This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

27981 

Vol. 72, No. 96 

Friday, May 18, 2007 

DEPARTMENT OF AGRICULTURE 

Federal Crop Insurance Corporation 

7 CFR Part 400 

RIN 0563–AB73 

General Administrative Regulations; 

Administrative Remedies for NonCompliance 

AGENCY: Federal Crop Insurance 

Corporation, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Federal Crop Insurance 

Corporation (FCIC) proposes to amend 7 

CFR part 400, subpart R to clarify 

existing administrative remedies, add 

additional administrative remedies that 

are available as a result of enactment of 

section 515(h) of the Federal Crop 

Insurance Act (Act) (7 U.S.C. 1515(h)), 

and make such other changes as are 

necessary to implement the provisions 

of section 515(h) of the Act. 

DATES: Written comments and opinions 

on this proposed rule will be accepted 

until close of business on June 18, 2007 

and will be considered when the rule is 

to be made final. 

ADDRESSES: Interested persons are 

invited to submit comments, titled 

‘‘Administrative Remedies for NonCompliance’’, by any of the following 

methods: 

∑ By Mail to: Deputy Administrator 

for Compliance, Risk Management 

Agency, United States Department of 

Agriculture, 1400 Independence 

Avenue, SW., Stop 0806, Washington, 

DC 20250–0806. 

∑ E-mail: 

cynthia.simpson@rma.usda.gov. 

∑ Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

∑ A copy of each response will be 

available for public inspection and 

copying from 8 a.m. to 4:30 p.m., EST, 

Monday through Friday, except 

holidays, at the above address. 

FOR FURTHER INFORMATION CONTACT: 

Michael Hand, Deputy Administrator 

for Compliance, at the address listed 

above, telephone (202) 720–0642. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This rule has been determined to be 

non significant for the purposes of 

Executive Order 12866 and, therefore, 

has not been reviewed by the Office of 

Management and Budget (OMB). 

Paperwork Reduction Act of 1995 

This rule does not constitute a 

collection of information under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. chapter 35). 

E-Government Act Compliance 

FCIC is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

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 

UMRA. 

Executive Order 13132 

It has been determined under section 

1(a) of Executive Order 13132, 

Federalism, that this rule does not have 

sufficient implications to warrant 

consultation with the States. The 

provisions contained in this rule will 

not have a substantial direct effect on 

States, on the relationship between the 

national government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. 

Regulatory Flexibility Act 

FCIC certifies that this regulation will 

not have a significant economic impact 

on a substantial number of small 

entities. All similarly situated 

participants are required to comply with 

the same standard of conduct contained 

in the Act, the regulations published at 

7 CFR chapter IV, the crop policies, and 

the applicable procedures. For example, 

any producer, whether growing 10 acres 

or 10,000 acres, submits the same 

documentation for insurance and for a 

claim. All agents, whether selling and 

servicing five policies or a hundred and 

five policies, are required to perform the 

same tasks for each. The consequences 

for failure to comply with the standards 

of conduct are also the same for all 

participants and other persons 

regardless of the size of their business. 

A Regulatory Flexibility Analysis has 

not been prepared since this regulation 

does not have a significant impact on a 

substantial number of small entities, 

and, therefore, this regulation is exempt 

from the provisions of the Regulatory 

Flexibility Act (5 U.S.C. 605). 

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 

in accordance with Executive Order 

12988 on civil justice reform. The 

provisions of this rule will not have a 

retroactive effect. The provisions of this 

rule will preempt State and local laws 

to the extent such State and local laws 

are inconsistent herewith. 

Environmental Evaluation 

This action is not expected to have a 

significant economic impact on the 

quality of the human environment, 

health, and safety. Therefore, neither an 

Environmental Assessment nor an 

Environmental Impact Statement is 

needed. 

Background 

Prior to the enactment of the 

Agricultural Risk Protection Act of 2000 

(ARPA), pursuant to section 506(n) of 

the Act (7 U.S.C. 1506(n)), FCIC had the 

election of disqualifying or imposing a 

$10,000 civil fine on a person who 

willfully and intentionally made a false 


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statement. With respect to the 

disqualification, the person was only 

disqualified from purchasing crop 

insurance or receiving noninsured crop 

disaster assistance (NAP) benefits. This 

meant the disqualification was only 

effective against producers and it would 

not apply to other program participants 

such as agents, loss adjusters, approved 

insurance providers or their employees 

or contractors or other persons who may 

provide information to a program 

participant. With respect to the 

imposition of civil fines, either the fine 

was insignificant in relation to the 

wrongful conduct or in many cases the 

person did not have the assets or 

resources to pay the fine so its 

imposition was meaningless. 

Through the enactment of section 

515(h) of the Act in ARPA, Congress 

significantly strengthened FCIC’s ability 

to combat fraud, waste and abuse by 

establishing a strong system of 

administrative actions that are now 

applicable to all participants in the 

Federal crop insurance program. Now, 

producers, agents, loss adjusters, 

approved insurance providers and their 

employees and contractors, and any 

other persons who willfully and 

intentionally provide any false or 

inaccurate information to FCIC or to an 

approved insurance provider with 

respect to a policy or plan of insurance 

are subject to remedial administrative 

remedies. 

If disqualified, participants in the 

Federal crop insurance program will be 

precluded from such participation. This 

means producers will not be able to 

insure their crops, agents and loss 

adjusters will no longer be able sell, 

service or adjust crop insurance 

policies, approved insurance providers 

would be precluded from holding 

reinsurance agreements related to 

insurance offered under the authority of 

the Act, and other persons, employees 

or contractors of approved insurance 

providers will not be able to purchase 

crop insurance or be affiliated with any 

entity participating in the crop 

insurance program for the period of 

disqualification. 

In addition to disqualification from 

participating in the Federal crop 

insurance program, producers will be 

disqualified from receiving benefits 

under the Agricultural Market 

Transition Act (7 U.S.C. 7201 et seq.), 

including NAP; the Agricultural Act of 

1949 (7 U.S.C. 1421 et seq.); the 

Commodity Credit Corporation Charter 

Act (15 U.S.C. 714 et seq.); the 

Agricultural Adjustment Act of 1938 (7 

U.S.C. 1281 et seq.); Title XII of the 

Food Security Act of 1985 (16 U.S.C. 

