[Federal Register Volume 76, Number 233 (Monday, December 5, 2011)]
[Proposed Rules]
[Pages 75799-75805]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31085]


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DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Part 400

[Docket No. FCIC-11-0009]
RIN 0563-AC26


General Administrative Regulations; Mutual Consent Cancellation; 
Food Security Act of 1985, Implementation; Denial of Benefits; and 
Ineligibility for Programs Under the Federal Crop Insurance Act

AGENCY: Federal Crop Insurance Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Federal Crop Insurance Corporation (FCIC) proposes to 
amend the General Administrative Regulations to revise Subpart U--
Ineligibility for Programs under the Federal Crop Insurance Act to 
eliminate redundancies, improve clarity, remove or update obsolete 
references, and add references to other provisions regarding 
ineligibility for Federal crop insurance. In addition, FCIC proposes to 
remove Subpart C--General Administrative Regulations; Mutual Consent 
Cancellation and Subpart F--Food Security Act of 1985, Implementation; 
Denial of Benefits. The changes will apply for the 2013 and succeeding 
crop years.

DATES: Written comments and opinions on this proposed rule will be 
accepted until close of business February 3, 2012 and will be 
considered when the rule is to be made final. Comments on the 
information collection requirements must be received on or before 
February 3, 2012.

ADDRESSES: FCIC prefers that comments be submitted electronically 
through the Federal eRulemaking Portal. You may submit comments, 
identified by Docket ID No. FCIC-11-0009, by any of the following 
methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Director, Product Administration and Standards 
Division, Risk Management Agency, United States Department of 
Agriculture, P.O. Box 419205, Kansas City, MO 64133-6205.
    All comments received, including those received by mail, will be 
posted without change to http://www.regulations.gov, including any 
personal information provided, and can be accessed by the public. All 
comments must include the agency name and docket number or Regulatory 
Information Number (RIN) for this rule. For detailed instructions on 
submitting comments and additional information, see http://www.regulations.gov. If you are submitting comments electronically 
through the Federal eRulemaking Portal and want to attach a document, 
we ask that it be in a text-based format. If you want to attach a 
document that is a scanned Adobe PDF file, it must be scanned as text 
and not as an image, thus allowing FCIC to search and copy certain 
portions of your submissions. For questions regarding attaching a 
document that is a scanned Adobe PDF file, please contact the Risk 
Management Agency (RMA) Web Content Team at (816) 823-4694 or by email 
at rmaweb.content@rma.usda.gov.

[[Page 75800]]

    Privacy Act: Anyone is able to search the electronic form of all 
comments received for any dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review the 
complete User Notice and Privacy Notice for Regulations.gov at http://www.regulations.gov/#!privacyNotice.

FOR FURTHER INFORMATION CONTACT: Director, Product Administration and 
Standards Division, at the Kansas City, MO, address listed above, 
telephone (816) 926-7387.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
rule is non-significant for the purpose of Executive Order 12866 and, 
therefore, it has not been reviewed by OMB.

