[Federal Register Volume 60, Number 250 (Friday, December 29, 1995)]
[Rules and Regulations]
[Pages 67298-67319]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31397]



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DEPARTMENT OF AGRICULTURE

Office of the Secretary
Farm Service Agency
Natural Resources Conservation Service
Rural Business-Cooperative Service
Rural Housing Service
Rural Utilities Service

7 CFR Parts 1, 11, 12, 400, 614, 620, 623, 631, 632, 634, 663, 701, 
702, 752, 780, 781, and 1900


National Appeals Division Rules of Procedure

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

ACTION: Interim final rule.

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SUMMARY: On May 22, 1995 (60 FR 27044), the National Appeals Division 
(NAD) in the Office of the Secretary published a proposed rule to 
implement Title II, Subtitle H, of the Federal Crop Insurance Reform 
and Department of Agriculture Reorganization Act of 1994, Pub. L. 103-
354, 7 U.S.C. 6991 et seq., by setting forth procedures for program 
participant appeals of adverse decisions by United States Department of 
Agriculture (USDA) agency officials to NAD. The deadline for receipt of 
comments was June 21, 1995. On June 28, 1995 (60 FR 32922) the Office 
of the Secretary published an extension of the deadline for receipt of 
comments until July 6, 1995. From the period May 22 to July 6, 1995, 
forty-six timely public comments were received in response to the 
proposed rulemaking. Based on these comments, including concerns 
regarding the need for an additional comment period on the proposed 
rules and the need for a comment period on USDA agency conforming 
rules, but mindful of the immediate need for published rules, the 
Secretary now issues these rules on an interim final basis. These rules 
also include conforming changes to the former appeal rules of USDA 
agencies whose adverse decisions are now subject to NAD review.

DATES: Part 11 of this interim rule is effective January 16, 1996. With 
the exception of Sec. 11.9, part 11 of this rule is applicable as to 
agency adverse decisions and NAD appeals for which hearings have not 
been held. Section 11.9 of this interim rule is applicable immediately 
as to all pending requests for Director review and is applicable 
retroactively to all requests for Director 

[[Page 67299]]
review made on or after October 20, 1994.
    Amendments made by this interim rule to all other parts of title 7 
of the Code of Federal Regulations are effective January 16, 1996 and 
are applicable on January 16, 1996 as to any adverse technical 
determinations or decisions made by an applicable agency.
    Written comments via letter, facsimile, or Internet are invited 
from interested individuals and organizations, and must be received on 
or before March 28, 1996.

ADDRESSES: Comments should be sent to L. Benjamin Young, Jr., Office of 
the General Counsel, Research and Operations Division, AgBox 1415, 
United States Department of Agriculture, Washington, DC 20250-1415; fax 
number: 202/720-5837; Internet: <a href="/cdn-cgi/l/email-protection#7e160f1a11131f171050121f090e115007110b10193e0d171b0d50090d1d501f1950191108"><span class="__cf_email__" data-cfemail="8de5fce9e2e0ece4e3a3e1ecfafde2a3f4e2f8e3eacdfee4e8fea3fafeeea3eceaa3eae2fb">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: L. Benjamin Young, Jr. at the above 
address or 202/720-4076.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been reviewed under E.O. 12866, and it has been 
determined that it is not a ``significant regulatory action'' rule 
because it will not have an annual effect on the economy of $100 
million or more or adversely and materially affect a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. This rule will not create any serious inconsistencies or 
otherwise interfere with actions taken or planned by another agency. It 
will not materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof, and does not raise novel legal or policy issues 
arising out of legal mandates, the President's priorities, or 
principles set forth in E.O. 12866.

Regulatory Flexibility Act

    USDA certifies that this rule will not have a significant impact on 
a substantial number of small entities as defined in the Regulatory 
Flexibility Act, Pub. L. 96-534, as amended (5 U.S.C. 601 et seq.).

Paperwork Reduction Act

    USDA has determined that the provisions of the Paperwork Reduction 
Act, as amended, 44 U.S.C., chapter 35, do not apply to any collections 
of information contained in this rule because any such collections of 
information are made during the conduct of administrative action taken 
by an agency against specific individuals or entities. 5 CFR 
1320.4(a)(2).

Background and Purpose

    On December 27, 1994 (see 59 FR 66,517), the Secretary of 
Agriculture noticed that the NAD was established pursuant to Title II, 
Subtitle H of the Federal Crop Insurance Reform and Department of 
Agriculture Reorganization Act of 1994, Public Law No. 103-354, 7 
U.S.C. 6991 et seq. (``the Act''). NAD was assigned responsibility for 
all administrative appeals formerly handled by the National Appeals 
Division of the former Agricultural Stabilization and Conservation 
Service (ASCS) and by the National Appeals Staff of the former Farmers 
Home Administration (FmHA), appeals arising from decisions of the 
former Rural Development Administration (RDA) and the former Soil 
Conservation Service (SCS), appeals arising from decisions of the 
successor agencies to the foregoing agencies established by the 
Secretary, appeals arising from decisions of the Commodity Credit 
Corporation (CCC) and the Federal Crop Insurance Corporation (FCIC), 
and such other administrative appeals arising from decisions of 
agencies and offices of USDA as may in the future be assigned by the 
Secretary.
    This rule sets forth the jurisdiction of the NAD, and the 
procedures appellants and agencies must follow upon appeal of adverse 
decisions by covered USDA program ``participants'' as defined in detail 
in the new 7 CFR part 11. In addition, since the Act changes existing 
formal administrative appeals procedures for some agencies while 
allowing participants a choice of pursuing informal appeals with an 
agency first or appealing directly to NAD, this rule also makes 
conforming amendments to the existing appeal procedures of the USDA 
agencies whose adverse decisions will be appealable to NAD under the 
new 7 CFR part 11.
    For the purposes of convenience, this preamble and the changes to 
USDA regulations are divided as follows:

----------------------------------------------------------------------------------------------------------------
        Item                         Subject                                        Contact                     
----------------------------------------------------------------------------------------------------------------
I..................  Authentication of Records..............  B. Young 202/720-4076.                            
II.................  NAD Rules of Procedure.................  B. Young 202/720-4076.                            
III................  Natural Resources Conservation Service   S. Penn 202/720-6521.                             
                      (NRCS) Appeal Rules.                                                                      
IV.................  Commodity Credit Corporation (CCC),      A. Grundeman 202/720-4591.                        
                      Federal Crop Insurance Corporation                                                        
                      (FCIC), and Farm Service Agency (FSA)                                                     
                      Appeal Rules.                                                                             
V..................  Rural Business-Cooperative Service       A. Grundeman 202/720-4591.                        
                      (RBS), Rural Housing Service (RHS),                                                       
                      and Rural Utilities Service (RUS)                                                         
                      Appeal Rules.                                                                             
----------------------------------------------------------------------------------------------------------------

I. Authentication of Records

    This rule amends the provisions of USDA regulations regarding 
authentication of official records to provide that the Director of NAD 
may authenticate documents in NAD records for USDA.

II. NAD Rules of Procedure

    Forty-six timely comments were received by July 6, 1995 in response 
to the requests for comment on the proposed NAD rule. In response to 
these comments, a number of changes have been made to the rules; 
however, USDA has opted not to publish the revised rules for an 
additional comment period. USDA does recognize the need for further 
public comment on these rules. USDA therefore is issuing this rule on 
an interim final basis for three specific reasons.
    First, a tension exists between the desire of Congress and the USDA 
to make this a farmer-friendly appeals process and the necessity of 
establishing an appeals procedure that comports with due process and 
results in determinations that will withstand scrutiny in the Federal 
courts. At the same time, it is important that the appeals procedure 
allow for ease of administration by NAD in a time of scarce and 
decreasing Federal resources. These problems are reflected in 
disagreements among the commenters as to how some of the most detailed 
procedures should be implemented. These tensions should not be resolved 
presumptively in a final rule. Therefore, promulgation of an interim 
rule will allow USDA to receive more feedback 

[[Page 67300]]
and make adjustments with the aid of experience.
    Second, several commenters expressed concern over the fact that 
conforming amendments to individual agency appeal rules were not 
published with the proposed rule. Additionally, these conforming 
amendments will result in more substantive changes to agency rules than 
originally were anticipated by USDA at the time the proposed rules were 
published. For example, FSA now has decided to combine appeal 
procedures for the former ASCS, the former FmHA, and FCIC programs that 
it now administers under the Act. These new agency appeal procedures 
will set forth how participants may use the ``informal hearings'' 
option provided in section 275 of the Act.
    Third, legislative changes may occur during consideration of the 
Farm Bill in 1996 that will necessitate changes to the NAD rules of 
procedure. By publishing this as an interim rule, the USDA establishes 
a process for current operations while leaving the rulemaking door open 
for timely adoption of rules necessary to implement possible 
legislative changes.
    The following explanation is given for those sections of the 
proposed rule that were heavily commented on or appeared to be 
misunderstood:


Sec. 11.1  Definitions.

    Adverse decision. Two commenters noted problems with the proposed 
definition of ``adverse decision'' with respect to such decisions 
resulting from a failure of the agency to act. The proposed rule had by 
definition provided that an adverse decision results when an agency 
failed to act or make a decision within timeframes prescribed by agency 
program regulations. The two commenters noted that in some cases 
statutes prescribed timeframes and that in others the regulations 
prescribed no timeframes. In the latter case, one of the commenters 
suggested that USDA use a ``reasonable'' time in the absence of a 
prescribed timeframe. The amended definition provides that an adverse 
decision results when an agency fails to act within prescribed 
statutory or regulatory timeframes, or, in the case where there are no 
such timeframes specified, within a reasonable time.
    Agency. All former and current agencies of the USDA whose adverse 
decisions are covered by this part have been added in response to a 
comment noting the lack of parallel treatment between inclusion of old 
and new agency names and the need to assist individuals unfamiliar with 
the new names.
    USDA also has added language to cover certain programs administered 
by RUS because, as one commenter correctly noted, they are former 
programs of RDA that by definition in the Act are covered by NAD. This 
is accomplished by excluding from NAD purview all RUS programs 
authorized under the Rural Electrification Act and the Rural Telephone 
Bank Act.
    Agency record, case record, and hearing record. Seven commenters 
had questions regarding the definitions of ``agency record,'' ``case 
record,'' and ``hearing record.'' These definitions were carefully 
nested within one another in order to construe the language of the Act 
in a logical manner.
    Section 278(c) of the Act requires that NAD determinations be made 
``based on information from the case record, laws applicable to the 
matter at issue, and applicable regulations published in the Federal 
Register.'' Section 277(a) of the Act, however, also makes reference to 
the fact that the Director and the Hearing Officer are to have access 
to the ``case record'' of an adverse decision upon initial filing of an 
appeal. Section 278(b) also makes reference to the ``case record'' that 
the Director must review as well as the record from the hearing. 
Clearly, the ``case record'' in the latter two provisions cannot be the 
same ``case record'' referred to in section 278(c), or else NAD 
determinations would have to be made without reference to the record 
developed in the hearing itself.
    USDA faced the task of construing these seemingly contradictory 
statutory provisions in a complementary manner. This was done by 
creating a definitional framework based upon section 271(4) of the Act 
that defines ``case record'' to include ``all the materials maintained 
by the Secretary related to an adverse decision.'' As in most cases 
where the Secretary is named in a statute, ``Secretary'' here is 
interpreted to mean not the person of the Secretary but rather the 
Secretary and all subordinate officials of USDA to whom the Secretary 
has delegated statutory authority. Construed in this manner, ``case 
record'' includes any and all materials held by USDA that relate to an 
adverse decision at any given moment during the administrative appeal 
process. What the term ``case record'' includes when used in the 
statute thus changes based upon the level of the appeal process in 
which it is used.
    For purposes of clarity in the rule, a new term needed to be 
created to distinguish the ``case record'' presented by the agency to 
the Hearing Officer, the record developed by the Hearing Officer in the 
hearing (sec. 278(b)) and eventually forwarded to the Director, and the 
``case record'' upon which the determination is based. This is 
accomplished in the rule by defining documents furnished by the agency 
to the Hearing Officer upon the initial filing of the appeal as the 
``agency record'' that by rule is deemed admitted as evidence in the 
hearing, by defining evidence presented at the hearing, the transcript 
of the hearing itself, and post-hearing submissions as the ``hearing 
record,'' and finally by explicitly incorporating both the ``agency 
record'' and the ``hearing record'' into the definition of ``case 
record'' upon which NAD determinations are made. ``Case record'' 
construed in this fashion also includes ``the request for review, and 
such other arguments or information as may be accepted by the 
Director'' (sec. 278(b)) in the Director review phase of NAD appeals 
because they would be included as materials maintained by the 
Secretary.
    Director. Three commenters objected to the proposed rule definition 
and other provisions that would allow the Director to delegate the 
authority of the Director to subordinate individuals within NAD. The 
primary rationale for the objections was that this would mean that 
someone without the credentials and qualifications required by the 
statute for the Director would be exercising the statutory authority of 
the Director.
    USDA rejected changing this provision for two reasons. First, even 
though the authority for certain actions may be delegated, such actions 
are still taken in the name of the Director. The Director, in other 
words, still exercises the final authority. Second, given the 
anticipated volume of appeals to be filed with NAD, it is not practical 
or efficient to require that the Director personally perform all 
actions specified for the Director by name in the Act.
    Division. One commenter suggested that the proposed rule was in 
error in specifying that the Division was established by this part 
instead of the Act itself. Section 272(a) of the Act provides that 
``[t]he Secretary shall establish'' NAD, not that the NAD ``is 
established.'' Therefore, action by the Secretary was required to 
establish NAD.
    Equitable relief. Two commenters suggested that the proposed rule 
definition of equitable relief needed to be better defined. USDA chose 
not to define equitable relief further because the meaning of such 
relief varies from program to program covered under these rules, 
depending on the language of the program statutes. The guiding intent 

