[Federal Register: September 10, 2002 (Volume 67, Number 175)]
[Rules and Regulations]
[Page 57309-57319]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se02-1]
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[[Page 57309]]
DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Part 785
Farm Service Agency, Rural Housing Service, Rural Utilities
Service, Rural Business-Cooperative Service
7 CFR Part 1946
RIN 0560-AE02
Certified Mediation Program
AGENCY: Farm Service Agency, Department of Agriculture.
ACTION: Final rule.
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SUMMARY: The Farm Service Agency (FSA) is amending its agricultural
loan mediation regulations to implement the requirements of the Federal
Crop Insurance Reform and Department of Agriculture Reorganization Act
of 1994 (the 1994 Act) and the United States Grain Standards Act of
2000 (the Grain Standards Act). This rule establishes and modifies
requirements and procedures for certification and funding of State
mediation programs. This rule also moves the mediation provisions, as
amended, from the Rural Development chapter of title 7 of the Code of
Federal Regulations (CFR) to the FSA chapter of the same title.
EFFECTIVE DATE: September 10, 2002.
FOR FURTHER INFORMATION CONTACT: Chester A. Bailey, Mediation Program
Manager, FSA, telephone 202-720-1471.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be not significant for
purposes of Executive Order 12866 and, therefore, has not been reviewed
by the Office of Management and Budget (OMB).
Federal Assistance Program
The title and number of the Federal assistance program, as found in
the Catalog of Federal Domestic Assistance, to which this rule applies,
are Certified Mediation Program--10.435.
Executive Order 12372
This activity is not subject to the provisions of Executive Order
12372, which requires 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).
Environmental Evaluation
It has been determined that this action will not have a significant
impact on the quality of the human environment. Therefore, neither an
Environmental Assessment nor an Environmental Impact Statement is
needed under the National Environmental Policy Act of 1969.
Executive Order 12612
This document has been reviewed in accordance with Executive Order
12612, Federalism. The agency has determined that this action does not
have significant Federalism implications.
Executive Order 12988
This final rule has been reviewed in accordance with Executive
Order 12988, Civil Justice Reform. All State and local laws and
regulations that are in conflict with this rule will be preempted, no
retroactive effect will be given to this rule, and administrative
proceedings published at 7 CFR part 11 must be exhausted before action
for judicial review may be brought.
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this program. The administration certifies that this
program will not have a significant impact on a substantial number of
small entities. By statute, this grant program applies only to States.
These grants cannot be made to small entities or individuals. Small
entities may participate in mediation, however, to the same extent as
individuals and other entities affected by adverse decisions covered by
certified mediation programs.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, tribal
governments, and the private sector. Under section 202 of the UMRA, the
Agency generally must prepare a written Statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures by State, local, or tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any 1 year. When such a Statement is needed for a
rule, section 205 of the UMRA generally requires the Agency to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, more cost-effective or least burdensome alternative
that achieves the objective of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, tribal
governments, or the private sector. Thus, this rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, FSA
submitted a request to OMB for the approval of the certified mediation
program information collection package (0560-0165). OMB control number
0560-0165 was approved for use through February 29, 2004.
Background
On November 9, 1999, FSA published a proposed rule (64 FR 61034) to
amend its agricultural loan mediation program regulations to implement
the requirements of the Federal Crop Insurance Reform and Department of
Agriculture Reorganization Act of 1994 (the 1994 Act) (Pub. L. 103-
354). The 1994 Act expanded the scope of issues that may be mediated in
State mediation programs certified by FSA. The proposed rule modified
previously established requirements and procedures for certification
and funding of State mediation programs under the Agricultural Credit
Act of 1987 (the 1987 Act) (7 U.S.C. 5101 et seq.).
On November 9, 2000, the Grain Standards and Warehouse Improvement
[[Page 57310]]
Act of 2000 (the Grain Standards Act) (Pub. L. 106-472) was enacted,
making a number of additional amendments to the 1987 Act. Section 306
of the Grain Standards Act reauthorizes the mediation program through
fiscal year 2005, and provides that funds appropriated by Congress to
the state agricultural mediation program must be used for farm credit
disputes and may be used, if available, for other specified U.S.
Department of Agriculture (USDA) program disputes. This section also
clarifies that the term ``mediation services,'' with respect to
mediation or a request for mediation, may include all activities
related to the intake and scheduling of cases, the provision of
background and selected information regarding the mediation process,
appropriate financial advisory and counseling services performed by a
person other than a State mediation program mediator, and the mediation
session. The Grain Standards Act also clarifies that the persons
eligible for mediation include: agricultural producers, creditors of
producers (as applicable), and persons directly affected by actions of
the USDA. The Grain Standards Act further provides that mediation is
voluntary and that a person may not be compelled to participate in such
mediation, but that the statute does not affect any law requiring
mediation before foreclosure on agricultural land or property.
FSA has incorporated these statutory provisions in the final rule.
Section 785.1(d) of the final rule provides that mediation is voluntary
and a that a person may not be compelled to participate in a mediation,
but that the statute does not affect any law requiring mediation before
foreclosure on agricultural land or property. A conforming definition
of mediation services has been added in Sec. 785.2, and a new
definition of ``covered persons'' in Sec. 785.2 specifies who may
request mediation and issues that may be mediated.
This rule also removes the mediation provisions from the Rural
Development chapter of Title 7 of the CFR (Chapter 18) and incorporates
those provisions into a new part 785 in the FSA chapter (Chapter 7) of
Title 7.
Public Comment
The comment period for the proposed rule ended on January 10, 2000.
FSA solicited comments on the proposed rule in general, and
particularly on certain specific matters addressed or considered during
development of the proposed rule, specifically: Training programs
implemented by States, the requirement for quarterly reporting by
certified State mediation programs, the experience of States in
mediating the additional issues authorized for mediation in the 1994
Act, mediation not involving USDA agencies and programs, the proposed
changes in procedures for determining grant awards and managing an
administrative reserve, and the appropriateness of requiring mediation
program participants to satisfy a needs test as a condition for use of
grant funds to pay for financial advisory and counseling services in
preparing participants for mediation.
Summary of Comments
Comments were received from the Coalition of Agricultural Mediation
Programs (CAMP) representing 25 USDA-certified State mediation
programs, 12 USDA-certified State mediation programs, the American Bar
Association, the Nebraska Legal Aid Society, the Oklahoma Farmers
Union, and two mediators. The comments addressed a number of issues
relating to the proposed rule in addition to those for which we had
specifically solicited comment. FSA considered the comments and
incorporates many of the recommendations and suggestions in this rule.
The following is a review of the general subjects of comments and of
the changes made in the final rule in response.
