Section 12.12 is revised to read as follows:

Sec. 12.12 Appeals.

Any person who has been or who would be denied program benefits in

accordance with Sec. 12.4 as the result of any determination made in

accordance with the provisions of this part may obtain a review of such

determination in accordance with the administrative appeals procedures

of the agency which rendered such determination. Agency appeal

procedures are contained in the Code of Federal Regulations as follows:

FSA, 7 CFR part 780; NRCS, 7 CFR part 614; RHS, RBS, and RUS, 7 CFR

part 1900, subpart B.

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

1-2. Subpart J is revised to read as follows:

Subpart J--Appeal Procedure--Regulations

Authority: 7 U.S.C. 1506(p).

Sec. 400.90 Applicability.

Persons who are insured or believe they are insured under contracts

of insurance issued under the Federal Crop Insurance Act must obtain

appeal and reconsideration of decisions made under the provisions of

this chapter in accordance with part 780 of this title.

PART 614--APPEAL PROCEDURES

1. Part 614 is revised to read as follows:

PART 614--APPEAL PROCEDURES

Subpart A--General Provisions

Sec.

614.1 Purpose and scope.

614.2 Definitions.

614.3 Applicability.

614.4 Reservation of authority.

614.5 Decisions not subject to appeal.

Subpart B--Appeals of Technical Determinations Related to the

Conservation Title (Title XII) of the Food Security Act of 1985, as

Amended

614.100 Applicability.

614.101 Notice of preliminary technical determinations.

614.102 Mediation of preliminary technical determinations.

614.103 Final determinations.

614.104 Appeals of technical determinations.

Subpart C--Appeals of Decision Related to Conservation Programs (non-

Title XII)

614.200 Applicability.

614.201 Notice of final decisions.

614.202 Time frames for filing requests for informal hearings.

614.203 Mediation of adverse final decisions.

614.204 Appeals of adverse final decisions.

Authority: 5 U.S.C. 301, sections 226 and 275 of Pub. L. 103-354

(7 U.S.C. 6932 and 6995); 16 U.S.C. 3843(a).

Subpart A--General Provisions

Sec. 614.1 Purpose and scope.

This part sets forth the informal procedures under which a

landowner or program participant may appeal adverse technical

determinations or decisions made by officials of the Natural Resources

Conservation Service (NRCS) or its successor agency.

Sec. 614.2 Definitions.

Adverse technical determination or decision includes, in addition

to the definition of adverse decision in 7 CFR part 11, an NRCS

technical determination or decision that affects the legal substantive

status of the land, though it may not necessarily be adverse.

Chief means the Chief of NRCS. For the purposes of this part, the

term ``Chief'' includes an official of NRCS national headquarters

designated by the Chief to act for the Chief in making decisions under

this part.

Conservation district means any district or unit of State or local

government formed under State law or territorial law for the express

purpose of developing and carrying out a local soil and water

conservation program. Such

[[Page 67314]]

district or unit of government may be referred to as a conservation

district, soil conservation district, soil and water conservation

district, natural resource district, land conservation committee, or a

similar name.

County committee means a Farm Service Agency (FSA) county or area

committee established in accordance with section 8(b) of the Soil

Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)).

Decision means a conclusion reached by an NRCS official based on

applicable regulations and program instructions which relates to

eligibility for program benefits, including a technical determination

used as a basis for the decision.

Designated conservationist means the NRCS official, usually the

district conservationist, whom the State Conservationist designates to

be responsible for the program or compliance requirement to which this

part is applicable.

Mediation means a process in which a neutral third party, the

mediator, meets with the disputing parties (e.g., the landowner or

program participant and the agency), facilitates discussions, and works

with the parties to resolve their disputes, narrow areas of

disagreement, and improve communications and relationships. A mediator

has no authority to render a decision or determination.

Preliminary technical determination means the initial written

technical determination provided to a client which will become final

after 30 days unless the client takes action in accordance with

Sec. 614.101 to stay the preliminary technical determination from

becoming final.

State Conservationist means the NRCS official in charge of NRCS

operations within a State, as set forth in part 600 of this chapter.

Technical determination means a conclusion concerning the status

and condition of the natural resources and cultural practices based on

science and best professional judgment of natural resource

professionals concerning the soils, water, air, plants, and animals.

