Rule2026-16207
Implementation of the Administrative False Claims Act
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 10, 2026
Effective
August 10, 2026
Issuing agencies
State Department
Abstract
This rule would establish updated, procedural regulations implementing the Administrative False Claims Act (AFCA) at the Department of State.
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 152 (Monday, August 10, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 152 (Monday, August 10, 2026)]
[Rules and Regulations]
[Pages 51386-51391]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-16207]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
22 CFR Part 35
[PN: 13097]
RIN 1400-AG08
Implementation of the Administrative False Claims Act
AGENCY: Department of State.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule would establish updated, procedural regulations
implementing the Administrative False Claims Act (AFCA) at the
Department of State.
DATES: This rule is effective on August 10, 2026.
FOR FURTHER INFORMATION CONTACT: Alice Kottmyer, Attorney-Adviser,
<a href="/cdn-cgi/l/email-protection#bdd6d2c9c9d0c4d8cfdcd0fdcec9dcc9d893dad2cb"><span class="__cf_email__" data-cfemail="dcb7b3a8a8b1a5b9aebdb19cafa8bda8b9f2bbb3aa">[email protected]</span></a>, 202-679-8083.
SUPPLEMENTARY INFORMATION: Congress originally enacted the Program
Fraud Civil Remedies Act (PFCRA) in 1986. The purpose of the PFCRA was
twofold: to provide agencies that were the victims of false claims and
statements an administrative remedy and to provide due process for all
parties subject to that remedy. Public Law 99-509 6102 (October 21,
1986) (findings and purposes at 31 U.S.C. 3801 note).
Section 5203 of the Servicemember Quality of Life Improvement and
National Defense Authorization Act for Fiscal Year 2025 (Pub. L. 118-
59), which was enacted on December 23, 2024, amended the PFCRA. Among
other things, the amendments changed the PFCRA's name to the
Administrative False Claims Act. In that legislation, Congress also
required agencies to make conforming changes to their regulations.
This rule includes the conforming changes required by that
provision. The intent of this rule is to cite the controlling statute
when possible, repeating statutory provisions in the regulation only
where necessary for the convenience of the regulated public. This rule
also restates the existing Department PFCRA regulations in Part 35 to
consolidate Department regulations into a streamlined AFCA section. The
revised structure of this regulation replaces forty-seven separate
sections with six sections to minimize the regulatory footprint of the
AFCA at the Department.
Regulatory Analysis
Administrative Procedure Act
The Department has issued this final rule without prior notice and
opportunity for comment because this is a rule of agency organization,
procedure, or practice (``procedural rule''). See 5 U.S.C. 553(b)(A).
The Department further finds good cause under the APA to issue this
rule without prior notice and comment and for immediate effect because
comments would be unnecessary under 5 U.S.C. 553(b)(B).
The procedural-rule exception ``covers agency actions that do not
themselves alter the rights or interests of parties, although it may
alter the manner in which the parties present themselves or their
viewpoints to the agency.'' JEM Broad. Co., Inc. v. FCC, 22 F.3d 320,
326 (D.C. Cir. 1994) (quoting Batterton v. Marshall, 648 F.2d 694, 707
(D.C. Cir. 1980)); see also Mendoza v. Perez, 754 F.3d 1002, 1023-24
(D.C. Cir. 2014); Am. Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1047 (D.C.
Cir. 1987) (holding that procedural rules are those that do not
``encode a substantive value judgment or put a stamp of approval or
disapproval on a given type of behavior'').
This final rule merely updates the Department's existing
regulations to reflect the statutory changes made by the FY 2025 NDAA
and to make other minor hearing procedure changes. The Department has
no discretion in the statutory changes and does not make substantive
policy choices or impose obligations beyond those required by statute.
Accordingly, notice and comment is unnecessary and delaying the rule's
effective date would not meaningfully enhance public participation or
implementation.
