RD Instruction 1940-E

Table of Contents

Page 1

PART 1940 - GENERAL

Subpart E - Alternative Dispute Resolution Program Policy for the
Customer/Program Mediation Services

## [TABLE OF CONTENTS]{.underline}

[Sec]{.underline}. [Page]{.underline}

1940.201 Purpose. 1

1940.202 Authority. 2

1940.203 Definitions. 2

1940.204 Responsibilities. 3

1940.205 Implementing mediation. 4

1940.206 Selecting a mediation service provider. 4

\(a\) Mediation in states with a USDA-

funded state mediation program. 4

\(b\) Mediation in states with a Community-Based

Mediation Center. 5

\(c\) Mediation in states which are not able to use

either a USDA-funded state mediation program or

Community-Based Mediation Center. 6

1940.207 Funding. 7

1940.208 Reporting. 7

1940.209 Memorandum of Understanding with mediation

service provider. 8

1940.110 - 1940.250 \[Reserved\] 8

Exhibit A - Rural Development ADR Procedures for Resolving Adverse
Decisions

Exhibit B - Adverse Decision Attachments

Exhibit B-1 -- Equal Credit Opportunity Act

Exhibit B-2 - Attachment to Letter Notifying Customer of an Appealable
Adverse Decision

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RD Instruction 1940-E

Table of Contents

Page 2

Exhibit B-3 - Attachment to Letter Notifying Customer of Unfavorable
Decision

Reached as a Result of an Informal Administrative Review

Exhibit B-4 - Assignment by Rural Development/USDA of a Customer
Mediation

Request to a Mediation Service Provider

Exhibit B-5 - Assignment by Rural Development/USDA of a Customer
Mediation

Request to a Mediation Service Provider

Exhibit B-6 - Notification to Customer of Expiration of the 10 days to
Select

a Mediation Service Provider

Exhibit B-7 - Customer Notification of Result of the Mediation of the
Adverse

Decision

Exhibit C -- Example Time-Line Customer/Program Mediation

Exhibit D -- Customer/Program Mediation Request Report

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## o0o 

RD Instruction 1940-E

PART 1940 - GENERAL

Subpart E - Alternative Dispute Resolution Program Policy for the

Customer/Program Mediation Services

§ 1940.201 [Purpose]{.underline}.

This instruction provides administrative guidance regarding the
requirements and procedures on the use of mediation as a form of
alternative dispute resolution (ADR) to resolve program disputes with
the Rural Development customer. Mediation is the only form of ADR funded
in part by Rural Development. Mediation is one of the three methods
available for resolving administrative disputes with the Rural
Development customer. The other two are: (1) administrative/informal
review by the program staff issuing the initial adverse decision; and
(2) administrative appeal to the National Appeals Division (NAD). (See
Exhibit A.)

\(a\) Mediation applies to the resolution of Agency adverse decisions in
all loan, grant, and technical assistance issues in Business and
Cooperative Programs, Housing and Community Facilities Programs, and
competitive Utilities Programs.

\(b\) Rural Development is committed to mediation as a tool for dealing
with customer disputes. Implementation of mediation does not displace
the traditional adjudicative methods of resolving disputes.

\(c\) Mediation is a supplemental method intended to resolve disputes
between the Agency and its customers in a manner that is expeditious,
cost-effective, and mutually acceptable to both the Rural Development
customer and to Rural Development. Mediation does not affect the rights
of program participants to seek resolution of their issues through the
established administrative appeal procedure. Rural Development will use
mediation in any dispute which can be appealed and where there is the
potential for a negotiated solution. This mediation policy has two
objectives: (1) to enhance customer satisfaction by establishing a
culture of respect and trust between Rural Development and its
customers; and (2) to make every effort to maintain the viability of
Rural Development program resources in rural America.

## DISTRIBUTION: WSAL Loan and Grant making

##  General

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RD Instruction 1940-E

§ 1940.202 [Authority]{.underline}.

On April 5, 2006, the United States Department of Agriculture (USDA)
Assistant Secretary for Administration issued the Departmental
Regulation 4710-001 on ADR. The following authorities, among others,
authorize the use of mediation as a form of alternative dispute
resolution by Rural Development: Administrative Dispute Resolution Act
of 1996; Agriculture Credit Act of 1987, as amended by the Federal Crop
Insurance Reform and Department of Agriculture Reorganization Act of
1994 and the Grain Standards and Warehouse Improvement Act of 2000
(Public Law No. 106-472); and Contract Disputes Act of 1978, as amended
(41 U.S.C. 601-613).

§ 1940.203 [Definitions]{.underline}.

For purposes of this instruction, the following definitions apply:

[Adverse Decision]{.underline}. An administrative decision by an officer
of an Agency that is adverse to a customer. The term includes denial of
equitable relief, failure to issue a decision, failure to act on a
request or right of the customer within timeframes specified by Agency
program statutes or regulations, or the failure to act within a
reasonable time if timeframes are not specified.

[Alternative Dispute Resolution (ADR)]{.underline}. Any of a number of
conflict resolution techniques that use a neutral third party to assist
managers, agencies, and USDA customers in resolving disputes.

[Customer]{.underline}. An applicant, a borrower, or a grantee.

[Good Faith]{.underline}. An effort to honestly, sincerely, and fully
discuss problems and matters in conflict, and to explore possible
solutions to those problems or conflicts.

[Mediation]{.underline}. An ADR technique in which a neutral third party
(the *mediator*) facilitates a confidential, non-adversarial, direct
discussion between two or more parties who are in conflict, as an
attempt to reach a resolution that is acceptable to all parties.

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RD Instruction 1940-E

§ 1940.203 (Con.)

[Participant]{.underline}. The Rural Development customer who has
received an appealable adverse decision (7 CFR 11.1) and who has
requested mediation.

[State ADR Coordinator]{.underline}. A State Office collateral duty
position which is responsible for setting up and supporting the
customer's request for mediation.