Training Programs Implemented by States
The proposed rule required a state requesting certification to
describe the State mediation program education and training
requirements for mediators. One commentor stated that the request for
information concerning State programs for training mediators is
appropriate provided that FSA understands that each program will employ
different models of mediation, and that the training curricula will
vary from one program to another. The commentor also stated that it is
necessary for the various USDA agencies to work with the State
agricultural mediation programs to provide training so that mediators
are adequately trained on issues relating to USDA programs.
The commentor observed that USDA personnel need additional training
regarding the objectives of mediation and its potential benefits. The
commentor recommended that as part of a cooperative training effort,
USDA personnel who will be involved in the mediation process receive
training on mediation. Another comment proposed that the USDA conduct
routine mediation training and orientation workshops for USDA staff and
other consumer populations on the use and processes associated with
mediation services.
Several other comments came from certified State mediation programs
pointing out that their State laws set standards for training,
qualifications, ethics and continuing education requirements for
approved mediation programs and mediators. Other comments encouraged
FSA to work with CAMP and States with certified mediation programs to
develop criteria for those training requirements if there are specific
areas that FSA believes it needs to monitor considering that training
requirements are generally approved under individual State laws as
well. Other commentors suggested that the USDA work with certified
States to develop curriculum and materials that comport with USDA
standards, for example, in a joint project with special funding. In
contrast, other comments suggested that because of the diversity of
State laws and the specific needs of the individual State programs,
mediator qualifications and training requirements generally should be
left to the respective certified mediation programs.
FSA agrees that both USDA employees and mediators must be
adequately trained for the mediation process to function effectively.
In response to the comments, FSA has added minimum Federal standards of
mediator training to this rule to ensure a threshold level of mediator
qualifications in all certified State mediation programs. For clarity,
``mediator'' and ``qualified mediator'' are separately defined in Sec.
785.2. The definition of ``qualified mediator'' establishes a minimum
training requirement that will apply in any State without a law
prescribing mediator qualifications. The minimum training requirements
in the final rule correspond to the minimums among States that
prescribe mediator qualifications by law. As one condition of USDA
certification under Sec. 501 of the 1987 Act, a State mediation
program must train its mediators. FSA also intends to work with
certified States on an on-going basis to schedule joint training
programs from time to time as funding is available.
Quarterly Reporting by Certified State Mediation Programs
One commentor stated that reporting requirements need to stay
proportional to the level of funding that is received by the States.
Because of the relatively small size of the maximum grants to certified
State mediation programs, annual rather than quarterly reporting is
[[Page 57311]]
appropriate. Comments from certified State mediation programs concurred
that quarterly reporting beyond financial reporting would greatly
increase the reporting burden on States and that quarterly reporting
would be excessively burdensome, especially on smaller programs where
administrative staff and time are limited. All comments concurred that,
with the exception of financial reporting, reporting by certified State
mediation programs should be on an annual basis. One commentor suggests
that programs receiving grants of less than $100,000 should report
under a simplified system. Another commented that as a general matter
the collection of information from the certified programs is necessary
and that the commentor would like to work with FSA to develop a uniform
reporting system that minimizes the burden of collecting information
and provides a better measure of program performance.
In light of these comments, the final rule does not modify
reporting requirements in Sec. 785.8 to require quarterly reporting on
program performance except as required under the Uniform Federal
Assistance Regulations, 7 CFR part 3015, and the Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local
Governments, 7 CFR part 3016. FSA will continue to work with certified
State mediation programs to determine how best to minimize the
paperwork burden on certified States and, at the same time, provide a
better method of measuring annual performance of the States' mediation
programs.
Funding and Administrative Reserve
The procedure for determining grant awards to certified State
mediation programs in the proposed rule represented an important change
from the existing regulations. Under current regulations, certified
States are awarded grants based on their requests, subject to the
statutory limitations. Where States' total grant requests exceeded the
funds appropriated, funds are allocated to States pro-rata. The
proposed rule set forth a series of criteria as factors that would be
considered in making awards to States.
In addition, the proposed rule provided for an administrative
reserve that would be funded by withholding 10 percent of the total
funds so that funds from the reserve could be obligated later in the
fiscal year to newly qualified States or reallocated to States to meet
demand for mediation services exceeding States' initial projections,
and then, subsequently, to requesting States. In addition, to provide
for flexibility in allocation of the program's limited funding, the
reserve mechanism is intended to provide a means for the program to
award funding at the beginning of the second half of a fiscal year for
a mediation program in a State that newly qualifies in the first half
of a fiscal year. Under the current regulation, a newly certified State
program is required to wait for an award of grant funds until the
following fiscal year.
Administrative Reserve
Several State mediation programs suggested that 5 percent of the
total grant funds should be held in reserve rather than 10 percent
because the sum withheld would be excessive when total funds
appropriated are not sufficient to meet all eligible State matching
grant needs. These commentors also suggested that making the reserve a
bit smaller rather than larger should encourage States to submit
applications for new certification or re-certification by the August 1
deadline. The commentors further suggested that meeting excess demand
for mediation in existing certified States should be a priority over
making grants to States newly certified in the current fiscal year or
to previously certified States missing the August 1 deadline for
recertification. FSA agrees with these comments, and the final rule
provides in Sec. 785.7(d) for a reserve of 5 percent of the total
grant funds appropriated for the fiscal year. The final rule also
revises priorities for disbursements from the administrative reserve
fund to provide in Sec. 785.7(d)(1) that additional unbudgeted demands
for mediation services in qualifying States submitting certifications
or recertifications on or before August 1 in a calendar year that are
received on or before March 1 of the fiscal year will be given priority
over requests for certification received between August 2 and March 1.
As suggested by commentors, this change will provide additional
incentive for States to submit timely requests for certification and
re-certification.
One commentor questioned why FSA will accept requests for
certification after the annual August 1 deadline, objecting because the
policy reduces funding available to States that submit timely grant
requests. To clarify the purpose of the reserve, the reserve is
relabeled an ``administrative reserve'' in the final rule to reflect
its administrative utility more clearly. FSA policy to receive and
consider requests for certification and recertification submitted after
the August 1 deadline reflects its belief that FSA should accommodate
the varying schedules on which States may be able to meet certification
requirements, particularly those requiring legislative action by the
respective State governments. In response to other comments, the final
rule provides in Sec. 785.7(d)(1)(i)--(ii) that grant requests
received between August 2 and March 1 will not be considered for
funding in a fiscal year until the Administrator has determined what
additional funding from the administrative reserve should be allocated
to qualifying States that submitted timely requests.
The final rule also provides in Sec. 785.7(d)(1)(ii) that funding
granted in response to a late-submitted request for a grant by a State
requesting re-certification may be made effective as of the beginning
of the fiscal year. To accommodate the differences in designations of
fiscal years by the Federal Government and the States, the final rule
expressly provides in Sec. 785.7(e), pursuant to 7 CFR 3016.23, that
any State receiving a grant may carry forward funds unobligated at the
end of the Federal fiscal year into the next fiscal year.
