Source: https://www.federalregister.gov/documents/2014/01/13/2013-31357/general-administrative-regulations-mutual-consent-cancellation-food-security-act-of-1985
Timestamp: 2017-10-18 15:12:32
Document Index: 202637124

Matched Legal Cases: ['art 407', 'art 457', 'art 400', 'art 400', 'art 400', 'art 3017', 'art 180', 'art 417', 'art 3017', 'art 3017', 'art 180', 'art 417', 'art 180', 'art 417', 'art 417', 'art 3017', 'art 180', 'art 417', 'art 180', 'art 417', 'art 3017', 'art 180', 'art 417', 'arts 180', 'art 180', 'art 417', 'art 400', 'art 400', 'art 400', 'art 400', 'art 400', 'arts 407', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', 'art 180', 'art 417', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', 'art 400', 'art 400', 'art 400', 'art 400', 'arts 400', '§\u20091408', '§\u2009400', '§\u2009400', '§\u2009400', 'art 180', 'art 417', 'art 180', 'art 417', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', 'art 11', 'art 11', '§\u2009400', '§\u2009400', 'art 180', 'art 417', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', '§\u2009400', 'art 407', '§\u2009407', 'art 457', '§\u2009457']

A Rule by the Federal Crop Insurance Corporation on 01/13/2014
2075-2084 (10 pages)
Section 400.677 Definitions
Section 400.679 Criteria for Ineligibility
Section 400.680 Controlled Substance
Section 400.682 Determination and Notification
Section 400.683 Period of Ineligibility
Section 400.684 Effect of Ineligibility
Section 400.686 Administration and Maintenance
Part 407, Area Risk Insurance Policy Basic Provisions
Part 457, Common Crop Insurance Policy Basic Provisions
List of Subjects in 7 CFR Part 400, 407 and 457
https://www.federalregister.gov/d/2013-31357 https://www.federalregister.gov/d/2013-31357
Start Preamble Start Printed Page 2075
Applicability date: The changes will apply for the 2015 and succeeding crop years for all crops with a contract change date after February 12, 2014.
In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the information collection or recordkeeping requirements included in this final rule, which were filed under 0563-0085, have been submitted for approval to the Office of Management and Budget (OMB). When OMB notifies us of its decision, if approval is denied, we will publish a document in the Federal Register providing notice of what action we plan to take.
This rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith.Start Printed Page 2076
This rule finalizes changes to 7 CFR part 400 by revising subpart U—Ineligibility for Programs Under the Federal Crop Insurance Act that were published by FCIC on December 5, 2011, as a notice of proposed rulemaking in the Federal Register at 76 FR 75799—75805. The public was afforded 61 days to submit comments after the regulation was published in the Federal Register.
A total of 25 comments were received from 4 commenters. The commenters were insurance providers and an insurance service organization.
Comment: A commenter questioned whether the provisions in the proposed rule would apply only to convictions that occur after the effective date of the final rule.
Response: Yes. The laws and regulations in effect at the time of a conviction will apply.
Comment: A commenter stated the definition of “conviction” is vague, will lead to delays in determinations, and is unclear what the effective date of the conviction will be for purposes of determining ineligibility.
Response: FCIC does not agree the definition of “conviction” is vague or will result in delays in determinations. The definition only defines the term; it does not include provisions regarding the effective date or consequences of a conviction. The effective date and duration of ineligibility due to a conviction is provided in section 400.683. No changes were made as a result of this comment.
Comment: A commenter questioned the phrase “functional equivalent of a judgment” within the definition of “conviction,” and states the definition of the term “conviction” should be limited to “criminal judgments.”
Response: FCIC agrees the reference to other resolutions that are the functional equivalent of a judgment is not necessary because the definition already includes the phrase “a judgment or any other determination of guilt.” The commenter did not define “criminal judgment” or state how it would differ from the proposed definition of “conviction” which includes “a judgment or any other determination of guilt of a criminal offense by any court of competent jurisdiction.” Accordingly, the reference to other resolutions that are the functional equivalent of a judgment were removed in the final rule; however, no change was made to limit the definition to “criminal judgments.”
Comment: A commenter questioned what role the Excluded Parties List System (EPLS) plays in the Ineligible Tracking System (ITS) for the insurance provider.