## § 1940.204 [Responsibilities]{.underline}.

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\(a\) Mediation is a tool for resolving disputes related to an adverse
decision made by any USDA Rural Development Agency involving these
programs: Housing, Business - Cooperative Programs, Enterprise
Communities, Empowerment Zone and Champion Communities, and competitive
Utility Programs.

\(b\) The following exceptions apply:

\(1\) The Civil Rights Program complaints filed will continue to be
processed pending the result of the mediation.

\(2\) The National Office Program Compliance Branch of the Civil Rights
Staff will be notified of the mediation. On a quarterly basis, the
Program Compliance Branch of the Civil Rights Staff and the ADR Director
will meet to review case activity to ensure that program cases closed in
mediation are removed from current inventory. A copy of the mediation
agreement will be provided to the Program Compliance Branch on the Civil
Rights Staff to be included in the complainant file.

\(3\) Reasonable accommodation requirements will be included in all
notifications for mediation.

\(4\) For the Single Family Housing (SFH) Direct and Grant programs,
this Instruction is the base document for the SFH procedures in
HB-1-3350 and HB-2-3550.

\(5\) For RD Utilities Programs Electric and Telecommunications
programs, the ADR procedures are contained in RD Utilities Programs
Staff Instruction 1700-2 and are to be followed in making decisions
concerning the use of ADR.

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RD Instruction 1940-E

§ 1940.205 [Implementing mediation]{.underline}.

\(a\) Following an adverse decision as defined in § 1940.203, mediation
is an option for resolving disputes with Rural Development customers.
(See Exhibit B for information concerning mediation to be included in
the notice to the customer of an adverse decision and mediation.) In the
mediation, the two participants are customers and the Rural Development
representative.

\(b\) After requesting mediation and Rural Development has acknowledged
the request in writing, if the participant (customer) does not concur
with the mediator provided by Rural Development within the prescribed
10-day time period, the request for mediation will be considered
withdrawn. If the participant's mediation request has been filed within
the applicable 30-day timeframe, withdrawal or cancellation of mediation
does not change the customer's right to an appeal with NAD.

(See Exhibit C)

\(c\) The mediator ensures that all participants to the mediation
receive a copy of the results of the mediation (a statement of
resolution, or of no resolution). The Rural Development representative
involved in the mediation is responsible for making sure that a copy of
the mediation report is in the customer's file. Resolution agreement
terms and conditions represent a binding contract. The State ADR
Coordinator is not responsible for monitoring the implementation of any
mediated agreement.

§ 1940.206 [Selecting a mediation service provider]{.underline}.

All mediators utilized by Rural Development shall follow the model
standards of conduct for mediators promulgated by the National
Association for Conflict Resolution, the American Arbitration
Association, and/or the American Bar Association.

\(a\) [Mediation in states with a USDA-funded state mediation
program]{.underline}. Many states have a state mediation program that is
annually certified by USDA. These programs, funded in part by USDA, were
established to mediate farm and ranch cases originating from the Farm
Service Agency but are now available to Rural Development. (If uncertain
of the existence of a USDA-funded state mediation program in a
particular State, contact the Rural Development National ADR Division,
Operations and Management.) There is only one USDA-certified and-funded

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RD Instruction 1940-E

§ 1940.206(a) (Con.)

mediation program in a state. Participants, who are provided appeal
rights and request mediation, will be referred to the USDA-funded state
mediation program. The participant does have the option to not use the
USDA-funded state mediation program. If so, Rural Development will
follow the procedures in (b) or (c) of this subpart, as appropriate. If
either procedures (b) or (c) is utilized, Rural Development should
consider the lowest cost option.

\(1\) There is no charge to Rural Development when the USDA-funded state
mediation program is used to provide mediation services (see 7 CFR
785.5), because the Agency's participation is mandatory. The use of
mediation for Rural Development customers is voluntary; however, the
program may charge the customer a 50 percent cost share for mediation.

\(2\) In states with a USDA-funded state mediation program, the State
Director shall sign a Memorandum of Understanding (MOU), specific to
only Rural Development and the state designated mediation entity, which
will not apply to any other USDA Agency or State entity. (Contact the
National ADR Unit for a copy of the MOU.)

\(b\) [Mediation in states with a Community-Based Mediation
Center]{.underline}. A Community-Based Mediation Center (CBMC) is a
nonprofit, public entity operating under the guidance of a governing
board. Its goal is to provide an alternative to the judicial system by
the use of trained mediators located in the geographical area served.
The CBMC provides mediation services to clients regardless of their
ability to pay. In states without a USDA-funded state mediation program,
the CBMC is an option. Customers with appeal rights who request
mediation can be referred to the CBMC. No MOU is required. Instead, the
State ADR Coordinator should establish a source/vendor list of CBMCs.
For each CBMC on the list, include the director, contact information,
and cost. After a CBMC has been chosen and before the CBMC schedules the
mediation, the Contracting Officer (CO) for the Rural Development State
Office must determine which contractual vehicle is best suited for
contracting with the CBMC. The National ADR Division will reimburse the
state for all costs associated with the mediation(s).

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(03-21-07) PN 407

RD Instruction 1940-E

§ 1940.206 (Con.)

\(c\) [Mediation in states which are not able to use either a
USDA-funded state mediation program or Community-Based Mediation
Center]{.underline}. In states without a USDA-funded state mediation
program or access to a CBMC, the State ADR Coordinator shall maintain a
source/vendor list of mediation providers. Assistance in developing the
list may be obtained from the National Association for Conflict
Resolution, many state universities, community colleges, the Office of
the State Attorney General, the State Bar Association and/or the
National ADR Division. When making contacts to establish the list, the
Agency will request the services of a mediator and not an arbitrator.

\(1\) The State ADR Coordinator shall develop and use the source/vendor
list as follows:

\(A\) For each mediator on the list, include: 1) name, 2) type of
document offered as proof of certification, 3) contact information, and
4) approximate cost to provide mediation services.