Paperwork Reduction Act of 1995

    Pursuant to the provisions of the Paperwork Reduction Act of 1995 
(44 U.S.C. chapter 35), the collections of information in this rule 
have been approved by OMB under control number 0563-0053 through March 
31, 2012. However, FCIC is creating a new package for the information 
collection requirements necessary for administering 7 CFR, part 400, 
subpart U.
    Accordingly, in accordance with the Paperwork Reduction Act of 
1995, RMA is seeking comments from all interested individuals and 
organizations on a new information collection request associated with 7 
CFR, part 400, subpart U--Ineligibility for Programs under the Federal 
Crop Insurance Act.
    You may submit comments, identified by Docket ID No. FCIC-11-0009, 
by going to the Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    Title: 7 CFR, part 400, subpart U--Ineligibility for Programs under 
the Federal Crop Insurance Act.
    OMB Control Number: 0563--NEW.
    Type of Request: New.
    Abstract: The following mandates require FCIC to identify persons 
who are ineligible to participate in the Federal crop insurance program 
administered under the Federal Crop Insurance Act.
    (1) Section 1764 of the Food Security Act of 1985 (Pub. L. 99-198);
    (2) 21 U.S.C., Chapter 13;
    (3) Section 14211 of the Food, Conservation, and Energy Act of 2008 
(Pub. L. 110-246);
    (4) Executive Order 12549; and
    (5) 7 U.S.C. 1515.
    The FCIC and Approved Insurance Providers (AIPs) use the 
information collected to determine whether persons seeking to obtain 
Federal crop insurance coverage are ineligible for such coverage 
according to the aforementioned mandates. The purpose of collecting the 
information is to ensure persons that are ineligible for benefits under 
the Federal crop insurance program are accurately identified as such 
and do not obtain benefits to which they are not eligible.
    FCIC and RMA do not obtain information used to identify a person as 
ineligible for benefits under the Federal crop insurance program 
directly from the ineligible person. AIPs notify RMA of persons with a 
delinquent debt electronically through a secure automated system. RMA 
(1) Sends written notification to the person informing them they are 
ineligible for benefits under the Federal crop insurance program; and 
(2) places that person on the RMA Ineligible Tracking System until the 
person regains eligibility for such benefits.
    RMAs Office of General Counsel notifies RMA in writing of persons 
convicted of controlled substance violations. RMA (1) Sends written 
notification to the person informing them they are ineligible for 
benefits under the Federal crop insurance program; and (2) places that 
person on RMAs Ineligible Tracking System until the person regains 
eligibility for such benefits.
    Persons debarred, suspended or disqualified by RMA are (1) 
Notified, in writing, they are ineligible for benefits under the 
Federal crop insurance program; and (2) placed on RMAs Ineligible 
Tracking System until the person regains eligibility for such benefits.
    Information identifying persons who are ineligible for benefits 
under the Federal crop insurance program is made available to all AIPs 
through RMAs Ineligible Tracking System. The Ineligible Tracking System 
is an electronic system, maintained by RMA, which identifies persons 
who are ineligible to participate in the Federal crop insurance 
program. The information must be made available to all AIPs to ensure 
ineligible persons cannot circumvent the mandates by switching from one 
AIP to another.
    In addition, information identifying persons who are debarred, 
suspended or disqualified by RMA is provided to the General Services 
Administration to be included in the Excluded Parties List System, an 
electronic system maintained by the General Services Administration 
that provides current information about persons who are excluded or 
disqualified from covered transactions.
    Estimate of burden: Reporting burden for the collection and 
transmission of information by AIPs is estimated to average 15 minutes 
per response.
    Respondents: Approved Insurance Providers.
    Estimated number of respondents: 16 AIPs.
    Estimated number of forms per respondent: All information is 
obtained electronically from AIPs.
    Estimated total annual responses: 5,792 total from all respondents.
    Estimated total annual respondent burden: 1,448 total from all 
respondents.
    We are requesting comments on all aspects of this information 
collection to help us to:
    (1) Evaluate whether the collection of information is necessary for 
the proper performance of the functions of the agencies, including 
whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of burden 
including the validity of the methodology and assumptions used;
    (3) Enhance the quality, utility and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond.
    All comments in response to this notice, including names and 
addresses when provided, will be a matter of public record. Comments 
will be summarized and included in the request for OMB approval.

E-Government Act Compliance

    FCIC is committed to complying with the E-Government Act of 2002, 
to promote the use of the Internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
establishes requirements for Federal agencies to assess the effects of 
their regulatory actions on State, local, and tribal governments and 
the private sector. This rule contains no Federal mandates (under the 
regulatory provisions of title II of the UMRA) for State, local, and 
tribal governments or the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

Executive Order 13132

    It has been determined under section 1(a) of Executive Order 13132,

[[Page 75801]]

Federalism, that this rule does not have sufficient implications to 
warrant consultation with the States. The provisions contained in this 
rule will not have a substantial direct effect on States, or on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. The review reveals that this regulation will not have 
substantial and direct effects on Tribal governments and will not have 
significant Tribal implications.

Regulatory Flexibility Act

    FCIC certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. Program 
requirements for the Federal crop insurance program are the same for 
all producers regardless of the size of their farming operation. 
However, FCIC does waive certain administrative fees for limited 
resource farmers to help ensure that small entities are given the same 
opportunities as large entities to obtain crop insurance. This 
regulation provides the rules regarding ineligibility for crop 
insurance under the Act based on actions or inactions of the producer, 
such as violations of the Controlled Substance Act, debarment from 
Federal Government programs, and failure to pay premiums and 
administrative fees when due. As such, all producers are treated 
equally under this regulation. A Regulatory Flexibility Analysis has 
not been prepared since this regulation does not have an unduly 
burdening impact on small entities, and therefore, this regulation is 
exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 
605).