Response: The EPLS and ITS are separate sources of data, each with a separate function and purpose. ITS is a list of persons who have been determined to be ineligible for crop insurance because of various reasons related to the crop insurance program. This list is created and maintained by FCIC. The EPLS is a list of persons who have met the criteria for inclusion and whose names were submitted by all government agencies to the General Services Administration (GSA). GSA creates and maintains the EPLS. Therefore, to the extent that FCIC reports to GSA ineligible persons who meet the criteria for inclusion in the EPLS, there is some overlap of the two lists. However, there are persons on the EPLS who may not appear on the ITS because of violations related to other government programs. Similarly, there are persons included on the ITS who do not appear on the ELPS because they do not meet the criteria from inclusion. There is no role for the insurance provider regarding submitting data to the EPLS. However, insurance providers are precluded from insuring or doing business with anyone on the ITS or the EPLS. Therefore, the insurance provider is required to check both the ITS and EPLS to ensure that it is not insuring or doing business with an ineligible person.
Comment: A commenter questioned whether the definition of the EPLS will change how the insurance provider transmits or receives information.
Response: The rule does not provide instructions regarding how insurance providers transmit or receive any applicable information regarding the EPLS. Since the ELPS is maintained by GSA, GSA will provide information to the public on how it can be accessed. This rule is just intended to provide notice to the insurance providers that they do need to access to EPLS to ensure that it is not insuring or doing business with an ineligible person.
Comment: A commenter questioned the timeframe for the “meaningful opportunity to contest” and whether the definition of “meaningful opportunity to contest” is a change from the notification process provided in the 2011 Ineligible Tracking System Handbook that allows 30 days from the date of Notice of Debt for the insured to challenge the debt.
Response: Nothing in this rule is intended to change the established time frames for filing for mediation, arbitration or judicial review contained in existing regulations, policy provisions, and procedures. To the extent that any time frame will be changed, such change will occur in the applicable regulation, policy provision, or procedure. Therefore, no changes have been made as a result of this comment.
Comment: A commenter questioned whether the term “Livestock Price Reinsurance Agreement” should be defined and whether the provisions of the rule apply to policies covered under the Livestock Price Reinsurance Agreement.
Response: The provisions contained within 7 CFR, part 400, subpart U apply to all policies insured under the Federal Crop Insurance Act, including those reinsured under the Livestock Price Reinsurance Agreement. FCIC agrees the term “Livestock Price Reinsurance Agreement” should be defined in the final rule. The definition was added and the term was referenced where applicable in the final rule.
Comment: A few commenters stated the provisions in section 400.679(d) should apply only to individuals and not to all “persons” as defined in the rule.
Response: FCIC agrees and has made the changes in section 400.679 and other applicable sections in the final rule.
Comment: A commenter stated the references to the regulations at 7 CFR part 3017 are incorrect because those regulations are obsolete and have been replaced with 2 CFR part 180 and 2 CFR part 417.
Response: FCIC agrees 7 CFR part 3017 is obsolete. All references to 7 CFR part 3017 have been corrected in the final rule to reference 2 CFR part 180 and 2 CFR part 417. Further, these are no longer the only provisions related to debarment since permanent debarment has been added by the 2008 Farm Bill. Therefore, FCIC has clarified the Start Printed Page 2077provisions in section 400.679 to make the distinction between suspensions and debarments under 2 CFR part 180 and 2 CFR part 417 and debarments under 7 U.S.C. 2209j.
Comment: A few commenters stated sections 400.679(c) and (f) are vague, ambiguous, and impose an unnecessary administrative burden on insurance providers and insured producers. They state subsection (f) is ambiguous because it is unclear whether the phrase “ineligible person,” refers to persons made ineligible under 2 CFR part 417, previously 7 CFR part 3017, or all persons ineligible under section 400.679 of the proposed rule. They also state the phrase “knowingly doing business” will impose an unnecessary administrative burden on the insurance providers if it is applied to ineligible persons outside of 2 CFR part 180 and 2 CFR part 417.
Response: The phrase “ineligible person” in section 400.679(f) of the proposed rule referred to persons found ineligible under 2 CFR part 180 and 2 CFR part 417, previously 7 CFR part 3017, and 7 U.S.C. 2209j, as a result of the 2008 Farm Bill. The language in the final rule has been amended to refer to persons debarred or suspended under 2 CFR part 180, 2 CFR part 417, and 7 U.S.C. 2209j to provide more clarity. With respect to the burdens, both 2 CFR parts 180 and 417 makes it clear that knowingly doing business with an ineligible person can subject a person to debarment. This applies to all persons, including insurance providers so FCIC cannot change the requirement or exempt insurance providers. As part of normal business operations, insurance providers must be in compliance with USDA regulations, policies and procedures regarding debarment, suspension and eligibility. FCIC has revised the provisions to clarify that it only applies to knowingly doing business with debarred persons as required by the debarment regulations and statutes.
