GSM Supporting statement 0551-0004 11.16.2017

Paperwork Reduction Act Submission OMB#0551-0004

2017 SUPPORTING STATEMENT’

CCC EXPORT CREDIT GUARANTEE PROGRAM

OMB #0551-0004

A. JUSTIFICATION

Summary

The GSM-102 Export Credit Guarantee Program (GSM-102) is administered by the Commodity Credit Corporation (CCC) of the U.S. Department of Agriculture (USDA). This program provides guarantees to exporters in order to maintain and increase overseas importers’ ability to purchase U.S. agricultural goods. The GSM-102 underwrites credit extended by U.S. private banks to approved foreign banks using dollar-denominated, irrevocable letters of credit. The GSM-102 program covers credit terms up to 18 months.

Sales under this program are considered normal commercial sales. Thus, the majority of the information required for program participation, including the guarantee application, evidence of export report, assignment notice, and filing of notices of default, is information that would already be in the possession of the participant. The only information not normally available, or additionally required, would be: (1) the amount of the guaranteed value and (2) the amount of the guarantee fee, which are both derived from simple mathematical calculations. The CCC’s requirement that an exporter must maintain or provide information which would normally be necessary to conduct export transactions or maintain records for accounting or tax purposes is not overly burdensome.

1. Explain the circumstances that make the collection of information necessary. Identify any legal or administrative requirements that necessitate the collection. Attach a copy of the appropriate section of each statute and regulation mandating or authorizing the collection of information.

This is a revision of a currently approved information collection. The information collection is necessary to enable exporters, U.S. banks and foreign banks to receive the benefits of the program and to allow CCC to comply with the Federal Funding Accountability and Transparency Act (FFATA), the Debt Collection Improvement Act (DCIA), and non-procurement suspension and debarment regulations found at 2 CFR Parts 180 and 417.

Summarized below are the requirements for the information collection associated with the rule at 7 CFR 1493 Subpart B.

Information Required for Collection	Reason for Information Collection	Legal Requirement
Qualification Requirements for Exporters - Evidence of an organized business, citizen or legal resident of the U.S.	Permits CCC to determine if an applicant is legally registered to conduct business in the U.S. and provides small business information. Protects the U.S. government from contracting Exporters that are debarred or suspended, in violation of Federal or State antitrust statutes, presently charged by a government entity, or in delinquent status on nontax debt to the United States.	1493.30
U.S. and Foreign Financial Institution qualification	Enables CCC to determine if the U.S. and Foreign Financial Institution is eligible to be approved for participation in the program.	1493.40; 1493.50
Certification of business regarding participation in U.S. government administered programs	Protects the U.S. government from contracting with Exporters and U.S. and Foreign Financial Institutions that are debarred or suspended, in violation of Federal or State antitrust statutes, presently charged by a government entity, in delinquent status on nontax debt to the United States, and ensures that all applicants are in compliance with the Foreign Corrupt Practices Act of 1977.	1493.60
Application for a Payment Guarantee	Enables CCC to determine if the export sales contract can be approved for coverage. Protects the U.S. government from doing business with debarred or suspended companies or individuals.	1493.70
Participant’s signature and certifying statements as to the accuracy of the information submitted and compliance with CCC regulations and U.S. laws	In order for the payment guarantee to be valid through the length of the agreement, all submitted information must be accurate. CCC will assume this to be the case if the program participant certifies this to the U.S. Government. Falsified information submitted may subject the participant to suspension, debarment, civil or criminal action by the U.S. government. The exporter also certifies that he has checked the importer on SAM.	1493.80; 2 CFR 180 Foreign Corrupt Practices Act of 1977, as amended
Amendments to the application for a payment guarantee	Alerts CCC to any proposed changes under the original contract to ensure that the payment guarantee originally issued is still valid. In evaluating proposed changes, CCC must determine the validity of sales under the current program announcements and regulations.	1493.100
Guarantee fees	1) To recover a portion of the costs of any claims paid and offset administrative costs. 2) To reduce speculative sales.	1493.110
Assignment notification of the payment guarantee	Enables CCC to determine to whom the guarantee has been assigned, determine the eligibility of the entity receiving the assignment, and to assure that the rights of the new guarantee holder are protected.	1493.120
Evidence of Export	Demonstrates actual performance under the sales contract. Also establishes the amount CCC is liable for in the case of default.	1493.130
Proof of Entry	Demonstrates to CCC that the U.S. Agricultural Commodities covered by a Payment Guarantee arrived in the country or region shown on the Payment Guarantee.	1493.150; Ag Trade Act of 1978, as amended
Notice of default	Alerts CCC that a default has occurred and a claim for loss may be filed in the near future. Prevents CCC from providing additional coverage on sales involving defaulting party.	1493.160
Claim for loss with a copy of all documents relating to that guarantee’s transactions	CCC becomes liable for payment under the payment guarantee upon submission of these documents in good order. Provides evidence to CCC that sale and shipment of goods occurred in conformity with the guarantee. All documentation must be in order before CCC will pay a claim. Enables CCC to obtain the right to collect from the party obligated to make payment.	1493.170
Maintenance of Records	Enables CCC to review exporter documentation related to program participation.	1493.191(a)