\(B\) It is important to keep the cost of mediation at a reasonable
level for both Rural Development and the Rural Development customer,
especially the low-income participant. (Contact the National ADR
Division regarding the protocol for mediation costs).

\(C\) The list should be alphabetical.

\(D\) For each mediation request, the State ADR Coordinator will provide
the participant with the complete list from which the participant is to
select a mediator. (See Exhibit B) and

\(E\) If a participant desires to use a certified mediator not on the
Rural Development list, with Agency approval, this mediator may be used.
(Contact the National ADR Division for the protocol to determine
mediation costs.)

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RD Instruction 1940-E

§ 1940.207 [Funding]{.underline}.

There may be a cost associated with mediation. When there are costs,
they will be shared equally between Rural Development and the
participant, except when using the USDA-funded state mediation program.
Rural Development policy is to pay 50 percent of the reasonable cost for
mediation. The State Director will ensure that all participants
requesting mediation in their state are treated consistently and pay the
same percentage, unless Agency regulations provide otherwise. Procedures
for a State Office contracting and paying for mediation services are as
follows:

\(a\) Before scheduling mediation, the State Office Contracting Officer
must prepare the appropriate funding contract document Purchase Order.

\(b\) After the mediation has been contracted, scheduled, and completed,
the State Office will forward, for verification to pay the Rural
Development portion of the actual cost, the necessary information to the
National ADR Division.

§ 1940.208 [Reporting]{.underline}.

\(a\) The Rural Development Customer/Program Mediation Request Report
will be used to report all [requested]{.underline} mediation even if the
mediation was not held and/or there is no cost to be reimbursed. (See
Exhibit D)

\(b\) When the requested mediation is closed (that is the participant
withdrew, did not show for the scheduled mediation, mediation was
successful or unsuccessful, or closed for some other reason), the State
ADR Coordinator will report the following information to the National
ADR Unit: 1) Description of the Request; 2) Customer File number; 3)
Total Cost (amount requested); 4) Program Area; 5) Adverse Action; 6)
Outcome of the Requested Mediation; 7) Mediation Service Used; 8) Unique
Situation (i.e., poverty status) and/or program status; and 9) the
signature of the State Approving Official (the State Director or the
designated individual).

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RD Instruction 1940-E

§ 1940.209 [Memorandum of Understanding with Mediation Service
Provider]{.underline}.

Under this instruction, Rural Development State Directors are given the
authority to enter into a MOU between Rural Development and the
USDA-funded state mediation program. (Contact the National ADR Office
for a copy of the approved MOU.)

§§ 1940.110 - 1940.250 \[Reserved\]

Attachments: Exhibits A, B, B-1, B-2, B-3, B-4, B-5, B-6, B-7, C, D

oOo

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Number range CHAPTERRD Instruction 1940-E

Exhibit A

Page 1

**RURAL DEVELOPMENT**

**[ADR PROCEDURES FOR RESOLVING ADVERSE DECISIONS]{.smallcaps}**

***Administrative Review -- Mediation -- Appeals***

+-----------+---------------------+-------------------+---------------+
|           | **Informal          | **[Mediati        | **Appeal**    |
|           | Administrative      | on]{.smallcaps}** |               |
|           | Review**            |                   |               |
+-----------+---------------------+-------------------+---------------+
| **When    | Within 15 calendar  | Within 30         | Within 30     |
| must a    | days from when the  | calendar days     | calendar days |
| mediation | customer received   | from the date of  | from receipt  |
| request   | the adverse         | any adverse       | of an adverse |
| be        | decision letter.    | decision          | decision      |
| made?**   | ^1^                 | letter.^2^        | letter.^3^    |
|           |                     |                   |               |
|           | Customer can        | Participant may   | Participant   |
|           | instead request     | request an appeal | has no        |
|           | mediation or appeal | without first     | a             |
|           | but waives future   | going to          | dministrative |
|           | rights to informal  | mediation. (No    | recourse to   |
|           | review.             | mediation rights  | dispute the   |
|           |                     | after appeal      | Agency's      |
|           |                     | hearing.)         | decision.     |
+-----------+---------------------+-------------------+---------------+
|           |                     |                   |               |
+-----------+---------------------+-------------------+---------------+
| **Does    | No, the 30-day      | Yes, on day       | Not           |
| the 30    | period continues    | following the     | applicable    |
| days for  | during the          | postmarked date   |               |
| filing an | administrative      | the Agency        |               |
| appeal    | review.             | receives the      |               |
| stop when |                     | written request   |               |
| request   |                     | for mediation.^4^ |               |
| is        |                     |                   |               |
| made?**   |                     |                   |               |
+-----------+---------------------+-------------------+---------------+
|           |                     |                   |               |
+-----------+---------------------+-------------------+---------------+
| **When    | 1\) Considered an   | Written notice of | Not           |
| the       | *adverse decision*, | the right to      | applicable    |
| requested | new 30-day appeal   | appeal the        |               |
| action or | clock begins for    | *original*        |               |
| decision  | mediation and       | adverse decision  |               |
| is not    | appeal.             | within remaining  |               |
| fav       |                     | days of original  |               |
| orable.** | 2\) Notify customer | 30-day time       |               |
|           | in writing of       | (NOTE: o*nly* NAD |               |
|           | rights to           | can determine the |               |
|           | *mediation* and     | number of         |               |
|           | appeal.^5^          | remaining appeal  |               |
|           |                     | days.)            |               |
+-----------+---------------------+-------------------+---------------+
|           |                     |                   |               |
+-----------+---------------------+-------------------+---------------+
| **How     | 45 days from the    | 45 days from the  | Generally     |
| much time | request for         | case being        | held within   |
| to        | informal review,    | accepted by the   | 45 days \--   |
| co        | unless the parties  | mediator.         | See NAD 7 CFR |
| mplete?** | agree to an         |                   | Part 11.      |
|           | extension.          |                   |               |
+-----------+---------------------+-------------------+---------------+

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Number range CHAPTERRD Instruction 1940-E

Exhibit A

Page 2

1\. If unable to determine when the customer received the letter, count
7 calendar days from the day after the date of the adverse decision
letter \[letter date + 7 days = receipt date of letter + 15 days = 22
days when request must be made\].

