FCSIC Regulations

AUTHORITY: 12 U.S.C. 2277a-5; 12 U.S.C. 2277a-7.

SOURCE: 55 FR 36610, Sept. 6, 1990, unless otherwise noted.

Subpart A—Organization and Functions

§1400.1 Farm Credit System Insurance Corporation.

The Farm Credit System Insurance Corporation (Corporation) was created by sections 

5.52 and 5.58 of the Farm Credit Act of 1971 (Act) to carry out the responsibilities set out in part 

E of title V of the Act, including insuring the timely payment of principal and interest on notes, 

bonds, debentures, and other obligations issued under subsection (c) or (d) of section 4.2 of the 

Farm Credit Act on behalf of one or more Farm Credit System banks.

§1400.2 Board of Directors of the Farm Credit System 

Insurance Corporation.

The Board of Directors of the Farm Credit System Insurance Corporation is entrusted 

with the responsibility to manage the Corporation. The Board of Directors consists of the 

members of the Farm Credit Administration Board. The Chairman of the Corporation is elected

by the members of the Board.

§1400.3 Organization of the Farm Credit System Insurance 

Corporation.

Officers of the Corporation shall be appointed by the Board of Directors of the 

Corporation. Current information on the organization of the Corporation may be obtained from 

the Corporation, 1501 Farm Credit Drive, McLean, Virginia 22102-0826.
Subpart B [Reserved]

PART 1401—EMPLOYEE RESPONSIBILITIES AND 

CONDUCT 

AUTHORITY: 5 U.S.C. 7301; 12 U.S.C. 2277a-7. 

§1401.1 Cross-references to employee ethical conduct 

standards and financial disclosure regulations.

Board members, officers, and other employees of the Farm Credit System Insurance 

Corporation are subject to the Standards of Ethical Conduct for Employees of the Executive 

Branch at 5 CFR part 2635, the Farm Credit System Insurance Corporation regulation at 5 CFR 

part 4001, which supplements the Executive Branch-wide Standards, and the executive branchwide financial disclosure regulations at 5 CFR part 2634. 

[60 FR 30778, June 12, 1995]

PART 1402—RELEASING INFORMATION

AUTHORITY: Secs. 5.58, 5.59 of Pub. L. 92-181, 85 Stat. 583 (12 U.S.C. 2277a-7, 2277a-8); 5 

U.S.C. 552; 52 FR 10012; E.O. 12600, 52 FR 23781, 3 CFR, 1987 Comp., p. 235.

SOURCE: 59 FR 24638, May 12, 1994, unless otherwise noted.

Subpart A [Reserved]

Subpart B—Availability of Records of the Farm Credit 

System Insurance Corporation

§1402.10 Official records of the Farm Credit System 

Insurance Corporation.

(a) The Farm Credit System Insurance Corporation shall, upon any request for 

records which reasonably describes them and is made in accordance with the provisions 

of this subpart, make the records available as promptly as practicable to any person, 

except exempt records, which include the following:

(1) Records specifically authorized under criteria established by an 

Executive order to be kept secret in the interest of national defense or foreign 

policy and are in fact properly classified pursuant to such Executive order;
(2) Records related solely to the internal personnel rules and practices of 

the Farm Credit System Insurance Corporation, including matters which are for 

the guidance of agency personnel;

(3) Records which are specifically exempted from disclosure by statute;

(4) Trade secret, commercial, proprietary, or financial information 

obtained from any person or organization and privileged or confidential;

(5) Inter-agency or intra-agency memorandums or letters which would not 

be available by law to a private party in litigation with the Farm Credit System 

Insurance Corporation or in litigation in which the United States, as a real party in 

interest on behalf of the Farm Credit System Insurance Corporation, is a party;

(6) Personnel and similar files, the disclosure of which would constitute a 

clearly unwarranted invasion of personal privacy;

(7) Records or information compiled for law enforcement purposes, but 

only to the extent that the production of such law enforcement records or 

information:

(i) Could reasonably be expected to interfere with enforcement 

proceedings;

(ii) Would deprive a person of a right to a fair trial or an impartial 

adjudication;

(iii) Could reasonably be expected to constitute an unwarranted 

invasion of personal privacy;

(iv) Could reasonably be expected to disclose the identity of a 

confidential source, including a State, local, or foreign agency or authority 

or any private institution which furnished information on a confidential 

basis, and, in the case of a record or information compiled by criminal law 

enforcement authority in the course of a criminal investigation or by an 

agency conducting a lawful national security intelligence investigation, 

information furnished by a confidential source;

(v) Would disclose techniques and procedures for law enforcement 

investigations or prosecutions, or would disclose guidelines for law 

enforcement investigations or prosecutions if such disclosure could 

reasonably be expected to risk circumvention of the law; or

(vi) Could reasonably be expected to endanger the life or physical 

safety of any individual; and
(8) Records of or related to examination, operation, reports of condition 

and performance, or reports of or related to Farm Credit System institutions and 

that are prepared by, on behalf of, or for the use of the Farm Credit System 

Insurance Corporation.

(b) Any reasonably segregable portion of a record shall be provided to any person 

requesting such record after deletion of the portions which are exempt under this section.

(c) This section does not authorize withholding of information or limit the 

availability of records to the public, except as specifically stated in this section. This 

section is not authority to withhold information from Congress.

§1402.11 Current index.

The Farm Credit System Insurance Corporation will make available for public inspection 

and copying a current index to provide identifying information as to any matter required by 5 

U.S.C. 552(a)(2)(C) to be made available or published in the FEDERAL REGISTER. Because of the 

anticipated infrequency of requests for material required to be indexed, it is determined that the 

publication of the index in the FEDERAL REGISTER is unnecessary and impracticable. However, 

the Farm Credit System Insurance Corporation will provide a copy of such index to a member of 

the public upon request therefor at a cost not in excess of the direct cost of duplication.

§1402.12 Identification of records requested.

A member of the public who requests records from the Farm Credit System Insurance 

Corporation shall provide a reasonable description of the records sought including, where 

possible, specific information as to dates, titles, and subject matter, so that such records may be 

located without undue search or inquiry. If a record is not identified by a reasonable description, 

the request therefor may be denied.

§1402.13 Request for records.

Requests for records shall be in writing and addressed to the attention of the Freedom of 

Information Officer, Farm Credit System Insurance Corporation, McLean, Virginia 22102. A 

request improperly addressed will be deemed not to have been received for purposes of the 20-

day time period set forth in §1402.14(a) of this part until it is received, or would have been 

received, by the Freedom of Information Officer, with the exercise of due diligence by 

Corporation personnel. Records requested in conformance with this subpart and which are not 

exempt records may be received in person or by mail as specified in the request. Records to be 

received in person will be available for inspection or copying during business hours on a regular 

business day in the office of the Farm Credit System Insurance Corporation, 1501 Farm Credit 

Drive, McLean, Virginia, 22102.

[62 FR 49593, Sept. 23, 1997]
§1402.14 Response to requests for records.

(a) Within 20 days (excluding Saturdays, Sundays, and legal public holidays), or 

any extensions thereof as provided in paragraph (d) of this section, of the receipt of a 

request by the Freedom of Information Officer, the Freedom of Information Officer shall 

determine whether to comply with or deny such a request and transmit a written notice 

thereof to the requester. 

(b) Within 90 days of the receipt of a notice denying, in whole or in part, a request 

for records, the requester may appeal the denial. The appeal shall be in writing addressed 

to the Chief Financial Officer, Farm Credit System Insurance Corporation, McLean, 

Virginia 22102, and both the letter and envelope shall clearly be marked “FOIA Appeal.” 

An appeal improperly addressed shall be deemed not to have been received for purposes 

of the 20-day time period set forth in paragraph (c) of this section until it is received, or 

would have been received with the exercise of due diligence by Farm Credit System 

Insurance Corporation personnel. You also have the right to seek dispute resolution 

services from the Corporation's FOIA Public Liaison, McLean, Virginia 22102, and the 

Office of Government Information Services, National Archives and Records 

Administration, 8601 Adelphi Road—OGIS, College Park, Maryland 20740-6001.

(c) Within 20 days (excluding Saturdays, Sundays, and legal public holidays), or 

any extension thereof as provided in paragraph (d) of this section, of the receipt of an 

appeal, the Farm Credit System Insurance Corporation shall act upon the appeal and 

place a notice of the determination thereof in writing in the mail addressed to the 

requester. If the determination on the appeal upholds in whole or in part the denial of the 

request for records, or, if a determination on the appeal has not been mailed at the end of 

the 20-day period or the last extension thereof, the requester is deemed to have exhausted 

that person's administrative remedies, giving rise to a right of review in a district court of 

the United States as specified in 5 U.S.C. 552(a)(4). When a determination cannot be 

mailed within the applicable time limit, the appeal will nevertheless be processed. In such 

case, upon the expiration of the time limit, the requester will be informed of the reason 

for the delay, of the date on which a determination may be expected to be mailed, and of 

that person's right to seek judicial review. The requester may be asked to forego judicial 

review until determination of the appeal. 

(d) In “unusual circumstances,” the 20-day time limit prescribed in paragraphs (a) 

and (c) of this section, or both, may be extended by the Freedom of Information Officer 

or, in the case of an appeal, by the General Counsel, provided that the total of all 

extensions does not exceed 10 days (excluding Saturdays, Sundays, and legal public 

holidays). Extensions shall be made by written notice to the requester setting forth the 

reason for the extension and the date on which a determination is expected to be 

dispatched. As used in this paragraph, “unusual circumstances” means, but only to the 

extent reasonably necessary to the proper processing of the request:

(1) The need to search for and collect the requested records from facilities 

or other establishments that are separate from the office processing the request;
(2) The need to search for, collect, and appropriately examine a 

voluminous amount of separate and distinct records which are demanded in a 

single request; or

(3) The need for consultation, which shall be conducted with all 

practicable speed, with another agency having a substantial interest in the 

determination of the request or among two or more components of the agency 

having a substantial subject matter interest therein.

(e) A requester may obtain, upon request, expedited processing of a request for 

records when the requester demonstrates a “compelling need” for the information. The 

Freedom of Information Officer will notify the requester within 10 calendar days after 

receipt of such a request whether the Corporation granted expedited processing. If 

expedited processing was granted, the request will be processed as soon as practicable.

(1) For the purposes of this paragraph, “compelling need” means:

(i) That a failure to obtain requested records on an expedited basis 

could reasonably be expected to pose an imminent threat to the life or 

physical safety of an individual; or

(ii) With respect to a request made by a person primarily engaged 

in disseminating information, urgency to inform the public concerning 

actual or alleged Federal Government activity.

(2) A requester shall demonstrate a compelling need by a statement 

certified by the requester to be true and correct to the best of such person's 

knowledge and belief.

(3) The procedures of this paragraph (e) for expedited processing apply to 

both requests for information and to administrative appeals.

[59 FR 24638, May 12, 1994, as amended at 62 FR 49593, Sept. 23, 1997; 81 FR 59438, Aug. 

30, 2016]

§1402.15 Business information.

(a) Business information provided to the Farm Credit System Insurance 

Corporation by a business submitter shall not be disclosed pursuant to a Freedom of 

Information Act request except in accordance with this section. The requirements of this 

section shall not apply if: 

(1) The Farm Credit System Insurance Corporation determines that the 

information should not be disclosed; 
(2) The information lawfully has been published or otherwise made 

available to the public; or 

(3) Disclosure of the information is required by law (other than 5 U.S.C. 

552). 

(b) For the purpose of this section, the following definitions shall apply. 

(1) Business information means trade secrets or other commercial or 

financial information. 

(2) Business submitter means any person or entity which provides business 

information to the government. 

(3) Requester means the person or entity making the Freedom of 

Information Act request. 

(c)(1) The Freedom of Information Officer shall, to the extent permitted by law, 

provide a business submitter with prompt written notice of a request encompassing its 

business information whenever required under paragraph (d) of this section. Such notice 

shall either describe the exact nature of the business information requested or provide 

copies of the records or portions thereof containing the business information. 

(2) Whenever the Freedom of Information Officer provides a business 

submitter with the notice set forth in paragraph (c)(1) of this section, the Freedom 

of Information Officer shall notify the requester that the request includes 

information that may arguably be exempt from disclosure under 5 U.S.C. 

552(b)(4) and that the person or entity who submitted the information to the Farm 

Credit System Insurance Corporation has been given the opportunity to comment 

on the proposed disclosure of information. 

(d)(1) The Farm Credit System Insurance Corporation shall provide a business 

submitter with notice of a request whenever: 

(i) The business submitter has in good faith designated the 

information as commercially or financially sensitive information; or 

(ii) The Farm Credit System Insurance Corporation has reason to 

believe that the disclosure of the information may result in commercial or 

financial injury to the business submitter. 

(2) Notice of a request for business information falling within paragraph 

(d)(1)(i) of this section shall be required for a period of not more than 10 years 

after the date of submission unless the business submitter requests and provides 

acceptable justification for a specific notice period of greater duration. 
(3) Whenever possible, the business submitter's claim of confidentiality 

should be supported by a statement or certification by an officer or authorized 

representative of the business submitter that the information in question is in fact 

a trade secret or commercial or financial information that is privileged or 

confidential. 

(e) Through the notice described in paragraph (c) of this section, the Farm Credit 

System Insurance Corporation shall, to the extent permitted by law, afford a business 

submitter a reasonable period within which it can provide the Farm Credit System 

Insurance Corporation with a detailed statement of any objection to disclosure. Such 

statement shall specify all grounds for withholding any of the information under any 

exemption of the Freedom of Information Act and, in the case of the exemption provided 

by 5 U.S.C. 552(b)(4), shall demonstrate why the information is contended to be a trade 

secret or commercial or financial information that is privileged or confidential. 

Information provided by a business submitter pursuant to this paragraph may itself be 

subject to disclosure under the Freedom of Information Act. 

