Appeal Procedure Regulation

DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 400

Farm Service Agency

7 CFR Part 780

Appeal Procedure Regulation

AGENCIES: Federal Crop Insurance Corporation and Farm Service Agency,

USDA.

ACTION: Proposed rule.

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

SUMMARY: The Federal Crop Insurance Corporation (FCIC) and the Farm

Service Agency (FSA) propose to amend general administrative

regulations and appeal procedure regulations. The intended effect of

the rule is to establish procedures for program participant appeals of

adverse decisions made by the Risk Management Agency (RMA).

DATES: Written comments and opinions on this proposed rule will be

accepted until close of business November 29, 1999, and will be

considered when the rule is to be made final.

ADDRESSES: Interested persons are invited to submit written comments to

Nancy Kreitzer, Appeals, Litigation and Legal Liaison Staff, Federal

Crop Insurance Corporation, United States Department of Agriculture,

1400 Independence Avenue, S.W., Stop 0807, Washington, D.C. 20250-0807.

FOR FURTHER INFORMATION CONTACT: Nancy Kreitzer, Director, Appeals,

Litigation and Legal Liaison Staff, Federal Crop Insurance Corporation,

at the address listed above, telephone (202) 690-1683.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

The Office of Management and Budget (OMB) has determined this rule

to be exempt for the purposes of Executive Order 12866 and, therefore,

this rule has not been reviewed by OMB.

Paperwork Reduction Act of 1995

This proposed rule does not constitute a collection of information

under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA),

establishes requirements for Federal agencies to assess the effects of

their regulatory actions on state, local, and tribal governments and

the private sector. This rule contains no Federal mandates (under the

regulatory provisions of title II of the UMRA) for State, local, and

tribal governments or the private sector. Therefore, this rule is not

subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12612

It has been determined under section 6(a) of Executive Order 12612,

Federalism, that this rule does not have sufficient federalism

implications to warrant the preparation of a Federalism Assessment. The

provisions contained in this rule will not have a substantial direct

effect on states or their political subdivisions, or on the

distribution of power and responsibilities among the various levels of

government.

Regulatory Flexibility Act

This regulation will not have a significant economic impact on a

substantial number of small entities. This action does not increase the

burden on any entity because this action merely clarifies and

establishes provisions for producers to use in filing appeals of

adverse decisions. The effect on small entities is the same as that for

large entities. Therefore, this action is determined to be exempt from

the provisions of the Regulatory Flexibility Act (5 U.S.C. 605) and no

Regulatory Flexibility Analysis was prepared.

Federal Assistance Program

This program is listed in the Catalog of Federal Domestic

Assistance under No. 10.450.

Executive Order 12372

This program is not subject to the provisions of Executive Order

12372, which require intergovernmental consultation with state and

local officials. See the Notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115, June 24, 1983.

Executive Order 12988

This proposed rule has been reviewed under the provisions of

Executive Order 12988 on civil justice reform. The provisions of this

rule will not have a retroactive effect prior to the effective date.

The provisions of this rule will preempt State and local laws to the

extent such State and local laws are inconsistent herewith. The

administrative appeal provisions published at 7 CFR part 11 must be

exhausted before any action for judicial review may be brought against

FCIC.

Environmental Evaluation

This action is not expected to have a significant impact on the

quality of the human environment, health, and safety. Therefore,

neither an Environmental Assessment nor an Environmental Impact

Statement is needed.

National Performance Review

This regulatory action is being taken as part of the National

Performance Review Initiative to eliminate unnecessary or duplicative

regulations and improve those that remain in force.

Background

The Federal Agriculture Improvement and Reform Act of 1996 (1996

Act) amended the Department of Agriculture Reorganization Act of 1994

(Reorganization Act) by creating an Office of Risk Management. The

Secretary implemented this provision with Secretary's Memorandum 1010-2

issued on May 3, 1996, which established the Risk Management Agency

(RMA). Among the functions of RMA is the administration of the crop

insurance programs for FCIC, a function formerly assigned to the Farm

Service Agency (FSA).

This proposed rule would amend FCIC and FSA informal appeal

regulations to reflect the establishment of RMA and the reorganization

of crop insurance functions. It does not reflect any response to

comments received on the prior interim final rule for 7 CFR part 400,

subpart J, or 7 CFR part 780 promulgated on December 29, 1995 (60 FR

67298).

[[Page 52679]]

List of Subjects in 7 CFR Parts 400 and 780

Administrative practice and procedure, Claims, Crop insurance,

Fraud, Reporting and recordkeeping requirements.

Proposed Rule

For the reasons stated in the preamble, the Federal Crop Insurance

Corporation proposes to amend 7 CFR part 400, subpart J, and the Farm

Service Agency proposes to amend 7 CFR part 780 as follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

1. Revise 7 CFR part 400, subpart J, to read as follows:

Subpart J--Appeal Procedure

Sec.