Refer to 7 CFR 11.1 for other definitions applicable to appeals of

adverse technical determinations and decisions covered by this part.

Sec. 614.3 Applicability.

(a) Appeals of adverse technical determinations and adverse

decisions covered by this part are also governed by National Appeals

Division (NAD) regulations at 7 CFR part 11.

(b) Decisions which are subject to this part include any decision

under one or more NRCS programs; and technical determinations or

decisions that affect the status of the land even though they may not

affect the landowner's or program participant's eligibility for USDA

program benefits.

(c) The failure of an official of NRCS to issue a technical

determination or decision is subject to this part.

(d) Complaints involving discrimination in program delivery will be

handled under the existing USDA civil rights rules and regulations.

(e) Appeals on contractual issues that are subject to the

jurisdiction of the Agriculture Board of Contract Appeals are not

appealable under the procedures within this part.

Sec. 614.4 Reservation of authority.

Nothing contained in the regulations of this part shall preclude

the Secretary of Agriculture or the Chief from determining at any time

any question arising under the programs to which the regulations of

this part apply, or from reversing or modifying in writing, with

sufficient reason given therefore, any technical determination or

decision made by an NRCS official.

Sec. 614.5 Decisions not subject to appeal.

The following are examples of decisions which are not appealable:

(a) General program requirements that apply to all participants;

(b) Science-based formulas and criteria;

(c) Procedural decisions relating to administration of the

programs; and

(d) Denials of assistance due to lack of funds or authority.

Subpart B--Appeals of Technical Determinations Related to the

Conservation Title (Title XII) of the Food Security Act of 1985, as

Amended

Sec. 614.100 Applicability.

The provisions of this subpart set forth the procedures under which

a landowner or program participant may seek mediation of a preliminary

technical determination or appeal from technical determinations made by

NRCS officials on or after January 16, 1996 regarding technical

determinations within the following programs:

(1) Highly Erodible Land Conservation;

(2) Wetland Conservation, including wetland technical

determinations made by NRCS officials not related to a request for USDA

program benefits;

(3) Conservation Reserve Program;

(4) Wetlands Reserve Program;

(5) Agricultural Water Quality Incentives Program; and

(6) Environmental Easement Program.

Sec. 614.101 Notice of preliminary technical determinations.

(a) All preliminary technical determinations related to programs

provided for in Sec. 614.100 shall be in writing and shall inform the

landowner or program participant of the following:

(1) The preliminary technical determination will become final after

30 days if the landowner or program participant does not arrange with

the designated conservationist for either or both of the following

options:

(i) A field visit to the site to gather additional information and

to discuss the facts concerning the preliminary technical

determination, together with, at the option of the conservation

district, a district representative; and

(ii) Mediation.

(2) Once the technical determination is final, the landowner or

program participant may appeal the technical determination to the FSA

county or area committee pursuant to 7 CFR part 780. Landowners or

program participants wishing to appeal must exhaust any available

appeal procedures through the FSA county committee prior to appealing

to NAD. Judicial review is available only as specified in 7 CFR part

11.

(b) The document containing the preliminary technical determination

shall be mailed or hand delivered to the landowner or program

participant.

Sec. 614.102 Mediation of preliminary technical determinations.

(a)(1) Any dispute with respect to a preliminary technical

determination related to the programs provided in Sec. 614.100 shall,

at the request of the landowner or program participant, be mediated:

(i) Through certified individuals in those States where a State

mediation program certified by the United States Department of

Agriculture (USDA) has been established. Conservation district

officials in certified State Mediation Program States may become

certified by the State and utilized for mediation, if they choose to

participate.

(ii) In States with no certified mediation program in effect,

through mediation by a qualified representative of a local conservation

district, if a local conservation district chooses to participate. Upon

mutual agreement of the parties, other individuals may serve as

mediators.

(2) Upon receiving a request for mediation, NRCS shall notify other

USDA and Federal agencies, as appropriate.

(b) The parties shall have not more than 30 days to reach an

agreement following a mediation session. The

[[Page 67315]]

mediator shall notify the designated conservationist in writing at the

end of this period whether the parties reached an agreement. Any

agreement reached during, or as a result of, the mediation process

shall conform to the statutory, regulatory, and manual provisions

governing the program.

Sec. 614.103 Final determinations.

