Source: https://www.federalregister.gov/documents/2010/05/25/2010-11864/office-of-the-chief-financial-officer-department-of-agriculture-implementation-of-omb-guidance-on
Timestamp: 2017-08-18 09:21:03
Document Index: 18760967

Matched Legal Cases: ['art 417', 'art 180', 'art 417', 'art 3017', 'art 3017', 'art 180', 'art 3017', 'art 417', 'art 3017', '§\u2009417', '§\u2009417', 'art 417', 'art 3017', 'art 417', '§\u2009417', '§\u2009417', 'art 180', '§\u2009417', '§\u2009417', 'art 180', '§\u2009417', 'art 180', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009180', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009417', '§\u2009180', '§\u2009417', '§\u2009417', '§\u2009180', '§\u2009180', '§\u2009417', '§\u2009417']

Federal Register :: Office of the Chief Financial Officer; Department of Agriculture Implementation of OMB Guidance on Nonprocurement Debarment and Suspension
Office of the Chief Financial Officer; Department of Agriculture Implementation of OMB Guidance on Nonprocurement Debarment and Suspension
A Rule by the Agriculture Department on 05/25/2010
This interim final rule is effective September 22, 2010, unless written adverse comments or written notice of intent to submit adverse comments are received on or before July 26, 2010.
29183-29189 (7 pages)
0505-AA11
Executive Order 12866 “Regulatory Planning and Review”
Subpart D—Responsibilities of USDA Officials Regarding Transactions
https://www.federalregister.gov/d/2010-11864 https://www.federalregister.gov/d/2010-11864
Start Preamble Start Printed Page 29183
The Department of Agriculture (USDA) is establishing a new part 417 on nonprocurement debarment and suspension at 2 CFR Chapter 4 that adopts and supplements the Office of Management and Budget (OMB) guidance at 2 CFR part 180 as USDA's policies and procedures for nonprocurement debarment and suspension. Part 417 of 2 CFR replaces the existing USDA implementation of the governmentwide common rule on nonprocurement debarment and suspension at 7 CFR part 3017, and 7 CFR part 3017 is removed. This action also modifies exclusions from covered transactions and codifies a statutory permanent debarment provision. This action also finalizes an earlier proposed rule to eliminate an appeal to a USDA administrative law judge (ALJ) of a suspension or debarment decision. USDA also makes adjustments to its current exclusions from covered transactions. Finally, this interim rule implements Section 14211 of the Food, Conservation, and Energy Act of 2008, Public Law 110-246 (7 U.S.C. 2209j), which requires the Secretary to debar permanently from participation in USDA programs those convicted of having knowingly committed fraud in USDA programs.
Comments may be submitted by any of the following methods: Federal eRulemaking Portal: Go to http://www.regulations.gov, select “Department of Agriculture—All” from the agency drop-down menu, select “Proposed Rules” from the document type menu, and then click “Submit.” In the document title column, select the proposed rule with “2 CFR 417, Implementation of OMB Guidance on Nonprocurement Debarment and Suspension” in the title to submit or view public comments and to view supporting and related materials available electronically. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link.
E-mail: peter.laub@cfo.usda.gov or Fax: (202) 690-1529. Include Regulatory Information Number (RIN) 0505-AA11 in the subject line of the message.
Postal Mail/Commercial Delivery: Please send four copies of your comments (an original and three copies) to Peter Laub, OCFO/CTGPD Room 3451-S, Stop 9010, 1400 Independence Avenue, SW., Washington, DC 20250-9010.
All comments submitted must include the agency name and RIN for this rulemaking. All comments received will be posted without change to http://www.regulations.gov, including any personal information provided.
Peter Laub, (202) 720-1554; Fax: (202) 690-1529, E-mail: peter.laub@usda.gov.
Background: On August 31, 2005, OMB issued interim final guidance for governmentwide nonprocurement debarment and suspension (70 FR 51863). This guidance, located at 2 CFR part 180, is substantively the same as the common rule but is published in a form that each agency can adopt, thus eliminating the need for each agency to publish its separate version of the same rule. It also facilitates the ability to update governmentwide requirements without each agency having to re-promulgate its own rules. On November 15, 2006, OMB published a final rule adopting the interim final guidance with changes (71 FR 66431).