(f)(1) The Farm Credit System Insurance Corporation shall consider carefully a 

business submitter's objections and specific grounds for nondisclosure prior to 

determining whether to disclose business information. Whenever the Farm Credit System 

Insurance Corporation decides to disclose business information over the objection of a 

business submitter, the Freedom of Information Officer shall forward to the business 

submitter a written notice which shall include: 

(i) A statement of the reasons for which the business submitter's 

disclosure objections were not sustained; 

(ii) A description of the business information to be disclosed; and 

(iii) A specified disclosure date. 

(2) The notice of intent to disclose required by this paragraph shall be sent, 

to the extent permitted by law, within a reasonable number of days prior to the 

specified date upon which disclosure is intended. 

(3) The Freedom of Information Officer shall send a copy of such 

disclosure notice to the requester at the same time the notice is sent to the 

business submitter. 

(g) Whenever a requester brings suit seeking to compel disclosure of business 

information covered by paragraph (d) of this section, the Farm Credit System Insurance 

Corporation shall promptly notify the business submitter of such action. 
Subpart C—Fees for Provision of Information

§1402.20 Definitions.

For the purpose of this subpart, the following definitions shall apply: 

(a) Commercial use request means a request for information that is from or on 

behalf of an individual or entity seeking information for a use or purpose that furthers the 

commercial, trade, or profit interests of the requester or on whose behalf the request is 

being made. To determine whether a request is properly classified as a commercial use 

request, the Farm Credit System Insurance Corporation shall determine the purpose for 

which the documents requested will be used. If the Farm Credit System Insurance 

Corporation has reasonable cause to doubt the purpose specified in the request, for which 

a requester will use the records sought, or where the purpose is not clear from the request 

itself, the Farm Credit System Insurance Corporation shall seek additional clarification 

before assigning the request to a specified category. 

(b) Direct costs means those expenditures the Farm Credit System Insurance 

Corporation actually incurs in searching for and reproducing documents to respond to a 

request for information. In the case of a commercial use request, the term also means 

those expenditures the Farm Credit System Insurance Corporation actually incurs in 

reviewing documents to respond to the request. The direct cost shall include the salary of 

the employee performing work (the basic rate of pay for the employee plus 16 percent of 

that rate to cover benefits) and the cost of operating reproduction equipment. Not 

included in direct costs are overhead expenses such as costs of space, and heating or 

lighting the facility in which the records are stored. 

(c) Educational institution means a preschool, a public or private elementary or 

secondary school, an institution of undergraduate higher education, an institution of 

graduate higher education, an institution of professional education, and an institution of 

vocational education that operates a program or programs of scholarly research. 

(d) Noncommercial scientific institution refers to an institution that is not operated 

on a commercial, trade, or profit basis and that is operated solely for the purpose of 

conducting scientific research, the results of which are not intended to promote any 

particular product or industry. 

(e) Representative of the news media means any person actively gathering news 

for an entity that is organized and operated to publish or broadcast news to the public. 

The term news means information that is about current events or that would be of current 

interest to the public. Examples of news media entities include television or radio stations 

broadcasting to the public at large, and publishers of periodicals (but only in those 

instances when the periodicals can qualify as disseminators of “news”) who make their 

products available for purchase or subscription by the general public. These examples are 

not intended to be all-inclusive. As traditional methods of news delivery evolve (e.g., 
electronic dissemination of newspapers through telecommunication services), such 

alternative media would be included in this category. “Freelance” journalists may be 

regarded as working for a news organization if they can demonstrate a solid basis for 

expecting publication through that organization even though they are not actually 

employed by the organization. A publication contract would be the clearest proof that a 

journalist is working for a news organization, but the Farm Credit System Insurance 

Corporation may look to a requester's past publication record to determine whether a 

journalist is working for a news organization. 

(f) Reproduce and reproduction mean the process of making a copy of a 

document necessary to respond to a request for information. Such copies take the form of 

paper copy, microfilm, audio-visual materials, or machine readable documentation (e.g., 

magnetic tape or disk), among others. The copy provided shall be in a form that is 

reasonably usable by requesters. 

(g) Review means the process of examining documents located in response to a 

request for information to determine whether any portion of any document located is 

permitted to be withheld. It also includes processing any documents for disclosure (e.g., 

doing all that is necessary to prepare the documents for release). The term review does 

not include the time spent resolving general legal or policy issues regarding the 

application of exemptions. The Farm Credit System Insurance Corporation shall only 

charge fees for reviewing documents in response to a commercial use request. 

(h) Search includes all time spent looking for material that is responsive to a 

request for information, including page-by-page or line-by-line identification of material 

within documents. Searching for material shall be done in the most efficient and least 

expensive manner so as to minimize the costs of the Farm Credit System Insurance 

Corporation and the requester. For example, a line-by-line search for responsive material 

should not be performed when merely reproducing an entire document would be the less 

expensive and the faster method of complying with a request for information. Searches 

may be done manually or by computer using existing programming. A “search” for 

material that is responsive to a request should be distinguished from a “review” of 

material to determine whether the material is exempt from disclosure. 

§1402.21 Categories of requesters—fees.

There are four categories of requesters: Commercial use requesters; educational and 

noncommercial scientific institutions; representatives of the news media; and all other requesters. 

(a) The Farm Credit System Insurance Corporation shall charge fees for records 

requested by or on behalf of educational institutions and noncommercial scientific 

institutions in an amount which equals the cost of reproducing the documents responsive 

to the request, excluding the costs of reproducing the first 100 pages. For a request to be 

included in this category, requesters must show that the request being made is authorized 

by and under the auspices of a qualifying institution and that the records are not sought 

for a commercial use but are sought in furtherance of scholarly research (if the request is 
from an educational institution) or scientific research (if the request is from a 

noncommercial scientific institution). 

(b) The Farm Credit System Insurance Corporation shall charge fees for records 

requested by representatives of the news media in an amount which equals the cost of 

reproducing the documents responsive to the request, excluding the costs of reproducing 

the first 100 pages. For a request to be included in this category, the requester must 

qualify as a representative of the news media and the request must not be made for a 

commercial use. A request for records supporting the news dissemination function of the 

requester shall not be considered to be a request that is for a commercial use. 

(c) The Farm Credit System Insurance Corporation shall charge fees for records 

requested by persons or entities making a commercial use request in an amount that 

equals the full direct costs for searching for, reviewing for release, and reproducing the 

records sought. Commercial use requesters are not entitled to 2 hours of free search time 

nor 100 free pages of reproduction of documents. In accordance with §1402.26, 

commercial use requesters may be charged the costs of searching for and reviewing 

records even if there is ultimately no disclosure of records. 

(d) The Farm Credit System Insurance Corporation shall charge fees for records 

requested by persons or entities that are not classified in any of the categories listed in 

paragraphs (a), (b), or (c) of this section in an amount that equals the full reasonable 

direct cost of searching for and reproducing records that are responsive to the request, 

excluding the first 2 hours of search time and the cost of reproducing the first 100 pages 

of records. In accordance with §1402.26, requesters in this category may be charged the 

cost of searching for records even if there is ultimately no disclosure of records, 

excluding the first 2 hours of search time. 

(e) For purposes of the exceptions contained in this section on assessment of fees, 

the word pages refers to paper copies of “81⁄2 × 11” or “11 × 14.” Thus, requesters are not 

entitled to 100 microfiche or 100 computer disks, for example. A microfiche containing 

the equivalent of 100 pages or a computer disk containing the equivalent of 100 pages of 

computer printout meets the terms of the exception. 

(f) For purposes of paragraph (d) of this section, the term search time has as its 

basis, manual search. To apply this term to searches made by computer, the Farm Credit 

System Insurance Corporation will determine the hourly cost of operating the central 

processing unit and the operator's hourly salary plus 16 percent of that rate. When the 

cost of search (including the operator time and the cost of operating the computer to 

process a request) equals the equivalent dollar amount of 2 hours of the salary of the 

person performing the search, i.e., the operator, the Farm Credit System Insurance 

Corporation will begin assessing charges for computer search. 
§1402.22 Fees to be charged.

(a) Generally, the fees charged for requests for records shall cover the full 

allowable direct costs of searching for, reproducing, and reviewing documents that are 

responsive to a request for information. 

(b) Manual searches for records will be charged at the salary rate(s) (i.e., basic 

pay plus 16 percent of that rate) of the employee(s) making the search. 

(c) Computer searches for records will be charged at the actual direct cost of 

providing the service. This will include the cost of operating the central processing unit 

for that portion of operating time that is directly attributable to searching for records and 

the operator/programmer salary apportionable to the search. A charge shall also be made 

for any substantial amounts of special supplies or materials used to contain, present, or 

make available the output of computers, based upon the prevailing levels of costs to the 

Farm Credit System Insurance Corporation for the type and amount of such supplies of 

materials that are used. Nothing in this paragraph shall be construed to entitle any person 

or entity, as a right, to any services in connection with computerized records, other than 

services to which such person or entity may be entitled under the provisions of this 

subpart. 

(d) Only requesters who are seeking documents for commercial use may be 

charged for time spent reviewing records to determine whether they are exempt from 

mandatory disclosure. Charges may be assessed only for the initial review; i.e., the 

review undertaken the first time the Farm Credit System Insurance Corporation analyzes 

the applicability of a specific exemption to a particular record or portion of a record. 

Records or portions of records withheld in full under an exemption that is subsequently 

determined not to apply may be reviewed again to determine the applicability of other 

exemptions not previously considered. The costs for such a subsequent review is 

assessable. 

(e) Records will be reproduced at a rate of $.15 per page. For copies prepared by 

computer, such as tapes or printouts, the requester shall be charged the actual cost, 

including operator time, of production of the tape or printout. For other methods of 

reproduction, the actual direct costs of producing the document(s) shall be charged. 

(f) The Farm Credit System Insurance Corporation will recover the full costs of 

providing services such as those enumerated below when it elects to provide them: 

(1) Certifying that records are true copies; or 

(2) Sending records by special methods such as express mail. 

(g) Remittances shall be in the form either of a personal check or bank draft 

drawn on a bank in the United States, or a postal money order. Remittances shall be made 

payable to the order of the Farm Credit System Insurance Corporation. 
(h) We will not assess fees if we fail to comply with any time limit under the 

FOIA or these regulations, and have not timely notified the requester, in writing, that an 

unusual circumstance exists. If an unusual circumstance exists, and timely, written notice 

is given to the requester, we may be excused an additional 10 working days before fees 

are automatically waived under this paragraph (h).

(i) If we determine that unusual circumstances apply and more than 5,000 pages 

are necessary to respond to a request, we may charge fees if we provided a timely, written 

notice to the requester and discussed with the requester via mail, Email, or telephone (or 

made at least three good faith attempts to do so) how the requester could effectively limit 

the scope of the request.

(j) If a court has determined that exceptional circumstances exist, a failure to 

comply with time limits imposed by these regulations or FOIA shall be excused for the 

length of time provided by court order.

(k) A receipt for fees paid will be given upon request. 

[59 FR 24638, May 12, 1994, as amended at 81 FR 59438, Aug. 30, 2016]

§1402.23 Waiver or reduction of fees.

(a) The Farm Credit System Insurance Corporation may grant a waiver or 

reduction of fees if the Farm Credit System Insurance Corporation determines that the 

disclosure of the information is in the public interest because it is likely to contribute 

significantly to public understanding of the operations or activities of the Government, 

and the disclosure of the information is not primarily in the commercial interest of the 

requester. 

(b) The Farm Credit System Insurance Corporation will not charge fees to any 

requester, including commercial use requesters, if the cost of collecting a fee would be 

equal to or greater than the fee itself. The elements to be considered in determining the 

“cost of collecting a fee” are the administrative costs of receiving and recording a 

requester's remittance and processing the fee. 

§1402.24 Advance payments—notice.

(a) Where it is anticipated that the fees chargeable will amount to more than $25 

and the requester has not indicated in advance a willingness to pay fees as high as are 

anticipated, the requester shall be promptly notified of the amount of the anticipated fee 

or such portion thereof that can be readily estimated. 

(b) If the anticipated fees exceed $250 and if the requester has a history of 

promptly paying fees charged in connection with information requests, the Farm Credit 
System Insurance Corporation may obtain satisfactory assurances that the requester will 

fully pay the fees anticipated. 

(c) If the anticipated fees exceed $250 and if the requester has no history of 

paying fees charged in connection with information requests, the Farm Credit System 

Insurance Corporation may require an advance payment of fees in an amount up to the 

full amount anticipated. 

(d) If the requester has previously failed to pay a fee charged within 30 days of 

the date of a billing for fees charged in connection with information requests, the Farm 

Credit System Insurance Corporation may require the requester to pay the fees owed, plus 

interest, or demonstrate that the full amount owed has been paid, and require the 

requester to make an advance payment of the full amount of the fees anticipated before 

processing a new request or a pending request from that requester. 

(e) The notice of the amount of an anticipated fee or a request for an advance 

deposit shall include an offer to the requester to confer with identified Farm Credit 

System Insurance Corporation personnel to attempt to reformulate the request in a 

manner which will meet the needs of the requester at a lower cost. 

§1402.25 Interest.

The Farm Credit System Insurance Corporation may begin charging interest on unpaid 

fees, starting on the 31st day following the day on which the bill for such fees was sent. Interest 

will not accrue if payment of the fees has been received by the Farm Credit System Insurance 

Corporation, even if said payment has not been processed. Interest will accrue at the rate 

prescribed in section 3717 of title 31, United States Code, and will accrue from the day on which 

the bill for such fees was sent. 

§1402.26 Charges for unsuccessful searches or reviews.