2. Indicate how, by whom, how frequently, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the agency has made of the information received from the current collection.

Information is collected from participating U.S. exporters and U.S. and Foreign Financial Institutions in order to determine their eligibility for program benefits. The information is also utilized in fulfilling the CCC’s obligation under the issued payment guarantee. Information may be provided in writing (via fax or email) or via the internet. There are no specific forms for information provided via fax or email; however, the Internet system is form-based, and participants are prompted for all required information. Information is collected whenever an exporter desires to participate in the programs. This information is not shared with organizations outside of USDA (unless provided as required under FOIA).

Qualification Requirements - This information ensures CCC that all participants have a business office in the United States and are not debarred or suspended from participating in government programs. CCC also collects a description of the applicant’s business, including whether it is a small or medium enterprise, and information on any related companies currently qualified to participate in the program. This information is provided by exporters. There is a form on the FAS website that an exporter can complete and either submit to CCC electronically or print and fax.

U.S. and Foreign Financial Institution Qualification – This information ensures CCC that all participating financial institutions comply with regulatory laws, are not debarred or suspended from participating in government programs, and provides CCC with adequate information to determine appropriate levels of risk. This information is provided by the financial institutions.

Certification of Business – This certification protects the U.S. government from contracting with debarred or suspended Exporters and U.S. and Foreign Financial Institutions. It further ensures that all applicants are in compliance with the Foreign Corrupt Practices Act of 1977, are not being charged by a government entity, do not have any delinquent nontax debt to the United States, or is not controlled or owned by someone with delinquent nontax debt to the United States.

Application for Payment Guarantee - The application is used to determine sale(s) eligibility for program coverage. The information requested in the application also provides CCC with adequate information to meet program goals and statutory requirements. This information is provided by exporters.

Signature and Certifying Statements - Certifications are made when the exporter signs the application for the payment guarantee. These certifications are necessary for program integrity and to ensure exporter compliance with regulatory requirements.

Amendments - Amendments to the payment guarantee are submitted in the same method as the application and reviewed to ensure that any changes to the initial application will not adversely impact a sale’s eligibility for coverage. This information is submitted by exporters.

Guarantee Fees – The guarantee fee is submitted by the exporter. The exporter may submit the fee in the form of a check payable to CCC, via the mail or courier service, or through a wire transfer. The payment guarantee will not be approved until the fee has been received.

Assignment - A notice of assignment of the payment guarantee to a financial institution must be submitted if the exporter wants to secure payment at the time of export. Exporters submit notices of assignment to the assignee (U.S. financial institution) for approval and signature, and then the notices of assignment are forwarded to CCC.

Evidence of Export - Evidence of export reports are required for each shipment made under the program and used to accurately determine CCC’s liability, consistent with Credit Reform legislation. The evidence of export reports also contain certifications that ensure the exporter’s compliance with program provisions. (Proof of entry documents are necessary to ensure the commodity/product exported under the programs arrived in the stated country of destination. Exporters are required to obtain proof of entry documentation for each shipment, but are not required to submit these documents to CCC unless specifically requested. Any request for such documents would be to ensure there had been no diversion of the commodity, which is prohibited by the program regulations and by statute.)

Notice of Default - Notice of default information must be filed in writing with CCC by the exporter or exporter’s assignee within 5 business days after the date that payment was due from the foreign bank. This informs CCC that a default in payment has occurred and there may be a claim filed or debt rescheduled in the near future. CCC also uses this information to preclude additional business with an obligor that is in default.