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 12988

    This proposed 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.

Environmental Evaluation

    This action is not expected to have a significant economic impact 
on the quality of the human environment, health, or safety. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is needed.

Background

    FCIC proposes to revise 7 CFR part 400 by revising subpart U--
Ineligibility for Programs Under the Federal Crop Insurance Act to 
eliminate redundancies, improve clarity, remove or update obsolete 
references, and simplify the regulations regarding ineligibility for 
Federal crop insurance. The rule will also reflect the provisions of 
the Controlled Substances Act and the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996. The Controlled Substance Act 
provides that persons convicted of possession or trafficking of 
controlled substances are ineligible for certain Federal benefits, 
including crop insurance. The Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996 provides that persons who are 
not a United States citizen, United States non-citizen national, or a 
qualified alien are ineligible for certain Federal benefits, including 
crop insurance.
    The proposed rule also incorporates the provisions formally 
contained in 7 CFR part 400, subpart F into subpart U for efficiency 
and ease of use. Accordingly, subpart F will be removed and reserved.
    Last, 7 CFR part 400, subpart C was promulgated in 1992 to allow 
certain crop insurance policies to be cancelled when producers applied 
for crop insurance believing they were required to obtain such crop 
insurance in order to participate in certain Commodity Credit 
Corporation disaster payment programs, but subsequently determined that 
such crop insurance was not a prerequisite. Amendments to the Federal 
Crop Insurance Act and the authorization and implementation of the 
Noninsured Crop Assistance Program have made the provisions of subpart 
C obsolete. Accordingly, this rule will remove and reserve subpart C. 
The provisions will be effective for the 2013 and succeeding crop 
years.

List of Subjects in 7 CFR Part 400

    Administrative practice and procedure, Crop insurance, Reporting 
and recordkeeping requirements.

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation proposes to amend 7 CFR part 400 as follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

    1. The authority citation for 7 CFR part 400 continues to read as 
follows:

    Authority:  7 U.S.C. 1506(1), 1506(o).

Subpart C--[Removed and Reserved]

    2. Remove and Reserve subpart C, General Administrative 
Regulations; Mutual Consent Cancellation.

Subpart F--[Removed and Reserved]

    3. Remove and Reserve subpart F, Food Security Act of 1985, 
Implementation; Denial of Benefits.
    4. Revise subpart U, Ineligibility for Programs under the Federal 
Crop Insurance Act, to read as follows:

Subpart U--Ineligibility for Programs Under the Federal Crop 
Insurance Act

400.675 Purpose.
400.676 [Reserved]
400.677 Definitions.
400.678 Applicability.
400.679 Criteria for ineligibility.
400.680 Controlled substance.
400.681 Written payment agreement.
400.682 Determination and notification.
400.683 Period of ineligibility.
400.684 Effect of ineligibility.
400.685 Criteria for regaining eligibility.
400.686 Administration and maintenance.


Sec.  400.675  Purpose.

    This rule prescribes conditions under which a person may be 
determined to be ineligible to participate in any program administered 
under the authority of the Federal Crop Insurance Act. This rule also 
establishes the criteria for regaining eligibility.


Sec.  400.676  [Reserved]


Sec.  400.677  Definitions.

    Act means the Federal Crop Insurance Act (7 U.S.C. 1501-1524).
    Applicant means a person who has submitted an application for crop 
insurance coverage under the Act.
    Approved Insurance Provider (AIP) means a legal entity which has 
entered into a Standard Reinsurance Agreement with FCIC for the 
applicable reinsurance year.
    Authorized person means any current or past officer, employee, 
elected official, managing general agent, agent,