USDA's current regulation on nonprocurement debarment and suspension is found at 7 CFR part 3017. In accordance with OMB's guidance, this rule places USDA's nonprocurement debarment and suspension regulations in Title 2 of the CFR, along with other agencies' nonprocurement debarment and suspension regulations. The new regulation at 2 CFR part 417 adopts the OMB guidelines and includes, with few exceptions, the same additions and clarifications that USDA made to the governmentwide common rule on this subject issued November 26, 2003 (68 FR 66534, 66562). In addition to those additions and clarifications, USDA is eliminating the ALJ appeal processes for suspension and debarment, which were authorized in 7 CFR 3017.765 and 3017.890, respectively. In 68 FR 66562, USDA stated an intention to remove the ALJ appeal. The Department did not receive any adverse comments regarding its intention to remove the ALJ appeals. The Department decided to remove the appeal to an ALJ to conform to the same process as other Federal agencies.
USDA is replacing the exclusion from covered transaction status for nonprocurement transactions currently found in paragraph (i) of 7 CFR section 3017.215 with narrower exclusions in paragraphs (a)(8) and (9) of 2 CFR section 417.215. The exclusion from covered transaction status under 7 CFR 3017.215(i) applied to any transactions below the primary tier covered transaction in USDA's export and foreign assistance programs, with one exception relating to the Market Access Program. USDA is also replacing the exclusion from covered transaction status for procurement transactions currently found in subsection (c) of 7 CFR 3017.220 with narrower exclusions in paragraphs (c) and (d) of 2 CFR section 417.220. The exclusion from covered transaction status under 7 CFR 3017.220(c) applied to any procurement transactions below the primary tier covered transaction in USDA's export and foreign assistance programs, with the exception of a contract for the procurement of ocean transportation in connection with USDA's foreign assistance programs.Start Printed Page 29184
The exclusions from covered transaction status in 2 CFR 417.215(a)(8) and (9) and 417.220(c) and (d) will apply only to USDA's foreign assistance programs and two categories of USDA's export programs, the export credit guarantee programs and the direct credit programs. Furthermore, the exclusions will apply only to lower tier transactions that will be implemented outside the United States. In two newly added sections, 2 CFR 417.221 and 417.222, USDA explains how the exclusions from covered transaction status for its foreign assistance, export credit guarantee and direct credit programs will apply. The examples of transactions provided in these sections are intended to be illustrative but not exhaustive.
At the current time, USDA is implementing two foreign assistance programs, the Food for Progress Program and the McGovern-Dole International Food for Education and Child Nutrition Program. USDA also has authority to carry out foreign assistance activities under section 416(b) of the Agricultural Act of 1949. With regard to USDA's foreign assistance programs, the vast majority of transactions below the primary tier covered transactions are carried out in foreign countries.
For example, a private voluntary organization receiving a grant under the McGovern-Dole International Food for Education and Child Nutrition Program might enter into an agreement with a foreign subrecipient that would hire a construction company to build a school in Afghanistan. In the absence of the exclusions from covered transaction status in 2 CFR 417.215(a)(8) and 417.220(c), the private voluntary organization would have to insert compliance language into its agreement with the subrecipient, which would be a participant in a covered transaction at the first lower tier, and require the subrecipient to insert appropriate language into its contract with the construction company. This contract would most likely be written in the foreign language. This would place a tremendous burden on the private voluntary organization. Entities in some countries may not have ready access to the Excluded Parties List System (EPLS). Furthermore, due to language and logistical difficulties, it would be very difficult for USDA to monitor compliance by participants in lower tier transactions who are located and carrying out activities in foreign countries. The exceptions in 2 CFR 417.215(a)(8) and 417.220(c) have been narrowly drawn to recognize the realities of foreign transactions and to avoid an adverse impact upon the implementation of USDA's foreign assistance programs.
Currently, the only export credit guarantee program operated by USDA is the Commodity Credit Corporation (CCC) Export Credit Guarantee Program, commonly known as the GSM-102 program. USDA does not currently operate a direct credit program. Under the GSM-102 program, CCC guarantees repayment of certain loans extended to foreign bank obligors. The guarantee itself is originally issued in favor of an exporter of U.S. agricultural commodities, and in the vast majority of cases, is assigned by such exporter to a U.S. financial institution. The currently authorized but dormant direct credit sales program authorizes CCC to finance commercial export sales of privately owned stocks of commodities.