The Farm Credit System Insurance Corporation may assess charges for time spent 

searching for records on behalf of requesters in the categories provided for in §1402.21 (c) and 

(d), even if there are no records that are responsive to the request or there is ultimately no 

disclosure of records. The Farm Credit System Insurance Corporation may assess charges for 

time spent reviewing records for requesters in the category provided for in §1402.21(c) even if 

the records located are determined to be exempt from disclosure. 

§1402.27 Aggregating requests.

A requester may not file multiple requests at the same time, each seeking portions of a 

document or documents, solely in order to avoid payment of fees. When the Farm Credit System 

Insurance Corporation reasonably believes that a requester, or a group of requesters acting in 

concert, is attempting to break a request down into a series of requests for the purpose of evading 

the assessment of fees, the Farm Credit System Insurance Corporation may aggregate any such
requests and charge accordingly. One element to be considered in determining whether a belief 

would be reasonable is the time period over which the requests have occurred.

PART 1403—PRIVACY ACT REGULATIONS

AUTHORITY: Secs. 5.58, 5.59 of the Farm Credit Act (12 U.S.C. 2277a-7, 2277a-8); 5 U.S.C. 

app. 3, 5 U.S.C. 552a. 

SOURCE: 59 FR 53084, Oct. 21, 1994, unless otherwise noted.

§1403.1 Purpose and scope.

(a) This part is published by the Farm Credit System Insurance Corporation 

pursuant to the Privacy Act of 1974 (Pub. L. 93-579, 5 U.S.C. 552a) which requires each 

Federal agency to promulgate rules to establish procedures for notification and disclosure 

to an individual of agency records pertaining to that person, and for review of such 

records. 

(b) The records covered by this part include: 

(1) Personnel and employment records maintained by the Farm Credit 

System Insurance Corporation not covered by §§293.101 through 293.108 of the 

regulations of the Office of Personnel Management (5 CFR 293.101 through 

293.108); and 

(2) Other records contained in record systems maintained by the Farm 

Credit System Insurance Corporation. 

(c) This part does not apply to any records maintained by the Farm Credit System 

Insurance Corporation in its capacity as a receiver or conservator. 

§1403.2 Definitions.

For the purposes of this part: 

(a) Agency means the Farm Credit System Insurance Corporation. It does not 

include the Farm Credit System Insurance Corporation when it is acting as a receiver or a 

conservator; 

(b) Individual means a citizen of the United States or an alien lawfully admitted 

for permanent residence; 

(c) Maintain includes maintain, collect, use, or disseminate; 
(d) Record means any item, collection, or grouping of information about an 

individual that is maintained by an agency including, but not limited to, that person's 

education, financial transactions, medical history, and criminal or employment history, 

and that contains that person's name, or the identifying number, symbol, or other 

identifying particular assigned to the individual, such as a finger or voice print or 

photograph; 

(e) Routine use means, with respect to the disclosure of a record, the use of such 

record for a purpose that is compatible with the purpose for which it was collected; 

(f) Statistical record means a record in a system of records maintained for 

statistical research or reporting purposes only and not used in whole or in part in making 

any determination about an identifiable individual, except as provided by 13 U.S.C. 8; 

(g) System of records means a group of any records under the control of any 

agency from which information is retrieved by the name of an individual or by some 

identifying number, symbol, or other identifying particular assigned to the individual. 

§1403.3 Procedures for requests pertaining to individual 

records in a record system.

(a) Any present or former employee of the Farm Credit System Insurance 

Corporation seeking access to that person's official civil service records maintained by 

the Farm Credit System Insurance Corporation shall submit a request in such manner as 

is prescribed by the Office of Personnel Management. 

(b) Individuals shall submit their requests in writing to the Privacy Act Officer, 

Farm Credit System Insurance Corporation, McLean, Virginia 22102-0826, when seeking 

to obtain the following information from the Farm Credit System Insurance Corporation: 

(1) Notification of whether the agency maintains a record pertaining to 

that person in a system of records; 

(2) Notification of whether the agency has disclosed a record for which an 

accounting of disclosure is required to be maintained and made available to that 

person; 

(3) A copy of a record pertaining to that person or the accounting of its 

disclosure; or 

(4) The review of a record pertaining to that person or the accounting of its 

disclosure.

The request shall state the full name and address of the individual, and identify the system or 

systems of records believed to contain the information or record sought. 
§1403.4 Times, places, and requirements for identification 

of individuals making requests.

The individual making written requests for information or records ordinarily will not be 

required to verify that person's identity. The signature upon such requests shall be deemed to be a 

certification by the requester that he or she is the individual to whom the record pertains, or the 

parent of a minor, or the duly appointed legal guardian of the individual to whom the record 

pertains. The Privacy Act Officer, however, may require such additional verification of identity 

in any instance in which the Privacy Act Officer deems it advisable. 

§1403.5 Disclosure of requested information to individuals.

(a) The Privacy Act Officer shall, within a reasonable period of time after the date 

of receipt of a request for information of records: 

(1) Determine whether or not such request shall be granted; 

(2) Notify the requester of the determination, and, if the request is denied, 

of the reasons therefor; and 

(3) Notify the requester that fees for reproducing copies of records may be 

charged as provided in §1403.10. 

(b) If access to a record is denied because the information therein has been 

compiled by the Farm Credit System Insurance Corporation in reasonable anticipation of 

a civil or criminal action proceeding, the Privacy Act Officer shall notify the requester of 

that person's right to judicial appeal under 5 U.S.C. 552a(g). 

(c)(1) If access to a record is granted, the requester shall notify the Privacy Act 

Officer whether the requested record is to be copied and mailed to the requester or 

whether the record is to be made available for personal inspection. 

(2) A requester who is an individual may be accompanied by an individual 

selected by the requester when the record is disclosed, in which case the requester 

may be required to furnish a written statement authorizing the discussion of the 

record in the presence of the accompanying person. 

(d) If the record is to be made available for personal inspection, the requester shall 

arrange with the Privacy Act Officer a mutually agreeable time in the offices of the Farm 

Credit System Insurance Corporation for inspection of the record. 

§1403.6 Special procedures for medical records.
Medical records in the custody of the Farm Credit System Insurance Corporation which 

are not subject to Office of Personnel Management regulations shall be disclosed either to the 

individual to whom they pertain or that person's authorized or legal representative or to a 

licensed physician named by the individual. 

§1403.7 Request for amendment to record.

(a) If, after disclosure of the requested information, an individual believes that the 

record is not accurate, relevant, timely, or complete, that person may request in writing 

that the record be amended. Such a request shall be submitted to the Privacy Act Officer 

and shall identify the system of records and the record or information therein, a brief 

description of the material requested to be changed, the requested change or changes, and 

the reason for such change or changes. 

(b) The Privacy Act Officer shall acknowledge receipt of the request within 10 

days (excluding Saturdays, Sundays, and legal holidays) and, if a determination has not 

been made, advise the individual when that person may expect to be advised of action 

taken on the request. The acknowledgment may contain a request for additional 

information needed to make a determination. 

§1403.8 Agency review of request for amendment of record.

Upon receipt of a request for amendment of a record, the Privacy Act Officer shall: 

(a) Correct any portion of a record which the individual making the request 

believes is not accurate, relevant, timely, or complete and thereafter inform the individual 

in writing of such correction, or 

(b) Inform the individual in writing of the refusal to amend the record and of the 

reasons therefor, and advise that the individual may appeal such determination as 

provided in §1403.9. 

§1403.9 Appeal of an initial adverse determination of a 

request to amend a record.

(a) Not more than 10 days (excluding Saturdays, Sundays, and legal holidays) 

after receipt by an individual of an adverse determination on the individual's request to 

amend a record or otherwise, the individual may appeal to the Chief Operating Officer, 

Farm Credit System Insurance Corporation, McLean, Virginia 22102-0826. 

(b) The appeal shall be by letter, mailed or delivered to the Chief Operating 

Officer, Farm Credit System Insurance Corporation, McLean, Virginia 22102-0826. The 

letter shall identify the records involved in the same manner they were identified to the 

Privacy Act Officer, shall specify the dates of the request and adverse determination, and 
shall indicate the expressed basis for that determination. Also, the letter shall state briefly 

and succinctly the reasons why the adverse determination should be reversed. 

(c) The review shall be completed and a final determination made by the Chief 

Operating Officer not later than 30 days (excluding Saturdays, Sundays, and legal 

holidays) from receipt of the request for such review, unless the Chief Operating Officer 

extends such 30-day period for good cause. If the 30-day period is extended, the 

individual shall be notified of the reasons therefor. 

(d) If the Chief Operating Officer refuses to amend the record in accordance with 

the request, the individual shall be notified of the right to file a concise statement setting 

forth that person's disagreement with the final determination and that person's right under 

5 U.S.C. 552a(g)(1)(A) to a judicial review of the final determination. 

(e) If the refusal to amend a record as requested is confirmed, there shall be 

included in the disputed portion of the record a copy of the concise statement filed by the 

individual together with a concise statement of the reasons for not amending the record as 

requested. Such statements will be included when disclosure of the disputed record is 

made to persons and agencies as authorized under 5 U.S.C. 552a. 

§1403.10 Fees for providing copies of records.

Fees for providing copies of records shall be charged in accordance with §§1402.22 and 1402.24 

of this chapter. 
§1403.11 Criminal penalties.

Section 552a(i)(3) of the Privacy Act (5 U.S.C. 552a(i)(3)) makes it a misdemeanor, 

subject to a maximum fine of $5,000, to knowingly and willfully request or obtain any record 

concerning any individual from an agency under false pretenses. Sections 552a(i) (1) and (2) of 

the Act (5 U.S.C. 552a(i) (1), (2)) provide penalties for violation by agency employees of the Act 

or regulations established thereunder. 

§1403.12 Exemptions.

Specific. Pursuant to 5 U.S.C. 552a(k)(5), the investigatory material compiled for law 

enforcement purposes in the following system of records is exempt from subsections (c)(3), (d), 

(e)(1), (e)(4) (G), (H), and (I), and (f) of 5 U.S.C. 552a and from the provisions of this part:

Personnel Security Files—FCSIC.

PART 1408—COLLECTION OF CLAIMS OWED THE 

UNITED STATES 

AUTHORITY: Sec. 5.58 of the Farm Credit Act (12 U.S.C. 2277a-7); 31 U.S.C. 3701-3719; 5 

U.S.C. 5514; 4 CFR parts 101-105; 5 CFR part 550. 

SOURCE: 59 FR 24899, May 13, 1994, unless otherwise noted.

Subpart A—Administrative Collection of Claims

§1408.1 Authority.

The regulations of this part are issued under the Federal Claims Collection Act of 1966, 

as amended by the Debt Collection Act of 1982, 31 U.S.C. 3701-3719 and 5 U.S.C. 5514, and in 

conformity with the joint regulations issued under that Act by the General Accounting Office and 

the Department of Justice (joint regulations) prescribing standards for administrative collection, 

compromise, suspension, and termination of agency collection actions, and referral to the 

General Accounting Office and to the Department of Justice for litigation of civil claims for 

money or property owed to the United States (4 CFR parts 101-105). 

§1408.2 Applicability.

This part applies to all claims of indebtedness due and owing to the United States and 

collectible under procedures authorized by the Federal Claims Collection Act of 1966, as 

amended by the Debt Collection Act of 1982. The joint regulations and this part do not apply to 

conduct in violation of antitrust laws, tax claims, claims between Federal agencies, or to any 

claim which appears to involve fraud, presentation of a false claim, or misrepresentation on the 
part of the debtor or any other party having an interest in the claim, unless the Justice 

Department authorizes the Farm Credit System Insurance Corporation, pursuant to 4 CFR 101.3, 

to handle the claim in accordance with the provisions of 4 CFR parts 101 through 105. 

Additionally, this part does not apply to Farm Credit System Insurance Corporation's premiums 

regulations under part 1410 of this chapter. 

§1408.3 Definitions.

In this part (except where the term is defined elsewhere in this part), the following 

definitions shall apply:

(a) Administrative offset or offset, as defined in 31 U.S.C. 3701(a)(1), means 

withholding money payable by the United States Government to, or held by the 

Government for, a person to satisfy a debt the person owes the Government. 

(b) Agency means a department, agency, or instrumentality in the executive or 

legislative branch of the Government. 

(c) Claim or debt means money or property owed by a person or entity to an 

agency of the Federal Government. A “claim” or “debt” includes amounts due the 

Government from loans insured by or guaranteed by the United States and all other 

amounts due from fees, leases, rents, royalties, services, sales of real or personal 

property, overpayment, penalties, damages, interest, and fines. 

(d) Claim certification means a creditor agency's written request to a paying 

agency to effect an administrative offset. 

(e) Corporation means the Farm Credit System Insurance Corporation. 

(f) Creditor agency means an agency to which a claim or debt is owed. 

(g) Debtor means the person or entity owing money to the Federal Government. 

(h) Hearing official means an individual who is responsible for reviewing a claim 

under §1408.10.

(i) Paying agency means an agency of the Federal Government owing money to a 

debtor against which an administrative or salary offset can be effected. 

(j) Salary offset means an administrative offset to collect a debt under 5 U.S.C. 

5514 by deductions at one or more officially established pay intervals from the current 

pay account of a debtor. 
§1408.4 Delegation of authority.

The Corporation official(s) designated by the Chairman of the Farm Credit System 

Insurance Corporation are authorized to perform all duties which the Chairman is authorized to 

perform under these regulations, the Federal Claims Collection Act of 1966, as amended, and the 

joint regulations issued under that Act. 

§1408.5 Responsibility for collection.

(a) The collection of claims shall be aggressively pursued in accordance with the 

provisions of the Federal Claims Collection Act of 1966, as amended, the joint 

regulations issued under that Act, and these regulations. Debts owed to the United States, 

together with charges for interest, penalties, and administrative costs, should be collected 

in one lump sum unless otherwise provided by law. If a debtor requests installment 

payments, the debtor, as requested by the Corporation, shall provide sufficient 

information to demonstrate that the debtor is unable to pay the debt in one lump sum. 