[[Page 75802]]

or contractor of an AIP, FCIC, or any other government agency whose 
duties require access to the ITS to administer the Act.
    Controlled substance has the same meaning provided in 7 CFR 
3021.610.
    Conviction means (1) a judgment or any other determination of guilt 
of a criminal offense by any court of competent jurisdiction, whether 
entered upon a verdict or plea, including a plea of nolo contendere; or 
(2) any other resolution that is the functional equivalent of a 
judgment, including probation before judgment and deferred prosecution. 
A disposition without the participation of the court is the functional 
equivalent of a judgment only if it includes an admission of guilt.
    Date of delinquency means (1) the termination date specified in the 
applicable policy for administrative fees and premiums owed for 
insurance issued under the authority of the Act, and any interest and 
penalties on those amounts, if applicable; (2) the due date specified 
in the notice to the person of the amount due for any other amounts due 
the AIP or FCIC for insurance issued under the authority of the Act, 
including but not limited to, indemnities, prevented planting payments, 
or replant payments found not to have been earned or that were 
overpaid, and any interest, administrative fees, and penalties on such 
amounts, if applicable. Payments postmarked or received before the date 
of delinquency by the AIP or its agent for debts owed to the AIP, or by 
FCIC for debts owed to FCIC, are not delinquent.
    Debt means an amount of money that has been determined to be owed 
by any person to FCIC or an AIP, excluding money owed to an AIP's 
agent, under any program administered under the Act. The debt may have 
arisen from nonpayment of interest, penalties, premium, or 
administrative fee; overpayment of indemnity, prevented planting or 
replant payment; cost of collection; or other causes. A debt does not 
include debts discharged in bankruptcy or other debts which are legally 
barred from collection.
    Debtor means a person who owes a debt and that debt is delinquent.
    Delinquent debt means a debt that is not satisfied on or before the 
date of delinquency. To avoid delinquency, a debtor may enter into a 
written payment agreement acceptable to the AIP or FCIC to pay any such 
debt as long as all payments are made by the due dates specified in 
such written payment agreement. A delinquent debt does not include 
debts discharged in bankruptcy, other debts which are legally barred 
from collection, or any debt to an AIP's agent.
    Employer Identification Number (EIN) means a Tax Identification 
Number issued by the Internal Revenue Service used to identify a 
business entity, and may also be referred to as a Federal Tax 
Identification Number.
    Excluded Parties List System (EPLS) means a list maintained by the 
General Services Administration that provides a source of current 
information about persons who are excluded or disqualified from covered 
transactions, including the date the person was determined ineligible 
and the date the period of ineligibility ends.
    Federal Crop Insurance Corporation (FCIC) means a wholly owned 
government corporation within the USDA.
    Ineligible person means a person who is denied participation in any 
program administered under the authority of the Act.
    Ineligible Tracking System (ITS) means an electronic system to 
identify persons who are ineligible to participate in any program 
pursuant to this subpart.
    Meaningful opportunity to contest means the opportunity for the 
insured to resolve disagreements with a decision by the AIP through 
requesting a review of the decision by the AIP, mediation, arbitration, 
and judicial review, as applicable.
    Person means an individual, partnership, association, corporation, 
estate, trust, or other legal entity, and wherever applicable, a State, 
political subdivision, or an agency of a State. ``Person'' does not 
include the United States Government or any agency thereof.
    Qualified alien has the same meaning provided in the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (8 
U.S.C. 1641).
    Reinsurance year means the period beginning July 1 and ending on 
June 30 of the following year and, for reference purposes, identified 
by reference to the year containing June.
    Settlement means a signed written payment agreement between a 
debtor and FCIC or the AIP to resolve a dispute arising from a debt or 
other administrative determination.
    Social Security Number (SSN) means an individual's Social Security 
Number as issued under the authority of the Social Security Act.
    Standard Reinsurance Agreement (SRA) means a cooperative financial 
assistance agreement between FCIC and an AIP 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.
    Substantial beneficial interest has the same meaning as contained 
in the applicable policy.
    USDA means the United States Department of Agriculture.
    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 AIP 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 Sec.  400.681.


Sec.  400.678  Applicability.

    This subpart applies to any program administered under the 
authority of the Act, including but not limited to:
    (a) The catastrophic risk protection plan of insurance;
    (b) The additional coverage plans of insurance as authorized under 
section 508(c) of the Act;
    (c) Private insurance products authorized under section 508(h) or 
523(d) of the Act and reinsured by FCIC; and
    (d) Persons entering contracts or cooperative agreements under 
sections 506(l), 522(c), 522(d), or 524(a) of the Act.


Sec.  400.679  Criteria for ineligibility.