Comment: A commenter stated section 400.679(e) should be eliminated or limit its application to those persons who have been listed in the EPLS.
Response: FCIC understands that there may be problems of identifying persons who have committed crimes for knowingly defrauding the United States. Further, as drafted, the proposed rule presumed that permanent debarment was automatic after such a conviction but there is still a process that must be followed for the Secretary to debar a person and once that process is completed, the debarred person will be reported to the EPLS. In addition, to make clear that this applies to persons listed on the EPLS, FCIC has referenced debarments under 2 CFR part 180, 2 CFR part 417, and 7 U.S.C. 2209j.
Comment: A commenter questioned the logic of barring someone convicted of a controlled substance violation from obtaining Federal crop insurance. The commenter stated there is no statutory authority for barring someone convicted of possession of or trafficking in a controlled substance, and the references to such in the rule should be deleted. The commenter stated that Chapter 13 of Title 21 is not applicable to the Federal crop insurance program because eligibility for Federal crop insurance is contingent upon various “payments” and the term “Federal benefit” does not include any benefit for which payments are required for eligibility.
Response: FCIC disagrees that there is no statutory authority for barring someone convicted of possession of or trafficking in a controlled substance. The statutory provisions of Chapter 13 of Title 21 regarding convictions for the possession of or trafficking in a controlled substance are applicable to Federal crop insurance because eligibility for Federal crop insurance is not contingent upon any payment. Therefore, no changes have been made as a result of this comment.
Comment: A commenter stated that convictions for possession of or trafficking a controlled substance do not result in automatic denial of Federal benefits, or denial of such benefits for a set amount of time, according to Title 21. The determination regarding the denial of Federal benefits and for how long is at the court's discretion; therefore, section 400.680 is incorrect.
Response: FCIC agrees the language in the proposed rule was inaccurate regarding automatic denial of benefits under the Act for conviction of the possession of or trafficking in controlled substances. The final rule has been amended to be consistent with the provisions of Title 21 regarding such convictions.
Comment: A commenter questioned whether National Appeals Division (NAD) appealable disputes are changing.
Response: Neither the proposed rule or final rule change appealable disputes under the NAD regulations.
Comment: A commenter stated the term “crop year” for determining when ineligibility begins for a person convicted of a controlled substance violation is vague and needs to be further defined or expanded.
Response: The proposed rule did not define the term “crop year.” The term “crop year” is defined in the policy for applicable commodities, and the public was not provided the opportunity to comment on those definitions under the proposed rule. In addition, the applicability of the term “crop year” regarding persons convicted under Federal or State law of planting, cultivation, growing, producing, harvesting or storing a controlled substance is statutory.
Comment: A commenter stated they understood that they, as an insurance provider, would deny coverage to an applicant who is not a United States citizen, United States non-citizen national, or a qualified alien, but were not aware of any obligation or requirement to report such individuals as part of the ITS process.
Response: Sections 400.682 and 400.684 of the proposed rule did provide that insurance providers must notify FCIC of applicants who are not a United States citizen, United States non-citizen national, or a qualified alien and that such individuals would be placed on the ITS. FCIC agrees that insurance providers are not required to report individuals who are not a United States citizen, United States non-citizen national, or a qualified alien to FCIC. FCIC also agrees that such individuals are not placed on ITS if the sole reason they are ineligible is because they are not a United States citizen, United States non-citizen national, or a qualified alien. The final rule has been amended to remove the reporting requirement of such individuals and the reference that such individuals would be placed on the ITS.
Comment: A couple of commenters stated the proposed rule had two subsections labeled “b” under section 400.684.
Response: FCIC agrees and has made the applicable changes in the final rule.
Comment: A commenter stated they agree with the consolidation of the provisions in 7 CFR, part 400, subpart F, into 7 CFR, part 400, subpart U, to eliminate redundancies. However, the commenter also stated the provisions in 7 CFR, part 400, subpart F, that allowed insurance providers to continue to receive reinsurance if the insurance provider follows all the regulations and procedures were not retained and consolidated in the proposed rule. The commenter stated the elimination of those provisions could result in an insurance provider being penalized Start Printed Page 2078even though it had followed all of the applicable regulations and procedures.
Response: FCIC agrees the provisions of 7 CFR, part 400, subpart F, regarding the continuation of reinsurance in cases involving controlled substance violations where the insurance provider followed all FCIC procedures and regulations should have been retained and consolidated in the proposed rule. The applicable provisions have been added to the final rule.
