Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations 2691

your request for an award for fees and

expenses may still be filed, but it will

not be considered by the ALJ until a

final decision is rendered.

§ 134.415 How will proceedings relating to

my application for fees and expenses be

conducted?

Proceedings will be conducted in

accordance with the provisions in

subpart B of this part.

§ 134.416 How will I know if I receive an

award?

The ALJ will issue an initial decision

on the merits of your request for an

award which will become final in 30

days unless a request for review is filed

under § 134.228. The decision will

include findings on your eligibility, on

whether SBA’s position was

substantially justified, and on the

reasonableness of the amount you

requested. Where applicable, there will

also be findings on whether you have

unduly protracted the proceedings or

whether other circumstances make an

award unjust, and an explanation of the

reason for the difference, if any,

between the amount requested and the

amount awarded. If you have sought an

award against more than one federal

agency, the decision will allocate

responsibility for payment among the

agencies with appropriate explanation.

§ 134.417 May I seek review of the ALJ’s

decision on my award?

You may request review of the ALJ’s

decision on your award by filing a

request for review in accordance with

§ 134.228. You may seek judicial review

of a final decision as provided in 5

U.S.C. 504(c)(2).

§ 134.418 How are awards paid?

If you are seeking payment of an

award, you must submit a copy of the

final decision, along with your

certification that you are not seeking

judicial review of either the decision in

the adversary adjudication, or of the

award, to the following address: Chief

Financial Officer, Office of Financial

Operations, SBA, P.O. Box 205, Denver,

CO 80201–0205. SBA will pay you the

amount awarded within 60 days of

receipt of your request unless it is

notified that you or another party has

sought judicial review of the underlying

decision or the award.

PART 132—[REMOVED]

2. Part 132 is hereby removed.

PARTS 112, 113, 124, and 136—

[AMENDED]

3. In accordance with the list below,

for each section indicated in the left

column, remove the reference indicated

in the middle column from wherever it

appears in the section, and add in its

place the reference in the right column:

Section Remove Add

112.11(b) ....... 134.34 ........... 134.228

112.11(b) ....... 134.19 ........... 134.222

112.11(b) ....... 134.21 ........... 134.211

112.11(c) ....... 134.32(b) ...... 134.227(b)

113.7(b) ......... 134.34 ........... 134.228

113.7(b) ......... 134.19 ........... 134.222

113.7(b) ......... 134.21 ........... 134.211

113.7(c) ......... 134.32(b) ...... 134.227(b)

124.210(b) ..... 134.11(a) ...... 134.203(a)

124.210(d)(2) 134.12 ........... 134.202

124.211(g) ..... 134.19 ........... 134.222

136.170(j)(2) .. 134.34(a) ...... 134.228(a)

136.170(j)(2) .. 134.34(b) ...... 134.228(a)

136.170(j)(2) .. 134.32(b)(3) .. 134.227(b)

Philip Lader,

Administrator.

[FR Doc. 96–1158 Filed 1–26–96; 8:45 am]

BILLING CODE 8025–01–P

13 CFR Part 142

Program Fraud Civil Remedies Act

Regulations

AGENCY: Small Business Administration.

ACTION: Final rule.

SUMMARY: In response to President

Clinton’s government-wide regulatory

reform initiative, the Small Business

Administration (SBA) has completed a

page-by-page, line-by-line review of all

of its existing regulations to determine

which might be revised or eliminated.

This rule renumbers, reorganizes,

condenses and rewrites in plain

language the existing regulation

implementing the ‘‘Program Fraud Civil

Remedies Act of 1986’’. The goal of the

plain language style is to eliminate

redundancies, ambiguities and

cumbersome wording. The goal of the

reorganization and revision is to make

this part consistent in practice and

procedure with other parts of this title

and to clarify requirements under this

regulation and applicable statutes of the

United States.

EFFECTIVE DATE: This rule is effective

February 28, 1996.

FOR FURTHER INFORMATION CONTACT:

Cheri Wolff, Chief Counsel for General

Litigation; Office of General Counsel, at

(202) 205–6643.

SUPPLEMENTARY INFORMATION: On March

4, 1995, President Clinton issued a

Memorandum to each federal agency,

directing them to simplify their

regulations. In response to this

directive, SBA completed a page-bypage, line-by-line review of all of its

existing regulations to determine which

might be revised or eliminated. This

rule reorganizes and rewords former

provisions for clarity and userfriendliness. Extensive renumbering was

necessary for reorganization,

simplification and clarification of

existing provisions. No substantive

changes to existing provisions were

made.

SBA published its proposed changes

to Part 142 in the Federal Register on

November 27, 1995 (60 FR 58297),

inviting the public to comment during

a thirty day comment period. Since no

comments were received, SBA has

decided to issue the final rule

substantially as proposed (subject only

to minor typographical corrections).

Compliance With Executive Orders

12612, 12778, and 12866, the

Regulatory Flexibility Act (5 U.S.C. 601,

et seq.), and the Paperwork Reduction

Act (44 U.S.C. Ch. 35)

SBA certifies that this rule does not

have a significant economic impact on

a substantial number of small entities

within the meaning of Executive Order

12866 or the Regulatory Flexibility Act,

5 U.S.C. 601, et seq. This rule

renumbers, reorganizes and rewrites the

existing regulation for clarity and ease

of use. Contracting opportunities and

financial assistance for small business

are not affected by this rule. Therefore,

it is not likely to have an annual

economic effect of $100 million or more,

result in a major increase in costs or

prices, or have a significant adverse

effect on competition or the United

States economy.