    Except as otherwise provided, a person is ineligible to participate 
in any program administered under the authority of the Act if the 
person meets one or more of the following criteria:
    (a) Has a delinquent debt.
    (1) The existence and delinquency of the debt must be verifiable.
    (2) The person has to be provided a meaningful opportunity to 
contest the debt.
    (3) If the person contests the debt, such action does not delay or 
preclude:
    (i) Determination or notification of ineligibility in accordance 
with Sec.  400.682;
    (ii) Effect of the determination of ineligibility;
    (iii) Termination of the applicable crop insurance policies; or
    (iv) Ineligible persons being reported in accordance with Sec.  
400.682 or the ineligible persons being recorded in the ITS.
    (4) If the person is determined not to owe the debt, eligibility is 
reinstated retroactive to the date of the determination of 
ineligibility, any

[[Page 75803]]

applicable policies will be reinstated, and any applicable indemnity, 
prevented planting or replant payment earned may be paid provided the 
person has continued to comply with the terms of the policy.
    (b) Has been convicted of a controlled substance violation 
according to Sec.  400.680;
    (c) Has been disqualified under section 515(h) of the Act or has 
been debarred or suspended under 7 CFR part 400 subpart R, or 7 CFR 
part 3017, or a successor regulation. 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 policies will be reinstated.
    (d) Is not a United States citizen, United States non-citizen 
national, or a qualified alien. Such persons may not be recorded in the 
ITS; however, such persons are ineligible under the provisions of the 
Personal Responsibility and Work Opportunity Reconciliation Act of 
1996, 8 U.S.C. 1611;
    (e) Has been convicted of a felony for knowingly defrauding the 
United States in connection with any program administered by USDA; or
    (f) Knowingly doing business with an ineligible person in 
accordance with 7 CFR part 3017.


Sec.  400.680  Controlled substance.

    (a) This section implements section 1764 of the Food Security Act 
of 1985 (Pub. L. 99-198) and Chapter 13 of Title 21 requiring the 
denial of Federal Benefits, including crop insurance, to persons 
convicted of controlled substance violations in accordance with 
subsection (b).
    (b) Notwithstanding any other provision of law, a person will be 
ineligible to participate in any program authorized under the Act, as 
provided in Sec.  400.683, if the person is convicted under Federal or 
State law of:
    (1) Planting, cultivating, growing, producing, harvesting, or 
storing a controlled substance in any crop year; or
    (2) Possession of or trafficking in a controlled substance.


Sec.  400.681  Written payment agreement.

    (a) Written payment agreements shall:
    (1) Require scheduled installment payments that will allow for full 
repayment of the debt within the time frame allotted in paragraph (2);
    (2) Not exceed two years in duration; and
    (3) Not be modified, replaced, or consolidated after it has been 
executed in accordance with subsections (b).
    (b) To avoid being determined to be ineligible through the 
execution of a written payment agreement:
    (1) For a debt arising from any unpaid premium, administrative 
fees, or catastrophic risk protection fees:
    (i) Only one written payment agreement is permitted per termination 
date. A written payment agreement may cover multiple crops provided 
they all have the same termination date; and
    (ii) The written payment agreement must be signed by both parties, 
the debtor and the AIP or FCIC, as applicable, on or before the 
termination 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 AIP 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.


Sec.  400.682  Determination and notification.

    (a) The AIP 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.
    (1) The AIP shall evaluate the person's response, if any, and 
determine if the debt is owed and delinquent.
    (2) Upon request by FCIC, the AIP shall submit all documentation 
related to the debt to FCIC.
    (b) If an AIP or any other person has evidence that a person meets 
any criteria set forth in Sec.  400.679, they must immediately notify 
FCIC.
    (c) After the AIP determines a person has met one or more of the 
criteria in Sec.  400.679 and notifies FCIC, FCIC will issue and mail a 
Notice of Ineligibility to the person's last known address and to the 
AIP. 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 subsection (e).
    (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 AIP, 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 AIP will be notified and provided 
with an opportunity to participate in the proceeding, if permitted by 7 
CFR part 11.


Sec.  400.683  Period of ineligibility.