[[Page 67301]]
behind the drafting of these rules was to ensure that they were written 
as broadly and flexibly as possible so that they do not need to be 
amended each time an agency amends its substantive program regulations.
    Ex parte communication. One commenter suggested this definition 
needed to include post-hearing requests for Director review and 
requests regarding the appealability of adverse decisions. The 
definition here was changed to include an oral or written communication 
``to any officer or employee of the Division.'' As explained below, 
further changes were made regarding ex parte communications to ensure 
that the prohibition on such communications covered all NAD proceedings 
and employees.
    Implement. Three comments were received suggesting changes to this 
definition. In combination with Sec. 11.11 of the rule, USDA feels that 
this language reflects the statutory definition and need not be 
changed.
    Participant. One commenter suggested that, rather than defining 
``participant'' by listing programs and statutes under which an 
individual may not bring an appeal before NAD, a separate list of non-
appealable decisions should be added to the regulation. This approach 
was considered, as was listing the programs from which adverse 
decisions could be appealed to NAD, but the statutory language did not 
support these approaches. ``Adverse decision'' is defined too broadly 
in the statute to limit by regulation. Further, nonappealability of 
decisions is limited only to matters of general applicability under 
section 272(d) of the Act. Conversely, Congress explicitly gave the 
Secretary authority to define ``participant'' (sec. 271(9)) and 
therefore the approach reflected in the rule was chosen.
    Seven substantive comments were made regarding the definition of 
``participant'' in the proposed rule. Two commenters suggested that the 
definition should be expanded to include the requirement that, for 
certain guaranteed loan programs of the former Farmers Home 
Administration (FmHA), both the applicant/borrower and the lender 
should be required to appeal jointly. Since any decision to deny a 
guaranteed loan would affect both the applicant/borrower and the 
lender, USDA agrees that both parties must appeal any such adverse 
decision and the rule has been revised to reflect this requirement. 
However, only the lender will be able to appeal the denial or reduction 
of a final loss payment to that lender.
    One commenter expressed concern that the language ``right to 
participate in'' did not clearly include an applicant. Therefore, USDA 
has added ``who has applied for'' to the definition.
    One commenter suggested that the wording of the definition 
technically could exclude someone from appealing to NAD if, for 
example, they had filed a tort claim against USDA. As a ``participant'' 
in a tort claim, they would not be included as a ``participant'' for 
purposes of a NAD appeal. To clarify that this is not the case, USDA 
has amended the introductory phrase before the list of programs to 
read: ``The term does not include persons whose claim(s) arise 
under:''.
    Finally, three comments were received from representatives of 
reinsured companies, that is, crop insurance companies whose insurance 
contracts with producers are reinsured by the FCIC. The reinsured 
companies objected to the language including participants affected by 
decisions of reinsured companies in the definition of ``participants.'' 
As originally proposed, the language would have allowed participants to 
appeal reinsured company decisions to NAD.
    The reinsured companies objected to this language on several 
grounds. First, they noted that while FCIC was included in the 
definition of ``agency'' in section 271(1) of the Act, reinsured 
companies were not. Thus, the proposed rule attempted to include 
private companies as government agencies contrary to the language of 
the Act. Second, the reinsured companies argued that promulgation of 
this language by USDA in the final rule would breach the terms of the 
Standard Reinsurance Agreements between USDA and the reinsured 
companies, as well as alter the legal terms of reinsured company 
policies with thousands of insureds. Third, the number of policy 
decisions made by reinsured companies that would be open to appeal to 
NAD under the proposed language would overwhelm NAD with thousands of 
appeals. Finally, the reinsured companies argued that the intent of the 
Act in including FCIC in the definition of ``agency'' was to provide 
appeal rights for participants in crop insurance programs for a narrow 
range of decisions still committed to FCIC after crop insurance reform, 
i.e., decisions regarding yield and coverage that are based on FCIC 
actuarial data or decisions where an individual is found ineligible to 
participate in the Federal crop insurance program.
    In response to these comments, USDA has dropped decisions of 
reinsured companies as decisions that participants may appeal under 
this part. The exclusion of disputes between reinsured companies and 
FCIC from the definition of participant in the final rule also means 
that all disputes between reinsured companies and FCIC likewise are 
excluded from the jurisdiction of NAD. Contract disputes between 
reinsured companies and FCIC will be appealable to the USDA Board of 
Contract Appeals as provided in its rules. Non-contract related 
decisions of FCIC that are adverse to reinsured companies may be 
settled with the agency or by resort to legal action in a court of 
competent jurisdiction.
    Additional definitions. Two commenters suggested that a definition 
for ``mediation'' be added. The use of mediation or other forms of 
alternative dispute resolution (ADR) by program participants is a 
matter of choice for the participants themselves. Since the type of 
mediation or ADR used by a participant and the agency is not a 
jurisdictional issue for purposes of determining whether an appeal is 
properly before NAD, NAD has no control over whatever means the 
participant and agency employ. Accordingly, USDA has declined to 
attempt to define mediation or ADR for purposes of this part.


Sec. 11.2  General statement.

    No comments were received in response to this section. USDA has 
made two changes to this section upon further review. First, language 
has been added to reflect the statutory provision that NAD, although 
independent, is subject to the general supervision and policy direction 
of the Secretary. Second, a statement has been added to make clear that 
exhaustion of the procedures for Hearing Officer review of an adverse 
decision under this part is required before a program participant may 
seek judicial review of an adverse decision. This additional language 
does not deprive participants of their right to seek review under any 
judicial exceptions to required exhaustion of administrative 
procedures.


Sec. 11.3  Applicability.

    Six commenters generally contended that the NAD appeal procedures 
should apply to appeals arising after October 13, 1994, and not October 
20, 1994 as specified in the proposed rule. The commenters' rationale 
for the October 13 date is that the Act was effective as of that date. 
One commenter also discussed the legal ability of the Department to 
make the rule effective retroactively.
    USDA has decided to delete the effective date subsection from this 

[[Page 67302]]
    section because it inaccurately indicated an intent to make this entire 
rule retroactive. Instead, the effective date of this rule is 
appropriately set forth in the EFFECTIVE DATE section of this Federal 
Register document.
    Two additional changes have been made to this section. First, 
wetland or highly erodible land determinations have been added to the 
list of examples of agency adverse decisions to clarify that these 
decisions are included.
    Second, a new subsection has been added to address confusion, 
reflected in some comments, that exists over the jurisdiction of NAD 
over agency programs. NAD Hearing Officers are not administrative law 
judges. NAD has no jurisdiction over questions of law or the 
appropriateness of agency regulations. It simply decides the factual 
matter of whether an agency complied with such laws and regulations in 
rendering an adverse decision. The limitation added here makes clear 
that NAD may not be used by program participants for the purpose of 
challenging the validity of USDA regulations issued pursuant to 
statutory authority.


Sec. 11.4  Inapplicability of other laws and regulations.

    Section 277 of the Act provides an elaborate appeals scheme for 
particular programs of USDA, including provisions for hearings, the 
issuance of subpoenas, and even ex parte communications. Section 
277(a)(2)(A) of the Act in fact explicitly incorporates the definition 
of an ex parte communication from the Administrative Procedure Act 
(APA) (5 U.S.C. 551(14)) as if the APA stands outside of, and is not 
applicable to, NAD proceedings. In view of this statutory language, and 
in the absence of Congressional intent otherwise, USDA has concluded 
that the provisions of the APA generally applicable to agency 
adjudications (5 U.S.C. 554, 555, 556, 557, & 3105) do not apply to NAD 
proceedings. Furthermore, because NAD proceedings are not required to 
be conducted under 5 U.S.C. 554, USDA also concludes the Equal Access 
to Justice Act, 5 U.S.C. 504, does not apply to NAD proceedings. 
Ardestani v. I.N.S., 112 S.Ct. 515, 519 (1991).
    Another issue is the applicability of the Federal Rules of Evidence 
to NAD proceedings. Congress intended that these proceedings be farmer-
friendly so that farmers would not be required to hire attorneys to use 
the NAD appeal process. Therefore, USDA concluded that the Federal 
Rules of Evidence should not apply to NAD proceedings.
    One commenter suggested USDA also should eliminate any ambiguity 
with respect to the applicability of the Federal Rules of Civil 
Procedure, which was referred to in one respect in what was 
Sec. 11.7(a)(2)(vi) of the proposed rule. The situation with respect to 
the Rules of Evidence, however, is unique in that attempts have been 
made in NAD hearings to apply the Federal Rules of Evidence as 
generally accepted rules of evidence, necessitating an explicit 
statement of policy in the rules. The same problems have not arisen 
with respect to the Federal Rules of Civil Procedure; therefore, USDA 
does not feel that it is necessary to state explicitly that those rules 
do not apply.


Sec. 11.5  Informal agency hearings and exhaustion.

    This section of the proposed rule drew 29 comments, more than any 
other. Some comments suggested that the exhaustion requirement for FSA 
county committees was contrary to statute, while others were concerned 
because the section did not provide for exhaustion to the FSA state 
committee. A number of commenters were confused by the sequence of 
events for informal hearings, mediation, and NAD appeals outlined in 
this section. Providers of mediation services particularly were 
concerned that all appellants be notified of mediation rights, and that 
mediation occur at the lowest level of the appeal process. A number of 
commenters expressed concern about the inconsistent use of the terms 
``informal hearings,'' ``informal appeal,'' and ``informal review.''
    With respect to the comments regarding agency notice of adverse 
decisions and appeal rights, USDA has determined to handle such notice 
outside the parameters of this rule. As a matter of Department policy, 
agencies will be expected to notify participants of their appeal rights 
and their right to choose mediation or ADR, where available, when they 
issue an adverse decision.
    In light of the other comments, this section has been revised 
significantly. Only the term ``informal review'' will be used 
throughout the section. Given this consistent use, USDA finds it 
unnecessary to define this term.
    Before appealing to NAD, participants may elect to request an 
informal review of an adverse decision by the agency. However, in the 
case of adverse decisions made by officials under the authority of FSA 
county and area committees, participants will be required to undergo 
informal review before the county or area committee before appealing 
the adverse decision to NAD. After receiving the mandatory informal 
review by the county or area committee, the participant then may seek 
informal review of that decision by the State committee or appeal 
directly to NAD. For purposes of this section, USDA interprets a 
decision at each level of agency informal review as a new adverse 
decision for purposes of calculating the timeliness of a participant's 
appeal to NAD under Sec. 11.6 of the rules.
    When a participant requests such mediation, the 30-day period 
within which the participant may request a hearing under 
Sec. 11.6(b)(1) will stop running until such time as the mediation or 
ADR is concluded. Unlike with informal review, however, the conclusion 
of mediation is not viewed as a new agency adverse decision. At that 
point, the participant will have the balance of the 30-day period to 
appeal to NAD, or to seek informal review as outlined above. The 30-day 
period will function in effect as a statute of limitations; it will be 
up to the agency, not NAD, to raise the jurisdictional issue before NAD 
as to the fact that a participant's appeal is untimely.
    Treatment of mediation or ADR in this manner means that the 
conclusion of mediation or ADR will not be treated as an adverse 
decision. Conversely, as indicated above, a decision at each level of 
the informal review process will be treated as an adverse decision for 
determining when the 30-day period for an appeal to NAD begins to run.

Example

    A FSA program participant receives an adverse decision from a 
county executive director. He cannot appeal to NAD. He must first 
pursue an informal review with the county committee. The county 
committee upholds the original adverse decision. Program participant 
now has three choices: (1) Within 30 days, choose mediation or ADR; 
(2) Within 30 days, appeal to NAD; or (3) Within the lesser of 30 
days, or the time period specified in FSA informal review 
regulations, request an informal review by the State Committee. 
Participant chooses mediation after 10 days. Mediation fails. 
Participant has the balance of 20 days (i.e., 30 days minus 10 days) 
to appeal to NAD after the conclusion of mediation or he may request 
review by the State Committee in accordance with FSA regulations. If 
he appeals to NAD, the agency bears the burden of proving 
untimeliness of the appeal to NAD, i.e., if the participant took 25 
days, 5 days in excess of his remaining 20, to appeal to NAD, the 
agency must demonstrate this to NAD. If he requests an informal 
review by the State Committee, the participant will have 30 days to 
appeal any adverse decision made by the State Committee to NAD. 

[[Page 67303]]



Sec. 11.6  Director review of agency determination of appealability and 
right of participants to Division hearing.

    USDA has revised the format of this section so that it follows the 
logical progression from a Director determination of appealability, 
where made necessary because of an agency determination that an adverse 
decision is not appealable, to the appeal itself.
    Section 11.6(a) (Sec. 11.6(b) in the proposed rule) provides the 
rules for requesting Director review of the determination of 
appealability. Two commenters suggested that the proposed language that 
the Director use ``any information he determines necessary'' in making 
a determination was too broad. These commenters felt the information to 
be considered should be defined, and that the allowance of any 
information the Director deemed necessary made the process appear 
secretive if the ex parte prohibition did not apply to this stage of 
the appeal process.
    USDA has revised this subsection to reflect the language of the 
statute and not specify anything regarding what information the 
Director may or may not use.
    Two commenters desired changes in the references to Deputy and 
Associate Directors to reflect titles currently used in the NAD 
internal structure. USDA has substituted ``subordinate official other 
than a Hearing Officer'' in the place of Deputy and Associate Directors 
to preserve the flexibility of the Director to organize NAD internally 
without reference to regulatorily defined titles. This change also 
responds to a comment that requests that the Director be allowed to 
delegate this responsibility as far down as possible to accomplish such 
a mission efficiently. Hearing Officers were excluded from such 
delegation because the delegation of such authority down to Hearing 
Officers facially contradicted the statute and could represent a 
potential conflict of interest for Hearing Officers who must justify 
resource requirements based on the burden of their caseload.
    USDA rejected comments suggesting that this delegation is improper 
under the statute, or that participants should be given the right to 
challenge the credentials of the subordinate reviewing official. 
Nothing in the statute requires that the Director personally must 
review every request for a determination of appealability that may be 
filed. The Director, as in the case of any agency official, remains 
ultimately responsible for any decision undertaken by a subordinate. 
Therefore, USDA sees no reason why this statute should be read any 
differently than any other statute where, absent a specific statutory 
prohibition, USDA and other executive branch agencies have allowed for 
delegation of decision-making authority by officials whose 
qualifications have been set by statute.
    With respect to this subsection as proposed, two commenters also 
expressed concern that it did not specify the timing for filing an 
appeal once the Director reversed an agency determination that an 
adverse decision was not appealable. USDA added language in what is now 
subsection (b) to specify that the 30 days for appeal of adverse 
decisions shall run from the date the participant receives notice of 
the adverse decision or receives notice of the Director's determination 
that an adverse decision is appealable.
    Subsection (b) (Sec. 11.6(c) in the proposed rule) provides rules 
for appealing adverse decisions to NAD. In addition to the change noted 
above, two additional changes were made to this section. First, seven 
commenters suggested that it is inappropriate in any circumstances to 
apply a ``should have known'' standard as a deadline for appeals in 
cases of agency inaction. They argued that this shifted the burden from 
the agency to the participant for policing the agency's failure to 
follow its own regulations; one commenter argued that the agency 
remained in continuing violation for failure to act within its own 
deadlines.
    USDA disagrees with these commenters. A failure to act by the 
agency at some point becomes ripe for appeal and the statute clearly 
also provides that at a point past 30 days from an adverse decision an 
appellant loses the right of appeal. USDA finds no intention on the 
part of Congress to extend a participant's right of appeal 
indefinitely, particularly when agency regulations define a specified 
period in which a decision is to be made. However, to add flexibility 
to the ``should have known'' standard in the latter situation, USDA has 
changed the regulation to require that a participant must request a 
hearing within 30 days after the participant ``reasonably'' should have 
known that the agency had not acted within the timeframes specified by 
program regulations.
    The second change made to the proposed rule regarding the request 
for a hearing is to require a participant to send a copy of the request 
for a hearing to the agency, and allow a participant the option to send 
a copy of the adverse decision being appealed to the agency as well. In 
either case, failure of the participant to send such copies to the 
agency is not jurisdictional and therefore will not be grounds for 
dismissal of an appeal.
    Agency officials often make many decisions a year with respect to 
some individual participants. In such cases, it is not always 
immediately apparent which decision a participant has appealed at a 
given time. USDA adds this provision to promote efficiency in the 
appeals process by encouraging full airings of appeals before the 
Hearing Officer. Sending the agency a copy of the decision will 
discourage agency requests for Director review because the agency did 
not have adequate notice of the appeal or the decision that was being 
appealed.
    With respect to the language in the proposed Sec. 11.9(c), several 
other comments were rejected. Two commenters suggested that, since the 
``should have known'' standard is being used, participants should not 
be required to exhaust administrative remedies prior to judicial review 
when appeals are taken from cases where agencies have failed to act. 
The statement added to Sec. 11.2 and discussed above makes clear that 
USDA considers exhaustion of an appeal to the Hearing Officer mandatory 
prior to seeking judicial review, regardless of the basis for the 
appeal.
    One commenter suggested that the regulation should state clearly 
that a decision becomes final after the 30-day time period for 
requesting a hearing is missed and that this timeframe may not be 
waived. USDA believes such a provision unnecessary; if a participant 
does not request the hearing within 30 days, the participant will not 
be allowed to have a hearing. USDA considers the 30-day requirement for 
filing an appeal to be jurisdictional in nature; thus, NAD has no 
authority under the Act to hear an appeal unless filed within the 30-
day time period as required.
    On the other hand, USDA does not view the requirements of section 
274 of the Act to be jurisdictional for NAD. That section requires an 
agency to provide participants with written notice of the adverse 
decision and appeal rights within 10 working days of the adverse 
decision. One commenter suggested that the proposed rule be revised to 
state that the 30-day timeframe for requesting a hearing does not begin 
to run until the participant receives complete appeal rights, 
presumably as provided for in section 274. While section 274 of the Act 
places a requirement on agencies, it has no bearing on the authority of 
NAD to hear an appeal by a participant. To read section 274 literally 
as suggested also would mean conversely that a participant achieves no 
standing to 