3801 et seq.); the Consolidated Farm 

and Rural Development Act (7 U.S.C. 

1921 et seq.); and any law that provides 

assistance to a producer of an 

agricultural commodity affected by a 

crop loss or a decline in the prices of 

agricultural commodities. This will 

allow greater protection of the interests 

of the government by preventing 

persons that commit wrongful acts in 

one governmental program from 

receiving program benefits from other 

governmental programs. 

Section 515(h) of the Act also 

authorizes disqualification of producers, 

agents, loss adjusters, approved 

insurance providers and their 

employees and contractors, and other 

persons if such person willfully and 

intentionally fails to comply with a 

requirement of FCIC. One purpose of 

this proposed rule is to define what 

constitutes a ‘‘requirement of FCIC.’’

In addition, civil fines have been 

increased. Previously only a civil fine of 

$10,000 could be imposed, regardless of 

how many times the person willfully 

and intentionally submits false or 

inaccurate information or fails to 

comply with a requirement of FCIC. 

Now a civil fine can be imposed for 

each violation and the civil fine is the 

greater of $10,000 or the amount of 

pecuniary gain obtained as a result of 

the false or inaccurate information 

provided or the noncompliance with a 

requirement of the Act. For example, a 

producer that submits a false claim for 

indemnity and collects $50,000 can be 

required to repay the $50,000 

overpayment and an additional $50,000 

in a civil fine, for a total of $100,000 

owed, or an agent that submitted 20 

false production reports that increased 

the amount of indemnities producers 

collected by $8,000 per producer can be 

required to pay a civil fine of $200,000. 

Like the previous administrative 

sanction provisions, the gravity of the 

violation must be taken into 

consideration when determining the 

appropriate term of disqualification or 

civil fine. 

The proposed changes to subpart R 

are as follows: 

1. Heading 

FCIC is proposing to replace the 

heading ‘‘Subpart R—Sanctions’’ with 

‘‘Administrative Remedies for NonCompliance’’. FCIC’s policy underlying 

administrative actions is the protection 

of the public interest from potential 

harm from persons who have abused the 

program, maintaining program integrity, 

and fostering public confidence in the 

program. Therefore, ‘‘Administrative 

Remedies for Non-Compliance’’ is a 

more accurate title for this subpart. 

2. Section 400.451—General 

FCIC is proposing to revise paragraph 

(a) to add a reference to section 515(h) 

of the Act, which authorizes 

disqualifications and civil fines. 

FCIC is proposing to revise paragraph 

(b) to add the other program participants 

and other persons now covered under 

section 515(h) of the Act, including 

producers, agents, loss adjusters, 

approved insurance providers and their 

employees and contractors, and other 

persons who may submit information 

related to the Federal crop insurance 

program. In the past, administrative 

remedies for the most part targeted a 

limited segment of wrongdoers in the 

crop insurance industry, the producer, 

and there were often inadequate 

administrative remedies applicable to 

other persons who committed fraud, 

waste, and abuse in the Federal crop 

insurance program. As a result of the 

enactment of section 515(h) of the Act, 

administrative sanctions are now 

applicable to all program participants 

and persons who may provide 

information related to the crop 

insurance program. 

FCIC is proposing to revise paragraph 

(c) to make minor editorial changes for 

clarity. 

FCIC is proposing to revise paragraph 

(d) to clarify that with respect to the 

submission of false or inaccurate 

statement, this rule is applicable to such 

conduct occurring after June 20, 2000, 

and with respect to failure to comply 

with a requirement of FCIC, this rule is 

applicable to such conduct occurring on 

and after the date this rule becomes 

effective. 

FCIC is proposing to add a new 

paragraph (e) to clarify that the purpose 

of the remedial actions authorized in 

this subpart are for the protection of the 

public interest from potential harm from 

persons who have abused the Federal 

crop insurance program, maintaining 

program integrity, and fostering public 

confidence in the program. The 

Government does not want to do 

business with persons who abuse its 

programs. 

3. Section 400.452—Definitions 

FCIC is proposing to add definitions 

for terms used in subpart R. 

Specifically, definitions have been 

added for the terms ‘‘Act,’’ ‘‘agency,’’

‘‘agent,’’ ‘‘approved insurance 

provider,’’ ‘‘affiliate,’’ ‘‘agricultural 

commodity,’’ ‘‘FCIC,’’ ‘‘managing 

general agent,’’ ‘‘participant,’’ ‘‘person,’’

‘‘policy,’’ ‘‘preponderance of the 

evidence,’’ ‘‘principal,’’ ‘‘producer,’’

‘‘requirement of FCIC,’’ ‘‘Standard 

Reinsurance Agreement,’’ ‘‘violation,’’


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and ‘‘willful and intentional.’’ Given 

that the remedial actions apply to all 

participants in the Federal crop 

insurance program, it is necessary to 

identify who qualifies as participants, 

such as producers, agencies, agents, 

approved insurance providers, and 

managing general agents since such 

persons or entities are now subject to 

the remedial actions in this subpart. The 

remedial actions can also apply to 

persons who are not participating in the 

Federal crop insurance program, but 

provide information that constitutes a 

willful and intentional violation so such 

persons must also be identified. In 

addition, it is necessary to define a 

‘‘requirement of FCIC’’ to distinguish 

requirements of FCIC that may be 

contained in policy, the Standard 

Reinsurance Agreement or procedure, 

for which there are generally adequate 

remedies available for the breach, from 

violations of requirements, such as 

cease and desist letters, letters or 

memoranda requiring that specific 

action be taken, or violations of policy, 

the Standard Reinsurance Agreement or 

procedure so egregious that remedial 

action is appropriate. Further, 

disqualification and civil fines are 

imposed upon a showing of a willful 

and intentional violation. Therefore, it 

is necessary to specify what constitutes 

willful and intentional conduct. It is 

also important that the standard of proof 

be identified for disqualifications and 

civil fines. Preponderance of the 

evidence was determined to be 

appropriate because this is the standard 

most commonly used by the government 

for imposition of similar administrative 

remedies. Most of the definitions will 

refer to terms and definitions contained 

in other regulations, such as the 

Common Crop Insurance Policy Basic 

Provisions (7 CFR 457.8) to ensure 

consistency and eliminate the need to 

revise multiple regulations when the 

definition is changed. 