2\. The request for mediation can be made after the request for an
appeal and prior to the hearing, provided the request is made within the
same 30 calendar days from receipt of the adverse decision letter.

3\. If unable to determine when the letter was received, count 7
calendar days, after the date on the adverse decision letter \[date on
letter + 7 days = date of receipt of letter + 30 days = 37 days when
request must be made\].

4\. The customer has 10 days to: respond to the State Office mediator
referrals to the USDA mediation Community-Based Mediation Center; select
a mediator from a list; provide another certified mediator for the State
Office to consider.

5\. If the informal review is successful, no further action is
necessary. If the review is not successful, this is considered another
adverse decision and a new 30 calendar day period to request an appeal
begins.

oOo

RD Instruction 1940-E

Exhibit B

Page 1

**ADVERSE DECISION ATTACHMENTS**

**for**

**IMPLEMENTING AND CARRYING OUT MEDIATION**

**Exhibit B-1** [Equal Credit Opportunity Act Statement]{.underline} to
be included in all correspondence.

**Exhibit B-2** [Attachment to Letter Notifying Customer of an
Appealable Adverse Decision]{.underline} (also used in the acceleration
of an account) with the options for electing an informal administrative
review, mediation, or an appeal hearing.

**Exhibit B-3** [Attachment to Letter Notifying Customer of Unfavorable
Decision Reached as a Result of an Informal Administrative
Review]{.underline}, customer notification of an unfavorable (adverse)
decision reached as a result of an informal administrative review with
the option to select mediation or an appeal hearing.

**Exhibit B-4** (\*) [Notification to Customer Who has Requested
Mediation of The Assignment of Their Case]{.underline} to a mediation
service provider, with a copy to the provider: either a USDA-funded
center, a Community-Based Center (CBMC), or other certified mediation
provider. This includes the estimated cost for the mediation.

**Exhibit B-5** [Assignment by Rural Development/USDA of a Customer
Mediation Request to a Mediation Service Provider]{.underline}, either a
USDA-funded center, Community-Based Center (CBMC), or other certified
mediation provider.

**Exhibit B-6** (\*) [Notification to Customer of Expiration of the 10
days to Select a Mediation Service Provider]{.underline}.

**Exhibit B-7** (\*) [Customer Notification of Result of the Mediation
of the Adverse Decision]{.underline}, a written notification to all
participants of the results of the mediation sent to all participants,
customers, Rural Development representatives (for SFH copy to CSC, St
Louis), as well as any participant representatives.

(\*) CRS Recommendation Reminder: All letters of notification to the
customer should include the USDA Nondiscrimination Statement at the
bottom of the first page. If this is already being done, please
disregard this recommendation/reminder.

oOo

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RD Instruction 1940-E

Exhibit B-1

Page 1

**Equal Credit Opportunity Act**

**Attachment to be Included in all Correspondence**

The Federal Equal Credit Opportunity Act prohibits creditors from
discriminating against credit applicants based on the basis of race,
color, religion, national origin, sex, marital status, or age (provided
the applicant has the capacity to enter into a binding contract);
because all or part of the applicant's income derives from any public
assistance program; or because the applicant has in good faith exercised
any right under the Consumer Credit Protection Act. The Federal Agency
that administers compliance with this law concerning this creditor is
the Federal Trade Commission.

If a person believes he or she was denied assistance in violation of
this law, they should contact the Federal Trade Commission, Washington,
D.C. 20580.

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RD Instruction 1940-E

Exhibit B-2

Page 1

**Attachment to Letter Notifying Customer**

**of**

**An Appealable Adverse Decision**

\...including the acceleration of an account, with the options for
electing an informal administrative review, a mediation, or an appeal
hearing.

*Note*: Attachment should not be sent if the adverse decision is not
subject to an administrative review or an appeal.

The described action in the attached letter \[*did not grant you the
assistance you requested or will terminate or reduce the assistance you
are currently receiving\].* If you believe this decision or the facts
used in this case are in error, you may pursue any or all of the
following three options:

**Option 1 - Request an Informal Administrative Review**

If you have questions concerning this decision or the facts used in
making it and desire further explanation, you may write this office to
request an informal administrative review. There is no cost for an
informal administrative review. Your written request must be received no
later than 15 calendar days from the date when you received this adverse
decision letter. Include any new information, evidence, and possible
alternatives along with your request. You may also have a representative
or legal counsel participate in the process at your cost. The informal
administrative review may be conducted by telephone or in person at the
discretion of the Agency. Please include a daytime phone number in your
request to arrange for the review. You may skip the informal
administrative review and select one of the following two options. If
you do, you will automatically waive your right to an informal
administrative review.

**Option 2 - Request Mediation**

You have the right to request mediation. The purpose of mediation is to
resolve disputes through the use of a certified, neutral mediator. In
most cases, the mediator is not a Federal Government employee. A
mediator will listen to all parties involved in the dispute and work
with all parties to achieve a mutually agreeable resolution. Many cases
that go to mediation are resolved without further action, extended
delays, or the cost of formal litigation. You have 30 days to request
mediation, 10 days to select a mediator, and then 45 days to complete
mediation. If you need more information on the mediation process to
assist you in deciding whether to use this Option 2, contact the Rural
Development State Director listed below.

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RD Instruction 1940-E

Exhibit B-2

Page 2

{*Rural Development State Director*\]

There may be a cost for mediation. If so it is Rural Development policy
to pay 50 percent of the reasonable cost for mediation. When there is a
cost, it is your responsibility to pay the other 50 percent. Every
effort, however, is made to keep any cost to a minimum, and in some
cases, the mediator will waive the customer's 50 percent share.