[[Page 67304]]
appeal an adverse decision to NAD until the participant receives a 
notice of appeal rights. USDA therefore rejects this comment and 
instead determines that the time period for requesting an appeal begins 
to run on ``the date on which the participant first received notice of 
the adverse decision'' as provided in section 276(b) of the Act.
    New subsection (c) retains language from the proposed subsection 
(a) regarding the requirement for participants to authorize 
representation by others in writing to USDA. Eight commenters addressed 
both this specific requirement and the requirement in other parts of 
this subsection that a participant must ``personally'' request a 
Director determination of appealability and an appeal to a Hearing 
Officer.
    The intention behind this requirement is to ensure that 
participants are fully aware of the implications of actions being taken 
on their behalf in the appeals process. By requiring that they 
personally sign requests for Director review of appealability, requests 
for hearing, and requests for Director review of Hearing Officer 
determinations (Sec. 11.9(a)), participants will be taking personal 
responsibility for such actions when represented by another. Authorized 
representatives also will be required to keep participants informed in 
order to get their signature authorizing proceeding to each new phase 
of a NAD appeal. USDA's concern is to ensure that participants are 
giving informed consent to the decisions undertaken in their behalf by 
their representatives, and, by requiring execution of a declaration of 
representation, that NAD is assured that purported representatives are 
who they actually claim to be. While USDA could curb potential abuses 
by licensed attorneys by complaints to state bars, USDA has no check on 
the actions of representatives who are not attorneys other than through 
provisions such as those promulgated here. The burdens imposed on 
participants and representatives are light--the language for the 
declaration can be obtained from NAD and signed documents can be 
submitted by mail or by facsimile transmission.
    Finally, four commenters felt that it was inappropriate for an 
appellant to state why the adverse decision is wrong because it was too 
early in the process to state a position or it may lead some 
participants to think that they need an attorney to bring an appeal. 
USDA disagrees. The word ``wrong'' was used here precisely to avoid any 
requirement that a participant state why a decision was ``erroneous'' 
or ``did not conform to published law or regulation'' or similar 
language. Those latter variations could be interpreted as legalistic, 
but USDA believes that at this initial stage the participant at least 
can tell NAD what is wrong with the decision that causes one to appeal 
it. This initial position is not binding, but rather provides NAD with 
a little bit more information that will allow for efficient 
administration of appeals. For example, if a participant feels 
discriminated against in the administration of a program, a statement 
to this effect at this stage may allow NAD to direct that person to the 
appropriate forum of USDA for consideration of civil rights complaints.


Sec. 11.7  Ex parte communications.

    The proposed rule included a paragraph on ex parte communications 
in Sec. 11.7(a) under the section regarding Division hearings. Two 
commenters expressed concerns in response to this proposed paragraph, 
the proposed definition of ex parte communication, and the proposed 
subsection on Director review of agency determinations of 
nonappealability, suggesting that the ex parte prohibition should apply 
to more than just the hearing phase of the NAD appeal process. One of 
these commenters also noted that the ex parte prohibition also should 
apply to all employees of the Division.
    Initially, USDA drafted the proposed regulation in parallel to the 
statute that stated the ex parte prohibition in the section of the Act 
on hearings. After reviewing the comments and the statutory language, 
and in order to foster a perception of fairness and equal treatment in 
the NAD appeals process, USDA has determined to apply the ex parte 
prohibition from the point at which the appeal is filed under section 
Sec. 11.6(b) through the issuance of a final determination by the 
Director under Sec. 11.9.
    To do this, a new Sec. 11.7 was created to make clear that the ex 
parte prohibition applies to more than just the hearing phase of the 
NAD process, and that it applies to any officer or employee of the 
Division. However, USDA rejected the comment that suggested that the ex 
parte prohibition apply to requests for Director review of 
appealability. The Director should be entitled to greater flexibility 
in contacting the agency and the USDA Office of the General Counsel to 
obtain information useful in making determinations as to whether 
particular adverse decisions are matters of general applicability. 
Additionally, the ex parte prohibition does not apply to Director 
reconsideration under Sec. 11.11 unless the Director decides to grant 
the request for reconsideration.


Sec. 11.8  Division hearings.

    Proposed Sec. 11.7 has been renumbered Sec. 11.8. The majority of 
comments on this section involved the perceived onerous burden on 
appellants of virtually requiring verbatim transcripts of hearings, the 
allegedly unreasonable time deadlines that could be set more flexibly 
by the Hearing Officer, the requirements for sending various notices to 
the appellant, the need for allowing good cause exceptions for 
absences, the need for actual documents to be submitted to Hearing 
Officers to make the hearing more efficient, the need to stress 
telephone hearings, the wisdom of continuing current NAD practice of 
telephonic pre-hearing conferences, the need to give additional parties 
the right to participate in the appeal, the need to reduce or waive the 
perceived unreasonable requirement that the requesting party pay for 
costs of witness travel and subsistence fees, and the ambiguity of the 
use of the word ``personally.''
    A number of changes have been made in response to comments and upon 
further reflection by USDA. The changes, or rejection of comments, are 
described below:

--Proposed Sec. 11.7(a)(1) (now Sec. 11.8(a)(1)) is revised to require 
the agency to provide the appellant a copy of the agency record upon 
request of the appellant; this requirement is a restatement of that 
requirement already included in the proposed rule at Sec. 11.7(b)(1) 
that also has been amended as Sec. 11.8(b)(1) in the final rule to 
require that such record be furnished to the appellant within 10 days 
of agency receipt of request for the record rather than ``promptly'' as 
proposed;
--A Hearing Officer will be required to obtain the concurrence of the 
Director prior to issuing a subpoena;
--Comments suggesting that an appellant have access to his or her 
entire file under this part were rejected, but the definition of 
``agency record'' was expanded above;
--The requirement that a request for subpoena be submitted 14 days 
ahead of the hearing was retained but a requirement that such a 
subpoena must be issued 7 days prior to the hearing was added;
--Parties requesting a subpoena will have to pay only the 
``reasonable'' travel and subsistence costs of a witness; USDA rejected 
all comments suggesting that the requirement that a party pay for all 
witnesses subpoenaed be deleted or that USDA should pay for such 
witnesses where the appellant was unable to pay; 

[[Page 67305]]
USDA also limited its payment for the costs associated with the 
appearance of a USDA employee to such situations where an employee's 
role as a witness arises out of his or her performance of official 
duties;
--The requirement for submission of certain documents to the Hearing 
Officer 28 days prior to the hearing is deleted; instead, the Hearing 
Officer may set a ``reasonable'' deadline for submission of such 
documents;
--The required pre-hearing submission of documents is limited to those 
documents not contained in the agency record that the appellant plans 
on introducing at the hearing;
--The amount of time for the Hearing Officer's notice of the date, 
time, and place of the hearing is reduced from 21 days to 14 days prior 
to the hearing, and the Hearing Officer also may take into account the 
convenience of the agency in picking a hearing site;
--A pre-hearing conference will be required and will be conducted by 
telephone unless otherwise agreed to by all parties and the Hearing 
Officer;
--The notice of the right to obtain the official record shall go to all 
parties, and all parties shall have the same participation rights in 
the actual hearing;
--The text of the proposed paragraph Sec. 11.7(c)(4)(iii) is deleted 
and replaced with new text in Sec. 11.8(c)(5)(iii) that makes a tape 
recording by the Division the official record of the proceeding unless 
a party requests a verbatim transcript, in which case that party must 
furnish a certified copy of the transcript to the Hearing Officer for 
the purpose of constituting the official record and must allow other 
parties to purchase that transcript from the transcription service;
--The authority of the Hearing Officer to cancel a hearing in the 
absence of a party is limited to such cases where the absent party 
fails to appear without good cause;
--The ability of the Hearing Officer to add additional evidence to the 
record in the absence of a party at a hearing is clarified;
--The section clarifies that a notice of determination must be sent by 
the Hearing Officer to the individual participant appealing the adverse 
decision, i.e. the ``named'' appellant, as well as the authorized 
representative of that person; and
--The Hearing Officer shall send, with the notice of determination, a 
copy of the procedures for a request for filing for Director review 
under Sec. 11.9.


Sec. 11.9  Director review of determinations of Hearing Officers.

    Fifteen commenters submitted comments on this section, which 
appeared as Sec. 11.8 in the proposed rule. Some of these comments, 
such as those objecting to the use of the word ``personally,'' the 
request for the procedures of this section to be sent to the appellant 
with the Hearing Officer notice of determination, and the extension of 
the ex parte prohibition to Director review, have been handled as 
described above.
    One comment suggesting that the agency head be allowed to delegate 
his or her authority to request Director review was rejected. On this 
point, USDA's position is that an agency request for Director review 
should only be exercised where the Hearing Officer has issued a 
determination that clearly is not supported by a preponderance of the 
evidence or is contrary to law. To avoid flooding NAD with agency 
requests for review, retaining the agency head, or the person acting in 
such capacity, as the only person allowed to request review assures 
that only the most meritorious and serious NAD decisions will be 
forwarded by an agency for Director review.
    A number of comments concerned the perceptions that all parties are 
not able to respond to requests for Director review, that the Director 
is not addressing all arguments in the rush to meet the statutory 
deadlines for issuing determinations, and that no provision is made for 
how new evidence introduced at this stage is to be handled. In response 
to these concerns, a number of changes were made.
    First, a request for Director review shall include specific reasons 
why the appellant believes the Hearing Officer's determination is 
wrong. Given the limited time period for agency response and the 
limited time period for Director review, the appellant should be 
required to do something more than simply submit a copy of the Hearing 
Officer's determination with a note saying that they appeal. As 
explained above, the term ``wrong'' is used specifically to avoid 
legalistic connotations. USDA simply asks that appellants express in 
their own terms what they find wrong with determinations. However, 
agencies here are held to a higher standard in order to assure 
efficient use of NAD resources. Agencies in their requests must state 
specific reasons why the determination of the Hearing Officer is 
erroneous, including citation of statutes or regulations that the 
agency believes the determination violates.
    Second, USDA has added language requiring that a party seeking 
Director review of the Hearing Officer's determination submit a copy of 
the request for review simultaneously to all other parties to the 
appeal. A new subsection also provides those non-submitting parties 5 
days from receipt of the request for Director review to submit written 
responses to the request. Added language makes clear that the Director 
may consider such responses in reaching a determination. However, if 
new evidence is submitted in such a request, new language authorizes 
the Director to remand all or a portion of the determination to the 
Hearing Officer for consideration of that new evidence. USDA rejected 
the comment that such a remanded determination should go back to a new 
Hearing Officer. The Hearing Officer making the original determination 
has the best knowledge of the case to make an efficient consideration 
of new evidence in the absence of some credible evidence of personal 
bias.
    Third, the deadlines set by the Act for the Director to issue a 
final determination or to remand to the Hearing Officer may be 
unrealistic at any given time because of caseload or the complexities 
of a particular appeal. Although USDA believes the failure to meet 
these deadlines does not deprive the Director of jurisdiction to reach 
a determination or issue a remand order, it fully intends to follow 
such deadlines to the extent possible in order to deliver fairly 
considered determinations of the Director that will withstand judicial 
review. Hastily rendered determinations that fail to develop an 
adequate decision for judicial review do not benefit either USDA or 
appellants. Therefore, while USDA has added no provision affirmatively 
authorizing the Director to extend the period for issuance of 
determinations, USDA recognizes that it may be necessary for the 
Director to do so in individual cases in order to facilitate a fair and 
equitable resolution of the appeal. Equitable, in this sense, refers to 
equal participation in and consideration of parties' submissions in the 
Director review process.
    Finally, the Director will review the determination of the Hearing 
Officer to determine whether the Hearing Officer's determination is 
supported by substantial evidence. If any additional information 
submitted in the Director review process is used as a basis for the 
Director's final determination, the Director shall note the reasons for 
use of such new information in the final determination.
    With respect to this section, one commenter also suggested that if 
a Hearing Officer does not have the power to reverse a denial of 
equitable relief (in 

[[Page 67306]]
effect, to award equitable relief) then this part should provide a 
shortcut past the Hearing Officer to the Director. The position of USDA 
is that the statute provides the Director with authority in appropriate 
cases to award equitable relief, and that no different procedural steps 
are required to implement that authority. However, a record developed 
by a Hearing Officer is necessary for the Director to determine whether 
such relief is appropriate.


Sec. 11.10  Basis for determinations.

    One commenter cited this section (proposed Sec. 11.9) as the 
appropriate place for stating that NAD is bound by prior findings of 
fact by an agency or NAD with respect to a particular appellant in 
another matter. While it is not the intention of USDA to implement NAD 
as part of a formal legal system based on large bodies of caselaw, USDA 
agrees that a Hearing Officer should not issue a contrary factual 
determination regarding the same appellant in a different matter where 
that factual determination was directly addressed in the other matter.
    Two commenters suggested in essence that the basis of 
determinations should be limited to issues raised by the decision of 
the agency and that the Hearing Officer or Director may not decide 
adversely to the appellant on issues not decided adversely to the 
appellant by the agency. USDA finds nothing in the statute to support 
anything other than a de novo review of agency decisions by NAD. The 
parties or NAD may raise any new issue as long as it conforms to the 
facts and law and regulations.
    Four commenters expressed concern that the language ``generally 
applicable interpretations'' in what is now Sec. 11.10(b) of the rule 
would make agency handbooks, manuals, and directives binding in a way 
that permits wholesale violations of the Act. These commenters point to 
section 278(c) of the Act that the commenters assert was enacted 
specifically to prevent agencies from using such materials by reference 
only to statutes and ``regulations published in the Federal Register'' 
as the basis for NAD determinations.
    USDA uses this language here to make clear again that NAD is not a 
forum for appellants to challenge agency statutes, regulations, or the 
generally applicable interpretations of those statutes and regulations. 
Some generally applicable interpretations actually may have been 
published once as a notice in the Federal Register, others may be based 
on caselaw interpreting a particular program provision in a particular 
Federal court jurisdiction or state court jurisdiction for programs in 
which state law is the applicable law. Still other generally applicable 
statements may be based on the previous advice of the Office of the 
General Counsel regarding a statute or regulation that constitutes the 
official legal position of USDA. In any of these described cases, for 
example, NAD could not ignore the generally applicable statements and 
base its determinations on legal interpretations that it is not 
authorized by the Act to make.