4. Section 400.454—Disqualification 

and Civil Fines 

FCIC is proposing to change the title 

of section 400.454 ‘‘Civil penalties’’ and 

to replace it with ‘‘Disqualification and 

Civil Fines’’. The procedures related to 

disqualifications have now been added 

to the section, which should be reflected 

in the title. Further, the Act now refers 

to civil fines, not civil penalties. 

FCIC is proposing to revise paragraph 

(a) to clarify that before any 

disqualification or civil fine is imposed, 

the participant or other person will have 

the opportunity for a hearing on the 

record. Proceedings will still be 

initiated by a complaint filed by the 

Manager of FCIC and the hearing will be 

before the Department’s Administrative 

Law Judges in accordance with 7 CFR 

part 1, subpart H. 

In paragraph (a), FCIC is also 

proposing to clarify the effective date of 

disqualification. FCIC is proposing the 

effective date of disqualification will be 

the date specified in the order issued by 

the Administrative Law Judge, Judicial 

Officer, or settlement agreement. If no 

date is specified in such documents, the 

effective date will be the date the 

disqualification order or settlement 

agreement was issued or executed. 

In paragraph (a), FCIC is also 

proposing to use a standard of proof of 

preponderance of the evidence for 

disqualification and civil fines this is 

the standard most commonly used by 

the government for imposition of similar 

administrative remedies. FCIC is also 

proposing that disqualification and civil 

fines may be imposed even if FCIC or 

the approved insurance provider has not 

sustained a financial loss. There may be 

situations where the false statement or 

other misconduct has the potential to 

create losses or increase payments but 

the act was discovered before the 

payment could be made. There may also 

be situations where the misconduct can 

be used to collect a future indemnity, 

such as falsely reporting high yields to 

increase the guarantee and a possibility 

of a future loss. The fact that any 

information is falsely or inaccurately 

reported adversely affects program 

integrity and has the potential to create 

a situation where the public loses 

confidence in the program. 

FCIC is proposing to revise paragraph 

(b) to include the situations in section 

515(h) of the Act where disqualification 

and civil fines may be imposed. 

Disqualification and civil fines may be 

imposed on a person based on either 

willfully and intentionally: (1) 

Providing false or inaccurate 

information; or (2) failing to comply 

with a requirement of FCIC. FCIC is 

proposing to clarify that the false or 

inaccurate information can be provided 

either through action (for example, 

falsely reporting the number of acres 

planted) or omission to act when there 

is knowledge that false or inaccurate 

information has or will be provided and 

no action is taken to prevent it (for 

example, the agent knows the planted 

acreage has been falsely reported and 

still submits the acreage reports with the 

false information). FCIC has determined 

that persons who knowingly allow false 

or inaccurate statements to be provided 

by others affect the program just as 

adversely as those who made the false 

or inaccurate statement in the first 

place. 

FCIC is proposing to revise paragraph 

(c) to specify the standards that will be 

applied when FCIC considers imposing 

a disqualification or civil fine. The 

gravity of the violation will be 

considered when determining whether 

to impose a disqualification or civil fine, 

the length of the disqualification or the 

amount, if any, of any civil fine. FCIC 

is also proposing that the maximum be 

imposed where there have been 

multiple violations in the same crop 

year or over several crop years, or a 

single violation that results in an 

overpayment of at least $100,000 or 

multiple acts of wrongdoings resulting 

in an overpayment in excess of 

$100,000. FCIC has determined that 

such conduct is so harmful to the 

program that the maximum remedial 

action is appropriate. However, these 

criteria are not all-inclusive and there 

may be other circumstances where the 

maximum actions are appropriate. 

FCIC is proposing to revise paragraph 

(d) to allow FCIC to impute the 

improper conduct of a person to another 

person, if such other person knew or 

should have known of the improper 

conduct, has the power to direct, 

manage, control or influence the 

activities of the person, participated in 

the improper conduct, or the improper 

conduct occurred in the connection 

with the person’s duties on behalf of the 

person to whom the conduct is imputed 

or with such persons approval or 

acquiescence. There are situations 

where the person who provided the 

false or inaccurate information has been 

directed to do so by another person, a 

person participates in providing false or 

inaccurate information, such as 

obtaining the false information and 

passing it on to the person to provide to 

an approved insurance provider, or a 

person knows that false or inaccurate 

information is being provided and does 

nothing to stop it. The conduct of the 

person who directed the conduct, 

participated in providing it, or allowed 

it to be provided is just as detrimental 

to the crop insurance program. 

Therefore, to protect the public interest, 

such persons should also be disqualified 

or have civil fines imposed. This is the 

same as the imputing of conduct 

permitted with respect to suspensions 

and debarments under 7 CFR 3017. 

Disqualifications 

FCIC proposes to revise paragraph (e) 

to incorporate the expanded range of 

administrative remedies made available 

under section 515(h) of the Act to 

include those that are applicable to: (1) 

Producers, which precludes many of the 

benefits provided to producers under 

other farm programs offered by the 


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Department; and (2) to other 

participants in the Federal crop 

insurance program and any other person 

who may provide information regarding 

the insured agricultural commodity, 

which precludes such participants or 

persons from participating in the 

Federal crop insurance program and 

receiving any benefit under the Act. 

This means such participants or persons 

could no longer hold a reinsurance 

agreement or be involved in any way in 

the sale, service or loss adjustment of a 

crop insurance policy and would also be 

precluded from purchasing a crop 

insurance policy or receiving any 

subsidy authorized under the Act. 

In paragraph (e), FCIC is also 

proposing to specify that 

disqualifications are for a period of not 

less than one year and not greater than 

five years from the date the 

disqualification is effective. 

Disqualifications of less than one year 

could be meaningless because existing 

policies can only be terminated at the 

next termination date. Disqualifications 

of less than one year could begin and 

end within the insurance period thereby 

making the disqualifications 

meaningless. Therefore, FCIC has 

determined that one year is the least 

period that could be effective. 

In addition, in paragraph (e) FCIC is 

proposing that disqualifications be 

imposed in one-year increments up to 

the maximum of five years. Most of the 

crop insurance policies and reinsurance 

agreements are in effect for one year. 

