[Federal Register Volume 61, Number 212 (Thursday, October 31, 1996)]
[Proposed Rules]
[Pages 56151-56155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27768]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 61, No. 212 / Thursday, October 31, 1996 /
Proposed Rules
[[Page 56151]]
DEPARTMENT OF AGRICULTURE
Federal Crop Insurance Corporation
7 CFR Part 400
RIN 0563-AB01
General Administrative Regulations; Ineligibility for Programs
Under the Federal Crop Insurance Act
AGENCY: Federal Crop Insurance Corporation, Department of Agriculture.
ACTION: Proposed rule.
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SUMMARY: The regulations contained in this subpart are issued pursuant
to the Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.)
To prescribe the procedures for determining eligibility for program
participation in any program administered under the Federal Crop
Insurance Act, as amended, and administering and maintaining an
ineligible tracking system. In addition, this rule sets out the
criteria for reinstatement of program eligibility.
DATES: Written comments, data, and opinions on this proposed rule will
be accepted until close of business December 30, 1996 and will be
considered when the rule is to be made final. The comment period for
information collections under the Paperwork Reduction Act of 1995
continues through December 30, 1996.
ADDRESSES: Written comments, data, and opinions on this proposed rule
should be sent to the Chief, Product Development Branch, Federal Crop
Insurance Corporation (FCIC), United States Department of Agriculture
(USDA), 9435 Holmes Road, Kansas City, MO 64131, telephone (816) 926-
7730. Written comments will be available for public inspection and
copying in room 0324, South Building, USDA, 14th and Independence
Avenue, SW., Washington, DC, 8:15 a.m.-4:45 p.m., Monday through
Friday, except holidays.
FOR FURTHER INFORMATION CONTACT:
For further information, contact Bill Smith, Supervisory Program
Analyst, Research and Development Division, Product Development Branch,
FCIC, at the Kansas City, MO address listed above, telephone (816) 926-
7743. For a copy of the Cost-Benefit Analysis to the General
Administrative Regulations; Ineligibility for Programs Under the
Federal Crop Insurance Act, contact Bonnie Hart, USDA, FSA, Advisory
and Corporate Operations Staff, Regulatory Review Group, P.O. Box 2415,
STOP 0572, USDA, Washington, DC 20013-2415, 8:15 a.m.-4:45 p.m., est,
Monday through Friday, except holidays, telephone (202) 690-2857.
SUPPLEMENTARY INFORMATION:
Executive Order 12866 and Departmental Regulation 1512-1
This action has been reviewed under USDA procedures established by
Executive Order 12866 and Departmental Regulation No. 1512-1. This
action constitutes a review as to the need, currency, clarity, and
effectiveness of these regulations under those procedures. The sunset
review date established for these regulations is February 1, 2001.
This rule has been determined to be significant for the purposes of
Executive Order 12866, and, therefore, has been reviewed by the Office
of Management and Budget (OMB).
Cost-Benefit Analysis
A Cost-Benefit Analysis has been completed and is available to
interested persons at the address listed above. In summary, the
analysis finds that the expected benefits of this action outweigh the
cost to society. By allowing the efficient tracking of ineligible
individuals, the Federal government will be able to collect about $6
million annually in debts owed by crop insurance policyholders. The
burden on policyholders and crop insurance companies for reporting
information to establish the tracking system is estimated to be $5.1
million. However, most policyholders have already reported their Social
Security Number for tracking purposes and will not need to report
again. Thus, the reporting burden in future years should be
considerably less. Federal costs for maintaining the tracking system
are estimated to be about $660,000 for the first year and somewhat less
in future years.
Paperwork Reduction Act of 1995
The information collection requirements contained in these
regulations have been submitted to OMB for their approval under section
3507(j) of the Paperwork Reduction Act of 1995. This proposed rule will
amend the information collection requirements under OMB number 0563-
0047, through September 30, 1996.
The title of this information collection is ``General
Administrative Regulation; Subpart Q, Collection and Storage of Social
Security Numbers (SSN) and Employer Identification Numbers (EIN), and
Subpart U, Ineligibility for Programs Under the Federal Crop Insurance
Act.'' The information collected is used to correctly identify the
participant, and any other person with an interest in the
policyholder's operation in excess of 10%, as a policyholder within the
systems maintained by FCIC, and to compile the names of debtors,
persons in violation of the controlled substance provisions of the Food
Security Act of 1985, persons who have committed fraud,
misrepresentation, or adopted a scheme or device.
The information requested is necessary to protect the integrity of
the program by ensuring that those producer's who have abused the
program are not eligible for further program benefits, or for program
participation in any program administered under the Federal Crop
Insurance Act, as amended, and administering and maintaining an
ineligible tracking system.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to be 25 minutes per response.