    (a) The beginning of the period of ineligibility will be:
    (1) For ineligibility as a result of a delinquent debt, beginning 
on the date stated in the applicable policy;
    (2) For ineligibility as a result of a conviction of the controlled 
substance provisions, the beginning of the crop year in which the 
person is convicted;
    (3) For ineligibility as a result of a disqualification, debarment, 
or suspension, the date the person was disqualified, debarred, or 
suspended by debarring official, Administrative Law Judge, or such 
other person authorized to take such action; and
    (4) For ineligibility as a result of a felony conviction for 
knowingly defrauding the United States in connection with any program 
administered by USDA, the crop year in which the person is convicted.
    (b) The duration of the period of ineligibility will be:
    (1) For ineligibility as a result of a delinquent debt, until the 
debt has been paid in full, discharged in bankruptcy, or the person has 
executed a written payment agreement.
    (2) For ineligibility as a result of a conviction of:
    (i) Planting, cultivating, growing, producing, harvesting, or 
storing a controlled substance, for four crop years succeeding the crop 
year in which the person was convicted; and
    (ii) Possession of a controlled substance or trafficking in a 
controlled substance, in addition to the time imposed in subparagraph 
(i), until the period of time imposed by a court has expired.
    (3) For ineligibility as a result of a disqualification, debarment, 
or suspension until the period of time of disqualification, debarment, 
or suspension, as applicable, has expired.
    (4) For ineligibility as a result of not being a United States 
citizen, United States non-citizen national, or a qualified alien, 
until the date such person becomes a United States citizen, United 
States non-citizen national, or a qualified alien.

[[Page 75804]]

    (5) For ineligibility as a result of a felony conviction for 
knowingly defrauding the United States in connection with any program 
administered by USDA, permanent unless otherwise determined by the 
Secretary of Agriculture for a period of not less than 10 years.


Sec.  400.684  Effect of ineligibility.

    (a) The effect of ineligibility depends on the basis for the 
determination.
    (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 Sec.  400.683.
    (2) Persons who are ineligible as a result of a suspension or 
debarment are precluded from:
    (i) Participating in all programs authorized under the Act, 
including but not limited to:
    (A) Obtaining crop insurance;
    (B) Acting as an agent, loss adjuster, insurance provider, or other 
affiliate, as defined in the Standard Reinsurance Agreement;
    (C) Entering into any contracts with FCIC under sections 506(l) and 
section 522(c) of the Act; and
    (D) Entering into any cooperative agreements or partnerships under 
sections 506(l), 522(d) and 524(a) of the Act; and
    (ii) Participating in any other covered transaction as specified in 
7 CFR part 3017, or a successor regulation.
    (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 (2)(i), and 
those listed in section 515(h)(3)(B) and (C) of the Act.
    (4) Persons who are ineligible because of 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 (2)(i).
    (5) Persons who are ineligible as a result of a felony conviction 
for knowingly defrauding the United States in connection with any 
program administered by USDA, are precluded from participating in any 
program offered by USDA.
    (b) Once a person has been determined to be ineligible:
    (1) The person will be placed on the ITS and may be reported to 
other government agencies.
    (2) If the ineligible person is an individual:
    (i) All crop insurance policies in which the ineligible person is 
the sole insured will terminate and the person will remain ineligible 
for crop insurance for the applicable period specified in Sec.  
400.683.
    (ii) The ineligible person must be reported on all policies in 
which the ineligible person has a substantial beneficial interest in 
the applicant or insured, and the insured share under such policy will 
be reduced commensurate with the ineligible person's substantial 
beneficial interest in the applicant or insured for as long as the 
ineligible person remains ineligible in accordance with Sec.  400.683.
    (iii) 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 coverage on or before the applicable sales closing date 
to obtain insurance coverage for the crop, if they are otherwise 
eligible for such coverage.
    (3) If the ineligible person is a general or limited liability 
partnership and is ineligible as a result of a delinquent debt, all 
partners of the ineligible general or limited liability partnership 
will be ineligible.
    (i) All crop insurance policies in which the ineligible partnership 
or an ineligible partner of the partnership is the sole insured will 
terminate, and the ineligible partnership and all partners of the 
partnership will remain ineligible for crop insurance for the 
applicable period specified in Sec.  400.683.
    (ii) The ineligible partnership and all ineligible partners in the 
partnership 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 partnership or partners' substantial beneficial interest in 
the applicant or insured for as long as the partnership or partners 
remain ineligible in accordance with Sec.  400.683.
    (4) If the ineligible person is a joint venture and is ineligible 
as a result of a delinquent debt, all members of the joint venture will 
be ineligible.
    (i) All policies in which the joint venture or a member of the 
joint venture is the sole insured will terminate and the joint venture 
and all members of the joint venture will remain ineligible for crop 
insurance for the applicable period specified in Sec.  400.683.
    (ii) The joint venture and all members of the joint venture 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 joint venture or members remain ineligible in 
accordance with Sec.  400.683.
    (5) If the ineligible person is an association, estate, trust, 
corporation, limited liability company, limited partnership, or other 
similar entity, and is ineligible as a result of a delinquent debt, 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 AIP or FCIC.
    (i) If determined ineligible, all policies in which such person is 
the sole insured will terminate, and the person will remain ineligible 
for crop insurance for the applicable period specified in Sec.  
400.683.
    (ii) The ineligible person 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 Sec.  400.683.
    (6) If an applicant or insured is a corporation, partnership, joint 
venture, trust, corporation, limited liability company, 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.
    (b) 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:
    (1) The individual is ineligible due to a conviction of a 
controlled substance violation in accordance with Sec.  400.680;
    (2) The individual is ineligible as a result of a felony conviction 
for knowingly defrauding the United States in connection with any 
program administered by USDA;
    (3) The individual is ineligible because they are not a United 
States citizen, United States non-citizen national, or a qualified 
alien;
    (4) The individual is ineligible as a result of a disqualification, 
debarment, or suspension;
    (5) The spouse can prove they are legally separated or otherwise 
legally separate under the applicable State dissolution of marriage 
laws; or

