44626 Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 

2There are no U.S. registrations for these 

commodities as of August 13, 2021. 

VI. Statutory and Executive Order 

Reviews 

This action establishes tolerances 

under FFDCA section 408(d) in 

response to a petition submitted to the 

Agency. The Office of Management and 

Budget (OMB) has exempted these types 

of actions from review under Executive 

Order 12866, entitled ‘‘Regulatory 

Planning and Review’’ (58 FR 51735, 

October 4, 1993). Because this action 

has been exempted from review under 

Executive Order 12866, this action is 

not subject to Executive Order 13211, 

entitled ‘‘Actions Concerning 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use’’ (66 

FR 28355, May 22, 2001) or Executive 

Order 13045, entitled ‘‘Protection of 

Children from Environmental Health 

Risks and Safety Risks’’ (62 FR 19885, 

April 23, 1997). This action does not 

contain any information collections 

subject to OMB approval under the 

Paperwork Reduction Act (PRA) (44 

U.S.C. 3501 et seq.), nor does it require 

any special considerations under 

Executive Order 12898, entitled 

‘‘Federal Actions to Address 

Environmental Justice in Minority 

Populations and Low-Income 

Populations’’ (59 FR 7629, February 16, 

1994). 

Since tolerances and exemptions that 

are established on the basis of a petition 

under FFDCA section 408(d), such as 

the tolerance in this final rule, do not 

require the issuance of a proposed rule, 

the requirements of the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601 et 

seq.), do not apply. 

This action directly regulates growers, 

food processors, food handlers, and food 

retailers, not States or tribes, nor does 

this action alter the relationships or 

distribution of power and 

responsibilities established by Congress 

in the preemption provisions of FFDCA 

section 408(n)(4). As such, the Agency 

has determined that this action will not 

have a substantial direct effect on States 

or Tribal Governments, on the 

relationship between the National 

Government and the States or Tribal 

Governments, or on the distribution of 

power and responsibilities among the 

various levels of government or between 

the Federal Government and Indian 

Tribes. Thus, the Agency has 

determined that Executive Order 13132, 

entitled ‘‘Federalism’’ (64 FR 43255, 

August 10, 1999) and Executive Order 

13175, entitled ‘‘Consultation and 

Coordination with Indian Tribal 

Governments’’ (65 FR 67249, November 

9, 2000) do not apply to this action. In 

addition, this action does not impose 

any enforceable duty or contain any 

unfunded mandate as described under 

Title II of the Unfunded Mandates 

Reform Act (UMRA) (2 U.S.C. 1501 et 

seq.). 

This action does not involve any 

technical standards that would require 

Agency consideration of voluntary 

consensus standards pursuant to section 

12(d) of the National Technology 

Transfer and Advancement Act 

(NTTAA) (15 U.S.C. 272 note). 

VII. Congressional Review Act 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), EPA will 

submit a report containing this rule and 

other required information to the U.S. 

Senate, the U.S. House of 

Representatives, and the Comptroller 

General of the United States prior to 

publication of the rule in the Federal 

Register. This action is not a ‘‘major 

rule’’ as defined by 5 U.S.C. 804(2). 

List of Subjects in 40 CFR Part 180 

Environmental protection, 

Administrative practice and procedure, 

Agricultural commodities, Pesticides 

and pests, Reporting and recordkeeping 

requirements. 

Dated: August 2, 2021. 

Marietta Echeverria, 

Acting Director, Registration Division, Office 

of Pesticide Programs. 

Therefore, for the reasons stated in the 

preamble, EPA is amending 40 CFR 

chapter I as follows: 

PART 180—TOLERANCES AND 

EXEMPTIONS FOR PESTICIDE 

CHEMICAL RESIDUES IN FOOD 

■ 1. The authority citation for part 180 

continues to read as follows: 

Authority: 21 U.S.C. 321(q), 346a and 371. 

■ 2. In § 180.589 amend the table in 

paragraph (a)(1) by adding in 

alphabetical order entries for ‘‘Tea, 

dried2’’ and ‘‘Tea, instant 2’’ to read as 

follows: 

§ 180.589 Boscalid; tolerances for 

residues. 

(a) * * * 

(1) * * * 

Commodity Parts per 

million 

* * * * * 

Tea, dried 2 ................................. 70 

Tea, instant 2 ............................... 70 

* * * * * 

* * * * * 

[FR Doc. 2021–16973 Filed 8–12–21; 8:45 am] 

BILLING CODE 6560–50–P 

NATIONAL FOUNDATION ON THE 

ARTS AND HUMANITIES 

National Endowment for the 

Humanities 

45 CFR Part 1174 

RIN 3136–AA36 

Implementation of the Program Fraud 

Civil Remedies Act of 1986 

AGENCY: National Endowment for the 

Humanities; National Foundation on the 

Arts and the Humanities. 

ACTION: Final rule. 

SUMMARY: The National Endowment for 

the Humanities (NEH) is adopting as 

final its proposed regulations to 

implement the Program Fraud Civil 

Remedies Act of 1986 (PFCRA). The 

PFCRA authorizes certain Federal 

agencies, including NEH, to impose 

civil penalties and assessments through 

administrative adjudication against any 

person who makes, submits, or presents 

a false, fictitious, or fraudulent claim or 

written statement to NEH. The rule 

establishes the procedures that NEH 

will follow in implementing the PFCRA, 

and specifies the hearing and appeal 

rights of persons subject to penalties 

and assessments under the PFCRA. 

DATES: This final rule is effective on 

August 13, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Voyatzis, Deputy General 

Counsel, Office of the General Counsel, 

National Endowment for the 

Humanities, 400 7th Street SW, Room 

4060, Washington, DC 20506; (202) 606– 

8322; gencounsel@neh.gov. 

SUPPLEMENTARY INFORMATION: 

1. Background 

On June 25, 2021, NEH published in 

the Federal Register a notice of 

proposed rulemaking (86 FR 33603), 

requesting public comment on a 

proposed rule to implement to 

implement the PFCRA. The agency 

received no comments. Accordingly, 

NEH is adopting the rule as proposed, 

subject to certain minor corrections to 

the rule’s organization and formatting. 

In October 1986, Congress enacted the 

PFCRA, 31 U.S.C. 3801–3812. The 

PFCRA established an administrative 

remedy against any person who makes, 

or causes to be made, a false claim or 

written statement to certain Federal 

agencies. The PFCRA requires these 


jbell on DSKJLSW7X2PROD with RULES
Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 44627 

1For a more detailed explanation of the 2015 Act 

and the civil monetary penalty inflation adjustment 

calculations that it requires, see NEH’s regulation 

implementing the 2015 Act at 85 FR 35566. 2Table 1 details the annual adjustments to the 

PFCRA maximum penalty amount for years 2016– 

2021. 

3Office of Management and Budget, 

Memorandum M–16–06 (February 24, 2016). 

4Office of Management and Budget, 

Memorandum M–17–11 (December 16, 2016). 

5Office of Management and Budget, 

Memorandum M–18–03 (December 15, 2017). 

6Office of Management and Budget, 

Memorandum M–19–04 (December 14, 2018). 

7Office of Management and Budget, 

Memorandum M–20–05 (December 16, 2019). 

8Office of Management and Budget, 

Memorandum M–21–10 (December 23, 2020). 

Federal agencies to follow certain 

procedures in recovering penalties and 

assessments against people who file 

false claims or statements for which the 

liability is $150,000 or less. Initially, the 

PFCRA did not apply to NEH. Section 

10 of the Inspector General Reform Act 

of 2008, Public Law 110–409, 122 Stat. 

4314, however, expanded the PFCRA’s 

scope to include NEH. 

The PFCRA requires each covered 

agency to promulgate rules and 

regulations necessary to implement its 

provisions. Following the PFCRA’s 

enactment, the President’s Council on 

Integrity and Efficiency requested that 

the Department of Health and Human 

Services lead an inter-agency task force 

to develop model PFCRA regulations. 