When appropriate, the Corporation shall arrange an installment payment schedule. 

Claims which cannot be collected directly or by administrative offset shall be either 

written off as administratively uncollectible or referred to the General Counsel for further 

consideration. 

(b) The Chairman, or designee of the Chairman, may compromise claims for 

money or property arising out of the activities of the Corporation, where the claim 

(exclusive of charges for interest, penalties, and administrative costs) does not exceed 

$100,000. When the claim exceeds $100,000 (exclusive of charges for interest, penalties, 

and administrative costs), the authority to accept a compromise rests solely with the

Department of Justice. The standards governing the compromise of claims are set forth in 

4 CFR part 103. 

(c) The Chairman, or designee of the Chairman, may suspend or terminate the 

collection of claims which do not exceed $100,000 (exclusive of charges for interest, 

penalties, and administrative costs) after deducting the amount of any partial payments or 

collections. If, after deducting the amount of any partial payments or collections, a claim 

exceeds $100,000 (exclusive of charges for interest, penalties, and administrative costs), 

the authority to suspend or terminate rests solely with the Department of Justice. The 

standards governing the suspension or termination of claim collections are set forth in 4 

CFR part 104. 

(d) The Corporation shall refer claims to the Department of Justice for litigation 

or to the General Accounting Office (GAO) for claims arising from audit exceptions 

taken by the GAO to payments made by the Corporation in accordance with 4 CFR part 

105. 
§1408.6 Demand for payment.

(a) A total of three progressively stronger written demands at not more than 30-

day intervals should normally be made upon a debtor, unless a response or other 

information indicates that additional written demands would either be unnecessary or 

futile. When necessary to protect the Government's interest, written demands may be 

preceded by other appropriate actions under Federal law, including immediate referral for 

litigation and/or administrative offset. 

(b) The initial demand for payment shall be in writing and shall inform the debtor 

of the following: 

(1) The amount of the debt, the date it was incurred, and the facts upon 

which the determination of indebtedness was made; 

(2) The payment due date, which shall be 30 calendar days from the date 

of mailing or hand delivery of the initial demand for payment;

(3) The right of the debtor to inspect and copy the records of the agency 

related to the claim or to receive copies if personal inspection is impractical. The 

debtor shall be informed that the debtor may be assessed for the cost of copying 

the documents in accordance with §1408.7; 

(4) The right of the debtor to obtain a review of the Corporation's 

determination of indebtedness; 

(5) The right of the debtor to offer to enter into a written agreement with 

the agency to repay the amount of the claim. The debtor shall be informed that the 

acceptance of such an agreement is discretionary with the agency; 

(6) That charges for interest, penalties, and administrative costs will be 

assessed against the debtor, in accordance with 31 U.S.C. 3717, if payment is not 

received by the payment due date; 

(7) That if the debtor has not entered into an agreement with the 

Corporation to pay the debt, has not requested the Corporation to review the debt, 

or has not paid the debt by the payment due date, the Corporation intends to 

collect the debt by all legally available means, which may include initiating legal 

action against the debtor, referring the debt to a collection agency for collection, 

collecting the debt by offset, or asking other Federal agencies for assistance in 

collecting the debt by offset;

(8) The name and address of the Corporation official to whom the debtor 

shall send all correspondence relating to the debt; and 

(9) Other information, as may be appropriate. 
(c) If, prior to, during, or after completion of the demand cycle, the Corporation 

determines to collect the debt by either administrative or salary offset, the Corporation 

shall follow, as applicable, the requirements for a Notice of Intent to Collect by 

Administrative Offset or a Notice of Intent to Collect by Salary Offset set forth in 

§1408.22. 

(d) If no response to the initial demand for payment is received by the payment 

due date, the Corporation shall take further action under this part, under the Federal 

Claims Collection Act of 1966, as amended, under the joint regulations (4 CFR parts 101-

105), or under any other applicable State or Federal law. These actions may include 

reports to credit bureaus, referrals to collection agencies, termination of contracts, 

debarment, and salary or administrative offset. 

§1408.7 Right to inspect and copy records.

The debtor may inspect and copy the Corporation records related to the claim. The debtor 

shall give the Corporation reasonable advanced notice that he/she intends to inspect and copy the 

records involved. The debtor shall pay copying costs unless they are waived by the Corporation. 

Copying costs shall be assessed pursuant to §1402.22 of this chapter. 

§1408.8 Right to offer to repay claim.

(a) The debtor may offer to enter into a written agreement with the Corporation to 

repay the amount of the claim. The acceptance of such an offer and the decision to enter 

into such a written agreement is at the discretion of the Corporation. 

(b) If the debtor requests a repayment arrangement because payment of the 

amount due would create a financial hardship, the Corporation shall analyze the debtor's 

financial condition. The Corporation may enter into a written agreement with the debtor 

permitting the debtor to repay the debt in installments if the Corporation determines, in 

its sole discretion, that payment of the amount due would create an undue financial 

hardship for the debtor. The written agreement shall set forth the amount and frequency 

of installment payments and shall, in accordance with §1408.12, provide for the 

imposition of charges for interest, penalties, and administrative costs unless waived by 

the Corporation. 

(c) The written agreement may require the debtor to execute a confess-judgment 

note when the total amount of the deferred installments will exceed $750. The 

Corporation shall provide the debtor with a written explanation of the consequences of 

signing a confess-judgment note. The debtor shall sign a statement acknowledging receipt 

of the written explanation. The statement shall recite that the written explanation was 

read and understood before execution of the note and that the debtor signed the note 

knowingly and voluntarily. Documentation of these procedures will be maintained in the 

Corporation's file on the debtor. 
§1408.9 Right to agency review.

(a) If the debtor disputes the claim, the debtor may request a review of the 

Corporation's determination of the existence of the debt or of the amount of the debt. If 

only part of the claim is disputed, the undisputed portion should be paid by the payment 

due date. 

(b) To obtain a review, the debtor shall submit a written request for review to the 

Corporation official named in the initial demand letter, within 15 calendar days after 

receipt of the letter. The debtor's request for review shall state the basis on which the 

claim is disputed. 

(c) The Corporation shall promptly notify the debtor, in writing, that the 

Corporation has received the request for review. The Corporation shall conduct its review 

of the claim in accordance with §1408.10. 

(d) Upon completion of its review of the claim, the Corporation shall notify the 

debtor whether the Corporation's determination of the existence or amount of the debt has 

been sustained, amended, or canceled. The notification shall include a copy of the written 

decision issued by the hearing official pursuant to §1408.10(e). If the Corporation's 

determination is sustained, this notification shall contain a provision which states that the 

Corporation intends to collect the debt by all legally available means, which may include 

initiating legal action against the debtor, referring the debt to a collection agency for 

collection, collecting the debt by offset, or asking other Federal agencies for assistance in 

collecting the debt by offset. 

§1408.10 Review procedures.

(a) Unless an oral hearing is required by §1408.23(d), the Corporation's review 

shall be a review of the written record of the claim. 

(b) If an oral hearing is required under §1408.23(d) the Corporation shall provide 

the debtor with a reasonable opportunity for such a hearing. The oral hearing, however, 

shall not be an adversarial adjudication and need not take the form of a formal 

evidentiary hearing. All significant matters discussed at the hearing, however, will be 

carefully documented. 

(c) Any review required by this part, whether a review of the written record or an 

oral hearing, shall be conducted by a hearing official. In the case of a salary offset, the 

hearing official shall not be under the supervision or control of the Chairman of the Farm 

Credit System Insurance Corporation.

(d) The Corporation may be represented by legal counsel. The debtor may 

represent himself or herself or may be represented by an individual of the debtor's choice 

and at the debtor's expense.
(e) The hearing official shall issue a final written decision based on documentary 

evidence and, if applicable, information developed at an oral hearing. The written 

decision shall be issued as soon as practicable after the review but not later than 60 days 

after the date on which the request for review was received by the Corporation, unless the 

debtor requests a delay in the proceedings. A delay in the proceedings shall be granted if 

the hearing official determines, in his or her sole discretion, that there is good cause to 

grant the delay. If a delay is granted, the 60-day decision period shall be extended by the 

number of days by which the review was postponed.

(f) Upon issuance of the written opinion, the Corporation shall promptly notify 

the debtor of the hearing official's decision. Said notification shall include a copy of the 

written decision issued by the hearing official pursuant to paragraph (e) of this section.

§1408.11 Special review.

(a) An employee subject to salary offset, under subpart C of this part, or a 

voluntary repayment agreement, may, at any time, request a special review by the 

Corporation of the amount of the salary offset or voluntary repayment, based on 

materially changed circumstances such as, but not limited to, catastrophic illness, 

divorce, death, or disability.

(b) To determine whether an offset would prevent the employee from meeting 

essential subsistence expenses (costs incurred for food, housing, clothing, transportation, 

and medical care), the employee shall submit a detailed statement and supporting 

documents for the employee, his or her spouse, and dependents indicating:

(1) Income from all sources;

(2) Assets;

(3) Liabilities;

(4) Number of dependents;

(5) Expenses for food, housing, clothing, and transportation;

(6) Medical expenses; and

(7) Exceptional expenses, if any.

(c) If the employee requests a special review under this section, the employee 

shall file an alternative proposed offset or payment schedule and a statement, with 

supporting documents, showing why the current salary offset or payments result in an 

extreme financial hardship to the employee.
(d) The Corporation shall evaluate the statement and supporting documents, and 

determine whether the original offset or repayment schedule imposes an undue financial 

hardship on the employee. The Corporation shall notify the employee in writing of such 

determination, including, if appropriate, a revised offset or payment schedule.

§1408.12 Charges for interest, administrative costs, and 

penalties.

(a) Except as provided in paragraph (d) of this section, the Corporation shall:

(1) Assess interest on unpaid claims;

(2) Assess administrative costs incurred in processing and handling 

overdue claims; and

(3) Assess penalty charges not to exceed 6 percent a year on any part of a 

debt more than 90 days past due.

The imposition of charges for interest, administrative costs, and penalties shall be made 

in accordance with 31 U.S.C. 3717.

(b)(1) Interest shall accrue from the date of mailing or hand delivery of the initial 

demand for payment or the Notice of Intent to Collect by either Administrative or Salary 

Offset if the amount of the claim is not paid within 30 days from the date of mailing or 

hand delivery of the initial demand or notice.

(2) The 30-day period may be extended on a case-by-case basis if the 

Corporation reasonably determines that such action is appropriate. Interest shall 

only accrue on the principal of the claim and the interest rate shall remain fixed 

for the duration of the indebtedness, except, as provided in paragraph (c) of this 

section, in cases where a debtor has defaulted on a repayment agreement and 

seeks to enter into a new agreement, or if the Corporation reasonably determines 

that a higher rate is necessary to protect the interests of the United States.

(c) If a debtor defaults on a repayment agreement and seeks to enter into a new 

agreement, the Corporation may assess a new interest rate on the unpaid claim. In 

addition, charges for interest, administrative costs, and penalties which accrued but were 

not collected under the original repayment agreement shall be added to the principal of 

the claim to be paid under the new repayment agreement. Interest shall accrue on the 

entire principal balance of the claim, as adjusted to reflect any increase resulting from the 

addition of these charges.

(d) The Corporation may waive charges for interest, administrative costs, and/or 

penalties if it determines that:
(1) The debtor is unable to pay any significant sum toward the claim 

within a reasonable period of time;

(2) Collection of charges for interest, administrative costs, and/or penalties 

would jeopardize collection of the principal of the claim;

(3) Collection of charges for interest, administrative costs, or penalties 

would be against equity and good conscience; or

(4) It is otherwise in the best interest of the United States, including the 

situation where an installment payment agreement or offset is in effect. 

§1408.13 Contracting for collection services.

The Chairman, or designee of the Chairman, may contract for collection services in 

accordance with 31 U.S.C. 3718 and 4 CFR 102.6 to recover debts.

§1408.14 Reporting of credit information.

The Chairman, or designee of the Chairman, may disclose to a consumer reporting 

agency information that an individual is responsible for a debt owed to the United States. 

Information will be disclosed to reporting agencies in accordance with the terms and conditions 

of agreements entered into between the Corporation and the reporting agencies. The terms and 

conditions of such agreements shall specify that all of the rights and protection afforded to the 

debtor under 31 U.S.C. 3711(f) have been fulfilled. The Corporation shall notify each consumer 

reporting agency, to which a claim was disclosed, when the debt has been satisfied.

§1408.15 Credit report.

In order to aid the Corporation in making appropriate determinations regarding the 

collection and compromise of claims; the collection of charges for interest, administrative costs, 

and penalties; the use of administrative offset; the use of other collection methods; and the 

likelihood of collecting the claim, the Corporation may institute, consistent with the provisions 

of the Fair Credit Reporting Act (15 U.S.C. 1681, et seq.), a credit investigation of the debtor 

immediately following a determination that the claim exists.

Subpart B—Administrative Offset

§1408.20 Applicability.

(a) The provisions of this subpart shall apply to the collection of debts by 

administrative [or salary] offset under 31 U.S.C. 3716, 5 U.S.C. 5514, or other statutory 

or common law.
(b) Offset shall not be used to collect a debt more than 10 years after the 

Government's right to collect the debt first accrued, unless facts material to the 

Government's right to collect the debt were not known and could not reasonably have 

been known by the official or officials of the Government who were charged with the 

responsibility of discovering and collecting such debt.

(c) Offset shall not be used with respect to:

(1) Debts owed by other agencies of the United States or by any State or 

local government;

(2) Debts arising under or payments made under the Social Security Act, 

the Internal Revenue Code of 1986, as amended, or tariff laws of the United 

States; or 

(3) Any case in which collection by offset of the type of debt involved is 

explicitly provided for or prohibited by another statute.