Regulatory Flexibility Analysis
The RFA's regulatory flexibility analysis requirements apply only
to those rules for which an agency is required to publish a general
notice of proposed rulemaking pursuant to 5 U.S.C. 553 or any other
law. See 5 U.S.C. 604(a). State did not issue a notice of proposed
rulemaking for this action. Therefore, a regulatory flexibility
analysis is not required for this rule. Nonetheless, DHS has determined
that this rule will not have a significant economic impact on a
substantial number of small entities. This rule is procedural.
[[Page 51387]]
Unfunded Mandates Reform Act (UMRA)
This final rule does not contain a federal mandate as the term is
defined under the UMRA.
Congressional Review Act (CRA)
This final rule is not a ``rule'' as defined by the CRA. See 5
U.S.C. 804(3)(C) (defining the term ``rule'' to exclude ``any rule of
agency organization, procedure, or practice that does not substantially
affect the rights or obligations of non-agency parties''). The
Department will nonetheless submit this final rule to both houses of
Congress and the Comptroller General before the rule takes effect.
Executive Order 13121 (Federalism)
This rule does not have sufficient federalism implications to
warrant the preparation of a federalism summary impact statement.
Executive Order 12988 (Civil Justice Reform)
The Department has determined that this rule meets the applicable
standards provided in section 3 of E.O. 12988.
Executive Orders 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review)
The Office of Management and Budget (OMB) has not designated this
rule a ``significant regulatory action,'' under section 3(f) of
Executive Order 12866.
Executive Order 14192 (Unleashing Prosperity Through Deregulation)
This rule is not a regulatory action because this rule is not
significant under Executive Order 12866.
Executive Order 13175 (Consultation and Coordination With Indian Tribal
Governments)
This final rule does not have Tribal implications under Executive
Order 13175 because it would not have a substantial direct effect on
one or more Indian Tribes, on the relationship between the Federal
Government and Indian Tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian Tribes.
Paperwork Reduction Act (PRA)
This final rule calls does not create or modify a collection of
information subject to the Paperwork Reduction Act, 44 U.S.C. 3501-
3520.
List of Subjects in 22 CFR Part 35
Administrative practice and procedure.
0
For the reasons stated in the preamble, the Department amends 22 CFR by
revising Part 35 to read as follows:
PART 35--THE ADMINISTRATIVE FALSE CLAIMS ACT
Sec.
35.10 Background.
35.11 Computation of time.
35.20 Definitions.
35.30 Pre-complaint procedures.
35.40 Complaint and pre-hearing procedures.
35.50 Hearing.
35.60 Post hearing procedures.
Authority: 22 U.S.C. 2651a; 31 U.S.C. 3803(g), 3809; and Pub.
L. 118-159.
Sec. 35.10 Background.
This subpart implements the Administrative False Claims Act,
codified at 31 U.S.C. 3801 through 3812. Section 3809 of that Act
requires each authority head to promulgate regulations necessary to
implement the provisions of the statute. Administrative False Claims
Act liability is identified at 31 U.S.C. 3802. Liability for claims can
include an assessment of up to twice the amount of the false claim and
a civil penalty. Liability for a false statement is a civil penalty.
The civil penalty for a false claim or false statement actionable under
that section is $14,308.
Sec. 35.11 Computation of time.
(a) A notice to a person alleged to be liable under this part must
bemailed or delivered by the later of:
(i) Six years after the date on which the violation of is
committed; or
(ii) Three years after the date on which facts material to the
action are known or reasonably should have been known by the Under
Secretary of State for Management, but in no event more than 10 years
after the date on which the violation is committed.
(b) A civil action to recover a penalty or assessment must be
commenced within the three-year timeframe noted in 31 U.S.C. 3808(b).
(c) In computing any period of time under this part or in an order
issued thereunder:
(1) The time begins with the day following the act, event, or
default, and includes the last day of the period, unless it is a
Saturday, Sunday, or legal holiday observed by the Federal Government,
in which event it includes the next business day.
(2) When the period of time allowed is less than 7 days,
intermediate Saturdays, Sundays, and legal holidays observed by the
Federal Government shall be excluded from the computation.
(3) Where a document has been served or issued by placing it in the
mail, an additional 5 days will be added to the time permitted for any
response.