This action was in keeping with the 

Senate Governmental Affairs 

Committee’s desire that ‘‘the regulations 

would be substantially similar 

throughout the government’’ (S. Rep. 

No. 99–212, 99th Cong., 1st Sess. 12 

(1985)). The Council recommended that 

all covered agencies adopt the model 

rule. 

Accordingly, NEH is implementing 

the PFCRA’s provisions through this 

final rule—which substantively 

conforms to the model rule—in order to 

establish procedures by which NEH will 

seek to recover penalties and 

assessments against persons who file, or 

cause to have filed, false claims or 

statements with NEH for which liability 

is $150,000 or less. 

2. Maximum Penalty Amount 

The PFCRA established a maximum 

penalty of $5,000 for each violation. The 

Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 

2015 (the 2015 Act), 28 U.S.C. 2461 

note, required all Federal agencies to (1) 

adjust the penalty amount to 2016 

inflation levels with an initial ‘‘catchup’’ inflation adjustment; and (2) make 

subsequent annual adjustments for 

inflation.1 This rule incorporates the 

initial ‘‘catch-up’’ adjustment to 2016 

inflation levels and the annual 

adjustments for 2017 through 2021, and 

applies those adjustments cumulatively 

to the civil monetary penalties that the 

PFCRA imposes.2

A. Initial ‘‘Catch-Up’’ and 2021 

Adjustments for Inflation 

NEH determined the first ‘‘catch-up’’ 

adjustment to 2016 inflation levels 

using the formula set forth in the 2015 

Act. Specifically, NEH calculated the 

percent change between the Consumer 

Price Index for all Urban Consumers 

(CPI–U) for October of the last year in 

which Congress adjusted the PFCRA 

civil penalties (October 1986) and the 

CPI–U for October 2015, and then 

rounded to the nearest dollar. 

NEH similarly determined each 

subsequent annual adjustment by 

calculating the percent increase between 

the CPI–U for the month of October 

preceding the date of the adjustment 

and the CPI–U for the October one year 

prior to the October immediately 

preceding the date of the adjustment. 

Table 1, below, details the above 

calculations. 

TABLE 1—ANNUAL ADJUSTMENTS TO PFCRA CIVIL MONETARY PENALTIES, 2016–2021 

Effective date 

Baseline 

maximum 

penalty 

Applicable 

multiplier 

based on 

percent 

increase 

in CPI–U 

New baseline 

maximum 

penalty 

August 1, 2016 ............................................................................................................................ $5,000 3 2.15628 $10,781 

January 15, 2017 ......................................................................................................................... 10,781 4 1.01636 10,957 

January 15, 2018 ......................................................................................................................... 10,957 5 1.02041 11,181 

January 15, 2019 ......................................................................................................................... 11,181 6 1.02522 11,463 

January 15, 2020 ......................................................................................................................... 11,463 7 1.01764 11,665 

January 15, 2021 ......................................................................................................................... 11,665 8 1.01182 11,803 

B. Future Annual Adjustments 

The 2015 Act requires agencies to 

make annual adjustments to civil 

penalty amounts no later than January 

15 of each year following the initial 

adjustment. NEH will calculate future 

annual adjustments using the same 

method as the adjustments previously 

described herein. If the CPI–U does not 

increase, then the civil penalties remain 

the same. 

NEH will publish a Notice in the 

Federal Register containing the amount 

of these annual inflation adjustments no 

later than January 15 of each year. 

Executive Order 12866, Regulatory 

Planning and Review, and Executive 

Order 13563, Improving Regulation and 

Regulatory Review 

This action is not a significant 

regulatory action and was therefore not 

submitted to the Office of Management 

and Budget for review. 

Executive Order 13132, Federalism 

This rulemaking does not have 

federalism implications. It will not have 

substantial direct effects on the 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. 

Executive Order 12988, Civil Justice 

Reform 

This rulemaking meets the applicable 

standards set forth in section 3(a) and 

3(b)(2) of Executive Order 12988. 

Specifically, this rulemaking is written 

in clear language designed to help 

reduce litigation. 

Executive Order 13175, Indian Tribal 

Governments 

Under the criteria in Executive Order 

13175, NEH evaluated this rulemaking 

and determined that it will not have any 


jbell on DSKJLSW7X2PROD with RULES
44628 Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 

potential effects on Federally recognized 

Indian Tribes. 

Executive Order 12630, Takings 

Under the criteria in Executive Order 

12630, this rulemaking does not have 

significant takings implications. 

Therefore, a takings implication 

assessment is not required. 

Regulatory Flexibility Act of 1980 

This rulemaking will not have a 

significant adverse impact on a 

substantial number of small entities, 

including small businesses, small 

governmental jurisdictions, or certain 

small not-for-profit organizations. 

Paperwork Reduction Act of 1995 

This rulemaking does not impose an 

information collection burden under the 

Paperwork Reduction Act. This action 

contains no provisions constituting a 

collection of information pursuant to 

the Paperwork Reduction Act. 

Unfunded Mandates Reform Act of 

1995 

This rulemaking does not contain a 

Federal mandate that will result in the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector of $100 million or more 

in any one year. 

National Environmental Policy Act of 

1969 

This rulemaking will not have a 

significant effect on the human 

environment. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 

This rulemaking will not be a major 

rule as defined in section 804 of the 

Small Business Regulatory Enforcement 

Fairness Act of 1996. This rulemaking 

will not result in an annual effect on the 

economy of $100 million or more, a 

major increase in costs or prices, 

significant adverse effects on 

competition, employment, investment, 

productivity, innovation, or the ability 

of United States-based companies to 

compete with foreign-based companies 

in domestic and export markets. 

E-Government Act of 2002 

All information about NEH required 

to be published in the Federal Register 

may be accessed at www.neh.gov. The 

website www.regulations.gov contains 

electronic dockets for NEH’s 

rulemakings under the Administrative 

Procedure Act of 1946. 

Plain Writing Act of 2010 

To ensure this rule speaks in plain 

and clear language so that the public 

can use and understand it, NEH 

modeled the language of the rule on the 

Federal Plain Language Guidelines. 

List of Subjects in 45 CFR 1174 

Claims, Fraud, Penalties. 

For the reasons set forth in the 

preamble, the National Endowment for 

the Humanities amends 45 CFR chapter 

XI by adding part 1174 to read as 

follows: 

PART 1174—PROGRAM FRAUD CIVIL 

REMEDIES ACT REGULATIONS 

Subpart A—Purpose, Definitions, and Basis 

for Liability 

Sec. 

1174.1 Purpose. 

1174.2 Definitions. 

1174.3 Basis for civil penalties and 

assessments. 

Subpart B—Procedures Leading to 

Issuance of a Complaint 

1174.4 Who investigates program fraud. 

1174.5 Review of suspected program fraud 

by the reviewing official. 

1174.6 Prerequisites for issuing a 

complaint. 

1174.7 Contents of a complaint. 

1174.8 Service of a complaint. 

Subpart C—Procedures Following Service 

of a Complaint 

1174.9 Answer to a complaint. 

1174.10 Default upon failure to file an 

answer. 

1174.11 Referral of complaint and answer 

to the ALJ. 

Subpart D—Hearing Procedures 

1174.12 Notice of hearing. 

1174.13 Location of the hearing. 

1174.14 Parties to the hearing and their 

rights. 

1174.15 Separation of functions. 

1174.16 The ALJ’s role and authority. 

1174.17 Disqualification of reviewing 

official or ALJ. 

1174.18 Parties’ rights to review 

documents. 

1174.19 Discovery. 

1174.20 Discovery motions. 

1174.21 Depositions. 

1174.22 Exchange of witness lists, 

statements, and exhibits. 

1174.23 Subpoenas for attendance at the 

hearing. 