[[Page 75805]]

    (6) The minor child has a separate legal interest in such person or 
is engaged in a separate farming operation from the individual.
    (c) When a policy is terminated in accordance with this subpart:
    (1) No indemnities or payments will be paid for the crop year in 
which the policy was terminated; and
    (2) Any indemnities or payments already made for the crop year in 
which the policy was terminated will be declared overpayments and must 
be repaid in full.
    (d) 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 for the crop year in which the reduction occurred will be 
declared overpayments and must be repaid in full; and
    (2) Any premiums paid by the insured commensurate with the share 
reduced will be refunded.
    (e) Any insurance written by an AIP 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.


Sec.  400.685  Criteria for regaining eligibility.

    After the period of ineligibility as specified in Sec.  400.683 has 
ended, the ineligible person is eligible to participate in programs 
authorized under the Act, provided the person meets all eligibility 
requirements.
    (a) After a person regains eligibility for crop insurance, if their 
policy was terminated 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 
year, the person may not participate until the following crop year 
unless that crop policy allows for applications to be accepted after 
the sales closing date.
    (b) If a person who was determined ineligible according to this 
subpart is subsequently determined to be an eligible person for crop 
insurance through mediation, arbitration, appeal, or judicial review, 
such person's policies will be reinstated effective at the beginning of 
the crop year for which the producer was determined ineligible, and 
such person will be entitled to all applicable benefits under such 
policies, provided the person meets all eligibility requirements and 
complies with the terms of the policy.


Sec.  400.686  Administration and maintenance.

    (a) Ineligible producer data will be maintained in a system of 
records established and maintained by the Risk Management Agency in 
accordance with the Privacy Act (5 U.S.C. 552a).
    (1) The ITS 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 of ineligibility.
    (2) Information in the ITS may be used by an authorized person. The 
information may be furnished to other users as may be appropriate or 
required by law or regulation, including but not limited to, FCIC 
contracted agencies, other government agencies, credit reporting 
agencies, and collection agencies, and in response to judicial orders 
in the course of litigation. The individual information may be made 
available in the form of various reports and notices.
    (3) Supporting documentation regarding the determination of 
ineligibility and reinstatement or regaining of eligibility will be 
maintained by FCIC, or its contractors, AIPs, 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 AIPs.
    (c) All persons applying for crop insurance policies or with crop 
insurance policies continuing from a previous crop year, 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) AIPs, partners, cooperators, and contracts 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 by an agency other than FCIC. Other sources, including but not 
limited to EPLS, provide data on persons ineligible to participate in 
programs authorized under the Act.

    Signed in Washington, DC, on November 22, 2011.
William J. Murphy,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2011-31085 Filed 12-2-11; 8:45 am]
BILLING CODE 3410-08-P