If you elect to seek mediation, your written request for this service
must be sent to the Rural Development State Director and ***must be
postmarked no later than 30 days from the date when you received the
attached letter***. Once you request mediation, it stops the running of
the 30-day period in which you may request an appeal hearing (described
in Option 3), but does not waive your right to an appeal.

Once you have requested mediation, the Rural Development State Director
will advise you of the mediation service provider, the estimated cost of
mediation, the amount the Agency will contribute, and the process and
procedures for this service:

> 1\) In states with a USDA-funded state mediation program, you will be
>
> referred to such a service.
>
> 2\) In states without a USDA-funded state mediation program, you will
>
> be either directed to a local community mediation service; or you will
> be provided with the names of mediators from which to select one.
>
> 3\) Also, you may suggest a mediator subject to the Agency's approval.

Once a mediation service provider has been identified, you will have
***10 days to contact the mediator***: Following the 10 days you are
allowed to select the mediator, you will be advised directly by the
mediation source if they can mediate your case.

Once you have been referred to a mediator, you have ***45 days to
complete the mediation***. The Agency can agree to an extension. If
mediation does not result in resolution of these issues, you have the
right to continue with a request for an appeal hearing as set forth in
Option 3.

When mediation is concluded, you will be notified of the result and your
right, if applicable, to request an appeal hearing.

Mediation does not take the place of, or limit your right to, an appeal
to the NAD; however, a NAD appeal hearing would take place only after
mediation. You may skip mediation and request an appeal hearing.
However, in doing so, you will automatically waive your right to an
informal meeting. Once the appeal hearing begins, you also waive your
right to mediation.

RD Instruction 1940-E

Exhibit B-2

Page 3

**Option 3 - Request an Appeal Hearing**

You may request an appeal hearing by NAD rather than an informal
administrative review or mediation. There is no cost for an appeal
hearing. Your request for an appeal must be made no later than 30 days
from the date you received the attached letter. To request an appeal
hearing, you must write the NAD Assistant Director for your region at
the following address:

\[*NAD Assistant Director Address*\]

Your request must state the reasons why you believe the decision is
wrong, be personally signed by you, and must include a copy of the
attached letter. A copy of your request must also be sent to the Rural
Development State Director at:

\[*Rural Development State Director Address*\]

You, or your representative or counsel, may contact this office anytime
during regular office hours to examine or copy the Agency\'s record
relative to this adverse decision. Photocopies will be provided to you.
Your representative or counsel must have your written authorization to
represent you and review your file. The NAD Hearing Officer will contact
you regarding a time and place for the hearing.

**Equal Credit Opportunity Act**

\[Enclose Exhibit B-1.\]

Attachments (2)

Copies for: State and/or National Office Program Director

CSC St. Louis for SFH cases

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RD Instruction 1940-E

Exhibit B-3

Page 1

**Attachment to Letter Notifying Customer**

**of**

**Unfavorable Decision Reached as a Result of an Informal Administrative
Review**

We appreciated the opportunity to review the facts relative to your
\[*request for assistance, or reduction or termination of benefits, or
foreclosure*\]. We regret that the decision in the attached letter did
not \[*grant the assistance you requested or will terminate or reduce
the assistance you are currently receiving, or will give you relief from
foreclosure*\]. If you believe that facts used in this case are in
error, you may pursue either or both of the following two options.

**Option 1- Request Mediation**

You have the right to request mediation. The purpose of mediation is to
resolve disputes through the use of a certified, neutral mediator. In
most cases, the mediator is not a Federal employee. A mediator will
listen to all parties involved in the dispute and work with all parties
to achieve a mutually agreeable resolution. Many cases that go to
mediation are resolved without further action, extended delays, or the
cost of formal litigation. You have 30 days to request mediation, 10
days to select a mediator, and then 45 days to complete mediation.

There may be a cost for mediation. If so, Rural Development will pay 50
percent of the reasonable cost for mediation. Where there is a cost, it
is your responsibility to pay the other 50 percent. Every effort,
however, is made to keep any cost to a minimum, and in some cases, the
mediator will waive the customer's 50 percent share.

If you elect to seek mediation, your written request for this service
must be sent to the Rural Development State Director and ***must be
postmarked no later than 30 days from the date of the attached
letter***. Once you request mediation, it stops the running of the
30-day period in which you may request an appeal hearing (described in
Option 3) but does not waive your right to an appeal.

(03-21-07) PN 407

RD Instruction 1940-E

Exhibit B-3

Page 2

Once you have requested mediation, the Rural Development State Director
will advise you of the mediation service provider, the estimated cost of
mediation, the amount the Agency will contribute, and the process and
procedures for this service:

> 1\) In states with a USDA-funded mediation program, you will be
> referred to that service.
>
> 2\) In states without a USDA-funded state mediation program, you will
> be either directed to a local community mediation service; or, you
> will be provided with the names of mediators from which to select one.
>
> 4\) Also, you may suggest a mediator subject to the Agency's approval.

Once a mediation service provider has been identified, they will contact
you and you will have ***10 days to contact the mediator***: Following
the 10 days that you are allowed to select the mediator, you will be
advised directly by the mediation source if they can mediate your case.

Once you have been referred to a mediator, you have ***45 days to
complete the mediation***. The Agency can agree to an extension. If
mediation does not result in resolution of these issues, you have the
right to continue with a request for an appeal hearing as set forth in
Option 2.

When mediation is concluded, you will be notified of the result and your
right, if applicable, to request an appeal hearing.