(a) Preliminary technical determinations shall become final:

(1) 30 days after receipt by the landowner or program participant

of the notice of a preliminary technical determination issued pursuant

to Sec. 614.101, unless a field visit or mediation is requested;

(2) After the earlier of 30 days after the field visit provided for

under Sec. 614.101(a) or receipt by the landowner or program

participant of a final determination from the designated

conservationist; or

(3) 30 days after a mediation session if a mutual agreement has not

been reached by the parties.

(b) The final technical determination shall set forth the decision,

the basis for the decision, including all factors, technical criteria,

and facts relied upon in making the decision, and shall inform the

landowner or program participant of the procedure for requesting and

pursuing further review.

Sec. 614.104 Appeals of technical determinations.

(a) Technical determinations related to the programs in

Sec. 614.100 may only be appealed, pursuant to the provisions of 7 CFR

part 780, to the FSA county committee with jurisdiction.

(b) In cases where a field visit has not already been completed in

accordance with Sec. 614.101(a), a field visit shall be completed by

the designated conservationist before the FSA county committee

considers the appeal.

(c) If the FSA county committee hearing the appeal requests review

of the technical determination by the applicable State Conservationist

prior to issuing their decision, the State Conservationist may:

(1) Designate an appropriate NRCS official to gather any additional

information necessary for review of the technical determination;

(2) Obtain additional oral and documentary evidence from any party

with personal or expert knowledge about the facts under review; and

(3) Conduct a field visit to review and obtain additional

information and to discuss the facts concerning the technical

determination. The State Conservationist shall provide the applicable

FSA county committee with a written technical determination, including

all factors, technical criteria, and facts relied upon in making the

technical determination.

(d) Any landowner or program participant who is adversely affected

by a decision of the FSA county committee may appeal to NAD in

accordance with 7 CFR part 11.

Subpart C--Appeals of Decisions Related to Conservation Programs (non-

Title XII)

Sec. 614.200 Applicability.

The provisions of this subpart set forth the procedures under which

a landowner or program participant may seek an informal hearing on

adverse decisions made by NRCS officials (exclusive of those decisions

that are appealable to the USDA Board of Contract Appeals) after

January 16, 1996 in the following program areas:

(1) Great Plains Conservation Program;

(2) Rural Abandoned Mine Program;

(3) Emergency Watershed Projects;

(4) Rural Clean Water Program;

(5) Colorado River Basin Salinity Control Program;

(6) Forestry Incentive Program;

(7) Water Bank Program;

(8) Flood Prevention and Watershed Protection Programs;

(9) Any other program which subsequently incorporates these

procedures through reference to this subpart within the program

regulations.

Sec. 614.201 Notice of final decisions.

(a) All final decisions related to programs provided for in

Sec. 614.200 that are made by the designated conservationist shall be

in writing and shall inform the landowner or program participant of

their right to request any or all of the following:

(1) An informal hearing before NRCS;

(2) Mediation; or

(3) A hearing before NAD in accordance with 7 CFR part 11.

(b) The document containing the decision shall be mailed or hand

delivered to the landowner or program participant.

Sec. 614.202 Time frames for filing requests for informal hearings.

(a) A request for an informal hearing before NRCS shall be filed

within 30 days after written notice of the final decision, which is the

subject of the request, is mailed or otherwise made available to the

landowner or program participant. A request for an informal hearing

shall be considered ``filed'' when personally delivered in writing to

the appropriate reviewing authority or when the properly addressed

request, postage paid, is postmarked.

(b) A request for appeal may be accepted and acted upon even though

it is not filed within the time prescribed in paragraph (a) of this

section if, in the judgment of the reviewing authority with whom such

request is filed, the circumstances warrant such action.

Sec. 614.203 Mediation of adverse final decisions.

(a) Any dispute with respect to an adverse final decision related

to the programs provided in Sec. 614.200 shall, at the request of the

landowner or program, be mediated:

(1) Through certified individual in those States where a State

Mediation Program has been established. Conservation district officials

in certified State Mediation Program States may become certified by the

State and utilized for mediation, if they choose to participate.

(2) In States where no certified mediation program is in effect,

through mediation by a qualified representative of a local conservation

district, if a local conservation district chooses to participate. Upon

mutual agreement of the parties, other individuals may serve as

mediators.

