129 NOTES TO THE FINANCIAL STATEMENTS 

Note 21. Contingencies 

Loss contingencies are existing conditions, situations, or sets of circumstances involving uncertainty as to possible loss 

to an entity. The uncertainty will ultimately be resolved when one or more future events occur or fail to occur. The 

government is subject to loss contingencies related to: 

x Legal and environmental and disposal; 

x Insurance and guarantees; and 

x Other Contingencies. 

The government is involved in various litigation, including administrative proceedings, legal actions, and tort claims, 

which may ultimately result in settlements or decisions adverse to the government. In addition, the government is subject to 

loss contingencies for a variety of environmental cleanup costs for the storage and disposal of hazardous material as well as 

the operations and closures of facilities at which environmental contamination may be present. Refer to the Legal 

Contingencies and Environmental and Disposal Contingencies section of this note for additional information. 

The government provides insurance and guarantees via a variety of programs. At the time an insurance policy or 

guarantee is issued, a contingency arises. The contingency is the risk of loss assumed by the insurer, that is, the risk of loss 

from events that may occur during the term of the policy. For additional information, refer to the Insurance and Guarantees 

sections of this note. 

Other contingencies include those related to the government’s establishment of construction budgets without receiving 

appropriations from Congress for such projects, appeals of Medicaid audit and program disallowances by the states, potential 

draws by GSEs, and whistleblower awards. The government is also a party to treaties and other international agreements. 

These treaties and other international agreements address various issues including, but not limited to, trade, commerce, 

security, and law enforcement that may involve financial obligations or give rise to possible exposure to losses. Estimated 

potential losses for legal claims related to treaties and international agreements are included in the Legal Contingencies and 

Environmental and Disposal Contingencies section of this note. For additional information on the government’s other loss 

contingencies, refer to the Other Contingencies section of this note. 

Financial Treatment of Loss Contingencies 

The reporting of loss contingencies depends on the likelihood that a future event or events will confirm the loss or 

impairment of an asset or the incurrence of a liability and the likelihood of loss can range from probable to remote. SFFAS 

No. 5, Accounting for Liabilities of the Federal Government, identifies the probability classifications used to assess the range 

for the likelihood of loss as probable, reasonably possible, and remote. Loss contingencies where a past event or exchange 

transaction has occurred, and where a future outflow or other sacrifice of resources is assessed as probable and measurable, 

are accrued in the financial statements. Loss contingencies that are assessed to be at least reasonably possible are disclosed in 

this note, and loss contingencies that are assessed as remote are neither reported in the financial statements, nor disclosed in 

the notes. Federal entities account for loss contingencies based on the likelihood of loss and measurability criteria provided in 

the following table.2

2

 In addition, a third condition must be met to be a loss contingency: a past event or an exchange transaction must occur. 
 NOTES TO THE FINANCIAL STATEMENTS 130 

Likelihood of future 

outflow or sacrifice of 

resources 

Loss amount can be 

reasonably measured 

Loss range can be 

reasonably measured 

Loss amount or range 

cannot be reasonably 

measured 

Probable 

Future confirming 

event(s) is(are) more 

likely than not to occur.3

Accrue the liability. 

Report on Balance Sheet 

and Statement of Net 

Cost.

Accrue liability of best 

estimate or minimum 

amount in loss range if 

there is no best estimate, 

and disclose nature of 

contingency and range of 

estimated liability.

Disclose nature of 

contingency and include 

a statement that an 

estimate cannot be 

made.

Reasonably possible 

Possibility of future 

confirming event(s) 

occurring is more than 

remote but less than 

probable.

Disclose nature of 

contingency and 

estimated amount.

Disclose nature of 

contingency and 

estimated loss range.

Disclose nature of 

contingency and include 

a statement that an 

estimate cannot be 

made.

Remote 

Possibility of future 

event(s) occurring is 

slight.

No action is required. No action is required. No action is required.

Loss contingencies arise in the normal course of operations and their ultimate disposition is unknown. Based on 

information currently available, however, it is management’s opinion that the expected outcome of these matters, individually 

or in the aggregate, will not have a material adverse effect on the financial statements, except for the litigation and insurance 

described in the following sections, which could have a material adverse effect on the financial statements. 

