[Federal Register Volume 79, Number 8 (Monday, January 13, 2014)]
[Rules and Regulations]
[Pages 2075-2084]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-31357]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 79, No. 8 / Monday, January 13, 2014 / Rules 
and Regulations

[[Page 2075]]



DEPARTMENT OF AGRICULTURE

Federal Crop Insurance Corporation

7 CFR Parts 400, 407 and 457

[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: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Crop Insurance Corporation (FCIC) finalizes the 
General Administrative Regulations to revise regulations addressing 
Ineligibility for Programs under the Federal Crop Insurance Act. The 
intended effect of this action is to eliminate redundancies, improve 
clarity, remove or update obsolete references, and add references to 
other provisions regarding ineligibility for Federal crop insurance.

DATES: Effective date: This rule is effective February 12, 2014.
    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.

FOR FURTHER INFORMATION CONTACT: Tim Hoffmann, Product Administration 
and Standards Division, Risk Management Agency, United States 
Department of Agriculture, Beacon Facility, Stop 0812, Room 421, P.O. 
Box 419205, Kansas City, MO 64141-6205, telephone (816) 926-7730.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

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

Paperwork Reduction Act of 1995

    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.

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, 
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 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.

[[Page 2076]]

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

    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.
    The public comments received regarding the proposed rule and FCIC's 
responses to the comments are as follows:

General Comment

    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.

Section 400.677 Definitions

    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.

Section 400.679 Criteria for Ineligibility

    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

[[Page 2077]]

provisions 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.

Section 400.680 Controlled Substance

    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.

Section 400.682 Determination and Notification

    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.

Section 400.683 Period of Ineligibility

    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.

Section 400.684 Effect of Ineligibility

    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

[[Page 2078]]

even 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 fa[ccedil]ade of an entity. 
Therefore, no changes have been made as a result of this comment.

Section 400.686 Administration and Maintenance

    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:
Part 400, Subpart U
    1. Revised the definition of ``debt'' and ``delinquent debt'' for 
consistency with Sec.  400.682 and Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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, Sec.  
400.684(b)(4) has been deleted and Sec.  400.684(b)(5) has been 
redesignated as Sec.  400.684(b)(4).

[[Page 2079]]

    6. Revised Sec.  400.684(b)(5) (redesignated Sec.  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.
Part 407, Area Risk Insurance Policy Basic Provisions
    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.
Part 457, Common Crop Insurance Policy Basic 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.

List of Subjects in 7 CFR Part 400, 407 and 457

    Administrative practice and procedure, crop insurance, reporting 
and recordkeeping requirements.

    Accordingly, as set forth in the preamble, the Federal Crop 
Insurance Corporation amends 7 CFR parts 400, 407 and 457 as follows:

PART 400--GENERAL ADMINISTRATIVE REGULATIONS

0
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]

0
2. Remove and reserve subpart C.

Subpart F [Removed and Reserved]

0
3. Remove and reserve subpart F.

0
4. Revise subpart U 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.

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


Sec.  400.675  Purpose.

    This subpart 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 subpart 
also establishes the criteria for regaining eligibility.


Sec.  400.676  [Reserved]


Sec.  400.677  Definitions.

    As used in this subpart:
    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.
    Authorized person means any current or past officer, employee, 
elected official, managing general agent, agent, or contractor of an 
insurance provider, 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 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 no contest.
    Date of delinquency means: 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; and the due date specified 
in the notice to the person of the amount due for any other amounts due 
the insurance provider or FCIC for insurance issued under the authority 
of the Act. Other amounts due include, but are not limited to, 
indemnities, prevented planting payments, or replant payments found not 
to have been earned or that were overpaid, premium billed with a due 
date after the termination date for the crop year in which premium is 
earned, and any interest, administrative fees, and penalties on such 
amounts, if applicable. Payments postmarked or received before the date 
of delinquency by the insurance provider or its agent for debts owed to 
the insurance provider, 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 insurance provider, excluding money owed to 
an insurance provider'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.
    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 or ineligibility due to a 
delinquent debt, a debtor may enter into a written payment agreement 
acceptable to the insurance provider 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 or any debt to an insurance provider'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.
    Insurance Provider means a legal entity which has entered into a 
Standard Reinsurance Agreement, Livestock Price Reinsurance Agreement, 
or other reinsurance agreement, as

[[Page 2080]]

applicable, 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.
    Meaningful opportunity to contest means the opportunity for the 
insured to resolve disagreements with a decision by the insurance 
provider through requesting a review of the decision by the insurance 
provider, mediation, arbitration, or judicial review, as applicable.
    Person means an individual, partnership, association, corporation, 
estate, trust, or other legal entity, and wherever applicable, a State 
or political subdivision or 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).
    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 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.
    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. Sec.  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 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) Effect of the determination of ineligibility;
    (ii) Determination or notification of ineligibility in accordance 
with Sec.  400.682;
    (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 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) Is an individual and has been convicted of a controlled 
substance violation according to Sec.  400.680;
    (c) Has been disqualified under section 515(h) of the Act.;
    (d) Is an individual and is not a United States citizen, United 
States non-citizen national, or a qualified alien. Such individuals may 
not be recorded in the ITS; however, such individuals are ineligible 
under the provisions of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996, 8 U.S.C. 1611;
    (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.


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 individuals 
convicted of controlled substance violations in accordance with 
paragraphs (b) and (c) of this section.
    (b) Notwithstanding any other provision of law, an individual will 
be ineligible to participate in any program authorized under the Act, 
as provided in Sec.  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 Sec.  400.683, if the person 
is convicted under Federal or State law of 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 
(a)(2) of this section;
    (2) Not exceed two years in duration; and
    (3) Not be modified, replaced, or consolidated after it has been 
executed in accordance with paragraph (b) of this section.
    (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 insurance provider or FCIC, as applicable, on or 
before the

[[Page 2081]]

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 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.