Sec. 11.11  Reconsideration of Hearing Officer or Director 
determinations.

    Upon further review, USDA has determined that the Director has 
limited inherent authority to reconsider final determinations of the 
Director even though provisions for such authority have not been 
specifically stated in the Act. Therefore, this new section sets forth 
standards for reconsideration of a Director's final determination.


Sec. 11.12  Effective date and implementation of final determinations 
of the Division.

    Several commenters suggested that this section needed more 
clarification as to the applicable dates, or, alternatively, that the 
Hearing Officer or Director should state what those dates are in the 
final determination. USDA finds further amendment of this section 
unnecessary at this time, given the variety of programs appealable to 
NAD and the responsibility of agencies for implementation of NAD and 
program decisions.
    It is the position of USDA with respect to implementation, however, 
that: (1) Implementation of a NAD decision only requires an agency to 
move to the next step of agency consideration of a benefit or 
application; (2) in keeping with the language of the Act, the 
applicable date of the decision is the date of the decision of the body 
from which the NAD appeal is brought; and (3) agencies, in accord with 
their regulations, may consider changes in the condition of the 
participant in the implementation of any NAD final determination.


Sec. 11.13  Judicial review.

    Two commenters suggested that appeals arising from an agency's 
failure to act should be excluded from this exhaustion requirement. 
USDA finds no support in the Act for such an exception. One commenter 
also suggested an amendment to include judicially recognized exceptions 
to the administrative exhaustion requirement. Since those exceptions 
are part of common law, and are thus changeable and subject to 
conflicting judicial interpretation, USDA finds inappropriate the 
addition of such exceptions to the regulation.


Sec. 11.14  Filing of appeals and computation of time.

    Two commenters expressed concerns that individuals residing in 
different time zones would have less time to appeal if Eastern time was 
used as a defining time for submission of filings required by this 
rule. In response, USDA has changed the deadline to 5:00 p.m. local 
time at the office of the Division to which the filing is submitted. 
Common practice now is for NAD or the agency, in its notice of appeal 
rights, to specify regional NAD offices where documents are to be 
submitted. USDA's change in this provision is acknowledgement of that 
practice and permits flexibility. However, USDA does not think that 
this permits participants on the East Coast to evade the purposes of 
this rule by filing documents with West Coast NAD offices in order to 
meet the 5:00 p.m. deadline.

III. Natural Resources Conservation Service (NRCS) Appeal Rules

    This portion of the interim-final rule sets forth the regulations 
for the handling of program participant requests for mediation or 
informal hearings of adverse technical determinations and decisions 
made by NRCS officials. Specifically, this rule amends part 614 to 
implement section 275 of the Act which requires NRCS to afford 
participants the opportunity for an informal hearing or mediation 
(where available), when requested, before they file an appeal of 
adverse decisions with NAD.
    These procedures are applicable to requests for mediation or 
informal hearings within the following program areas:
    (1) Highly erodible land conservation.
    (2) Wetland Conservation.
    (3) Wetland Technical determinations, including wetland technical 
determinations made by NRCS officials not related to a request for USDA 
program benefits.
    (4) Conservation Reserve Program.
    (5) Wetlands Reserve Program.
    (6) Great Plains Conservation Program.
    (7) Rural Abandoned Mine Program.
    (8) Colorado River Basin Salinity Control Program.
    (9) Resource Conservation and Development Program.
    (10) Emergency Wetland Reserve Program.
    (11) Agricultural Water Quality Incentives Program.
    (12) Environmental Easement Program. 
    
[[Page 67307]]

    (13) Forestry Incentives Program.
    (14) Water Bank Program.
    (15) Long term cost-sharing agreements under Public Law 83-566 and 
Public Law 78-534 watershed projects.
    (16) Any other program which subsequently incorporates these 
procedures through reference to this part within its program 
regulations.
    Part 614 as revised establishes two major categories of decisions 
made by NRCS officials for which landowners and participants may seek 
reconsideration or appeal: 1) those technical determinations of NRCS 
officials that may be appealed to NAD after appeal to the FSA county or 
area committees established under section 8(b)(5) of the Soil 
Conservation and Domestic Allotment Act (16 U.S.C 590h(b)(5)); and 2) 
other decisions made by NRCS.
    The current regulations in 7 CFR part 614 were published as a final 
rule on July 24, 1986, pursuant to Title XII of the Food Security Act 
of 1985, P.L. 99-198, 16 U.S.C. 3801 et seq. (Title XII). Those 
regulations set forth the procedures under which an owner or operator 
could seek reconsideration of, or appeal from, certain decisions made 
by NRCS officials regarding eligibility for participation in the 
Conservation Reserve Program, as authorized by Subtitle D of Title XII, 
or regarding the applicability of the compliance requirements of the 
highly erodible land and wetland conservation provisions of subtitles B 
and C of title XII, respectively.
    The Reorganization Act specified that, until such time as an 
adverse decision is referred to the NAD for consideration, FSA county 
or area committees established under section 8(b)(5) of the Soil 
Conservation and Domestic Allotment Act (16 U.S.C 590h(b)(5)) would 
have jurisdiction over any appeal resulting from adverse technical 
determinations made under Title XII, including an adverse decision 
involving technical determinations made by NRCS. Thus the subject 
matter of the current part 614 has been incorporated into subpart B of 
the revised part 614 which sets forth the informal appeal process for 
appeals of title XII technical determinations made by NRCS to FSA 
county committees as required by the Reorganization Act.
    Subpart C of the revised part 614 consolidates appeal procedures 
for all other existing NRCS programs in part 614. Appeals for the 
following additional programs are now also covered by part 614: 7 CFR 
Part 623, Emergency Wetland Reserve Program; 7 CFR Part 631, Great 
Plains Conservation Program; 7 CFR Part 632, Rural Abandoned Mine 
Program; 7 CFR Part 634, Rural Clean Water Program; 7 CFR Part 663, 
Wellton-Mohawk Irrigation Improvement Program, and 7 CFR Part 702, 
Colorado River Basin Salinity Control Program; 7 CFR Part 701 subpart-
Forestry Incentives Program; and 7 CFR Part 752, Water Bank program.
    Subpart A of part 614 includes general provisions applicable to 
informal appeals under both subparts B and C.
    Appeal provisions for 7 CFR parts 12, 620, 623, 631, 632, 634, 663, 
701, 702, and 752 are revised to make reference to part 614 for NRCS 
appeal procedures.

IV. Commodity Credit Corporation (CCC), Federal Crop Insurance 
Corporation (FCIC), and Farm Service Agency (FSA) Appeal Rules

    The interim final rule makes amendments to 7 CFR parts 400 and 780 
to maintain and revise the informal appeals process for adverse 
decisions of the FSA regarding Federal crop insurance, CCC, and FSA 
programs. The procedures for appeals under both parts will be 
consolidated in part 780. The revised part 780 sets forth regulations 
for requesting informal hearings or mediation in accordance with 
section 275 of the Act.
    Part 780 includes procedures for the handling of appeals of NRCS 
technical determinations to FSA county and area committees.
    Part 780 also includes procedures for the mandatory appeal of 
certain FSA adverse decisions to such committees as required by 7 CFR 
11.5(a) of the NAD rules of procedure.
    This rule also amends part 781 to conform the hearing procedures to 
that of part 780.

V. Rural Housing Service (RHS), Rural Business-Cooperative Service 
(RBS), and Rural Utilities Service (RUS) Appeal Rules

    7 CFR part 1900, subpart B currently contains rules for appeals of 
decisions of the former Farmers Home Administration (FmHA). Either by 
the Act or by delegation of the Secretary, the FmHA programs covered by 
part 1900, subpart B were divided among RHS, RBS, and RUS. This rule 
amends part 1900, subpart B to set forth rules for requesting informal 
appeals or mediation of adverse decisions concerning direct loans, loan 
guarantees, and grants under the following programs: RUS Water and 
Waste Disposal Facility Loans and Grants Program, RHS Housing and 
Community Facilities Loan Programs, and RBS Loan, Grant, and Guarantee 
Programs and the Intermediary Relending Program.

List of Subjects

7 CFR Part 1

    Administrative practice and procedure, Agriculture, Reporting and 
recordkeeping requirements.

7 CFR Part 11

    Administrative practice and procedure, Agriculture, Agricultural 
commodities, Crop insurance, Ex parte communications, Farmers, Federal 
aid programs, Guaranteed loans, Insured loans, Loan programs, Price 
support programs, Soil conservation.

7 CFR Part 12

    Administrative practice and procedure, Agriculture, Soil 
conservation, Wetlands.

7 CFR Part 400

    Administrative practice and procedure, Agriculture, Agricultural 
commodities, Crop insurance.

7 CFR Part 614

    Administrative practice and procedure, Agriculture, Soil 
conservation, Wetlands.

7 CFR Part 620

    Administrative practice and procedure, Agriculture, Soil 
conservation, Wetlands.

7 CFR Part 623

    Administrative practice and procedure, Agriculture, Soil 
conservation, Wetlands.

7 CFR Part 631

    Administrative practice and procedure, Agriculture, Soil 
conservation.

7 CFR Part 632

    Administrative practice and procedure, Mines, Rural areas, Soil 
conservation.

7 CFR Part 634

    Administrative practice and procedure, Agriculture, Soil 
conservation, Water resources, Water pollution control.

7 CFR Part 663

    Administrative practice and procedure, Irrigation, Soil 
conservation, Water resources.

7 CFR Part 701

    Administrative practice and procedure, Agriculture, Environmental 
protection, Forests and forest products, Soil conservation, Wetlands. 

[[Page 67308]]


7 CFR Part 702

    Administrative practice and procedure, Agriculture, Soil 
conservation, Water resources.

7 CFR Part 752

    Administrative practice and procedure, Agriculture, Soil 
Conservation, Water bank program, Water resources.

7 CFR Part 780

    Administrative practice and procedure, Agriculture, Agricultural 
commodities, Crop insurance, Ex parte communications, Farmers, Federal 
aid programs, Loan programs, Price support programs, Soil conservation, 
Wetlands.

7 CFR Part 781

    Administrative practice and procedure, Agriculture, Farmers.

7 CFR Part 1900

    Administrative practice and procedure, Agriculture, Business, 
Community development, Farmers, Federal aid programs, Guaranteed loans, 
Housing, Insured loans, Loan programs, Rural areas, Utilities.

    For the reasons set out in the preamble, Title 7 of the Code of 
Federal Regulations is amended as set forth below:

PART 1--ADMINISTRATIVE REGULATIONS

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

    Authority: 5 U.S.C. 301 and 552. Appendix A also issued under 7 
U.S.C. 2244; 31 U.S.C. 9701, and 7 CFR 2.75(a)(6)(xiii).

    2. Section 1.20 is revised to read as follows:


Sec. 1.20  Authentication.

    When a request is received for an authenticated copy of a document 
which the agency determines to make available to the requesting party, 
the agency shall cause a correct copy to be prepared and sent to the 
Office of the General Counsel which shall certify the same and cause 
the seal of the Department to be affixed, except that the Hearing Clerk 
in the Office of Administrative Law Judges may authenticate copies of 
documents in the records of the Hearing Clerk and that the Director of 
the National Appeals Division may authenticate copies of documents in 
the records of the National Appeals Division.

PART 11--NATIONAL APPEALS DIVISION RULES OF PROCEDURE

    Part 11 is added to read as follows:

PART 11--NATIONAL APPEALS DIVISION RULES OF PROCEDURE

Sec.
11.1  Definitions.
11.2  General statement.
11.3  Applicability.
11.4  Inapplicability of other laws and regulations.
11.5  Informal review of adverse decisions.
11.6  Director review of agency determination of appealability and 
right of participants to Division hearing.
11.7  Ex parte communications.
11.8  Division hearings.
11.9  Director review of determinations of Hearing Officers.
11.10  Basis for determinations.
11.11  Reconsideration of Director determinations.
11.12  Effective date and implementation of final determinations of 
the Division.
11.13  Judicial review.
11.14  Filing of appeals and computation of time.

    Authority: 5 U.S.C. 301; Title II, Subtitle H, Pub. L. 103-354, 
108 Stat. 3228 (7 U.S.C. 6991 et seq.); Reorganization Plan No. 2 of 
1953 (5 U.S.C. App.).


Sec. 11.1  Definitions.

    For purposes of this part:
    Adverse decision means an administrative decision made by an 
officer, employee, or committee of an agency that is adverse to a 
participant. The term includes a denial of equitable relief by an 
agency or the failure of an agency to issue a decision or otherwise act 
on the request or right of the participant within timeframes specified 
by agency program statutes or regulations or within a reasonable time 
if timeframes are not specified in such statutes or regulations. The 
term does not include a decision over which the Board of Contract 
Appeals has jurisdiction.
    Agency means:
    (1) The Agricultural Stabilization and Conservation Service (ASCS);
    (2) The Commodity Credit Corporation (CCC);
    (3) The Farm Service Agency (FSA);
    (4) The Farmers Home Administration (FmHA);
    (5) The Federal Crop Insurance Corporation (FCIC);
    (6) The Natural Resources Conservation Service (NRCS);
    (7) The Rural Business-Cooperative Service (RBS);
    (8) The Rural Development Administration (RDA);
    (9) The Rural Housing Service (RHS);
    (10) The Rural Utilities Service (RUS) (but not for programs 
authorized by the Rural Electrification Act of 1936 and the Rural 
Telephone Bank Act, 7 U.S.C. 901 et seq.);
    (11) The Soil Conservation Service (SCS);
    (12) A State, county, or area committee established under section 
8(b)(5) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 
590h(b)(5)); and
    (13) Any successor agency to the above-named agencies, and any 
other agency or office of the Department which the Secretary may 
designate.
    Agency record means all the materials maintained by an agency 
related to an adverse decision which are submitted to the Division by 
an agency for consideration in connection with an appeal under this 
part, including all materials prepared or reviewed by the agency during 
its consideration and decision-making process, but shall not include 
records or information not related to the adverse decision at issue. 
All materials contained in the agency record submitted to the Division 
shall be deemed admitted as evidence for purposes of a hearing or a 
record review under Sec. 11.8.
    Agency representative means any person, whether or not an attorney, 
who is authorized to represent the agency in an administrative appeal 
under this part.
    Appeal means a written request by a participant asking for review 
by the National Appeals Division of an adverse decision under this 
part.
    Appellant means any participant who appeals an adverse decision in 
accordance with this part. Unless separately set forth in this part, 
the term ``appellant'' includes an authorized representative.
    Authorized representative means any person, whether or not an 
attorney, who is authorized in writing by a participant, consistent 
with Sec. 11.6(c), to act for the participant in an administrative 
appeal under this part. The authorized representative may act on behalf 
of the participant except when the provisions of this part require 
action by the participant or appellant personally.
    Case record means all the materials maintained by the Secretary 
related to an adverse decision. The case record includes both the 
agency record and the hearing record.
    Days means calendar days unless otherwise specified.
    Department means the United States Department of Agriculture 
(USDA).
    Director means the Director of the Division or a designee of the 
Director.
    Division means the National Appeals Division established by this 
part.
    Equitable relief means relief which is authorized under section 326 
of the Food and Agriculture Act of 1962 (7 U.S.C. 1339a) and other laws 
administered by the agency. 