For example, under GSM-102, a CCC guarantee would exist in favor of a U.S. exporter or U.S. financial institution, as assignee of such exporter. At inception, such a guarantee would contemplate a U.S. exporter, a foreign importer, a CCC-approved foreign bank, and, in all likelihood, an assignee U.S. financial institution. The guarantee would extend to certain obligations of the CCC-approved foreign bank. To the extent the foreign bank and the importer are considered participants in a covered transaction at the first lower tier, then, in the absence of an exception, the foreign bank and the importer would each be required to adhere to the provisions of 2 CFR 180.300 when entering into a covered transaction with another person at the next lower tier. This would have the effect of requiring each foreign bank and each importer involved in a GSM-102 transaction, with respect to any person with whom it enters into a lower tier covered transaction, to check the EPLS, collect a certification, or add a clause or condition to the covered transaction with that person. Similar concerns would arise with respect to the direct credit sales program, in the event it became active.
It would be difficult in the extreme to monitor compliance by each importer participant and foreign bank participant with respect to each person with whom it entered into a lower tier covered transaction. More importantly, the inability to ensure compliance with such a requirement could readily cause U.S. financial institutions to opt out of participation in the program. As nearly 100 percent of all GSM-102 transactions currently involve a U.S. financial institution as assignee of the program, such reticence on the part of the U.S. financial institutions would effectively cause the demise of the program altogether.
While there will be no covered transactions below the primary tier covered transaction in USDA's foreign assistance programs, export credit guarantee programs, and direct credit programs, USDA will still require primary tier participants in these programs to check the EPLS and not to enter into a nonprocurement transaction or a procurement contract that is expected to equal or exceed $25,000 at the first lower tier with a person who is excluded or disqualified. Complying with this requirement will not be impracticable or impose undue hardship upon the primary tier participant.
USDA is also eliminating the exclusion from covered transaction status for nonprocurement transactions currently found in subsection (j) of 7 CFR 3017.215. This exclusion applied to any transactions under USDA's conservation programs, warehouse licensing programs, or programs that provide statutory entitlements and make available loans to individuals and entities in their capacity as producers of agricultural commodities. With regard to USDA's conservation and commodity programs, after approximately 20 years, USDA has determined that the interests of the United States are not adequately protected if persons who have been suspended or debarred are allowed to participate in these programs. With respect to USDA's warehouse licensing programs, these would be excluded from covered transaction status pursuant to 2 CFR 417.215(a)(3), which excludes the receipt of licenses, permits, certificates, and indemnification under regulatory programs conducted in the interest of public health and safety.
It is important to note that, consistent with its predecessor in 7 CFR part 3017, this rule excludes from covered transaction status those nonprocurement transactions provided as individual benefits, sometimes referred to as personal entitlements, which are received without regard to an individual's present responsibility. An individual debarred or suspended from participation in a covered transaction under this part, then, would not be prohibited on that basis from participation in a transaction that involves Federal funds but does not have covered transaction status under this part. To clarify further, an individual debarred or suspended nevertheless remains eligible to participate in a USDA transaction excluded from covered transaction status by this rule. For instance, based on a criminal conviction in connection Start Printed Page 29185with the performance of a grant related to another Federal agency's program, an individual may be debarred from participation in all covered transactions governmentwide. Despite being debarred, however, the individual would remain eligible to participate in a USDA transaction excluded from covered transaction status here, such as the receipt of individual or household benefits under the USDA's Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program). This particular exemption is also consistent with that established in Section 1(c) of Executive Order 12549, Debarment and Suspension, the basis for the governmentwide nonprocurement debarment and suspension authorities codified here, which specifically “does not cover * * * benefits to an individual as a personal entitlement.” Examples of other noncovered transactions, for purposes of nonprocurement debarment and suspension, include participation as an authorized retailer in SNAP or as a retail vendor in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), because exclusion under this part is superseded by other law, i.e., comprehensive statutory disqualification provisions are in place for these entities that would conflict with the application of this part.
In addition, this rule codifies at 2 CFR 417.865(b) the Secretary's recently enacted statutory authority to debar permanently a specific class of participants involved in USDA programs. Section 14211(b)(2) of the Food, Conservation, and Energy Act of 2008, Public Law 110-246 (7 U.S.C. 2209j), directs the Secretary to debar permanently from subsequent participation in USDA programs an “individual, organization, corporation, or other entity” convicted of a felony for “knowingly defrauding” the USDA related to any of its programs. While a conviction may be imposed by a State, local, or Federal jurist, the underlying crime must encompass a fraud committed with knowledge by the defendant. Permanent debarment is also statutorily limited—extending only to a felon's future participation in USDA programs.
