[Federal Register Volume 61, Number 231 (Friday, November 29, 1996)]
[Rules and Regulations]
[Pages 60513-60524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30032]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1499
Foreign Donation of Agricultural Commodities
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Final rule.
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SUMMARY: These regulations govern the provision of agricultural
commodities by Commodity Credit Corporation pursuant to section 416(b)
of the Agricultural Act of 1949 or the Food for Progress Act of 1985
for distribution in foreign countries.
EFFECTIVE DATE: December 30, 1996.
FOR FURTHER INFORMATION CONTACT: Director/CCCPSD, Foreign Agricultural
Service, United States Department of Agriculture, 1400 Independence
Ave., S.W., Stop 1031; Washington, D.C. 20250-1031; telephone (202)
720-3573.
SUPPLEMENTARY INFORMATION: This rule is issued in conformance with
Executive Order 12866. Based on information compiled by the Department,
it has been determined that this rule:
(1) Would have an annual effect on the economy of less than $100
million;
(2) Would not adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities;
(3) Would not create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency;
(4) Would not alter the budgetary impact of entitlements, grants,
user fees, or loan programs or rights and obligations of recipients
thereof; and
(5) Would not raise novel legal or policy issues arising out of
legal mandates, the President's priorities, or principles set forth in
Executive Order 12866.
Regulatory Flexibility Act
This rule deals primarily with requirements imposed upon foreign
governments and non-profit entities distributing humanitarian grant
food supplies overseas. Therefore, the rule does not have a significant
impact upon a substantial number of small business
[[Page 60514]]
entities and a Regulatory Impact Statement was not prepared. A copy of
this rule has been sent to the Chief Counsel, Office of Advocacy, U.S.
Small Business Administration.
Paperwork Reduction Act
The information collection requirements imposed by this final rule
have been previously submitted to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act of 1980 (44 U.S.C. Chapter 35).
OMB has assigned control number 0051-0035 for this information
collection. This regulation does not change any of the information
collection requirements. A submission to extend this approval will be
submitted to OMB.
Executive Order 12372
This rule is not subject to the provisions of Executive Order 12372
which requires intergovernmental consultation with state and local
officials. See the Notice related to 7 CFR part 3015, subpart V,
published at 46 FR 29115 (June 24, 1983).
Executive Order 12988
This rule has been reviewed under the Executive Order 12988, Civil
Justice Reform. The rule would have pre-emptive effect with respect to
any state or local laws, regulations, or policies which conflict with
such provisions or which otherwise impede their full implementation.
The rule would not have retroactive effect. Administrative proceedings
are not required before parties may seek judicial review.
Background
On February 14, 1994, the Commodity Credit Corporation (CCC)
published a proposed rule (59 FR 6916) to govern its donation of
agricultural commodities for distribution in foreign countries pursuant
to section 416(b) of the Agricultural Act of 1949 (section 416(b)) or
the Food for Progress Act of 1985. Comments on the proposed rule were
received from private entities which are most affected by these
regulations: private voluntary organizations (PVOs), shippers, and
freight forwarders. Their comments are discussed below, except for
those dealing with issues outside of the scope of the proposed rule,
making editorial suggestions, or simply expressing support for the
proposed rule.
Commodity Availability
Comment: The PVO community requested that the CCC make a commodity
availability determination for the Food for Progress Program (FFP)
similar to the one required for the section 416(b) program.
Response: As a general matter, only commodities in CCC uncommitted
inventory are available for donation under section 416(b).
Consequently, CCC annually reviews its inventory to determine commodity
availability and publicizes the results to assist PVO's in planning
donation activities. By contrast, FFP donations are not limited to CCC
inventory; CCC may purchase commodities for FFP donations to meet
justified needs. Therefore, there is no reason to announce yearly
availability of commodities in connection with the FFP or to establish
a specific list of eligible commodities.