Certain significant consolidation entities apply financial accounting and reporting standards issued by FASB, and such 

entities, as permitted by SFFAS No. 47, Reporting Entity, are consolidated into the U.S. government’s consolidated financial 

statements without conversion to financial and reporting standards issued by FASAB.4 Generally, under FASAB standards, a 

contingency is considered “probable” if the future event or events are more likely than not to occur. Under FASB standards, a 

contingency is considered “probable” if the future event or events are likely to occur. “Likely to occur” is considered to be 

more certain than “more likely than not to occur.” Under both accounting frameworks, a contingency is considered 

“reasonably possible” if occurrence of the future event or events is more likely than remote, but less likely than “probable” 

(“probable” as defined within each corresponding accounting framework). 

3 For pending or threatened litigation and unasserted claims, the future confirming event or events are considered “probable” if such events are likely to 

occur. 

4 Significant consolidation entities that apply FASB standards without conversion to FASAB standards are FCSIC, FDIC, NRRIT, PBGC, Smithsonian, 

TVA, and USPS.
131 NOTES TO THE FINANCIAL STATEMENTS 

Legal Contingencies and Environmental and Disposal Contingencies 

Legal Contingencies and Environmental and Disposal Contingencies as of September 30, 2023, and 

2022 

2023 2022 

Estimated Range of Loss Estimated Range of Loss 

for Certain Cases 2 for Certain Cases 2

Accrued Accrued 

(In billions of dollars) Liabilities 1 Lower End Upper End Liabilities 1 Lower End Upper End 

Probable 55.9 55.4 66.3 41.1 40.6 43.6 

Reasonably possible N/A 10.6 107.4 N/A 17.2 44.5 

1 Accrued liabilities are recorded and presented in other liabilities on the Balance Sheet. 

2 Does not reflect the total range of loss; many cases assessed as reasonably possible of an unfavorable outcome did not include 

estimated losses that could be determined. 

Note: "N/A" indicates not applicable. 

Management and legal counsel have determined that it is “probable” that some legal actions, litigation, tort claims, and 

environmental and disposal contingencies will result in a loss to the government and the loss amounts are reasonably 

measurable. The estimated liabilities for “probable” cases against the government are $55.9 billion and $41.1 billion as of 

September 30, 2023, and 2022, respectively, and are included in “Other Liabilities” on the Balance Sheet. For example, the 

U.S. Supreme Court 2012 decision in Salazar v. Ramah Navajo Chapter, and subsequent cases related to contract support 

costs have resulted in increased claims against the Indian Health Service, which is a component within HHS. As a result of 

this decision, many tribes have filed claims. Some claims have been paid and others have been asserted but not yet settled. It 

is expected that some tribes will file additional claims for prior years. The estimated amount recorded for contract support 

costs is $6.4 billion in FY 2023 and $6.1 billion in FY 2022. 

There are also administrative claims and legal actions pending where adverse decisions are considered by management 

and legal counsel as “reasonably possible” with an estimate of potential loss or a range of potential loss. The estimated 

potential losses reported for such claims and actions range from $10.6 billion to $107.4 billion as of September 30, 2023, and 

from $17.2 billion to $44.5 billion as of September 30, 2022. 

The estimated upper range of potential loss for probable and reasonably possible claims and actions increased $22.7 

billion, and $62.9 billion, respectively in FY 2023. The increase is primarily due to new cases, a change in the likelihood of 

loss, along with the net change in the amount of potential loss, and legal cases that are no longer pending. 

In accordance with the NWPA, DOE entered into more than 69 standard contracts with utilities in which, in return for 

payment of fees into the Nuclear Waste Fund, DOE agreed to begin disposal of SNF by January 31, 1998. Because DOE has 

no facility available to receive SNF under the NWPA, it has been unable to begin disposal of the utilities’ SNF as required by 

the contracts. Significant litigation claiming damages for partial breach of contract has ensued as a result of this delay. Based 

on settlement estimates, the total liability estimate as of September 30, 2023 is in a range between $44.7 billion and $51.6 

billion. After deducting the cumulative amount paid of $10.6 billion as of September 30, 2023 under settlements, and as a 

result of final judgments, the remaining accrued liability is estimated to be approximately $34.1 billion, compared to 

approximately $31.0 billion as of September 30, 2022. 