Respondents: Policyholders and those with a substantial beneficial
interest in the policyholder or any person having any interest in the
policyholder and receiving separate benefits under another USDA program
as a direct result of such interest.
Estimated Number of Respondents: 2,032,800.
Estimated Number of Responses per Respondent: 1 per year.
Estimated Total Burden Hours: 508,200.
The comment period for information collections under the Paperwork
[[Page 56152]]
Reduction Act of 1995 continues on the following: (a) whether the
proposed collection of information is necessary for the proper
performance of the functions of the agency, including whether the
information shall have practical utility; (b) the accuracy of the
agency's estimate of the burden of the proposed collection of
information; (c) ways to enhance the quality, utility, and clarity of
the information to be collected; and (d) ways to minimize the burden of
the collection of information on respondents, including through the use
of automated collection techniques or other forms of information
gathering technology.
Comments regarding paperwork reduction should be submitted to the
Desk Officer of Agriculture, Office of Information and Regulatory
Affairs, Office of Management and Budget (OMB), Washington, D.C., 20503
and to Bonnie Hart, Advisory and Corporate Operations Staff, Regulatory
Review Group, Farm Service Agency, P.O. Box 2415, Ag Box 0572, United
States Department of Agriculture, Washington, D.C. 20013-2415. Copies
of the information collection may be obtained from Bonnie Hart at the
above address, telephone (202) 690-2857.
The Office of Management and Budget (OMB) is required to make a
decision concerning the collection(s) of information contained in these
proposed regulations between 30 and 60 days after submission to OMB.
Therefore, a comment to OMB is best assured of having its full effect
if OMB receives it within 30 days of publication. This does not affect
the deadline for the public to comment on the proposed regulation.
Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA, FCIC
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with Federal mandates that may
result in expenditures to State, local, or tribal governments, in the
aggregate, or to the private sector, of $100 million or more in any 1
year. When such a statement is needed for a rule, section 205 of the
UMRA generally requires FCIC to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, more
cost-effective or least burdensome alternative that achieves the
objectives of the rule.
This rule contains no Federal mandate (under the regulatory
provisions of Title II of the UMRA) for State, local, and tribal
governments or the private sector. Thus, this rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Executive Order 12612
It has been determined under section 6(a) of Executive Order 12612,
Federalism, that this rule does not have sufficient Federalism
implications to warrant the preparation of a Federalism Assessment. The
policies and procedures contained in this rule will not have a
substantial direct effect on States or their political subdivisions, or
on the distribution of power and responsibilities among the various
levels of Government.
Regulatory Flexibility Act
This regulation will not have a significant impact on a substantial
number of small entities. The amount of work required of insurance
companies should not increase because the information used to determine
eligibility is already maintained at their office. The amount of work
required of insurance companies may actually be reduced because
verification with FCIC of a producer's compliance with the controlled
substance regulations, currently done manually, will be automated.
Therefore, this action is determined to be exempt from the provisions
of the Regulatory Flexibility Act (5 U.S.C. 605) and no Regulatory
Flexibility Analysis was prepared.
Federal Assistance Program
This program is listed in the Catalog of Federal Domestic
Assistance under No. 10.450.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which require intergovernmental consultation with State and local
officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115, June 24, 1983.
Executive Order 12778
The Office of General Counsel has determined that these regulations
meet the applicable standards provided in sections 2(a) and 2(b)(2) of
Executive Order 12778. The provisions of this rule will preempt State
and local laws to the extent such State and local laws are inconsistent
herewith. The administrative appeal provisions published at 7 CFR part
11 must be exhausted before action for judicial review may be brought.
Environmental Evaluation
This action is not expected to have any significant impact on the
quality of the human environment, health, and safety. Therefore,
neither an Environmental Assessment nor an Environmental Impact
Statement is needed.
Background
It is the intention of FCIC to compile a list of those persons who
have been found ineligible for participation in catastrophic risk
protection coverage, limited coverage, and additional coverage because
of various violations committed under the Federal Crop Insurance Act,
as amended, and the Food Security Act of 1985, as amended. Violations
which may cause a person's ineligibility include a delinquent debt from
non-payment of premium or overstatement of indemnity, a material scheme
or device, fraud, conviction of certain controlled substance
infractions, or other causes.
List of Subjects in 7 CFR Part 400
Administrative practice and procedure, Claims, Crop insurance,
Fraud, Reporting and recordkeeping requirements.