(d) Unless otherwise provided by contract or law, debts or payments which are 

not subject to offset under 31 U.S.C. 3716 or 5 U.S.C. 5514 may be collected by offset if 

such collection is authorized under common law or other applicable statutory authority.

§1408.21 Collection by offset.

(a) Collection of a debt by administrative [or salary] offset shall be accomplished 

in accordance with the provisions of these regulations, 4 CFR 102.3, and 5 CFR part 550, 

subpart K. It is not necessary for the debt to be reduced to judgment or to be undisputed 

for offset to be used.

(b) The Chairman, or designee of the Chairman, may determine that it is feasible 

to collect a debt to the United States by offset against funds payable to the debtor. 

(c) The feasibility of collecting a debt by offset will be determined on a case-bycase basis. This determination shall be made by considering all relevant factors, including 

the following: (1) The degree to which the offset can be accomplished in accordance with 

law. This determination should take into consideration relevant statutory, regulatory, and 

contractual requirements; 

(2) The degree to which the Corporation is certain that its determination of 

the existence and amount of the debt is correct;

(3) The practicality of collecting the debt by offset. The cost, in time and 

money, of collecting the debt by offset and the amount of money which can 

reasonably be expected to be recovered through offset will be relevant to this 

determination; and
(4) Whether the use of offset will substantially interfere with or defeat the 

purpose of a program authorizing payments against which the offset is 

contemplated. For example, under a grant program in which payments are made 

in advance of the grantee's performance, the imposition of offset against such a 

payment may be inappropriate.

(d) The collection of a debt by offset may not be feasible when there are 

circumstances which would indicate that the likelihood of collection by offset is less than 

probable.

(e) The offset will be effected 31 days after the debtor receives a Notice of Intent 

to Collect by Administrative Offset (or Notice of Intent to Collect by Salary Offset if the 

offset is a salary offset), or upon the expiration of a stay of offset, unless the Corporation 

determines under §1408.24 that immediate action is necessary.

(f) If the debtor owes more than one debt, amounts recovered through offset may 

be applied to them in any order. Applicable statutes of limitation would be considered 

before applying the amounts recovered to any debts owed. 

§1408.22 Notice requirements before offset.

(a) Except as provided in §1408.24, the Corporation will provide the debtor with 

30 calendar days' written notice that unpaid debt amounts shall be collected by 

administrative [or salary] offset (Notice of Intent to Collect by Administrative [or Salary] 

Offset) before the Corporation imposes offset against any money that is to be paid to the 

debtor. 

(b) The Notice of Intent to Collect by Administrative [or Salary] Offset shall be 

delivered to the debtor by hand or by mail and shall provide the following information: 

(1) The amount of the debt, the date it was incurred, and the facts upon 

which the determination of indebtedness was made; 

(2) In the case of an administrative offset, the payment due date, which 

shall be 30 calendar days from the date of mailing or hand delivery of the Notice; 

(3) In the case of a salary offset: 

(i) The Corporation's intention to collect the debt by means of 

deduction from the employee's current disposable pay account until the 

debt and all accumulated interest is paid in full; and 

(ii) The amount, frequency, proposed beginning date, and duration 

of the intended deductions; 
(4) The right of the debtor to inspect and copy the records of the 

Corporation related to the claim or to receive copies if personal inspection is 

impractical. The debtor shall be informed that he/she shall be assessed for the cost 

of copying the documents in accordance with §1408.7 of this part; 

(5) The right of the debtor to obtain a review of, and to request a hearing, 

on the Corporation's determination of indebtedness, the propriety of collecting the 

debt by offset, and, in the case of salary offset, the propriety of the proposed 

repayment schedule (i.e., the percentage of disposable pay to be deducted each 

pay period). The debtor shall be informed that to obtain a review, the debtor shall 

deliver a written request for a review to the Corporation official named in the 

Notice, within 15 calendar days after the debtor's receipt of the Notice. In the case 

of a salary offset, the debtor shall also be informed that the review shall be 

conducted by an official arranged for by the Corporation who shall be a hearing 

official not under the control of the Chairman of the Farm Credit System 

Insurance Corporation, or an administrative law judge; 

(6) That the filing of a petition for hearing within 15 calendar days after 

receipt of the Notice will stay the commencement of collection proceedings; 

(7) That a final decision on the hearing (if one is requested) will be issued 

at the earliest practical date, but not later than 60 days after the filing of the 

written request for review unless the employee requests, and the hearing official 

grants, a delay in the proceedings; 

(8) The right of the debtor to offer to enter into a written agreement with 

the Corporation to repay the amount of the claim. The debtor shall be informed 

that the acceptance of such an agreement is discretionary with the Corporation; 

(9) That charges for interest, penalties, and administrative costs shall be 

assessed against the debtor, in accordance with 31 U.S.C. 3717, if payment is not 

received by the payment due date. The debtor shall be informed that such 

assessments must be made unless excused in accordance with the Federal Claims 

Collection Standards (4 CFR parts 103 and 104); 

(10) The amount of accrued interest and the amount of any other penalties 

or administrative costs which may have been added to the principal debt; 

(11) That if the debtor has not entered into an agreement with the 

Corporation to pay the debt, has not requested the Corporation to review the debt, 

or has not paid the debt prior to the date on which the offset is to be imposed, the 

Corporation intends to collect the debt by administrative [or salary] offset or by 

requesting other Federal agencies for assistance in collecting the debt by offset. 

The debtor shall be informed that the offset shall be imposed against any funds 

that might become available to the debtor, until the principal debt and all 

accumulated interest and other charges are paid in full; 
(12) The date on which the offset will be imposed, which shall be 31 

calendar days from the date of mailing or hand delivery of the Notice. The debtor 

shall be informed that the Corporation reserves the right to impose an offset prior 

to this date if the Corporation determines that immediate action is necessary; 

(13) That any knowingly false or frivolous statements, representations, or 

evidence may subject the debtor to: 

(i) Penalties under the False Claims Act, 31 U.S.C. 3729 through 

3731, or any other applicable statutory authority; 

(ii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, 

or any other applicable statutory authority; and, with regard to employees, 

(iii) Disciplinary procedures appropriate under 5 U.S.C. chapter 

75; 5 CFR part 752, or any other applicable statute or regulation; 

(14) The name and address of the Corporation official to whom the debtor 

shall send all correspondence relating to the debt or the offset; 

(15) Any other rights and remedies available to the debtor under statutes 

or regulations governing the program for which the collection is being made; 

(16) That unless there are applicable contractual or statutory provisions to 

the contrary, amounts paid on or deducted for the debt, which are later waived or 

found not owed to the United States, will be promptly refunded to the employee; 

and 

(17) Other information, as may be appropriate. 

(c) When the procedural requirements of this section have been provided to the 

debtor in connection with the same debt or under some other statutory or regulatory 

authority, the Corporation is not required to duplicate those requirements before effecting 

offset. 

§1408.23 Right to review of claim.

(a) If the debtor disputes the claim, the debtor may request a review of the 

Corporation's determination of the existence of the debt, the amount of the debt, the 

propriety of collecting the debt by offset, and in the case of salary offset, the propriety of 

the proposed repayment schedule. If only part of the claim is disputed, the undisputed 

portion should be paid by the payment due date. 

(b) To obtain a review, the debtor shall submit a written request for review to the 

Corporation official named in the Notice of Intent to Collect by Administrative [or 

Salary] Offset within 15 calendar days after receipt of the notice. The debtor's written 
request for review shall state the basis on which the claim is disputed and shall specify 

whether the debtor requests an oral hearing or a review of the written record of the claim. 

If an oral hearing is requested, the debtor shall explain in the request why the matter 

cannot be resolved by a review of the documentary evidence alone. 

(c) The Corporation shall promptly notify the debtor, in writing, that the 

Corporation has received the request for review. The Corporation shall conduct its review 

of the claim in accordance with §1408.10. 

(d) The Corporation's review of the claim, under this section, shall include 

providing the debtor with a reasonable opportunity for an oral hearing if: 

(1) An applicable statute authorizes or requires the Corporation to consider 

waiver of the indebtedness, the debtor requests waiver of the indebtedness, and 

the waiver determination turns on an issue of credibility or veracity; or 

(2) The debtor requests reconsideration of the debt and the Corporation 

determines that the question of the indebtedness cannot be resolved by reviewing 

the documentary evidence; for example, when the validity of the debt turns on an 

issue of credibility or veracity. 

(e) A debtor waives the right to a hearing and will have his or her debt offset in 

accordance with the proposed offset schedule if the debtor: 

(1) Fails to file a written request for review within the timeframe set forth 

in paragraph (b) of this section, unless the Corporation determines that the delay 

was the result of circumstances beyond his or her control; or 

(2) Fails to appear at an oral hearing of which he or she was notified 

unless the hearing official determines that the failure to appear was due to 

circumstances beyond the employee's control. 

(f) Upon completion of its review of the claim, the Corporation shall notify the 

debtor whether the Corporation's determination of the existence or amount of the debt has 

been sustained, amended, or canceled. The notification shall include a copy of the written 

decision issued by the hearing official, pursuant to §1408.10(e). If the Corporation's 

determination is sustained, this notification shall contain a provision which states that the 

Corporation intends to collect the debt by offset or by requesting other Federal agencies 

for assistance in collecting the debt. 

(g) When the procedural requirements of this section have been provided to the 

debtor in connection with the same debt or under some other statutory or regulatory 

authority, the Corporation is not required to duplicate those requirements before effecting 

offset. 
§1408.24 Waiver of procedural requirements.

(a) The Corporation may impose offset against a payment to be made to a debtor 

prior to the completion of the procedures required by this part, if: 

(1) Failure to impose the offset would substantially prejudice the 

Government's ability to collect the debt; and 

(2) The timing of the payment against which the offset will be imposed 

does not reasonably permit the completion of those procedures. 

(b) The procedures required by this part shall be complied with promptly after the 

offset is imposed. Amounts recovered by offset, which are later found not to be owed to 

the Government, shall be promptly refunded to the debtor. 

§1408.25 Coordinating offset with other Federal agencies.

(a)(1) Any creditor agency which requests the Corporation to impose an offset 

against amounts owed to the debtor shall submit to the Corporation a claim certification 

which meets the requirements of this paragraph. The Corporation shall submit the same 

certification to any agency that the Corporation requests to effect an offset. 

(2) The claim certification shall be in writing. It shall certify the debtor 

owes the debt and that all of the applicable requirements of 31 U.S.C. 3716 and 4 

CFR part 102 have been met. If the intended offset is to be a salary offset, a claim 

certification shall instead certify that the debtor owes the debt and that the 

applicable requirements of 5 U.S.C. 5514 and 5 CFR part 550, subpart K, have 

been met. 

(3) A certification that the debtor owes the debt shall state the amount of 

the debt, the factual basis supporting the determination of indebtedness, and the 

date on which payment of the debt was due. A certification that the requirements 

of 31 U.S.C. 3716 and 4 CFR part 102 have been met shall include a statement 

that the debtor has been sent a Notice of Intent to Collect by Administrative 

Offset at least 31 calendar days prior to the date of the intended offset or a 

statement that pursuant to 4 CFR 102.3(b)(5) said Notice was not required to be 

sent. A certification that the requirements of 5 U.S.C. 5514 and 5 CFR part 550, 

subpart K, have been met shall include a statement that the debtor has been sent a 

Notice of Intent to Collect by Salary Offset at least 31 calendar days prior to the 

date of the intended offset or a statement that pursuant to 4 CFR 102.3(b)(5) said 

Notice was not required to be sent. 

(b)(1) The Corporation shall not effect an offset requested by another Federal 

agency without first obtaining the claim certification required by paragraph (a) of this 

section. If the Corporation receives an incomplete claim certification, the Corporation 
shall return the claim certification with notice that a claim certification which complies 

with the requirements of paragraph (a) of this section must be submitted to the 

Corporation before the Corporation will consider effecting an offset. 

(2) The Corporation may rely on the information contained in the claim 

certification provided by a requesting creditor agency. The Corporation is not 

authorized to review a creditor agency's determination of indebtedness. 

(c) Only the creditor agency may agree to enter into an agreement with the debtor 

for the repayment of the claim. Only the creditor agency may agree to compromise, 

suspend, or terminate collection of the claim. 

(d) The Corporation may decline, for good cause, a request by another agency to 

effect an offset. Good cause includes that the offset might disrupt, directly or indirectly, 

essential Corporation operations. The refusal and the reasons shall be sent in writing to 

the creditor agency. 

§1408.26 Stay of offset.

(a)(1) When a creditor agency receives a debtor's request for inspection of agency 

records, the offset is stayed for 10 calendar days beyond the date set for the record 

inspection. 

(2) When a creditor agency receives a debtor's offer to enter into a 

repayment agreement, the offset is stayed until the debtor is notified as to whether 

the proposed agreement is acceptable. 

(3) When a review is conducted, the offset is stayed until the creditor 

agency issues a final written decision. 

(b) When offset is stayed, the amount of the debt and the amount of any accrued 

interest or other charges will be withheld from payments to the debtor. The withheld 

amounts shall not be applied against the debt until the stay expires. If withheld funds are 

later determined not to be subject to offset, they will be promptly refunded to the debtor. 

(c) If the Corporation is the creditor agency and the offset is stayed, the 

Corporation will immediately notify an offsetting agency to withhold the payment 

pending termination of the stay. 

§1408.27 Offset against amounts payable from Civil Service 

Retirement and Disability Fund.

The Corporation may request that monies payable to a debtor from the Civil Service 

Retirement and Disability Fund be administratively offset to collect debts owed to the 

Corporation by the debtor. The Corporation must certify that the debtor owes the debt, the 
amount of the debt, and that the Corporation has complied with the requirements set forth in this 

part, 4 CFR 102.3, and the Office of Personnel Management regulations. The request shall be 

submitted to the official designated in the Office of Personnel Management regulations to 

receive the request. 