A number of class action and/or multiple plaintiff tort suits have been filed against current and former DOE contractors 

in which the plaintiffs seek damages for alleged exposures to radioactive and/or toxic substances as a result of the historic 

operations of DOE’s nuclear facilities. Collectively, in these cases, damages of $1.2 billion are currently sought. 

Numerous litigation cases are pending where the outcome is uncertain or it is reasonably possible that a loss has been 

incurred and where estimates cannot be made. There are other litigation cases where the plaintiffs have not made claims for 

specific dollar amounts, but the settlement may be significant. The ultimate resolution of these legal actions for which the 

potential loss could not be determined may materially affect the U.S. government’s financial position or operating results. 

A number of cases were filed in the U.S. Court of Federal Claims and U.S. District Courts in which the plaintiffs allege, 

among other things, that the U.S. government took their property, breached contractual rights of preferred and common 
 NOTES TO THE FINANCIAL STATEMENTS 132 

stockholders, and breached fiduciary duties when the third amendments to the SPSPAs between Treasury and each GSE were 

executed in August 2012 (please refer to Note 8—Investments in Government-Sponsored Enterprises). In the U.S. Court of 

Federal Claims, the plaintiffs seek just compensation and other damages from the U.S. government. With respect to certain 

cases pending before the U.S. Court of Federal Claims, the U.S. government’s motion to dismiss was granted with respect to 

certain claims and denied with respect to certain other claims. The U.S. Court of Appeals for the Federal Circuit dismissed all

of the claims. Certain plaintiffs filed petitions for a writ of certiorari with the Supreme Court, which were denied. While most 

of the cases brought before the U.S. Court of Federal Claims have been dismissed, some are still pending. In the U.S. District 

Courts, the plaintiffs seek to set aside the third amendments to the SPSPAs as well as damages, and in some cases an 

injunction that results in changes to Treasury’s liquidation preference, or that converts Treasury’s GSE senior preferred stock

to common stock. Following the Supreme Court’s decision in June 2021, the Court left open the possibility that the plaintiffs 

may be entitled to retrospective relief if the unconstitutional provision inflicted “compensable harm”. The Fifth and Eighth 

Circuit Courts of Appeals remanded cases to the U.S. District Court for the Southern District of Texas and the U.S. District 

Court for the District of Minnesota, where plaintiffs filed amended complaints alleging that the unconstitutional provision 

inflicted “compensable harm”. In the Southern District of Texas litigation, plaintiffs also added claims that FHFA’s funding 

structure violates the Appropriations Clause of the U.S. Constitution. The U.S. District Court for the Southern District of 

Texas dismissed the amended complaint, and the Fifth Circuit Court of Appeals affirmed the dismissal. The U.S. District 

Court for the District of Minnesota also dismissed the amended complaint, and that case is now again pending at the Eighth 

Circuit Court of Appeals. The Sixth Circuit Court of Appeals remanded a case to the U.S. District Court for the Western 

District of Michigan to determine if the unconstitutional provision inflicted “compensable harm,” while rejecting claims that 

an FHFA director had been serving in violation of the Appointments Clause of the U.S. Constitution. The plaintiffs filed a 

petition for a writ of certiorari with the Supreme Court regarding the Appointments Clause claim, which was denied. On 

remand, plaintiffs are seeking to amend their complaint to add claims that FHFA’s funding structure violates the 

Appropriations Clause of the U.S. Constitution. A case in the Eastern District of Pennsylvania remains in litigation, and a 

motion to dismiss is pending. Treasury is unable to determine the likelihood of an unfavorable outcome or an estimate of 

potential loss in these cases at this time. 

Insurance and Guarantees 

As discussed in Note 1.N—Insurance and Guarantee Program Liabilities, certain consolidation entities with significant 

insurance and guarantee programs apply FASB standards, while other insurance programs are accounted for in the 

consolidated financial statements pursuant to FASAB standards. Please refer to Note 16—Insurance and Guarantee Program 

Liabilities for insurance and guarantee liabilities and Note 13—Federal Employee and Veteran Benefits Payable for insurance 

related to federal employee and veteran benefits. 