If you request mediation prior to filing for an appeal, the number of
days you will have to request an appeal will be 30 days from the adverse
decision minus the number of days you took to request mediation.
Mediation does not take the place of, or limit your right to, an appeal
to the NAD; however, a NAD appeal hearing would take place only after
mediation. You may skip mediation and request an appeal hearing.
However, in doing so, you will automatically waive your right to an
informal meeting. Once the appeal hearing begins, you also waive your
right to mediation.

RD Instruction 1940-E

Exhibit B-3

Page 3

**Option 2 - Request an Appeal Hearing**

Following your mediation, you may request an appeal hearing by NAD, as
long as there are days remaining from the original 30 days to request
mediation as outlined in the original adverse decision letter. You must
*immediately* contact the NAD Assistant Director for your region (at the
following address) to determine if you can file for an appeal hearing.

\[*NAD Assistant Director Address*\]

There is no cost for an appeal hearing. Your request must state the
reasons why you believe the decision is wrong, be personally signed by
you, and include a copy of the attached letter. A copy of your request
must also be sent to the Rural Development State Director:

\[*Rural Development State Director Address*\]

You, or your representative or counsel, may contact this office anytime
during regular office hours to examine or copy the Agency\'s record
relative to this adverse decision. Photocopies will be provided to you.
Your representative or counsel must have your written authorization to
represent you and review your file. The NAD Hearing Officer will contact
you regarding a time and place for the hearing.

**Equal Credit Opportunity Act**

\[Enclose Exhibit B-1.\]

Attachments (2)

Copies for: State and/or National Office Program Director

CSC St. Louis for SFH cases

oOo

(03-21-07) PN 407

RD Instruction 1940-E

Exhibit B-4

Page 1

**Notification to Customer Who has Requested Mediation**

**of**

**The Assignment of Their Case to:**

**A USDA-Funded State Mediation Program**

**or**

**A Community-Based Mediation Center**

**or**

**Certified Mediation Provider**

**for**

**Mediation**

TO: \[*CUSTOMER\]*

FROM: Rural Development State Director

SUBJECT: Request for Mediation Services

This replies to your request for the mediation of your adverse decision.
Your request has been referred to a \[*USDA-funded state mediation
program*\] \[*Community Based Mediation Center*\] or \[*you must select
from the attached list of certified mediation providers*\].

As indicated in our adverse decision letter, there may be a cost for the
mediation. The following is an estimate, but you will be advised by the
mediation service provider if there will be a cost. Rural Development
policy is to pay 50 percent of the reasonable cost for mediation.

\$ \_\_\_\_\_\_\_\_\_\_ USDA-funded state mediation program \[*and
address*\]

\$ \_\_\_\_\_\_\_\_\_\_ Community-Based Mediation Center \[*and
address*\]

> Attached is an alphabetical list of certified mediators to select a
> mediator, or subject to our concurrence you may request the use of
> another mediator.

(03-21-07) PN 407

RD Instruction 1940-E

Exhibit B-4

Page 2

***Within 10 days of the date of this letter, you must*** provide this
office, in writing, with the concurrence/selection of the mediator. If
you do not, you will waive your right to mediation. Rural Development
will then contact the mediator, who in turn will contact you to
determine if they can mediate the issues in your case. You will then
have 45 days to complete the mediation.

When the mediation is concluded, you may file an appeal of the original
adverse decision by immediately contacting the National Appeals Division
(NAD):

\[*NAD Assistant Director Address*\]

Once you have been contacted by the mediation provider and if you decide
not to pursue mediation, you must immediately contact this office
(address at the top of this letter). You are responsible for all costs
incurred by the mediation provider from the time of selection until your
cancellation.

Mediation, or the cancellation of mediation, does not affect your rights
to seek an appeal with NAD.

**Equal Credit Opportunity Act**

\[Enclose Exhibit B-1.\]

Copies for: State and/or National Office Program Director

CSC St. Louis for SFH cases

State ADR Coordinator

oOo

RD Instruction 1940-E

Exhibit B-5

Page 1

**Assignment by Rural Development/USDA of a Customer Mediation Request**

**to**

**A Mediation Service Provider**

TO: \[*Mediation Service Provider*\]

FROM: Rural Development State Director

SUBJECT: Request for Mediation

CUSTOMER: \[*Name of the Rural Development customer requesting
mediation*\]

\[*Customer contact information*\]

The above Rural Development customer has received an adverse decision
from our Agency and has requested mediation. Attached is a copy of the
adverse decision letter and the customer's request for mediation.

**Informal Administrative Review**

\_\_\_\_ The Customer was provided with the opportunity for an informal
administrative review with the Agency; however, the customer chose not
to exercise this option.

\_\_\_\_ An informal administrative review was conducted; however, the
Agency did not reverse its decision.

**Jurisdiction of the Case**

The adverse decision in this case was made by the following office. You
should contact this office for further information on the case:

\[*Agency contact: program, individual, address phone and e-mail*\]

(03-21-07) PN 407

RD Instruction 1940-E

Exhibit B-5

Page 2

**Payment for Service**

The Rural Development policy is to pay 50 percent of the reasonable cost
of the mediation service and the customer will pay 50 percent. In
addition, we encourage the mediation service to consider the customer's
ability to pay. The customer is solely responsible for their portion of
the cost of this service and should be billed directly. The bill for the
Agency's portion should be submitted to this Rural Development State
Office:

\[*State ADR Coordinator Name and Address*\]

***Mediation must be completed within 45 days*** from the date of this
letter, unless both parties agree to an extension. We also request a
teleconference prior to your acceptance of this case to determine
whether the adverse decision lends itself to mediation by your service.