In combination, these provisions in the final rule are intended to
provide a measure of administrative flexibility to support USDA policy
favoring increased use of mediation as a means for resolution of
administrative disputes, to assist efficient allocations of limited
funds in response to unanticipated demands, and to accelerate start-up
of newly certified State mediation programs.
Funding Criteria
Several commentors expressed concern about the criteria that are to
be used to determine funding. There were concerns that using both
objective criteria and criteria providing for discretion could operate
unfairly. States with mandatory mediation programs would clearly serve
more clients while States without mandatory agricultural mediation
programs would need to commit resources for outreach that would be
unnecessary in States with mandatory agricultural mediation
requirements. The existence of these competing concerns is a reason why
the final rule must provide for discretion in allocating grant funds.
The criteria in the final rule accordingly identify considerations that
will affect determinations of grant awards but do not specify a
formula. No substantive changes were made in response to these
comments.
[[Page 57312]]
Certification Requests
One commentor stated that it appreciates the need for USDA to
receive sufficient information and documentation to adequately evaluate
whether a State's request for certification meets the eligibility
criteria to become a certified mediation program. However, it maintains
that the existing certification process provides USDA with adequate
information to make this decision. The commentor requested that the
certification process be kept as simple as possible so as not to
discourage new or existing States from participating.
FSA agrees that the procedures for requesting certification of a
State mediation program and for requesting grant assistance should be
manageable for States participating in the certified State mediation
program. The final rule is reorganized to reflect more clearly the
differing requirements for certification of a State mediation program
(Sec. 785.3) and submission of a request to obtain grant funds for a
certified program (Sec. 785.4). For purposes of certification, FSA
will rely on the certification required of a governor or the head of a
State agency designated by the governor. The changes from the proposed
rule requiring submission by States of information concerning training
of mediators and the State's experience in delivery of mediation
services are adopted to achieve a better allocation of grant funds
relative to needs while preserving some administrative flexibility to
make grants to support mediation programs in newly qualifying States.
Also, while, pursuant to 7 U.S.C. 5101(c)(3)(E)-(F), the governor
of a State must certify that lenders and borrowers of agricultural
loans received adequate notification of the mediation program (Sec.
785.3(a)(2)(v)) and that, in the case of other issues covered by the
mediation program, persons directly affected by actions of the USDA
received adequate notification of the mediation program (Sec.
785.3(a)(2)(vi)), these requirements are effectively met by USDA
agencies. As required by 7 U.S.C. 6995, covered agencies must offer
mediation when a certified mediation program is available as part of
their informal appeals process.
Several commentors recommended that regulations be modified to
identify what specific information must be included in a grant request
in compliance with 7 CFR parts 3015 and 3016. FSA believes that
modifying the rule as suggested would introduce either redundancy or
inconsistency, so no changes have been made in response to these
comments. Parts 3015 and 3016 contain uniform rules that apply to USDA
grants and cooperative agreements to State and local governments,
universities, non-profit and for-profit organizations. The State
mediation programs qualifying to date are operated primarily by State
universities or State departments of agriculture, but other State
agencies can be certified as State mediation programs. As a general
matter, States are familiar with the uniform requirements set forth in
parts 3015 and 3016. It is the responsibility of the State to know and
comply with the applicable sections of parts 3015 and 3016 when
applying for and receiving USDA grants.
Use of Grant Funds To Support Mediation in Other Programs of the USDA
Several commentors stated that the allowable costs provision in the
proposed rule appears to authorize mediation programs to use grant
funds to mediate disputes for persons directly affected by actions of
any USDA agency, but that the USDA has required that the Secretary make
a specific designation for grant funds to be used to mediate disputes
in other programs of the USDA. The final rule removes this
inconsistency and provides in Sec. 785.2, in the definition of
``covered persons,'' that the Secretary may designate issues for
mediation where other persons are directly affected by actions of the
USDA and that State mediation programs may certify that they provide
mediation services to such persons (Sec. 785.3(a)(2)). Within the
general scope of the discretion of the Secretary authorized by section
501(c)(1) of the 1987 Act, the final rule contemplates that the
specific authorizations for uses of grant funds to mediate such
disputes will vary with particular circumstances and should not be
specified in the final rule.
The final rule also provides that a certified State mediation
program may require non-USDA participants in mediations to pay a fee
for mediation services (Sec. 785.5), but that no such fee may be
required of any USDA agency that is mandated to participate in
mediation. The restriction against imposition of fees on USDA agencies
mandated to participate in mediations reflects that the USDA is already
funding the mediation program through grants and cannot reasonably be
expected to pay twice. In addition, one of the primary reasons to
charge a fee for mediation is to ensure good-faith participation. By
law, USDA agencies must participate in good faith in mediation. As a
result, there is no reason to charge USDA agencies a fee to participate
in mediation to ensure their good faith.
Experience in Mediating the Additional Issues Authorized for Mediation
in the 1994 Act
Both the 1994 Act and the Grain Standards Act expanded the
statutory coverage of issues that may be mediated by a State mediation
program and the categories of persons that may be eligible for
mediation services through a certified program. The proposed rule
reflected the specific expansions of coverage under the 1994 Act and
also its authorization for the Secretary to identify other issues
appropriate for mediation.
The Secretary's Memorandum 4710-1, dated March 23, 2000, entitled
``USDA Alternative Dispute Resolution Policy,'' authorized expansion of
the issues handled by USDA-certified State mediation programs in
accordance with the 1994 Act to include rural housing loans; rural
business loans; crop insurance; and other issues the Secretary may
subsequently consider appropriate. The final rule also reflects further
expansions of coverage of issues and of persons eligible for mediation
services under the Grain Standards Act to include mediations of
disputes between producers and their creditors involving agricultural
loans, regardless of whether the loans are made or guaranteed by the
USDA or are made by a third party (Sec. Sec. 785.2 (``Covered
persons'') and 785.3(b)(2)). Significantly, the final rule does not
refer to ``agricultural loan mediation,'' but instead refers to
mediation services delivered by certified State mediation programs.
Pursuant to the Secretary's alternative dispute resolution policy, the
final rule also supports greater utilization of the certified State
mediation programs to resolve both credit and non-credit issues in
rural communities.
In light of this policy, the USDA solicited specific comments
regarding program experience to date in mediating the broader range of
issues covered by the 1994 Act. Comments from the certified State
programs were generally supportive that the coverage of issues for
mediation under their programs could be expanded. With respect to
mediation of non-credit issues, one mediator commented that the
opportunities for resolution of such issues in mediation has been
constrained by rigidity in the program regulations governing many such
disputes. For mediation to be effective, participants must have
confidence that there are options that can be explored with the
assistance of a mediator. The
[[Page 57313]]
commentor observed that many of the regulations implicated in
mediations of non-credit issues were published prior to 1994 and the
regulations may need modification to create more opportunity for
mediated resolutions of disputes.
