Supporting Statement 2015

U.S. Department of Agriculture Farm Services Agency

Supporting Statement for Information Collection

Debt Settlement Policies and Procedures

0560-0146

May 2015

Purpose: This document is a request for extension of the information collection authorized by the regulations, 7 CFR 792, Debt Settlement Policies and Procedures (Farm Service Agency (FSA)), and 7 CFR 1403, Debt Settlement Policies and Procedures (Commodity Credit Corporation (CCC)). CCC-279 is revised for just one word to correct the language, but the burden hours have not changed for the form.

1. Circumstances making collection of information necessary.

The Federal Claims Collection Standards provide at 4 CFR part 102 that, whenever feasible, debts owed to the United States should be collected in full in one lump sum. Debt Collection Improvement Act (DCIA) further emphasizes, as one of its goals, to maximize collections of delinquent debts owed to the Government by ensuring quick action is taken to enforce recovery of debts and the use of all appropriate collection tools, while ensuring that the public is fully informed of the Federal Government’s debt collection policies and that debtors are fully cognizant of their financial obligations to repay amounts owed to the Federal Government. The Federal Claims Collection Standards and the DCIA also provide that if the debtor is financially unable to pay the debt in one lump sum, payment may be accepted in regular installments. In such instances agencies should obtain financial statements from debtors who represent that they are unable to pay the debt in one lump sum, and those agencies which agree to accept payment in regular installments should obtain a legally enforceable written agreement from the debtor which specifies all of the terms of the agreement. Therefore, in order to promulgate regulations consistent with the standards and directions it is necessary for FSA and CCC to provide for the collection of financial information and the completion of a settlement agreement or promissory note for those debtors who are unable to pay their debts in one lump sum.

2. How, by whom, and for what purpose is information used.

All debt settlement policies are implemented by State and County, Washington and Kansas City FSA employees who perform FSA and CCC duties.

Request for Installment Agreement: When a debt situation arises, the debtor is notified through a notification and a demand letter process describing the nature and amount of the debt. In the demand letter, the debtor is provided the opportunity to request paying the debt through installments. Installment agreements are authorized when the debtor’s financial situation warrants repaying the debt in installments instead of one lump sum. The debtor’s request is made by memo to their county FSA Office. After the request for installment is approved for consideration, the debtor is notified to submit a financial statement. State and County offices can enter into installment agreements of up-to 3 years. Installment agreements over 3 years must be approved by the State Executive Director (SED), the claims officer or the State Committee (STC).

Financial Statement: A financial statement is required when a debtor requests an installment agreement to settle their debt. This requirement is authorized by 7 CFR 792.6 (FSA) and 7 CFR 1403.6 (CCC). The financial statement must include information on the debtor’s assets, liabilities, income and expenses. Based on that information a determination can be made on whether the debtor can pay the debt in one lump sum or an installment is necessary. If an installment is necessary, based on the debtor’s financial situation determinations are made regarding the installment period and payment amount. Without this financial information FSA/CCC would have no method of allowing debtor’s to pay their debts in installments while still ensuring that the government’s financial interests are protected.

CCC-279, Promissory Note: Once an installment request has been approved, a legally enforceable written agreement incorporating the terms of payment is necessary to evidence the agreement and allow for judicial enforcement if the debtor defaults on the agreement. Therefore, the completion of and submission of a promissory note, Form CCC-279, is required.

Administrative reviews as requested by the debtor to satisfy his appeal rights (7 CFR 792.4 and 7 CFR 1403.4) are conducted by FSA officials in accordance with regulations at 7 CFR 780.

3. Use of improved information technology.

The CCC-279 will be available at http://forms.sc.egov.usda.gov/eforms/mainservlet. The demand letter and the electronic form can be transmitted through email between FSA/CCC and debtors. The final promissory note form must be executed on paper due to the required original signatures. This collection process is not fully automated at this time, and is not expected to be fully automated. Although the demand letter process has been automated to a large extent in the past few years, it is not fully automated to the extent that we are able to process demand letters giving the right to request review and enter into installment agreements to debtors automatically. Preparation of the Installment Agreement(s) and the subsequent Promissory Note(s) are automated in the sense that these formats have become fairly standardized, and are easily called up in the word processing arena. The use of these accepted formats reduces the burden at the County Office level, but would not reduce the burden on the producer for reading and taking action on the contents of the letters.

4. Efforts to identify duplication.

Financial Statement and promissory notes are required on a one-time only basis when a debtor requests to enter into a settlement agreement. Debtors can use up-to-date financial statement, which have been developed for other entities such as lending institutions, if available. The Farm Service Agency, Debt Management Offices are the offices responsible for and tasked with handling debt collection and the use of these procedures and formats for FSA and CCC within U.S. Department of Agriculture. Any collection of or settlement of outstanding debt owed FSA or CCC through a repayment or installment agreement are done solely through this process and through the Office of Budget and Finance (OBF), Financial Management Division (FMD), Financial Services Center (FSC) located in Kansas City, Missouri.