(b)(1) The parties shall have not more than 30 days to reach an

agreement following a mediation session. The mediator shall notify the

designated conservationist in writing at the end of this period whether

the parties reached an agreement.

(2) Any agreement reached during, or as a result of, the mediation

process shall conform to the statutory, regulatory, and manual

provisions governing the program.

(3) If the parties fail to reach an agreement within the specified

period, the designated conservationist shall have up to 30 days after

the conclusion of mediation to issue a final decision.

Sec. 614.204 Appeals of adverse final decisions.

(a) Any landowner or program participant, who is adversely affected

by a decision made by a designated conservationist related to the

programs in Sec. 614.200, may appeal the decision to the State

Conservationist in the applicable State for an informal hearing or to

NAD in accordance with 7 CFR part 11.

(b) The State Conservationist may designate a NRCS official to

gather information and conduct the informal hearing before making a

decision.

(c) Any landowner or program participant who is adversely affected

by a decision of the State Conservationist may appeal to NAD in

accordance with 7 CFR part 11.

[[Page 67316]]

PART 620--WETLANDS RESERVE PROGRAM

1. The authority citation for part 620 continues to read as

follows:

Authority: 16 U.S.C. 590a et seq., 3837 et seq.

2. Section 620.17(a) is revised to read as follows:

Sec. 620.17 Appeals.

(a) A person participating in the WRP may obtain review of any

administrative determination concerning eligibility for participation

utilizing the administrative appeal procedures in 7 CFR part 614, 7 CFR

part 780, and 7 CFR part 11, as appropriate.

* * * * *

PART 623--EMERGENCY WETLANDS RESERVE PROGRAM

1. The authority citation for part 623 continues to read as

follows:

Authority: 16 U.S.C. 3837-3837f; Pub. L. 103-75, Chapter 1, 107

Stat. 739, 742.

2. Section 623.20 is revised to read as follows;

Sec. 623.20 Appeals.

A participant in the EWRP may obtain a review of any administrative

determination concerning land eligibility, development of a WRPO, or

any adverse determination under this part in accordance with the

administrative appeal regulations provided in part 614 of this title.

PART 631--GREAT PLAINS CONSERVATION PROGRAM

1. The authority citation for part 631 continues to read as

follows:

Authority: 16 U.S.C. 590p(b).

2. Section 631.13 is revised to read as follows:

Sec. 631.13 Disputes and appeals for matters other than contract

violations.

Applicants or participants may appeal decisions regarding matters

other than contract disputes under this part in accordance with part

614 of this title.

PART 632--RURAL ABANDONED MINE PROGRAM

1. The authority citation for part 632 continues to read as

follows:

Authority: Sec. 406, Pub. L. 95-87; 91 Stat. 460 (30 U.S.C.

1236).

2. Section 632.40 is revised to read as follows:

Sec. 632.40 Appeals.

Land users may appeal decisions under this part in accordance with

part 614 of this title.

PART 634--RURAL CLEAN WATER PROGRAM

1. The authority citation for part 634 continues to read as

follows:

Authority: Sec. 35, Pub. L. 95-217, 91 Stat. 1579 (33 U.S.C.

1288).

2. Section 634.30 is revised to read as follows:

Sec. 634.30 Appeals in USDA administered projects.

The participant in a USDA-administered RCWP project may appeal

decisions of the administering agency in accordance with part 614 of

this title.

PART 663--WELLTON-MOHAWK IRRIGATION IMPROVEMENT PROGRAM

1. The authority citation for part 663 continues to read as

follows:

Authority: Pub. L. 93-320, 88 Stat. 266 (43 U.S.C. 1571 et

seq.); sec. 601, Pub. L. 72-212, 47 Stat. 417 (31 U.S.C. 686).

2. Section 663.17 is revised to read as follows:

Sec. 663.17 Appeals.

A decision under this part may be appealed by a cooperator in

accordance part 614 of this title.

PART 701--CONSERVATION AND ENVIRONMENTAL PROGRAMS

1. The authority citation for part 701 continues to read as

follows:

Authority: 16 U.S.C. 590d, 590g-590o, 590p(a), 590q, 1501-1510,

1606, 2101-2111, 2201-2205; 48 U.S.C. 1469d(c).