For purposes of the Paperwork

Reduction Act, 44 U.S.C. Ch. 35, SBA

certifies that this rule contains no new

reporting or recordkeeping

requirements. For purposes of Executive

Order 12612, SBA certifies that this rule

does not have any federalism

implications warranting the preparation

of a Federalism Assessment. For

purposes of Executive Order 12778,

SBA certifies that this rule is drafted, to

the extent practicable, in accordance

with the standards set forth in Section

2 of that Order.

List of Subjects in 13 CFR Part 142

Administrative practice and

procedure, Claims, Fraud, Penalties.

For the above reasons, SBA revises

Part 142 of Title 13 of the Code of

Federal Regulations to read as follows:

PART 142—PROGRAM FRAUD CIVIL

REMEDIES ACT REGULATIONS

Overview and Definitions

142.1 Overview of regulations.
2692 Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations

142.2 What kind of conduct will result in

program fraud enforcement?

142.3 What is a claim?

142.4 What is a statement?

142.5 What is a false claim or statement?

142.6 What does the phrase ‘‘know or have

reason to know’’ mean?

Procedures Leading to Issuance of a

Complaint

142.7 Who investigates program fraud?

142.8 What happens if program fraud is

suspected?

142.9 When will SBA issue a complaint?

142.10 What is contained in a complaint?

142.11 How will the complaint be served?

Procedures Following Service of a Complaint

142.12 How does a defendant respond to

the complaint?

142.13 What happens if a defendant fails to

file an answer?

142.14 What happens once an answer is

filed?

Hearing Provisions

142.15 What kind of hearing is

contemplated?

142.16 At the hearing, what rights do the

parties have?

142.17 What is the role of the ALJ?

142.18 Can the reviewing official or ALJ be

disqualified?

142.19 How are issues brought to the

attention of the ALJ?

142.20 How are papers served?

142.21 How will the hearing be conducted

and who has the burden of proof?

142.22 How is evidence presented at the

hearing?

142.23 Are there limits on disclosure of

documents or discovery?

142.24 Can witnesses be subpoenaed?

142.25 Can a party or witness object to

discovery?

142.26 Can a party informally discuss the

case with the ALJ?

142.27 Are there sanctions for misconduct?

142.28 Where is the hearing held?

142.29 Are witness lists exchanged before

the hearing?

Decisions and Appeals

142.30 How is the case decided?

142.31 Can a party request reconsideration

of the initial decision?

142.32 When does the initial decision of the

ALJ become final?

142.33 What are the procedures for

appealing the ALJ decision?

142.34 Are there any limitations on the

right to appeal to the Administrator?

142.35 How does the Administrator dispose

of an appeal?

142.36 Can I obtain judicial review?

142.37 What judicial review is available?

142.38 Can the administrative complaint be

settled voluntarily?

142.39 How are civil penalties and

assessments collected?

142.40 What if the investigation indicates

criminal misconduct?

142.41 How does SBA protect the rights of

defendants?

Authority: 15 U.S.C. 634(b); 31 U.S.C.

3803(g)(2).

Overview and Definitions

§ 142.1 Overview of regulations.

(a) Statutory basis. This part

implements the Program Fraud Civil

Remedies Act of 1986, 31 U.S.C. 3801–

3812 (‘‘the Act’’). The Act provides SBA

and other federal agencies with an

administrative remedy to impose civil

penalties and assessments against

persons making false claims and

statements. The Act also provides due

process protections to all persons who

are subject to administrative

proceedings under this part.

(b) Possible remedies for program

fraud. In addition to any other penalty

which may be prescribed by law, a

person who submits, or causes to be

submitted, a false claim or a false

statement to SBA is subject to a civil

penalty of not more than $5,000 for each

statement or claim, regardless of

whether property, services, or money is

actually delivered or paid by SBA. If

SBA has made any payment, transferred

property, or provided services in

reliance on a false claim, the person

submitting it is also subject to an

assessment of not more than twice the

amount of the false claim. This

assessment is in lieu of damages

sustained by SBA because of the false

claim.

§ 142.2 What kind of conduct will result in

program fraud enforcement?

(a) Any person who makes, or causes

to be made, a false, fictitious, or

fraudulent claim or written statement to

SBA is subject to program fraud

enforcement. A ‘‘person’’ means any

individual, partnership, corporation,

association, or other legal entity.

(b) If more than one person makes a

false claim or statement, each person is

liable for a civil penalty. If more than

one person makes a false claim which

has induced SBA to make payment, an

assessment is imposed against each

person. The liability of each such

person to pay the assessment is joint

and several, that is, each is responsible

for the entire amount.

(c) No proof of specific intent to

defraud is required to establish liability

under this part.

§ 142.3 What is a claim?

(a) Claim means any request, demand,

or submission:

(1) Made to SBA for property,

services, or money;

(2) Made to a recipient of property,

services, or money from SBA or to a

party to a contract with SBA for

property or services, or for the payment

of money. This provision applies only

when the claim is related to the

property, services or money from SBA

or to the contract with SBA; or

(3) Made to SBA which decreases an

obligation to pay or account for

property, services, or money.

