FCA Legal Opinion Summary

Legal Opinion Summary
Topic:	Incidental Authority: Does a Farm Credit System bank or association have authority to provide printing services to non-System entities?
ID Number:	07-02
Issue Date:	09/20/2007

An institution asked whether it could use its excess capacity in its digital printing service operations to provide printing services to non-System entities. The institution acquired the printing presses to conduct its core business because of their quality and pricing, but it is unable to use their full capacity with its own printing needs. The institution will not acquire additional staff or equipment to provide the non-System printing and will retain some reserve to accommodate any unexpected needs it may face. While providing these services will generate additional income, this income will be de minimus compared to the institution's core financial and services operations.

The Office of General Counsel (OGC) concluded that the institution may provide digital printing services to non-System entities. This conclusion is based on numerous prior opinions in which OGC has held that if a System institution, in good faith, obtains or maintains excess capacity in an asset in attempting to conduct its Farm Credit business, the institution may properly exercise its incidental powers to make profitable, non-Farm Credit use of that excess capacity to obtain full economic value from the asset and avoid economic waste. If circumstances change, however, and the institution finds it no longer needs to keep digital printing presses capable of the current volume of printing in order to conduct its core business, it would no longer have the authority to provide its printing services to non-System entities under its incidental powers because it would no longer be keeping its excess capacity "in good faith."