[[Page 67309]]

    Ex parte communication means an oral or written communication to 
any officer or employee of the Division with respect to which 
reasonable prior notice to all parties is not given, but it shall not 
include requests for status reports, or inquiries on Division 
procedure, in reference to any matter or proceeding connected with the 
appeal involved.
    Hearing, except with respect to Sec. 11.5, means a proceeding 
before the Division to afford a participant the opportunity to present 
testimony or documentary evidence or both in order to have a previous 
determination reversed and to show why an adverse determination was in 
error.
    Hearing Officer means an individual employed by the Division who 
conducts the hearing and determines appeals of adverse decisions by any 
agency.
    Hearing record means all documents, evidence, and other materials 
generated in relation to a hearing under Sec. 11.8.
    Implement means the taking of action by an agency of the Department 
in order fully and promptly to effectuate a final determination of the 
Division.
    Participant means any individual or entity who has applied for, or 
whose right to participate in or receive, a payment, loan, loan 
guarantee, or other benefit in accordance with any program of an agency 
to which the regulations in this part apply is affected by a decision 
of such agency. With respect to guaranteed loans made by FSA, both the 
borrower and the lender jointly must appeal an adverse decision except 
that the denial or reduction of a final loss payment to a lender shall 
be appealed by the lender only. The term does not include persons whose 
claim(s) arise under:
    (1) Programs subject to various proceedings provided for in 7 CFR 
part 1;
    (2) Programs governed by Federal contracting laws and regulations 
(appealable under other rules and to other forums, including to the 
Department's Board of Contract Appeals under 7 CFR part 24);
    (3) The Freedom of Information Act (appealable under 7 CFR part 1, 
subpart A);
    (4) Suspension and debarment disputes, including, but not limited 
to, those falling within the scope of 7 CFR parts 1407 and 3017;
    (5) Export programs administered by the Commodity Credit 
Corporation;
    (6) Disputes between reinsured companies and the Federal Crop 
Insurance Corporation;
    (7) Tenant grievances or appeals prosecutable under the provisions 
of 7 CFR part 1944, subpart L, under the multi-family housing program 
carried out by RHS;
    (8) Personnel, equal employment opportunity, and other similar 
disputes with any agency or office of the Department which arise out of 
the employment relationship;
    (9) The Federal Tort Claims Act, 28 U.S.C. 2671 et seq., or the 
Military Personnel and Civilian Employees Claims Act of 1964, 31 U.S.C. 
3721; or
    (10) Discrimination complaints prosecutable under the 
nondiscrimination regulations at 7 CFR parts 15, 15a, 15b, and 15e.
    Record review means an appeal considered by the Hearing Officer in 
which the Hearing Officer's determination is based on the agency record 
and other information submitted by the appellant and the agency, 
including information submitted by affidavit or declaration.
    Secretary means the Secretary of Agriculture.


Sec. 11.2  General statement.

    (a) This part sets forth procedures for proceedings before the 
National Appeals Division within the Department. The Division is an 
organization within the Department, subject to the general supervision 
of and policy direction by the Secretary, which is independent from all 
other agencies and offices of the Department, including Department 
officials at the state and local level. The Director of the Division 
reports directly to the Secretary of Agriculture. The authority of the 
Hearing Officers and the Director of the Division, and the 
administrative appeal procedures which must be followed by program 
participants who desire to appeal an adverse decision and by the agency 
which issued the adverse decision, are included in this part.
    (b) Pursuant to section 212(e) of the Federal Crop Insurance Reform 
and Department of Agriculture Reorganization Act of 1994, Public Law 
103-354 (the Act), 7 U.S.C. 6912(e), program participants shall seek 
review of an adverse decision before a Hearing Officer of the Division, 
and may seek further review by the Director, under the provisions of 
this part prior to seeking judicial review.


Sec. 11.3  Applicability.

    (a) Subject matter. The regulations contained in this part are 
applicable to adverse decisions made by an agency, including, for 
example, those with respect to:
    (1) Denial of participation in, or receipt of benefits under, any 
program of an agency;
    (2) Compliance with program requirements;
    (3) The making or amount of payments or other program benefits to a 
participant in any program of an agency; and
    (4) A determination that a parcel of land is a wetland or highly 
erodible land.
    (b) Limitation. The procedures contained in this part may not be 
used to seek review of statutes or USDA regulations issued under 
Federal law.


Sec. 11.4  Inapplicability of other laws and regulations.

    The provisions of the Administrative Procedure Act generally 
applicable to agency adjudications (5 U.S.C. 554, 555, 556, 557, & 
3105) are not applicable to proceedings under this part. The Equal 
Access to Justice Act, as amended, 5 U.S.C. 504, does not apply to 
these proceedings. The Federal Rules of Evidence, 28 U.S.C. App., shall 
not apply to these proceedings.


Sec. 11.5  Informal review of adverse decisions.

    (a) Required informal review of FSA adverse decisions. A 
participant must seek an informal review of an adverse decision issued 
at the field service office level by an officer or employee of FSA, or 
by any employee of a county or area committee established under section 
8(b)(5) of the Soil Conservation and Domestic Allotment Act, 16 U.S.C. 
590h(b)(5), before NAD will accept an appeal of an FSA adverse 
decision. Such informal review shall be done by the county or area 
committee with responsibility for the adverse decision at issue. The 
procedures for requesting such an informal review before FSA are found 
in 7 CFR part 780. After receiving a decision upon review by a county 
or area committee, a participant may seek further informal review by 
the State FSA committee or may appeal directly to NAD under 
Sec. 11.6(b).
    (b) Optional informal review. With respect to adverse decisions 
issued at the State office level of FSA and adverse decisions of all 
other agencies, a participant may request an agency informal review of 
an adverse decision of that agency prior to appealing to NAD. 
Procedures for requesting such an informal review are found at 7 CFR 
part 780 (FSA), 7 CFR part 614 (NRCS), 7 CFR part 1900, subpart B 
(RUS), 7 CFR part 1900, subpart B (RBS), and 7 CFR part 1900, subpart B 
(RHS).
    (c) Mediation. A participant also shall have the right to utilize 
any available alternative dispute resolution (ADR) or mediation 
program, including any mediation program available under title 

[[Page 67310]]
V of the Agriculture Credit Act of 1987, 7 U.S.C. 5101 et seq., in 
order to attempt to seek resolution of an adverse decision of an agency 
prior to a NAD hearing. If a participant:
    (1) Requests mediation or ADR prior to filing an appeal with NAD, 
the participant stops the running of the 30-day period during which a 
participant may appeal to NAD under Sec. 11.6(b)(1), and will have the 
balance of days remaining in that period to appeal to NAD once 
mediation or ADR has concluded.
    (2) Requests mediation or ADR after having filed an appeal to NAD 
under Sec. 11.6(b), but before the hearing, the participant will be 
deemed to have waived his right to have a hearing within 45 days under 
Sec. 11.8(c)(1) but shall have the right to have a hearing within 45 
days after conclusion of mediation or ADR.


Sec. 11.6  Director review of agency determination of appealability and 
right of participants to Division hearing.

    (a) Director review of agency determination of appealability. (1) 
Not later than 30 days after the date on which a participant receives a 
determination from an agency that an agency decision is not appealable, 
the participant must submit a written request to the Director to review 
the determination in order to obtain such review by the Director.
    (2) The Director shall determine whether the decision is adverse to 
the individual participant and thus appealable or is a matter of 
general applicability and thus not subject to appeal, and will issue a 
final determination notice that upholds or reverses the determination 
of the agency. This final determination is not appealable. If the 
Director reverses the determination of the agency, the Director will 
notify the participant and the agency of that decision and inform the 
participant of his or her right to proceed with an appeal.
    (3) The Director may delegate his or her authority to conduct a 
review under this subsection to any subordinate official of the 
Division other than a Hearing Officer. In any case in which such review 
is conducted by such a subordinate official, the subordinate official's 
determination shall be considered to be the determination of the 
Director and shall be final and not appealable.
    (b) Appeals of adverse decisions. (1) To obtain a hearing under 
Sec. 11.8, a participant personally must request such hearing not later 
than 30 days after the date on which the participant first received 
notice of the adverse decision or after the date on which the 
participant receives notice of the Director's determination that a 
decision is appealable. In the case of the failure of an agency to act 
on the request or right of a recipient, a participant personally must 
request such hearing not later than 30 days after the participant knew 
or reasonably should have known that the agency had not acted within 
the timeframes specified by agency program regulations, or, where such 
regulations specify no timeframes, not later than 30 days after the 
participant reasonably should have known of the agency's failure to 
act.
    (2) A request for a hearing shall be in writing and personally 
signed by the participant, and shall include a copy of the adverse 
decision to be reviewed, if available, along with a brief statement of 
the participant's reasons for believing that the decision, or the 
agency's failure to act, was wrong. The participant also shall send a 
copy of the request for a hearing to the agency, and may send a copy of 
the adverse decision to be reviewed to the agency, but failure to do 
either will not constitute grounds for dismissal of the appeal. Instead 
of a hearing, the participant may request a record review.
    (c) If a participant is represented by an authorized 
representative, the authorized representative must file a declaration 
with NAD, executed in accordance with 28 U.S.C. 1746, stating that the 
participant has duly authorized the declarant in writing to represent 
the participant for purposes of a specified adverse decision or 
decisions, and attach a copy of the written authorization to the 
declaration.


Sec. 11.7  Ex parte communications.

    (a)(1) At no time between the filing of an appeal and the issuance 
of a final determination under this part shall any officer or employee 
of the Division engage in ex parte communications regarding the merits 
of the appeal with any person having any interest in the appeal pending 
before the Division, including any person in an advocacy or 
investigative capacity. This prohibition does not apply to:
    (i) Discussions of procedural matters related to an appeal; or
    (ii) Discussions of the merits of the appeal where all parties to 
the appeal have been given notice and an opportunity to participate.
    (2) In the case of a communication described in paragraph 
(a)(1)(ii) of this section, a memorandum of any such discussion shall 
be included in the hearing record.
    (b) No interested person shall make or knowingly cause to be made 
to any officer or employee of the Division an ex parte communication 
relevant to the merits of the appeal.
    (c) If any officer or employee of the Division receives an ex parte 
communication in violation of this section, the one who receives the 
communication shall place in the hearing record:
    (1) All such written communications;
    (2) Memoranda stating the substance of all such oral 
communications; and
    (3) All written responses to such communications, and memoranda 
stating the substance of any oral responses thereto.
    (d) Upon receipt of a communication knowingly made or knowingly 
caused to be made by a party in violation of this section the Hearing 
Officer or Director may, to the extent consistent with the interests of 
justice and the policy of the underlying program, require the party to 
show cause why such party's claim or interest in the appeal should not 
be dismissed, denied, disregarded, or otherwise adversely affected on 
account of such violation.


Sec. 11.8  Division hearings.

    (a) General rules. (1) The Director, the Hearing Officer, and the 
appellant shall have access to the agency record of any adverse 
decision appealed to the Division for a hearing. Upon request by the 
appellant, the agency shall provide the appellant a copy of the agency 
record.
    (2) The Director and Hearing Officer shall have the authority to 
administer oaths and affirmations, and to require, by subpoena, the 
attendance of witnesses and the production of evidence. A Hearing 
Officer shall obtain the concurrence of the Director prior to issuing a 
subpoena.
    (i) A subpoena requiring the production of evidence may be 
requested and issued at any time while the case is pending before the 
Division.
    (ii) An appellant or an agency, acting through any appropriate 
official, may request the issuance of a subpoena requiring the 
attendance of a witness by submitting such a request in writing at 
least 14 days before the scheduled date of a hearing. The Director or 
Hearing Officer shall issue a subpoena at least 7 days prior to the 
scheduled date of a hearing.
    (iii) A subpoena shall be issued only if the Director or a Hearing 
Officer determines that:
    (A) For a subpoena of documents, the appellant or the agency has 
established that production of documentary evidence is necessary and is 
reasonably calculated to lead to information which would affect the 
final determination or 

[[Page 67311]]
is necessary to fully present the case before the Division; or
    (B) For a subpoena of a witness, the appellant or the agency has 
established that either a representative of the Department or a private 
individual possesses information that is pertinent and necessary for 
disclosure of all relevant facts which could impact the final 
determination, that the information cannot be obtained except through 
testimony of the person, and that the testimony cannot be obtained 
absent issuance of a subpoena.
    (iv) The party requesting issuance of a subpoena shall arrange for 
service. Service of a subpoena upon a person named therein may be made 
by registered or certified mail, or in person. Personal service shall 
be made by personal delivery of a copy of the subpoena to the person 
named therein by any person who is not a party and who is not less than 
18 years of age. Proof of service shall be made by filing with the 
Hearing Officer or Director who issued the subpoena a statement of the 
date and manner of service and of the names of the persons served, 
certified by the person who made the service in person or by return 
receipts for certified or registered mail.
    (v) A party who requests that a subpoena be issued shall be 
responsible for the payment of any reasonable travel and subsistence 
costs incurred by the witness in connection with his or her appearance 
and any fees of a person who serves the subpoena in person. The 
Department shall pay the costs associated with the appearance of a 
Department employee whose role as a witness arises out of his or her 
performance of official duties, regardless of which party requested the 
subpoena. The failure to make payment of such charges on demand may be 
deemed by the Hearing Officer or Director as sufficient ground for 
striking the testimony of the witness and the evidence the witness has 
produced.
    (vi) If a person refuses to obey a subpoena, the Director, acting 
through the Office of the General Counsel of the Department and the 
Department of Justice, may apply to the United States District Court in 
the jurisdiction where that person resides to have the subpoena 
enforced as provided in the Federal Rules of Civil Procedure (28 U.S.C. 
App.).
    (3) Testimony required by subpoena pursuant to paragraph (a)(2) of 
this section may, at the discretion of the Director or a Hearing 
Officer, be presented at the hearing either in person or 
telephonically.
    (b) Hearing procedures applicable to both record review and 
hearings. (1) Upon the filing of an appeal under this part of an 
adverse decision by any agency, the agency promptly shall provide the 
Division with a copy of the agency record. If requested by the 
appellant prior to the hearing, a copy of such agency record shall be 
provided to the appellant by the agency within 10 days of receipt of 
the request by the agency.
    (2) The Director shall assign the appeal to a Hearing Officer and 
shall notify the appellant and agency of such assignment. The notice 
also shall advise the appellant and the agency of the documents 
required to be submitted under paragraph (c)(2) of this section, and 
notify the appellant of the option of having a hearing by telephone.
    (3) The Hearing Officer will receive evidence into the hearing 
record without regard to whether the evidence was known to the agency 
officer, employee, or committee making the adverse decision at the time 
the adverse decision was made.
    (c) Procedures applicable only to hearings. (1) Upon a timely 
request for a hearing under Sec. 11.6(b), an appellant has the right to 
have a hearing by the Division on any adverse decision within 45 days 
after the date of receipt of the request for the hearing by the 
Division.
    (2) The Hearing Officer shall set a reasonable deadline for 
submission of the following documents:
    (i) By the appellant:
    (A) A short statement of why the decision is wrong;
    (B) A copy of any document not in the agency record that the 
appellant anticipates introducing at the hearing; and
    (C) A list of anticipated witnesses and brief descriptions of the 
evidence such witnesses will offer.
    (ii) By the agency:
    (A) A copy of the adverse decision challenged by the appellant;
    (B) A written explanation of the agency's position, including the 
regulatory or statutory basis therefor;
    (C) A copy of any document not in the agency record that the agency 
anticipates introducing at the hearing; and
    (D) A list of anticipated witnesses and brief descriptions of the 
evidence such witnesses will offer.
    (3) Not less than 14 days prior to the hearing, the Division must 
provide the appellant, the authorized representative, and the agency a 
notice of hearing specifying the date, time, and place of the hearing. 
The hearing will be held in the State of residence of the appellant, as 
determined by the Hearing Officer, or at a location that is otherwise 
convenient to the appellant, the agency, and the Division. The notice 
also shall notify all parties of the right to obtain an official record 
of the hearing.
    (4) Pre-hearing conference. Whenever appropriate, the Hearing 
Officer shall hold a pre-hearing conference in order to attempt to 
resolve the dispute or to narrow the issues involved. Such pre-hearing 
conference shall be held by telephone unless the Hearing Officer and 
all parties agree to hold such conference in person.
    (5) Conduct of the hearing. (i) A hearing before a Hearing Officer 
will be in person unless the appellant agrees to a hearing by 
telephone.
    (ii) The hearing will be conducted by the Hearing Officer in the 
manner determined by the Division most likely to obtain the facts 
relevant to the matter or matters at issue. The Hearing Officer will 
allow the presentation of evidence at the hearing by any party without 
regard to whether the evidence was known to the officer, employee, or 
committee of the agency making the adverse decision at the time the 
adverse decision was made. The Hearing Officer may confine the 
presentation of facts and evidence to pertinent matters and exclude 
irrelevant, immaterial, or unduly repetitious evidence, information, or 
questions. Any party shall have the opportunity to present oral and 
documentary evidence, oral testimony of witnesses, and arguments in 
support of the party's position; controvert evidence relied on by any 
other party; and question all witnesses. When appropriate, agency 
witnesses requested by the appellant will be made available at the 
hearing. Any evidence may be received by the Hearing Officer without 
regard to whether that evidence could be admitted in judicial 
proceedings.
    (iii) An official record shall be made of the proceedings of every 
hearing. This record will be made by an official tape recording by the 
Division. In addition, either party may request that a verbatim 
transcript be made of the hearing proceedings and that such transcript 
shall be made the official record of the hearing. The party requesting 
a verbatim transcript shall pay for the transcription service, shall 
provide a certified copy of the transcript to the Hearing Officer free 
of charge, and shall allow any other party desiring to purchase a copy 
of the transcript to order it from the transcription service.
    (6) Absence of parties. (i) If at the time scheduled for the 
hearing either the appellant or the agency representative is absent, 
and no appearance is made on behalf of such absent party, or no 
arrangements have been made for rescheduling the hearing, the Hearing 