Entities Reporting under FASB 

PBGC, FCSIC, and FDIC are the main contributing consolidation entities with significant insurance or guarantee 

programs that apply FASB standards. Insurance in-force estimates and a discussion of PBGC’s coverage are disclosed to 

provide an understanding of the magnitude of the programs. Current conditions indicate it is extremely unlikely that losses 

equal to the maximum risk exposure described below would be incurred. 

PBGC insures pension benefits for participants in covered defined benefit pension plans. Under current law, PBGC's 

liabilities may be paid only from PBGC's assets. Accordingly, PBGC's liabilities are not backed by the full faith of the U.S. 

government. As of September 30, 2023, PBGC's single-employer and multiemployer pension insurance programs had $130.9 

billion and $4.0 billion in total assets, respectively. In FY 2022, PBGC reported pension insurance program total assets for 

single-employer and multiemployer of $124.4 billion and $3.5 billion, respectively. 

PBGC operates two separate pension insurance programs: a single-employer program and a multiemployer program. 

The single-employer program covered about 20.6 million people (excluding those in plans that PBGC has trusteed) in FY 

2023, down from about 22.3 million people in FY 2022, and the maximum guaranteed annual benefit for participants who are 

in a plan that terminated in FY 2023 and commence benefits at age 65 is $81,000. The maximum guaranteed benefit for 

single-employer plan participants is determined by the year the retiree’s plan terminated (if the plan terminated during the 

plan sponsor’s bankruptcy, the year the sponsor entered bankruptcy) and the participant’s age at the later of the date the 

sponsor entered bankruptcy or the date the participant begins collecting benefits. The number of covered ongoing plans at the 

end of FY 2023 was about 23,500. 

The multiemployer program covers about 11.0 million participants in about 1,360 insured plans and the maximum 

annual benefit is $12,870 to a participant who worked for 30 years in jobs covered by the plan. The maximum benefit for 

multiemployer plan participants varies with covered service and would be lower if the participant worked less than 30 years 

and higher if the participant worked more than 30 years. On March 11, 2021, the President signed into law the ARP. The 

ARP established a new multiemployer SFA program resulting in a new source of financing from the General Fund. PBGC 
133 NOTES TO THE FINANCIAL STATEMENTS 

receives appropriated SFA funds to disburse to multiemployer plans that meet certain criteria. Unlike traditional financial 

assistance where PBGC provides assistance to the multiemployer plans in the form of a loan, the new special financial 

assistance will be provided via a transfer of funds with no obligation of repayment. The SFA program is expected to enable 

PBGC to satisfy long-term multiemployer obligations by providing SFA to currently insolvent and probable plans. PBGC’s 

FY 2022 Projection Report shows that the multiemployer program is likely to remain solvent for more than 40 years. 

FCSIC insures the timely payment of principal and interest on Systemwide Debt Securities. Systemwide Debt Securities 

are the general unsecured joint and several obligations of the FCSB. Systemwide Debt Securities are not obligations of and 

are not guaranteed by the U.S. government. As stated in the Farm Credit Quarterly Information Statement of the Farm Credit 

System, outstanding Systemwide Debt Securities reported by the FCSB totaled $401.9 billion and $377.2 billion as of 

September 30, 2023, and 2022 respectively. The insurance provided by FCSIC is also not an obligation of and is not 

guaranteed by the U.S. government. Under current law, if FCSIC does not have sufficient funds to pay unpaid principal and 

interest on insured Systemwide Debt Securities, the FCSB will be required to make payments under joint and several 

liability. As of September 30, 2023, and 2022, FCSIC reported an Insurance Fund balance of $7.2 billion and $6.5 billion, 

respectively. 

FDIC insures bank and savings association deposits, which exposes FDIC to various risks. FDIC has estimated total 

insured deposits of $10,592.6 billion and $9,926.3 billion as of September 30, 2023, and 2022 respectively, for the DIF. 

As described below, the government also has insurance and guarantee contingencies for PBGC and FDIC that are 

reasonably possible in the amount of $26.4 billion and $54.5 billion as of September 30, 2023, and 2022, respectively. 