(d) If, at any time, the Attorney General or an Assistant Attorney
General designated by the Attorney General transmits to the Under
Secretary for Management a written finding that continuation of the
administrative process described in this part with respect to a claim
or statement may adversely affect any pending or potential criminal or
civil action related to such claim or statement, the Under Secretary
shall stay the process immediately. The Under Secretary may order the
process resumed only upon receipt of the written authorization of the
Attorney General, the Assistant Attorney General who ordered the stay,
or other appropriate Department of Justice official.
(e) Federal agencies that receive or discover any specific
information regarding bribery, gratuities, conflict of interest, or
other corruption or similar activity in relation to a false claim or
statement, must immediately report that information consistent with the
requirements of 31 U.S.C. 3808(c) to the Attorney General and Inspector
General as appropriate.
(f) If the Department uses a presiding officer who is a member of a
board of contract appeals for a matter, the procedural rules
implemented by that board of contract appeals will control the
litigation of that matter to the extent there is an inconsistency
between the board's procedural rules and the procedural rules of this
part.
(g) In cases where a party, witness or material evidence in a
proceeding under these regulations is located abroad, the investigating
official, reviewing official or presiding officer, as the case may be,
may adjust the provisions of this part for service, filing of
documents, time limitations, and related matters to meet special
problems arising out of that location.
Sec. 35.20 Definitions.
(a) The definitions of ``authority,'' ``authority head,''
``claim,'' ``investigating official,'' ``knows or has reason to know,''
``person,'' ``presiding officer,'' ``reviewing official,''
``statement,'' ``material,'' and ``obligation'' are the same as those
found in 31 U.S.C. 3801. The authority head for the Department is the
Under Secretary for Management. In addition, the investigating official
is the Inspector General of the Department of State or designee, and
the Assistant Legal Adviser for Buildings and Acquisitions is the
reviewing official.
(b) Complaint means the administrative complaint served by the
[[Page 51388]]
reviewing official on the defendant under Sec. 35.40(c).
(c) Defendant means any person alleged in a complaint under Sec.
35.40(a) to be liable for a civil penalty or assessment under Sec.
35.10.
Sec. 35.30 Pre-complaint Procedures.
(a) Investigating official. (1) An investigating official may elect
to investigate matters potentially resulting in an Administrative False
Claims Act action using the subpoena authority at 31 U.S.C. 3804, or
any other authority granted to the investigating official, such as the
authority of the Inspector General Act at 5 United States Code, Chapter
4.
(2) If the investigating official concludes that an action under
the Administrative False Claims Act may be warranted, the investigating
official shall submit a report containing the findings and conclusions
of such investigation to the reviewing official.
(3) Nothing in this section shall preclude or limit an
investigating official's discretion to refer allegations directly to
the Department of Justice for suit under the False Claims Act or other
civil relief, or to defer or postpone a report or referral to the
reviewing official to avoid interference with a criminal investigation
or prosecution.
(4) Nothing in this section modifies any responsibility of an
investigating official to report violations of criminal law to the
Attorney General.
(b) Reviewing official. (1) If, based on the report of the
investigating official under this section, the reviewing official
determines that there is adequate evidence to believe that a person is
liable under the Administrative False Claims Act, and there is a
reasonable prospect of collecting, from a person with respect to whom
the reviewing official is referring allegations of liability in such
notice, the amount for which such person may be liable, the reviewing
official shall transmit to the Attorney General a written notice of the
reviewing official's intention to have a complaint issued under Sec.
35.40(a).
(2) A written notice of the reviewing official's intention to have
a complaint issued under Sec. 35.40(a) shall include:
(i) A statement of the reviewing official's reasons for issuing a
complaint;
(ii) A statement specifying the evidence that supports the
allegations of liability;
(iii) A description of the claims or statements upon which the
allegations of liability are based;
(iv) An estimate of the amount of money, or the value of property,
services, or other benefits, requested or demanded in violation of the
Administrative False Claims Act;
(v) A statement of any exculpatory or mitigating circumstances that
may relate to the claims or statements known by the reviewing official
or the investigating official; and
(vi) A statement that there is a reasonable prospect of collecting
an appropriate amount of penalties and assessments.
