2021 Supporting_Statement

U.S. Department of Agriculture

Commodity Credit Corporation

Farm Service Agency

OMB Number: 0560-0215

Representations for CCC and FSA Loans and Authorization to File a Financing Statement under the Revised Article 9 of the Uniform Commercial Code

TERMS OF CLEARANCE: When this ICR is renewed, USDA should provide an update on the feasibility of obtaining signatures electronically and allowing this information to be collected in that format.

FSA’s responses: The form CCC-10 and instruction is currently available through the USDA eForms web site at https://forms.sc.egov.usda.gov/. Currently, a completed CCC-10 cannot be submitted electronically with a digital signature because the form may require multiple signatures. However, CCC-10 can be accepted by fax or scanned and electronically sent by email. When the technology for the multiple electronic signature capabilities in the form become available, FSA will work with Information Technology offices to provide it to the public.

Purpose:

The purpose of this document is to request an extension with revision of a currently approved information collection. The current approval expires on July 31, 2021.

This information collection package is necessary to obtain continued approval for form CCC-10, Representations for Commodity Credit Corporation or Farm Service Agency Loans and Authorization to File a Financing Statement and Related Documents, which is used to gather information from Commodity Credit Corporation (CCC) and Farm Service Agency (FSA) loan applicants. The information is used to: (a) gather or verify basic data regarding the applicant which is required on a financing statement; and (b) to obtain their permission to file a financing statement prior to the execution of a security agreement.

Supporting Statement for Paperwork Reduction

Justification

1. Explain the circumstances that make the collection of information necessary.

CCC and FSA programs require loans be secured with collateral. The security interest is created and attaches to the collateral when: (1) value has been given, (2) the debtor has rights in the collateral or the power to transfer rights in the collateral, and, (3) the debtor has authenticated a security agreement that provides a description of the collateral. In order to perfect the security interest in collateral, a financing statement must be filed according to a State’s Uniform Commercial Code. This action ‘perfects’ the security interest and legally allows the lender to foreclose upon and liquidate the collateral in the event the borrower defaults on a loan. The revised Article 9 affects the manner in which CCC and FSA, as well as any other creditor, perfect and liquidate security interests in collateral.

The information obtained on CCC-10 is needed to not only obtain authorization from loan applicants to file a financing statement without their signature, but also to verify the full legal name and location of the debtor. For most FSA programs, an applicant is identified by using their social security number or a tax identification number. While most FSA program applicants already have their name and identification number data on file with the FSA County Office, verification of this data is critical when it comes to financing statement transactions, because the applicant’s exact legal name must be entered on the financing statement under the revised Article 9. Before form CCC-10 was developed and approved for use, this information was not required by either CCC or FSA. Also under revised Article 9, the debtor’s location or primary residence, rather than the location of collateral, now determines the place to file a financing statement. The debtor’s location is its place of business, or the location of the chief executive office, if the debtor has more than one place of business. However, if the borrower is an entity which must register to come into existence, (e.g. corporation, Limited Liability Company, limited partnership) its location is the state in which the entity was organized.

Without obtaining the information from loan applicants, CCC and FSA would be unable to perfect a security interest in collateral used to secure loans. However, CCC and FSA limit the use of CCC-10 to the extent possible. For example, the application form for a Farm Loan Programs (FLP) loan (FSA-2001, approved under 0560-0237) includes the collections for the applicant’s “exact legal name” and location. In addition, FSA-2001 includes the authorization to file a financing statement prior to the execution of a security agreement in the existing certifications and authorizations. As a result, form CCC-10 will only be used for an FLP loan when an individual other than the applicant will be pledging security for the loan. This significantly decreases the use of the form for FLP.

2. Indicate how, by whom, and for what purpose the information is to be used.

Producers applying for CCC or FSA loans at USDA Service Centers,) will be asked to provide Farm Loan Program certain information on Form CCC-10. They may also obtain the form at the USDA eForms website, fill it out, and submit it to the appropriate person at the USDA Service:

• serves as CCC or FSA’s notice of intent to perfect its security interest

• identifies the debtor’s exact full legal name, primary residence, and if the debtor is an entity, the type and location of the entity

• authorizes CCC or FSA to file financing statements prior to the execution of a security agreement.

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.

The form and instruction to fill it out is available through the USDA eForms web site at https://forms.sc.egov.usda.gov/. Currently, a completed CCC-10 cannot be submitted electronically with a digital signature because the form may require multiple signatures. However, CCC-10 can be accepted by fax or scanned and electronically sent by email.

4. Describe efforts to identify duplication.

Some of the information collected on CCC-10 may already be available at the County office in the form of information gathered to make payment limit determinations. However, an applicant was previously not required to provide their full legal name. Therefore, the information gathered on the CCC-10 will serve to verify and/or update the information already on file. Also, the

CCC-10 is a combined effort between CCC and FSA to gather information that can be used for five FSA loan programs, thus eliminating the need for a separate form for each loan program.

5. Methods to Minimize burden on small businesses or other small entities (Item 5 of OMB Form 83-1), describe any methods used to minimize burden.

CCC-10 is identical for all applicants without regard to their volume or business. Therefore, no additional burden is being placed on businesses of any particular size. There are 900 small businesses or entities.

6. Describe the consequence to Federal program or policy activities if the collection is not conducted or is conducted less frequently.

All information will be collected the first time a producer applies for a CCC or FSA loan. If the information has not changed, for subsequent loan applications there is no need to gather it again. If this information is not collected, CCC and FSA will not be able to disburse loans because a security interest would not be perfected.

