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for other parties to subpoena the wit- ALJ may apply the Federal Rules of ness for cross-examination at the hear- Evidence where appropriate, e.g., to exing. Prior written statements of wit- clude unreliable evidence. Desses proposed to testify at the hear (c) The ALJ shall exclude irrelevant ing and deposition transcripts shall be and immaterial evidence. exchanged as provided in $42.22(a) of (d) Although relevant, evidence may this part.

be excluded if its probative value is (c) The ALJ shall exercise reasonable substantially outweighed by the danger control over the mode and order of in- of unfair prejudice. confusion of the terrogating witnesses and presenting issues, or by considerations of undue evidence so as to:

delay or needless presentation of cumu(1) Make the interrogation and pres- lative evidence. entation effective for the ascertain

(e) Although relevant, evidence may ment of the truth,

be excluded if it is privileged under (2) Avoid needless consumption of Federal law. time, and

(f) Evidence concerning offers of com(3) Protect witnesses from harass

promise or settlement shall be inadment or undue embarrassment.

missible to the extent provided in Rule (d) The ALJ shall permit the parties 408 of the Federal Rules of Evidence. to conduct such cross-examination as

(g) The ALJ shall permit the parties may be required for a full and true dis

to introduce rebuttal witnesses and closure of the facts.

evidence. (e) At the discretion of the ALJ, a

(h) All documents and other evidence witness may be cross-examined on mat

offered or taken for the record shall be ters relevant to the proceeding without

open to examination by all parties, unregard to the scope of the direct exam

less otherwise ordered by the ALJ purination. To the extent permitted by the

suant to § 42.24 of this part. ALJ, cross-examination on matters outside the scope of direct examination 8.42.35 The record. shall be conducted in the manner of direct examination and may proceed by

(a) The hearing will be recorded and leading questions only if the witness is

transcribed. Transcripts may be oba hostile witness, an adverse party, or

tained following the hearing from the a witness identified with an adverse

ALJ at a cost not to exceed the actual party

cost of duplication. (1) Upon motion of any party, the

(b) The transcription of testimony, ALJ shall order witnesses excluded so

exhibits and other evidence admitted that they cannot hear the testimony of at the hearing, and all papers and reother witnesses. This rule does not au

quests filed in the proceeding conthorize the exclusion of

stitute the record for the decision by (1) A party who is an individual;

the ALJ and the Secretary of Veterans (2) In the case of a party that is not an individual, an officer or employee of (c) The record may be inspected and the party appearing for the entity pro copied (upon payment of a reasonable se or designated by the party's rep fee) by anyone, unless otherwise orresentative; or

dered by the ALJ pursuant to $42.24 of (3) An individual whose presence is this part. shown by a party to be essential to the presentation of its case, including an

$ 42.36 Post-hearing briefs. individual employed by the Govern The ALJ may require the parties to ment engaged in assisting the rep file post-hearing briefs. In any event, resentative for the Government.

any party may file a post-hearing brief.

The ALJ shall fix the time for filing $42.34 Evidence.

the briefs, not to exceed 60 days from (a) The ALJ shall determine the ad- the date the parties receive the tranmissibility of evidence.

script of the hearing or, if applicable, (b) Except as provided in this part, the stipulated record. The briefs may the ALJ shall not be bound by the Fed- be accompanied by proposed findings of eral Rules of Evidence. However, the fact and conclusions of law. The ALJ

may permit the parties to file reply briefs.

$42.37 Initial decision.

(a) The ALJ shall issue an initial decision based only on the record, which shall contain findings of fact, conclusions of law, and the amount of any penalties and assessments imposed.

(b) The findings of fact shall include a finding on each of the following issues:

(1) Whether the claims or statements identified in the complaint, or any portions thereof, violate $ 42.3 of this part;

(2) If the person is liable for penalties or assessments, the appropriate amount of the penalties or assessments considering any mitigating or aggravating factors that the ALJ finds in the case, such as those described in $ 42.31 of this part.