(c) Request for authorization from the Department of Justice. (1)
The reviewing official may issue a complaint under Sec. 35.40(a) only
if:
(i) The Department of Justice approves the issuance of a complaint
in a written statement described in 31 U.S.C. 3803(b)(1), and
(ii) In the case of allegations of liability under 31 U.S.C.
3802(a)(1) with respect to a claim, the reviewing official determines
that, with respect to such claim or a group of related claims submitted
at the same time such claim is submitted, the amount of money, or the
value of property or services, demanded or requested in violation of
Sec. 3802(a)(1) does not exceed $1,000,000.
(iii) For the purposes of this section, a related group of claims
submitted at the same time shall include only those claims arising from
the same transaction (e.g., grant, loan, application, or contract) that
are submitted simultaneously as part of a single request, demand, or
submission.
(2) Nothing in this section shall be construed to limit the
reviewing official's authority to join in a single complaint against a
person, claims that are unrelated or were not submitted simultaneously,
regardless of the amount of money, or the value of property or
services, demanded or requested.
(d) A reviewing official shall make all appropriate written
notifications required by section 3803(j)(2) of title 31 of the United
States Code.
Sec. 35.40 Complaint and pre-hearing procedures.
(a) Complaint. The reviewing official will identify the allegations
of liability in a complaint. The complaint must identify the following:
(1) The allegations of liability against the defendant, including
the statutory basis for liability, an identification of the claims or
statements that are the basis for the alleged liability, and the
reasons why liability allegedly arises from such claims or statements;
(2) The maximum amount of penalties and assessments for which the
defendant may be held liable;
(3) Instructions for filing an answer, including a specific
statement of the defendant's right to request a hearing and to be
represented by a representative;
(4) Identification and contact information for the governmental
employee representing the Department in the matter; and
(5) The fact that failure to file an answer within 30 days of
service of the complaint will result in the imposition of the maximum
amount of penalties and assessments without right to appeal, as
provided in Sec. 35.40(e).
(b) Notice of regulations. At the same time the reviewing official
serves the complaint, he or she shall serve the defendant with a copy
of these regulations or identify a free online resource where the
defendant can access these regulations.
(c) Service of the complaint. The Department must mail or deliver
the complaint to the person alleged to be liable in accordance with 31
U.S.C. 3803(d)(1) within the time limitations identified at 31 U.S.C.
3808(a).
(d) Answer. (1) The defendant may request a hearing in the answer
filed with the reviewing official within 30 days of service of the
complaint. In the answer, the defendant:
(i) Shall admit or deny each of the allegations of liability made
in the complaint;
(ii) Shall state any defense on which the defendant intends to
rely;
(iii) May state any reasons why the defendant contends that the
penalties and assessments should be less than the statutory maximum;
and
(iv) Shall state the name, postal address, electronic mail address,
and telephone number of the person authorized by the defendant to act
as defendant's representative, if any.
(2) Upon receipt of an answer, the reviewing official shall file
the complaint and answer with the presiding officer.
(3) If the defendant is unable to file an answer meeting the
requirements of paragraph (d)(1) of this section within the time
provided, the defendant may, before the expiration of 30 days from
service of the complaint, file with the reviewing official a general
answer denying liability and requesting a hearing, and a request for an
extension of time within which to file an answer meeting the
requirements of paragraph (d)(1) of this section. The reviewing
official shall file promptly with the presiding officer the complaint,
the general answer denying liability, and the request for an extension
of time as provided in Sec. 35.40(e). For good cause shown, the
presiding officer may grant the defendant up to 30 additional days
within which to file an answer meeting
[[Page 51389]]
the requirements of paragraph (d)(1) of this section. The presiding
officer shall decide expeditiously whether the defendant shall be
granted an additional period of time to file such answer.
(e) Default upon failure to file an answer. (1) If the defendant
does not file an answer within the time prescribed in Sec. 35.40, the
reviewing official must refer the complaint to the presiding officer
within a reasonable time.