(b) A claim can relate to grants, loans,

insurance, or other benefits, and

includes SBA guaranteed loans made by

participating lenders. A claim is made

when it is received by SBA, an agent,

fiscal intermediary, or other entity

acting for SBA, or when it is received

by the recipient of property, services, or

money, or the party to the contract.

(c) Each voucher, invoice, claim form,

or individual request or demand for

property, services, or money constitutes

a separate claim.

§ 142.4 What is a statement?

A ‘‘statement’’ means any written

representation, certification, affirmation,

document, record, or accounting or

bookkeeping entry made with respect to

a claim or with respect to a contract, bid

or proposal for a contract, grant, loan or

other benefit from SBA. ‘‘From SBA’’

means that SBA provides some portion

of the money or property in connection

with the contract, bid, grant, loan, or

benefit, or is potentially liable to

another party for some portion of the

money or property under such contract,

bid, grant, loan, or benefit. A statement

is made, presented, or submitted to SBA

when it is received by SBA or an agent,

fiscal intermediary, or other entity

acting for SBA.

§ 142.5 What is a false claim or statement?

(a) A claim submitted to SBA is a

‘‘false’’ claim if the person making the

claim, or causing the claim to be made,

knows or has reason to know that the

claim:

(1) Is false, fictitious or fraudulent;

(2) Includes or is supported by a

written statement which asserts or

contains a material fact which is false,

fictitious, or fraudulent;

(3) Includes or is supported by a

written statement which is false,

fictitious or fraudulent because it omits

a material fact that the person making

the statement has a duty to include in

the statement; or

(4) Is for payment for the provision of

property or services which the person

has not provided as claimed.

(b) A statement submitted to SBA is

a false statement if the person making

the statement, or causing the statement

to be made, knows or has reason to

know that the statement:

(1) Asserts a material fact which is

false, fictitious, or fraudulent; or

(2) Is false, fictitious, or fraudulent

because it omits a material fact that the

person making the statement has a duty
Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations 2693

to include in the statement. In addition,

the statement must contain or be

accompanied by an express certification

or affirmation of the truthfulness and

accuracy of the contents of the

statement.

§ 142.6 What does the phrase ‘‘know or

have reason to know’’ mean?

A person knows or has reason to

know (that a claim or statement is false)

if the person:

(a) Has actual knowledge that the

claim or statement is false, fictitious, or

fraudulent; or

(b) Acts in deliberate ignorance of the

truth or falsity of the claim or statement;

or

(c) Acts in reckless disregard of the

truth or falsity of the claim or statement.

Procedures Leading to Issuance of a

Complaint

§ 142.7 Who investigates program fraud?

The Inspector General, or his

designee, is responsible for investigating

allegations that a false claim or

statement has been made. In this regard,

the Inspector General has authority

under the Program Fraud Civil

Remedies Act and the Inspector General

Act of 1978 (5 U.S.C. App. 3), as

amended, to issue administrative

subpoenas for the production of records

and documents. The methods for

serving a subpoena are set forth in Part

101 of this chapter.

§ 142.8 What happens if program fraud is

suspected?

(a) If the investigating official

concludes that an action under this Part

is warranted, the investigating official

submits a report containing the findings

and conclusions of the investigation to

a reviewing official. The reviewing

official is the General Counsel or his

designee. If the reviewing official

determines that the report provides

adequate evidence that a person

submitted a false claim or statement, the

reviewing official transmits to the

Attorney General written notice of an

intention to refer the matter for

adjudication, with a request for

approval of such referral. This notice

will include the reviewing official’s

statements concerning:

(1) The reasons for the referral;

(2) The claims or statements upon

which liability would be based;

(3) The evidence that supports

liability;

(4) An estimate of the amount of

money or the value of property,

services, or other benefits requested or

demanded in the false claim or

statement;

(5) Any exculpatory or mitigating

circumstances that may relate to the

claims or statements known by the

reviewing official or the investigating

official; and

(6) The likelihood of collecting the

proposed penalties and assessments.

(b) If at any time, the Attorney

General or designee requests in writing

that this administrative process be

stayed, the Administrator must stay the

process immediately. The Administrator

may order the process resumed only

upon receipt of the written

authorization of the Attorney General.

§ 142.9 When will SBA issue a complaint?

SBA will issue a complaint:

(a) If the Attorney General (or

designee) approves the referral of the

allegations for adjudication; and

(b) In a case of submission of false

claims, if the amount of money or the

value of property or services demanded

or requested in a false claim, or a group

of related claims submitted at the same

time, does not exceed $150,000. A group

of related claims submitted at the same

time includes only those claims arising

from the same transaction (such as a

grant, loan, application, or contract)

which are submitted together as part of

a single request, demand, or submission.

§ 142.10 What is contained in a complaint?

(a) A complaint is a written statement

giving notice to the person alleged to be

liable under 31 U.S.C. 3802 of the

specific allegations being referred for

adjudication and of the person’s right to

request a hearing with respect to those

allegations. The person alleged to have

made false statements or to have

submitted false claims to SBA is

referred to as the ‘‘defendant.’’