**Equal Credit Opportunity Act**

\[Enclose Exhibit B-1.\]

Copies for: State and/or National Office Program Director

CSC St. Louis for SFH cases

> State ADR Coordinator

Enclosure (2): Adverse decision letter

Customer's request for mediation

oOo

RD Instruction 1940-E

Exhibit B-6

Page 1

**Notification to Customer**

**of**

**Expiration of the 10 days to Select a Mediation Service Provider**

TO: \[*CUSTOMER*\]

FROM: \[*State Director*\]

SUBJECT: Expiration of Selection of Mediation Service Provider

On \[*date*\], you requested mediation of the adverse decision as
outlined in the attached letter which did not \[*grant the assistance
you requested or will terminate or reduce the assistance you are
currently receiving, or will give you relief from foreclosure*\]. You
were also informed that you had 10 days from \[*date*\] to either concur
in the mediation service assigned by Rural Development to your case, or
name another mediation service for our consideration.

The 10 days to acknowledge the selection of the mediation service
provider has expired. Your request for mediation therefore has expired,
and Rural Development will begin to process the initial adverse decision
as outlined in the attached letter.

**Request an Appeal Hearing**

Your request for mediation did not take the place of, or limit your
right to request an appeal to the National Appeals Division (NAD). You
may request an appeal hearing by NAD as long as there are days remaining
from the original 30 days to request an appeal as outlined in the
original adverse decision letter. You must *immediately* contact the NAD
Assistant Director for your region (at the following address) to
determine if you can file for an appeal hearing.

\[*NAD Assistant Director Address*\]

There is no cost for an appeal hearing. Your request must state the
reasons why you believe the decision is wrong, be personally signed by
you, and include a copy of the attached original decision letter. A copy
of your request must also be sent to the Rural Development State
Director:

(03-21-07) PN 407

RD Instruction 1940-E

Exhibit B-6

Page 2

\[*Rural Development State Director Address*\]

You, or your representative or counsel, may contact this office at
anytime during regular office hours to examine or copy the Agency\'s
record relative to the adverse decision. Photocopies will be provided to
you. Your representative or counsel must have your written authorization
to represent you and review your file. The NAD Hearing Officer will
contact you regarding a time and place for the hearing.

**Equal Credit Opportunity Act**

\[Enclose Exhibit B-1.\]

Attachments (2)

Copies for: State and/or National Office Program Director

CSC St. Louis for SFH cases

> State ADR Coordinator

oOo

RD Instruction 1940-E

Exhibit B-7

Page 1

**Customer** **Notification**

**of**

**Unresolved Result of the Mediation of the Adverse Decision**

TO: \[*CUSTOMER*\]

FROM: \[*State Director*\]

SUBJECT: Unresolved Result of the Requested Mediation

Your request for mediation has been completed. We regret that mediation
did not result in resolution of the issues. \[*We are unable to grant
the assistance you requested,* or *will terminate,* or *will reduce the
assistance you requested*\]*.*

If you believe the decision or facts used in the case are in error, you
may continue to pursue your right to an appeal by the National Appeals
Division (NAD). There is no cost for an appeal. Please follow the
guidance in the paragraph indicated with an \"X.\"

> \_\_\_\_ You requested an appeal hearing to NAD prior to entering into
> mediation. You must immediately write to the Assistant Director of NAD
> at the address below to determine the number of days remaining, if
> any, to schedule the appeal hearing.

\[*NAD Regional Assistant Director Address*\]

> \_\_\_\_ You did not request an appeal hearing to NAD prior to
> entering into mediation. If you wish to schedule an appeal hearing,
> you must immediately write to the Assistant Director of NAD at the
> address below to determine the number of days remaining, if any, to
> schedule the appeal hearing. Your appeal request must be received
> within the remaining days, as determined by NAD, from the date when
> you requested mediation.

(03-21-07) PN 407

RD Instruction 1940-E

Exhibit B-7

Page 2

\[*NAD Regional Assistant Director Address*\]

**Information Regarding Appeals**

If NAD determines that you have appeal rights and you want to exercise
those appeal rights, you, or your representative or counsel, may contact
this office at anytime during regular office hours to examine or to have
copied the Agency\'s record relating to the original adverse decision.
Photocopies will be provided. Your representative or counsel must have
your written authorization to represent you and review your file.

The NAD Hearing Officer will contact you regarding a time and place for
the hearing. You may also request a teleconference hearing in lieu of
the face-to-face hearing. At any time before the scheduled hearing, you
may also request that the Hearing Officer make a decision without a
hearing.

**Equal Credit Opportunity Act**

\[Enclose Exhibit B-1.\]