(2) Upon the referral of the complaint, the presiding officer shall
promptly serve on the defendant in the manner prescribed in Sec.
35.40(c), a notice that an initial decision will be issued under this
section.
(3) The presiding officer shall assume the facts alleged in the
complaint to be true and, if such facts establish liability under 31
U.S.C. 3802, the presiding officer shall issue an initial decision
imposing the maximum amount of penalties and assessments allowed under
the statute.
(4) Except as otherwise provided in this section, by failing to
file a timely answer the defendant waives any right to further review
of the penalties and assessments imposed under paragraph (e)(3) of this
section and the initial decision shall become final and binding upon
the parties 30 days after it is issued.
(5) If, before such an initial decision becomes final, the
defendant files a motion with the presiding officer seeking to reopen
on the grounds that extraordinary circumstances prevented the defendant
from filing an answer, the initial decision shall be stayed pending the
presiding officer's decision on the motion.
(6) If, on such motion, the defendant can demonstrate extraordinary
circumstances excusing the failure to file a timely answer, the
presiding officer shall withdraw the initial decision in paragraph
(e)(3) of this section, if such a decision has been issued, and shall
grant the defendant an opportunity to answer the complaint.
(7) A decision of the presiding officer denying a defendant's
motion under paragraph (e)(5) of this section is not subject to
reconsideration under Sec. 35.60(d).
(8) The defendant may appeal to the authority head the decision
denying a motion to reopen by filing a notice of appeal with the
authority head within 15 days after the presiding officer denies the
motion. The timely filing of a notice of appeal shall stay the initial
decision until the authority head decides the issue.
(9) If the defendant files a timely notice of appeal with the
authority head, the presiding officer shall forward the record of the
proceeding to the authority head.
(10) The authority head shall decide expeditiously whether
extraordinary circumstances excuse the defendant's failure to file a
timely answer based solely on the record before the presiding officer.
(11) If the authority head decides that extraordinary circumstances
excused the defendant's failure to file a timely answer, the authority
head shall remand the case to the presiding officer with instructions
to grant the defendant an opportunity to answer.
(12) If the authority head decides that the defendant's failure to
file a timely answer is not excused, the authority head shall reinstate
the initial decision of the presiding officer, which shall become final
and binding upon the parties 30 days after the authority head issues
such decision.
(f) Presiding officer disqualification and authorities. (1) A
presiding officer may be removed from a case:
(i) On the presiding officer's own initiative; or
(ii) On motion by the parties for disqualification of the presiding
officer.
(A) Such motion shall be accompanied by an affidavit alleging
personal bias or other reason for disqualification.
(B) Such motion and affidavit shall be filed promptly upon the
party's discovery of reasons requiring disqualification, or such
objections shall be deemed waived.
(C) Such affidavit shall state specific facts that support the
party's belief that personal bias or other reason for disqualification
exists and the time and circumstances of the party's discovery of such
facts. It shall be accompanied by a certificate of the representative
of record that it is made in good faith.
(D) Upon the filing of such a motion and affidavit, the presiding
officer shall proceed no further in the case until he or she resolves
the matter of disqualification in accordance with this section.
(2) The presiding officer shall conduct a fair and impartial
hearing, avoid delay, maintain order, and assure that a record of the
proceeding is made. The presiding officer has the authority to:
(i) Set and change the date, time, and place of the hearing upon
reasonable notice to the parties;
(ii) Continue or recess the hearing in whole or in part for a
reasonable period of time;
(iii) Hold conferences to identify or simplify the issues, or to
consider other matters that may aid in the expeditious disposition of
the proceeding;
(iv) Administer oaths and affirmations;
(v) For the purpose of conducting a hearing, the presiding officer
may issue subpoenas requiring the attendance and testimony of witnesses
as well as the production of information as set forth in in 31 U.S.C.