PBGC reported $26.1 billion and $54.2 billion as of September 30, 2023, and 2022, respectively, for the estimated 

aggregate unfunded vested benefits exposure to PBGC for private-sector single-employer and multiemployer defined benefit 

pension plans that are classified with a reasonably possible exposure to loss. As of September 30, 2023, PBGC’s estimate of 

its single-employer reasonably possible exposure decreased to $25.7 billion. The $26.3 billion decrease from the reasonably 

possible exposure of $52.0 billion as of September 30, 2022, is primarily due to the significant increase in the interest factors 

used for valuing liabilities as of the measurement date.5

 In FY 2023, PBGC estimated that it is reasonably possible that 

multiemployer plans may require future assistance in the amount of $0.4 billion, a $1.8 billion decrease from the $2.2 billion 

in FY 2022. The primary reason for the decrease in exposure was a net decrease in the number of plans classified as 

reasonably possible. 

FDIC reported $0.3 billion as of September 30, 2023, and 2022 for reasonably possible losses to the DIF for additional 

risks identified in the financial services industry should potentially vulnerable insured institutions ultimately fail. Actual 

losses, if any, will largely depend on future economic and market conditions. 

Entities Reporting under FASAB 

The total amount of coverage provided by an insurer as of the end of the reporting period is referred to as insurance inforce. Insurance in-force represents the total amount of unexpired insurance arrangements for the corresponding program as 

of a given date. Insurance in-force is presented to provide the reader with a better understanding of the unexpired insurance 

arrangements that are not considered a liability. It is extremely unlikely that losses equal to the maximum risk exposure 

would be incurred. The table below shows the estimate of insurance in-force for consolidation entities with significant 

insurance programs that apply FASAB standards in accordance with SFFAS No. 51, Insurance Programs. 

 

Insurance In-force as of September 30, 2023, and 2022 

(In billions of dollars) 2023 2022 

Ginnie Mae - HUD ........................................................................................................................ 2,472.8 2,284.5 

National Credit Union Share Insurance Fund - NCUA ................................................................. 1,700.0 1,700.0 

National Flood Insurance Program - DHS .................................................................................... 1,281.9 1,286.2 

Federal Crop Insurance - USDA .................................................................................................. 206.1 193.2 

Ginnie Mae insures MBS and commitments, which exposes Ginnie Mae to various risks. Ginnie Mae’s MBS program 

guarantees the timely payment of principal and interest on securities backed by pools of mortgage loans insured by FHA, 

Public and Indian Housing, and Rural Housing Service, or guaranteed by the VA. Accordingly, Ginnie Mae’s credit risk 

5

 The estimate of the reasonably possible exposure to the loss for the single-employer plans was determined using a measurement date of December 31, 

2022. 
 NOTES TO THE FINANCIAL STATEMENTS 134 

related to outstanding MBS is greatly mitigated by guarantees discussed in Note 4—Loans Receivable, Net and Loan 

Guarantee Liabilities. 

NCUA operates and manages the NCUSIF, insuring the deposits of over 138.8 million account holders in all federal 

credit unions and the majority of state-chartered credit unions. NCUSIF insures the balance of each members’ accounts, 

dollar-for-dollar, up to at least the standard maximum share insurance amount of $250,000. 

NFIP, managed by FEMA, is considered an exchange transaction insurance program and pays claims to policy holders 

who experience flood damage due to flooding within the NFIP rules and regulations. FEMA is authorized to secure 

reinsurance coverage from private reinsurance and capital markets to maintain the financial ability of the program to pay 

claims from major flooding events. 

FEMA, a component of DHS, is authorized to borrow from Treasury up to $30.4 billion to fund the payment of flood 

insurance claims and claims-related expenses of the NFIP. Amounts borrowed at any time are not predetermined, and 

authority is used only as needed to pay existing obligations for claims and expenses. Insurance premiums collected are used 

to pay insurance claims and to repay borrowings. As of September 30, 2023, and 2022, FEMA had drawn from Treasury 

$20.5 billion, leaving $9.9 billion available to be borrowed. Premiums collected by FEMA are not expected to be sufficient to 

cover the debt repayments. Given the current premium rate structure, FEMA is not expected to be able to generate sufficient 

resources from premiums to pay its debt in full. 