Other commentors suggest that the differing opportunities for
developing options are a consideration that States are taking into
account in management of their mediation intake processes. These States
are determining at an early stage whether an issue in dispute may be
amenable to mediation, so that their clients may be soundly advised
whether mediation is a good option for resolution of the dispute.
FSA agrees that mediation programs should take appropriate steps to
determine at an early stage whether the issues in a dispute are subject
to statutory or regulatory requirements that must apply uniformly that
diminish or eliminate opportunities for effective mediation of a
dispute. FSA likewise agrees that in situations where there is a sense
that nothing can be accomplished, the mediation program as a whole is
adversely affected. In a number of situations, however, mediations
involving disputes under uniformly applicable regulatory standards may
focus on strategies for resolution of a dispute with options, e.g., in
wetlands disputes, options for mitigation or restoration of wetlands,
or in claims disputes, options for repayment of debts.
Mediation Not Involving USDA Agencies and Programs
One commentor noted that agriculture disputes not involving USDA or
agricultural credit may be mediated by certified programs, but that
USDA funds may not cover such costs. FSA agrees that with regard to the
costs of non-USDA non-agricultural credit mediation, grant funds are
not allowed to assist producers who have disputes with other producers.
The Grain Standards Act clarified that persons eligible for mediation
services include agricultural producers, creditors of producers (as
appropriate), and persons directly affected by actions of the USDA. It
is intended that grant funds will be used by certified States to assist
producers resolve agriculture-related disputes with the USDA that, if
not timely resolved, would discourage lenders from financing their
operations. FSA has clarified this issue in the final rule in Sec.
785.4(c)(1) by providing that grant funds can be used to pay eligible
costs that are reasonable and necessary to carry out the State's
certified mediation program in providing mediation services to covered
persons, i.e., agriculture producers and their creditors, and other
persons directly affected by actions of the USDA.
Use of a Financial Needs Test as a Condition for Use of Grant Funds To
Pay for Financial Advisory and Counseling Services in Preparing Clients
for Mediation
The proposed rule provided that costs of providing financial
advisory and counseling services to mediation clients would be allowed
if: the services were incidental to a mediation case, a financial need
was demonstrated under guidelines established by the program and
reported to FSA, the work product was made available to all parties to
a mediation, the services were provided under the control of a
mediator, and were determined in advance to be reasonable, necessary,
and consistent with the goal of mediation in the particular case.
Comments were solicited particularly regarding this financial needs
test.
One commentor stated that the requirement that preparatory
financial advisory and counseling services should be provided under the
control of the mediator should be deleted, or at least modified to
provide for control by staff of the mediation program rather than by
the mediator. The commentor believed that mediators would be exposed to
ex parte communications from assisted parties prior to mediation, which
would appear to compromise their neutrality and interfere with their
ability to get a balanced understanding of the facts implicated in a
mediation. These concerns are also reflected in other comments on the
proposed rule. The commentor suggested, and FSA agrees, that costs of
financial advisory services provided by a person other than a mediator
are allowable when approved under guidelines established by the
certified State mediation program and are reported to FSA.
Several commentors stated that the requirement in the proposed rule
that the results of financial analysis be made available to all parties
as a condition for allowing the cost should be deleted. One commentor
observed that, as a practical matter, participants are going to provide
all relevant information to an analyst only if participants are
reasonably certain to retain some control over the information that
they provide. This suggested change is reflected in Sec. 785.4 of the
final rule, however, which provides that such services may be provided
under guidelines established by the certified State mediation program.
To ensure accountability in delivery of such services under guidelines
established by certified State mediation programs, the final rule also
provides, in Sec. 785.9(a), that records of delivery of financial
advisory and counseling services are pertinent records for review that
must be maintained by the program and that the USDA or other Federal
Departments must be granted access to these records for purposes of
evaluation, audit, and monitoring of the certified State mediation
program.
As a general matter, commentors supported providing financial and
counseling services by certified mediation programs, but did not
support the requirement of a financial needs test. The commentors
stated that requiring a financial needs test would be a burden on both
mediation programs and producers seeking assistance. In cases where a
mediation client might be desperately in need of assistance simply to
sort out financial documents prior to a mediation, requiring the
mediation client to complete a financial needs assessment could impede
the client from actually requesting financial advice because the
process to qualify for assistance would appear too complicated.
Other commentors pointed out that in an overwhelming majority of
the credit cases handled, producers will have financial need;
otherwise, they would not be seeking mediation in the first place.
Given these general circumstances, the commentors suggested that
administering the financial needs test would delay and interfere with
time better spent assisting mediation clients with preparations for
productive mediation sessions. FSA agrees and has revised Sec. 785.4
accordingly.
Comments on Other Matters
Notice of Mediation Services
One comment was received suggesting that the proposed rule should
clarify how potential mediation clients receiving adverse decisions in
USDA programs are to be notified of mediation services. The final rule
clarifies in Sec. 785.1(b) that, where a certified State mediation
program is available, USDA agency notices of decisions will offer as
part of the agency's informal appeal process the opportunity to mediate
the decision under the certified State mediation program, in accordance
with the agency regulations applicable to its informal appeals process.
The USDA adverse decision notice will satisfy the grantee's notice
requirement.
Because section 274 of the 1994 Act requires that notices of
decisions by covered agencies must offer the opportunity to mediate in
States with
[[Page 57314]]
certified State mediation program as part of their informal appeals
processes, State mediation programs need only ensure that appropriate
procedures are in place to schedule mediations and to notify parties
when a mediation closes. In addition, State mediation programs shall
also ensure that procedures in place publicize the availability of
mediation so as to ensure that persons involved in agricultural loans,
regardless of whether the loans are made or guaranteed by the Secretary
or made by a third party, also receive adequate notification of the
mediation program.
Guidance for Agency Participation in Mediations
One commentor suggested that FSA should clarify the manner in which
USDA agencies are to participate in mediations, specifically, that FSA
should ``clearly delineate both the format and the level of
participation the Department and its sub-agencies will follow.'' The
commentor observed that the proposed rule does not adequately establish
how the assistance to mediation programs provided for in the rule is to
culminate in delivery of mediation services.