Section 14211(b)(2) limits the effect of permanent debarments imposed by the Secretary using this authority, stating that they “shall not apply with respect to participation in domestic food assistance programs (as defined by the Secretary).” In view of the definitional discretion afforded the Secretary, this rule includes an inclusive rather than exhaustive list of those domestic food assistance programs. We note that the listed programs encompass benefits provided under domestic food assistance programs to individuals or households participating in and receiving benefits under those listed programs. In contrast, the rule provides that a business, organization, corporation, etc., debarred by the Secretary using this authority would be prohibited from participation in the listed programs. Thus, for example, the Secretary could use the authority in § 417.865(b) to debar from future participation in USDA programs a day care home provider convicted of knowingly defrauding the USDA while participating in the Child and Adult Care Food Program. As an individual, the day care home provider and her household would remain eligible to participate in USDA's domestic food assistance programs as recipients—for example, receiving benefits under the Supplemental Nutrition Assistance Programs. Conversely, WIC retail vendors and other nonbeneficiary entities in the domestic food assistance programs are not considered participants and are therefore subject to permanent debarment under § 417.865(b).
In light of the new 2 CFR part 417, USDA is removing 7 CFR part 3017, which is the current location for USDA's nonprocurement debarment and suspension regulations.
OMB has determined this rule to be “Nonsignificant.”
1. Add Chapter IV, consisting of part 417, to Subchapter B to read as follows:
Who in the USDA may grant an exception to let an excluded person participate in a covered transaction?
How would the exclusions from coverage for the USDA's foreign assistance programs apply?
How would the exclusions from coverage for the USDA's export credit guarantee and direct credit programs apply?
What methods must I use to pass down requirements to participants in lower-tier covered transactions with whom I intend to do business?
Start Printed Page 29186 Subpart E—[Reserved] Subpart F—[Reserved] Subpart G—Suspension
When will I know whether the USDA suspension is continued or terminated?
What are the USDA causes for debarment?
When do I know if the USDA debarring official debars me?
Debarring official (USDA supplement to governmentwide definition at 2 CFR 180.930).
417.1010
Suspending official (USDA supplement to governmentwide definition at 2 CFR 180.1010).
§ 417.10
§ 417.20
(a) Participant or principal in a “covered transaction” (see Subpart B of 2 CFR part 180 and the definition of “nonprocurement transaction” at 2 CFR 180.970, as supplemented by §§ 417.215 and 417.220 of this part);
§ 417.30
The USDA policies and procedures that you must follow are the policies and procedures specified in this regulation and each applicable section of the OMB guidance in Subparts A through I of 2 CFR part 180, as that section is supplemented by the section in this part with the same section number. The contracts that are covered transactions, for example, are specified by section 220 of the OMB guidance (i.e., 2 CFR 180.220) as supplemented by section 220 in this part (i.e., § 417.220). For any section of OMB guidance in Subparts A through I of 2 CFR part 180 that has no corresponding section in this part, USDA policies and procedures are those in the OMB guidance.
§ 417.137
§ 417.210
All nonprocurement transactions, as defined in § 417.970, are covered transactions unless listed in § 417.215.
§ 417.215
(c) Exception. A cause for suspension or debarment under § 180.700 or 180.800 of this title (as supplemented by § 417.800) may be based on the actions of a person with respect to a procurement or nonprocurement transaction under a USDA program even if such transaction has been excluded from covered transaction status by this section or § 417.220.
§ 417.220
(2) Do include some procurement contracts awarded by non-Federal participants in nonprocurement covered transactions (see appendix to this part).Start Printed Page 29187
(1) The contract is awarded by a participant in a nonprocurement transaction that is covered under § 417.210, and the amount of the contract is expected to equal or exceed $25,000.
§ 417.221
The primary tier covered transaction would be the food aid grant agreement entered into between USDA and a program participant, such as a U.S. private voluntary organization. USDA would have to check the EPLS before entering into the food aid grant agreement to ensure that the U.S. private voluntary organization that would be the primary tier participant is not excluded or disqualified. A transaction at the first lower tier might be a subrecipient agreement between the U.S. private voluntary organization and a foreign subrecipient of the commodities that were provided under the food aid grant agreement. Pursuant to § 417.215(a)(8), this nonprocurement transaction would not be a covered transaction. In addition, a transaction at the first lower tier might be a procurement contract entered into between the U.S. private voluntary organization and a foreign entity to provide supplies or services that are expected to equal or exceed $25,000 in value and that are needed by such organization to implement activities under the food aid grant agreement. Pursuant to § 417.220(c), this procurement contract would not be a covered transaction. However, pursuant to §§ 417.215(b) and 417.220(e), the U.S. private voluntary organization would be prohibited from entering into, at the first lower tier, an agreement with a subrecipient or a procurement contract that is expected to equal or exceed $25,000 with an entity that appears on the EPLS as excluded or disqualified.