Disqualifications of different periods, 

such as 18 months, would be 

burdensome and create additional 

complexities in determining when 

persons are eligible again to participate 

in the program. 

In paragraph (e) FCIC is also 

proposing to specify that the names of 

all persons who are disqualified will be 

placed into FCIC’s Ineligible Tracking 

System (ITS) and reported to the U.S. 

General Services Administration (GSA) 

in accordance with 7 CFR part 3017. 

GSA publishes a list of all persons who 

are determined ineligible in its 

Excluded Parties List System (EPLS). 

FCIC is also proposing to specify that if 

a person is doing business with a 

disqualified person, such person may 

also be subject disqualification. FCIC 

does not want to allow persons who 

have been disqualified to still 

participate in the program through the 

association with another person. FCIC 

also proposes to make it the 

responsibility of a person who 

participates in the Federal crop 

insurance program to routinely review 

ITS and EPLS to ensure that the person 

is not doing business with a disqualified 

person. 

Civil Fines 

FCIC is proposing to revise paragraph 

(f) to specify that, in accordance with 

section 515(h) of the Act, the amount of 

civil fines will not exceed the greater of 

the amount of monetary gain or $10,000. 

In addition, in accordance with section 

515(h) of the Act, FCIC is proposing that 

the civil fine will be imposed for each 

violation. FCIC is also proposing to 

clarify that a civil fine is a debt owed 

to FCIC and that the civil fine must be 

paid by the due date specified in the 

order issued by the Administrative Law 

Judge or Judicial Officer, as applicable, 

or the settlement agreement, or, if no 

due date is specified, it shall be 30 days 

after the date the order was issued or the 

settlement agreement signed by FCIC. 

This is to clarify that even though the 

amount of monetary gain may be owed 

to another person, for example, overpaid 

indemnity is owed to the approved 

insurance provider, the civil fine is 

always owed to FCIC. Further, there 

must be a due date because FCIC is 

proposing that failure to pay by the due 

date can subject the person to 

ineligibility to participate in the 

program. This is to provide a 

meaningful consequence for failure to 

comply with their responsibility to 

timely pay their civil fine. Without such 

consequences, persons may delay 

forever the payment of such fines. 

In paragraph (f), FCIC also proposes to 

specify that a civil fine imposed under 

this section is in addition to any debt 

that may be owed to FCIC or to any 

approved insurance provider, such as an 

overpaid indemnity, underpaid 

premium, or other amounts owed. This 

is necessary to distinguish between the 

civil fine, which could equal the 

amount owed, and the other amount 

owed. For example, if the producer was 

overpaid $12,000 and a civil fine of 

$12,000 is imposed, the producer owes 

a total of $24,000. FCIC is also 

proposing to specify that, in its sole 

discretion, FCIC may settle any civil 

fine imposed if it considers it 

appropriate or in the best interest of the 

USDA. 

In paragraph (f), FCIC is also 

proposing to specify that the 

ineligibility procedures established in 

subpart U are not applicable to 

ineligibility determinations for 

nonpayment of civil fines. This is 

necessary because subpart U applies to 

producers and there could be confusion 

regarding which procedures apply. FCIC 

is also proposing to specify that failure 

to timely pay a civil fine will make a 

person ineligible for further benefits 

under the Act until the civil fine is paid 

in full. 

FCIC proposed to add a new 

paragraph (g) that specifies the 

consequences of disqualification or if a 

person fails to timely pay the civil fines. 

FCIC is proposing that with respect to 

producers, all existing policies will 

automatically terminate as of the next 

termination date and that new 

application cannot be made until the 

next sales closing date after the period 

of disqualification has ended and the 

civil fine is paid in full. This is 

consistent with the requirements of 

other types of ineligibility and is 

necessary under the terms of the policy. 

With respect to all other persons, FCIC 

is proposing that such persons cannot 

be involved in any way with the crop 

insurance program. Further, if the 

person is an agent or agency, FCIC is 

proposing to require that the approved 

insurance provider assign the book to 

another agent or agency during the 

period of disqualification or 

ineligibility. This will ensure the 

continued, uninterrupted service of the 

policy. If the person is an approved 

insurance provider, FCIC is proposing 

that the approved insurance provider be 

precluded from selling any new policies 

or renewing any existing policies during 

the period of disqualification or 

ineligibility. FCIC has made this similar 

to a suspension under its reinsurance 

agreements because FCIC wants to make 

sure that there is uninterrupted service 

for all existing policies during the crop 

year, but that such policies be cancelled 

and transferred for subsequent crop 

years if the period of disqualification or 

ineligibility is still ongoing. 

FCIC is proposing to add a new 

paragraph (h) that specifies that the 

imposition of disqualification or a civil 

fine under this section is in addition to 

any other administrative or legal 

remedies available under this section or 

other applicable law including, but not 

limited to, debarment and suspension. 

Other remedies may serve a different 

purpose or have different consequences 

and may be equally appropriate for the 

wrongful conduct. 

5. Section 400.455—Governmentwide 

Debarment and Suspension 

(Procurement) 

FCIC is proposing to delete paragraph 

(a) because it does not add to the 

content or clarity of the provision. 

FCIC is proposing to redesignate 

paragraph (b) as paragraph (a) and revise 

it to correct the cross references and 

better specify that the Federal 

Acquisition Regulation will be applied 

in debarment and suspension 

proceedings involving procurement 


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transactions and that the FCIC’s 

Manager will have the authority to 

suspend or debar any person under this 

provision. 

FCIC is proposing to redesignate 

paragraph (c) as paragraph (b) and revise 

it to clarify that if suspended or 

debarred, the person may not contract 

with FCIC or the Risk Management 

Agency. This change is necessary 

because the Risk Management Agency 

administers the crop insurance program 

on behalf of FCIC. FCIC has also made 

other minor editorial changes for clarity 

and consistency. 

6. Section 400.456—Governmentwide 

Debarment and Suspension 

(Nonprocurement) 

FCIC is proposing to delete paragraph 

(a) because it does not add to the 

content or clarity of the provision. 

FCIC is proposing to redesignate 

paragraph (b) as paragraph (a) and revise 

it to clarify that suspensions and 

debarments will be done in accordance 

with 7 CFR part 3017. 