3804(b)(2). The party requesting a subpoena shall pay the cost of the
fees and mileage of any witness subpoenaed in the amounts that would be
payable to a witness in a proceeding in United States District Court. A
check for witness fees and mileage shall accompany the subpoena when
served, except that when a subpoena is issued on behalf of the
Department, a check for witness fees and mileage need not accompany the
subpoena;
(vi) Rule on motions and other procedural matters;
(vii) Regulate the requirements regarding motions including
requiring any oral motion to be reduced to writing and establishing the
time within which a response to any written motion will be due if the
motion is not due within 15 days after the written motion is served;
(viii) Regulate the scope and timing of discovery;
(ix) Regulate the course of the hearing and the conduct of
representatives and parties to include imposing sanctions, such as
drawing adverse inferences, striking pleadings, deeming items admitted,
restricting use of evidence, dismissing an action, or issuing an
initial decision that reasonably relate to the severity and nature of
the failure or misconduct;
(x) Examine witnesses;
(xi) Receive, rule on, exclude, or limit evidence;
(xii) Upon motion of a party, take official notice of facts;
(xiii) Upon motion of a party, decide cases, in whole or in part,
by summary judgment where there is no disputed issue of material fact;
(xiv) Conduct any conference, argument, or hearing on motions in
person or by telephone; and
(xv) Exercise such other authority as is necessary to carry out the
responsibilities of the presiding officer under this part.
(xvi) Irrespective of any implications of the above, the presiding
officer does not have the authority to find Federal statutes or
regulations invalid.
(xvii) Additionally, the presiding officer shall not, except to the
extent required for the disposition of ex parte matters as authorized
by law:
(A) Consult a person or party on a fact in issue, unless on notice
and opportunity for all parties to the hearing to participate; or
[[Page 51390]]
(B) Be responsible to or subject to the supervision or direction of
the investigating official or the reviewing official.
(g) Prehearing--(1) Entitlement to review and obtain information.
Defendants receiving notice of the hearing from the presiding officer
under 31 U.S.C. 3803(d)(2)(B) are entitled to information identified in
31 U.S.C. 3803(e), including a copy of all relevant and material
documents, transcripts, records, and other materials, which relate to
the allegations and upon which the findings and conclusions of the
investigating official are based. Defendants should request any such
information from the government's point of contact identified in the
complaint. The government's point of contact will provide all requested
information expeditiously. Information subject to payment of a fee will
be expeditiously provided upon payment of any applicable reasonable
duplication fee.
(2) Discovery. (i) Unless mutually agreed to by the parties,
discovery is available only as ordered by the presiding officer. The
presiding officer may order the following types of discovery:
(A) Requests for production of documents for inspection and
copying;
(B) Requests for admissions of the authenticity of any relevant
document or of the truth of any relevant fact;
(C) Written interrogatories; and
(D) Depositions.
(ii) A party seeking discovery must file a motion with the
presiding officer. Such a motion shall be accompanied by a copy of the
requested discovery, or in the case of depositions, a summary of the
scope of the proposed deposition. Within 10 days of service, a party
may file an opposition to the motion and/or a motion for protective
order as provided in Sec. 35.40(g)(3). The presiding officer may grant
a motion for discovery only if he or she finds that the discovery
sought:
(A) Is necessary for the expeditious, fair, and reasonable
consideration of the issues;
(B) Is not unduly costly or burdensome;
(C) Will not unduly delay the proceeding; and
(D) Does not seek privileged information.
(iii) The burden of showing that discovery should be allowed is on
the party seeking discovery.
(iv) The presiding officer shall regulate the timing of discovery.
(3) Protective orders. A party or a prospective witness or deponent
may file a motion for a protective order with respect to discovery
sought by an opposing party or with respect to the hearing, seeking to
limit the availability or disclosure of evidence. In issuing a
protective order, the presiding officer may make any order which
justice requires to protect a party or person from annoyance,
embarrassment, oppression, or undue burden or expense, including one or
more of the following:
(i) That the discovery not be had;
(ii) That the discovery may be had only on specified terms and
conditions, including a designation of the time or place;
(iii) That the discovery may be had only through a method of
discovery other than that requested;
(iv) That certain matters not be the subject of inquiry, or that
the scope of discovery be limited to certain matters;
(v) That discovery be conducted with no one present except persons
designated by the presiding officer;
(vi) That the contents of discovery or evidence be sealed;
(vii) That a sealed deposition be opened only by order of the
presiding officer;
(viii) That a trade secret or other confidential research,
development, commercial information, or facts pertaining to any
criminal investigation, proceeding, or other administrative
investigation not be disclosed or be disclosed only in a designated
way; or
(ix) That the parties simultaneously file specified documents.