400.90 Definitions.

400.91 Applicability.

400.92 Appeals.

400.93 Administrative review.

400.94 Mediation.

400.95 Time limitations for filing and responding to requests for

administrative review.

400.96 Judicial review.

400.97 Reservations of authority.

Authority: 7 U.S.C. 1506(l), 1506(p)

Sec. 400.90 Definitions.

Act. The Federal Crop Insurance Act (7 U.S.C. 1501-1521).

Administrative review. A subsequent consideration of a prior

decision by the same reviewing authority. A participant cannot request

an administrative review of an adverse decision that resulted from a

previous request for administrative review.

Adverse decision. See the definition in 7 CFR part 11.

Agency. RMA or FCIC, including the RSO, FOSD or any other division

within the Agency with decision making authority.

Appellant. Any participant who appeals or requests mediation of an

adverse decision of the Agency in accordance with this subpart. Unless

otherwise specified in this subpart, the term ``appellant'' includes an

authorized representative.

Authorized representative. Any person, whether or not an attorney,

who has obtained a Privacy Act waiver and is authorized in writing by a

participant to act for the participant in the appeal process.

Certified State. A State with a mediation program, approved by the

Secretary of Agriculture, that meets the requirements of 7 CFR part

1946, subpart A, or a successor regulation.

FCIC. The Federal Crop Insurance Corporation, a wholly owned

Government corporation within USDA.

FSA. The Farm Service Agency, an agency of USDA, or a successor

agency.

FOSD. The Fiscal Operations and Systems Division established by the

Agency for the purpose of making determinations of indebtedness of

persons who are insured under contracts of insurance issued under the

Act.

Mediation. A process in which a trained, impartial, neutral third

party (the mediator), meets with the disputing parties, facilitates

discussions, and works with the parties to resolve their disputes,

narrow areas of disagreement, and improve communication.

NAD. The USDA National Appeals Division.

Non-certified State. A State that has either not applied for or has

not been approved by the Secretary of Agriculture to participate in the

USDA Mediation Program under 7 CFR part 1946, subpart A, or a successor

regulation.

Participant. See the definition in 7 CFR part 11.

RSO. The Regional Service Offices established by the Agency for the

purpose of providing program and underwriting services for private

insurance companies reinsured by FCIC under the Act and for FCIC

insurance contracts delivered through FSA offices.

Reinsured company. A private insurance company, including its

agents, that has been approved and reinsured by FCIC to provide

insurance to participants.

Reviewing authority. A person assigned the responsibility by the

Agency of making a decision on a request for administrative review

requested by the participant in accordance with this subpart.

RMA. The Risk Management Agency, an agency of USDA, or a successor

agency.

Secretary. The Secretary of Agriculture.

USDA. United States Department of Agriculture.

Sec. 400.91 Applicability.

(a) This subpart applies to adverse decisions made by personnel of

the Agency with respect to:

(1) Contracts of insurance insured by FCIC; and

(2) Contracts of insurance of private insurance companies and

reinsured by FCIC under the provisions of the Act.

(b) This subpart is not applicable to any decision:

(1) Made by the Agency with respect to any matter arising under the

terms of the Standard Reinsurance Agreement with the reinsured company;

or

(2) 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 Act.

(c) With respect to matters identified in Sec. 400.91(a),

participants may request an administrative review, mediation or appeal

of adverse decisions by the 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; and

(4) Issuance of payments or other benefits to an individual or

entity who is not a participant in a program.

(d) Only a participant may seek an administrative review or

mediation under this subpart.

Sec. 400.92 Appeals.

Nothing in this subpart prohibits a participant from filing an

appeal of an adverse decision directly with NAD in accordance with the

provisions of part 11 of this title without requesting administrative

review or mediation under this subpart. However, if the participant has

timely requested administrative review or mediation, the participant

may not appeal to NAD until the adverse decision on such administrative

review or mediation. The time for appeal to NAD is suspended from the

date of receipt of a request for administrative review or mediation

until the conclusion of the administrative review or mediation.

Sec. 400.93 Administrative review.

(a) An appellant may seek one administrative review of an adverse

decision or seek mediation under Sec. 400.94, but not both. If the

appellant elects to seek administrative review, appellant must file a

written request for administrative review with the reviewing authority

that issued the adverse decision in accordance with Sec. 400.95. The

written request must state the basis upon which the appellant relies to

show that:

(1) The decision was not proper and not made in accordance with

applicable program regulations and procedures; or

(2) All material facts were not properly considered in such

decision.

(b) The reviewing authority will issue a written decision that will

not be subject to further reconsideration by the Agency.