Subpart C—Offset Against Salary

§1408.35 Purpose.

The purpose of this subpart is to implement section 5 of the Debt Collection Act of 1982 

(Pub. L. 97-365 (5 U.S.C. 5514)), which authorizes the collection of debts owed by Federal 

employees to the Federal Government by means of salary offsets. These regulations provide 

procedures for the collection of a debt owed to the Government by the imposition of a salary 

offset against amounts payable to a Federal employee as salary. These regulations are consistent 

with the regulations on salary offset published by the Office of Personnel Management, codified 

in 5 CFR part 550, subpart K. Since salary offset is a type of administrative offset, the 

requirements of subpart B also apply to salary offsets. 

§1408.36 Applicability of regulations.

(a) These regulations apply to the following cases:

(1) Where the Corporation is owed a debt by an individual currently 

employed by another agency; 

(2) Where the Corporation is owed a debt by an individual who is 

currently employed by the Corporation; or 

(3) Where the Corporation currently employs an individual who owes a 

debt to another Federal agency. Upon receipt of proper certification from the 

creditor agency, the Corporation will offset the debtor-employee's salary in 

accordance with these regulations. 

(b) These regulations do not apply to the following: (1) Debts or claims arising 

under the Internal Revenue Code of 1986, as amended (26 U.S.C. 1 et seq.); the Social 

Security Act (42 U.S.C. 301 et seq.); the tariff laws of the United States; or to any case 

where collection of a debt by salary offset is explicitly provided for or prohibited by 

another statute (e.g., travel advances in 5 U.S.C. 5705 and employee training expenses in 

5 U.S.C. 4108). 

(2) Any adjustment to pay arising from an employee's election of coverage 

or a change in coverage under a Federal benefits program requiring periodic 

deductions from pay if the amount to be recovered was accumulated over four pay 

periods or less. 
(3) A claim which has been outstanding for more than 10 years after the 

creditor agency's right to collect the debt first accrued, unless facts material to the 

Government's right to collect were not known and could not reasonably have been

known by the official or officials charged with the responsibility for discovery 

and collection of such debts. 

§1408.37 Definitions.

In this subpart, the following definitions shall apply: 

(a) Agency means: 

(1) An executive agency as defined by 5 U.S.C. 105, including the United 

States Postal Service and the United States Postal Rate Commission; 

(2) A military department as defined in 5 U.S.C. 102; 

(3) An agency or court of the judicial branch, including a court as defined 

in 28 U.S.C. 610, the District Court for the Northern Mariana Islands, and the 

Judicial Panel on Multi-district Litigation; 

(4) An agency of the legislative branch, including the United States Senate 

and the United States House of Representatives; or 

(5) Other independent establishments that are entities of the Federal 

Government. 

(b) Disposable pay means, for an officially established pay interval, that part of 

current basic pay, special pay, incentive pay, retired pay, retainer pay, or, in the case of 

an employee not entitled to basic pay, other authorized pay remaining after the deduction 

of any amount required by law to be withheld. The Corporation shall allow the 

deductions described in 5 CFR 581.105 (b) through (f). 

(c) Employee means a current employee of the Corporation or other agency, 

including a current member of the Armed Forces or Reserve of the Armed Forces of the 

United States. 

(d) Waiver means the cancellation, remission, forgiveness, or nonrecovery of a 

debt allegedly owed by an employee to the Corporation or another agency as permitted or 

required by 5 U.S.C. 5584 or 8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or any other law. 
§1408.38 Waiver requests and claims to the General 

Accounting Office.

(a) The regulations contained in this subpart do not preclude an employee from 

requesting a waiver of an overpayment under 5 U.S.C. 5584 or 8346(b), 10 U.S.C. 2774, 

32 U.S.C. 716, or in any way questioning the amount or validity of a debt by submitting a 

subsequent claim to the General Accounting Office in accordance with the procedures 

prescribed by the General Accounting Office. 

(b) These regulations also do not preclude an employee from requesting a waiver 

pursuant to other statutory provisions pertaining to the particular debts being collected. 

§1408.39 Procedures for salary offset.

(a) The Chairman, or designee of the Chairman, shall determine the amount of an 

employee's disposable pay and the amount to be deducted from the employee's disposable 

pay at regular pay intervals. 

(b) Deductions shall begin within three official pay periods following the date of 

mailing or delivery of the Notice of Intent to Collect by Salary Offset.

(c)(1) If the amount of the debt is equal to or is less than 15 percent of the 

employee's disposable pay, such debt should be collected in one lump-sum deduction. 

(2) If the amount of the debt is not collected in one lump-sum deduction, 

the debt shall be collected in installment deductions over a period of time not 

greater than the anticipated period of employment. The size and frequency of 

installment deductions will bear a reasonable relation to the size of the debt and 

the employee's ability to pay. However, the amount deducted from any pay period 

will not exceed 15 percent of the employee's disposable pay for that period, unless 

the employee has agreed in writing to the deduction of a greater amount. 

(3) A deduction exceeding the 15-percent disposable pay limitation may 

be made from any final salary payment pursuant to 31 U.S.C. 3716 in order to 

liquidate the debt, whether the employee is being separated voluntarily or 

involuntarily. 

(4) Whenever an employee subject to salary offset is separated from the 

Corporation and the balance of the debt cannot be liquidated by offset of the final 

salary check pursuant to 31 U.S.C. 3716, the Corporation may offset any later 

payments of any kind against the balance of the debt. 

(d) In instances where two or more creditor agencies are seeking salary offsets 

against current employees of the Corporation or where two or more debts are owed to a 

single creditor agency, the Corporation, at its discretion, may determine whether one or 
more debts should be offset simultaneously within the 15-percent limitation. Debts owed 

to the Corporation should generally take precedence over debts owed to other agencies. 

§1408.40 Refunds.

(a) In instances where the Corporation is the creditor agency, it shall promptly 

refund any amounts deducted under the authority of 5 U.S.C. 5514 when: 

(1) The debt is waived or otherwise found not to be owed to the United 

States (unless expressly prohibited by statute or regulations); or 

(2) An administrative or judicial order directs the Corporation to make a 

refund. 

(b) Unless required or permitted by law or contract, refunds under this section 

shall not bear interest. 

§1408.41 Requesting current paying agency to offset salary.

(a) To request a paying agency to impose a salary offset against amounts owed to 

the debtor, the Corporation shall provide the paying agency with a claim certification 

which meets the requirements set forth in §1408.25(a) of this part. The Corporation shall 

also provide the paying agency with a repayment schedule determined under the 

provisions of §1408.39 or in accordance with a repayment agreement entered into with 

the debtor. 

(b) If the employee separates from the paying agency before the debt is paid in 

full, the paying agency shall certify the total amount collected on the debt. A copy of this 

certification shall be sent to the employee and a copy shall be sent to the Corporation. If 

the paying agency is aware that the employee is entitled to payments from the Civil 

Service Retirement and Disability Fund, or other similar payments, it must provide 

written notification to the agency responsible for making such payments that the debtor 

owes a debt (including the amount) and that the provisions of this section have been fully

complied with. However, the Corporation must submit a properly certified claim to the 

agency responsible for making such payments before the collection can be made. 

(c) When an employee transfers to another paying agency, the Corporation is not 

required to repeat the due process procedures set forth in 5 U.S.C. 5514 and this part to 

resume the collection. The Corporation shall, however, review the debt upon receiving 

the former paying agency's notice of the employee's transfer to make sure the collection 

is resumed by the new paying agency. 

(d) If a special review is conducted pursuant to §1408.11 and results in a revised 

offset or repayment schedule, the Corporation shall provide a new claim certification to 

the paying agency. 
§1408.42 Responsibility of the Corporation as the paying 

agency.

(a) When the Corporation receives a claim certification from a creditor agency, 

deductions should be scheduled to begin at the next officially established pay interval. 

The Corporation shall send the debtor written notice which provides:

(1) That the Corporation has received a valid claim certification from the 

creditor agency; 

(2) The date on which salary offset will begin; 

(3) The amount of the debt; and 

(4) The amount of such deductions. 

(b) If, after the creditor agency has submitted the claim certification to the 

Corporation, the employee transfers to a different agency before the debt is collected in 

full, the Corporation must certify the total amount collected on the debt. The Corporation 

shall send a copy of this certification to the creditor agency and a copy to the employee. 

If the Corporation is aware that the employee is entitled to payments from the Civil 

Service Retirement Fund and Disability Fund, or other similar payments, it shall provide 

written notification to the agency responsible for making such payments that the debtor 

owes a debt (including the amount). 

§1408.43 Nonwaiver of rights by payments.

An employee's involuntary payment of all or any portion of a debt being collected under 

this subpart shall not be construed as a waiver of any rights the employee may have under 5 

U.S.C. 5514 or any other provisions of a written contract or law unless there are statutory or 

contractual provisions to the contrary.

PART 1410—PREMIUMS

AUTHORITY: Secs. 12 U.S.C. 2020, 2277a-4, 2277a-5, 2277a-7.

SOURCE: 56 FR 3201, Jan. 29, 1991, unless otherwise noted.

§1410.1 Purpose and scope.

This part sets forth the rules for:

(a) The calculation of premiums;
(b) The time for payment of the premium required by sections 5.55 and 5.56 of 

the Farm Credit Act of 1971, as amended;

(c) Interest charges on delinquent payments;

(d) The form and content of certified statements; and,

(e) Documentation supporting certified statements.

§1410.2 Definitions.

(a) Act means the Farm Credit Act of 1971, as amended.

(b) Average principal outstanding means the average annual principal outstanding 

on a daily basis using balances as of the close of each day. In computing the average 

annual principal outstanding in this manner, the closing balance of the most recent past 

business day shall be the closing balance for days when an institution is closed.

(c) Direct lending association means any production credit association or any 

other association making direct loans under authority provided under section 7.6 of the 

Act, including, without limitation, agricultural credit associations and Federal land credit 

associations.

(d) Government-guaranteed loans or investments means loans or credits or 

investments, or portions of loans or credits or investments, that are guaranteed:

(1) By the full faith and credit of the United States Government or any 

State government; or,

(2) By an agency or other entity of the United States Government whose 

obligations are explicitly guaranteed by the United States Government; or,

(3) By an agency or other entity of a State government whose obligations 

are explicitly guaranteed by such State government.

(e) Insured bank means any Farm Credit bank whose participation in notes, 

bonds, debentures, and other obligations issued under subsection (c) or (d) of section 4.2 

of the Act is insured under part E of title V of the Act, including, without limitation, 

banks that are in or are placed in receivership or conservatorship to the extent that those 

banks' participation in such obligations is insured.

(f) Loan means any extension of credit or lease resulting from direct negotiations 

between a lender and a borrowing entity that is recorded as an asset of an insured bank, a 

direct lending association, or an other financing institution. The term “loan” includes 

loans, contracts of sale, notes receivable, and other similar obligations and lease 

financings. The term “loan” includes loans originated through direct negotiations 
between the insured bank, direct lending association, or other financing institution and a 

borrowing entity and loans or interests in loans purchased from another lender. Loans 

purchased subject to recourse shall be considered loans of the seller to the extent of the 

recourse.

(g)(1) Nonaccrual loan means any loan where—

(i) Any amount of outstanding principal and all past and future 

interest accruals, considered over the full term of the asset, are determined 

to be uncollectible for any reason; or,

(ii) It has been classified “loss” as a result of a periodic credit 

evaluation and has not been charged off; or,

(iii) The loan is severely past due and is not adequately secured, in 

process of collection, and fully collectible with respect to all principal and 

interest.

(2) For the purposes of determining whether a loan is considered as 

accrual or nonaccrual under this part, all loans on which a borrowing entity, or a 

component of a borrowing entity, is primarily obligated to the institution shall be 

considered as one loan unless a review of all pertinent facts supports a reasonable 

determination that a particular loan constitutes an independent credit risk and such 

determination is adequately documented in the loan file.

(h) Other financing institution means any bank, company, institution, corporation, 

union, or association described in section 1.7(b)(1)(B) of the Act.

[56 FR 3201, Jan. 29, 1991; 56 FR 10302, Mar. 11, 1991; 74 FR 17373, Apr. 15, 2009]
§1410.3 Calculation and reporting of premiums due.

(a) Reporting. For purposes of computing premiums, each insured bank shall, 

without limitation, report all information concerning the insured bank; each direct lending 

association that is receiving (or has received) funds provided through the insured bank; 

and each other financing institution that is receiving (or has received) funds provided 

through the insured bank; that the Corporation determines is necessary in order to 

compute the premiums due under the Act.

(b) Calculating the premium payment for periods from July 1, 2008 through 

December 31, 2008.

(1) The premium payment for the 3rd Quarter 2008 (defined for purposes 

of this section as the period from July 1, 2008 through September 30, 2008) and 

the premium payment for the 4th Quarter 2008 (defined for purposes of this 

section as the period October 1, 2008, through December 31, 2008) shall be equal 

to 25 percent of the amount computed by applying the premium calculation 

formulas contained in sections 5.55 and 5.56 of the Act (unless reduced by the 

Corporation acting under section 5.55(a)(3) of the Act or under paragraph (d) of 

this section) to the insured bank during the 3rd Quarter 2008 or 4th Quarter 2008, 

respectively.