Comment: A commenter stated that subsections 400.684(b)(3) and (4), for general and limited liability partnerships and joint ventures, respectively, are the same and could be combined.
Response: FCIC agrees the provisions for general partnerships, limited liability partnerships and joint ventures are repetitive and although legally there may be distinctions between these entities, they are being treated the same for the purposes of this final rule. Therefore, FCIC has combined the provisions and renumbers the subsequent provisions accordingly.
Comment: A few commenters stated section 400.684(b)(5)(redesignated as 400.684(b)(4)) is ambiguous, denies appeal rights and liability protections to insured producers and insurance providers, could adversely affect a person's eligibility for program benefits even when that person is not a party to a contract, and that FCIC should revise or eliminate the subsection because it creates a burden that outweighs the potential benefits.
Response: FCIC does not agree the subsection is ambiguous, denies any appeal rights or liability protections or could affect a person who is not a party to the applicable policy. The provision applies to different types of entities and specifies that it applies to the persons who are in control of the actions of such entities or are responsible for the action or inaction that resulted in the ineligibility. Since entities have no ability to take action except through the persons conducting the business of the entity, it is appropriate to hold such individuals responsible for their actions or inactions. Further, appeal rights will be afforded such individuals the same as they would for any other person determined to be ineligible. While certain state laws protect individuals within certain entities, the crop insurance program is funded with taxpayer dollars and FCIC has the responsibility to ensure those dollars are properly spent. The provisions are necessary to ensure the integrity of the Federal crop insurance program and prevent producers from circumventing their ineligibility by hiding behind the façade of an entity. Therefore, no changes have been made as a result of this comment.
Comment: A commenter stated that subsection 400.686(d) should be rewritten to read “AIPs must check to ensure that the persons with whom they are doing business are eligible to participate in the programs authorized under the Act. The ITS does not include all persons ineligible to receive government benefits, such as persons debarred, disqualified or suspended from receiving government benefits as a result of being listed in EPLS.”
Response: FCIC disagrees with the commenters suggested changes. The provision applies to all participants in the program, and that includes not only insurance providers but it also includes partners, cooperators, and contractors, to ensure that the persons with whom they are doing business are eligible to participate in the programs authorized under the Act. The provision has been clarified to specify that insurance providers, partners, cooperators, and contractors must check ITS and other sources, such as the EPLS, to identify ineligible persons. Further, there appears to be some confusion regarding the EPLS. The EPLS is a source of information about certain persons who are ineligible for certain benefits or transactions. The government agency that reported the person to EPLS actually determined the person's ineligibility.
In addition to the changes described above, FCIC has made minor editorial changes, revisions to specific sections of 7 CFR, part 400, subpart U, and revisions to 7 CFR, parts 407 and 457 as follows:
1. Revised the definition of “debt” and “delinquent debt” for consistency with § 400.682 and § 400.684 regarding debtors that file bankruptcy. The definitions in the proposed rule were in conflict with the existing provisions regarding the eligibility of a person in bankruptcy in section 400.683(b)(1). The final rule clarifies that only discharge of the debt in bankruptcy will restore eligibility.
2. Revised § 400.682(a) because of the inconsistency in the proposed rule regarding bankruptcy. The intent of the proposed rule was to specify that filing for bankruptcy did not make a person eligible for crop insurance. To be eligible the debt must be discharged in bankruptcy. However, nothing in this rule was intended to abrogate any existing bankruptcy laws regarding the collection of a debt while the producer is in bankruptcy. Therefore, FCIC has clarified that a debtor who has filed for bankruptcy may be notified of the amount of debt owed and their ineligibility for insurance; however, no request for payment of the debt can be made, unless approved in writing by the Office of General Counsel. The clarified language will ensure that insurance providers do not request payment of a debt when they are aware the debtor has filed bankruptcy.
3. Revised § 400.683 to distinguish between suspensions and debarments under 2 CFR part 180 and 2 CFR part 417 and debarments under 7 U.S.C. 2209j because the effective date for each is different and that was not clear in the proposed rule.
4. Revised § 400.684(a)(1) to clarify that filing bankruptcy does not make an ineligible person eligible for crop insurance or preclude the ineligible person from being placed on the ITS. There was an inconsistency in the proposed rule and the intent was to not allow debtors to be eligible for insurance until their debt was discharged in bankruptcy and FCIC had revised the provisions to be consistent. This does not change the law regarding the collection of debts from persons in bankruptcy so FCIC has clarified that while insurance providers are precluded from requesting payment of the debt once a person files bankruptcy, such filing does not make the person eligible to obtain crop insurance.