1174.24 Protective orders. 

1174.25 Filing and serving documents with 

the ALJ. 

1174.26 Computation of time. 

1174.27 The hearing and the burden of 

proof. 

1174.28 Presentation of evidence. 

1174.29 Witness testimony. 

1174.30 Ex parte communications. 

1174.31 Sanctions for misconduct. 

1174.32 Post-hearing briefs. 

Subpart E—Decisions and Appeals 

1174.33 Initial decision. 

1174.34 Determining the amount of 

penalties and assessments. 

1174.35 Reconsideration of the initial 

decision. 

1174.36 Finalizing the initial decision. 

1174.37 Procedures for appealing the ALJ’s 

decision. 

1174.38 Appeal to the authority head. 

1174.39 Judicial review. 

1174.40 Collection of civil penalties and 

assessments. 

1174.41 Rights to administrative offset. 

1174.42 Deposit in Treasury of the United 

States. 

1174.43 Voluntary settlement of the 

administrative complaint. 

1174.44 Limitations regarding criminal 

misconduct. 

Authority: 31 U.S.C. 3801–3812; 5 U.S.C. 

App. 8G(a)(2). 

Subpart A—Purpose, Definitions, and 

Basis for Liability 

§ 1174.1 Purpose. 

This part implements the Program 

Fraud Civil Remedies Act of 1986, 31 

U.S.C. 3801–3812 (PFCRA). The PFCRA 

provides the National Endowment for 

the Humanities (NEH), and other 

Federal agencies, with an administrative 

remedy to impose civil penalties and 

assessments against persons who make, 

submit, or present, or cause to be made, 

submitted or presented, false, fictitious, 

or fraudulent claims or written 

statements to NEH. The PFCRA also 

provides due process protections to all 

persons who are subject to 

administrative proceedings under this 

part. 

§ 1174.2 Definitions. 

For the purposes of this part— 

ALJ means an Administrative Law 

Judge in the authority appointed 

pursuant to 5 U.S.C. 3105 or detailed to 

the authority pursuant to 5 U.S.C. 3344. 

Authority means the National 

Endowment for the Humanities (NEH). 

Authority head means the NEH 

Chairperson or the Chairperson’s 

designee. 

Benefit means anything of value, 

including but not limited to any 

advantage, preference, privilege, license, 

permit, favorable decision, ruling, status 

or loan guarantee. 

Claim means any request, demand or 

submission that a person makes— 

(1) To the authority— 

(i) For property, services, or money 

(including money representing grants, 

loans, insurance, or benefits); or 

(ii) Which has the effect of decreasing 

an obligation to pay or account for 

property, services, or money; or 

(2) To a recipient of property, 

services, or money from the authority or 

to a party to a contract with the 

authority— 

(i) For property or services if the 

United States— 


jbell on DSKJLSW7X2PROD with RULES
Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 44629 

(A) Provided such property or 

services; 

(B) Provided any portion of the funds 

for the purchase of such property or 

services; or 

(C) Will reimburse such recipient or 

party for the purchase of such property 

or services; or 

(ii) For the payment of money 

(including money representing grants, 

loans, insurance, or benefits) if the 

United States— 

(A) Provided any portion of the 

money requested or demanded; or 

(B) Will reimburse such recipient or 

party for any portion of the money paid 

on such request or demand. 

Complaint means the administrative 

complaint that the reviewing official 

serves on the defendant under § 1174.8. 

Defendant means any person alleged 

in a complaint to be liable for a civil 

penalty or assessment pursuant to the 

PFCRA. 

Government means the United States 

Government. 

Individual means a natural person. 

Initial decision means the written 

decision of the ALJ under § 1174.33, and 

includes a revised initial decision 

issued following a remand or a motion 

for reconsideration. 

Knows or has reason to know means 

that a person, with respect to a claim or 

statement— 

(1) Has actual knowledge that the 

claim or statement is false, fictitious, or 

fraudulent; 

(2) Acts in deliberate ignorance of the 

truth or falsity of the claim or statement; 

or 

(3) Acts in reckless disregard of the 

truth or falsity of the claim or statement; 

and no proof of specific intent to 

defraud is required. 

Makes shall include the terms 

presents, submits, and causes to be 

made, presented, or submitted. As the 

context requires, making or made shall 

likewise include the corresponding 

forms of such terms. 

Person means any individual, 

partnership, corporation, association, or 

private organization, and includes the 

plural of that term. 

Representative means an attorney 

who is in good standing of the bar of 

any State, Territory, or possession of the 

United States, or the District of 

Columbia, or the Commonwealth of 

Puerto Rico, or any other individual 

who the defendant designates in 

writing. 

Reviewing official means the NEH 

General Counsel or the General 

Counsel’s designee. 

Statement means any representation, 

certification, affirmation, document, 

record, or accounting or bookkeeping 

entry that a person makes— 

(1) With respect to a claim (or 

eligibility to make a claim) or to obtain 

the approval or payment of a claim; or 

(2) With respect to (or with respect to 

eligibility for)— 

(i) A contract with, or a bid or 

proposal for a contract with, or 

(ii) A grant, loan, or benefit from, the 

authority, or any State, political 

subdivision of a State, or other party, if 

the United States Government provides 

any portion of the money or property 

under such contract or for such grant, 

loan, or benefit, or if the Government 

will reimburse such State, political 

subdivision, or party for any portion of 

the money or property under such 

contract or for such grant, loan, or 

benefit. 

§ 1174.3 Basis for civil penalties and 

assessments. 

(a) Claims. (1) Any person shall be 

subject, in addition to any other remedy 

that may be prescribed by law, to a civil 

penalty of not more than $11,803 for 

each claim that person makes that the 

person knows or has reason to know— 

(i) Is false, fictitious, or fraudulent; 

(ii) Includes or is supported by any 

written statement which asserts a 

material fact which is false, fictitious, or 

fraudulent; 

(iii) Includes or is supported by any 

written statement that— 

(A) Omits a material fact; 

(B) Is false, fictitious, or fraudulent as 

a result of such omission; and 

(C) Is a statement in which the person 

making such statement has a duty to 

include such material fact; or 

(iv) Is for payment for the provision 

of property or services which the person 

has not provided as claimed. 

(2) Each voucher, invoice, claim form, 

or other individual request or demand 

for property, services, or money 

constitutes a separate claim. 

(3) A claim shall be considered made 

to the authority, recipient, or party 

when such a claim is actually made to 

an agent, fiscal intermediary, or other 

entity, including any State or political 

subdivision of a State, acting for or on 

behalf of the authority. 

(4) Each claim for property, services, 

or money is subject to a civil penalty 

regardless of whether such property, 

services, or money is actually delivered 

or paid. 

(5) If the Government has made any 

payment on a claim, a person subject to 

a civil penalty under paragraph (a)(1) of 

this section may also be subject to an 

assessment of not more than twice the 

amount of that claim or the portion 

thereof that violates paragraph (a)(1) of 

this section. Such assessment shall be in 

lieu of damages that the Government 

sustained because of such a claim. 

(b) Statements. (1) Any person shall 

be subject, in addition to any other 

remedy prescribed by law, to a civil 

penalty of not more than $11,803 for 

each written statement that person 

makes that the person knows or has 

reason to know— 

(i) Asserts a material fact which is 

false, fictitious or fraudulent; or 

(ii) Is false, fictitious, or fraudulent 

because it omits a material fact that the 

person making the statement has a duty 

to include in such a statement; and 

(iii) Contains or is accompanied by an 

express certification or affirmation of 

the truthfulness and accuracy of the 

statement’s contents. 

(2) A person will only be subject to a 

civil penalty under paragraph (b)(1) of 

this section if the written statement 

made by the person contains or is 

accompanied by an express certification 

or affirmation of the truthfulness and 

accuracy of the statement’s contents. 

(3) Each written representation, 

certification, or affirmation constitutes a 

separate statement. 