2. Section 701.76 is revised to read as follows:

Sec. 701.76 Appeals.

Any person may obtain review of determinations affecting

participation in:

(a) The Forestry Incentive Program, in accordance with part 614 of

this title; and

(b) All other programs within this part, in accordance with part

780 of this title.

PART 702--COLORADO RIVER BASIN SALINITY (CRSC) CONTROL PROGRAM

1. The authority citation for part 702 continues to read as

follows:

Authority: Sec. 201, Pub. L. 93-320, 88 Stat. 271; Sec. 2, Pub.

L. 98-569, 98 Stat. 2933 (43 U.S.C. 1592(c)).

2. Section 702.20 is revised to read as follows:

Sec. 702.20 Appeals.

The participant may obtain a review, in accordance with the

provisions of 7 CFR part 614 and 7 CFR part 11, of any administrative

decision made under the provisions of this part.

PART 752--WATER BANK PROGRAM

1. The authority citation for part 752 continues to read as

follows:

Authority: Secs. 2-12, 84 Stat. 1468-1471, as amended (16 U.S.C.

1301-1311).

2. Section 752.28 is revised to read as follows:

Sec. 752.28 Appeals.

Any person may obtain review of determinations affecting

participation in this program in accordance with part 614 of this

title.

PART 780--APPEAL REGULATIONS

1. Part 780 is revised to read as follows:

PART 780--APPEAL REGULATIONS

Sec.

780.1 Definitions.

780.2 Applicability.

780.3-5 Reserved.

780.6 Mediation.

780.7 Reconsideration and appeals with the county and State

committees and reconsideration with the regional service offices.

780.8 Time limitations for filing requests for reconsideration or

appeal.

780.9 Appeals of NRCS technical determinations.

780.10 Other finality provisions.

780.11 Reservation of authority.

Authority: 5 U.S.C. 301; 15 U.S.C. 714b and 714c; 16 U.S.C.

590h.

Sec. 780.1 Definitions.

For purposes of this part:

1994 Act means the Federal Crop Insurance Reform and Department of

Agriculture Reorganization Act of 1994 (Public Law 103-354).

Agency means FSA and its county and State committees and their

personnel, CCC, NRCS, FCIC, and any other agency or office of the

Department which the Secretary may designate, or any successor agency.

Appeal means a written request by a participant asking the next

level reviewing authority to review a decision.

CCC means the Commodity Credit Corporation, a wholly owned

Government corporation within the U.S. Department of Agriculture.

County committee means an FSA county or area committee established

in accordance with section 8(b) of the Soil Conservation and Domestic

Allotment Act (16 U.S.C. 590h(b)).

[[Page 67317]]

FCIC means the Federal Crop Insurance Corporation, a wholly owned

Government corporation within the U.S. Department of Agriculture.

Final decision means the program decision rendered by the county or

State committee or the FCIC Regional Service Office upon written

request of the participant. A decision that is otherwise final shall

remain final unless the decision is timely appealed to the State

committee or NAD. A decision of FSA or FCIC made by personnel

subordinate to the county committee is considered ``final'' for the

purpose of appeal to NAD only after that decision has been appealed to

the county committee under the provisions of this part.

FSA means the Farm Service Agency.

NAD means the National Appeals Division, established pursuant to

the 1994 Act.

NAD regulations means the National Appeals Division (NAD) rules of

procedure published by the Secretary at 7 CFR part 11 implementing

title II, subtitle H of the 1994 Act.

NRCS means the Natural Resource Conservation Service of the United

States Department of Agriculture, formerly the Soil Conservation

Service.

Reconsideration is a subsequent consideration of a prior decision

by the same reviewing authority.

Regional Service Office means the regional offices established by

FSA and FCIC for the purpose of making determinations for private

insurance companies reinsured by FCIC under the Federal Crop Insurance

Act and for FSA for insurance contracts delivered through county FSA

offices (including underwriting decisions), the applicability of

provisions under chapter IV of 7 CFR, and decisions as to insurability

and rating of acreage.

Reviewing authority means a person or committee assigned the

responsibility of making a decision on the appeal filed by the

participant in accordance with this part.

State committee means an FSA State committee established in

accordance with section 8(b) of the Soil Conservation and Domestic

Allotment Act (16 U.S.C. 590h(b)) including, where appropriate, the

Director of the Caribbean Area FSA office for Puerto Rico and the

Virgin Islands.