FSA agrees that its guidance regarding the duties of agency
participants in mediations should be clarified. For example, FSA is
currently streamlining its farm loan program regulations and expects to
resolve the apparent inconsistencies and update many obsolete
provisions in current regulations during this process. As to a need for
more general guidance regarding the duties of agency participants in
mediation programs, FSA agrees that guidance regarding the contours and
constraints on agency participation in mediation processes should be
addressed in the rules governing informal agency appeals processes,
e.g., 7 CFR parts 614 and 780. While agreeing in principle with this
comment, FSA believes that agencies must adopt rules tailored to their
respective programs and is more generally concerned that any such
regulations provide sufficient flexibility to permit States latitude to
experiment with different mediation strategies within the guidelines
that agencies may establish. Section 785.1(b) has been revised
accordingly.
Access to Records and Confidentiality
The proposed rule expressly provided that pertinent records of
certified State mediation programs must be made available to the
Government in accordance with 7 CFR 3015.24. It further provided that
parties in a mediation should sign an acknowledgment that the
Government would have access to mediation records to conduct an audit
or evaluation of mediation services funded in whole or part by the
USDA.
One commentor stated that ``records'' should be defined and that
the rule should expressly identify what records will be considered
pertinent that must be made available for an audit. Section 785.9 of
the final rule identifies specific ``pertinent records'' of mediations
to be maintained and made available for purposes of audit, evaluation,
or monitoring. ``Pertinent records'' include the following: (i) Names
and addresses of applicants for mediation services; (ii) dates
mediations are opened and closed; (iii) issues mediated; (iv) records
of financial advisory and counseling services furnished to parties in
mediation; (v) dates of sessions with mediators; (vi) names of
mediators; (vii) other mediation services furnished to participants by
the program; (viii) sums charged for each mediation service; and (ix)
outcomes of mediation services including formal settlement results and
supporting documentation. These are the minimum records needed for FSA
and the Office of Inspector General to monitor the use of Federal
grants for certified mediation programs and ensure the integrity of the
grant program. Most of these items would not be protected as ``dispute
resolution communications'' under sections 571 and 574 of the
Administrative Dispute Resolution Act of 1996 (ADR Act) (5 U.S.C. 571
et seq.) because the basic information would be included in any written
agreement to mediate or any final mediation resolution agreement.
Section 574 prohibitions also do not apply to information necessary to
document such mediation resolutions according to paragraph (g) of that
section. To the extent that ``pertinent records'' are normally
protected by the ADR Act, the parties will acknowledge and consent to
their release for the limited purposes of 7 CFR 785.9. FSA has adopted
a reasonable maintenance requirement of 5 years for these
acknowledgments.
The final rule also clarifies in Sec. 785.9 that, notwithstanding
7 CFR 3015.24, pertinent records must be disclosed to the USDA, the
Comptroller General of the United States, the Administrator, and their
representatives only as necessary to monitor, audit or evaluate
mediation services funded in whole or in part by the USDA. This access
provision is not intended to be used to seek information to use against
the participant in an unrelated administrative decision. FSA recognizes
that not all communications made to a mediator in confidence or all
mediator work product, including records of mental impressions, will be
maintained indefinitely. The final rule is intended to clarify that
mediators' notes, other highly sensitive documents prepared for
mediation, and other records of mediators' impressions will not be the
``pertinent records'' that mediators will be expected to produce to
substantiate services delivered during a mediation. The purpose of the
access requirement is to ensure that there is adequate documentation
for the Government to review to verify that only authorized mediation
services have in fact been furnished by a certified State mediation
program in connection with a mediation.
Two State mediation programs commented that the requirement for
execution of an acknowledgment of Government access to records by
parties in a mediation was ``an extreme example of overkill'' that
would encourage disputing parties simply to go through motions and not
help mediation programs in their effort to solve problems. FSA believes
that clarification of the limited purposes for which Government access
may be required should minimize this potential obstacle. Credible
mediators should be able to explain that as recipients of Federal grant
funds their mediation programs have a responsibility to be accountable
to the Government. No changes were made in response to these comments.
Several commentors suggested that the definition of confidentiality
be changed to make divulging of mediation records subject to section
574 of the ADR Act. Some suggested that the rule expressly provide that
to the extent that 7 CFR 3015.24 conflicts with statutory provisions
for confidentiality in the ADR Act or section 501 of the Agricultural
Credit Act of 1987, as amended, 7 U.S.C. 5101(c)(3), the statutory
provisions would take precedence. FSA agrees that the definition of
``confidential mediation'' should be consistent with the ADR Act to the
extent possible in carrying out the Federally funded certified
mediation programs in accordance with authorizing legislation and
regulations. FSA, therefore, has revised the proposed definition of the
term to mean a mediation in which the mediator will not disclose to any
person oral or written communications provided in confidence to the
mediator except as allowed by section 574 of the ADR Act or the record
access provisions in 7 CFR 785.9.
[[Page 57315]]
Annual Reporting and Program Evaluation
Several commentors suggested that the USDA should continue to use
an annual reporting system for monitoring the effectiveness and
productivity of all State mediation services, inclusive of all
affiliated services incidental to caseload. These commentors encouraged
the USDA to clearly delineate the categories, methodologies,
measurement criteria, forms, and other equations for those purposes.
The final rule is responsive to these suggestions and includes in
section 785.8 more specific guidance regarding matters to be contained
in the annual report than was set forth in the proposed rule. The
emphasis of the revisions is to afford certified State mediation
programs better means to report uniformly on the costs and benefits of
their services and on areas where delivery of mediation services to
covered persons can be improved. Because the final rule furnishes
additional detail regarding the organization and coverage expected in
the annual report, FSA believes that the revisions will simplify
reporting for certified State mediation programs and will reduce the
burden on the grantee.
Several commentors observed that FSA and other USDA agencies are in
a better position than the mediation programs to track which cases go
from mediation to appeals. They stated that it is the responsibility of
the USDA to articulate a standard for data comparisons and recommended
that data on administrative appeal costs should be furnished to
certified States by the USDA. The final rule adopts this suggestion in
section 785.8(a)(2) and provides that the mediation program will
project costs of avoided administrative appeals based on data furnished
by FSA.
One commentor observed that the proposed rule was unclear regarding
who should receive annual reports from mediation programs, the
Administrator of FSA, or the FSA State Executive Directors. The final
rule clarifies that annual reports must be submitted to the
Administrator.
Other significant changes are as follows:
Section 785.5 Fees for Mediation Services
This new section expressly provides that non-USDA parties who elect
to participate in mediation may be required to pay a fee for mediation
services, but that a State certified mediation program may not require
a USDA agency to pay a fee to participate in a mediation. Because of
the grant funding made available by the USDA for certified State
mediation programs, the restriction against imposition of fees on USDA
agencies protects against double charging of the Government. Further,
charging fees ensures good faith participation by the parties. By law
USDA agencies must participate in mediation in good faith. Charging a
fee to USDA agencies under such circumstances is, therefore, not
warranted.
Section 785.11 Reconsideration by the Administrator
This new section provides for reconsideration by the Administrator
of any determination that a State is not a qualifying State or of
penalties imposed pursuant to section 785.10. The decision of the
Administrator following reconsideration is the final administrative
decision of FSA.