5. Revised § 400.684(b)(3) to include limited partnerships and limited liability companies. The proposed rule impacted partners and members of limited partnerships and limited liability companies differently than members of limited liability partnerships, which was not the intent of FCIC. In addition, the proposed rule created program vulnerability because it would allow certain partners and members to evade ineligibility determinations. The revision will address the program vulnerability and ensure equal treatment of partners and members of limited partnerships, limited liability partnerships, and limited liability companies. Also revised § 400.684(b)(3) to include references to joint ventures because although they may be legally different, they are treated the same as of limited partnerships, limited liability partnerships, and limited liability companies for the purposes of this rule. As a result, § 400.684(b)(4) has been deleted and § 400.684(b)(5) has been redesignated as § 400.684(b)(4).Start Printed Page 2079
6. Revised § 400.684(b)(5) (redesignated § 400.684(b)(4)) to remove limited partnerships and limited liability companies. The proposed rule impacted partners and members of limited partnerships and limited liability companies differently than members of limited liability partnerships, which was not the intent of FCIC. In addition, the proposed rule created program vulnerability because it would allow certain partners and members to evade ineligibility determinations. The revision will address the program vulnerability and ensure equal treatment of partners and members of limited partnerships, limited liability partnerships, and limited liability companies.
1. Revise sections 2(k) and (p) to be consistent with the provisions in 7 CFR, part 400, subpart U. After it had published the proposed rule for 7 CFR, part 400, subpart U, FCIC discovered the Area Risk Insurance Policy Basic Provisions regarding debt for persons in bankruptcy were inconsistent with the existing provisions.
1. Revise section 2(f) to be consistent with the provisions in 7 CFR, part 400, subpart U. After it had published the proposed rule for 7 CFR, part 400, subpart U, FCIC discovered the Common Crop insurance Policy Basic Provisions regarding debt for persons in bankruptcy were inconsistent with the existing provisions.
Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation amends 7 CFR parts 400, 407 and 457 as follows:
3. Remove and reserve subpart F.
4. Revise subpart U to read as follows:
Insurance Provider means a legal entity which has entered into a Standard Reinsurance Agreement, Livestock Price Reinsurance Agreement, or other reinsurance agreement, as Start Printed Page 2080applicable, with FCIC for the applicable reinsurance year.
Livestock Price Reinsurance Agreement means a cooperative financial assistance agreement between FCIC and an insurance provider to deliver eligible livestock price insurance contracts under the authority of the Act and establishes the terms and conditions under which FCIC will provide subsidy and reinsurance on eligible livestock price insurance policies sold.
Standard Reinsurance Agreement (SRA) means a cooperative financial assistance agreement between FCIC and an insurance provider to deliver eligible crop insurance contracts under the authority of the Act and establishes the terms and conditions under which FCIC will provide subsidy and reinsurance on eligible crop insurance policies sold.
United States non-citizen national has the same meaning provided in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. § 1408).
Written payment agreement means a written document between a debtor and the insurance provider, or FCIC, that is signed and dated by all applicable parties to satisfy financial obligations of the debtor with scheduled installment payments under conditions that modify the terms of the original debt in accordance with § 400.681.
(ii) Determination or notification of ineligibility in accordance with § 400.682;
(b) Is an individual and has been convicted of a controlled substance violation according to § 400.680;
(e) Has been suspended or debarred for committing a crime specified in 2 CFR part 180 or 2 CFR part 417, or 7 U.S.C. 2209j (Ineligibility determinations will not be stayed pending review. However, reversal of the determination of ineligibility will reinstate eligibility retroactive to the date of the determination of ineligibility, and any applicable policies will be reinstated); or
(f) Has been debarred for knowingly doing business with a person debarred or suspended under 2 CFR part 180 or 2 CFR part 417 or 7 U.S.C. 2209j.
(b) Notwithstanding any other provision of law, an individual will be ineligible to participate in any program authorized under the Act, as provided in § 400.683, if the individual is convicted under Federal or State law of planting, cultivating, growing, producing, harvesting, or storing a controlled substance in any crop year.
(c) Notwithstanding any other provision of law, an individual may, as determined by the court, be ineligible to participate in any program authorized under the Act, as provided in § 400.683, if the person is convicted under Federal or State law of possession of or trafficking in a controlled substance.
(1) Require scheduled installment payments that will allow for full repayment of the debt within the time frame allotted in paragraph (a)(2) of this section;
(3) Not be modified, replaced, or consolidated after it has been executed in accordance with paragraph (b) of this section.