Pursuant to the authority contained in the Federal Crop Insurance
Act, as amended (7 U.S.C. 1501 et seq.) the Federal Crop Insurance
Corporation proposes to add a new subpart U to 7 CFR part 400,
effective for the 1997 (1998 for Texas and Arizona/California Citrus)
and succeeding crop years, to read as follows:
PART 400--GENERAL ADMINISTRATIVE REGULATIONS
Subpart U--Ineligibility for Programs Under the Federal Crop Insurance
Act
Sec.
400.675 Purpose.
400.676 OMB control numbers.
400.677 Definitions.
400.678 Applicability.
400.679 Criteria for ineligibility.
400.680 Determinations of ineligibility.
400.681 Effect of ineligibility.
400.682 Criteria for reinstatement of eligibility.
400.683 Administration and maintenance.
Subpart U--Ineligibility for Programs Under the Federal Crop
Insurance Act
Authority: 7 U.S.C. 1506(1) and 1506(p).
Sec. 400.675 Purpose.
This subpart prescribes conditions under which a person may be
determined to be ineligible to participate in any program administered
by FCIC under the Federal Crop Insurance Act, as amended. This
[[Page 56153]]
subpart also establishes the criteria for reinstatement of eligibility.
Sec. 400.676 OMB control numbers.
The collecting of information requirements in this subpart has been
approved by the Office of Management and Budget and assigned OMB
control number 0563-0047.
Sec. 400.677 Definitions.
Act.--The Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et
seq.).
Actively engaged in farming.--Means a person who, in return for a
share of profits and losses, makes a significant contribution to the
production of an insurable crop in the form of capital, equipment,
land, personal labor, or personal management.
Applicant.--A person who has submitted an application for crop
insurance coverage under the Act.
Authorized person.--Any current or past officer, employee, elected
official, general agent, agent, contractor, or loss adjuster of FCIC,
the insurance provider, or any other government agency whose duties
require access to the Ineligible Tracking System to administer the Act.
Controlled substance.--Any prohibited drug-producing plants
including, but not limited to, cacti of the genus (lophophora), coca
bushes (erythroxylum coca), marijuana (cannabis satiua), opium poppies
(papauer somniferum), and other drug-producing plants, the planting and
harvesting of which is prohibited by Federal or state law.
Debt.--An amount of money which has been determined by an
appropriate agency official to be owed, by any person, to FCIC or an
insurance provider under any program administered under the ACT. The
debt may have arisen from overpayment, premium non-payment, interest,
penalties, or other causes.
Debtor.--A person who owes a debt and that debt is delinquent.
Delinquent debt.--Any debt owed to FCIC or the insurance provider,
under any program administered under the authority of the Act, that has
not been paid by the termination date specified in the applicable
contract of insurance, or other due date for payment contained in any
other agreement or notification of indebtedness, or any overdue debt
owed to FCIC or the insurance provider which is the subject of a
scheduled installment payment agreement which the debtor has failed to
satisfy under the terms of such agreement. Such debt may include any
accrued interest, penalty, and administrative charges for which demand
for repayment has been made, or unpaid premium including any accrued
interest, penalty and administrative charges (Sec. 400.116). A
delinquent debt does not include debts discharged in bankruptcy and
other debts which are legally barred from collection.
EIN.--An Employer Identification Number as required under section
6109 of the Internal Revenue Code of 1986 (26 U.S.C. 6109).
FCIC.--The Federal Crop Insurance Corporation, a wholly owned
corporation within the United States Department of Agriculture.
FSA.--The Farm Service Agency or successor agency, USDA.
Ineligible person.--A person who is denied participation in any
program administered by FCIC under the Act.
Insurance provider.--A private insurance company approved by FCIC,
or FSA providing crop insurance coverage to producers participating in
any Federal crop insurance program administered under the Act.
Person.--An individual, partnership, association, corporation,
estate, trust, or other legal entity, and wherever applicable, a State,
political subdivision, or an agency of a State.
Policyholder.--An applicant whose properly completed application
for insurance under the crop insurance program has been accepted by
FCIC or an insurance provider.
Reinsurance agreement.--An agreement between two parties by which
an insurer cedes to a reinsurer certain liabilities arising from the
insurer's sale of insurance policies.
Reinsured company.--A private insurance company having a Standard
Reinsurance Agreement, or other reinsurance agreement, with FCIC, whose
crop insurance policies are approved and reinsured by FCIC.
Scheduled installment payment agreement.--An agreement between a
person and FCIC or the insurance provider to satisfy financial
obligations of the person under conditions which modify the terms of
the original debt.
Settlement.--An agreement between a person and FCIC or the
insurance provider to resolve a dispute arising from a debt or other
administrative determination.