(4) A statement shall be considered 

made to the authority when it is actually 

made to an agent, fiscal intermediary, or 

other entity, including any State or 

political subdivision of a State, acting 

for or on behalf of the authority. 

(c) Proof of specific intent to defraud 

is not required to establish liability 

under this section. 

(d) In any case in which more than 

one person is liable for making a false, 

fictitious, or fraudulent claim or 

statement under this section, each 

person may be held liable for a civil 

penalty and assessment. 

(e) In any case in which more than 

one person is liable for making a claim 

under this section on which the 

Government has made payment, the 

authority may impose an assessment 

against any such person or jointly and 

severally against any combination of 

persons. 

(f) The authority will annually adjust 

for inflation the maximum amount of 

the civil penalties described in this 

section, and will publish a document in 

the Federal Register containing the new 

maximum amount no later than January 

15 of each year. 

Subpart B—Procedures Leading to 

Issuance of a Complaint 

§ 1174.4 Who investigates program fraud. 

The Inspector General, or his or her 

designee, is the investigating official 

responsible for investigating allegations 

that a person has made a false claim or 

statement. In this regard, the Inspector 

General has authority under the PFCRA 

and the Inspector General Act of 1978, 


jbell on DSKJLSW7X2PROD with RULES
44630 Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 

5 U.S.C. App. 3, as amended, to issue 

administrative subpoenas for the 

production of records and documents. 

§ 1174.5 Review of suspected program 

fraud by the reviewing official. 

(a) If the investigating official 

concludes that the results of his or her 

investigation warrant an action under 

this part, the investigating official shall 

submit to the reviewing official a report 

containing the investigation’s findings 

and conclusions. 

(b) If the reviewing official determines 

that the report provides adequate 

evidence that a person made a false, 

fictitious or fraudulent claim or 

statement, the reviewing official shall 

transmit to the Attorney General written 

notice of the reviewing official’s 

intention to refer the matter for 

adjudication, with a request for 

approval of such referral. This notice 

will include the reviewing official’s 

statement concerning: 

(1) The reasons for the referral; 

(2) The claims or statements that form 

the basis for liability; 

(3) The evidence that supports 

liability; 

(4) An estimate of the amount of 

money or the value of property, 

services, or other benefits requested or 

demanded in the false claim or 

statement; 

(5) Any exculpatory or mitigating 

circumstances that may relate to the 

claims or statements that are known by 

the reviewing official or the 

investigating official; and 

(6) A statement that there is a 

reasonable prospect of collecting an 

appropriate amount of penalties and 

assessments. 

(c) If, at any time, the Attorney 

General (or designee) requests in writing 

that the authority stay this 

administrative process, the authority 

head must stay the process immediately. 

The authority head may resume the 

process only upon receipt of the 

Attorney General’s written 

authorization. 

§ 1174.6 Prerequisites for issuing a 

complaint. 

The authority may issue a complaint 

only if: 

(a) The Attorney General (or designee) 

approves the reviewing official’s referral 

of the allegations for adjudication; and 

(b) In a case of submission of false 

claims, if the amount of money or the 

value of property or services that a false 

claim (or a group of related claims 

submitted at the same time) demanded 

or requested does not exceed $150,000. 

§ 1174.7 Contents of a complaint. 

(a) The complaint will state that the 

authority seeks to impose civil 

penalties, assessments, or both, against 

the defendant and will include: 

(1) The allegations of liability against 

the defendant and the statutory basis for 

liability, identification of the claims or 

statements involved, and the reasons 

liability allegedly arises from such 

claims or statements; 

(2) The maximum amount of penalties 

and assessments for which the 

defendant may be held liable; 

(3) A statement that the defendant 

may request a hearing by filing an 

answer and may be represented by a 

representative; 

(4) Instructions for filing such an 

answer; and 

(5) A warning that failure to file an 

answer within thirty days of service of 

the complaint will result in an 

imposition of the maximum amount of 

penalties and assessments. 

(b) The reviewing official must serve 

the complaint on the defendant and, if 

the defendant requests a hearing, 

provide a copy to the ALJ assigned to 

the case. 

§ 1174.8 Service of a complaint. 

(a) The reviewing official must serve 

the complaint on an individual 

defendant directly, on a partnership 

through a general partner, and on a 

corporation or an unincorporated 

association through an executive officer 

or a director, except that the reviewing 

official may also make service on any 

person authorized by appointment or by 

law to receive process for the defendant. 

(b) The reviewing official may serve 

the complaint either by: 

(1) Registered or certified mail; or 

(2) Personal delivery by anyone 

eighteen years of age or older. 

(c) The date of service is the date of 

personal delivery or, in the case of 

service by registered or certified mail, 

the date of postmark. 

(d) When the reviewing official serves 

the complaint, he or she should also 

serve the defendant with a copy of this 

part and 31 U.S.C. 3801–3812. 

Subpart C—Procedures Following 

Service of a Complaint 

§ 1174.9 Answer to a complaint. 

(a) A defendant may file an answer 

with the reviewing official within thirty 

days of service of the complaint. An 

answer will be considered a request for 

an oral hearing. 

(b) In the answer, the defendant— 

(1) Must admit or deny each 

allegation of liability contained in the 

complaint (a failure to deny an 

allegation is considered an admission); 

(2) Must state any defense on which 

the defendant intends to rely; 

(3) May state any reasons why the 

penalties, assessments, or both should 

be less than the statutory maximum; and 

(4) Must state the name, address, and 

telephone number of the person the 

defendant authorized to act as the 

defendant’s representative, if any. 

(c) If the defendant is unable to file a 

timely answer which meets the 

requirements set forth in paragraph (b) 

of this section, the defendant may file 

with the reviewing official a general 

answer denying liability, requesting a 

hearing, and requesting an extension of 

time in which to file a complete answer. 

The defendant must file a general 

answer within thirty days of service of 

the complaint. 

(d) If the defendant initially files a 

general answer requesting an extension 

of time, the reviewing official must 

promptly file with the ALJ the 

complaint, the general answer, and the 

request for an extension of time. 

(e) For good cause shown, the ALJ 

may grant the defendant up to thirty 

additional days within which to file an 

answer that meets the requirements of 

paragraph (b) of this section. The 

defendant must file such an answer 

with the ALJ and must serve a copy on 

the reviewing official. 

§ 1174.10 Default upon failure to file an 

answer. 

(a) If the defendant does not file any 

answer within thirty days after service 

of the complaint, the reviewing official 

may refer the complaint to the ALJ. 

(b) Once the reviewing official refers 

the complaint, the ALJ will promptly 

serve on the defendant a notice that the 

ALJ will issue an initial decision. 

(c) The ALJ will assume the facts 

alleged in the complaint to be true and, 

if such facts establish liability under the 

statute, the ALJ will issue an initial 

decision imposing the maximum 

amount of penalties and assessments 

allowed under the PFCRA. 

(d) Except as otherwise provided in 

this section, when a defendant fails to 

file a timely answer, the defendant 

waives any right to further review of the 

penalties and assessments the ALJ may 

impose in the initial decision. 

(e) The initial decision becomes final 

thirty days after the ALJ issues it. 

(f) At any time before an initial 

decision becomes final, a defendant may 

file a motion with the ALJ asking that 

the ALJ reopen the case. An ALJ may 

only reopen a case if he or she 

determines that the defendant set forth 

in the motion extraordinary 

circumstances that prevented the 

defendant from filing a timely answer. 


jbell on DSKJLSW7X2PROD with RULES
Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 44631 

The initial decision will be stayed until 

the ALJ decides on the motion. The 

reviewing official may respond to the 

motion. 

(g) If the ALJ determines that a 

defendant has demonstrated 

extraordinary circumstances that excuse 

his or her failure to file a timely answer, 

the ALJ will withdraw the initial 

decision and grant the defendant an 

opportunity to answer the complaint. 