List of Subjects in 7 CFR Parts 785 and 1946
Agriculture, Federal-State relations, Grant programs--
Intergovernmental relations, Mediation.
Accordingly, 7 CFR chapters VII and XVIII are amended as follows:
1. Part 785 is added to read as follows:
PART 785--CERTIFIED STATE MEDIATION PROGRAM
Sec.
785.1 General.
785.2 Definitions.
785.3 Annual certification of State mediation programs.
785.4 Grants to certified State mediation programs.
785.5 Deadlines and address.
785.6 Fees for mediation services.
785.7 Distribution of Federal grant funds.
785.8 Reports by qualifying States receiving mediation grant funds.
785.9 Access to program records.
785.10 Penalties for noncompliance.
785.11 Reconsideration by the Administrator.
785.12 Nondiscrimination.
785.13 OMB control number.
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; and 7 U.S.C. 5101-5104.
Sec. 785.1 General.
(a) States meeting conditions specified in this part may have their
mediation programs certified by the Farm Service Agency (FSA) and
receive Federal grant funds for the operation and administration of
agricultural mediation programs.
(b) USDA agencies participate in mediations pursuant to agency
rules governing their informal appeals processes. Where mediation of an
agency decision by a certified State mediation program is available to
participants in an agency program as part of the agency's informal
appeal process, the agency will offer a participant receiving notice of
an agency decision the opportunity to mediate the decision under the
State's certified mediation program, in accordance with the agency's
informal appeals regulations.
(c) USDA agencies making mediation available as part of the agency
informal appeals process may execute memoranda of understanding with a
certified mediation program concerning procedures and policies for
mediations during agency informal appeals that are not inconsistent
with this part or other applicable regulations. Each such memorandum of
understanding will be deemed part of the grant agreement governing the
operation and administration of a State certified mediation program
receiving Federal grant funds under this part.
(d) A mediator in a program certified under this part has no
authority to make decisions that are binding on parties to a dispute.
(e) No person may be compelled to participate in mediation provided
through a mediation program certified under this part. This provision
shall not affect a State law requiring mediation before foreclosure on
agricultural land or property.
Sec. 785.2 Definitions.
Administrator means the Administrator, FSA, or authorized designee.
Certified State mediation program means a program providing
mediation services that has been certified in accordance with section
785.3.
Confidential mediation means a mediation process in which the
mediator will not disclose to any person oral or written communications
provided to the mediator in confidence, except as allowed by 5 U.S.C.
574 or section 785.9.
Covered persons means producers, their creditors (as applicable),
and other persons directly affected by actions of the USDA involving
one or more of the following issues:
(1) Wetlands determinations;
(2) Compliance with farm programs, including conservation programs;
(3) Agricultural loans (regardless of whether the loans are made or
guaranteed by the USDA or are made by a third party);
(4) Rural water loan programs;
(5) Grazing on National Forest System lands;
(6) Pesticides; or
(7) Such other issues as the Secretary may consider appropriate.
[[Page 57316]]
Fiscal year means the period of time beginning October 1 of one
year and ending September 30 of the next year and designated by the
year in which it ends.
FSA means the Farm Service Agency of the U.S. Department of
Agriculture, or a successor agency.
Mediation services means all activities relating to the intake and
scheduling of mediations; the provision of background and selected
information regarding the mediation process; financial advisory and
counseling services (as reasonable and necessary to prepare parties for
mediation) performed by a person other than a State mediation program
mediator; and mediation sessions in which a mediator assists disputing
parties in voluntarily reaching mutually agreeable settlement of issues
within the laws, regulations, and the agency's generally applicable
program policies and procedures, but has no authoritative decision
making power.
Mediator means a neutral individual who functions specifically to
aid the parties in a dispute during a mediation process.
Qualified mediator means a mediator who meets the training
requirements established by State law in the State in which mediation
services will be provided or, where a State has no law prescribing
mediator qualifications, an individual who has attended a minimum of 40
hours of core mediator knowledge and skills training and, to remain in
a qualified mediator status, completes a minimum of 20 hours of
additional training or education during each 2-year period. Such
training or education must be approved by the USDA, by an accredited
college or university, or by one of the following organizations: State
Bar of a qualifying State, a State mediation association, a State
approved mediation program, or a society of professionals in dispute
resolution.
Qualifying State means a State with a State mediation program
currently certified by FSA.
Sec. 785.3 Annual certification of State mediation programs.
To obtain FSA certification of the State's mediation program, the
State must meet the requirements of this section.
(a) New request for certification. A new request for certification
of a State mediation program must include descriptive and supporting
information regarding the mediation program and a certification that
the mediation program meets certain requirements as prescribed in this
subsection. If a State is also qualifying its mediation program to
request a grant of Federal funds under the certified State mediation
program, the State must submit with its request for certification
additional information in accordance with Sec. 785.4.
(1) Description of mediation program. The State must submit a
narrative describing the following with supporting documentation:
(i) A summary of the program;
(ii) An identification of issues available for mediation under the
program;
(iii) Management of the program;
(iv) Mediation services offered by the program;
(v) Program staffing and staffing levels;
(vi) Uses of contract mediation services in the program describing
both services provided by contractors and costs of such services;
(vii) State statutes and regulations in effect that are applicable
to the State's mediation program; and
(viii) A description of the State program's education and training
requirements for mediators including:
(A) Training in mediation skills and in USDA programs;
(B) Identification and compliance with any State law requirements;
and
(C) Other steps by the State's program to recruit and deploy
qualified mediators.
(ix) Any other information requested by FSA;
(2) Certification. The Governor, or head of a State agency
designated by the Governor, must certify in writing to the
Administrator that the State's mediation program meets the following
program requirements:
(i) That the State's mediation program provides mediation services
to covered persons with the aim of reaching mutually agreeable
decisions between the parties under the program;
(ii) That the State's mediation program is authorized or
administered by an agency of the State government or by the Governor of
the State;
(iii) That the State's mediation program provides for training of
mediators in mediation skills and in all issues covered by the State's
mediation program;
(iv) That the State's mediation program shall provide confidential
mediation as defined in Sec. 785.2;
(v) That the State's mediation program ensures, in the case of
agricultural loans, that all lenders and borrowers of agricultural
loans receive adequate notification of the mediation program;
(vi) That the State's mediation program ensures, in the case of
other issues covered by the mediation program, that persons directly
affected by actions of the USDA receive adequate notification of the
mediation program; and
(vii) That the State's mediation program prohibits discrimination
in its programs on the basis of race, color, national origin, sex,
religion, age, disability, political beliefs, and marital or familial
status.