(b) The reviewing official may join in

a single complaint false claims or

statements that are unrelated or were

not submitted simultaneously,

regardless of the amount of money or

the value of property or services

demanded or requested.

(c) The complaint will state that SBA

seeks to impose civil penalties,

assessments, or both, against each

defendant and will include:

(1) The allegations of liability against

each defendant, including the statutory

basis for liability, identification of the

claims or statements involved, and the

reasons liability allegedly arises from

such claims or statements;

(2) The maximum amount of penalties

and assessments for which each

defendant may be held liable;

(3) A statement that each defendant

may request a hearing by filing an

answer and may be represented by a

representative;

(4) Instructions for filing such an

answer;

(5) A warning that failure to file an

answer within 30 days of service of the

complaint will result in imposition of

the maximum amount of penalties and

assessments.

(d) The reviewing official must serve

any complaint on the defendant and

provide a copy to the Office of Hearings

and Appeals (OHA). If a hearing is

requested, an Administrative Law Judge

(ALJ) from OHA will serve as the

Presiding Officer.

§ 142.11 How will the complaint be

served?

(a) The complaint must be served on

individual defendants directly, a

partnership through a general partner,

and on corporations or on

unincorporated associations through an

executive officer or a director, except

that service also may be made on any

person authorized by appointment or by

law to receive process for the defendant.

(b) The complaint may be served

either by:

(1) Registered or certified mail (return

receipt requested) addressed to the

defendant at his or her residence, usual

dwelling place, principal office or place

of business; or by

(2) Personal delivery by anyone 18

years of age or older.

(c) The date of service is the date of

personal delivery or, in the case of

service by registered or certified mail,

the date of postmark.

(d) Proof of service—

(1) When service is made by

registered or certified mail, the return

postal receipt will serve as proof of

service.

(2) When service is made by personal

delivery, an affidavit of the individual

serving the complaint, or written

acknowledgment of receipt by the

defendant or a representative, will serve

as proof of service.

(e) When served with the complaint,

the defendant also should be served

with a copy of this part 142 and 31

U.S.C. 3801–3812.

Procedures Following Service of a

Complaint

§ 142.12 How does a defendant respond to

the complaint?

(a) A defendant may file an answer

with the reviewing official and the

Office of Hearings and Appeals within

30 days of service of the complaint. An

answer will be considered a request for

an oral hearing.

(b) In the answer, a defendant—

(1) Must admit or deny each of the

allegations of liability contained in the
2694 Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations

complaint (a failure to deny an

allegation is considered an admission);

(2) Must state any defense on which

the defendant intends to rely;

(3) May state any reasons why he or

she believes the penalties, assessments,

or both should be less than the statutory

maximum; and

(4) Must state the name, address, and

telephone number of the person

authorized by the defendant to act as

defendant’s representative, if any.

(c) If the defendant is unable to file an

answer which meets the requirements

set forth in paragraph (b) of this section,

the defendant may file with the

reviewing official a general answer

denying liability, requesting a hearing,

and requesting an extension of time in

which to file a complete answer. A

general answer must be filed within 30

days of service of the complaint.

(d) If the defendant initially files a

general answer requesting an extension

of time, the reviewing official must

promptly file with the ALJ the

complaint, the general answer, and the

request for an extension of time.

(e) For good cause shown, the ALJ

may grant the defendant up to 30

additional days within which to file an

answer meeting the requirements of

paragraph (b) of this section. Such

answer must be filed with OHA and a

copy must be served on the reviewing

official.

§ 142.13 What happens if a defendant fails

to file an answer?

(a) If a defendant does not file any

answer within 30 days after service of

the complaint, the reviewing official

will refer the complaint to the ALJ.

(b) Once the complaint is referred, the

ALJ will promptly serve on the

defendant a notice that an initial

decision will be issued.

(c) The ALJ will assume the facts

alleged in the complaint to be true and,

if such facts establish liability under the

statute, the ALJ will issue an initial

decision imposing the maximum

amount of penalties and assessments

allowed under the statute.

(d) Except as otherwise provided in

this section, when a defendant fails to

file a timely answer, the defendant

waives any right to further review of the

penalties and assessments imposed in

the initial decision.

(e) The initial decision becomes final

30 days after it is issued.

(f) If, at any time before an initial

decision becomes final, a defendant files

a motion with the ALJ asking that the

case be reopened and describing the

extraordinary circumstances that

prevented the defendant from filing an

answer, the initial decision will be

stayed until the ALJ makes a decision

on the motion. The reviewing official

may respond to the motion.

(g) If, in his motion to reopen, a

defendant demonstrates extraordinary

circumstances excusing his failure to

file a timely answer, the ALJ will

withdraw the initial decision, and grant

the defendant an opportunity to answer

the complaint.

(h) A decision by the ALJ to deny a

defendant’s motion to reopen a case is

not subject to review or reconsideration.

§ 142.14 What happens once an answer is

filed?

(a) When the reviewing official

receives an answer, he must file

concurrently, the complaint and the

answer with the ALJ, along with a

designation of an SBA representative.

(b) When the ALJ receives the

complaint and the answer, the ALJ will

promptly serve a notice of oral hearing

upon the defendant and the

representative for SBA, in the same

manner as the complaint, service of

which is described in § 142.11. The

notice of oral hearing must be served

within six years of the date on which

the claim or statement is made.