Method of Payment to PVOs
Comment: PVOs requested that CCC delete the requirement in section
1499.7 of the proposed rule that a portion of the funds provided PVOs
be paid on a reimbursement basis. The PVO's stated that they were
unable to finance many expenses out-of-pocket.
Response: In CCC's experience, this requirement has not constrained
PVO participation in CCC grant food aid programs. CCC has determined
that, to maintain adequate program management, it is necessary to
maintain a minimal 15% reimbursement requirement.
Recipient Agency Agreements
Comment: PVOs requested that section 1499.10 of the proposed rule
be revised to delete the requirement that agreements with local
recipient agencies include by reference the terms of these regulations.
The PVOs suggested that such agreements need only be consistent with
these regulations.
Response: CCC agrees. The final rule, therefore, has been revised
to require that recipient agency agreements be consistent with these
rules.
Private sector involvement
Comment: PVOs suggested that the requirement in
Sec. 1499.5(b)(6)(d) of the proposed rule that PVOs use private sector
channels to sell commodities provided under section 416(b) is
inappropriate because section 416(b) unlike FFP, does not specify
support for the private sector.
Response: CCC will maintain this requirement because economic
development is one of the goals of section 416(b). Development of
private sector selling mechanisms is an element of economic
development.
Other comments from PVOs
Comment: The PVO community proposed a number of changes which it
asserted would ease its administrative burden without affecting CCC's
ability to review and monitor the programs. The PVOs suggested that:
the plan of operations be submitted to the Agricultural Counselor or
Attache only if the Counselor or Attache is resident in the country
targeted for assistance; the priorities governing decisions to enter
into section 416(b) and FFP agreements be refined to better reflect the
different purposes of each program; CCC allow flexibility in shifting
funds among approved expenditure categories within the total CCC-
approved commodity distribution budget in order to facilitate
management of the programs by the PVOs; and a quarterly, rather than
monthly, financial statement from the PVO will provide CCC sufficient
and timely information with which to monitor the programs.
Response: CCC agrees with these suggestions and the final rule has
been revised accordingly.
Commissions
Comment: Shippers and shipping agents expressed concern regarding
section 1499.8(e)(1) of the proposed rule which allows commissions to
be paid only on the ocean portion of any transportation arranged for
the commodities even if the movement of the commodities involves inland
transportation after discharge. A number of freight forwarders noted
that they were section 8(a) qualified small businesses and that this
proposed rule would have an adverse impact on their businesses as a
result of reducing the amount of commissions that they could receive.
Comments also noted that the Shipping Act of 1984 mandates that
conference carriers pay to shipping agents a commission based on the
aggregate of all rates and charges for a movement which would include
both ocean and inland charges. Finally, they suggested that this
proposal was unreasonable because it ignored the fact that shipping
agents did a considerable amount of work with shipments after cargo is
discharged and moves inland.
Response: CCC has determined that the complexity of arranging
inland transportation warrants continued financing of commissions for
that service when CCC is financing this movement.
Comment: Section 1499.8(e)(2) proposed a limit on the amount of
commission payable to a shipping agent. The limit proposed was 2/3 of
the maximum commission payable (2 1/2 percent of the total freight). A
number of comments characterized the proposed change as arbitrary and
unduly
[[Page 60515]]
restrictive and argued that it would not result in overall savings for
CCC.
Response: In view of the issues raised by these comments, CCC has
concluded not to proceed with the proposed 2/3's limitation.
Freight payments
Comments: Several parties suggested that CCC make full freight
payment upon loading, stating this would be consistent with standard
commercial practice.
Response: In CCC's experience, payment upon discharge is necessary
to assure proper handling and discharge of the commodities provided and
to protect CCC's programmatic interests. These programs are not
commercial; they often provide commodities that would not otherwise be
moved in normal international trade to recipients facing emergency food
needs.
Agents
Comment: Section 1499.8(c) of the proposed rule extends conflict of
interest requirements currently applicable to title I, P.L. 480 and
section 416(b) to the FFP. Comments argued that this provision would
punish status rather than address any actual conflict of interest, and
would reduce competition and increase costs.