SSN.--An individual's Social Security Number as required under
section 6109 of the Internal Revenue Code of 1986.
Standard Reinsurance Agreement (SRA).--The primary reinsurance
agreement between the reinsured company and FCIC.
Substantial beneficial interest.--Any person having an interest of
at least ten percent (10%) or more in the applicant or policyholder.
System of records.--Records established and maintained by FCIC and
FSA containing SSN or EIN data, name, address, city and State,
applicable policy numbers, and other information related to Federal
crop programs as required by FCIC, from which information is retrieved
by a personal identifier including the SSN, EIN, name, or other unique
identifier of a person.
Sec. 400.678 Applicability.
This subpart applies to any program administered by FCIC under the
Act, including:
(a) The Catastrophic Risk Protection Program; and
(b) The Limited and Additional Coverage Program as authorized under
sections 508(c) and 508(h) of the Act.
Sec. 400.679 Criteria for ineligibility.
A person may be determined to be ineligible to participate in any
program administered by FCIC under the authority of the Act, if the
person meets one or more of the following criteria:
(a) Has a delinquent debt on a crop insurance policy, issued or
reinsured by FCIC, or any delinquent debt due FCIC. Any person with a
delinquent debt owed to FCIC or to the insurance provider shall be
ineligible to participate in any program administered under the
authority of the Act. Delinquent debts are limited to those that arise
from crop insurance programs administered by FCIC under the Act. The
existence and delinquency of the debt must be verifiable.
(b) Has violated the Controlled Substance (7 CFR part 796)
provisions of the Food Security Act of 1985, as amended. Any person who
violates the Controlled Substance provisions of the Food Security Act
of 1985, as amended, shall be ineligible to participate in all programs
administered under the Act.
(c) Has committed fraud, misrepresentation, or adopted a scheme or
device to obtain any benefits under the Act. Any person who is found in
a criminal or civil proceeding, or a formal or informal administrative
proceeding to have willfully and intentionally provided any false or
inaccurate information to FCIC or the insurance provider, which the
person knew or should have known was false or inaccurate, or adopted a
material scheme or device in their participation in programs
administered under the authority of the Act, shall be ineligible to
participate in all programs administered under the Act. Ineligibility
determinations resulting from judicial or administrative proceedings
will not be stayed pending review.
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Sec. 400.680 Determinations of ineligibility.
If an insurance provider or any other authorized person has
evidence that any person meets any of the criteria set forth in this
subpart, they must submit the evidence to FCIC. After verification that
the person has met one or more of the criteria, a Notice of
Ineligibility will be issued and mailed to the person at the person's
last known address. 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 person's right for review of the ineligibility
determination. Any person receiving such a Notice of Ineligibility may
seek reconsideration of the determination of ineligibility from the
provider of insurance, or appeal to the USDA National Appeals Division
(NAD), pursuant to 7 CFR part 11, within thirty (30) days from the date
the Notice of Ineligibility is received by the person.
Sec. 400.681 Effect of ineligibility.
(a) Once the person has been determined to be ineligible:
(1) All policies in which the person has a 100 percent share of all
crops covered by the policy will be void effective for the crop year
for which the person was determined to be ineligible;
(2) If the ineligible person is a general partnership, all partners
will be individually ineligible and any policy in which a partner has a
100 percent interest will be void effective for the crop year for which
the partnership was determined to be ineligible. The partnership and
all partners will be removed from any policy in which they have a
substantial beneficial interest, and the policyholder share under the
policies will be reduced commensurate with the ineligible person's
share;
(3) If the applicant or policyholder is a corporation, partnership,
or other business entity, and an ineligible person has a substantial
beneficial interest in the applicant or policyholder, the application
may be accepted or existing policies remain in effect, although the
ineligible person will be removed from the policies and the
policyholder share under the policies will be reduced commensurate with
the ineligible person's share;
(4) If the applicant or policyholder is a corporation, partnership,
or other business entity that was created to conceal the interest of a
person in the farming operation or to evade the ineligibility
determination of a person with a substantial beneficial interest in the
applicant or policyholder, the corporation, partnership or other
business entity will be disregarded, the individual shareholders or
partners will be personally responsible, and any shareholder or partner
that is ineligible will be removed from the policy and the policyholder
share under the policies will be reduced commensurate with the
ineligible person's share;
(5) Any indemnities or payments made on a voided policy or on the
portion of the policy reduced because of ineligibility will be declared
overpayments and must be repaid; and
(6) If the policy is voided, all premiums may be refunded or if an
ineligible person is removed from a policy, the portion of the premium
commensurate with the ineligible person's share may be refunded, unless
FCIC determines the person has willfully and intentionally provided
false or inaccurate information to FCIC or an insurance provider.