(c) The notice must include:

(1) The tentative time, place and

nature of the hearing;

(2) The legal authority and

jurisdiction under which the hearing is

to be held;

(3) The matters of fact and law to be

asserted;

(4) A description of the procedures for

the conduct of the hearing;

(5) The name, address, and telephone

number of the defendant’s

representative and the representative for

SBA; and

(6) Such other matters as the ALJ

deems appropriate.

Hearing Provisions

§ 142.15 What kind of hearing is

contemplated?

The hearing is a formal proceeding

conducted by the ALJ during which a

defendant will have the opportunity to

cross-examine witnesses, present

testimony, and dispute liability.

§ 142.16 At the hearing, what rights do the

parties have?

(a) The parties to the hearing shall be

the defendant and SBA. Pursuant to 31

U.S.C. 3730(c)(5), a private plaintiff in

an action under the False Claims Act

may participate in the hearing to the

extent authorized by the provisions of

that Act.

(b) Each party has the right to:

(1) Be represented by a representative;

(2) Request a pre-hearing conference

and participate in any conference held

by the ALJ;

(3) Conduct discovery;

(4) Agree to stipulations of fact or law

which will be made a part of the record;

(5) Present evidence relevant to the

issues at the hearing;

(6) Present and cross-examine

witnesses;

(7) Present arguments at the hearing

as permitted by the ALJ; and

(8) Submit written briefs and

proposed findings of fact and

conclusions of law after the hearing, as

permitted by the ALJ.

§ 142.17 What is the role of the ALJ?

An ALJ from OHA serves as the

Presiding Officer at all hearings, with

authority as set forth in § 134.218(b) of

this chapter.

§ 142.18 Can the reviewing official or ALJ

be disqualified?

(a) A reviewing official or an ALJ may

disqualify himself or herself at any time.

(b) Upon motion of any party, the

reviewing official or ALJ may be

disqualified as follows:

(1) The motion must be supported by

an affidavit containing specific facts

establishing that personal bias or other

reason for disqualification exists,

including the time and circumstances of

the discovery of such facts;

(2) The motion must be filed promptly

after discovery of the grounds for

disqualification, or the objection will be

deemed waived; and

(3) The party, or representative of

record, must certify in writing that the

motion is made in good faith.

(c) Once a motion has been filed to

disqualify the reviewing official, the ALJ

will halt the proceedings until resolving

the matter of disqualification. If the ALJ

determines that the reviewing official is

disqualified, the ALJ will dismiss the

complaint without prejudice. If the ALJ

disqualifies himself or herself, the case

will be promptly reassigned to another

ALJ.

§ 142.19 How are issues brought to the

attention of the ALJ?

All applications to the ALJ for an

order or ruling are made by motion,

stating the relief sought, the authority

relied upon, and the facts alleged.

Procedures for filing motions under this

section are governed by § 134.211 of this

chapter.

§ 142.20 How are papers served?

Except for service of a complaint or a

notice of hearing under § 142.11 and

§ 142.14(b) respectively, service of

papers must be made as prescribed by

§ 134.204 of this chapter.
Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations 2695

§ 142.21 How will the hearing be

conducted and who has the burden of

proof?

(a) The ALJ conducts a hearing in

order to determine whether a defendant

is liable for a civil penalty, assessment,

or both and, if so, the appropriate

amount of the civil penalty and/or

assessment. The hearing will be

recorded and transcribed, and the

transcript of testimony, exhibits

admitted at the hearing, and all papers

and requests filed in the proceeding

constitute the record for a decision by

the ALJ.

(b) SBA must prove a defendant’s

liability and any aggravating factors by

a preponderance of the evidence.

(c) A defendant must prove any

affirmative defenses and any mitigating

factors by a preponderance of the

evidence.

(d) The hearing will be open to the

public unless otherwise ordered by the

ALJ for good cause shown.

§ 142.22 How is evidence presented at the

hearing?

(a) Witnesses at the hearing must

testify orally under oath or affirmation

unless otherwise ordered by the ALJ. At

the discretion of the ALJ, testimony may

be admitted in the form of a written

statement or deposition, a copy of

which must be provided to all other

parties, along with the last known

address of the witness, in a manner

which allows sufficient time for other

parties to subpoena the witness for

cross-examination at the hearing.

(b) The ALJ determines the

admissibility of evidence in accordance

with § 134.223 (a) and (b) of this

chapter.

§ 142.23 Are there limits on disclosure of

documents or discovery?

(a) Upon written request to the

reviewing official, the defendant may

review all non-privileged, relevant and

material documents, records and other

material related to the allegations

contained in the complaint. After

paying SBA a reasonable fee for

duplication, the defendant may obtain a

copy of the records described.

(b) Upon written request to the

reviewing official, the defendant may

obtain a copy of all exculpatory

information in the possession of the

reviewing official or investigating

official relating to the allegations in the

complaint. If the document would

otherwise be privileged, only the

portion of the document containing

exculpatory information must be

disclosed. As used in this section, the

term ‘‘information’’ does not include

legal materials such as statutes or case

law obtained through legal research.

(c) The notice sent to the Attorney

General from the reviewing official is

not discoverable under any

circumstances.