(c) The ALJ shall promptly serve the initial decision on all parties within 90 days after the time for submission of post-hearing briefs and reply briefs (if permitted) has expired. The ALJ shall at the same time serve all parties with a statement describing the right of any defendant determined to be liable for a civil penalty or assessment to file a motion for reconsideration with the ALJ or a notice of appeal with the Secretary. If the ALJ fails to meet the deadline contained in this paragraph, the ALJ shall notify the parties of the reason for the delay and shall set a new deadline.

(d) Unless the initial decision of the ALJ is timely appealed to the Secretary, or a motion for reconsideration of the initial decision is timely filed, the initial decision shall constitute the final decision of the Secretary and shall be final and binding on the parties 30 days after it is issued by the ALJ.

(b) Every motion must set forth the matters claimed to have been erroneously decided and the nature of the alleged errors. The motion shall be accompanied by a supporting brief.

(c) Responses to the motions shall be allowed only upon request of the ALJ.

(d) No party may file a motion for reconsideration of an initial decision that has been revised in response to a previous motion for reconsideration.

(e) The ALJ may dispose of a motion for reconsideration by denying it or by issuing a revised initial decision.

(f) If the ALJ denies a motion for reconsideration, the initial decision shall constitute the final decision of the Secretary and shall be final and binding on the parties 30 days after the ALJ denies the motion, unless the initial decision is timely appealed to the Secretary in accordance with § 42.39 of this part.

(g) If the ALJ issues a revised initial decision, that decision shall constitute the final decision of the Secretary and shall be final and binding on the parties 30 days after it is issued, unless it is timely appealed to the Secretary in accordance with $42.39 of this part.

$42.39 Appeal to the Secretary of Vet

erans Affairs. (a) Any defendant who has filed a timely answer and who is determined in an initial decision to be liable for a civil penalty or assessment may appeal the decision to the Secretary of Veterans Affairs by filing a notice of appeal with the Secretary in accordance with this section.

(b)(1) A notice of appeal may be filed at any time within 30 days after the ALJ issues an initial decision. However, if another party files a motion for reconsideration under $42.8 of this part, consideration of the appeal shall be stayed automatically pending resolution of the motion for reconsideration.

(2) If a motion for reconsideration is timely filed, a notice of appeal may be filed within 30 days after the ALJ denies the motion or issues a revised initial decision, whichever applies.

(3) The Secretary may extend the initial 30 day period for an additional 30 days if the defendant files with the Secretary a request for an extension

$ 42.38 Reconsideration of initial deci.

sion. (a) Except as provided in paragraph (d) of this section, any party may file a motion for reconsideration of the initial decision within 20 days of receipt of the initial decision. If service was made by mail, receipt will be presumed to be five days from the mailing in the absence of contrary proof.

within the initial 30 day period and $42.40 Stays ordered by the Departshows good cause.

ment of Justice. (C) If the defendant files a timely no- If at any time the Attorney General tice of appeal with the Secretary, and or Assistant Attorney General desthe time for filing motions for recon- ignated by the Attorney General transsideration under $42.38 of this part has mits to the Secretary a written finding expired, the ALJ shall forward the that continuation of the administrarecord of the proceeding to the Sec tive process described in this part with retary.

respect to a claim or statement may (d) A notice of appeal shall be accom adversely affect any pending or potenpanied by a written brief specifying ex- tial criminal or civil action related to ceptions to the initial decision and rea the claim or statement, the Secretary sons supporting the exceptions.

shall stay the process immediately. (e) The representative for the Gov The Secretary may order the process ernment may file a brief in opposition

resumed only upon receipt of the writto exceptions within 30 days of receiv

ten authorization of the Attorney Gening the notice of appeal and accom

eral. panying brief.

$ 42.41 Stay pending appeal. (f) There is no right to appear personally before the Secretary.

