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Final Agency Determination: FAD-107


Subject: Request dated October 27, 2009, resubmitted, (received by the Risk Management Agency (RMA) November 30, 2009) requesting a Final Agency Determination for the 2007 and 2008 crop years regarding the interpretation of section 24(e) of the Common Crop Insurance Policy Basic Provisions (Basic Provisions), published at 7 C.F.R. 457.8. This request is pursuant to 7 C.F.R. part 400, subpart X.


Section 24 of the Basic Provisions states, as here pertinent:

24. Amounts Due Us.
(e) The portion of the amounts owed by you for a policy authorized under the Act that are owed to FCIC may be collected in part through administrative offset from payments you receive from United States government agencies in accordance with 31 U.S.C. chapter 37. Such amounts include all administrative fees, and the share of the overpaid indemnities and premiums retained by FCIC plus any interest owed thereon.

Interpretation Submitted

The requestor’s interpretation of the above quoted provisions is that, specific to reinsured policies only, the Federal Crop Insurance Corporation (FCIC) may offset payments under the farm programs for any overpaid indemnities FCIC has paid “out of pocket;” this offset shall be limited to administrative fees owed to FCIC, portions of premiums to be retained by FCIC, and only those amounts which FCIC has lost due to its reinsurance contract with the approved insurance provider (AIP). Under no circumstances will the AIPs be allowed to unilaterally offset farm program payments they claim are owed directly to the AIPs for “overpaid indemnities”, absent a separate administrative or judicial proceeding.

The requestor asked if any entity, an AIP, for instance – other than FCIC/RMA may offset farm program payments to the policyholder for amounts claimed as debts by an AIP. The requestor also asked if an AIP has claimed a debt against a policyholder for an alleged “overpaid indemnity” can the administrative offset described above be implemented to collect amounts on behalf of the AIP.

Final Agency Determination

Only FCIC may collect amounts owed directly to FCIC through administrative offset from payments a policyholder may receive from United States government agencies in accordance with 31 U.S.C. chapter 37. AIPs may not use section 24(e) as a means to collect overpaid indemnities owed to them. Further, 31 U.S.C. chapter 37 only applies to debts owed to the government. This provision is not applicable to debts owed to private entities. In accordance with 7 C.F.R. 400.765 (c), this Final Agency Determination is binding on all participants in the Federal crop insurance program for the 2007 and 2008 crop years. Any appeal of this decision must be in accordance with 7 C.F.R. 400.768(g).

Date of Issue: Jan 25, 2010