# Disqualification due to Federal Crop Insurance fraud.
**AGENCY:**
Commodity Credit Corporation, USDA.
**ACTION:**
Proposed rule.
**SUMMARY:**
This rule implements statutory provisions which render a producer ineligible for certain benefits if that person is found to be engaged in crop insurance fraud.
**DATES:**
Comments must be received on or before November 12, 2002 to be assured of consideration.
**ADDRESS:**
Comments should be directed to, Sandy Bryant, Branch Chief, Production, Emergencies, and Compliance Division, Farm Service Agency (FSA), United States Department of Agriculture, STOP 0517, 1400 Independence Avenue, SW., Washington, DC 20250-0517, telephone (202) 720-4380.
**FOR FURTHER INFORMATION CONTACT:**
Sandy Bryant, (202) 720-4380.
**SUPPLEMENTARY INFORMATION:**
**Executive Order 12866**
This proposed rule was reviewed in conformance with Executive Order 12866, has been determined to be not significant, and therefore has not been reviewed by the Office of Management and Budget.
**Regulatory Flexibility Act**
The Regulatory Flexibility Act is not applicable to this rule.
**Environmental Evaluation**
An environmental evaluation was performed and determined that this rule will not impact the quality of the human environment. Thus, the Agency is not required to prepare an environmental assessment or Environmental Impact Statement.
**Executive Order 12988**
This rule has been reviewed in accordance with Executive Order 12988. This final rule preempts any State law that is inconsistent with its provisions. Before any legal action may be brought concerning this rule, all administrative remedies provided must be exhausted.
**Executive Order 12372**
Executive Order 12372 requires consultation by Federal Agencies with State and local officials when providing funds or assistance that may require non-Federal input. The programs affected by this rule were excluded from the scope of this Executive Order in the Notice related to 7 CFR part 3015 published at 48 FR 29115 on June 24, 1983.
**Unfunded Mandates Reform Act of 1995**
This rule contains no Federal mandates as defined in Title II of the Unfunded Mandates Reform Act of 1995 (UMRA). Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA.
**Paperwork Reduction Act**
This rule has no effect on the information collection requirements of the Agency.
**Executive Order 12612**
This rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have a substantial direct effect on States or their political subdivisions, or on the distribution of power and responsibilities among the various levels of government.
**Background**
**Producer Disqualification**
This proposed rule implements section 121(a) of the Agricultural Risk Protection Act of 2000 (ARPA) (Pub. L. 106-224), signed June 20, 2000. ARPA amended section 515(h)(3)(B) of the Federal Crop Insurance Act (7 U.S.C. 1514) to provide that a producer may be disqualified for a period of up to 5 years from receiving any monetary or non-monetary benefit produced under each of the following:
• ARPA (Pub. L. 106-224).
• The Agricultural Market Transition Act (7 U.S.C. 7201 *et seq.* ), including Noninsured Crop Disaster Assistance Program under section 196 of that act (7 U.S.C. 7333).
• The Agricultural Act of 1949 (7 U.S.C. 1421 *et seq.* ).
• The Commodity Credit Corporation Charter Act (15 U.S.C. 714 *et seq.* ).
• The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 *et seq.* ).
• Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 *et seq.* ).
• The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 *et seq.* ).
• Any law that provides assistance to a producer of an agricultural commodity affected by a crop loss or a decline in the prices of agricultural commodities.
ARPA provided that the disqualification of the program participant was at the discretion of the Secretary of Agriculture based on the gravity of the violation, the type and amount of the sanction to be imposed.
Covered benefits under the statute include crop insurance benefits administered by the Federal Crop Insurance Corporation (FCIC). FCIC will make the basic finding of violation and thus the basic disqualification decision. This rule simply provides for applying the disqualification to programs either administered by the Department of Agriculture's Farm Service Agency or conducted using funds of the Commodity Credit Corporation. The period of disqualification would automatically be that found right by FCIC for its own program. This will allow for consistent results between agencies and allowed for one hearing process to resolve all issues.
**List of Subjects in 7 CFR Part 1405**
Loan Programs-agricultural, Price support programs.
Accordingly, it is proposed that 7 CFR part 1405 be amended as follows:
**PART 1405—LOANS, PURCHASES AND OTHER OPERATIONS**
1. The authority citation for part 1405 continues to read as follows:
**Authority:**
15 U.S.C. 714b and 714c.
2. Part 1405 is amended by adding § 1405.7 to read as follows:
§ 1405.7
(a) Section 1515(h) of the Federal Crop Insurance Act (FCIA) provides that a person who willfully and intentionally provides any false or inaccurate information to the Federal Crop Insurance Corporation (FCIC) or to an approved insurance provider with respect to a policy or plan of FCIC insurance after notice and an opportunity for a hearing on the record, will be subject to one or more of the sanctions described in section 1515 (h)(3). In section 1515(h)(3), the FCIA specifies that in the case of a violation committed by a producer, the producer may be disqualified for a period of up to 5 years from receiving any monetary or non-monetary benefit under a number of programs. The list includes, but is not limited to, benefits under:
(1) Title V of the FCIA.
(2) The Agricultural Market Transition Act (7 U.S.C. 7201 *et seq.* ), including the noninsured crop disaster assistance producer under section 196 of that Act (7 U.S.C. 7333).
(3) The Agricultural Act of 1949 (7 U.S.C. 1421 *et seq.* ).
(4) The Commodity Credit Corporation Charter Act ( 15 U.S.C. 714 *et seq* ).
(5) The Agricultural Adjustment Act of 1938 (7 U.S.C. 1281 *et seq.* ).
(6) Title XII of the Food Security Act of 1985 (16 U.S.C. 3801 *et seq.* ).
(7) Any law that provides assistance to a producer of an agricultural commodity affected by a crop loss or a decline in prices of agricultural commodities.
(b) Violation determinations in this connection are made by FCIC. However, upon notice from FCIC to the Commodity Credit Corporation (CCC) that a producer has been found to have committed a violation to which paragraph (a) of this section applies, that person shall be considered ineligible for payments administered by the Farm Service Agency (FSA) or made using Commodity Credit Corporation funds for the same period of time for which, as determined by FCIC, the producer will be ineligible for crop insurance benefits of the kind referred to in paragraph (a)(1) of this section. Appeals of the determination of ineligibility will be administered under the rules set by FCIC.
(c) Other sanctions may also apply.
Signed in Washington, DC, on September 3, 2002.
James R. Little,
Executive Vice President, Commodity Credit Corporation.