Claim for Loss - A claim for loss must be made within 180 calendar days from the due date of the defaulted payment. The claim for loss is submitted by the holder of the payment guarantee: either the exporter or the exporter’s assignee. This information is used to determine and confirm CCC’s liability under a defaulted transaction before any payment is made by CCC.

Record Keeping - For a period of 5 years after the date of expiration of the coverage of a payment guarantee, the exporter must maintain accurate records related to the export sale. The regulation and statute gives USDA officials the authority to review these records during exporters’ regular business hours. FAS routinely audits a sampling of program participants to ensure compliance with all regulatory requirements. In addition, this information may be reviewed by the Office of Inspector General if CCC has any reason to suspect fraud in a transaction.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses, and the basis for the decision for adopting this means of collection. Also, describe any consideration of using information technology to reduce burden.

CCC’s Internet-based system allows program participants to submit the following documents via the Internet: qualification requirements, applications for payment guarantees, electronic signatures/certifying statements, evidences of export, notices of default, and notices of assignment. All program participants are eligible to use this Internet-based system, which is advertised on FAS’s Web site (www.fas.usda.gov). FAS anticipates 60% of respondents will submit the documents identified in this paragraph electronically via the CCC’s Internet-based system.

Qualification requirements may also be submitted using the separate form on the FAS Web site, as the exporter may be prepared to qualify for participation before gaining access to the on line system. The form (see attachment) is located on our website for exporters to utilize.

Claims documentation must be submitted in hardcopy because participants must submit certain documents (such as a subrogation agreement) which must be original.

4. Describe efforts to identify duplication. Show specifically why any similar information already available cannot be used or modified for use for the purpose described in item 2 above.

No similar information exists.

5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden.

The information required from any size entity does not vary, and thus does not lend in itself to making special provisions for small businesses. Although current data collection does include information that enables CCC to identify small businesses, CCC’s historical information does not include this information as it was not required until the last regulation change. Based on information obtained since the last regulation change CCC estimates approximately 50 percent of program participants are small businesses.

6. Describe the consequence to Federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.

CCC would be unable to determine if export sales under the programs would be eligible for coverage or, if coverage conformed to program requirements. Credit Reform Act legislation also requires the collection of information to assess outstanding liability.

7. Explain any special circumstances that would cause an information collecti­on to be con­ducted in a manner:

• requiring respondents to report informa­tion to the agency more often than quarterly;

Once a payment guarantee is issued, respondents are required to submit information as required under section 1493.130 within 30 calendar days from the date of export, depending upon the mode of transportation. A notice of default under Section 1493.160(a) must be submitted by the exporter or the exporter’s assignee to CCC not later than 5 business days after the date that payment was due from the foreign obligor. The purpose of the 5 day limitation is to ensure CCC does not guarantee any further transactions with the defaulting party once the default has occurred.

• requiring respondents to prepare a writ­ten response to a collection of infor­ma­tion in fewer than 30 days after receipt of it;

There is no such written response required in fewer than 30 days.

• requiring respondents to submit more than an original and two copies of any docu­ment;

Submissions do not require more than an original and two copies.

• requiring respondents to retain re­cords, other than health, medical, governm­ent contract, grant-in-aid, or tax records for more than three years;

Program participants are required by statute to retain all records in connection with export sales for five years after the date of expiration of the coverage of a payment guarantee. The Secretary of Agriculture or the Comptroller General of the United States must have full access to such records in order to uphold and protect the interests of the U.S. Government in the case of a default and claim.

• in connection with a statisti­cal sur­vey, that is not de­signed to produce valid and reli­able results that can be general­ized to the uni­verse of study;

No statistical survey is designed under this collection.

• requiring the use of a statis­tical data classi­fication that has not been re­vie­wed and approved by OMB;

No statistical data is required.

• that includes a pledge of confiden­tiali­ty that is not supported by au­thority estab­lished in statute or regu­la­tion, that is not sup­ported by dis­closure and data security policies that are consistent with the pledge, or which unneces­sarily impedes shar­ing of data with other agencies for com­patible confiden­tial use; or

No such pledge of confidentiality is involved.

• requiring respondents to submit propri­etary trade secret, or other confidential information unless the agency can demon­strate that it has instituted procedures to protect the information's confidentiality to the extent permit­ted by law.