FCIC is proposing to revise paragraph 

(b) to specify the effects of suspension 

and debarment involving nonprocurement transactions. FCIC is 

proposing that if suspended or debarred, 

the person may not contract with FCIC 

or the Risk Management Agency. FCIC 

is also proposing that if the person is 

suspended or debarred, the person 

cannot contract with an approved 

insurance provider or its contractors. 

This is consistent with the provisions in 

7 CFR 3017 that participants in the crop 

insurance program cannot do business 

with debarred or disqualified persons. 

FCIC is proposing that FCIC have the 

discretion to waive the provisions if the 

approved insurance provider has taken 

sufficient action to ensure that the 

suspended or debarred person will not 

be involved in any way with the crop 

insurance program or receive any 

benefits from any program under the 

Act. 

7. Section 400.457—Program Fraud 

Civil Remedies Act 

FCIC is proposing to add new 

paragraph (d) to specify that civil fines 

and assessments imposed under this 

provision are in addition to any other 

remedies provided by law or imposed 

under this subpart. This paragraph was 

added to for clarification of how this 

statute interacts with other laws and 

regulations. 

8. Section 400.458—Scheme or Device 

FCIC is proposing to delete paragraph 

(b)(2) because the nonstandard 

classification system is no longer used 

by FCIC and redesignate paragraph 

(b)(3) as paragraph (b)(2). 

9. Section 400.459—Indebtedness 

FCIC is proposing to remove this 

section from subpart R. The 

consequences for failure to pay a civil 

fine have been included in section 

400.454. With respect to any other debt, 

the provisions in the policy and 7 CFR 

part 400, subpart U apply. Therefore, 

this provision is no longer needed. 

List of Subjects in 7 CFR Part 400 

Administrative practice and 

procedure, Penalties. 

Proposed Rule 

Accordingly, as set forth in the 

preamble, the Federal Crop Insurance 

Corporation proposes to amend 7 CFR 

part 400 as follows: 

PART 400—GENERAL 

ADMINISTRATIVE REGULATIONS 

1. Revise the authority citation for 7 

CFR 400, subpart R to read as follows: 

Authority: 7 U.S.C. 1506(l) and 7 U.S.C. 

1515(h). 

Subpart R—Administrative Remedies 

for Non-Compliance 

2. Revise the heading for subpart R to 

read as set forth above. 

3. Revise § 400.451 to read as follows: 

§ 400.451 General. 

(a) FCIC has implemented a system of 

administrative remedies to ensure 

program compliance and prevention of 

fraud, waste, and abuse within the 

Federal crop insurance program. Such 

remedies include civil fines and 

disqualifications under the authority of 

section 515(h) of the Act (7 U.S.C. 

1515(h)); government-wide suspension 

and debarment under the authority of 48 

CFR part 9, 48 CFR part 409, and 7 CFR 

part 3017; and civil fines and 

assessments under the authority of the 

Program Fraud Civil Remedies Act (31 

U.S.C. 3801–3812). 

(b) The provisions of this subpart 

apply to all participants in the Federal 

crop insurance program, including but 

not limited to producers, agents, loss 

adjusters, approved insurance providers 

and their employees or contractors, as 

well as any other persons who may 

provide information to a program 

participant and meet the elements for 

imposition of one or more 

administrative remedies contained in 

this subpart. 

(c) Any remedial action taken 

pursuant to this subpart is in addition 

to any other actions specifically 

provided in applicable crop insurance 

policies, contracts, reinsurance 

agreements, or other applicable statutes 

and regulations. 

(d) With respect to the submission of 

a false or inaccurate statement, this rule 

is applicable to any act or omission 

occurring after June 20, 2000, and with 

respect to failure to comply with a 

requirement of FCIC, this rule is 

applicable to any act or omission 

occurring on and after the date this rule 

becomes effective. 

(e) The purpose of the remedial 

actions authorized in this subpart are for 

the protection of the public interest 

from potential harm from persons who 

have abused the Federal crop insurance 

program, maintaining program integrity, 

and fostering public confidence in the 

program. 

4. Revise § 400.452 to read as follows: 

§ 400.452 Definitions. 

Act. Has the same meaning as the 

term in section 1 of the Common Crop 

Insurance Policy Basic Provisions (7 

CFR 457.8). 

Affiliate. Persons are affiliates of each 

other if, directly or indirectly, either one 

controls or has the power to control the 

other, or, a third person controls or has 

the power to control both. Indicia of 

control include, but are not limited to: 

interlocking management or ownership, 

identity of interests among family 

members, shared facilities and 

equipment, common use of employees, 

or a business entity organized following 

the disqualification, suspension or 

debarment of a person which has the 

same or similar management, 

ownership, or principal employees as 

the disqualified, suspended, debarred, 

ineligible, or voluntarily excluded 

person. 

Agency. The person authorized by an 

approved insurance provider, or its 

designee, to sell and service a crop 

insurance policy under the Federal crop 

insurance program. 

Agent. Has the same meaning as the 

term in 7 CFR 400.701. 

Agricultural commodity. Has the same 

meaning as the term in section 1 of the 

Common Crop Insurance Policy Basic 

Provisions (7 CFR 457.8). 

Approved insurance provider. Has the 

same meaning as the term in 7 CFR 

400.701. 

FCIC. Has the same meaning as the 

term in 7 CFR 400.701. 

Managing General Agent. Has the 

same meaning as the term in 7 CFR 

400.701. 

Participant. Any person who obtains 

any benefit that is derived in whole or 

in part from funds paid by FCIC to the 

approved insurance provider or 

premium paid by the producer. 


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27986 Federal Register / Vol. 72, No. 96 / Friday, May 18, 2007 / Proposed Rules 

Participants include but are not limited 

to producers, agents, loss adjusters, 

agencies, managing general agencies, 

approved insurance providers, and any 

person associated with the approved 

insurance provider through 

employment, contract, or agreement. 

Person. An individual, partnership, 

association, corporation, estate, trust or 

other legal entity, any affiliate or 

principal thereof, and whenever 

applicable, a State or political 

subdivision or agency of a State. 

‘‘Person’’ does not include the United 

States Government or any of its 

agencies. 

Policy. Has the same meaning as the 

term in section 1 of the Common Crop 

Insurance Policy Basic Provisions (7 

CFR 457.8). 