Copies for: State and/or National Office Program Director

CSC St. Louis for SFH cases

State ADR Coordinator

oOo

RD Instruction 1940-E

Exhibit C

Page 1

**EXAMPLE TIME-LINE CUSTOMER/PROGRAM MEDIATION**

**RURAL DEVELOPMENT**

+--------------+-----------------+-------------------------------------+
| # \[Start 30 | June 1, 2007    | Customer receives adverse decision. |
| -day Appeal  |                 |                                     |
| option^1^\]  |                 |                                     |
+--------------+-----------------+-------------------------------------+
|              | June 14, 2007   | The Agency receives written request |
|              |                 | from the customer for an            |
|              | # \[30-day      | administrative review postmarked on |
|              |  clock stops ap | June 14.                            |
|              | peal day follow |                                     |
|              | ing postmark.\] |                                     |
+--------------+-----------------+-------------------------------------+
| \[Start new  | July 16, 2007   | Unfavorable decision letter sent on |
| 30-day       |                 | the administrative review. This     |
| Appeal       |                 | adverse decision starts a second    |
| clock\]      |                 | 30-day appeal clock. A request for  |
|              |                 | mediation must be made before the   |
|              |                 | end of this second 30-day time      |
|              |                 | period.                             |
+--------------+-----------------+-------------------------------------+
| **30 days to |                 |                                     |
| ask for      |                 |                                     |
| mediation\.  |                 |                                     |
| ..\...\...10 |                 |                                     |
| days to      |                 |                                     |
| select a     |                 |                                     |
| mediator\..  |                 |                                     |
| .\...\....45 |                 |                                     |
| days to      |                 |                                     |
| conclude     |                 |                                     |
| mediation**  |                 |                                     |
+--------------+-----------------+-------------------------------------+
| \[Mediation  | July 23, 2007   | The Agency^2^ receives written      |
| process      |                 | request from the customer for       |
| begins\]     | #               | mediation, postmarked July 23.      |
|              |                 | \[Clock stops on the new 30-day     |
|              |                 | appeal option on day following      |
|              |                 | postmark\]                          |
+--------------+-----------------+-------------------------------------+
| \[Start the  | July 28, 2007   | ADR Coordinator sends (7/28/07)     |
| 10-day clock |                 | designated mediator service         |
| for          |                 | provider^3^ for the selection to be |
| selection\]  |                 | made within 10 days from date of    |
|              |                 | the letter^4^...by August 7.        |
+--------------+-----------------+-------------------------------------+
| \[Stop the   | August 4, 2007  | The Agency receives mediator        |
| 10-day clock |                 | selection from participant on       |
| for          |                 | 8/4/07...3 days early on the 8/7/07 |
| selection\]  |                 | 10-day clock.                       |
+--------------+-----------------+-------------------------------------+
| \[Start      | August 6, 2007  | The Agency notifies the selected    |
| 45-days to   |                 | mediator and informs mediator the   |
| complete     |                 | mediation is to be completed within |
| mediation    |                 | 45 days from August 5 on September  |
|              |                 | 19.                                 |
+--------------+-----------------+-------------------------------------+
| \[Stop       | August 30, 2007 | Mediation is held, and an agreement |
| 45-day clock |                 | is signed on the status of the      |
| for          |                 | adverse decision, with 20 days      |
| mediation\]  |                 | remaining.                          |
+--------------+-----------------+-------------------------------------+
| NOTE: 46     |                 |                                     |
| days elapsed |                 |                                     |
| from 7/16 to |                 |                                     |
| 8/30: 8 days |                 |                                     |
| for customer |                 |                                     |
| to request   |                 |                                     |
| mediation, 5 |                 |                                     |
| days for the |                 |                                     |
| State ADR    |                 |                                     |
| Coordinator  |                 |                                     |
| to assign    |                 |                                     |
| mediator, 7  |                 |                                     |
| days to      |                 |                                     |
| select, 2    |                 |                                     |
| days to      |                 |                                     |
| notify       |                 |                                     |
| mediator,    |                 |                                     |
| and 24 days  |                 |                                     |
| to arrange   |                 |                                     |
| and hold     |                 |                                     |
| mediation.   |                 |                                     |
+--------------+-----------------+-------------------------------------+
| \[Resume     | September 15    | Customer requests an appeal. Even   |
| 2^nd^ 30-day |                 | in a successful mediation           |
| clock (-6    |                 | (resolution), the participant can   |
| days)        |                 | ask for an appeal hearing of the    |
| 7/16-22,     |                 | adverse decision. REMEMBER, only    |
| before       |                 | NAD has the authority to determine  |
| requested    |                 | whether a participant has timely    |
| mediation    |                 | filed for an appeal.                |
| and day      |                 |                                     |
| after        |                 |                                     |
| mediation    |                 |                                     |
| was held,    |                 |                                     |
| 8/30.\]      |                 |                                     |
+--------------+-----------------+-------------------------------------+

(03-21-07) PN 407

RD Instruction 1940-E

Exhibit C

Page 2

1\. All counts are calendar days, including weekends and holidays.

2\. The appropriate program representative, the State ADR Coordinator,
and the State Procurement staff work as a team to ensure the necessary
procedures are followed.

3\. If the participant is located in a state with a USDA-funded program,
or the State Office is using a Community-Based Mediation service, the
participant has 10 days to respond to the assigned mediator; if not, the
participant has 10 days to select from a State Office list, or ask the
consideration of a certified mediator.

4\. If unable to determine when the letter was received, count 7
calendar days from day after date on the adverse decision letter
\[example: date on letter + 7 days = date of receipt of letter + 10 days
= 17 days when request must be made\].

oOo

RD Instruction 1940-E

Exhibit D

Page 1

**[Rural Development]{.smallcaps}**

**[Customer/Program Mediation Request Report]{.smallcaps}**

State: State ADR Coordinator:

Telephone #: FAX #:

\(1\) [[Description of Request:]{.underline}]{.smallcaps} [State Office
share of customer mediation expenses incurred]{.underline}.

\(2\) [Customer File:]{.smallcaps}

[(3) **[Total Cost]{.underline}**]{.smallcaps} (amount requested)\$
**\[attach invoice\]**

Description of customer mediation \[check **√** all that applies to the
mediation\]:

\(4\) [Program area:]{.underline} SFH RBEG EZ

MFH RBOG EC

CF REDLG Champion

B&I RCDG Water

IRP CR Waste

Other

\(5\) [Adverse action]{.underline}:
[\_\_]{.underline}Acceleration/Foreclosure Eligibility Moratorium

Procedural problem

Other

\(6\) [Outcome of the]{.underline} Resolved

[requested]{.underline} No resolution

[mediation:]{.underline} Request withdrawn by customer

Time expired for mediation. Please indicate if it

is the \[ \] 10-days to request mediation, or \[ \] 45-days to hold it.

Customer no-show

Other

\[Name of Provider\]

\(7\) [Mediation]{.underline} USDA-Certified Center

[service]{.underline} Community-Based Mediation Center

[used:]{.underline} Mediator from Rural Development list

Mediator selected by participant

Other

\(8\) [Unique situation *(i.e.,* poverty status) and/or program
status:]{.underline}

\(9\)

State Approving Official Date

**[FAX]{.underline} [202-720-0004]{.underline}** to ADR National Office,
Cheryl Prejean Greaux, Rm 4017-S (Ph 202-692-0204)

(Concurrence):

Cheryl Prejean Greaux, National ADR Director Date

ADR Code - - - - - - - - O&M Code - - - - Object Code - - -

oOo

(03-21-07) PN 407