Sec.  400.682  Determination and notification.

    (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 Sec.  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 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 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.


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 under Federal or 
State law of:
    (i) Planting, cultivating, growing, producing, harvesting, or 
storing a controlled substance, the beginning of the crop year in which 
the individual is convicted; or
    (ii) Possession of or trafficking in a controlled substance, the 
beginning of the crop year in which the individual is convicted, unless 
determined otherwise by the court.
    (3) For ineligibility as a result of a disqualification, debarment, 
or suspension under 515(h) of the Act, 2 CFR part 180, 2 CFR part 417, 
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 debarment under 7 U.S.C. 2209j, the beginning of 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 under Federal or 
State law of:
    (i) Planting, cultivating, growing, producing, harvesting, or 
storing a controlled substance, 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 of ineligibility imposed 
in paragraph (b)(2)(i) of this section, until the period of time 
imposed by a court has expired.
    (3) For ineligibility as a result of a disqualification, debarment, 
or suspension under section 515(h) of the Act, or 2 CFR part 180 and 2 
CFR part 417 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 individual becomes a United States citizen, United 
States non-citizen national, or a qualified alien.
    (5) For ineligibility as a result of a conviction falling under 7 
U.S.C. 2209j, 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. 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 Sec.  
400.684(b)(1).
    (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 
affiliate, as defined in the Standard Reinsurance Agreement or 
Livestock Price Reinsurance Agreement, or successor agreements;
    (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 
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

[[Page 2082]]

participating in any program offered by USDA.
    (b) Once a person has been determined to be ineligible:
    (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.
    (2) If the ineligible person is an individual:
    (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 Sec.  400.680, and the person will remain 
ineligible for crop insurance for the applicable period specified in 
Sec.  400.683; and
    (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.
    (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 Sec.  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 Sec.  400.683; or
    (ii) Meeting the criteria specified in Sec.  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 Sec.  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 Sec.  400.683.
    (4) If the ineligible person is an association, estate, trust, 
corporation, or other similar entity, and is ineligible as a result of:
    (i) A delinquent debt:
    (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 Sec.  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 Sec.  400.683;
    (D) All policies in which a partner, member, shareholder, 
administrator, executor, trustee, or grantor determined ineligible 
according to Sec.  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 Sec.  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 Sec.  400.683; or
    (ii) Meeting the criteria specified in Sec.  400.679(c), (e) or 
(f):
    (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 Sec.  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 Sec.  
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

[[Page 2083]]

coverage 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:
    (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
    (6) The minor child has a separate legal interest in such person or 
is engaged in a separate farming operation from the individual.
    (d) Notwithstanding Sec.  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 Sec.  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
    (2) Any premiums paid by the insured commensurate with the share 
reduced will be refunded.
    (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 
Sec.  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.


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 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.
    (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, 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.

PART 407--AREA RISK PROTECTION INSURANCE REGULATIONS

0
5. The authority citation for 7 CFR part 407 continues to read as 
follows:

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

0
6. Amend Sec.  407.9 as follows:
0
a. Amend section 2(k)(1)(i)(B) by adding the word ``or'' after the 
semicolon at the end;
0
b. Amend section 2(k)(1)(i)(C) by removing the phrase ``; or'' and 
adding a period in its place;
0
c. Remove section 2(k)(1)(i)(D);

[[Page 2084]]

0
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;
0
e. Amend section 2(k)(2)(i)(C) by adding the word ``or'' after the 
semicolon at the end;
0
f. Amend section 2(k)(2)(i)(D) by removing the phrase ``; or'' and 
adding a period in its place;
0
g. Remove section 2(k)(2)(i)(E);
0
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;
0
i. Revise section 2(k)(3)(iii); and
0
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.
    The revised text reads as follows:


Sec.  407.9  Area risk protection insurance policy.

* * * * *
    2. Life of Policy, Cancellation, and Termination.
* * * * *
    (k) * * *
    (3) * * *
    (iii) Have your debts discharged in bankruptcy.
* * * * *

PART 457--COMMON CROP INSURANCE REGULATIONS

0
7. The authority citation for 7 CFR part 457 continues to read as 
follows:

    Authority: 7 U.S.C. 1506(l), 1506(p).

0
8. Amend Sec.  457.8 as follows:
0
a. Amend section 2(f)(1)(i)(B) by adding the word ``or'' after the 
semicolon at the end;
0
b. Amend section 2(f)(1)(i)(C) by removing the phrase ``; or'' and 
adding a period in its place;
0
c. Remove section 2(f)(1)(i)(D);
0
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;
0
e. Amend section 2(f)(2)(i)(C) by adding the word ``or'' after the 
semicolon at the end;
0
f. Amend section 2(f)(2)(i)(D) by removing the phrase ``; or'' and 
adding a period in its place;
0
g. Remove section 2(f)(2)(i)(E);
0
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;
0
i. Revise section 2(f)(3)(iii); and
0
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.
    The revised text reads as follows:


Sec.  457.8  The application and policy.

* * * * *
    2. Life of Policy, Cancellation, and Termination.
* * * * *
    (f) * * *
    (3) * * *
    (iii) Have your debts discharged in bankruptcy.
* * * * *

    Signed in Washington, DC, on December 20, 2013.
Brandon Willis,
Manager, Federal Crop Insurance Corporation.
[FR Doc. 2013-31357 Filed 1-10-14; 8:45 am]
BILLING CODE 3410-08-P