[[Page 67312]]
Officer has the option to cancel the hearing unless the absent party 
has good cause for the failure to appear. If the Hearing Officer elects 
to cancel the hearing, the Hearing Officer may:
    (A) Treat the appeal as a record review and issue a determination 
based on the agency record as submitted by the agency and the hearing 
record developed prior to the hearing date;
    (B) Accept evidence into the hearing record submitted by any party 
present at the hearing, and then issue a determination; or
    (C) Dismiss the appeal.
    (ii) When a hearing is cancelled due to the absence of a party, the 
Hearing Officer will add to the hearing record any additional evidence 
submitted by any party present, provide a copy of such evidence to the 
absent party or parties, and allow the absent party or parties 10 days 
to provide a response to such additional evidence for inclusion in the 
hearing record.
    (iii) Where an absent party has demonstrated good cause for the 
failure to appear, the Hearing Officer shall reschedule the hearing 
unless all parties agree to proceed without a hearing.
    (7) Post-hearing procedure. The Hearing Officer will leave the 
hearing record open after the hearing for 10 days, or for such other 
period of time as the Hearing Officer shall establish, to allow the 
submission of information by the appellant or the agency, to the extent 
necessary to respond to new facts, information, arguments, or evidence 
presented or raised at the hearing. Any such new information will be 
added by the Hearing Officer to the hearing record and sent to the 
other party or parties by the submitter of the information. The Hearing 
Officer, in his or her discretion, may permit the other party or 
parties to respond to this post-hearing submission.
    (d) Interlocutory review. Interlocutory review by the Director of 
rulings of a Hearing Officer are not permitted under the procedures of 
this part.
    (e) Burden of proof. The appellant has the burden of proving that 
the adverse decision of the agency was erroneous by a preponderance of 
the evidence.
    (f) Timing of issuance of determination. The Hearing Officer will 
issue a notice of the determination on the appeal to the named 
appellant, the authorized representative, and the agency not later than 
30 days after a hearing or the closing date of the hearing record in 
cases in which the Hearing Officer receives additional evidence from 
the agency or appellant after a hearing. In the case of a record 
review, the Hearing Officer will issue a notice of determination within 
45 days of receipt of the appellant's request for a record review. Upon 
the Hearing Officer's request, the Director may establish an earlier or 
later deadline. A notice of determination shall be accompanied by a 
copy of the procedures for filing a request for Director review under 
Sec. 11.9. If the determination is not appealed to the Director for 
review under Sec. 11.9, the notice provided by the Hearing Officer 
shall be considered to be a notice of a final determination under this 
part.


Sec. 11.9  Director review of determinations of Hearing Officers.

    (a) Requests for Director review. (1) Not later than 30 days after 
the date on which an appellant receives the determination of a Hearing 
Officer under Sec. 11.8, the appellant must submit a written request, 
signed personally by the named appellant, to the Director to review the 
determination in order to be entitled to such review by the Director. 
Such request shall include specific reasons why the appellant believes 
the determination is wrong.
    (2) Not later than 15 business days after the date on which an 
agency receives the determination of a Hearing Officer under Sec. 11.8, 
the head of the agency may make a written request that the Director 
review the determination. Such request shall include specific reasons 
why the agency believes the determination is wrong, including citations 
of statutes or regulations that the agency believes the determination 
violates. Any such request may be made by the head of an agency only, 
or by a person acting in such capacity, but not by any subordinate 
officer of such agency.
    (3) A copy of a request for Director review submitted under this 
paragraph (a) shall be provided simultaneously by the submitter to each 
party to the appeal.
    (b) Notification of parties. The Director promptly shall notify all 
parties of receipt of a request for review.
    (c) Responses to request for Director review. Other parties to an 
appeal may submit written responses to a request for Director review 
within 5 business days from the date of receipt of a copy of the 
request for review.
    (d) Determination of Director. (1) The Director will conduct a 
review of the determination of the Hearing Officer using the agency 
record, the hearing record, the request for review, any responses 
submitted under paragraph (c) of this section, and such other arguments 
or information as may be accepted by the Director, in order to 
determine whether the decision of the Hearing Officer is supported by 
substantial evidence. Based on such review, the Director will issue a 
final determination notice that upholds, reverses, or modifies the 
determination of the Hearing Officer. The Director's determination upon 
review of a Hearing Officer's decision shall be considered to be the 
final determination under this part and shall not be appealable. 
However, if the Director determines that the hearing record is 
inadequate or that new evidence has been submitted, the Director may 
remand all or a portion of the determination to the Hearing Officer for 
further proceedings to complete the hearing record or, at the option of 
the Director, to hold a new hearing.
    (2) The Director will complete the review and either issue a final 
determination or remand the determination not later than--
    (i) 10 business days after receipt of the request for review, in 
the case of a request by the head of an agency; or
    (ii) 30 business days after receipt of the request for review, in 
the case of a request by an appellant.
    (3) In any case or any category of cases, the Director may delegate 
his or her authority to conduct a review under this section to any 
Deputy or Associate Directors of the Division. In any case in which 
such review is conducted by a Deputy or Associate Director under 
authority delegated by the Director, the Deputy or Associate Director's 
determination shall be considered to be the determination of the 
Director under this part and shall be final and not appealable.
    (e) Equitable relief. In reaching a decision on an appeal, the 
Director shall have the authority to grant equitable relief under this 
part in the same manner and to the same extent as such authority is 
provided an agency under applicable laws and regulations.


Sec. 11.10  Basis for determinations.

    (a) In making a determination, the Hearing Officers and the 
Director are not bound by previous findings of facts on which the 
agency's adverse decision was based.
    (b) In making a determination on the appeal, Hearing Officers and 
the Director shall ensure that the decision is consistent with the laws 
and regulations of the agency, and with the generally applicable 
interpretations of such laws and regulations.
    (c) All determinations of the Hearing Officers and the Director 
must be based on information from the case record, laws applicable to 
the matter at issue, and applicable regulations published in the 
Federal Register and in effect on the date of the adverse decision or 
the date on which the acts that gave rise to the 

[[Page 67313]]
adverse decision occurred, whichever date is appropriate under the 
applicable agency program laws and regulations.


Sec. 11.11  Reconsideration of Director determinations.

    (a) Reconsideration of a determination of the Director may be 
requested by the appellant or the agency within 10 days of receipt of 
the determination. The Director will not consider any request for 
reconsideration that does not contain a detailed statement of a 
material error of fact made in the determination, or a detailed 
explanation of how the determination is contrary to statute or 
regulation, which would justify reversal or modification of the 
determination.
    (b) The Director shall issue a notice to all parties as to whether 
a request for reconsideration meets the criteria in paragraph (a) of 
this section. If the request for reconsideration meets such criteria, 
the Director shall include a copy of the request for reconsideration in 
the notice to the non-requesting parties to the appeal. The non-
requesting parties shall have 5 days from receipt of such notice from 
the Director to file a response to the request for reconsideration with 
the Director.
    (c) The Director shall issue a decision on the request for 
reconsideration within 5 days of receipt of responses from the non-
requesting parties. If the Director's decision upon reconsideration 
reverses or modifies the final determination of the Director rendered 
under Sec. 11.9(d), the Director's decision on reconsideration will 
become the final determination of the Director under Sec. 11.9(d) for 
purposes of this part.


Sec. 11.12  Effective date and implementation of final determinations 
of the Division.

    (a) On the return of a case to an agency pursuant to the final 
determination of the Division, the head of the agency shall implement 
the final determination not later than 30 days after the effective date 
of the notice of the final determination.
    (b) A final determination will be effective as of the date of 
filing of an application, the date of the transaction or event in 
question, or the date of the original adverse decision, whichever is 
applicable under the applicable agency program statutes or regulations.


Sec. 11.13  Judicial review.

    (a) A final determination of the Division shall be reviewable and 
enforceable by any United States District Court of competent 
jurisdiction in accordance with chapter 7 of title 5, United States 
Code.
    (b) An appellant may not seek judicial review of any agency adverse 
decision appealable under this part without receiving a final 
determination from the Division pursuant to the procedures of this 
part.


Sec. 11.14  Filing of appeals and computation of time.

    (a) An appeal, a request for Director review, or any other document 
will be considered ``filed'' when delivered in writing to the Division, 
when postmarked, or when a complete facsimile copy is received by the 
Division.
    (b) Whenever the final date for any requirement of this part falls 
on a Saturday, Sunday, Federal holiday, or other day on which the 
Division is not open for the transaction of business during normal 
working hours, the time for filing will be extended to the close of 
business on the next working day.
    (c) The time for filing an appeal, a request for Director review, 
or any other document expires at 5:00 p.m. local time at the office of 
the Division to which the filing is submitted on the last day on which 
such filing may be made.

PART 12--HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION

    1. The authority citation for part 12 continues to read as follows:

    Authority: 16 U.S.C. 3801 et seq.

    2. Section 12.12 is revised to read as follows:


Sec. 12.12  Appeals.

    Any person who has been or who would be denied program benefits in 
accordance with Sec. 12.4 as the result of any determination made in 
accordance with the provisions of this part may obtain a review of such 
determination in accordance with the administrative appeals procedures 
of the agency which rendered such determination. Agency appeal 
procedures are contained in the Code of Federal Regulations as follows: 
FSA, 7 CFR part 780; NRCS, 7 CFR part 614; RHS, RBS, and RUS, 7 CFR 
part 1900, subpart B.

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

    1-2. Subpart J is revised to read as follows:

Subpart J--Appeal Procedure--Regulations

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


Sec. 400.90  Applicability.

    Persons who are insured or believe they are insured under contracts 
of insurance issued under the Federal Crop Insurance Act must obtain 
appeal and reconsideration of decisions made under the provisions of 
this chapter in accordance with part 780 of this title.

PART 614--APPEAL PROCEDURES

    1. Part 614 is revised to read as follows:

PART 614--APPEAL PROCEDURES

Subpart A--General Provisions

Sec.
614.1  Purpose and scope.
614.2  Definitions.
614.3  Applicability.
614.4  Reservation of authority.
614.5  Decisions not subject to appeal.
Subpart B--Appeals of Technical Determinations Related to the 
Conservation Title (Title XII) of the Food Security Act of 1985, as 
Amended
614.100  Applicability.
614.101  Notice of preliminary technical determinations.
614.102  Mediation of preliminary technical determinations.
614.103  Final determinations.
614.104  Appeals of technical determinations.

Subpart C--Appeals of Decision Related to Conservation Programs (non-
Title XII)

614.200  Applicability.
614.201  Notice of final decisions.
614.202  Time frames for filing requests for informal hearings.
614.203  Mediation of adverse final decisions.
614.204  Appeals of adverse final decisions.

    Authority: 5 U.S.C. 301, sections 226 and 275 of Pub. L. 103-354 
(7 U.S.C. 6932 and 6995); 16 U.S.C. 3843(a).

Subpart A--General Provisions


Sec. 614.1  Purpose and scope.

    This part sets forth the informal procedures under which a 
landowner or program participant may appeal adverse technical 
determinations or decisions made by officials of the Natural Resources 
Conservation Service (NRCS) or its successor agency.


Sec. 614.2  Definitions.

    Adverse technical determination or decision includes, in addition 
to the definition of adverse decision in 7 CFR part 11, an NRCS 
technical determination or decision that affects the legal substantive 
status of the land, though it may not necessarily be adverse.
    Chief means the Chief of NRCS. For the purposes of this part, the 
term ``Chief'' includes an official of NRCS national headquarters 
designated by the Chief to act for the Chief in making decisions under 
this part.
    Conservation district means any district or unit of State or local 
government formed under State law or territorial law for the express 
purpose of developing and carrying out a local soil and water 
conservation program. Such 

[[Page 67314]]
district or unit of government may be referred to as a conservation 
district, soil conservation district, soil and water conservation 
district, natural resource district, land conservation committee, or a 
similar name.
    County committee means a Farm Service Agency (FSA) county or area 
committee established in accordance with section 8(b) of the Soil 
Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)).
    Decision means a conclusion reached by an NRCS official based on 
applicable regulations and program instructions which relates to 
eligibility for program benefits, including a technical determination 
used as a basis for the decision.
    Designated conservationist means the NRCS official, usually the 
district conservationist, whom the State Conservationist designates to 
be responsible for the program or compliance requirement to which this 
part is applicable.
    Mediation means a process in which a neutral third party, the 
mediator, meets with the disputing parties (e.g., the landowner or 
program participant and the agency), facilitates discussions, and works 
with the parties to resolve their disputes, narrow areas of 
disagreement, and improve communications and relationships. A mediator 
has no authority to render a decision or determination.
    Preliminary technical determination means the initial written 
technical determination provided to a client which will become final 
after 30 days unless the client takes action in accordance with 
Sec. 614.101 to stay the preliminary technical determination from 
becoming final.
    State Conservationist means the NRCS official in charge of NRCS 
operations within a State, as set forth in part 600 of this chapter.
    Technical determination means a conclusion concerning the status 
and condition of the natural resources and cultural practices based on 
science and best professional judgment of natural resource 
professionals concerning the soils, water, air, plants, and animals.
    Refer to 7 CFR 11.1 for other definitions applicable to appeals of 
adverse technical determinations and decisions covered by this part.