(b) The spouse and minor children of an individual are considered
to be the same as the individual for purposes of this subpart except
that:
(1) The spouse who was actively engaged in farming in a separate
farming operation prior to their marriage will be a separate person
with respect to that separate farming operation so long as that
operation remains separate and distinct from any farming operation
conducted by the other spouse;
(2) A minor child who is actively engaged in farming in a separate
farming operation will be a separate person with respect to that
separate farming operation if:
(i) The parent or other entity in which the parent has a
substantial beneficial interest does not have any interest in the
minor's separate farming operation or in any production from such
operation;
(ii) The minor has established and maintains a separate household
from the parent;
(iii) The minor personally carries out the farming activities with
respect to the minor's farming operation; and
(iv) The minor establishes separate accounting and record keeping
for the minor's farming operation.
(c) An individual shall be considered to be a minor until the age
of 18 is reached. Court proceedings conferring majority on an
individual under 18 years of age will not change such individual's
status as a minor.
(d) Any person determined to be ineligible will be denied
subsequent participation in any program administered under the Act
until eligibility is reinstated pursuant to this subpart.
(e) Any person who has been determined ineligible for:
(1) Controlled substance violations will be denied benefits for the
crop year of the conviction and the four succeeding crop years;
(2) Adopting a material scheme or devise will be denied benefits
for one crop year; and
(3) Fraud or misrepresentation may be disqualified from receiving
benefits under the Catastrophic Risk protection plan for up to two crop
years and for any plan of insurance providing coverage greater than the
catastrophic coverage, may be disqualified from receiving benefits for
up to ten crop years.
Sec. 400.682 Criteria for reinstatement of eligibility.
A person who has been determined ineligible may have eligibility
reinstated as follows:
(a) A delinquent debt owed on a crop insurance policy insured or
reinsured by FCIC or any delinquent debt due FCIC. Eligibility may be
reinstated after payment of the debt, or acceptance by FCIC or the
insurance provider of a scheduled installment payment agreement.
Eligibility will be reinstated as of the date the debt is paid or the
date the agreement is accepted.
(b) Violations of the Controlled Substance provisions of the Food
Security Act of 1985, as amended. Eligibility will be reinstated in
accordance with Sec. 400.681.
(c) Commission of a fraud, misrepresentation, and adoption of a
material scheme or device to obtain benefits under any program
administered under the Act. Eligibility may be restored when the period
of disqualification has expired and payment of all penalties and
overpayments have been completed.
(d) Timing of reinstatement of eligibility. If the date of
reinstatement of eligibility occurs after the applicable sales closing
date for the crop year, the person may not participate in any program
administered under the Act until the following crop year.
(e) After eligibility has been reinstated, the person must complete
a new application for crop insurance coverage on or before the
applicable sales closing date.
Sec. 400.683 Administration and maintenance.
(a) Ineligible producer data will be maintained in a system of
records in accordance with the Privacy Act, 5 U.S.C. 552a.
(1) The Ineligible Tracking System is a record of all persons who
have been determined to be ineligible for participation in any program
pursuant
[[Page 56155]]
to this subpart. This system contains identifying information of the
ineligible person including, but not limited to, name, address,
telephone number, SSN or EIN, reason for ineligibility, and time period
for ineligibility.
(2) Information in the Ineligible Tracking System may be used by
Federal agencies, FCIC employees, contractors, and private companies
and their personnel who require such information in the performance of
their duties in connection with any program administered under the Act.
The information may be furnished to other users including, but not
limited to, FCIC contracted agencies; credit reporting agencies and
collection agencies; in response to judicial orders in the course of
litigation; and other users as may be appropriate or required by law or
regulation. The individual information will be made available in the
form of various reports and notices produced from the Ineligible
Tracking System, based on valid requests.
(3) Supporting documentation regarding the determination of
ineligibility and reinstatement of eligibility will be maintained by
FCIC and FSA, or its contractors, private companies, and Federal and
State agencies. This documentation will be maintained consistent with
the electronic information contained within the Ineligible Tracking
System.
(b) Information may be entered into the Ineligible Tracking System
by FCIC or FSA personnel.
(c) All persons applying for or renewing crop insurance contracts
issued or reinsured by FCIC will be subject to validation of their
eligibility status against the Ineligible Tracking System. Applications
or benefits approved and accepted are considered approved or accepted
subject to review of eligibility status in accordance with this
subpart.
Signed in Washington, D.C., October 22, 1996.
Kenneth D. Ackerman,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 96-27768 Filed 10-30-96; 8:45 am]
BILLING CODE 3410-FA-P