Preponderance of the evidence. 

Evidence which is of greater weight or 

more convincing than the evidence 

which is offered in opposition to it; that 

is, evidence which as a whole shows 

that the fact sought to be proved is more 

probable than not. 

Principal. A person who is an officer, 

director, owner, partner, key employee, 

or other person within an entity with 

primary management or supervisory 

responsibilities; or a person who has a 

critical influence on or substantive 

control over the activities of the entity. 

Producer. A person engaged in 

producing an agricultural commodity 

for a share of the insured crop, or the 

proceeds thereof. 

Reinsurance agreement. Has the same 

meaning as the term in 7 CFR 400.161, 

except that such agreement is only 

between FCIC and the approved 

insurance provider. 

Requirement of FCIC. Includes, but is 

not limited to, any regulation, 

procedure, policy provision, 

reinsurance agreement, or other written 

communication from FCIC that requires 

a particular program participant or 

group of program participants to take a 

specific action or to cease and desist 

from a taking a specific action. General 

regulations procedures, policy 

provisions, or reinsurance agreements 

for which there is a remedy provided in 

such document for the breach will not 

be considered a requirement of FCIC 

unless such breach arises to the level 

where remedial action is appropriate 

(For example, multiple breaches of the 

same provision in separate policies or 

the procedures or multiple breaches of 

different provisions in the same policy 

or procedure). 

Violation. Each act or omission by a 

person that satisfies all required 

elements for the imposition of a 

disqualification or a civil fine under this 

subpart. 

Willful and intentional. To make a 

false or inaccurate statement with the 

knowledge that the statement is false or 

inaccurate at the time the statement was 

made; the failure to correct the false or 

inaccurate statement when its nature 

becomes known to the person who 

made it; or to commit an act or omission 

with the knowledge that the act or 

omission is not in compliance with a 

‘‘requirement of FCIC’’ at the time the 

act or omission occurred. No showing of 

malicious intent is necessary. 

5. Revise § 400.454 to read as follows: 

§ 400.454 Disqualification and civil fines. 

(a) Before any disqualification or civil 

fine is imposed, FCIC will provide the 

affected participants and other persons 

with notice and an opportunity for a 

hearing on the record in accordance 

with 7 CFR part 1, subpart H. 

(1) Proceedings will be initiated when 

the Manager of FCIC files a complaint 

with the Hearing Clerk, United States 

Department of Agriculture. 

(2) Disqualifications become effective: 

(i) On the date specified in the order 

issued by the Administrative Law Judge 

or Judicial Officer, as applicable, or if no 

date is specified in the order, the date 

that the order was issued. 

(ii) With respect to a settlement 

agreement with FCIC, the date 

contained in the settlement agreement 

or, if no date is specified, the date that 

such agreement is executed by FCIC. 

(3) Disqualification and civil fines 

may only be imposed if a 

preponderance of the evidence shows 

that the participant or other person has 

met the standards contained in 

§ 400.454(b). 

(4) Disqualification and civil fines 

may be imposed regardless of whether 

FCIC or the approved insurance 

provider has suffered any monetary 

losses. 

(b) Disqualification and civil fines 

may be imposed on any participant or 

person who willfully and intentionally: 

(1) Provides any false or inaccurate 

information to FCIC or to any approved 

insurance provider with respect to a 

policy or plan of insurance authorized 

under the Act either through action or 

omission to act when there is 

knowledge that false or inaccurate 

information is or will be provided; or 

(2) Fails to comply with a requirement 

of FCIC. 

(c) When imposing any 

disqualification or civil fine, 

(1) The gravity of the violation must 

be considered when determining: 

(i) Whether to disqualify a participant 

or other person; 

(ii) The amount of time that a 

participant or other person should be 

disqualified; 

(iii) Whether to impose a civil fine; 

and 

(iv) The amount of a civil fine that 

should be imposed. 

(2) The maximum term of 

disqualification and civil fines will be 

imposed against participants and other 

persons who: 

(i) Commit multiple violations in the 

same crop year or over several crop 

years; or 

(ii) Commit a single violation but such 

violation results in an overpayment of 

more than $100,000 or multiple acts of 

wrongdoings resulting in an 

overpayment in excess of $100,000. 

(iii) Commit such other action or 

omission of so serious a nature that 

imposition of the maximum is 

appropriate. 

(d) With respect to the imputing of 

conduct: 

(1) The conduct of any officer, 

director, shareholder, partner, 

employee, or other individual 

associated with an organization, in 

violation of § 400.454(b) may be 

imputed to that organization when such 

conduct occurred in connection with 

the individual’s performance of duties 

for or on behalf of that organization, or 

with the organization’s knowledge, 

approval or acquiescence. The 

organization’s acceptance of the benefits 

derived from the violation is evidence of 

knowledge, approval or acquiescence. 

(2) The conduct of any organization in 

violation of § 400.454(b) may be 

imputed to an individual, or from one 

individual to another individual, if the 

individual to whom the improper 

conduct is imputed either participated 

in, had knowledge of, or reason to know 

of such conduct. 

(3) The conduct of one organization in 

violation of § 400.454(b) may be 

imputed to another organization when 

such conduct occurred in connection 

with a partnership, joint venture, joint 

application, association or similar 

arrangement, or when the organization 

to whom the improper conduct is 

imputed has the power to direct, 

manage, control or influence the 

activities of the organization responsible 

for the improper conduct. Acceptance of 

the benefits derived from the conduct is 

evidence of knowledge, approval or 

acquiescence. 

(4) If such conduct is imputed, the 

person to whom the conduct is imputed 

to may be subject to the same 

disqualification and civil fines as the 

person from whom the conduct is 

imputed. 