(d) Other discovery is available only

as ordered by the ALJ and includes only

those methods of discovery allowed by

§ 134.213 of this chapter.

§ 142.24 Can witnesses be subpoenaed?

A party seeking the appearance and

testimony of any individual or the

production of documents or records at

a hearing may request in writing that the

ALJ issue a subpoena. Any such request

must be filed with the ALJ not less than

15 days before the scheduled hearing

date unless otherwise allowed by the

ALJ for good cause. A subpoena shall be

issued by the ALJ in the manner

specified by § 134.214 of this chapter.

§ 142.25 Can a party or witness object to

discovery?

Any party or prospective witness may

file a motion to quash a subpoena or to

limit discovery or the disclosure of

evidence. Motions to limit discovery or

to object to the disclosure of evidence

are governed by § 134.213 of this

chapter. Motions to limit or quash

subpoenas are governed by § 134.214(d)

of this chapter.

§ 142.26 Can a party informally discuss

the case with the ALJ?

No. Such discussions are forbidden as

ex parte communications with the ALJ

as set forth in § 134.220 of this chapter.

This does not prohibit a party from

communicating with other employees of

OHA to inquire about the status of a

case or to ask routine questions

concerning administrative functions and

procedures.

§ 142.27 Are there sanctions for

misconduct?

The ALJ may sanction a party or

representative, as set forth in § 134.219

of this chapter.

§ 142.28 Where is the hearing held?

The ALJ will hold the hearing in any

judicial district of the United States:

(a) In which the defendant resides or

transacts business; or

(b) In which the claim or statement on

which liability is based was made,

presented or submitted to SBA; or

(c) As agreed upon by the defendant

and the ALJ.

§ 142.29 Are witness lists exchanged

before the hearing?

(a) At least 15 days before the hearing

or at such other time as ordered by the

ALJ, the parties must exchange witness

lists and copies of proposed hearing

exhibits, including copies of any written

statements or transcripts of deposition

testimony that the party intends to offer

in lieu of live testimony.

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

admit into evidence the testimony of

any witness whose name does not

appear on the witness list or any exhibit

not provided to an opposing party

unless the ALJ finds good cause for the

omission or concludes that there is no

prejudice to the objecting party.

(c) Unless a party objects within the

time set by the ALJ, documents

exchanged in accordance with this

section are deemed to be authentic for

the purpose of admissibility at the

hearing.

Decisions and Appeals

§ 142.30 How is the case decided?

(a) The ALJ will issue an initial

decision based only on the record. It

will contain findings of fact,

conclusions of law, and the amount of

any penalties and assessments imposed.

(b) The ALJ will serve the initial

decision on all parties within 90 days

after close of the hearing or expiration

of any allowed time for submission of

post-hearing briefs. If the ALJ fails to

meet this deadline, he or she shall

promptly notify the parties of the reason

for the delay and set a new deadline.

(c) The findings of fact must include

a finding on each of the following

issues:

(1) Whether any one or more of the

claims or statements identified in the

complaint violate this part; and

(2) If the defendant is liable for

penalties or assessments, the

appropriate amount of any such

penalties or assessments, considering

any mitigating or aggravating factors.

(d) The initial decision will include a

description of the right of a defendant

found liable for a civil penalty or

assessment to file a motion for

reconsideration with the ALJ or a notice

of appeal with the Administrator.

§ 142.31 Can a party request

reconsideration of the initial decision?

(a) Any party may file a motion for

reconsideration of the initial decision

with the ALJ within 20 days of receipt

of the initial decision. If the initial

decision was served by mail, there is a

rebuttable presumption that the initial

decision was received by the party 5

days from the date of mailing.

(b) A motion for reconsideration must

be accompanied by a supporting brief

and must describe specifically each

allegedly erroneous decision.

(c) Any response to a motion for

reconsideration must be filed within 20

days of receipt of such motion.
2696 Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations

(d) The ALJ will dispose of a motion

for reconsideration by denying it or by

issuing a revised initial decision.

(e) If the ALJ issues a revised initial

decision upon motion of a party, that

party may not file another motion for

reconsideration.

§ 142.32 When does the initial decision of

the ALJ become final?

(a) The initial decision of the ALJ

becomes the final decision of SBA, and

shall be binding on all parties 30 days

after it is issued, unless any party timely

files a motion for reconsideration or any

defendant adjudged to have submitted a

false claim or statement timely appeals

to the SBA Administrator, as set forth in

§ 142.33.

(b) If the ALJ disposes of a motion for

reconsideration by denying it or by

issuing a revised initial decision, the

ALJ’s order on the motion for

reconsideration becomes the final

decision of SBA 30 days after the order

is issued, unless a defendant adjudged

to have submitted a false claim or

statement timely appeals to the

Administrator, within 30 days of the

ALJ’s order, as set forth in § 142.33.

§ 142.33 What are the procedures for

appealing the ALJ decision?

(a) Any defendant who submits a

timely answer and is found liable for a

civil penalty or assessment in an initial

decision may appeal the decision.

(b) The defendant may file a notice of

appeal with the Administrator within 30

days following issuance of the initial

decision, serving a copy of the notice of

appeal on all parties and the ALJ. The

Administrator may extend this deadline

for up to thirty additional days if an

extension request is filed within the

initial 30 day period and shows good

cause.

