§ 1499.10 - Claims for damage to or loss of donated commodities.

§ 1499.10 Claims for damage to or loss of donated commodities.

(a) CCC will be responsible for claims arising out of damage to or loss of a quantity of the donated commodities prior to the transfer of title to the donated commodities to the recipient. The recipient will be responsible for claims arising out of damage to or loss of a quantity of the donated commodities while the recipient has title to the donated commodities.

(b) If the recipient has title to donated commodities that have been damaged or lost, and the amount of the damage or loss is estimated to exceed $20,000, the recipient must:

(1) Promptly upon discovery of the damage or loss, initiate a claim arising out of such damage or loss, including, if appropriate, initiating an action to collect pursuant to a commercial insurance contract;

(2) Take all necessary action to pursue the claim diligently and within any applicable periods of limitations; and

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3) Provide to CCC copies of all documentation relating to the claim.

(c)

(1) The value of a claim for lost donated commodities will be determined on the basis of the commodity acquisition, transportation, and related costs incurred by CCC with respect to such commodities, as well as such costs incurred by the recipient and paid by CCC.

(2) The value of a claim for damaged donated commodities will be determined on the basis of the commodity acquisition, transportation, and related costs incurred by CCC with respect to such commodities, as well as such costs incurred by the recipient and paid by CCC, less any funds generated if such commodities are sold in accordance with § 1499.9(f)(1).

(d) If CCC determines that a recipient has not initiated a claim or is not exercising due diligence in the pursuit of a claim, CCC may require the recipient to assign its rights to initiate or pursue the claim to CCC. Failure by the recipient to initiate a claim or exercise due diligence in the pursuit of a claim will be considered by CCC during the review of applications for subsequent food assistance awards.

(e)

(1) A recipient may retain any funds obtained as a result of a claims collection action initiated by it in accordance with this section, or recovered pursuant to any insurance policy or other similar form of indemnification, but such funds must be expended in accordance with the agreement or for other purposes approved in advance by CCC.

(2) CCC will retain any funds obtained as a result of a claims collection action initiated by it under this section; provided, however, that if the recipient paid for the transportation of the donated commodities or a portion thereof, CCC will use a portion of such funds to reimburse the recipient for such expense on a prorated basis.

[81 FR 62605, Sept. 12, 2016, as amended at 87 FR 53367, Aug. 31, 2022]