§ 417.222
How would the exclusions from coverage for USDA's export credit guarantee and direct credit programs apply?
(a) Export credit guarantee program. In the case of the export credit guarantee program, the primary tier covered transaction would be the guarantee issued by the USDA to a U.S. exporter. The U.S. exporter usually assigns the guarantee to a U.S. financial institution, and this would create another primary tier covered transaction between USDA and the U.S. financial institution. USDA would have to check the EPLS before issuing a guarantee or accepting a guarantee assignment to ensure that the U.S. exporter or financial institution that would be the primary tier participant is not excluded or disqualified. A transaction at the first lower tier under the export credit guarantee program might be a payment obligation of a foreign bank to the U.S. exporter to pay on behalf of the importer for the exported U.S. commodities that are covered by the guarantee. Similarly, a transaction at the first lower tier might be a payment obligation of a foreign bank under an instrument, such as a loan agreement or letter of credit, to the U.S. financial institution assigned the guarantee, which has paid the exporter for the exported U.S. commodities and, in so doing, issued a loan to the foreign bank, which the foreign bank is obligated to repay on deferred payment terms. Pursuant to § 417.215(a)(9), these nonprocurement transactions would not be covered transactions. In addition, a transaction at the first lower tier under the export credit guarantee program might be a procurement contract (i.e., a contract for the purchase and sale of goods) that is expected to equal or exceed $25,000 entered into between the U.S. exporter and the foreign importer for the U.S. commodities, the payment for which is covered by the guarantee. Pursuant to § 417.220(d), this procurement contract would not be a covered transaction. However, pursuant to §§ 417.215(b) and 417.220(e), the U.S. exporter or U.S. financial institution would be prohibited from entering into, at the first lower tier, an agreement with an importer (or intervening purchaser) or foreign bank or a procurement contract that is expected to equal or exceed $25,000 with an entity that appears on the EPLS as excluded or disqualified.
(b) Direct credit program. In the case of the direct credit program, the primary tier covered transaction would be the financing agreement between the USDA and the U.S. exporter. USDA purchases the exporter's account receivable in a particular transaction pursuant to the financing agreement. On occasion, such transaction may contemplate a payment obligation of a U.S. or foreign bank to make the required payments. USDA would have to check the EPLS before entering into a financing agreement or accepting such a payor to ensure that the U.S. exporter or the bank, if any, that would be the primary tier participant is not excluded or disqualified. A transaction at the first lower tier might be a payment obligation of the importer to pay the exporter for the exported U.S. commodities that are covered by the financing agreement. Pursuant to § 417.215(a)(9), this nonprocurement transaction would not be a covered transaction. In addition, a transaction at the first lower tier might be a procurement contract that is expected to equal or exceed $25,000 entered into between the U.S. exporter and the foreign importer for the U.S. commodities, the payment for which is covered by the financing agreement. Pursuant to § 417.220(d), this procurement contract would not be a covered transaction. However, pursuant to §§ 417.215(b) and 417.220(e), the U.S. exporter would be prohibited from entering into, at the first lower tier, an agreement with an importer (or intervening purchaser) or bank, or a procurement contract that is expected to equal or exceed $25,000 with an entity that appears on the EPLS as excluded or disqualified.
§ 417.332
What methods must I use to pass down requirements to participants in lower tier covered transactions with whom I intend to do business?
§ 417.437
§ 417.755
The suspending official must make a written decision whether to continue, modify, or terminate your suspension within 45 days of closing the official record. The official record closes upon the suspending official's receipt of final submissions, information and findings of fact, if any. The suspending official may extend that period for good cause. However, the record will remain open for the full 30 days, as called for in § 180.725, even when you make a submission before the 30 days expire.
§ 417.865
§ 417.870
(a) The debarring official must make a written decision whether to debar within 45 days of closing the official record. The official record closes upon the debarring official's receipt of final submissions, information and findings of fact, if any. The debarring official may extend that period for good cause. However, the record will remain open for the full 30 days, as called for in § 180.820, even when you make a submission before the 30 days expire.
(b) The debarring official sends you written notice, pursuant to § 180.615, that the official decided, either:
§ 417.930
§ 417.1010
[FR Doc. 2010-11864 Filed 5-24-10; 8:45 am]