(a) An initial decision is stayed auto(g) There is no right to appeal any in

matically pending disposition of a moterlocutory ruling by the ALJ.

tion for reconsideration or of an appeal (h) In reviewing the initial decision,

to the Secretary, the Secretary shall not consider any

(b) No administrative stay is avail

able following a final decision of the objection that was not raised before the ALJ unless a demonstration is

Secretary. made of extraordinary circumstances

$ 42.42 Judicial review. causing the failure to raise the objection.

Section 3805 of title 31 U.S.C., author

izes judicial review by an appropriate (i) If any party demonstrates to the

United States District Court of a final satisfaction of the Secretary that addi

decision of the Secretary imposing pentional evidence not presented at the

alties or assessments under this part hearing is material and that there were

and specifies the procedures for the rereasonable grounds for the failure to

view. present the evidence at the hearing, the Secretary shall remand the matter $42.43 Collection of civil penalties and to the ALJ for consideration of such

assessments. additional evidence.

Sections 3806 and 3808(b) of title 31 () The Secretary may affirm, reduce,

U.S.C., authorizes actions for collecreverse, compromise, remand, or settle

tion of civil penalties and assessments any penalty or assessment, determined

imposed under this part and specify the by the ALJ in any initial decision.

procedures for the action. (k) The Secretary shall promptly serve each party to the appeal with a $ 42.44 Right to administrative offset. copy of the decision of the Secretary

The amount of any penalty or assessand a statement describing the right of

ment which has become final, or for any person to seek judicial review.

which a judgment has been entered (1) Unless a petition for review is

under $42.42 or $42.43 of this part, or filed as provided in 31 U.S.C. 3805 after

any amount agreed upon in a coma defendant has exhausted all adminis- promise or settlement under $ 42.46 of trative remedies under this part and this part, may be collected by adminiswithin 60 days after the date on which trative offset under 31 U.S.C. 3716, exthe Secretary serves the defendant cept that an administrative offset may with a copy of the Secretary's decision, not be made under this subsection a determination that a defendant is lia- against a refund of an overpayment of ble under $42.3 of this part is final and Federal taxes, then or later owing by is not subject to judicial review.

the United States to the defendant.

$ 42.45 Deposit in Treasury of United

States. All amounts collected pursuant to this part shall be deposited as miscellaneous receipts in the Treasury of the United States, except as provided in 31 U.S.C. 3806(b).



Subpart A-General

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$ 42.46 Compromise and settlement.

(a) Parties may make offers of compromise or settlement at any time.

(b) The reviewing official has the exclusive authority to compromise or settle a case under this part at any time after the date on which the reviewing official is permitted to issue a complaint and before the date on which the ALJ issues an initial decision.

(c) The Secretary has exclusive authority to compromise or settle a case under this part at any time after the date on which the ALJ issues an initial decision, except during the pendency of any review under $42.42 of this part or during the pendency of any action to collect penalties and assessments under $ 42.43 of this part.

(d) The Attorney General has exclusive authority to compromise or settle a case under this part during the pendency of any review under $42.42 of this part, or of any action to recover penalties and assessments under 31 U.S.C. 3806.

(e) The investigating official may recommend settlement terms to the reviewing official, the Secretary, or the Attorney General, as appropriate. The reviewing official may recommend settlement terms to the Secretary, or the Attorney General, as appropriate.

(f) Any compromise or settlement must be in writing.

Subpart C-Post-Award Requirements

FINANCIAL ADMINISTRATION 43.20 Standards for financial management

systems. 43.21 Payment. 43.22 Allowable costs. 43.23 Period of availability of funds. 43.24 Matching or cost sharing. 43.25 Program income. 43.26 Non-Federal audit.

CHANGES, PROPERTY, AND SUBAWARDS 43.30 Changes. 43.31 Real property. 43.32 Equipment. 43.33 Supplies. 43.34 Copyrights. 43.35 Subawards to debarred and suspended

parties. 43.36 Procurement. 43.37 Subgrants.