Sec. 614.3  Applicability.

    (a) Appeals of adverse technical determinations and adverse 
decisions covered by this part are also governed by National Appeals 
Division (NAD) regulations at 7 CFR part 11.
    (b) Decisions which are subject to this part include any decision 
under one or more NRCS programs; and technical determinations or 
decisions that affect the status of the land even though they may not 
affect the landowner's or program participant's eligibility for USDA 
program benefits.
    (c) The failure of an official of NRCS to issue a technical 
determination or decision is subject to this part.
    (d) Complaints involving discrimination in program delivery will be 
handled under the existing USDA civil rights rules and regulations.
    (e) Appeals on contractual issues that are subject to the 
jurisdiction of the Agriculture Board of Contract Appeals are not 
appealable under the procedures within this part.


Sec. 614.4  Reservation of authority.

    Nothing contained in the regulations of this part shall preclude 
the Secretary of Agriculture or the Chief from determining at any time 
any question arising under the programs to which the regulations of 
this part apply, or from reversing or modifying in writing, with 
sufficient reason given therefore, any technical determination or 
decision made by an NRCS official.


Sec. 614.5  Decisions not subject to appeal.

    The following are examples of decisions which are not appealable:
    (a) General program requirements that apply to all participants;
    (b) Science-based formulas and criteria;
    (c) Procedural decisions relating to administration of the 
programs; and
    (d) Denials of assistance due to lack of funds or authority.

Subpart B--Appeals of Technical Determinations Related to the 
Conservation Title (Title XII) of the Food Security Act of 1985, as 
Amended


Sec. 614.100  Applicability.

    The provisions of this subpart set forth the procedures under which 
a landowner or program participant may seek mediation of a preliminary 
technical determination or appeal from technical determinations made by 
NRCS officials on or after January 16, 1996 regarding technical 
determinations within the following programs:
    (1) Highly Erodible Land Conservation;
    (2) Wetland Conservation, including wetland technical 
determinations made by NRCS officials not related to a request for USDA 
program benefits;
    (3) Conservation Reserve Program;
    (4) Wetlands Reserve Program;
    (5) Agricultural Water Quality Incentives Program; and
    (6) Environmental Easement Program.


Sec. 614.101  Notice of preliminary technical determinations.

    (a) All preliminary technical determinations related to programs 
provided for in Sec. 614.100 shall be in writing and shall inform the 
landowner or program participant of the following:
    (1) The preliminary technical determination will become final after 
30 days if the landowner or program participant does not arrange with 
the designated conservationist for either or both of the following 
options:
    (i) A field visit to the site to gather additional information and 
to discuss the facts concerning the preliminary technical 
determination, together with, at the option of the conservation 
district, a district representative; and
    (ii) Mediation.
    (2) Once the technical determination is final, the landowner or 
program participant may appeal the technical determination to the FSA 
county or area committee pursuant to 7 CFR part 780. Landowners or 
program participants wishing to appeal must exhaust any available 
appeal procedures through the FSA county committee prior to appealing 
to NAD. Judicial review is available only as specified in 7 CFR part 
11.
    (b) The document containing the preliminary technical determination 
shall be mailed or hand delivered to the landowner or program 
participant.


Sec. 614.102  Mediation of preliminary technical determinations.

    (a)(1) Any dispute with respect to a preliminary technical 
determination related to the programs provided in Sec. 614.100 shall, 
at the request of the landowner or program participant, be mediated:
    (i) Through certified individuals in those States where a State 
mediation program certified by the United States Department of 
Agriculture (USDA) has been established. Conservation district 
officials in certified State Mediation Program States may become 
certified by the State and utilized for mediation, if they choose to 
participate.
    (ii) In States with no certified mediation program in effect, 
through mediation by a qualified representative of a local conservation 
district, if a local conservation district chooses to participate. Upon 
mutual agreement of the parties, other individuals may serve as 
mediators.
    (2) Upon receiving a request for mediation, NRCS shall notify other 
USDA and Federal agencies, as appropriate.
    (b) The parties shall have not more than 30 days to reach an 
agreement following a mediation session. The 

[[Page 67315]]
mediator shall notify the designated conservationist in writing at the 
end of this period whether the parties reached an agreement. Any 
agreement reached during, or as a result of, the mediation process 
shall conform to the statutory, regulatory, and manual provisions 
governing the program.


Sec. 614.103  Final determinations.

    (a) Preliminary technical determinations shall become final:
    (1) 30 days after receipt by the landowner or program participant 
of the notice of a preliminary technical determination issued pursuant 
to Sec. 614.101, unless a field visit or mediation is requested;
    (2) After the earlier of 30 days after the field visit provided for 
under Sec. 614.101(a) or receipt by the landowner or program 
participant of a final determination from the designated 
conservationist; or
    (3) 30 days after a mediation session if a mutual agreement has not 
been reached by the parties.
    (b) The final technical determination shall set forth the decision, 
the basis for the decision, including all factors, technical criteria, 
and facts relied upon in making the decision, and shall inform the 
landowner or program participant of the procedure for requesting and 
pursuing further review.


Sec. 614.104  Appeals of technical determinations.

    (a) Technical determinations related to the programs in 
Sec. 614.100 may only be appealed, pursuant to the provisions of 7 CFR 
part 780, to the FSA county committee with jurisdiction.
    (b) In cases where a field visit has not already been completed in 
accordance with Sec. 614.101(a), a field visit shall be completed by 
the designated conservationist before the FSA county committee 
considers the appeal.
    (c) If the FSA county committee hearing the appeal requests review 
of the technical determination by the applicable State Conservationist 
prior to issuing their decision, the State Conservationist may:
    (1) Designate an appropriate NRCS official to gather any additional 
information necessary for review of the technical determination;
    (2) Obtain additional oral and documentary evidence from any party 
with personal or expert knowledge about the facts under review; and
    (3) Conduct a field visit to review and obtain additional 
information and to discuss the facts concerning the technical 
determination. The State Conservationist shall provide the applicable 
FSA county committee with a written technical determination, including 
all factors, technical criteria, and facts relied upon in making the 
technical determination.
    (d) Any landowner or program participant who is adversely affected 
by a decision of the FSA county committee may appeal to NAD in 
accordance with 7 CFR part 11.

Subpart C--Appeals of Decisions Related to Conservation Programs (non-
Title XII)


Sec. 614.200  Applicability.

    The provisions of this subpart set forth the procedures under which 
a landowner or program participant may seek an informal hearing on 
adverse decisions made by NRCS officials (exclusive of those decisions 
that are appealable to the USDA Board of Contract Appeals) after 
January 16, 1996 in the following program areas:
    (1) Great Plains Conservation Program;
    (2) Rural Abandoned Mine Program;
    (3) Emergency Watershed Projects;
    (4) Rural Clean Water Program;
    (5) Colorado River Basin Salinity Control Program;
    (6) Forestry Incentive Program;
    (7) Water Bank Program;
    (8) Flood Prevention and Watershed Protection Programs;
    (9) Any other program which subsequently incorporates these 
procedures through reference to this subpart within the program 
regulations.


Sec. 614.201  Notice of final decisions.

    (a) All final decisions related to programs provided for in 
Sec. 614.200 that are made by the designated conservationist shall be 
in writing and shall inform the landowner or program participant of 
their right to request any or all of the following:
    (1) An informal hearing before NRCS;
    (2) Mediation; or
    (3) A hearing before NAD in accordance with 7 CFR part 11.
    (b) The document containing the decision shall be mailed or hand 
delivered to the landowner or program participant.


Sec. 614.202  Time frames for filing requests for informal hearings.

    (a) A request for an informal hearing before NRCS shall be filed 
within 30 days after written notice of the final decision, which is the 
subject of the request, is mailed or otherwise made available to the 
landowner or program participant. A request for an informal hearing 
shall be considered ``filed'' when personally delivered in writing to 
the appropriate reviewing authority or when the properly addressed 
request, postage paid, is postmarked.
    (b) A request for appeal may be accepted and acted upon even though 
it is not filed within the time prescribed in paragraph (a) of this 
section if, in the judgment of the reviewing authority with whom such 
request is filed, the circumstances warrant such action.


Sec. 614.203  Mediation of adverse final decisions.

    (a) Any dispute with respect to an adverse final decision related 
to the programs provided in Sec. 614.200 shall, at the request of the 
landowner or program, be mediated:
    (1) Through certified individual in those States where a State 
Mediation Program has been established. Conservation district officials 
in certified State Mediation Program States may become certified by the 
State and utilized for mediation, if they choose to participate.
    (2) In States where no certified mediation program is in effect, 
through mediation by a qualified representative of a local conservation 
district, if a local conservation district chooses to participate. Upon 
mutual agreement of the parties, other individuals may serve as 
mediators.
    (b)(1) The parties shall have not more than 30 days to reach an 
agreement following a mediation session. The mediator shall notify the 
designated conservationist in writing at the end of this period whether 
the parties reached an agreement.
    (2) Any agreement reached during, or as a result of, the mediation 
process shall conform to the statutory, regulatory, and manual 
provisions governing the program.
    (3) If the parties fail to reach an agreement within the specified 
period, the designated conservationist shall have up to 30 days after 
the conclusion of mediation to issue a final decision.


Sec. 614.204  Appeals of adverse final decisions.

    (a) Any landowner or program participant, who is adversely affected 
by a decision made by a designated conservationist related to the 
programs in Sec. 614.200, may appeal the decision to the State 
Conservationist in the applicable State for an informal hearing or to 
NAD in accordance with 7 CFR part 11.
    (b) The State Conservationist may designate a NRCS official to 
gather information and conduct the informal hearing before making a 
decision.
    (c) Any landowner or program participant who is adversely affected 
by a decision of the State Conservationist may appeal to NAD in 
accordance with 7 CFR part 11. 

[[Page 67316]]


PART 620--WETLANDS RESERVE PROGRAM

    1. The authority citation for part 620 continues to read as 
follows:

    Authority: 16 U.S.C. 590a et seq., 3837 et seq.

    2. Section 620.17(a) is revised to read as follows:


Sec. 620.17  Appeals.

    (a) A person participating in the WRP may obtain review of any 
administrative determination concerning eligibility for participation 
utilizing the administrative appeal procedures in 7 CFR part 614, 7 CFR 
part 780, and 7 CFR part 11, as appropriate.
* * * * *

PART 623--EMERGENCY WETLANDS RESERVE PROGRAM

    1. The authority citation for part 623 continues to read as 
follows:

    Authority: 16 U.S.C. 3837-3837f; Pub. L. 103-75, Chapter 1, 107 
Stat. 739, 742.

    2. Section 623.20 is revised to read as follows;


Sec. 623.20  Appeals.

    A participant in the EWRP may obtain a review of any administrative 
determination concerning land eligibility, development of a WRPO, or 
any adverse determination under this part in accordance with the 
administrative appeal regulations provided in part 614 of this title.

PART 631--GREAT PLAINS CONSERVATION PROGRAM

    1. The authority citation for part 631 continues to read as 
follows:

    Authority: 16 U.S.C. 590p(b).

    2. Section 631.13 is revised to read as follows:


Sec. 631.13  Disputes and appeals for matters other than contract 
violations.

    Applicants or participants may appeal decisions regarding matters 
other than contract disputes under this part in accordance with part 
614 of this title.

PART 632--RURAL ABANDONED MINE PROGRAM

    1. The authority citation for part 632 continues to read as 
follows:

    Authority: Sec. 406, Pub. L. 95-87; 91 Stat. 460 (30 U.S.C. 
1236).

    2. Section 632.40 is revised to read as follows:


Sec. 632.40  Appeals.

    Land users may appeal decisions under this part in accordance with 
part 614 of this title.

PART 634--RURAL CLEAN WATER PROGRAM

    1. The authority citation for part 634 continues to read as 
follows:

    Authority: Sec. 35, Pub. L. 95-217, 91 Stat. 1579 (33 U.S.C. 
1288).

    2. Section 634.30 is revised to read as follows:


Sec. 634.30  Appeals in USDA administered projects.

    The participant in a USDA-administered RCWP project may appeal 
decisions of the administering agency in accordance with part 614 of 
this title.

PART 663--WELLTON-MOHAWK IRRIGATION IMPROVEMENT PROGRAM

    1. The authority citation for part 663 continues to read as 
follows:

    Authority: Pub. L. 93-320, 88 Stat. 266 (43 U.S.C. 1571 et 
seq.); sec. 601, Pub. L. 72-212, 47 Stat. 417 (31 U.S.C. 686).

    2. Section 663.17 is revised to read as follows:


Sec. 663.17  Appeals.

    A decision under this part may be appealed by a cooperator in 
accordance part 614 of this title.

PART 701--CONSERVATION AND ENVIRONMENTAL PROGRAMS

    1. The authority citation for part 701 continues to read as 
follows:

    Authority: 16 U.S.C. 590d, 590g-590o, 590p(a), 590q, 1501-1510, 
1606, 2101-2111, 2201-2205; 48 U.S.C. 1469d(c).

    2. Section 701.76 is revised to read as follows:


Sec. 701.76  Appeals.

    Any person may obtain review of determinations affecting 
participation in:
    (a) The Forestry Incentive Program, in accordance with part 614 of 
this title; and
    (b) All other programs within this part, in accordance with part 
780 of this title.

PART 702--COLORADO RIVER BASIN SALINITY (CRSC) CONTROL PROGRAM

    1. The authority citation for part 702 continues to read as 
follows:

    Authority: Sec. 201, Pub. L. 93-320, 88 Stat. 271; Sec. 2, Pub. 
L. 98-569, 98 Stat. 2933 (43 U.S.C. 1592(c)).

    2. Section 702.20 is revised to read as follows:


Sec. 702.20  Appeals.

    The participant may obtain a review, in accordance with the 
provisions of 7 CFR part 614 and 7 CFR part 11, of any administrative 
decision made under the provisions of this part.

PART 752--WATER BANK PROGRAM

    1. The authority citation for part 752 continues to read as 
follows:

    Authority: Secs. 2-12, 84 Stat. 1468-1471, as amended (16 U.S.C. 
1301-1311).

    2. Section 752.28 is revised to read as follows:


Sec. 752.28  Appeals.

    Any person may obtain review of determinations affecting 
participation in this program in accordance with part 614 of this 
title.

PART 780--APPEAL REGULATIONS

    1. Part 780 is revised to read as follows:

PART 780--APPEAL REGULATIONS

Sec.
780.1  Definitions.
780.2  Applicability.
780.3-5  Reserved.
780.6  Mediation.
780.7  Reconsideration and appeals with the county and State 
committees and reconsideration with the regional service offices.
780.8  Time limitations for filing requests for reconsideration or 
appeal.
780.9  Appeals of NRCS technical determinations.
780.10  Other finality provisions.
780.11  Reservation of authority.

    Authority: 5 U.S.C. 301; 15 U.S.C. 714b and 714c; 16 U.S.C. 
590h.


Sec. 780.1  Definitions.