(e) With respect to disqualifications: 

(1) If a person is disqualified and that 

person is a: 


cprice-sewell on PRODPC61 with PROPOSALS
Federal Register / Vol. 72, No. 96 / Friday, May 18, 2007 / Proposed Rules 27987 

(i) Producer, the producer will be 

precluded from receiving any monetary 

or non-monetary benefit provided under 

all of the following authorities, or their 

successors: 

(A) The Act; 

(B) The Agricultural Market 

Transition Act (7 U.S.C. 7201, et seq.); 

(C) The noninsured crop disaster 

assistance program (7 U.S.C. 7333); 

(D) The Agricultural Act of 1949 (7 

U.S.C. 1421 et seq.); 

(E) The Commodity Credit 

Corporation Charter Act (15 U.S.C. 714 

et seq.); 

(F) The Agricultural Adjustment Act 

of 1938 (7 U.S.C. 1281 et seq.); 

(G) Title XII of the Food Security Act 

of 1985 (16 U.S.C. 3801 et seq.); 

(H) The Consolidated Farm and Rural 

Development Act (7 U.S.C. 1921, et 

seq.); and 

(I) Any law that provides assistance to 

the producer of an agricultural 

commodity affected by a crop loss or 

decline in the prices of agricultural 

commodities. 

(ii) Participant or other person, other 

than a producer, such participant or 

person will be precluded from 

participating in any way in the Federal 

crop insurance program and receiving 

any monetary or non-monetary benefit 

under the Act. 

(2) With respect to the term of 

disqualification: 

(i) The minimum term will be not less 

than one year from the effective date 

determined in § 400.454(a)(2); 

(ii) The maximum term will be not 

more than five years from the effective 

date determined in § 400.454(a)(2); and 

(iii) Disqualification is to be imposed 

only in one-year increments, up to the 

maximum five years. 

(3) Once a disqualification becomes 

final, the name, address, and other 

identifying information of the 

participant or other person shall be 

entered into the Ineligible Tracking 

System (ITS) maintained by FCIC in 

accordance with 7 CFR part 400, subpart 

U, and this information along with a list 

of the programs that the person is 

disqualified from shall be promptly 

reported to the General Services 

Administration for listing in the 

Excluded Parties List System (EPLS) in 

accordance with 7 CFR part 3017, 

subpart E. 

(i) It is a participant’s responsibility to 

periodically review the ITS and EPLS to 

determine those participants and other 

persons who have been disqualified. 

(ii) No participant may conduct 

business with a disqualified participant 

or other person if such business directly 

relates to the Federal crop insurance 

program, or if, through the business 

relationship, the disqualified participant 

or other person will derive any 

monetary or non-monetary benefit from 

a program administered under the Act. 

(iii) If a participant or other person 

does business with a disqualified 

participant or other person, such 

participant may be subject to 

disqualification under this section. 

(f) With respect to civil fines: 

(1) A civil fine may be imposed for 

each individual action that violates 

§ 400.454(b). 

(2) The amount of such civil fine shall 

not exceed the greater of: 

(i) The amount of monetary gain, or 

value of the benefit, obtained as a result 

of the false or inaccurate information 

provided, or the amount obtained as a 

result of noncompliance with a 

requirement of FCIC; or 

(ii) $10,000. 

(3) Civil fines are debts owed to FCIC. 

(i) A civil fine that is either imposed 

under with this subpart, or agreed to 

through an executed settlement 

agreement with FCIC, must be paid by 

the specified due date (If the due date 

is not specified in the order issued by 

the Administrative Law Judge or 

Judicial Officer, as applicable, or the 

settlement agreement, it shall be 30 days 

after the date the order was issued or the 

settlement agreement signed by FCIC). 

(ii) Any civil fine imposed under this 

section is in addition to any debt that 

may be owed to FCIC or to any 

approved insurance provider, such an 

overpaid indemnity, underpaid 

premium, or other amounts owed. 

(iii) FCIC, in its sole discretion, may 

reduce or otherwise settle any civil fine 

imposed under this section whenever it 

considers it appropriate or in the best 

interest of the USDA. 

(4) The ineligibility procedures 

established in 7 CFR part 400, subpart 

U are not applicable to ineligibility 

determinations made under this section 

for nonpayment of civil fines. 

(5) If a civil fine has been imposed 

and the person has not made timely 

payment for the total amount due, the 

person is ineligible to participate in the 

Federal crop insurance program until 

the amount due is paid in full. 

(g) With respect to any person that has 

been disqualified or is otherwise 

ineligible due to non-payment of civil 

fines in accordance with § 400.454(f): 

(1) With respect to producers: 

(i) All existing insurance policies will 

automatically terminate as of the next 

termination date that occurs during the 

period of disqualification and while the 

civil fine remains unpaid; 

(ii) No new policies can be purchased, 

and no current policies can be renewed, 

between the date that the producer is 

disqualified and the date that the 

disqualification ends; and 

(iii) New application for insurance 

cannot be made for any agricultural 

commodity until the next sales closing 

date after the period of disqualification 

has ended and the civil fine is paid in 

full. 

(2) With respect to all other persons: 

(i) Such person may not be involved 

in any function related to the Federal 

crop insurance program during the 

disqualification or ineligibility period 

(including the sale, service, adjustment, 

data transmission or storage, 

reinsurance, etc. of any crop insurance 

policy) or receive any monetary or nonmonetary benefit from a program 

administered under the Act. 

(ii) If the person is an agent or 

insurance agency, the approved 

insurance provider must assume all 

policies within the agent’s or agency’s 

book of business written for the 

approved insurance provider and assign 

them to a different agent or agency to 

service during the period of 

disqualification or ineligibility; 

(iii) If the person is an approved 

insurance provider, the approved 

insurance provider shall not sell, or 

authorize to be sold, any new policies 

or may not renew, or authorize the 

renewal of, existing policies, as 

determined by FCIC, during the period 

of disqualification or ineligibility. 

Nothing in this provision affects the 

approved insurance provider’s 

responsibilities with respect to the 

service of existing policies. 

(h) Imposition of disqualification or a 

civil fine under this section is in 

addition to any other administrative or 

legal remedies available under this 

section or other applicable law 

including, but not limited to, debarment 

and suspension. 

6. Revise § 400.455 to read as follows: 

§ 400.455 Governmentwide debarment and 

suspension (procurement). 

(a) For all transactions undertaken 

pursuant to the Federal Acquisition 

Regulation, FCIC will proceed under 48 

CFR part 9, subpart 9.4 or 48 CFR part 

409 when taking action to suspend or 

debar persons involved in such 

transactions, except that the authority to 

suspend or debar under these provisions 

will be reserved to the Manager of FCIC, 

or the Manager’s designee. 