(h) The ALJ’s decision to deny a 

defendant’s motion to reopen a case is 

not subject to reconsideration under 

§ 1174.35. 

(i) The defendant may appeal the 

ALJ’s decision denying a motion to 

reopen by filing a notice of appeal with 

the authority head within fifteen days 

after the ALJ denies the motion. The 

timely filing of a notice of appeal shall 

stay the initial decision until the 

authority head decides the issue. 

(j) If the defendant files a timely 

notice of appeal with the authority 

head, the ALJ shall forward the record 

of the proceeding to the authority head. 

(k) The authority head shall decide 

expeditiously, based solely on the 

record before the ALJ, whether 

extraordinary circumstances excuse the 

defendant’s failure to file a timely 

answer. 

(l) If the authority head decides that 

extraordinary circumstances excuse the 

defendant’s failure to file a timely 

answer, the authority head shall remand 

the case to the ALJ with instructions to 

grant the defendant an opportunity to 

answer. 

(m) If the authority head decides that 

the circumstances do not excuse the 

defendant’s failure to file a timely 

answer, the authority head shall 

reinstate the ALJ’s initial decision, 

which shall become final and binding 

upon the parties thirty days after the 

authority head issues such a decision. 

§ 1174.11 Referral of complaint and 

answer to the ALJ. 

When the reviewing official receives 

an answer, he or she must 

simultaneously file the complaint, the 

answer, and a designation of the 

authority’s representative with the ALJ. 

Subpart D—Hearing Procedures 

§ 1174.12 Notice of hearing. 

(a) When the ALJ receives the 

complaint and the answer, the ALJ will 

promptly serve a notice of hearing upon 

the defendant and the authority’s 

representative in the same manner as 

the complaint. The ALJ must serve the 

notice of oral hearing within six years 

of the date on which the claim or 

statement was made. 

(b) The hearing is a formal proceeding 

conducted by the ALJ during which a 

defendant will have the opportunity to 

cross-examine witnesses, present 

testimony, and dispute liability. 

(c) The notice of hearing must 

include: 

(1) The tentative date, time, and place 

of the hearing; 

(2) The legal authority and 

jurisdiction under which the hearing is 

being held; 

(3) The matters of fact and law to be 

asserted; 

(4) A description of the procedures for 

the conduct of the hearing; 

(5) The name, address, and telephone 

number of the defendant’s 

representative and the representative for 

the authority; and 

(6) Such other matters as the ALJ 

deems appropriate. 

§ 1174.13 Location of the hearing. 

(a) The ALJ shall hold the hearing: 

(1) In any judicial district of the 

United States in which the defendant 

resides or transacts business; 

(2) In any judicial district of the 

United States in which a claim or 

statement in issue was made; or 

(3) In such other place as the parties 

and the ALJ may agree upon. 

(b) Each party shall have the 

opportunity to present arguments with 

respect to the location of the hearing. 

(c) The ALJ shall decide the time and 

the place of the hearing. 

§ 1174.14 Parties to the hearing and their 

rights. 

(a) The parties to the hearing shall be 

the defendant and the authority. 

(b) Except where the authority head 

designates another representative, the 

NEH General Counsel (or designee) shall 

represent the authority. 

(c) Each party has the right to: 

(1) Be represented by a representative; 

(2) Request a pre-hearing conference 

and participate in any conference held 

by the ALJ; 

(3) Conduct discovery; 

(4) Agree to stipulations of fact or law 

which will be made a part of the record; 

(5) Present evidence relevant to the 

issues at the hearing; 

(6) Present and cross-examine 

witnesses; 

(7) Present arguments at the hearing 

as permitted by the ALJ; and 

(8) Submit written briefs and 

proposed findings of fact and 

conclusions of law after the hearing, as 

permitted by the ALJ. 

§ 1174.15 Separation of functions. 

(a) The investigating official, the 

reviewing official, and any employee or 

agent of the authority who takes part in 

investigating, preparing, or presenting a 

particular case may not, in such case or 

a factually related case: 

(1) Participate in the hearing as the 

ALJ; 

(2) Participate or advise in the 

authority head’s review of the initial 

decision; or 

(3) Make the collection of penalties 

and assessment. 

(b) The ALJ must not be responsible 

to or subject to the supervision or 

direction of the investigating official or 

the reviewing official. 

§ 1174.16 The ALJ’s role and authority. 

(a) An ALJ serves as the presiding 

officer at all hearings. The Office of 

Personnel Management selects the ALJ. 

(b) The ALJ must conduct a fair and 

impartial hearing, avoid delay, maintain 

order, and assure that a record of the 

proceeding is made. 

(c) The ALJ has the authority to— 

(1) Set and change the date, time, and 

place of the hearing upon reasonable 

notice to the parties; 

(2) Continue or recess the hearing, in 

whole or in part, for a reasonable period 

of time; 

(3) Hold conferences to identify or 

simplify the issues or to consider other 

matters that may aid in the expeditious 

disposition of the proceeding; 

(4) Administer oaths and affirmations; 

(5) Issue subpoenas requiring witness 

attendance and the production of 

documents at depositions or at hearings; 

(6) Rule on motions and other 

procedural matters; 

(7) Regulate the scope and timing of 

discovery; 

(8) Regulate the course of the hearing 

and the conduct of representatives and 

parties; 

(9) Examine witnesses; 

(10) Receive, rule on, exclude, or limit 

evidence; 

(11) Upon motion of a party, take 

official notice of facts; 

(12) Upon motion of a party, decide 

cases, in whole or in part, by summary 

judgment when there is no disputed 

issue of material fact; 

(13) Conduct any conference, 

argument or hearing on motions in 

person or by telephone; and 

(14) Exercise such other authority as 

is necessary to carry out the 

responsibilities of the ALJ under this 

part. 

(d) The ALJ does not have the 

authority to find Federal statutes or 

regulations invalid. 

§ 1174.17 Disqualification of reviewing 

official or ALJ. 

(a) A reviewing official or an ALJ may 

disqualify himself or herself at any time. 


jbell on DSKJLSW7X2PROD with RULES
44632 Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 

(b) Upon any party’s motion, the 

reviewing official or ALJ may be 

disqualified as follows: 

(1) The party must support the motion 

by an affidavit containing specific facts 

establishing that personal bias or other 

reason for disqualification exists, 

including the time and circumstances of 

the party’s discovery of such facts; 

(2) The party must file the motion 

promptly after discovery of the grounds 

for disqualification or the objection will 

be deemed waived; and 

(3) The party, or representative of 

record, must certify in writing that such 

party makes the motion in good faith. 

(c) Once a party has filed a motion to 

disqualify, the ALJ will halt the 

proceedings until he or she resolves the 

disqualification matter. If the ALJ 

disqualifies the reviewing official, the 

ALJ will dismiss the complaint without 

prejudice. If the ALJ disqualifies himself 

or herself, the authority will promptly 

reassign the case to another ALJ. 

§ 1174.18 Parties’ rights to review 

documents. 

(a) Once the ALJ issues a hearing 

notice pursuant to § 1174.12, and upon 

written request to the reviewing official, 

the defendant may: 

(1) Review any relevant and material 

documents, transcripts, records, and 

other materials that relate to the 

allegations set out in the complaint and 

upon which the investigating official 

based his or her findings and 

conclusions, unless such documents are 

subject to a privilege under Federal law, 

and obtain copies of such documents 

upon payment of duplication fees; and 

(2) Obtain a copy of all exculpatory 

information in the reviewing official’s or 

investigating official’s possession that 

relates to the allegations in the 

complaint, even if it appears in a 

document that would otherwise be 

privileged. If the document would 

otherwise be privileged, the other party 

only must disclose the portion 

containing exculpatory information. 

(b) The notice that the reviewing 

official sends to the Attorney General, as 

described in § 1174.5(b), is not 

discoverable under any circumstances. 