(4) Prehearing orders. The presiding officer shall issue scheduling
orders the presiding officer deems appropriate to ensure a fair and
impartial hearing, avoid delay, maintain order, and assure that a
record of the proceeding is made. At a minimum, the presiding officer
must issue an order that:
(i) Sets the hearing in a location permissible under 31 U.S.C.
3803(g)(4);
(ii) Provides the written notice required by 31 U.S.C.
3803(g)(2)(A);
(iii) Governs the exchange of witness lists, statements, and
exhibits; and
(iv) Ensures the defendant has an opportunity to present their
case, to submit rebuttal evidence, and to conduct such cross-
examination as may be required for a full and true disclosure of the
facts.
(v) Includes in any written notice of a hearing to a defendant a
description of the procedures for the conduct of the hearing.
Sec. 35.50 Hearing.
(a) The presiding officer will conduct the hearing consistent with
that officer's authority to make the determinations identified in 31
U.S.C. 3803(f) by a preponderance of the evidence.
(b) In determining an appropriate amount of civil penalties and
assessments, the presiding officer and the authority head, upon appeal,
should evaluate any circumstances that mitigate or aggravate the
violation and should articulate in their opinions the reasons that
support the penalties and assessments they impose. Because of the
intangible costs of fraud, the expense of investigating such conduct,
and the need to deter others who might be similarly tempted, double
damages and a significant civil penalty ordinarily should be imposed.
Although not exhaustive, the following factors are among those that may
influence the presiding officer and the authority head in determining
the amount of penalties and assessments to impose with respect to the
misconduct (i.e., the false, fictitious, or fraudulent claims or
statements) charged in the complaint:
(1) The number of false, fictitious or fraudulent claims or
statements;
(2) The time period over which such claims or statements were made;
(3) The degree of the defendant's culpability with respect to the
misconduct;
(4) The amount of money or the value of the property, services, or
benefit falsely claimed;
(5) The cost of the Government's actual loss as a result of the
misconduct, including foreseeable consequential damages and the costs
of investigation;
(6) The relationship of the amount imposed as civil penalties to
the amount of the Government's loss;
(7) The potential or actual impact of the misconduct upon public
confidence in the management of Government programs and operations;
(8) Whether the defendant has engaged in a pattern of the same or
similar misconduct;
(9) Whether the defendant attempted to conceal the misconduct;
(10) The degree to which the defendant has involved others in the
misconduct or in concealing it;
(11) Where the misconduct of employees or agents is imputed to the
defendant, the extent to which the defendant's practices fostered or
attempted to preclude such misconduct;
(12) Whether the defendant cooperated in or obstructed an
investigation of the misconduct;
(13) Whether the defendant assisted in identifying and prosecuting
other wrongdoers;
(14) The complexity of the program or transaction, and the degree
of the defendant's sophistication with respect to it, including the
extent of the defendant's prior participation in the program or in
similar transactions;
[[Page 51391]]
(15) Whether the defendant has been found, in any criminal, civil,
or administrative proceeding to have engaged in similar misconduct or
to have dealt dishonestly with the Government of the United States or
of a state, directly or indirectly;
(16) The need to deter the defendant and others from engaging in
the same or similar misconduct; and
(17) The potential impact of the misconduct on the rights of
others.
(c) Nothing in this section shall be construed to limit the
presiding officer or the authority head from considering any other
factors that in any given case may mitigate or aggravate the offense
for which penalties and assessments are imposed.
(d) In assembling the record:
(1) The hearing shall be recorded and transcribed;
(2) Transcripts shall be available following the hearing at a cost
not to exceed the actual cost of duplication and any court reporter's
reasonable fee;
(3) The transcript of testimony, exhibits and other evidence
admitted at the hearing, and all documents filed in the proceeding
constitute the record for the decision by the presiding officer and the
authority head; and
(4) The record may be inspected and copied by anyone upon payment
of a reasonable fee, unless otherwise ordered by the presiding officer.