(b) Any person suspended or debarred 

under the provisions of 48 CFR part 9, 

subpart 9.4 or 48 CFR part 409 will not 

be eligible to contract with FCIC or the 

Risk Management Agency and will not 

be eligible to participate in or receive 

any benefit from any program under the 

Act during the period of ineligibility. 


cprice-sewell on PRODPC61 with PROPOSALS
27988 Federal Register / Vol. 72, No. 96 / Friday, May 18, 2007 / Proposed Rules 

This includes, but is not limited to, 

being employed by or contracting with 

any approved insurance provider that 

sells, services, or adjusts policies offered 

under the authority of the Act. FCIC 

may waive this provision if it is satisfied 

that the person who employs the 

suspended or debarred person has taken 

sufficient action to ensure that the 

suspended or debarred person will not 

be involved, in any way, with FCIC or 

receive any benefit from any program 

under the Act. 

7. Amend § 400.456 as follows: 

A. Remove paragraph (a). 

B. Redesignate paragraphs (b) through 

(d) as paragraphs (a) through (c). 

C. Revise newly redesignated 

paragraphs (a) and (b) to read as follows: 

§ 400.456 Governmentwide debarment and 

suspension (nonprocurement). 

* * * * * 

(a) FCIC will proceed under 7 CFR 

part 3017 when taking action to suspend 

or debar persons involved in nonprocurement transactions. 

(b) Any person suspended or debarred 

under the provisions of 7 CFR part 3017, 

will not be eligible to contract with 

FCIC or the Risk Management Agency 

and will not be eligible to participate in 

or receive any benefit from any program 

under the Act during the period of 

ineligibility. This includes, but is not 

limited to, being employed by or 

contracting with any approved 

insurance provider, or its contractors, 

that sell, service, or adjust policies 

either insured or reinsured by FCIC. 

FCIC may waive this provision if it is 

satisfied that the approved insurance 

provider or contractors have taken 

sufficient action to ensure that the 

suspended or debarred person will not 

be involved in any way with the Federal 

crop insurance program or receive any 

benefit from any program under the Act. 

* * * * * 

8. Amend § 400.457 by adding a new 

paragraph (d) to read as follows: 

§ 400.457 Program Fraud Civil Remedies 

Act. 

* * * * * 

(d) Civil penalties and assessments 

imposed pursuant to this section are in 

addition to any other remedies that may 

be prescribed by law or imposed under 

this subpart. 

§ 400.458 [Amended] 

9. Amend § 400.458 by removing 

paragraph (b)(2), adding an ‘‘or’’ at the 

end of paragraph (b)(1) and 

redesignating paragraph (b)(3) as 

paragraph (b)(2). 

§ 400.459 [Removed] 

10. Remove § 400.459 from subpart R. 

Signed in Washington, DC, on May 10, 

2007. 

Eldon Gould, 

Manager, Federal Crop Insurance 

Corporation. 

[FR Doc. E7–9418 Filed 5–17–07; 8:45 am] 

BILLING CODE 3410–08–P 

DEPARTMENT OF AGRICULTURE 

Rural Housing Service 

Rural Business-Cooperative Service 

Rural Utility Service 

Farm Service Agency 

7 CFR Part 1944 

Rural Housing Service 

7 CFR Part 3551 

RIN 0575–AC20 

Streamlining of the Section 523 Mutual 

and Self-Help Housing Program 

AGENCY: Rural Housing Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: This action proposes to 

replace the Mutual and Self-Help 

Housing Program’s (MSH) 

administration under 7 CFR part 1944, 

Subpart I with 7 CFR part 3551. This 

rule will apply to grants executed after 

the effective date of the final rule. The 

Rural Housing Service (an agency 

within the Rural Development mission 

area) proposes to streamline and clarify 

its regulations for MSH. This action is 

taken to reduce regulations, improve 

customer service and enhance 

efficiency, flexibility, and effectiveness 

in managing the program. 

DATES: Written or e-mail comments 

must be received on or before July 17, 

2007. The comment period for 

information collections under the 

Paperwork Reduction Act of 1995 

continues through July 17, 2007. 

ADDRESSES: You may submit comments 

to this rule by any of the following 

methods: 

• Agency Web Site: http:// 

www.rurdev.usda.gov/regs. Follow 

instructions for submitting comments 

on the Web Site. 

• E-Mail: comments@wdc.usda.gov. 

Include ‘‘RIN No. 0575–AC20’’ in the 

subject line of the message. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Submit written comments via 

the U.S. Postal Service to the Branch 

Chief, Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, STOP 0742, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0742. 

• Hand Delivery/Courier: Submit 

written comments via Federal Express 

Mail or other courier service requiring a 

street address to the Branch Chief, 

Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, 300 7th Street, SW., 7th 

Floor, Washington, DC 20024. 

All written comments will be 

available for public inspection during 

regular work hours at 300 7th Street, 

SW., 7th Floor address listed above. 

FOR FURTHER INFORMATION CONTACT: 

Debra S. Mangrum, Senior Loan 

Specialist, Special Programs and New 

Initiatives Branch, Single Family 

Housing Direct Loan Division, RHS, 

Stop 0783, Room 2209, South 

Agriculture Building, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0783, telephone 

(202) 720–1366. 

SUPPLEMENTARY INFORMATION: 

Classification 

This proposed rule has been 

determined not to be significant for 

purposes of Executive Order 12866 and, 

therefore, has not been reviewed by the 

Office of Management and Budget 

(OMB). 

Executive Order 12988 

This proposed rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. If this proposed rule is 

adopted: (1) Unless otherwise 

specifically provided, all State and local 

laws and regulations that are in conflict 

with this rule will be preempted; (2) no 

retroactive effect will be given to this 

rule except as specifically prescribed in 

the rule; and (3) the appeal procedures 

of the National Appeals Division (7 CFR 

part 11) must be exhausted before 

bringing suit. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

the Agency generally must prepare a 

written statement, including a costbenefit analysis, for proposed and final 

rules with ‘‘Federal mandates’’ that may 

result in expenditures to State, local, or 

tribal governments, in the aggregate, or 

to the private sector, of $100 million or 

more in any one year. When such a 

statement is needed for a rule, section 

205 of the UMRA generally requires the 


cprice-sewell on PRODPC61 with PROPOSALS