(c) The defendant’s appeal will not be

considered until all timely motions for

reconsideration have been resolved.

(d) If a timely motion for

reconsideration is denied, a notice of

appeal may be filed within 30 days

following such denial or issuance of a

revised initial decision, whichever

applies.

(e) A notice of appeal must be

supported by a written brief specifying

why the initial decision should be

reversed or modified.

(f) SBA’s representative may file a

brief in opposition to the notice of

appeal within 30 days of receiving the

defendant’s notice of appeal and

supporting brief.

(g) If a defendant timely files a notice

of appeal, and the time for filing

motions for reconsideration has expired,

the ALJ will forward the record of the

proceeding to the Administrator.

§ 142.34 Are there any limitations on the

right to appeal to the Administrator?

(a) A defendant has no right to appear

personally, or through a representative,

before the Administrator.

(b) There is no right to appeal any

interlocutory ruling.

(c) The Administrator will not

consider any objection or evidence that

was not raised before the ALJ unless the

defendant demonstrates that the failure

to object was caused by extraordinary

circumstances. If the appealing

defendant demonstrates to the

satisfaction of the Administrator that

extraordinary circumstances prevented

the presentation of evidence at the

hearing, and that the additional

evidence is material, the Administrator

may remand the matter to the ALJ for

consideration of the additional

evidence.

§ 142.35 How does the Administrator

dispose of an appeal?

(a) The Administrator may affirm,

reduce, reverse, compromise, remand,

or settle any penalty or assessment

imposed by the ALJ in the initial

decision or reconsideration decision.

(b) The Administrator will promptly

serve each party to the appeal and the

ALJ with a copy of his or her decision.

This decision must contain a statement

describing the right of any person,

against whom a penalty or assessment

has been made, to seek judicial review.

§ 142.36 Can I obtain judicial review?

If the initial decision is appealed, the

decision of the Administrator is the

final decision of SBA and is not subject

to judicial review unless the defendant

files a petition for judicial review within

60 days after the Administrator serves

the defendant with a copy of the final

decision.

§ 142.37 What judicial review is available?

31 U.S.C. 3805 authorizes judicial

review by the appropriate United States

District Court of any final SBA decision

imposing penalties or assessments, and

specifies the procedures for such

review. To obtain judicial review, a

defendant must file a petition in a

timely fashion.

§ 142.38 Can the administrative complaint

be settled voluntarily? (a)

(a) Parties may make offers of

compromise or settlement at any time.

Any compromise or settlement must be

in writing.

(b) The reviewing official has the

exclusive authority to compromise or

settle the case from the date on which

the reviewing official is permitted to

issue a complaint until the ALJ issues

an initial decision.

(c) The Administrator has exclusive

authority to compromise or settle the

case from the date of the ALJ’s initial

decision until initiation of any judicial

review or any action to collect the

penalties and assessments.

(d) The Attorney General has

exclusive authority to compromise or

settle the case while any judicial review

or any action to recover penalties and

assessments is pending.

(e) The investigating official may

recommend settlement terms to the

reviewing official, the Administrator, or

the Attorney General, as appropriate.

The reviewing official may recommend

settlement terms to the Administrator or

the Attorney General, as appropriate.

§ 142.39 How are civil penalties and

assessments collected?

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

the Attorney General to bring specific

actions for collection of such civil

penalties and assessments including

administrative offset under 31 U.S.C.

3716. The penalties and assessments

may not, however, be administratively

offset against an overpayment of federal

taxes (then or later owed) to the

defendant by the United States.

§ 142.40 What if the investigation indicates

criminal misconduct?

(a) Any investigating official may:

(1) Refer allegations of criminal

misconduct directly to the Department

of Justice for prosecution or for suit

under the False Claims Act or other civil

proceeding;

(2) Defer or postpone a report or

referral to the reviewing official to avoid

interference with a criminal

investigation or prosecution; or

(3) Issue subpoenas under other

statutory authority.

(b) Nothing in this part limits the

requirement that SBA employees report

suspected violations of criminal law to

the SBA Office of Inspector General or

to the Attorney General.

§ 142.41 How does SBA protect the rights

of defendants?

These procedures separate the

functions of the investigating official,

reviewing official, and the ALJ, each of

whom report to a separate

organizational authority in accordance

with 31 U.S.C. 3801. Except for

purposes of settlement, or as a witness

or a representative in public

proceedings, no investigating official,

reviewing official, or SBA employee or

agent who helps investigate, prepare, or

present a case may (in such case, or a

factually related case) participate in the

initial decision or the review of the

initial decision by the Administrator.
Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations 2697

This separation of functions and

organization is designed to assure the

independence and impartiality of each

government official during every stage

of the proceeding. The representative for

SBA may be employed in the offices of

either the investigating official or the

reviewing official.

Dated: January 22, 1996.

John T. Spotila,

Acting Administrator.

[FR Doc. 96–1349 Filed 1–26 –96; 8:45 am]

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 96–NM–03–AD; Amendment

39–9491; AD 96–01–52]

Airworthiness Directives; Airbus Model

A310 and A300–600 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule; request for

comments.