ENFORCEMENT 43.40 Monitoring and reporting program

performance. 43.41 Financial reporting. 43.42 Retention and access requirements for

records. 43.43 Enforcement. 43.44 Termination for convenience.

842.47 Limitations. (a) The notice of hearing with respect

+ to a claim or statement must be served in the manner specified in $42.8 of this part within 6 years after the date on which such claim or statement is made.

(b) If the defendant fails to file a timely answer, service of a notice under $ 42.10(b) of this part shall be deemed a notice of hearing of purposes of this section.

(c) The statute of limitations may be extended by agreement of the parties.

Subpart D-After-the-Grant Requirements

43.50 Closeout. 43.51 Later disallowances and adjustments. 43.52 Collection of amounts due.

Subpart E-Entitlements [Reserved)

AUTHORITY: 38 U.S.C. 501, 1712.

SOURCE: 53 FR 8073 and 8087, Mar. 11, 1988, general, such as financial management, unless otherwise noted.

kinds and frequency of reports, and re

tention of records. These are distinSubpart A-General

guished from programmatic require

ments, which concern matters that can $ 43.1 Purpose and scope of this part. be treated only on a program-by-pro

This part establishes uniform admin- gram or grant-by-grant basis, such as istrative rules for Federal grants and kinds of activities that can be supcooperative agreements and subawards ported by grants under a particular to State, local and Indian tribal gov- program. ernments.

Awarding agency means (1) with re

spect to a grant, the Federal agency, $ 43.2 Scope of subpart.

and (2) with respect to a subgrant, the This subpart contains general rules party that awarded the subgrant. pertaining to this part and procedures Cash contributions means the grantfor control of exceptions from this ee's cash outlay, including the outlay part.

of money contributed to the grantee or

subgrantee by other public agencies 43.3 Definitions.

and institutions, and private organizaAs used in this part:

tions and individuals. When authorized Accrued erpenditures mean the by Federal legislation, Federal funds charges incurred by the grantee during received from other assistance agreea given period requiring the provision ments may be considered as grantee or of funds for:

subgrantee cash contributions. (1) Goods and other tangible property Contract means (except as used in the received;

definitions for grant and subgrant in (2) Services performed by employees this section and except where qualified contractors, subgrantees, subcontrac- by Federal) a procurement contract tors, and other payees; and

under a grant or subgrant, and means a (3) Other amounts becoming owed procurement subcontract under a conunder programs for which no current tract. services or performance is required Cost sharing or matching means the such as annuities, insurance claims, value of the third party in-kind conand other benefit payments.

tributions and the portion of the costs Accrued income means the sum of: of a federally assisted project or pro

(1) Earnings during a given period gram not borne by the Federal Governfrom services performed by the grantee ment. and goods and other tangible property Cost-type contract means a contract or delivered to purchasers, and

subcontract under a grant in which the (2) Amounts becoming owed to the contractor or subcontractor is paid on grantee for which no current services the basis of the costs it incurs, with or or performance is required by the without a fee. grantee.

Equipment means tangible, nonAcquisition cost of an item of pur- expendable, personal property having a chased equipment means the net in- useful life of more than one year and voice unit price of the property includ- an acquisition cost of $5,000 or more ing the cost of modifications, attach- per unit. A grantee may use its own ments, accessories, or auxiliary appa definition of equipment provided that ratus necessary to make the property such definition would at least include usable for the purpose for which it was all equipment defined above. acquired. Other charges such as the Expenditure report means: (1) For noncost of installation, transportation, construction grants, the SF-269 “Fitaxes, duty or protective in-transit in nancial Status Report” (or other equivsurance, shall be included or excluded alent report); (2) for construction from the unit acquisition cost in ac- grants, the SF-271 “Outlay Report and cordance with the grantee's regular ac- Request for Reimbursement” (or other counting practices.

equivalent report). Administrative requirements mean Federally recognized Indian tribal govthose matters common to grants in ernment means the governing body or a

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