(ii) The written payment agreement must be signed by both parties, the debtor and the insurance provider or FCIC, as applicable, on or before the Start Printed Page 2081termination date specified in the applicable policy to prevent an ineligible determination for a delinquent debt.
(2) For all other debts, the written payment agreement must be signed by both parties, the debtor and the insurance provider or FCIC, as applicable, on or before the due date specified in the notice to the person of the amount due to prevent an ineligible determination for a delinquent debt.
(a) The insurance provider must send a written notice of the debt to the person, including the time frame in which the debt must be paid, and provide the person with a meaningful opportunity to contest the amount or existence of the debt. Once a debtor has filed bankruptcy and the insurance provider is formally informed of such through the court or the debtor, no request for payment of the debt can be made, unless approved in writing by the Office of General Counsel. The debtor may be notified of the amount of debt and ineligibility for crop insurance.
(1) The insurance provider shall evaluate the person's response, if any, and determine if the debt is owed and delinquent.
(2) Upon request by FCIC, the insurance provider shall submit all documentation related to the debt to FCIC.
(b) If an insurance provider or any other person has evidence that a person meets criteria set forth in § 400.679(a), (b), (c), (e) or (f), they must immediately notify FCIC.
(c) After the insurance provider determines a person has met one or more of the criteria in § 400.679 and notifies FCIC, FCIC will issue and mail a Notice of Ineligibility to the person's last known address and to the insurance provider. Notices sent to such address will be conclusively presumed to have been received by that person.
(d) The Notice of Ineligibility will state the criteria upon which the determination of ineligibility has been based, a brief statement of the facts to support the determination, the time period of ineligibility, and the right to appeal the determination to be placed on the ITS in accordance with paragraph (e) of this section.
(e) Within 30 days of receiving the Notice of Ineligibility, the ineligible person may appeal FCIC's determination to be placed on ITS to the National Appeals Division in accordance with 7 CFR part 11. The existence and amount of the debt is determined by the insurance provider, not FCIC; therefore, those determinations are not appealable to the National Appeals Division.
(f) If the person appeals FCIC's determination to be placed on ITS to the National Appeals Division, the insurance provider will be notified and provided with an opportunity to participate in the proceeding, if permitted by 7 CFR part 11.
(1) Persons who are ineligible as a result of a delinquent debt are ineligible for crop insurance authorized under the Act for a certain time period in accordance with § 400.683. Filing for bankruptcy does not make the person eligible for crop insurance or preclude the ineligible person from being placed on the ITS in accordance with § 400.684(b)(1).
(B) Acting as an agent, loss adjuster, insurance provider, or affiliate, as defined in the Standard Reinsurance Agreement or Livestock Price Reinsurance Agreement, or successor agreements;
(ii) Participating in any other covered transaction as specified in 2 CFR part 180 and 2 CFR part 417.
(3) Persons who are ineligible because of disqualification under section 515(h) of the Act are precluded from participating in all programs authorized under the Act indicated in paragraph (a)(2)(i) of this section, and those listed in section 515(h)(3)(B) and (C) of the Act.
(4) Individuals who are ineligible because of a conviction of a violation of the controlled substance provisions or are not a United States citizen, United States non-citizen national, or a qualified alien are precluded from participating in any program authorized under the Act indicated in paragraph (a)(2)(i) of this section.
(5) Persons who are ineligible as a result of a conviction falling under 7 U.S.C. 2209j, are precluded from Start Printed Page 2082participating in any program offered by USDA.
(1) The ineligible person will be placed on the ITS and may be reported to other government agencies, unless the ineligible person is an individual and the sole reason for ineligibility is because the individual is not a United States citizen, United States non-citizen national, or qualified alien.
(i) All crop insurance policies in which the ineligible person is the sole insured will terminate if the person is ineligible for any reason other than a controlled substance violation, or be void if the person is ineligible due to conviction of a controlled substance violation according to § 400.680, and the person will remain ineligible for crop insurance for the applicable period specified in § 400.683; and
(3) If the ineligible person is a general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture and is ineligible as a result of:
(i) A delinquent debt:
(A) All partners or members of the ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture will be ineligible;
(B) The ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture and all partners and members of the ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture will remain ineligible for crop insurance for the applicable period specified in § 400.683;
(C) All crop insurance policies in which the ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture is the sole insured will terminate;
(D) All crop insurance policies in which the ineligible partner or member is the sole insured will terminate; and
(E) The ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture and all ineligible partners or members must be reported on any other policy in which they have a substantial beneficial interest in the applicant or insured, and the insured share under such policies will be reduced commensurate with the ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture or the ineligible partners' or members' substantial beneficial interest in the applicant or insured for as long as they remain ineligible in accordance with § 400.683; or
(ii) Meeting the criteria specified in § 400.679(c), (e) or (f):
(A) All crop insurance policies in which the ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture is the sole insured will terminate, and the ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture will remain ineligible for crop insurance for the applicable period specified in § 400.683; and
(B) The ineligible general partnership, limited partnership, limited liability partnership, limited liability company, or joint venture must be reported on any other policy in which it has a substantial beneficial interest in the applicant or insured, and the insured share under such policies will be reduced commensurate with the ineligible general partnership's, limited partnership's, limited liability partnership's, limited liability company's, or joint venture's substantial beneficial interest in the applicant or insured for as long as it remains ineligible in accordance with § 400.683.