Confidential sales contract information, which is considered a proprietary trade secret, is required to establish approval of a credit guarantee. The Freedom of Information Act (FOIA) has two exclusionary sections that pertain to proprietary business practices. Under Section 552(b) of the FOIA, trade secrets and confidential commercial or financial information are both lawfully allowed to be withheld from any FOIA request. CCC has internal guidelines in place for responding to FOIA requests in a manner to ensure market sensitive or confidential data is not released.

8. If applicable, provide a copy and identify the date and page number of publication in the Federal Register of the agency's notice, soliciting comments on the information collection prior to submission to OMB. Summarize public comments received in response to that notice and describe actions taken by the agency in response to these comments.

Request for comment was included in the Notice of Request for a Renewal of a Currently Approved Information Collection published in the Federal Register June 19, 2017 (82 FR 27794). No comments were received related to this information collection.

Describe efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting form, and on the data elements to be recorded, disclosed, or reported.

The following organizations were consulted regarding this information collection:

Cargill/Karla Hennsey (952-984-3141)

The Redwood Group/Ross Cameron (309-642-1146)

Huntington Bank/Edward Schick (412-667-6457)

9. Explain any decision to provide any payment or gift to respondents, other than reenumeration of contractors or grantees.

There are no payments or gifts provided to respondents.

10. Describe any assurance of confidentiality provided to respondents and the basis for the assurance in statute, regulation, or agency policy.

No such assurances are given.

11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior or attitudes, religious beliefs, and other matters that are commonly considered private. This justification should include the reasons why the agency considers the questions necessary, the specific uses to be made of the information, the explanation to be given to persons from whom the information is requested, and any steps to be taken to obtain their consent.

No such questions are asked.

12. Provide estimates of the hour burden of the collection of information. The statement should:

• Indicate the number of respondents, frequency of response, annual hour burden, and an explanation of how the burden was estimated. If this request for approval covers more than one form, provide separate hour burden estimates for each form and aggregate the hour burdens in Item 13 of OMB Form 83-I.

• Provide estimates of annualized cost to respondents for the hour burdens for collections of information, identifying and using appropriate wage rate categories.

The attached charts entitled “Hour Burden for Collection of Information” details the hour burden under the GSM-102 program. Burden estimates were obtained by contacting several active program participants for input. As previously noted, many of the required submissions for the program can be submitted via fax or an Internet-based on-line system; times for each of these methods are specified in the attached charts for each collection that is submitted using both methods. Final burden figures are weighted based on the number of submissions received via fax versus on-line. All burden times are in hours.

The total estimated burden for this collection is 1,423 hours and 3,700 total annual responses. The estimated annualized cost to respondents for the hour burden of information collection is $66,796 based on an average hourly wage of $46.94.

13. Provide estimates of the total annual cost burden to respondents or record keepers resulting from the collection of information, (do not include the cost of any hour burden shown in items 12 and 14). The cost estimates should be split into two components: (a) a total capital and start-up cost component annualized over its expected useful life; and (b) a total operation and maintenance and purchase of services component.

There is no, capital, start-up cost, total operation, maintenance or purchases of services cost associated with this information collection.

14. Provide estimates of annualized cost to the Federal government. Also, provide a description of the method used to estimate cost and any other expense that would not have been incurred without this collection of information.

The annualized cost to the Federal government is estimated at $1,633,270 and is attributed to the salary costs of officials administering the program. Staff members in grades 6 to 14 are involved in GSM registration and record keeping. Calculations of record keeping burden hours of employees include only the staff members specifically involved in the GSM-102 registration application process.

15. Explain the reasons for any program changes or adjustments reported in Items 13 or 14 of the OMB Form 83-1.

This is a revision of a currently approved information collection request. There is an increase in the number of respondents (from 84 to 88), but a decrease in responses (from 7,274 to 3,700), and therefore a decrease in burden hours (from 2,637 to 1,423) since the last approval. The decrease in responses and burden are due to respondents submitting fewer applications.

16. For collections of information whose results are planned to be published, outline plans for tabulation and publication.

No collections of information results will be published.

17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons that display would be inappropriate.

There are no plans to seek such approval.

18. Explain each exception to the certification statement identified in Item 19 "Certification for Paperwork Reduction Act."

There are no exceptions.

10