[[Page 52680]]

Sec. 400.94 Mediation.

(a) Appellants have the right to seek mediation, instead of a

administrative review under Sec. 400.93, involving any adverse

decision.

(b) All requests for mediation under this subpart must be made

after issuance of the adverse decision and before the appellant has a

hearing before a NAD hearing officer on the adverse decision.

(c) An appellant who chooses mediation must request mediation not

later than 30 calendar days after the date written notice of the

adverse decision is mailed or otherwise made known to the appellant.

(d) An appellant will have the balance of days remaining in the 30-

day period to appeal to NAD if mediation is concluded without

resolution unless a new adverse decision is issued as a result of

mediation. Such new adverse decisions results in a new 30-day period

for appeals to NAD.

(e) An appellant is responsible for contacting the Certified State

Mediation Program in States where such mediation program exists. The

State mediation program will make all arrangements for the mediation

process.

(f) An appellant is responsible for making all necessary contacts

to arrange for mediation in non-certified States or in certified States

that are not currently offering mediation on specific Agency issues.

(g) An appellant needing mediation in States without a certified

mediation program can request mediation by contacting the RSO, which

will provide the participant with a list of acceptable mediators.

(h) An appellant may only mediate an adverse decision once.

(i) If the dispute is not resolved in mediation,

(1) The adverse decision that was the subject of the mediation

remains in effect and becomes the adverse decision that is appealable

to NAD or

(2) The adverse decision which may be modified as a result of the

mediation process becomes the new adverse decision for appeals to NAD.

Sec. 400.95 Time limitations for filing and responding to requests for

administrative review.

(a) A request for administrative review of a adverse decision must

be filed within 30 days after the date written notice of the decision

that is the subject of the request is mailed or otherwise made

available to the appellant. A request for an administrative review will

be considered to have been ``filed'' when personally delivered in

writing to the appropriate decision maker or when the properly

addressed request, postage paid, is postmarked. An adverse decision

will become non-reviewable by the Agency unless a request for

administrative review is timely filed.

(b) A request for administrative review may be accepted and acted

upon even though it is not filed within the time prescribed in

Sec. 400.95(a) if, in the judgment of the appropriate reviewing

authority, the circumstances warrant such action.

Sec. 400.96 Judicial Review.

(a) A participant must exhaust administrative remedies before

seeking judicial review of an adverse decision. This requires the

participant to appeal an Agency adverse decision to NAD in accordance

with 7 CFR part 11.

(b) If the adverse decision involves a matter determined by the

Agency to be not appealable, the appellant must request a determination

of non-appealability from the Director of NAD prior to seeking judicial

review.

(c) A participant with a contract of insurance reinsured by the

Agency may bring suit against the Agency in a Federal district court

after exhaustion of administrative remedies as provided in paragraphs

(a) and (b) of this section. Nothing in this section can be construed

to create privity of contract between the Agency and a participant.

Sec. 400.97 Reservations of authority.

(a) Representatives of the Agency may correct all errors in

entering data on program contracts and other program documents, and the

results of computations or calculations made pursuant to the contract.

(b) Nothing contained in this subpart precludes the Secretary, the

Manager of FCIC, or the Administrator of RMA, or a designee, from

determining at any time any question arising under the programs within

their respective authority or from reversing or modifying any adverse

decision.

PART 780--APPEAL REGULATIONS

2. The authority citation for 7 CFR part 780 continues to read as

follows:

Authority: 5 U.S.C. 301; 15 U.S.C. 714b and 714c; 16 U.S.C.

590h.

3. Amend Sec. 780.1 to remove the definition of ``Regional Service

Office'' and the terms ``FCIC'' and ``the FCIC Regional Service

Office'' in the definitions of ``agency'' and ``final decision.''

4. In Sec. 780.2:

a. Revise paragraphs (a)(1)(iii) and (iv) to read as set forth

below:

b. Amend paragraph (a)(2) to remove the initials ``FCIC'' wherever

they appear.

c. Remove paragraph (a)(3).

Sec. 780.2 Applicability.

(a) * * *

(1) * * *

(iii) Decisions made by personnel of FSA with respect to contracts

of insurance insured by FCIC and the noninsured crop disaster

assistance program;

(iv) Decisions made by personnel of 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

* * * * *

5. Amend Sec. 780.7(b), (c) and (e), to remove the phrase ``or the

Regional Service Office'' wherever it may appear.

6. Amend Sec. 780.11 to remove the words ``FCIC'' and ``the Manager

of FCIC'' wherever they may appear.

Signed in Washington, D.C., September 11, 1999.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance Corporation.

Keith Kelly,

Administrator, Farm Service Agency.

[FR Doc. 99-24819 Filed 9-29-99; 8:45 am]

BILLING CODE 3410-08-P