(2) In accord with paragraph (b)(1) of this section, the premium payment 

for the 3rd Quarter 2008 (having been reduced by the Corporation acting under 

section 5.55(a)(3) of the Act) shall be equal to 25 percent of the following 

amount:

(i) The average outstanding insured obligations issued by the bank

for the period, after deducting from the obligations the percentages of the 

guaranteed portions of loans and investments described in section 

5.55(a)(2) of the Act, multiplied by 0.0015; and

(ii) The product obtained by multiplying—

(A) The sum of—

(1) The average principal outstanding for the period 

on loans made by the bank (computed in accord with 

section 5.55 of the Act) that are in nonaccrual status; and

(2) The average amount outstanding for the period 

of other-than-temporarily impaired investments made by 

the bank (computed in accord with section 5.55 of the Act);

(B) By 0.0010.
(3) In accord with paragraph (b)(1) of this section, 

the premium payment for the 4th Quarter 2008 (having 

been reduced by the Corporation acting under section 

5.55(a)(3) of the Act) shall be equal to 25 percent of the 

following amount:

(i) The average outstanding insured obligations issued by the bank 

for the period, after deducting from the obligations the percentages of the 

guaranteed portions of loans and investments described in section 

5.55(a)(2) of the Act, multiplied by 0.0018; and

(ii) The product obtained by multiplying—

(A) The sum of—

(1) The average principal outstanding for the period 

on loans made by the bank (computed in accord with 

section 5.55 of the Act) that are in nonaccrual status; and

(2) The average amount outstanding for the period 

of other-than-temporarily impaired investments made by 

the bank (computed in accord with section 5.55 of the Act);

(B) By 0.0010.

(c) Calculating the premium payment for periods in 2009 and subsequent years.

(1) The premium payment for periods in calendar year 2009 and 

subsequent years shall be equal to the amount computed by applying the premium 

calculation formulas contained in sections 5.55 and 5.56 of the Act (unless 

reduced by the Corporation acting under section 5.55(a)(3) of the Act or under 

paragraph (d) of this section) to the insured bank during the period.

(2) In accord with paragraph (c)(1) of this section, the premium payment 

for the period shall (unless reduced by the Corporation acting under section 

5.55(a)(3) of the Act or under paragraph (d) of this section) be equal to:

(i) The average outstanding insured obligations issued by the bank 

for the period, after deducting from the obligations the percentages of the

guaranteed portions of loans and investments described in section 

5.55(a)(2), multiplied by 0.0020; and

(ii) The product obtained by multiplying—

(A) The sum of—
(1) The average principal outstanding for the period 

on loans made by the bank (computed in accord with 

section 5.55 of the Act) that are in nonaccrual status; and

(2) The average amount outstanding for the period 

of other than temporarily impaired investments made by the 

bank (computed in accord with section 5.55 of the Act);

(B) By 0.0010.

(d) Secure base amount. In addition to the Corporation's authority to reduce 

premiums under section 5.55(a)(3) of the Act, upon reaching the secure base amount 

determined by the Corporation in accordance with section 5.55 of the Act, the annual 

premium to be paid by each insured bank, computed in accordance with paragraphs (b) 

and (c) of this section, shall be reduced by a percentage determined by the Corporation so 

that the aggregate of the premiums payable by all of the Farm Credit banks for the 

following calendar year is sufficient to ensure that the Insurance Fund balance is 

maintained at not less than the secure base amount. The Corporation shall announce any 

such percentage no later than December 31 of the year prior to the January in which such 

premiums are to be paid.

[74 FR 17373, Apr. 15, 2009]

§1410.4 Payment of premiums.

(a) Payments. Each insured bank shall pay to the Corporation the amount of the 

premium due to the Corporation computed in accordance with sections 5.55 and 5.56 of 

the Act, and §1410.3 of this part, and shown on its certified statement, at the time the 

statement is filed. Certified statements shall be considered to have been filed and 

payments made in a timely manner if they are received on or before January 31 following

the end of the calendar year on which the certified statement is based.

(b) Premiums as obligations of insured banks. Premiums required to be paid by 

§1410.3 are obligations of the insured banks, and are to be paid at the times required by 

this section, regardless of whether the insured bank has assessed and collected any 

assessments under section 1.12 of the Act.

[56 FR 3201, Jan. 29, 1991; 56 FR 10302, Mar. 11, 1991; 74 FR 17374, Apr. 15, 2009]

§1410.5 Delinquent premium payments and premium 

overpayments.

(a) Delinquent payments. Each insured bank shall pay to the Corporation interest 

on delinquent premium payments. All premiums will be considered delinquent if they are 

received after the time for payment specified in §1410.4 of this part, including late 
payments caused by bank errors in the certified statement. The interest rate will be the 

United States Treasury Department's current value of funds rate, which is issued under 

the Treasury Fiscal Requirements Manual (TFRM rate) and published quarterly in the 

FEDERAL REGISTER. The interest rate will be determined as follows:

(1) Current year.

(i) For delinquent days occurring on or prior to March 31, the rate 

will be the TFRM rate that is published in the preceding December.

(ii) For delinquent days occurring from April 1 to June 30, the rate 

will be the TFRM rate that is published in March for the second quarter of 

the year.

(iii) For delinquent days occurring from July 1 to September 30, 

the rate will be the TFRM rate that is published in June for the third 

quarter.

(iv) For delinquent days occurring from October 1 to December 

31, the rate will be the TFRM rate that is published in September for the 

fourth quarter.

(2) Prior years. The interest will be calculated quarterly and compounded 

annually at the rates applicable for each quarter as issued under the TFRM. For 

the initial year, the rate will be applied to the gross amount of the delinquent 

payment. For each additional year or portion thereof the rate will be applied to the 

net amount of the delinquent payment after it has been reduced by any premium 

credit under paragraph (c) of this section.

(b) Other rights and remedies. Payment of the interest specified in paragraph (a) 

of this section does not affect any other rights and remedies available to the Corporation.

(c) Overpayments. To the extent that any payment by a bank exceeds the required 

amount:

(1) The excess shall be credited against future premium payments by the 

bank which overpaid; or,

(2)(i) Upon written request to the Corporation by the bank which overpaid, 

the excess shall be refunded to the bank within 30 days of receipt of the written 

request; and

(ii) If the Corporation fails to make a refund within such 30-day 

period, and the Corporation determines that a refund is in order, the 

Corporation shall pay to the bank interest on the amount of the 
overpayment, from the end of such 30-day period through the date the 

refund is issued.

§1410.6 Certified statements.

(a) Forms. The certified statements required to be filed by insured banks under the 

provisions of section 5.56 of the Act shall be filed with the Corporation. The certified 

statement forms will be furnished to all insured banks by, or may be obtained from, the 

Corporation. 

(b) Amendments to certified statements. In the event of an amendment or 

correction of a previously submitted certified statement, the amending insured bank shall 

resubmit to the Corporation the appropriate certified statement along with a letter of 

explanation regarding the amendment or correction.

[56 FR 3201, Jan. 29, 1991, as amended at 56 FR 57233, Nov. 8, 1991; 74 FR 17374, Apr. 15, 

2009]

§1410.7 Documentation.

Each insured bank shall:

(a) Prepare and maintain accurate and complete records as necessary to prepare 

certified statements, including, but not limited to, records relating to the loans of each 

direct lending association and other financing institution that are able to make such loans 

because they are receiving, or have received, funding from the insured bank.

(b) Prepare and maintain on its premises books and records in such a manner as to 

facilitate reconciliation with certified statements prepared from them.

(c) Maintain in its books and records documentation supporting its certified 

statement for a period no less than 5 years following the date of each certified statement, 

unless the bank shall have requested in writing, and the Corporation shall have granted to 

the bank, written permission to dispose of such documentation prior to the expiration of 5 

years.

(d) Make all records and any supporting documentation available, without 

limitation, to Corporation officials upon request.
PART 1411—RULES OF PRACTICE AND PROCEDURE 

AUTHORITY: 12 U.S.C. 2277a-7(10), 2277a-14(c) and (d); 28 U.S.C. 2461 note.

Subpart A—Rules and Procedures for Assessment and 

Collection of Civil Money Penalties

§1411.1 Inflation adjustment of civil money penalties for 

failure to file a certified statement, pay any premium 

required or obtain approval before employment of persons 

convicted of criminal offenses.

In accordance with the Federal Civil Penalties Inflation Adjustment Act of 1990, as 

amended, a civil money penalty imposed pursuant to section 5.65(c) or (d) of the Farm Credit 

Act of 1971, as amended, shall not exceed $217 per day for each day the violation continues.

[86 FR 8854, Feb. 10, 2021]

PART 1412—GOLDEN PARACHUTE AND 

INDEMNIFICATION PAYMENTS 

AUTHORITY: 12 U.S.C. 2277a-10b.

SOURCE: 71 FR 7405, Feb. 13, 2006, unless otherwise noted.

§1412.1 Scope.

(a) This part limits and/or prohibits, in certain circumstances, the ability of Farm 

Credit System (System) institutions, their service corporations, subsidiaries and affiliates 

from making golden parachute and indemnification payments to institution-related parties 

(IRPs).

(b) This part applies to System institutions in a troubled condition that seek to 

make golden parachute payments to their IRPs.

(c) The limitations on indemnification payments apply to all System institutions, 

their service corporations, subsidiaries and affiliates regardless of their financial health.

§1412.2 Definitions.
(a) Act or Farm Credit Act means Farm Credit Act of 1971 (12 U.S.C. 2002(a)), 

as amended by the Farm Credit System Reform Act of 1996, amending 12 U.S.C. 2277a10.

(b) Farm Credit System institution or System institution means any “institution” 

enumerated in section 1.2 of the Act including, but not limited to, associations, banks, 

service corporations, the Federal Farm Credit Banks Funding Corporation, the Farm 

Credit Leasing Services Corporation and their subsidiaries and affiliates, as well as, the 

Federal Agricultural Mortgage Corporation and its subsidiaries and affiliates, as 

described in 12 U.S.C. 2279aa-1(a).

(c) Benefit plan means any plan, contract, agreement or other arrangement which 

is an “employee welfare benefit plan” as that term is defined in section 3(1) of the 

Employee Retirement Income Security Act of 1974, as amended (29 U.S.C. 1002(1)), or 

other usual and customary plans such as dependent care, tuition reimbursement, group 

legal services or other benefits provided under a cafeteria plan sponsored by the System 

institution; provided however, that such term shall not include any plan intended to be 

subject to paragraph (f)(2)(iii), (vii) and (viii) of this section.

(d) Bona fide deferred compensation plan or arrangement means any plan, 

contract, agreement or other arrangement whereby:

(1) An IRP voluntarily elects to defer all or a portion of the reasonable 

compensation, wages or fees paid for services rendered which otherwise would 

have been paid to such party at the time the services were rendered (including a 

plan that provides for the crediting of a reasonable investment return on such 

elective deferrals) and the System institution either:

(i) Recognizes compensation expense and accrues a liability for the 

benefit payments according to generally accepted accounting principles 

(GAAP); or

(ii) Segregates or otherwise sets aside assets in a trust which may 

only be used to pay plan and other benefits, except that the assets of such 

trust may be available to satisfy claims of the System institution's creditors 

in the case of insolvency; or

(2) The System institution establishes a nonqualified deferred 

compensation or supplemental retirement plan, other than an elective deferral plan 

described in paragraph (d)(1) of this section:

(i) Primarily for the purpose of providing benefits for certain IRPs 

in excess of the limitations on contributions and benefits imposed by 

sections 415, 401(a)(17), 402(g) or any other applicable provision of the 

Internal Revenue Code of 1986 (26 U.S.C. 415, 401(a)(17), 402(g)); or
(ii) Primarily for the purpose of providing supplemental retirement 

benefits or other deferred compensation for a select group of directors, 

management or highly compensated employees (excluding severance 

payments described in paragraph (f)(2)(v) of this section and permissible 

golden parachute payments described in §1412.5); and

(3) In the case of any nonqualified deferred compensation or supplemental 

retirement plans as described in paragraphs (d)(1) and (2) of this section, the 

following requirements shall apply:

(i) The plan was in effect at least 1 year prior to any of the events 

described in paragraph (f)(1)(ii) of this section;

(ii) Any payment made pursuant to such plan is made in 

accordance with the terms of the plan as in effect no later than 1 year prior 

to any of the events described in paragraph (f)(1)(ii) of this section and in 

accordance with any amendments to such plan during such 1 year period 

that do not increase the benefits payable thereunder;

(iii) The IRP has a vested right, as defined under the applicable 

plan document, at the time of termination of employment to payments 

under such plan;

(iv) Benefits under such plan are accrued each period only for 

current or prior service rendered to the employer (except that an allowance 

may be made for service with a predecessor employer);

(v) Any payment made pursuant to such plan is not based on any 

discretionary acceleration of vesting or accrual of benefits which occurs at 

any time later than 1 year prior to any of the events described in paragraph 

(f)(1)(ii) of this section;

(vi) The System institution has previously recognized 

compensation expense and accrued a liability for the benefit payments 

according to GAAP or segregated or otherwise set aside assets in a trust 

which may only be used to pay plan benefits, except that the assets of such 

trust may be available to satisfy claims of the System institution's creditors 

in the case of insolvency; and

(vii) Payments pursuant to such plans shall not be in excess of the 

accrued liability computed in accordance with GAAP.

(e) Corporation or FCSIC mean the Farm Credit System Insurance Corporation, 

in its corporate capacity.
(f) Golden parachute payment. (1) The term “golden parachute payment” means 

any payment (or any agreement to make any payment) in the nature of compensation by 

any System institution for the benefit of any current or former IRP pursuant to an 

obligation of such System institution that:

(i) Is contingent on the termination of such party's primary 

employment or relationship with the System institution; and

(ii) Is received on or after, or is made in contemplation of, any of 

the following events:

(A) The insolvency (or similar event) of the System 

institution which is making the payment or bankruptcy or 

insolvency (or similar event) of the service corporation, subsidiary 

or affiliate which is making the payment; or

(B) The System institution is assigned a composite rating of 

4 or 5 by the FCA; or

(C) The appointment of any conservator or receiver for 

such System institution; or

(D) A determination by the Corporation, that the System 

institution is in a troubled condition, as defined in paragraph (m) of 

this section; and

(iii) Is payable to an IRP whose employment by or relationship 

with a System institution is terminated at a time when the System 

institution by which the IRP is employed or related satisfies any of the

conditions enumerated in paragraphs (f)(1)(ii)(A) through (D) of this 

section, or in contemplation of any of these conditions.