(4) If the ineligible person is an association, estate, trust, corporation, or other similar entity, and is ineligible as a result of:
(A) Any partners, members, shareholders, administrators, executors, trustees, or grantors may be individually ineligible if the delinquent debt occurred as a result of their actions or inactions, as determined by the insurance provider or FCIC;
(B) All policies in which the ineligible association, estate, trust, corporation, or other similar entity is the sole insured will terminate, and it will remain ineligible for crop insurance for the applicable period specified in § 400.683.
(C) The ineligible association, estate, trust, corporation, or other similar entity must be reported on any other policy in which it has a substantial beneficial interest in the applicant or insured, and the insured share under such policies will be reduced commensurate with the ineligible entity's substantial beneficial interest in the applicant or insured for as long as the person remains ineligible in accordance with § 400.683;
(D) All policies in which a partner, member, shareholder, administrator, executor, trustee, or grantor determined ineligible according to § 400.684(b)(4)(i)(A) is the sole insured will terminate, and the person will remain ineligible for crop insurance for the applicable period specified in § 400.683; and
(E) The ineligible partner, member, shareholder, administrator, executor, trustee, or grantor must be reported on any other policy in which they have a substantial beneficial interest in the applicant or insured, and the insured share under such policies will be reduced commensurate with the ineligible person's substantial beneficial interest in the applicant or insured for as long as the person remains ineligible in accordance with § 400.683; or
(A) All crop insurance policies in which the ineligible association, estate, trust, corporation, or other similar entity is the sole insured will terminate, and the ineligible association, estate, trust, corporation, or other similar entity will remain ineligible for crop insurance for the applicable period specified in § 400.683; and
(B) The ineligible association, estate, trust, corporation, or other similar entity must be reported on any other policy in which it has a substantial beneficial interest in the applicant or insured, and the insured share under such policies will be reduced commensurate with the ineligible association, estate, trust, corporation, or other similar entity's substantial beneficial interest in the applicant or insured for as long as it remains ineligible in accordance with § 400.683.
(5) If an applicant or insured is a corporation, partnership, joint venture, trust, corporation, limited liability company, limited liability partnership, limited partnership, or other similar entity that was created to conceal the interest of an ineligible person or to evade the ineligibility determination of a person with a substantial beneficial interest in the applicant or insured, the policy will be void.
(6) All crop insurance policies in which the ineligible person is insured as landlord/tenant will terminate on the next termination date. The other person(s) on such policy may submit a new application for crop insurance Start Printed Page 2083coverage on or before the applicable sales closing date to obtain insurance coverage for the crop, if they are otherwise eligible for such coverage.
(c) The spouse and minor child of an individual insured is considered to be the same as the individual for purposes of this subpart and subject to the same ineligibility, except when:
(5) The spouse can prove they are legally separated or otherwise legally separate under the applicable State dissolution of marriage laws; or
(d) Notwithstanding § 400.684(f), when a policy is voided in accordance with this subpart:
(1) No indemnities or payments will be paid for the voided policy;
(2) Any indemnities or payments already made for the voided policy will be declared overpayments and must be repaid in full; and
(3) No premiums will be due and any premium paid will be refunded except when the policy is void due to a conviction of a controlled substance violation according to § 400.680, in which case the insured will still be required to pay 20 percent of the premium the insured would otherwise be required to pay to offset costs in the servicing of the policy.
(e) When the insured share of a policy is reduced in accordance with this subpart:
(1) Any indemnities or payments commensurate with the share reduced already made will be declared overpayments and must be repaid in full; and
(f) Any insurance written by an insurance provider to any person who is ineligible under the provisions of this subpart is not eligible for reinsurance by FCIC. All premium subsidies, expenses, or other payments made by FCIC for insurance written for any person who is ineligible under the provisions of this subpart must be immediately refunded to FCIC. However, with regard to policies that would be void due to a conviction of a controlled substance violation according to § 400.680, if the insurance provider follows the procedures of FCIC and the requirements of the regulations, reinsurance will continue to be provided under the reinsurance agreement on the policy unless it is shown that the agent or insurance provider had knowledge of the facts which would indicate ineligibility on the part of the insured and failed to act on that knowledge.