The FCIP, administered by USDA’s FCIC, is considered a short-duration exchange transaction insurance program. The 

crop insurance policies insure against unexpected declines in yield and/or price due to natural causes. There were 

approximately 1.2 million crop insurance policies in force for crop years 2023, and 2022. The insurance policies are 

structured as a contract between approved insurance providers and producers, with the FCIC providing reinsurance to 

approved insurance providers. Crop insurance policies automatically renew each year unless producers cancel them by a 

published annual deadline. FCIC may request the Secretary of Agriculture to provide borrowing authority funds of the 

Commodity Credit Corporation if at any time the amounts in the insurance fund are insufficient to allow FCIC to carry out its 

duties. Even though the authority exists, FCIC did not request Commodity Credit Corporation funds in the reporting period. 

USDA has a permanent indefinite appropriation for the crop insurance program used to cover premium subsidy, delivery 

expenses, losses in excess of premiums, and research and delivery costs. FCIC has no outstanding borrowing as of September 

30, 2023. 

Please refer to the financial statements of the main contributing entities, HUD, NCUA, DHS, and USDA for additional 

information. 

Congress originally enacted the Terrorism Risk Insurance Act in November 2002, to address market disruptions 

resulting from terrorist attacks on September 11, 2001. Most recently, the Terrorism Risk Insurance Program 

Reauthorization Act of 2019 extended TRIP until December 31, 2027. The TRIP helps to ensure available and affordable 

commercial property and casualty insurance for terrorism risk, and simultaneously allows private markets to stabilize. The 

authority to pay claims under TRIP is activated when the Secretary of the Treasury (in consultation with the Secretary of the 

DHS and the U.S. Attorney General) certifies an “act of terrorism.” In the event of certification of an “act of terrorism” 

insurers may be eligible to receive reimbursement from the U.S. government for associated insured losses assuming an 

aggregate insured loss threshold (“Program Trigger”) has been reached once a particular insurer has satisfied its designated 

deductible amount. For calendar years 2023 and 2022, the Program Trigger amount was $200.0 million. Insurance companies 

and the U.S. government will share insured losses above insurer deductibles. TRIP includes both mandatory and 

discretionary authority for Treasury to recoup federal payments made under TRIP through policyholder surcharges under 

certain circumstances, and contains provisions designed to manage litigation arising from or relating to a certified “act of 

terrorism.” There were no claims under TRIP as of September 30, 2023 or 2022. 

Other Contingencies 

DOT, HHS, and Treasury reported the following other contingencies: 

FHWA has a reasonably possible contingency due to their authority to approve projects using advance construction 

under 23 U.S.C. § 115(a) and 23 CFR 630.701-630.709. FHWA does not guarantee the ultimate funding to the states for 

these “advance construction” projects and, accordingly, does not obligate any funds for these projects. The state may submit 

a written request to FHWA that a project be converted to a regular federal aid project at any time provided that sufficient 

federal aid funds and obligation authority are available. As of September 30, 2023, and 2022, FHWA has $75.4 billion and 

$69.3 billion, respectively, of advanced construction authorizations that could be converted to federal obligations subject to 

the availability of funds. These authorizations have not been recognized in the DOT consolidated financial statements. 

Contingent liabilities have been accrued as a result of Medicaid audit and program disallowances that are currently 

being appealed by the states. The Medicaid amounts are $8.2 billion and $7.0 billion for fiscal years ending September 30, 

2023, and 2022, respectively. The states could return the funds through payments to HHS, or HHS could recoup the funds by 

reducing future grant awards to the states. Conversely, if the appeals are decided in favor of the states, HHS will be required
135 NOTES TO THE FINANCIAL STATEMENTS 

to pay these amounts. In addition, certain amounts for payment have been deferred under the Medicaid program when there is 

reasonable doubt as to the legitimacy of expenditures claimed by a state. There are also outstanding reviews of the state 

expenditures in which a final determination has not been made. 

Treasury has a contingency for future draws by the GSEs. There were no probable future draws accrued as of 

September 30, 2023, and 2022, and the total amount of reasonably possible future draws is not estimable as of September 30, 

2023. Refer to Note 8—Investments in Government-Sponsored Enterprises for additional information.