SUMMARY: This document publishes in

the Federal Register an amendment

adopting Airworthiness Directive (AD)

T96–01–52 that was sent previously to

all known U.S. owners and operators of

Airbus Model A310 and A300–600

series airplanes by individual telegrams.

Among other things, this AD requires

repetitive inspections to ensure correct

synchronization of the hydraulic control

valves of the trimmable horizontal

stabilizer (THS) actuator; replacement of

the horizontal stabilizer actuator motors

with new or serviceable motors and

resynchronization of the valves, or

adjustment of the synchronization, if

necessary; and a functional test of the

THS. This amendment is prompted by

a report of desynchronization of the

hydraulic control valves that direct fluid

to the horizontal stabilizer actuator

motors, which resulted in

uncommanded movement of the THS.

The actions specified by this AD are

intended to prevent such

desynchronization, which could lead to

runaway of the horizontal stabilizer to

its full up or down position, subsequent

reduced maneuvering capability, and

potential pitch upset.

DATES: Effective February 5, 1996, to all

persons except those persons to whom

it was made immediately effective by

telegraphic AD T96–01–52, issued

January 9, 1996, which contained the

requirements of this amendment.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of February 5,

1996.

Comments for inclusion in the Rules

Docket must be received on or before

March 29, 1996.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, ANM–103,

Attention: Rules Docket No.96–NM–03–

AD, 1601 Lind Avenue SW., Renton,

Washington 98055–4056.

The applicable service information

may be obtained from Airbus Industrie,

1 Rond Point Maurice Bellonte, 31707

Blagnac Cedex, France. This

information may be examined at the

FAA, Transport Airplane Directorate,

1601 Lind Avenue SW., Renton,

Washington; or at the Office of the

Federal Register, 800 North Capitol

Street NW., suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Tom

Groves, Aerospace Engineer,

Standardization Branch, ANM–113,

FAA, Transport Airplane Directorate,

1601 Lind Avenue SW., Renton,

Washington 98055–4056; telephone

(206) 227–1503; fax (206) 227–1149.

SUPPLEMENTARY INFORMATION: The

Direction Ge ́ne ́rale de l’Aviation Civile

(DGAC), which is the airworthiness

authority for France, recently notified

the FAA that an unsafe condition may

exist on certain Airbus Model A310 and

A300–600 series airplanes. The DGAC

advises that it recently received a report

indicating that uncommanded

movement of the trimmable horizontal

stabilizer (THS) occurred on a Model

A310 series airplane after the engine

was started while the airplane was on

the ground. Both pitch trim levers and

the autopilot (AP) 1 tripped;

additionally, the servo control push

button (P/B) of one of the hydraulic

systems illuminated. The servo control

P/B was reset successfully following

engagement of the pitch trim and AP1.

The crew attempted to command the

pitch trim by using one of the rocking

switches; however, the pitch trim and

AP1 tripped again. Then, without

further action on the part of the crew,

the pitch trim control wheel moved to

a position of 14 degrees up (end of

travel).

During subsequent bench testing of

the motor on one of the hydraulic

systems of the airplane, the positioning

pin on the cam plate was found to be

broken. This pin is not designed to carry

loads. The shape of the pin hole

indicated that the pin was bent and

ruptured.

Further investigation revealed that the

pin rupture was caused by

desynchronization of the hydraulic

control valves that direct fluid to the

horizontal stabilizer actuator (HSA)

motors. Desynchronization of the

hydraulic control valves can result in

one hydraulic motor being pressurized

before the other. In this case, the

nonpressurized motor opposes the

torque of the motor that is pressurized

first, which causes load to be applied to

the positioning pin of the

nonpressurized motor. Consequently,

the pin can rupture due to fatigue. Such

rupturing of the positioning pin of one

motor can result in jamming of the THS

actuator and can contribute to

subsequent failure of the hydraulic

system of the other motor.

These conditions, if not corrected,

could result in runaway of the

horizontal stabilizer to its full up or

down position, and subsequent reduced

maneuvering capability and a potential

pitch upset.

The horizontal stabilizer actuator

installed on Model A310 series

airplanes is similar in design to the one

installed on Model A300–600 series

airplanes. Therefore, the FAA finds that

Model A300–600 series airplanes are

subject to the same unsafe condition

identified in the Model A310.

Airbus has issued All Operators Telex

(AOT) 27–21, Revision 1, dated January

5, 1996, which describes procedures for

repetitive inspections to ensure correct

synchronization of the hydraulic control

valves of the THS actuators;

replacement of the hydraulic motors

with new or serviceable motors and

resynchronization of the valves, or

adjustment of the synchronization, if

necessary; and a functional test of the

THS.

For airplanes on which the hydraulic

motor or hydraulic valve block of the

HSA has been subject to previous

maintenance action, the AOT also

describes procedures for replacement of

both hydraulic motors of the HSA with

new or serviceable motors.

In lieu of replacing the motors, the

AOT also describes procedures for

removal of the hydraulic motors of the

HSA, accomplishment of various

follow-on actions, and repair of any

discrepancy found. (The follow-on

actions include checking the motors and

the cam seats, assembling the motors,

and metal stamping the modification

plate of the motors.)

Additionally, the AOT describes

procedures for eventual removal of

certain motors for inspection to detect

any wear or damage caused by

desynchronization; and, if necessary,

either replacement of the motors with