(c) If the reviewing official does not 

respond to the defendant’s request 

within twenty days, the defendant may 

file with the ALJ a motion to compel 

disclosure of the documents, subject to 

the provisions of this section. The 

defendant may only file such a motion 

with the ALJ after filing an answer 

pursuant to § 1174.9. 

§ 1174.19 Discovery. 

(a) Parties may conduct the following 

types of discovery: 

(1) Requests for production of 

documents for inspection and copying; 

(2) Requests for admissions of 

authenticity of any relevant document 

or of the truth of any relevant fact; 

(3) Written interrogatories; and 

(4) Depositions. 

(b) For the purpose of this section, the 

term ‘‘documents’’ includes 

information, documents, reports, 

answers, records, accounts, papers, and 

other data and documentary evidence. 

Nothing contained herein shall be 

interpreted to require the creation of a 

document. 

(c) Unless the parties mutually agree 

to discovery, a party may conduct 

discovery only as ordered by the ALJ. 

The ALJ shall regulate the timing of 

discovery. 

(d) Each party shall bear its own 

discovery costs. 

§ 1174.20 Discovery motions. 

(a) Any party seeking discovery may 

file a motion with the ALJ together with 

a copy of the requested discovery, or in 

the case of depositions, a summary of 

the scope of the proposed deposition. 

(b) Within ten days of service, a party 

may file an opposition to the motion 

and/or a motion for protective order as 

provided in § 1174.24. 

(c) The ALJ may grant a motion for 

discovery only if he or she finds that the 

discovery sought— 

(1) Is necessary for the expeditious, 

fair, and reasonable consideration of the 

issues; 

(2) Is not unduly costly or 

burdensome; 

(3) Will not unduly delay the 

proceeding; and 

(4) Does not seek privileged 

information. 

(d) The burden of showing that the 

ALJ should allow discovery is on the 

party seeking discovery. 

(e) The ALJ may grant discovery 

subject to a protective order under 

§ 1174.24. 

§ 1174.21 Depositions. 

(a) If the ALJ grants a motion for 

deposition, the ALJ shall issue a 

subpoena for the deponent, which may 

require the deponent to produce 

documents. The subpoena shall specify 

the time and place at which the 

deposition will take place. 

(b) The party seeking to depose shall 

serve the subpoena in the manner 

prescribed by § 1174.8. 

(c) The deponent may file with the 

ALJ a motion to quash the subpoena or 

a motion for a protective order within 

ten days of service. 

(d) The party seeking to depose shall 

provide for the taking of a verbatim 

transcript of the deposition, which it 

shall make available to all other parties 

for inspection and copying. 

§ 1174.22 Exchange of witness lists, 

statements, and exhibits. 

(a) As ordered by the ALJ, the parties 

must exchange witness lists and copies 

of proposed hearing exhibits, including 

copies of any written statements or 

transcripts of deposition testimony that 

each party intends to offer in lieu of live 

testimony. 

(b) If a party objects, the ALJ will not 

admit into evidence the testimony of 

any witness whose name does not 

appear on the witness list or any exhibit 

not provided to an opposing party in 

advance, unless the ALJ finds good 

cause for the omission or concludes that 

there is no prejudice to the objecting 

party. 

(c) Unless a party objects within the 

time set by the ALJ, documents 

exchanged in accordance with this 

section are deemed to be authentic for 

the purpose of admissibility at the 

hearing. 

§ 1174.23 Subpoenas for attendance at the 

hearing. 

(a) A party wishing to procure the 

appearance and testimony of any 

individual at the hearing may request 

that the ALJ issue a subpoena. 

(b) A subpoena requiring the 

attendance and testimony of an 

individual may also require the 

individual to produce documents at the 

hearing. 

(c) A party seeking a subpoena shall 

file a written request no less than fifteen 

days before the hearing date unless 

otherwise allowed by the ALJ for good 

cause shown. Such request shall specify 

any documents to be produced, 

designate the witness, and describe the 

witness’ address and location with 

sufficient particularity to permit the 

witness to be found. 

(d) The subpoena shall specify the 

time and place at which the witness is 

to appear and any documents the 

witness is to produce. 

(e) The party seeking the subpoena 

shall serve it in the same manner 

prescribed in § 1174.8. The party 

seeking the subpoena may serve the 

subpoena on a party, or upon an 

individual under the control of a party, 

by first class mail. 

(f) The party requesting a subpoena 

shall pay the subpoenaed witness’ fees 

and mileage in the amounts that would 

be payable to a witness in a proceeding 

in United States District Court. A check 

for witness fees and mileage shall 

accompany the subpoena when it is 

served, except that when the authority 


jbell on DSKJLSW7X2PROD with RULES
Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 44633 

issues a subpoena, a check for witness 

fees and mileage need not accompany 

the subpoena. 

(g) A party, or the individual to whom 

the subpoena is directed, may file with 

the ALJ a motion to quash the subpoena 

within ten days after service, or on or 

before the time specified in the 

subpoena for compliance if it is less 

than ten days after service. 

§ 1174.24 Protective orders. 

(a) A party, prospective witness, or 

deponent may file a motion for a 

protective order that seeks to limit the 

availability or disclosure of evidence 

with respect to discovery sought by an 

opposing party or with respect to the 

hearing. 

(b) In issuing a protective order, the 

ALJ may make any order which justice 

requires to protect a party or person 

from annoyance, embarrassment, 

oppression, or undue burden or 

expense, including one or more of the 

following: 

(1) That the parties shall not have 

discovery; 

(2) That the parties shall have 

discovery only on specified terms and 

conditions; 

(3) That the parties shall have 

discovery only through a method of 

discovery other than requested; 

(4) That the parties shall not inquire 

into certain matters, or that the parties 

shall limit the scope of discovery to 

certain matters; 

(5) That the parties shall conduct 

discovery with no one present except 

persons designated by the ALJ; 

(6) That the parties shall seal the 

contents of the discovery; 

(7) That a sealed deposition shall be 

opened only by order of the ALJ; 

(8) That a trade secret or other 

confidential research, development, 

commercial information, or facts 

pertaining to any criminal investigation, 

proceeding, or other administrative 

investigation shall not be disclosed or 

shall be disclosed only in a designated 

way; or 

(9) That the parties shall 

simultaneously file specified documents 

or information enclosed in sealed 

envelopes to be opened as the ALJ 

directs. 

§ 1174.25 Filing and serving documents 

with the ALJ. 

(a) Documents filed with the ALJ must 

include an original and two copies. 

Every document filed in the proceeding 

must contain a title (e.g., motion to 

quash subpoena), a caption setting forth 

the title of the action, and the case 

number assigned by the ALJ. Every 

document must be signed by the person 

on whose behalf the paper was filed, or 

by his or her representative. 

(b) Documents are considered filed 

when they are mailed. The mailing date 

may be established by a certificate from 

the party or its representative, or by 

proof that the document was sent by 

certified or registered mail. 

(c) A party filing a document with the 

ALJ must, at the time of filing, serve a 

copy of such document on every other 

party. When a party is represented by a 

representative, the party’s representative 

must be served in lieu of the party. 

(d) A certificate from the individual 

serving the document constitutes proof 

of service. The certificate must set forth 

the manner in which the document was 

served. 

(e) Service upon any party of any 

document other than the complaint 

must be made by delivering a copy or 

by placing a copy in the United States 

mail, postage prepaid and addressed to 

the party’s last known address. 

(f) If a party consents in writing, 

documents may be sent electronically. 

In this instance, service is complete 

upon transmission unless the serving 

party receives electronic notification 

that transmission of the communication 

was not completed. 

§ 1174.26 Computation of time. 

(a) In computing any period of time 

under this part or in an order issued 

under it, the time begins with the day 

following the act, event, or default, and 

includes the last day of the period, 

unless it is a Saturday, Sunday, or legal 

holiday that is observed by the Federal 

government, in which event it includes 

the next business day. 