Technical determination of NRCS means a decision by NRCS concerning

the status and condition of the natural resources based on science and

on the best professional judgment of natural resource professionals

within NRCS.

Sec. 780.2 Applicability.

(a)(1) Except as provided in other regulations, this part applies

to decisions made under programs and by agencies, as set forth herein:

(i) Decisions in those domestic programs administered by the Farm

Service Agency (FSA), and programs administered by FSA on behalf of the

Commodity Credit Corporation (CCC) through State and county committees,

which are generally set forth in chapters VII and XIV of this title;

(ii) Technical decisions made by the Natural Resources Conservation

Service (NRCS) under title XII of the Food Security Act of 1985, as

amended;

(iii) Decisions made by personnel of the Federal Crop Insurance

Corporation (``FCIC'') or FSA with respect to contracts of insurance

insured by FCIC and the noninsured crop disaster assistance program;

(iv) Decisions made by personnel of FCIC or FSA with respect to

contracts of insurance provided by private insurance carriers and

reinsured by FCIC under the provisions of the Federal Crop Insurance

Act; and

(v) Other programs to which this part is made applicable by

individual program regulations.

(2) For covered programs, this part is applicable to any decision

made by FSA and its State and county committees, CCC, FCIC, the

personnel and agents of FSA, FCIC, or CCC, and by the officials of NRCS

(to the extent provided in Sec. 780.9), except as otherwise may be

provided in individual program requirements or by the Secretary.

(3) This part is not applicable to any decision:

(i) Made by FSA or FCIC with respect to any matter arising under

the terms of the Standard Reinsurance Agreement between FCIC and any

private insurance company reinsured by FCIC under the provisions of the

Federal Crop Insurance Act, as amended; or

(ii) Made by any private insurance company with respect to any

contract of insurance issued to any producer by the private insurance

company and reinsured by FCIC under the provisions of the Federal Crop

Insurance Act, as amended. Those insurance contracts are subject to

dispute resolution through arbitration or mediation in accordance with

the contract terms.

(b) With respect to matters identified in paragraph (a) of this

section, participants may request reconsideration or appeal, under the

provisions of this part, of decisions by an agency made with respect

to:

(1) Denial of participation in a program;

(2) Compliance with program requirements;

(3) Issuance of payments or other program benefits to a participant

in a program;

(4) Making payments or other benefits to an individual or entity

who is not a participant in a program; or

(5) Technical determinations by NRCS.

(c) No reconsideration or appeal may be sought under this part of

any general program provision or program policy, or any statutory or

regulatory requirement that is applicable to all similarly situated

participants.

(d) Mathematical formulas established under a statute or program

regulations, and decisions based solely on the application of those

formulas, are not appealable under this part.

(e) Only a participant may seek reconsideration or appeal under

this part.

Sec. Sec. 780.3-780.5 [Reserved]

Sec. 780.6 Mediation.

Participants have the right to seek mediation involving any

decision appealed under this part in accordance with the provisions of

section 282 of the 1994 Act, if the mediation program of the State

where the participant's farming operation giving rise to the decision

is located has been certified by the Secretary for the program involved

in the agency decision. Any time limitation for review contained in

this part will be stayed pending timely pursuit and completion of the

mediation process.

Sec. 780.7 Reconsideration and appeals with the county and State

committees and reconsideration with the regional service offices.

(a) A participant may appeal a decision of personnel subordinate to

the county committee by filing with the county committee a written

request for appeal that states the basis upon which the participant

relies to show that:

(1) The decision was not proper and not made in accordance with

applicable program policies; or

(2) All material facts were not properly considered in such

decision.

(b) A participant may seek reconsideration of a final decision by a

county committee or the Regional Service Office by filing a written

request for reconsideration with the county committee or the Regional

Service Office that states the basis upon which the participant relies

to show that:

(1) The decision was not proper and not made in accordance with

applicable program regulations; or

(2) All material facts were not properly considered in such

decision.

[[Page 67318]]

(c) A participant may appeal a final decision by a county committee

or the Regional Service Office to the State committee and request an

informal hearing in connection therewith, by filing a written appeal

with the State committee.