5. Methods to minimize burden on small business or entities.

This collection of information does not place an additional burden on small businesses or other small entities. However, there are no businesses or small entities in this request.

6. Consequence if information collection were less frequent.

The collections are required on an as needed basis when a debt occurs, and when an attempt to resolve the outstanding debt is undertaken through a process of discussion, compromise and/or installment proposals. Only 1 response for each collection applicable to the debt situation is required. If USDA/FSA and CCC could not use these methods to resolve outstanding debt, and collect these sums that are owed to the government, then these debts would remain uncollectible, the debtors would be in danger of defaulting on their debts, and the sums involved would never be collected by and for the government. These sums would have to be written off, and cause a further increase of the deficit.

7. Special circumstances.

The information collected is provided voluntarily by debtors, and the collection is conducted in a manner consistent with guidelines in 5 CFR 1320.6. There are no special circumstances that require information to be collected more often than the one time when a debtor requests to enter into a settlement/repayment agreement.

8. Federal Register notice, summarization of comments, and consultation with persons outside the agency.

A Federal Register 60-day notice was published on March 6, 2015 at

80 FR 12138-12139.  There were no received comments.  

The consultations outside the Agency on the information collection were in the following. These individuals were directly contacted with no response received from them or no comment elicited or returned upon inquiry:

1. Fournerat Land Co Ptrnshp

(Mr. Logan Fournerat)

1620 Bearcat Rd

Basile, LA 70515-3033

2. Justin W. Sayers

1741 108^th Street

Marengo. IA 52301-8726

3. Bob and Ira Clairday

PO. Box 1677

Jonesboro, AR 72403-1677

9. Any decision to provide any payment or gift to respondents.

There are no payment or gift offered to or provided to any prospective respondents.

10. Confidentiality provided to respondents.

Debt settlement matters are handled according to established FSA/CCC procedures implementing the Privacy and Freedom of Information Act of 1974 and OMB Circular A-130, Responsibilities for the Maintenance of Records about Individuals by Federal Agencies.

11. Questions of a sensitive nature.

This information collection does not contain any sensitive data.

12. Estimates of Burden.

(See a breakdown for the burden of each item on the attached FSA-85-1)

The estimated respondent cost is: $4,542 (average hourly rate $22.71 x 200 burden hours).

Cost per hour for respondents was derived from the U.S. Department of Labor’s Occupational Employment and Wages, May 2014, tables which are found at the Bureau of Labor Statistics website at http://stats.bls.gov/oes. The last respondent cost was in error because FSA used the administrative assistance’s average hourly rate at the County offices instead of average hourly rate of all occupations.

13. Total annual cost burden to respondents or record keepers.

There is no capital and start-up or ongoing operation or maintenance costs associated with this information collection.

14. Provide estimates of annualized cost to the Federal government.

The total annualized cost to the Federal Government (recordkeepers) is $2,537.

Program Administration: $2,300. The County FSA Office employee (average GS-5 (5)) spends approximately 1 hour per debtor (100) preparing documents for a total of 100 hours. ($23 hour x 100 hours equals $2,300).

Printing and Distribution: $237.

Program Development: $0.00. Program is already developed and in operation.

15. Reasons for changes in burden.

There is no change in burden from the last approval.

16. Tabulation, analysis and publication plans.

The information collected is for the performance of the Agency’s functions in administering debt management activities, and is not intended for publication.

17. Reasons display of expiration date of OMB approval is inappropriate.

The agency is seeking approval to not display the OMB expiration date on the forms associated with this information collection since the forms do not change and it is not cost effective for Forms officer to change the expiration date every three years to post or reprint/distribute new version form.

18. Exceptions to 83-1 certificate statement.

There are no exceptions to 83-1 certification statement.

19. How is this information collection related to the Customer Service Center?

If a producer/debtor is attempting to work out a compromise and payment plan for the repayment of the producer's/debtor's debt to USDA (FSA or CCC), the producer/debtor would be contacting the Customer Service Center to ascertain what needs to be done. The Producer/Debtor would receive this information from the FSA/CCC agent at the Customer Service Center. The Producer/Debtor could then submit his written request for a compromise/repayment plan, along with his earnings statement to the Customer Service Center. The Producer/Debtor might then have to appear in person at the Customer Service Center (or the FSA County or State Office) to fill out the Promissory Note in completing the compromise/repayment agreement. At other times, the producer/debtor may accomplish the final execution through mail, if the producer/debtor desires to complete the process that way.