(2) Exceptions. The term “golden parachute payment” shall not include:

(i) Any payment made pursuant to a pension or retirement plan 

which is qualified (or is intended within a reasonable period of time to be 

qualified) under section 401 of the Internal Revenue Code of 1986 (26 

U.S.C. 401); or

(ii) Any payment made pursuant to a benefit plan as that term is 

defined in paragraph (c) of this section; or

(iii) Any payment made pursuant to a “bona fide” deferred 

compensation plan or arrangement as defined in paragraph (d) of this 

section; or
(iv) Any payment made by reason of death or by reason of 

termination caused by the disability of IRP; or

(v) Any severance or similar payment which is required to be made 

pursuant to a state statute or foreign law which is applicable to all 

employers within the appropriate jurisdiction (with the exception of 

employers that may be exempt due to their small number of employees or 

other similar criteria); or

(vi) Any other payment which the Corporation determines to be 

permissible in accordance with §1412.6, on permissible indemnification 

payments; or

(vii) Any payment made pursuant to a nondiscriminatory severance 

pay plan or arrangement that provides for payment of severance benefits 

to all eligible employees upon involuntary termination other than for 

cause, voluntary resignation, or early retirement. Furthermore, such 

severance pay plan or arrangement shall not have been adopted or 

modified to increase the amount or scope of severance benefits at a time 

when the System institution was in a condition specified in paragraph 

(f)(1)(ii) of this section or in contemplation of such a condition without the 

prior written consent of the FCA; or in lieu of a payment made pursuant to 

this paragraph;

(viii) Any payment made pursuant to a severance pay plan or 

arrangement that provides severance benefits upon involuntary 

termination other than for cause, voluntary resignation, or early retirement. 

No employee shall receive any payment under this subpart which exceeds 

the base compensation paid to such employee during the 12 months (or 

longer period or greater benefit as the Corporation shall consent to) 

immediately proceeding termination of employment. Furthermore, such 

severance pay plan or arrangement shall not have been adopted or 

modified to increase the amount or the scope of the severance benefits at a 

time when the System institution was in a condition specified in paragraph 

(f)(1)(ii) of this section or in contemplation of such a condition without the 

written approval of the FCA.

(g) The FCA means the Farm Credit Administration.

(h) Institution-related party (IRP) means:

(1) Any director, officer, employee, or controlling stockholder (other than 

another Farm Credit System institution) of, or agent for a System institution;

(2) Any stockholder (other than another Farm Credit System institution), 

consultant, joint venture partner, and any other person as determined by the FCA 
(by regulation or case-by-case) who participates in the conduct of the affairs of a 

System institution; and

(3) Any independent contractor (including any attorney, appraiser, or 

accountant) who knowingly or recklessly participates in any violation of any law 

or regulation, any breach of fiduciary duty, or any unsafe or unsound practice, 

which caused or is likely to cause more than a minimal financial loss to, or a 

significant adverse effect on, the System institution.

(i) Liability or legal expense means:

(1) Any legal or other professional fees and expenses incurred in 

connection with any claim, proceeding, or action;

(2) The amount of, and any cost incurred in connection with, any 

settlement of any claim, proceeding, or actions; and

(3) The amount of, any cost incurred in connection with, any judgment or 

penalty imposed with respect to any claim, processing, or action.

(j) Nondiscriminatory means that the plan, contract or arrangement in question 

applies to all employees of a System institution who meet reasonable and customary 

eligibility requirements applicable to all employees, such as minimum length of service 

requirements. A nondiscriminatory plan, contract or arrangement may provide different 

benefits based only on objective criteria such as salary, total compensation, length of 

service, job grade or classification, which are applied on a proportionate basis, with a 

modest disparity in severance benefits relating to any one criterion of 20 percent.

(k) Payment means:

(1) Any direct or indirect transfer of any funds or any asset;

(2) Any forgiveness of any debt or other obligation;

(3) The conferring of benefits in the nature of compensation, including but 

not limited to stock options and stock appreciation rights; or

(4) Any segregation of any funds or assets, the establishment or funding of 

any trust or the purchase of or arrangement for any letter of credit or other 

instrument, for the purpose of making, or pursuant to any agreement to make, any 

payment on or after the date on which such funds or assets are segregated, or at 

the time of or after such trust is established or letter of credit or other instrument 

is made available, without regard to whether the obligation to make such payment 

is contingent on:
(i) The determination, after such date, of the liability for the 

payment of such amount; or

(ii) The liquidation, after such date, of the amount of such 

payment.

(l) Prohibited indemnification payment. (1) The term “prohibited 

indemnification payment” means any payment (or any agreement or arrangement 

to make any payment) by any System institution for the benefit of any person who 

is or was an IRP of such System institution, to pay or reimburse such person for 

any civil money penalty or judgment resulting from any administrative or civil 

action instituted by the FCA, or any other liability or legal expense with regard to 

any administrative proceeding or civil action instituted by the FCA which results 

in a final order or settlement pursuant to which such person:

(i) Is assessed a civil money penalty;

(ii) Is removed from office or prohibited from participating in the 

conduct of the affairs of the institution; or

(iii) Is required to cease and desist from or take any affirmative 

action with respect to such institution.

(2) Exceptions. (i) The term “prohibited indemnification” payment shall 

not include any reasonable payment by a System institution which is used to 

purchase any commercial insurance policy or fidelity bond, provided that such 

insurance policy or bond shall not be used to pay or reimburse an IRP for the cost 

of any judgment or civil money penalty assessed against such person in an 

administrative proceeding or civil action commenced by the FCA, but may pay 

any legal or professional expenses incurred in connection with such proceeding or 

action or the amount of any restitution to the System institution or receiver.

(ii) The term “prohibited indemnification payment” shall not 

include any reasonable payment by a System institution that represents 

partial indemnification for legal or professional expenses specifically 

attributable to particular charges for which there has been a formal and 

final adjudication or finding in connection with a settlement that the IRP 

has not violated certain FCA laws or regulations or has not engaged in 

certain unsafe or unsound practices or breaches of fiduciary duty, unless 

the administrative action or civil proceedings has resulted in a final 

prohibition order against the IRP.

(m) Troubled condition means a System institution that:

(1) Is subject to a cease-and-desist order or written agreement issued by 

the FCA that requires action to improve the financial condition of the System 
institution or is subject to a proceeding initiated by the FCA which contemplates 

the issuance of an order that requires action to improve the financial condition of 

the institution, unless otherwise informed in writing by the FCA; or

(2) Is unable to make a timely payment of principal or interest on any 

insured obligation (as defined in section 5.51(3) of the Farm Credit Act; 12 

U.S.C. 2277a(3)); or

(3) Is receiving assistance as described in section 5.61 of the Farm Credit 

Act, 12 U.S.C. 2277a-10; or

(4) Is unable to make timely payment of principal or interest on debt 

obligations issued under the authority of section 8.6(e)(2) of the Farm Credit Act; 

12 U.S.C. 2279aa-6(e)(2) or is unable to fulfill the guarantee obligations provided 

under section 8.6 of the Farm Credit Act; 12 U.S.C. 2279aa-6; or

(5) Is informed in writing by the Corporation that it is in a “troubled 

condition” for purposes of the requirements of this subpart on the basis of the 

System institution's most recent report of condition or report of examination or 

other information available to the Corporation.

§1412.3 Golden parachute payments prohibited.

No System institution shall make or agree to make any golden parachute payment, except 

as provided in this part.

§1412.4 Prohibited indemnification payments.

No System institution shall make or agree to make any prohibited indemnification 

payment, except as provided in this part.

§1412.5 Permissible golden parachute payments.

(a) A System institution may agree to make or may make a golden parachute 

payment if and to the extent that:

(1) The FCA, with the written concurrence of the Corporation, determines 

that such a payment or agreement is permissible; or

(2) Such an agreement is made in order to hire a person to become an IRP 

either at a time when the System institution satisfies or in an effort to prevent it 

from imminently satisfying any of the criteria set forth in §1412.2(f)(1)(ii), and 

the FCA and the Corporation consent in writing to the amount and terms of the 

golden parachute payment. Such consent by the Corporation and the FCA shall 

not improve the IRP's position in the event of the insolvency of the institution 
since such consent can neither bind a receiver nor affect the provability of 

receivership claims. In the event that the institution is placed into receivership or 

conservatorship, the Corporation and/or the FCA shall not be obligated to pay the 

promised golden parachute and the IRP shall not be accorded preferential 

treatment on the basis of such prior approval; or

(3) Such a payment is made pursuant to an agreement which provides for a 

reasonable severance payment, not to exceed 18-months' salary, to an IRP in the 

event of a change in control of the System institution; provided, however, that the 

System institution shall obtain the consent of the FCA prior to making such a 

payment and this paragraph (a)(3) shall not apply to any change in control of 

System institution which results from an assisted transaction as described in 

section 5.61 of the Farm Credit Act; 12 U.S.C. 2277a-10 or the System institution 

being placed into conservatorship or receivership; and

(4) A System institution or IRP making a request pursuant to paragraphs 

(a)(1) through (3) of this section shall demonstrate that it is not aware of any 

information, evidence, documents or other materials which would indicate that 

there is a reasonable basis to believe, at the time such payment is proposed to be 

made, that:

(i) The IRP has committed any fraudulent act or omission, breach 

of trust or fiduciary duty, or insider abuse with regard to the System 

institution that has had or is likely to have a material adverse effect on the 

institution;

(ii) The IRP is substantially responsible for the insolvency of, the 

appointment of a conservator or receiver for, or the troubled condition, as 

defined by applicable regulations concerning the System institution;

(iii) The IRP has materially violated any applicable Federal or state 

law or regulation that has had or is likely to have a material effect on the 

System institution; and

(iv) The IRP has violated or conspired to violate section 215, 657, 

1006, 1014, or 1344 of title 18 of the United States Code or section 1341 

or 1343 of such title affecting a Farm Credit System institution.

(b) In making a determination under paragraphs (a)(1) through (3) of this section 

the FCA and the Corporation may consider:

(1) Whether, and to what degree, the IRP was in a position of managerial 

or fiduciary responsibility;

(2) The length of time the IRP was affiliated with the System institution, 

and the degree to which the proposed payment represents reasonable 
compensation earned over the period of employment and reasonable payment for 

services rendered; and

(3) Any other factors or circumstances which would indicate that the 

proposed payment would be contrary to the intent of the Act or this part.

§1412.6 Permissible indemnification payments.

(a) A System institution may make or agree to make reasonable indemnification 

payments to an IRP with respect to an administrative proceeding or civil action initiated 

by the FCA if:

(1) The System institution's board of directors, in good faith, determines in 

writing after due investigation and consideration that the IRP acted in good faith 

and in a manner he/she believed to be in the best interests of the institution;

(2) The System institution's board of directors, in good faith, determines in 

writing after due investigation and consideration that the payment of such 

expenses will not materially adversely affect the institution's safety and 

soundness;

(3) The indemnification payments do not constitute prohibited 

indemnification payments as that term is defined in §1412.2(l); and

(4) The IRP agrees in writing to reimburse the System institution, to the 

extent not covered by payments from insurance or bonds purchased pursuant to 

§1412.2(l)(2), for that portion of the advanced indemnification payments which 

subsequently become prohibited indemnification payments, as defined herein.

(b) An IRP requesting indemnification payments shall not participate in any way 

in the board's discussion and approval of such payments; provided, however, that such 

IRP may present his/her request to the board and respond to any inquiries from the board 

concerning his/her involvement in the circumstances giving rise to the administrative 

proceeding or civil action.

(c) In the event that a majority of the members of the board of directors are named 

as respondents in an administrative proceeding or civil action and request 

indemnification, the remaining members of the board may authorize independent legal 

counsel to review the indemnification request and provide the remaining members of the 

board with a written opinion of counsel as to whether the conditions delineated in 

paragraph (a) of this section have been met. If independent legal counsel opines that said 

conditions have been met, the remaining members of the board of directors may rely on 

such opinion in authorizing the requested indemnification.

(d) In the event that all of the members of the board of directors are named as 

respondents in an administrative proceeding or civil action and request indemnification, 
the board shall authorize independent legal counsel to review the indemnification request 

and provide the board with a written opinion of counsel as to whether the conditions 

delineated in paragraph (a) of this section have been met. If independent legal counsel 

opines that said conditions have been met, the board of directors may rely on such 

opinion in authorizing the requested indemnification.

§1412.7 Filing instructions.

Requests to make excess nondiscriminatory severance plan payments and permitted 

golden parachute payments shall be submitted in writing to the FCA and the Corporation. The 

request shall be in letter form and shall contain all relevant factual information as well as the 

reasons why such approval should be granted.

§1412.8 Application in the event of receivership.

The provisions of this part or any consent or approval granted under the provisions of this 

part by the Corporation (in its corporate capacity), shall not in any way bind any receiver of a 

failed System institution. Any consent or approval granted under the provisions of this part by 

the Corporation or the FCA shall not in any way obligate such agency or receiver to pay any 

claim or obligation pursuant to any golden parachute, severance, indemnification or other 

agreement. Claims for employee welfare benefits or other benefits which are contingent, even if 

otherwise vested, when the Corporation is appointed as receiver for any System institution, 

including any contingency for termination of employment, are not provable claims or actual, 

direct compensatory damage claims against such receiver. Nothing in this part may be construed 

to permit the payment of salary or any liability or legal expense of any IRP contrary to 12 U.S.C. 

2277a-10b(d).

1413-1499 [RESERVED]