(d) A participant may seek reconsideration of a decision by a State

committee, and request an informal hearing in connection therewith, by

filing a written request for reconsideration with the State committee

that states the basis upon which the participant relies to show that:

(1) The decision was not proper and not made in accordance with

applicable program regulations; or

(2) All material facts were not properly considered in such

decision.

(e) Nothing in this part prohibits a participant from filing an

appeal of a final decision of the county committee or the Regional

Service Office with NAD in accordance with the NAD regulations.

(f) This section does not apply to a technical determination by

NRCS. Procedures regarding the appeal of a technical determination by

NRCS are contained in Sec. 780.9.

Sec. 780.8 Time limitations for filing requests for reconsideration or

appeal.

(a) A request for reconsideration or an appeal of a decision shall

be filed within 30 days after written notice of the decision which is

the subject of the request is mailed or otherwise made available to the

participant. A request for reconsideration or appeal shall be

considered to have been ``filed'' when personally delivered in writing

to the appropriate reviewing authority or when the properly addressed

request, postage paid, is postmarked. A decision shall become final and

non-reviewable unless reconsideration is timely sought or the decision

is timely appealed.

(b) A request for reconsideration or appeal may be accepted and

acted upon even though it is not filed within the time prescribed in

paragraph (a) of this section if, in the judgment of the reviewing

authority with whom such request is filed, the circumstances warrant

such action.

Sec. 780.9 Appeals of NRCS technical determinations.

(a) Notwithstanding any other provision of this part, a technical

determination of NRCS issued to a participant pursuant to Title XII of

the Food Security Act of 1985, as amended, including wetland

determinations, may be appealed to a county committee in accordance

with the procedures in this part.

(b) If the county committee hears the appeal and agrees with the

participant's appeal, the county committee shall refer the case with

its findings to the NRCS State Conservationist to review the matter and

review the technical determination. The County or State committee

decision shall incorporate, and be based upon, the NRCS State

Conservationist's technical determination.

Sec. 780.10 Other finality provisions.

The finality provisions contained in section 281 of the 1994 Act

shall be applied to appeals under this part to the extent provided for

in that section of the 1994 Act.

Sec. 780.11 Reservations of authority.

(a) Representatives of FSA, FCIC, and CCC may correct all errors in

entering data on program contracts, loan agreements, and other program

documents and the results of the computations or calculations made

pursuant to the contract or agreement.

(b) Nothing contained in this part shall preclude the Secretary, or

the Administrator of FSA, Executive Vice President of CCC, the Manager

of FCIC, the Chief of NRCS, if applicable, or a designee, from

determining at any time any question arising under the programs within

their respective authority or from reversing or modifying any decision

made by FSA or its county and State committees, FCIC, or CCC.

PART 781--DISCLOSURE OF FOREIGN INVESTMENT IN AGRICULTURAL LAND

1. The authority citation for part 781 continues to read as

follows:

Authority: Sec. 1-10, 92 Stat. 1266 (7 U.S.C. 3501 et seq.).

2. In Sec. 781.5 paragraphs (c), (d) and (e) are removed,

paragraphs (f) through (h) are redesignated as paragraphs (d) through

(f) respectively, and paragraph (b)(3) is revised and a new paragraph

(c) is added to read as follows:

Sec. 781.5 Penalty review procedure.

* * * * *

(b) * * *

(3) A request for a hearing on the proposed penalty may be filed in

accordance with part 780 of this title.

(c) After a final decision is issued pursuant to an appeal under

part 780 of this title, the Administrator or Administrator's designee

shall mail the foreign person a notice of the determination on appeal,

stating whether a report must be filed or amended in compliance with

Sec. 781.3, the amount of the penalty (if any), and the date by which

it must be paid. The foreign person shall file or amend the report as

required by the Administrator. The penalty in the amount stated shall

be paid by check or money order drawn to the Treasurer of the United

States and shall be mailed to the United States Department of

Agriculture, P.O. Box 2415, Washington, DC 20013. The Department is not

responsible for the loss of currency sent through the mails.

* * * * *

PART 1900--GENERAL

1. The authority for part 1900 is revised to read as follows:

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 7 U.S.C. 6991, et. seq.;

42 U.S.C. 1480; Reorganization Plan No. 2 of 1953 (5 U.S.C. App.).

2-3. Subpart B is revised to read as follows:

Subpart B--Adverse Decisions and Administrative Appeals

1900.51 Definitions.

1900.52 General.

1900.53 Applicability.

1900.54 Effect on assistance pending appeal.

1900.55 Adverse action procedures.

1900.56 Non-appealable decisions.

1900.57 [Reserved].