(a) After a person regains eligibility for crop insurance when their policy was terminated or voided, the person must submit a new application for crop insurance coverage on or before the applicable sales closing date to obtain insurance coverage for the crop. If the date of regaining eligibility occurs after the applicable sales closing date for the crop, the person may not participate until the following year unless that crop policy allows for applications to be accepted after the sales closing date.
(3) Supporting documentation regarding the determination of ineligibility and reinstatement or regaining of eligibility will be maintained by FCIC, or its contractors, insurance providers, Federal agencies, and State agencies. This documentation will be maintained and retained consistent with the electronic information contained within the ITS.
(b) Information may be entered into the ITS by FCIC employees or contractors, or insurance providers.
(c) All persons applying for crop insurance policies or with an existing policy, issued or reinsured by FCIC, will be subject to validation of their eligibility status against the ITS. Applications, transfers, or benefits approved and accepted are considered approved or accepted subject to review of eligibility status in accordance with this subpart.
(d) Insurance providers, partners, cooperators, and contractors must check to ensure that the persons with whom they are doing business are eligible to participate in the programs authorized under the Act. Insurance providers, partners, cooperators, and contractors must check the ITS but the ITS may not include all persons ineligible to receive government benefits, such as persons debarred, disqualified or suspended from receiving government benefits by an agency other than FCIC. Insurance providers, partners, cooperators, and contractors must check other sources that contain ineligible persons, including but not limited to EPLS, or successor list, provide data on persons ineligible to participate in programs authorized under the Act.
5. The authority citation for 7 CFR part 407 continues to read as follows:
6. Amend § 407.9 as follows:
a. Amend section 2(k)(1)(i)(B) by adding the word “or” after the semicolon at the end;
b. Amend section 2(k)(1)(i)(C) by removing the phrase “; or” and adding a period in its place;
c. Remove section 2(k)(1)(i)(D); Start Printed Page 2084
d. Amend section 2(k)(1)(ii) by removing the phrase “2(k)(2)(i)(A), (B), (D) or (E)” and adding the phrase “2(k)(2)(i)(A), (B) or (D)” in its place;
e. Amend section 2(k)(2)(i)(C) by adding the word “or” after the semicolon at the end;
f. Amend section 2(k)(2)(i)(D) by removing the phrase “; or” and adding a period in its place;
g. Remove section 2(k)(2)(i)(E);
h. Amend section 2(k)(2)(ii) by removing the phrase “2(k)(2)(i)(A), (B), (D) or (E)” and adding the phrase “2(k)(2)(i)(A), (B) or (D)” in its place;
i. Revise section 2(k)(3)(iii); and
j. Amend section 2(p)(2) by removing the phrase “or you file a petition to discharge the debt in bankruptcy” in the last sentence and adding the phrase “or you have your debts discharged in bankruptcy” in its place.
7. The authority citation for 7 CFR part 457 continues to read as follows:
8. Amend § 457.8 as follows:
a. Amend section 2(f)(1)(i)(B) by adding the word “or” after the semicolon at the end;
b. Amend section 2(f)(1)(i)(C) by removing the phrase “; or” and adding a period in its place;
c. Remove section 2(f)(1)(i)(D);
d. Amend section 2(f)(1)(ii) by removing the phrase “2(f)(2)(i)(A), (B), (D) or (E)” and adding the phrase “2(f)(2)(i)(A), (B) or (D)” in its place;
e. Amend section 2(f)(2)(i)(C) by adding the word “or” after the semicolon at the end;
f. Amend section 2(f)(2)(i)(D) by removing the phrase “; or” and adding a period in its place;
g. Remove section 2(f)(2)(i)(E);
h. Amend section 2(f)(2)(ii) by removing the phrase “2(f)(2)(i)(A), (B), (D) or (E)” and adding the phrase “2(f)(2)(i)(A), (B) or (D)” in its place;
i. Revise section 2(f)(3)(iii); and
j. Amend section 2(f)(5) by removing the phrase “or you file a petition to discharge the debt in bankruptcy” in the last sentence and adding the phrase “or you have your debts discharged in bankruptcy” in its place.
Signed in Washington, DC, on December 20, 2013.
[FR Doc. 2013-31357 Filed 1-10-14; 8:45 am]