    For purposes of this part:
    1994 Act means the Federal Crop Insurance Reform and Department of 
Agriculture Reorganization Act of 1994 (Public Law 103-354).
    Agency means FSA and its county and State committees and their 
personnel, CCC, NRCS, FCIC, and any other agency or office of the 
Department which the Secretary may designate, or any successor agency.
    Appeal means a written request by a participant asking the next 
level reviewing authority to review a decision.
    CCC means the Commodity Credit Corporation, a wholly owned 
Government corporation within the U.S. Department of Agriculture.
    County committee means an FSA county or area committee established 
in accordance with section 8(b) of the Soil Conservation and Domestic 
Allotment Act (16 U.S.C. 590h(b)). 

[[Page 67317]]

    FCIC means the Federal Crop Insurance Corporation, a wholly owned 
Government corporation within the U.S. Department of Agriculture.
    Final decision means the program decision rendered by the county or 
State committee or the FCIC Regional Service Office upon written 
request of the participant. A decision that is otherwise final shall 
remain final unless the decision is timely appealed to the State 
committee or NAD. A decision of FSA or FCIC made by personnel 
subordinate to the county committee is considered ``final'' for the 
purpose of appeal to NAD only after that decision has been appealed to 
the county committee under the provisions of this part.
    FSA means the Farm Service Agency.
    NAD means the National Appeals Division, established pursuant to 
the 1994 Act.
    NAD regulations means the National Appeals Division (NAD) rules of 
procedure published by the Secretary at 7 CFR part 11 implementing 
title II, subtitle H of the 1994 Act.
    NRCS means the Natural Resource Conservation Service of the United 
States Department of Agriculture, formerly the Soil Conservation 
Service.
    Reconsideration is a subsequent consideration of a prior decision 
by the same reviewing authority.
    Regional Service Office means the regional offices established by 
FSA and FCIC for the purpose of making determinations for private 
insurance companies reinsured by FCIC under the Federal Crop Insurance 
Act and for FSA for insurance contracts delivered through county FSA 
offices (including underwriting decisions), the applicability of 
provisions under chapter IV of 7 CFR, and decisions as to insurability 
and rating of acreage.
    Reviewing authority means a person or committee assigned the 
responsibility of making a decision on the appeal filed by the 
participant in accordance with this part.
    State committee means an FSA State committee established in 
accordance with section 8(b) of the Soil Conservation and Domestic 
Allotment Act (16 U.S.C. 590h(b)) including, where appropriate, the 
Director of the Caribbean Area FSA office for Puerto Rico and the 
Virgin Islands.
    Technical determination of NRCS means a decision by NRCS concerning 
the status and condition of the natural resources based on science and 
on the best professional judgment of natural resource professionals 
within NRCS.


Sec. 780.2  Applicability.

    (a)(1) Except as provided in other regulations, this part applies 
to decisions made under programs and by agencies, as set forth herein:
    (i) Decisions in those domestic programs administered by the Farm 
Service Agency (FSA), and programs administered by FSA on behalf of the 
Commodity Credit Corporation (CCC) through State and county committees, 
which are generally set forth in chapters VII and XIV of this title;
    (ii) Technical decisions made by the Natural Resources Conservation 
Service (NRCS) under title XII of the Food Security Act of 1985, as 
amended;
    (iii) Decisions made by personnel of the Federal Crop Insurance 
Corporation (``FCIC'') or FSA with respect to contracts of insurance 
insured by FCIC and the noninsured crop disaster assistance program;
    (iv) Decisions made by personnel of FCIC or FSA with respect to 
contracts of insurance provided by private insurance carriers and 
reinsured by FCIC under the provisions of the Federal Crop Insurance 
Act; and
    (v) Other programs to which this part is made applicable by 
individual program regulations.
    (2) For covered programs, this part is applicable to any decision 
made by FSA and its State and county committees, CCC, FCIC, the 
personnel and agents of FSA, FCIC, or CCC, and by the officials of NRCS 
(to the extent provided in Sec. 780.9), except as otherwise may be 
provided in individual program requirements or by the Secretary.
    (3) This part is not applicable to any decision:
    (i) Made by FSA or FCIC with respect to any matter arising under 
the terms of the Standard Reinsurance Agreement between FCIC and any 
private insurance company reinsured by FCIC under the provisions of the 
Federal Crop Insurance Act, as amended; or
    (ii) Made by any private insurance company with respect to any 
contract of insurance issued to any producer by the private insurance 
company and reinsured by FCIC under the provisions of the Federal Crop 
Insurance Act, as amended. Those insurance contracts are subject to 
dispute resolution through arbitration or mediation in accordance with 
the contract terms.
    (b) With respect to matters identified in paragraph (a) of this 
section, participants may request reconsideration or appeal, under the 
provisions of this part, of decisions by an agency made with respect 
to:
    (1) Denial of participation in a program;
    (2) Compliance with program requirements;
    (3) Issuance of payments or other program benefits to a participant 
in a program;
    (4) Making payments or other benefits to an individual or entity 
who is not a participant in a program; or
    (5) Technical determinations by NRCS.
    (c) No reconsideration or appeal may be sought under this part of 
any general program provision or program policy, or any statutory or 
regulatory requirement that is applicable to all similarly situated 
participants.
    (d) Mathematical formulas established under a statute or program 
regulations, and decisions based solely on the application of those 
formulas, are not appealable under this part.
    (e) Only a participant may seek reconsideration or appeal under 
this part.


Sec. Sec. 780.3-780.5  [Reserved]


Sec. 780.6  Mediation.

    Participants have the right to seek mediation involving any 
decision appealed under this part in accordance with the provisions of 
section 282 of the 1994 Act, if the mediation program of the State 
where the participant's farming operation giving rise to the decision 
is located has been certified by the Secretary for the program involved 
in the agency decision. Any time limitation for review contained in 
this part will be stayed pending timely pursuit and completion of the 
mediation process.


Sec. 780.7  Reconsideration and appeals with the county and State 
committees and reconsideration with the regional service offices.

    (a) A participant may appeal a decision of personnel subordinate to 
the county committee by filing with the county committee a written 
request for appeal that states the basis upon which the participant 
relies to show that:
    (1) The decision was not proper and not made in accordance with 
applicable program policies; or
    (2) All material facts were not properly considered in such 
decision.
    (b) A participant may seek reconsideration of a final decision by a 
county committee or the Regional Service Office by filing a written 
request for reconsideration with the county committee or the Regional 
Service Office that states the basis upon which the participant relies 
to show that:
    (1) The decision was not proper and not made in accordance with 
applicable program regulations; or
    (2) All material facts were not properly considered in such 
decision. 

[[Page 67318]]

    (c) A participant may appeal a final decision by a county committee 
or the Regional Service Office to the State committee and request an 
informal hearing in connection therewith, by filing a written appeal 
with the State committee.
    (d) A participant may seek reconsideration of a decision by a State 
committee, and request an informal hearing in connection therewith, by 
filing a written request for reconsideration with the State committee 
that states the basis upon which the participant relies to show that:
    (1) The decision was not proper and not made in accordance with 
applicable program regulations; or
    (2) All material facts were not properly considered in such 
decision.
    (e) Nothing in this part prohibits a participant from filing an 
appeal of a final decision of the county committee or the Regional 
Service Office with NAD in accordance with the NAD regulations.
    (f) This section does not apply to a technical determination by 
NRCS. Procedures regarding the appeal of a technical determination by 
NRCS are contained in Sec. 780.9.


Sec. 780.8  Time limitations for filing requests for reconsideration or 
appeal.

    (a) A request for reconsideration or an appeal of a decision shall 
be filed within 30 days after written notice of the decision which is 
the subject of the request is mailed or otherwise made available to the 
participant. A request for reconsideration or appeal shall be 
considered to have been ``filed'' when personally delivered in writing 
to the appropriate reviewing authority or when the properly addressed 
request, postage paid, is postmarked. A decision shall become final and 
non-reviewable unless reconsideration is timely sought or the decision 
is timely appealed.
    (b) A request for reconsideration or appeal may be accepted and 
acted upon even though it is not filed within the time prescribed in 
paragraph (a) of this section if, in the judgment of the reviewing 
authority with whom such request is filed, the circumstances warrant 
such action.


Sec. 780.9  Appeals of NRCS technical determinations.

    (a) Notwithstanding any other provision of this part, a technical 
determination of NRCS issued to a participant pursuant to Title XII of 
the Food Security Act of 1985, as amended, including wetland 
determinations, may be appealed to a county committee in accordance 
with the procedures in this part.
    (b) If the county committee hears the appeal and agrees with the 
participant's appeal, the county committee shall refer the case with 
its findings to the NRCS State Conservationist to review the matter and 
review the technical determination. The County or State committee 
decision shall incorporate, and be based upon, the NRCS State 
Conservationist's technical determination.


Sec. 780.10  Other finality provisions.

    The finality provisions contained in section 281 of the 1994 Act 
shall be applied to appeals under this part to the extent provided for 
in that section of the 1994 Act.


Sec. 780.11  Reservations of authority.

    (a) Representatives of FSA, FCIC, and CCC may correct all errors in 
entering data on program contracts, loan agreements, and other program 
documents and the results of the computations or calculations made 
pursuant to the contract or agreement.
    (b) Nothing contained in this part shall preclude the Secretary, or 
the Administrator of FSA, Executive Vice President of CCC, the Manager 
of FCIC, the Chief of NRCS, if applicable, or a designee, from 
determining at any time any question arising under the programs within 
their respective authority or from reversing or modifying any decision 
made by FSA or its county and State committees, FCIC, or CCC.

PART 781--DISCLOSURE OF FOREIGN INVESTMENT IN AGRICULTURAL LAND

    1. The authority citation for part 781 continues to read as 
follows:

    Authority: Sec. 1-10, 92 Stat. 1266 (7 U.S.C. 3501 et seq.).

    2. In Sec. 781.5 paragraphs (c), (d) and (e) are removed, 
paragraphs (f) through (h) are redesignated as paragraphs (d) through 
(f) respectively, and paragraph (b)(3) is revised and a new paragraph 
(c) is added to read as follows:


Sec. 781.5  Penalty review procedure.

* * * * *
    (b) * * *
    (3) A request for a hearing on the proposed penalty may be filed in 
accordance with part 780 of this title.
    (c) After a final decision is issued pursuant to an appeal under 
part 780 of this title, the Administrator or Administrator's designee 
shall mail the foreign person a notice of the determination on appeal, 
stating whether a report must be filed or amended in compliance with 
Sec. 781.3, the amount of the penalty (if any), and the date by which 
it must be paid. The foreign person shall file or amend the report as 
required by the Administrator. The penalty in the amount stated shall 
be paid by check or money order drawn to the Treasurer of the United 
States and shall be mailed to the United States Department of 
Agriculture, P.O. Box 2415, Washington, DC 20013. The Department is not 
responsible for the loss of currency sent through the mails.
* * * * *

PART 1900--GENERAL

    1. The authority for part 1900 is revised to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 7 U.S.C. 6991, et. seq.; 
42 U.S.C. 1480; Reorganization Plan No. 2 of 1953 (5 U.S.C. App.).

    2-3. Subpart B is revised to read as follows:

Subpart B--Adverse Decisions and Administrative Appeals

1900.51  Definitions.
1900.52  General.
1900.53  Applicability.
1900.54  Effect on assistance pending appeal.
1900.55  Adverse action procedures.
1900.56  Non-appealable decisions.
1900.57  [Reserved].
* * * * *


Sec. 1900.51  Definitions.

    Act means the Federal Crop Insurance Reform and Department of 
Agriculture Reorganization Act of 1994, Public Law No. 103-354 (7 
U.S.C. 6991 et seq.).
    Agency means the Rural Utilities Service (RUS), the Rural Housing 
Service (RHS), and the Rural Business-Cooperative Development Service 
(RBS), or their successor agencies.
    Refer to 7 CFR 11.1 for other definitions applicable to appeals of 
adverse decisions covered by this subpart.


Sec. 1900.52  General.

    This subpart specifies procedures for use by USDA personnel and 
program participants to ensure that full and complete consideration is 
given to program participants who are affected by an agency adverse 
decision.


Sec. 1900.53  Applicability.

    (a) Appeals of adverse decisions covered by this subpart will be 
governed by 7 CFR part 11.
    (b) The provisions of this subpart apply to adverse decisions 
concerning direct loans, loan guarantees, and grants under the 
following programs: RUS Water and Waste Disposal Facility Loans and 
Grants Program; RHS Housing and Community Facilities Loan 

[[Page 67319]]
Programs; RBS Loan, Grant, and Guarantee Programs and the Intermediary 
Relending Program; and determinations of the Rural Housing Trust 1987-1 
Master Servicer.
    (c) This subpart does not apply to decisions made by parties 
outside an agency even when those decisions are used as a basis for 
decisions falling within paragraph (b) of this section, for example: 
decisions by state governmental construction standards-setting agencies 
(which may determine whether RHS will finance certain houses); Davis-
Bacon wage rates; flood plain determinations; archaeological and 
historical areas preservation requirements; and designations of areas 
inhabited by endangered species.


Sec. 1900.54  Effect on assistance pending appeal.

    (a) Assistance will not be discontinued pending the outcome of an 
appeal of a complete or partial adverse decision.
    (b) Notwithstanding the provisions of paragraph (a) of this 
section, administrative offsets initiated under subpart C of part 1951 
will not be stayed pending the outcome of an appeal and any further 
review of the decision to initiate the offset.


Sec. 1900.55  Adverse action procedures.

    (a) If an applicant, guaranteed lender, a holder, borrower or 
grantee is adversely affected by a decision covered by this subpart, 
the decision maker will inform the participant of the adverse decision 
and whether the adverse decision is appealable. A participant has the 
right to request the Director of NAD to review the agency's finding of 
nonappealability in accordance with 7 CFR 11.6(a). In cases where the 
adverse decision is based on both appealable and nonappealable actions, 
the adverse action is not appealable.
    (b) A participant affected by an adverse decision of an agency is 
entitled under section 275 of the Act to an opportunity for a separate 
informal meeting with the agency before commencing an appeal to NAD 
under 7 CFR part 11.
    (c) Participants also have the right under section 275 of the Act 
to seek mediation involving any adverse decision appealable under this 
subpart if the mediation program of the State in which the 
participant's farming operation giving rise to the decision is located 
has been certified by the Secretary for the program involved in the 
decision. An agency shall cooperate in such mediation. Any time 
limitation for appeal will be stayed pending completion of the 
mediation process (7 CFR 11.5(c)).


Sec. 1900.56  Non-appealable decisions.

    The following are examples of decisions which are not appealable:
    (a) Decisions which do not fall within the scope of this subpart as 
set out in Sec. 1900.53.
    (b) Decisions that do not meet the definition of an ``adverse 
decision'' under 7 CFR part 11.
    (c) Decisions involving parties who do not meet the definition of 
``participant'' under 7 CFR part 11.
    (d) Decisions with subject matters not covered by 7 CFR part 11.
    (e) Interest rates as set forth in agency procedures, except for 
appeals alleging application of an incorrect interest rate.
    (f) The State RECD Director's refusal to request an administrative 
waiver provided for in agency program regulations.
    (g) Denials of assistance due to lack of funds or authority to 
guarantee.


Sec. 1900.57  [Reserved]

    Done at Washington, D.C., this 21st day of December, 1995.
Dan Glickman,
Secretary of Agriculture.
[FR Doc. 95-31397 Filed 12-28-95; 8:45 am]
BILLING CODE 3410-01-P

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