* * * * *

Sec. 1900.51 Definitions.

Act means the Federal Crop Insurance Reform and Department of

Agriculture Reorganization Act of 1994, Public Law No. 103-354 (7

U.S.C. 6991 et seq.).

Agency means the Rural Utilities Service (RUS), the Rural Housing

Service (RHS), and the Rural Business-Cooperative Development Service

(RBS), or their successor agencies.

Refer to 7 CFR 11.1 for other definitions applicable to appeals of

adverse decisions covered by this subpart.

Sec. 1900.52 General.

This subpart specifies procedures for use by USDA personnel and

program participants to ensure that full and complete consideration is

given to program participants who are affected by an agency adverse

decision.

Sec. 1900.53 Applicability.

(a) Appeals of adverse decisions covered by this subpart will be

governed by 7 CFR part 11.

(b) The provisions of this subpart apply to adverse decisions

concerning direct loans, loan guarantees, and grants under the

following programs: RUS Water and Waste Disposal Facility Loans and

Grants Program; RHS Housing and Community Facilities Loan

[[Page 67319]]

Programs; RBS Loan, Grant, and Guarantee Programs and the Intermediary

Relending Program; and determinations of the Rural Housing Trust 1987-1

Master Servicer.

(c) This subpart does not apply to decisions made by parties

outside an agency even when those decisions are used as a basis for

decisions falling within paragraph (b) of this section, for example:

decisions by state governmental construction standards-setting agencies

(which may determine whether RHS will finance certain houses); Davis-

Bacon wage rates; flood plain determinations; archaeological and

historical areas preservation requirements; and designations of areas

inhabited by endangered species.

Sec. 1900.54 Effect on assistance pending appeal.

(a) Assistance will not be discontinued pending the outcome of an

appeal of a complete or partial adverse decision.

(b) Notwithstanding the provisions of paragraph (a) of this

section, administrative offsets initiated under subpart C of part 1951

will not be stayed pending the outcome of an appeal and any further

review of the decision to initiate the offset.

Sec. 1900.55 Adverse action procedures.

(a) If an applicant, guaranteed lender, a holder, borrower or

grantee is adversely affected by a decision covered by this subpart,

the decision maker will inform the participant of the adverse decision

and whether the adverse decision is appealable. A participant has the

right to request the Director of NAD to review the agency's finding of

nonappealability in accordance with 7 CFR 11.6(a). In cases where the

adverse decision is based on both appealable and nonappealable actions,

the adverse action is not appealable.

(b) A participant affected by an adverse decision of an agency is

entitled under section 275 of the Act to an opportunity for a separate

informal meeting with the agency before commencing an appeal to NAD

under 7 CFR part 11.

(c) Participants also have the right under section 275 of the Act

to seek mediation involving any adverse decision appealable under this

subpart if the mediation program of the State in which the

participant's farming operation giving rise to the decision is located

has been certified by the Secretary for the program involved in the

decision. An agency shall cooperate in such mediation. Any time

limitation for appeal will be stayed pending completion of the

mediation process (7 CFR 11.5(c)).

Sec. 1900.56 Non-appealable decisions.

The following are examples of decisions which are not appealable:

(a) Decisions which do not fall within the scope of this subpart as

set out in Sec. 1900.53.

(b) Decisions that do not meet the definition of an ``adverse

decision'' under 7 CFR part 11.

(c) Decisions involving parties who do not meet the definition of

``participant'' under 7 CFR part 11.

(d) Decisions with subject matters not covered by 7 CFR part 11.

(e) Interest rates as set forth in agency procedures, except for

appeals alleging application of an incorrect interest rate.

(f) The State RECD Director's refusal to request an administrative

waiver provided for in agency program regulations.

(g) Denials of assistance due to lack of funds or authority to

guarantee.

Sec. 1900.57 [Reserved]

Done at Washington, D.C., this 21st day of December, 1995.

Dan Glickman,

Secretary of Agriculture.

[FR Doc. 95-31397 Filed 12-28-95; 8:45 am]

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