(b) Request for re-certification by qualifying State. If a State is
a qualifying State at the time its request is made, the written request
need only describe the changes made in the program since the previous
year's request, together with such documents and information as are
necessary concerning such changes, and a written certification that the
remaining elements of the program will continue as described in the
previous request.
Sec. 785.4 Grants to certified State mediation programs.
(a) Eligibility. To be eligible to receive a grant, a State
mediation program must:
(1) Be certified as described in Sec. 785.3; and
(2) Submit an application for a grant with its certification or re-
certification request as set forth in this section.
(b) Application for grant. A State requesting a grant will submit
the following to the Administrator:
(1) Application for Federal Assistance, Standard Form 424
(available in any FSA office and on the Internet, http://
www.whitehouse.gov/omb/grants/);
(2) A budget with supporting details providing estimates of the
cost of operation and administration of the program. Proposed direct
expenditures will be grouped in the categories of allowable direct
costs under the program as set forth in paragraph (c)(1) of this
section;
(3) Other information pertinent to the funding criteria specified
in Sec. 785.7(b); and
(4) Any additional supporting information requested by FSA in
connection with its review of the grant request.
(c) Grant purposes. Grants made under this part will be used only
to pay the allowable costs of operation and administration of the
components of a qualifying State's mediation program that have been
certified as set forth in Sec. 785.3(b)(2). Costs of services other
than mediation services to covered persons within the State are not
considered part of the cost of operation and administration of the
mediation program for the purpose of determining the amount of a grant
award.
(1) Allowable costs. Subject to applicable cost principles as set
forth or referenced in Sec. 3016.22 of this title,
[[Page 57317]]
allowable costs for operations and administration are limited to those
that are reasonable and necessary to carry out the State's certified
mediation program in providing mediation services for covered persons
within the State. Specific categories of costs allowable under the
certified State mediation program include, and are limited to:
(i) Staff salaries and fringe benefits;
(ii) Reasonable fees and costs of mediators;
(iii) Office rent and expenses, such as utilities and equipment
rental;
(iv) Office supplies;
(v) Administrative costs, such as workers' compensation, liability
insurance, employer's share of Social Security, and travel that is
necessary to provide mediation services;
(vi) Education and training of participants and mediators involved
in mediation;
(vii) Security systems necessary to assure confidentiality of
mediation sessions and records of mediation sessions;
(viii) Costs associated with publicity and promotion of the
program; and
(ix) Financial advisory and counseling services for parties
requesting mediation (as reasonable and necessary to prepare parties
for mediation) that are performed by a person other than a state
mediation program mediator and as approved under guidelines established
by the state mediation program and reported to FSA.
(2) Prohibited expenditures. Expenditures of grant funds are not
allowed for:
(i) Purchase of capital assets, real estate, or vehicles and
repair, or maintenance of privately-owned property;
(ii) Political activities;
(iii) Routine administrative activities not allowable under OMB
Cost Principles found in part 3015, subpart T, of this title and OMB
Circular No. A-87; and
(iv) Services provided by a State mediation program that are not
consistent with the features of the mediation program certified by the
State, including advocacy services on behalf of a mediation
participant, such as representation of a mediation client before an
administrative appeals entity of the USDA or other Federal Government
department or Federal or State Court proceeding.
Sec. 785.5 Fees for mediation services.
A requirement that non-USDA parties who elect to participate in
mediation pay a fee for mediation services will not preclude
certification of a certified State mediation program or its eligibility
for a grant; however, if participation in mediation is mandatory for a
USDA agency, a certified State mediation program may not require the
USDA agency to pay a fee to participate in a mediation.
Sec. 785.6 Deadlines and address.
(a) Deadlines. (1) To be a qualifying State as of the beginning of
a fiscal year and to be eligible for grant funding as of the beginning
of the fiscal year, the Governor of a State or head of a State agency
designated by the Governor of a State must submit a request for
certification and application for grant on or before August 1 of the
calendar year in which the fiscal year begins.
(2) Requests received after August 1. FSA will accept requests for
re-certifications and for new certifications of State mediation
programs after August 1 in each calendar year; however, such requests
will not be considered for grant funding under Sec. 785.7(c) until
after March 1.
(3) Requests for additional grant funds during a fiscal year. Any
request by a State mediation program that is eligible for grant funding
as of the beginning of the fiscal year for additional grant funds
during that fiscal year for additional, unbudgeted demands for
mediation services must be submitted on or before March 1 of the fiscal
year.
(b) Address. The request for certification or re-certification and
any grant request must be mailed or delivered to: Administrator, Farm
Service Agency, U.S. Department of Agriculture, Stop 0501, 1400
Independence Avenue, SW., Washington, DC 20250-0501.
Sec. 785.7 Distribution of Federal grant funds.
(a) Maximum grant award. A grant award shall not exceed 70 percent
of the budgeted allowable costs of operation and administration of the
certified State mediation program. In no case will the sum granted to a
State exceed $500,000 per fiscal year.
(b) Funding criteria. FSA will consider the following in
determining the grant award to a qualifying State:
(1) Demand for and use of mediation services (historical and
projected);
(2) Scope of mediation services;
(3) Service record of the State program, as evidenced by:
(i) Number of inquiries;
(ii) Number of requests for and use of mediation services,
historical and projected, as applicable;
(iii) Number of mediations resulting in signed mediation
agreements;
(iv) Timeliness of mediation services; and
(v) Activities promoting awareness and use of mediation;
(4) Historic use of program funds (budgeted versus actual); and
(5) Material changes in the State program.
(c) Disbursements of grant funds. (1) Grant funds will be paid in
advance, in installments throughout the Federal fiscal year as
requested by a certified State mediation program and approved by FSA.
The initial payment to a program in a qualifying State eligible for
grant funding as of the beginning of a fiscal year shall represent at
least one-fourth of the State's annual grant award. The initial payment
will be made as soon as practicable after certification, or re-
certification, after grant funds are appropriated and available.
(2) Payment of grant funds will be by electronic funds transfer to
the designated account of each certified State mediation program, as
approved by FSA.
(d) Administrative reserve fund. After funds are appropriated, FSA
will set aside 5 percent of the annual appropriation for use as an
administrative reserve.
(1) Subject to paragraph (a) of this section and the availability
of funds, the Administrator will allocate and disburse sums from the
administrative reserve in the following priority order:
(i) Disbursements to cover additional, unbudgeted demands for
mediation services in qualifying States eligible for grant funding as
of the beginning of the fiscal year;
(ii) Grants to qualifying States whose requests for new
certification or re-certification were received between August 2 and
March 1. A previously qualifying State that submits a request for re-
certification received after August 1 may receive a grant award
effective as of the beginning of the fiscal year. A newly qualifying
State that submits a request for certification received after August 1
may receive a grant award effective March 31 of the fiscal year.