Sec. 35.60 Post-hearing procedures.
(a) Post-hearing motions. The presiding officer may decide on any
post-hearing motions.
(b) Post-hearing briefs. Any party may file a post-hearing brief.
The presiding officer shall fix the time for filing such briefs, not to
exceed 60 days from the date the parties receive the transcript of the
hearing or, if applicable, the stipulated record. Such briefs may be
accompanied by proposed findings of fact and conclusions of law. The
presiding officer may permit the parties to file reply briefs.
(c) Initial decision. Except for good cause, the presiding officer
shall issue a written decision required by 31 U.S.C. 3803(h) within 90
days after the time for submission of post-hearing briefs and reply
briefs, if permitted, has expired.
(d) Reconsideration of the initial decision. (1) 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 5 days from the date of mailing in the absence
of contrary proof. Every such motion must set forth the matters claimed
to have been erroneously decided and the nature of the alleged errors.
Such motion shall be accompanied by a supporting brief. Responses to
such motions shall be allowed only upon request of the presiding
officer.
(2) The presiding officer may dispose of a motion for
reconsideration by denying it or by issuing a revised initial decision.
If the presiding officer denies a motion for reconsideration, the
initial decision shall constitute the final decision of the authority
head and shall be final and binding on all parties 30 days after the
presiding officer denies the motion, unless the initial decision is
timely appealed to the authority head in accordance with paragraph (e)
of this section.
(3) If the presiding officer issues a revised initial decision,
that decision shall constitute the final decision of the authority head
and shall be final and binding on the parties 30 days after it is
issued, unless it is timely appealed to the authority head in
accordance with paragraph (e) of this section.
(e) Appeal to the authority head. (1) Parties may not appeal
interlocutory rulings by the presiding officer to the authority head.
(2) Except in case of default, if the defendant is determined in an
initial decision to be liable for a civil penalty or assessment, the
defendant may appeal such decision to the authority head by filing a
notice of appeal with the Government's representative identified in the
complaint for review by the authority head. A notice of appeal shall be
accompanied by a written brief specifying exceptions to the initial
decision and reasons supporting the exceptions.
(i) A notice of appeal may be filed at any time within 30 days
after the presiding officer issues an initial decision. However, if
another party files a motion for reconsideration, consideration of the
appeal shall be stayed automatically pending resolution of the motion
for reconsideration.
(ii) If a motion for reconsideration is timely filed, a notice of
appeal must be filed within 30 days after the presiding officer denies
the motion or issues a revised initial decision, whichever applies.
(iii) If no motion for reconsideration is timely filed, a notice of
appeal must be filed within 30 days after the presiding officer issues
the initial decision.
(iv) The authority head may extend the initial 30-day period for an
additional 30 days if the defendant files with the authority head a
request for an extension within the initial 30-day period and shows
good cause.
(3) The Department's representative may file a brief in opposition
to the notice of appeal within 30 days of receiving the notice of
appeal and accompanying brief.
(4) The authority head's review will occur within the limitations
noted in 31 U.S.C. 3803(i)(2)(B) and (C). There is no right to appear
personally before the authority head.
(f) Judicial review. Section 3805 of title 31, United States Code,
authorizes judicial review by an appropriate United States District
Court of a final decision of the authority head imposing penalties and/
or assessments under this part and specifies the procedures for such
review.
(g) Collection. Sections 3806 and 3808(b) of title 31, United
States Code, authorize actions for collection of civil penalties and
assessments imposed under this part and specify the procedures for such
actions.
Under Secretary for Management Jason Evans approved this rule on
August 4, 2026, and delegated signature authority to the undersigned.
Alice M. Kottmyer,
Attorney-Adviser, Office of the Legal Adviser, U.S. Department of
State.
[FR Doc. 2026-16207 Filed 8-7-26; 8:45 am]
BILLING CODE 4710-08-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on August 10, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.