(b) When the period of time allowed 

is less than seven days, intermediate 

Saturdays, Sundays, and legal holidays 

that are observed by the Federal 

government are excluded from the 

computation. 

(c) Where a document has been served 

or issued by placing it in the mail, an 

additional five days will be added to the 

time permitted for any response. 

§ 1174.27 The hearing and the burden of 

proof. 

(a) The ALJ conducts a hearing in 

order to determine whether a defendant 

is liable for a civil penalty, assessment, 

or both and, if so, the appropriate 

amount of the penalty and/or 

assessment. 

(b) The hearing will be recorded and 

transcribed. The transcript of testimony, 

exhibits and other evidence admitted at 

the hearing, and all papers and requests 

filed in the proceeding, constitute the 

record for the ALJ’s and the authority 

head’s decisions. 

(c) The hearing will be open to the 

public unless otherwise ordered by the 

ALJ for good cause shown. 

(d) The authority must prove a 

defendant’s liability and any aggravating 

factors by a preponderance of the 

evidence. 

(e) A defendant must prove any 

affirmative defenses and any mitigating 

factors by a preponderance of the 

evidence. 

§ 1174.28 Presentation of evidence. 

(a) The ALJ shall determine the 

admissibility of evidence. 

(b) Except as provided in this part, the 

ALJ shall not be bound by the Federal 

Rules of Evidence, but the ALJ may 

apply the Federal Rules of Evidence 

where he or she deems appropriate. 

(c) The ALJ shall exclude irrelevant 

and immaterial evidence. 

(d) The ALJ may exclude evidence, 

although relevant, if its probative value 

is substantially outweighed by the 

danger of unfair prejudice, confusion of 

the issues, or by considerations of 

undue delay or needless presentation of 

cumulative evidence. 

(e) The ALJ shall exclude evidence, 

although relevant, if it is privileged 

under Federal law. 

(f) Evidence concerning compromise 

or settlement offers shall be 

inadmissible to the extent provided in 

Rule 408 of the Federal Rules of 

Evidence. 

(g) The ALJ shall permit the parties to 

introduce rebuttal witnesses and 

evidence. 

(h) All documents and other evidence 

taken for the record must be open to 

examination by all parties unless the 

ALJ orders otherwise. 

§ 1174.29 Witness testimony. 

(a) Except as provided in paragraph 

(b) of this section, testimony at the 

hearing shall be given orally by 

witnesses under oath or affirmation. 

(b) At the ALJ’s discretion, the ALJ 

may admit testimony in the form of a 

written statement or deposition. The 

party offering such a statement must 

provide it to all other parties along with 

the last known address of the witness, 

in a manner which allows sufficient 

time for other parties to subpoena the 

witness for cross-examination at the 

hearing. The parties shall exchange 

deposition transcripts and prior written 

statements of witnesses proposed to 

testify at the hearing as provided in 

§ 1174.22. 

(c) The ALJ shall exercise reasonable 

control over the mode and order of 

interrogating witnesses and presenting 

evidence. 

(d) The ALJ shall permit the parties to 

conduct such cross-examination as may 


jbell on DSKJLSW7X2PROD with RULES
44634 Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 

be required for a full and true disclosure 

of the facts. 

(e) Upon any party’s motion, the ALJ 

shall order witnesses excluded from the 

hearing room so that they cannot hear 

the testimony of other witnesses. This 

rule does not authorize exclusion of— 

(1) A party who is an individual; 

(2) In the case of a party that is not 

an individual, the party’s officer or 

employee appearing for the entity pro se 

or designated by the party’s 

representative; or 

(3) An individual whose presence a 

party shows to be essential to the 

presentation of its case, including an 

individual employed by the 

Government or engaged in assisting the 

Government’s representative. 

§ 1174.30 Ex parte communications. 

A party may not communicate with 

the ALJ ex parte unless the other party 

consents to such a communication 

taking place. This does not prohibit a 

party from inquiring about the status of 

a case or asking routine questions 

concerning administrative functions or 

procedures. 

§ 1174.31 Sanctions for misconduct. 

(a) The ALJ may sanction a person, 

including any party or representative, 

for failing to comply with an order, or 

for engaging in other misconduct that 

interferes with the speedy, orderly, and 

fair conduct of a hearing. 

(b) Any such sanction shall 

reasonably relate to the severity and 

nature of the misconduct. 

(c) When a party fails to comply with 

an order, including an order for taking 

a deposition, producing evidence within 

the party’s control, or responding to a 

request for admission, the ALJ may: 

(1) Draw an inference in favor of the 

requesting party with regard to the 

information sought; 

(2) In the case of requests for 

admission, deem each matter for which 

an admission is requested to be 

admitted; 

(3) Prohibit the party failing to 

comply with such order from 

introducing evidence concerning, or 

otherwise relying upon testimony 

relating to, the information sought; and 

(4) Strike any part of the pleadings or 

other submissions filed by the party 

failing to comply with such a request. 

(d) The ALJ may refuse to consider 

any motion, request, response, brief or 

other document which is not filed in a 

timely fashion. 

(e) If a party fails to prosecute or 

defend an action under this part that is 

commenced by service of a hearing 

notice, the ALJ may dismiss the action 

or may issue an initial decision 

imposing penalties and assessments. 

§ 1174.32 Post-hearing briefs. 

Any party may file a post-hearing 

brief. Such briefs are not required, 

however, unless ordered by the ALJ. 

The ALJ must fix the time for filing such 

briefs, not to exceed 60 days from the 

date the parties receive the transcript of 

the hearing or, if applicable, the 

stipulated record. Such briefs may be 

accompanied by proposed findings of 

fact and conclusions of law. The ALJ 

may permit the parties to file reply 

briefs. 

Subpart E—Decisions and Appeals 

§ 1174.33 Initial decision. 

(a) The ALJ will issue an initial 

decision based only on the record. It 

will contain findings of fact, 

conclusions of law, and the amount of 

any penalties and assessments. 

(b) The ALJ will serve the initial 

decision on all parties within ninety 

days after the hearing’s close or, if the 

ALJ permitted the filing of post-hearing 

briefs, within ninety days after the final 

post-hearing brief was filed. 

(c) The findings of fact must include 

a finding on each of the following 

issues: 

(1) Whether any one or more of the 

claims or statements identified in the 

complaint violate this part; and 

(2) If the defendant is liable for 

penalties or assessments, the 

appropriate amount of any such 

penalties or assessments, considering 

any mitigating or aggravating factors. 

(d) If the defendant is liable for a civil 

penalty or assessment, the initial 

decision shall describe the defendant’s 

right to file a motion for reconsideration 

with the ALJ or a notice of appeal with 

the authority head. 

§ 1174.34 Determining the amount of 

penalties and assessments. 

In determining an appropriate amount 

of civil penalties and assessments, the 

ALJ and the authority head, upon 

appeal, should evaluate any 

circumstances that mitigate or aggravate 

the violation and should articulate in 

their opinions the reasons that support 

the penalties and assessments they 

impose. 

§ 1174.35 Reconsideration of the initial 

decision. 

(a) Any party may file a motion with 

the ALJ for reconsideration of the initial 

decision within twenty days of receipt 

of the initial decision. If the initial 

decision was served by mail, there is a 

rebuttable presumption that the party 

received the initial decision five days 

from the date of mailing. 

(b) A motion for reconsideration must 

be accompanied by a supporting brief 

and must describe specifically each 

allegedly erroneous decision. 

(c) A party only may file a response 

to a motion for reconsideration upon the 

ALJ’s request. 

(d) The ALJ will dispose of a motion 

for reconsideration by denying it or by 

issuing a revised initial decision. 

(e) If the ALJ issues a revised initial 

decision upon a party’s motion, no party 

may file a further motion for 

reconsideration. 

§ 1174.36 Finalizing the initial decision. 