(iii) Any balance remaining in the administrative reserve will be
allocated pro rata to certified State mediation programs based on their
initial fiscal year grant awards.
(2) All funds from the administrative reserve will be made
available on or before March 31 of the fiscal year.
(e) Period of availability of funds. (1) Certified State mediation
programs receiving grant funds are encouraged to obligate award funds
within the Federal fiscal year of the award. A State may, however,
carry forward any funds disbursed to its certified State mediation
program that remain unobligated at the end of the fiscal year of award
for use
[[Page 57318]]
in the next fiscal year for costs resulting from obligations in the
subsequent funding period. Any carryover balances plus any additional
obligated fiscal year grant will not exceed the lesser of 70 percent of
the State's budgeted allowable costs of operation and administration of
the certified State mediation program for the subsequent fiscal year,
or $500,000.
(2) Grant funds not spent in accordance with this part will be
subject to de-obligation and must be returned to the USDA.
Sec. 785.8 Reports by qualifying States receiving mediation grant
funds.
(a) Annual report by certified State mediation program. No later
than 30 days following the end of a fiscal year during which a
qualifying State received a grant award under this part, the State must
submit to the Administrator an annual report on its certified State
mediation program. The annual report must include the following:
(1) A review of mediation services provided by the certified State
mediation program during the preceding Federal fiscal year providing
information concerning the following matters:
(i) A narrative review of the goals and accomplishments of the
certified State mediation program in providing intake and scheduling of
cases; the provision of background and selected information regarding
the mediation process; financial advisory and counseling services,
training, notification, public education, increasing resolution rates,
and obtaining program funding from sources other than the grant under
this part.
(ii) A quantitative summary for the preceding fiscal year, and for
prior fiscal years, as appropriate, for comparisons of program
activities and outcomes of the cases opened and closed during the
reporting period; mediation services provided to clients grouped by
program and subdivided by issue, USDA agency, types of covered persons
and other participants; and the resolution rate for each category of
issue reported for cases closed during the year;
(2) An assessment of the performance and effectiveness of the
State's certified mediation program considering:
(i) Estimated average costs of mediation services per client with
estimates furnished in terms of the allowable costs set forth in Sec.
785.4(b)(1).
(ii) Estimated savings to the State as a result of having the State
mediation program certified including:
(A) Projected costs of avoided USDA administrative appeals based on
projections of the average costs of such appeals furnished to the State
by FSA, with the assistance of the USDA National Appeals Division and
other agencies as appropriate;
(B) In agricultural credit mediations that do not result from a
USDA adverse program decision, projected cost savings to the various
parties as a result of resolution of their dispute in mediation.
Projected cost savings will be based on such reliable statistical data
as may be obtained from State statistical sources including the
certified State's bar association, State Department of Agriculture,
State court system or Better Business Bureau, or other reliable State
or Federal sources;
(iii) Recommendations for improving the delivery of mediation
services to covered persons, including:
(A) Increasing responsiveness to needs for mediation services.
(B) Promoting increases in dispute resolution rates.
(C) Improving assessments of training needs.
(D) Improving delivery of training.
(E) Reducing costs per mediation.
(3) Such other matters relating to the program as the State may
elect to include, or as the Administrator may require.
(b) Audit report. In addition to the auditing requirements of part
3015, subpart I and Sec. 3016.26 of this title, any qualifying State
receiving a grant under this part must submit an audit report to the
Administrator in compliance with OMB Circular A-133.
Sec. 785.9 Access to program records.
Notwithstanding Sec. 3015.24 of this title, the State must
maintain and provide the Government access to pertinent records
regarding services delivered by the certified State mediation program
for purposes of evaluation, audit and monitoring of the certified State
mediation program as follows:
(a) For purposes of this section, pertinent records consist of: the
names and addresses of applicants for mediation services; dates
mediations opened and closed; issues mediated; dates of sessions with
mediators; names of mediators; mediation services furnished to
participants by the program; the sums charged to parties for each
mediation service; records of delivery of services to prepare parties
for mediation (including financial advisory and counseling services);
and the outcome of the mediation services including formal settlement
results and supporting documentation.
(b) State mediators will notify all participants in writing at the
beginning of the mediation session that the USDA, including the USDA
Inspector General, the Comptroller General of the United States, the
Administrator, and any of their representatives will have access to
pertinent records as necessary to monitor and to conduct audits,
investigations, or evaluations of mediation services funded in whole or
in part by the USDA.
(c) All participants in a mediation must sign and date an
acknowledgment of receipt of such notice from the mediator. The
certified State mediation program shall maintain originals of such
acknowledgments in its mediation files for at least 5 years.
Sec. 785.10 Penalty for non-compliance.
(a) The Administrator is authorized to withdraw certification of a
State mediation program, terminate or suspend the grant to such
program, require a return of unspent grant funds, a reimbursement of
grant funds on account of expenditures that are not allowed, and may
impose any other penalties or sanctions authorized by law if the
Administrator determines that:
(1) The State's mediation program, at any time, does not meet the
requirements for certification;
(2) The mediation program is not being operated in a manner
consistent with the features of the program certified by the State,
with applicable regulations, or the grant agreement;
(3) Costs that are not allowed under Sec. 785.4(b) are being paid
out of grant funds;
(4) The mediation program fails to grant access to mediation
records for purposes specified in Sec. 785.8; or
(5) Reports submitted by the State pursuant to Sec. 785.7 are
false, contain misrepresentations or material omissions, or are
otherwise misleading.
(b) In the event that FSA gives notice to the State of its intent
to enforce any withdrawal of certification or other penalty for non-
compliance, USDA agencies will cease to participate in any mediation
conducted by the State's mediation program immediately upon delivery of
such notice to the State.
Sec. 785.11 Reconsideration by the Administrator.
(a) A State mediation program may request that the Administrator
reconsider any determination that a State is not a qualifying State
under Sec. 785.3 and any penalty decision made under Sec. 785.10. The
decision of the Administrator upon reconsideration shall be the final
administrative decision of FSA.
(b) Nothing in this part shall preclude action to suspend or debar
a State mediation program or administering
[[Page 57319]]
entity under part 3017 of this title following a withdrawal of
certification of the State mediation program.
Sec. 785.12 Nondiscrimination.
The provisions of parts 15, 15b and 1901, subpart E, of this title
and part 90 of title 45 apply to activities financed by grants made
under this part.
Sec. 785.13 OMB Control Number.
The information collection requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0560-0165.
PART 1946--[Removed and Reserved]
2. Part 1946 is removed and reserved.
Signed in Washington, DC, on September 3, 2002.
J.B. Penn,
Under Secretary for Farm and Foreign Agricultural Services.
[FR Doc. 02-22800 Filed 9-9-02; 8:45 am]
BILLING CODE 3410-05-P
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