6. Special circumstances.

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; There are no circumstances that would require information more than quarterly from an applicant.

• requiring respondents to prepare a written response to a collection of information in fewer than 30 days after receipt of it; There are no circumstances that would require a respondent to prepare a written response to a collection of information in fewer than 30 days after receipt.

• requiring respondents to submit more than an original and two copies of any document; There are no special circumstances requiring respondents to submit more than an original and two copies of any document. In most situations, only the original, faxed or scanned copy is required.

• requiring respondents to retain records, other than health, medical, government contract, grain-in-aid, or tax records for more than three years; There are no special circumstances requiring respondents to retain records, other than health, medical, government contract, grain-in-aid, or tax records for more than three years.

• using statistical sampling, that is not designed to produce valid and reliable results that can be generalized to the universe of study; There are no special circumstances that would be used in connection with a statistical survey.

• requiring the use of a statistical data classification that has not been reviewed and approved by OMB; There are no special circumstances that would require the use of a statistical data classification that has not been reviewed and approved by OMB.

• requiring a pledge of confidentiality; There are no special circumstances that include a pledge of confidentiality that is not supported by authority established in statute or regulation.

• requiring respondents to submit proprietary trade secret; This agency protects confidentiality to the extent permitted by law.

6. Federal Register Notice, Summarization of Comments and Consultation with Persons outside the Agency.

A Federal Register notice was published on April 2, 2021, at 86 FR 17350 announcing FSA's intention to renew a currently approved information collection. No comments were received for the collection of information.

The form was also sent to Mr. Kevin Collins, [email protected], Mr. Faith Kittleson, [email protected] and Mr. Spencer Worthington @ [email protected]. There were no comments received from these three individuals.

6. Explain any decision to provide any payment or gift to respondents.

Respondents may be eligible for loan benefits under the applicable loan program and will be subject to the applicable loan eligibility requirements. No other incentive will be provided for completing CCC-10.

6. Confidentiality Provided To Respondents.

All information collected will be treated as confidential throughout FSA, as indicated on the form, and in conformance with the Privacy Act and Freedom of Information Act. The information collected in this ICR are described in applicable Routine Uses identified in the System of Records Notice for USDA/FSA-2, Farm Records File (Automated) and USDA/FSA-14, Applicant/Borrower.

6. Questions of a Sensitive Nature.

There are no personal questions of a sensitive nature, such as sexual preference, religious beliefs, and other matters that are commonly considered private. Although some loan applicants may consider their farm operating information to be sensitive information, that information is fundamental to the perfection of a security interest in collateral and is required under the Uniform Commercial Code. CCC and FSA will be unable to approve a loan without the information.

6. Estimates of Burden.

See the attached FSA-85-1 for a burden break down for the form.

Farm Loan Programs includes direct operating, farm ownership, and emergency loans. As stated on the CCC-10, CCC and FSA continue to use the information on the CCC-10 for future loans until the signer of the form notifies CCC or FSA of any changes. However, new applicants for any CCC and FSA loans must submit a CCC-10.

Accordingly, the average annual number of respondents using the CCC-10 for Farm Loan Programs is estimated at 4,634 annual respondents.

The total annual burden associated with applicant’s preparing the form is estimated to be 385 hours. This was calculated based on 4,634 respondents/responses taking five minutes (0.0833/hour) to complete the form for CCC and FSA programs. (4,634 x 0.0833/hour = 385 hours)

The estimated annual cost to the public is $14,908 which is based on the annual burden of 385 hours times an average hourly wage/fringe benefit of $38.76 (385 hours x $38.76 = $14,908). The average hourly wage of $30.33 was obtained from a publication by the Bureau of Labor Statistics, U. S. Department of Labor (USDL-21-1019) released June 10, 2021. This is the average hourly earnings on private nonfarm payrolls but was used because figures showing total farm income include a large portion of off-farm income which can inflate the total hourly earnings of the majority of loan applicants. Fringe benefits for all government workers are an additional 31 percent, or $8.43, resulting in a total of $38.76 per hour.

1. Total Annual Costs Burden to Respondents.

This information collection and reporting burden does not impose any burden cost on respondents for capital, start-up, operation, maintenance, or the purchase of services.

14. Estimated Annual Cost to the Federal Government.

The cost of gathering, maintaining, retrieving, and disseminating the data is $14,112. This figure is based on requiring at least 5 minutes (.083/hour) per response times the average FSA employee wage of $36.69 (4,634 applicants x 0.083/hour x $36.69 = $14,112). The average FSA Program Technician employee wage was obtained from the Office of FSA’s Deputy Administrator for Field Operations and is Grade 7 Step 7). Fringe benefits for all government workers are an additional 31 percent, or $8.43, resulting in a total of $36.69 per hour.

The cost of form development, printing and distribution is minimal because the form is computer generated.

1. Change in Burden.

FSA increased the number of respondents by 1,711. and the burden hours increased by 147. The applicants who are applying for farm loans to pledge security for a loan have increased since the last request. CCC’s Marketing Assistance Loan and Farm Storage Facility Loan programs are exempted from Paperwork Reduction Act.

15. Tabulation, Analysis, and Publication Plans.

The information collected is not planned for publication.

15. Reasons Display of Expiration Date of OMB Approval is Inappropriate.

FSA is displaying the OMB expiration date on the form CCC-10.

1. Exceptions to 83-I Certification Statement.

FSA complied with all provisions under Item 19 of OMB Form 83-I.