(a) Thirty days after issuance, the 

ALJ’s initial decision shall become the 

authority’s final decision and shall bind 

all parties, unless any party timely files 

a motion for reconsideration or any 

defendant adjudged to have submitted a 

false, fictitious, or fraudulent claim or 

statement timely appeals to the 

authority head, as set forth in § 1174.37. 

(b) If the ALJ disposes of a motion for 

reconsideration by denying it or by 

issuing a revised initial decision, the 

ALJ’s order on the motion for 

reconsideration shall become the 

authority’s final decision thirty days 

after the ALJ issues the order, unless a 

defendant that is adjudged to have 

submitted a false, fictitious, or 

fraudulent claim or statement timely 

appeals to the authority head, as set 

forth in § 1174.37. 

§ 1174.37 Procedures for appealing the 

ALJ’s decision. 

(a) Any defendant who submits a 

timely answer and is found liable in an 

initial decision for a civil penalty or 

assessment may appeal the decision. 

(b) The defendant may file a notice of 

appeal with the authority head within 

thirty days following issuance of the 

initial decision, serving a copy of the 

notice of appeal on all parties and the 

ALJ. The authority head may extend this 

deadline for up to an additional thirty 

days if the defendant files an extension 

request within the initial thirty day 

period and shows good cause. 

(c) The authority head shall not 

consider a defendant’s appeal until all 

timely motions for reconsideration have 

been resolved. 

(d) If the ALJ denies a timely motion 

for reconsideration, the defendant may 

file a notice of appeal within thirty days 

following such denial or issuance of a 

revised initial decision, whichever 

applies. 

(e) The defendant must support its 

notice of appeal with a written brief 

specifying why the authority head 

should reverse or modify the initial 

decision. 

(f) The authority’s representative may 

file a brief in opposition to the notice of 


jbell on DSKJLSW7X2PROD with RULES
Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations 44635 

appeal within thirty days of receiving 

the defendant’s appeal and supporting 

brief. 

(g) If a defendant timely files a notice 

of appeal, and the time for filing 

reconsideration motions has expired, 

the ALJ will forward the record of the 

proceeding to the authority head. 

(h) An initial decision is 

automatically stayed pending 

disposition of a motion for 

reconsideration or of an appeal to the 

authority head. 

(i) No administrative stay is available 

following the authority head’s final 

decision. 

§ 1174.38 Appeal to the authority head. 

(a) A defendant has no right to appear 

personally, or through a representative, 

before the authority head. 

(b) There is no right to appeal any 

interlocutory ruling. 

(c) The authority head will not 

consider any objection or evidence that 

was not raised before the ALJ unless the 

defendant demonstrates that 

extraordinary circumstances excuse the 

failure to object. If the defendant 

demonstrates to the authority head’s 

satisfaction that extraordinary 

circumstances prevented the 

presentation of evidence at the hearing, 

and that the additional evidence is 

material, the authority head may 

remand the matter to the ALJ for 

consideration of the additional 

evidence. 

(d) The authority head may affirm, 

reduce, reverse, compromise, remand, 

or settle any penalty or assessment that 

the ALJ imposed in the initial decision 

or reconsideration decision. 

(e) The authority head will promptly 

serve each party to the appeal and the 

ALJ with a copy of the decision. This 

decision must contain a statement 

describing the right of any person, 

against whom a penalty or assessment 

has been made, to seek judicial review. 

§ 1174.39 Judicial review. 

31 U.S.C. 3805 authorizes the 

appropriate United States District Court 

to review any final decision imposing 

penalties or assessments, and specifies 

the procedures for such review. To 

obtain judicial review, a defendant must 

file a petition with the appropriate court 

in a timely manner. 

§ 1174.40 Collection of civil penalties and 

assessments. 

31 U.S.C. 3806 and 3808(b) authorize 

actions for collecting civil penalties and 

assessments imposed under this part 

and specify the procedures for such 

actions. 

§ 1174.41 Rights to administrative offset. 

The authority may make an 

administrative offset under 31 U.S.C. 

3716 to collect the amount of any 

penalty or assessment which has 

become final, for which a judgment has 

been entered, or which the parties agree 

upon in a compromise or settlement. 

However, the authority may not make 

an administrative offset under this 

subsection against a Federal tax refund 

that the United States owes to the 

defendant then or at a later time. 

§ 1174.42 Deposit in Treasury of the 

United States. 

The authority shall deposit all 

amounts collected pursuant to this part 

as miscellaneous receipts in the 

Treasury of the United States, except as 

provided in 31 U.S.C. 3806(g). 

§ 1174.43 Voluntary settlement of the 

administrative complaint. 

(a) Parties may make offers of 

compromise or settlement at any time. 

Any compromise or settlement must be 

in writing. 

(b) The reviewing official has the 

exclusive authority to compromise or 

settle the case from the date on which 

the reviewing official is permitted to 

issue a complaint until the ALJ issues 

an initial decision. 

(c) The authority head has exclusive 

authority to compromise or settle the 

case from the date of the ALJ’s initial 

decision until initiation of any judicial 

review or any action to collect the 

penalties and assessments. 

(d) The Attorney General has 

exclusive authority to compromise or 

settle the case while any judicial review 

or any action to recover penalties and 

assessments is pending. 

(e) The investigating official may 

recommend settlement terms to the 

reviewing official, the authority head, or 

the Attorney General, as appropriate. 

§ 1174.44 Limitations regarding criminal 

misconduct. 

(a) Any investigating official may: 

(1) Refer allegations of criminal 

misconduct or a violation of the False 

Claims Act directly to the Department of 

Justice for prosecution and/or civil 

action, as appropriate; 

(2) Defer or postpone a report or 

referral to the reviewing official to avoid 

interference with a criminal 

investigation or prosecution; or 

(3) Issue subpoenas under any other 

statutory authority. 

(b) Nothing in this part limits the 

requirement that the authority’s 

employees must report suspected 

violations of criminal law to the NEH 

Office of the Inspector General or to the 

Attorney General. 

Dated: August 2, 2021. 

Elizabeth Voyatzis, 

Deputy General Counsel, National 

Endowment for the Humanities. 

[FR Doc. 2021–16763 Filed 8–12–21; 8:45 am] 

BILLING CODE 7536–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 20 

[GN Docket No. 13–111; FCC 21–82; FR ID 

39494] 

Promoting Technological Solutions To 

Combat Contraband Wireless Device 

Use in Correctional Facilities 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission or FCC) takes further steps 

to facilitate the deployment and 

viability of technological solutions used 

to combat contraband wireless devices 

in correctional facilities. The Second 

Report and Order adopts a framework 

requiring the disabling of contraband 

wireless devices detected in correctional 

facilities upon satisfaction of certain 

criteria, and we address issues involving 

oversight, wireless provider liability, 

and treatment of 911 calls. The Second 

Report and Order further adopts rules 

requiring advance notice of certain 

wireless provider network changes to 

promote and maintain contraband 

interdiction system effectiveness. 

DATES: This final rule is effective 

September 13, 2021, with the exception 

of the revisions to § 20.23, which are 

delayed. The Commission will publish 

a document in the Federal Register 

announcing the effective date for those 

revisions. 

FOR FURTHER INFORMATION CONTACT: 

Melissa Conway of the Wireless 

Telecommunications Bureau, Mobility 

Division, at (202) 418–2887 or 

Melissa.Conway@fcc.gov. For 

information regarding the Paperwork 

Reduction Act of 1995 (PRA) 

information collection requirements 

contained in this document, contact 

Cathy Williams, Office of Managing 

Director, at (202) 418–2918 or 

Cathy.Williams@fcc.gov. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Second 

Report and Order in GN Docket No. 13– 

111, FCC 21–82 adopted July 12, 2021 

and released July 13, 2020. The full text 

of the Second Report and Order, 

including all Appendices, is available 


jbell on DSKJLSW7X2PROD with RULES