Response: The provisions complained of are legislatively required
in connection with shipments under title I and section 416(b). CCC has
determined to extend the conflict of interest provisions to the FFP in
order to maintain consistency between these food donation programs.
Other Changes to Proposed Rule
The final rule also incorporates the changes to the section 416(b)
and Food for Progress (FFP) programs mandated by the Federal
Agriculture Improvement and Reform Act of 1996, Pub. L. 104-127. That
Act allows the use of generated local currency in section 416(b) for
administrative expenses, extends the time period to expend such
currency; authorizes the participation of international organizations
in the FFP; expands CCC's authority to provide commodities on credit
terms under the FFP; and to fund technical assistance for monetization
programs in the FFP. Finally, the final rule makes a number of
editorial and organizational changes to the text of the proposed rule.
List of Subjects in 7 CFR Part 1499
Agricultural commodities, Exports, Foreign aid.
Accordingly, title 7 of the Code of Federal Regulations is amended
by adding a new Part 1499 to read as follows:
PART 1499--FOREIGN DONATION PROGRAMS
Sec.
1499.1 Definitions.
1499.2 General purpose and scope.
1499.3 Eligibility requirements for Cooperating Sponsors.
1499.4 Availability of commodities from CCC inventory.
1499.5 Program Agreements and Plans of Operation.
1499.6 Usual marketing requirements.
1499.7 Apportionment of costs and advances.
1499.8 Ocean transportation.
1499.9 Arrangements for entry and handling in the foreign country.
1499.10 Restrictions on commodity use and distribution.
1499.11 Agreement between Cooperating Sponsor and Recipient
Agencies.
1499.12 Sales and barter of commodities provided and use of
proceeds.
1499.13 Processing, packaging and labeling of section 416(b)
commodities in the foreign country.
1499.14 Disposition of commodities unfit for authorized use.
1499.15 Liability for loss, damage, or improper distribution of
commodities--claims and procedures.
1499.16 Records and reporting requirements.
1499.17 Audits.
1499.18 Suspension of the program.
1499.19 Sample documents and guidelines for developing proposals
and reports.
1499.20 Paperwork reduction requirement.
Authority: 7 U.S.C. 1431(b); 7 U.S.C. 1736o; E.O. 12752.
Sec. 1499.1 Definitions.
Activity--a Cooperating Sponsor's use of agricultural commodities
provided under Program Agreements or use of sale proceeds.
Agricultural Counselor or Attache--the United States Foreign
Agricultural Service representative stationed abroad, who has been
assigned responsibilities with regard to the country into which the
commodities provided are imported, or such representative's designee.
CCC--the Commodity Credit Corporation.
Commodities--agricultural commodities or products.
Director, P.L. 480-OD--the Director, Pub. L. 480 Operations
Division, Foreign Agricultural Service, USDA.
Director, CCCPSD--the Director, CCC Program Support Division,
Foreign Agricultural Service, USDA.
Director, PDD--the Director, Program Development Division, Foreign
Agricultural Service, USDA.
Deputy Administrator--Deputy Administrator for Export Credits,
Foreign Agricultural Service, USDA.
Force Majeure--damage caused by perils of the sea or other waters;
collisions; wrecks; standing without the fault of the carrier;
jettison; fire from any cause; Act of God; public enemies or pirates;
arrest or restraint of princes, princesses, rulers of peoples without
the fault of the carrier; wars; public disorders; captures; or
detention by public authority in the interest of public safety.
General Sales Manager--General Sales Manager and Associate
Administrator, Foreign Agricultural Service, USDA, who is a Vice
President, CCC.
KCCO--Kansas City Commodity Office, Farm Services Agency, USDA,
P.O. Box 419205, Kansas City, Missouri, 64141-6205.
KCFMO--Kansas City Financial Management Office, Farm Services
Agency, USDA, P.O. Box 419205, Kansas City, Missouri, 64141-6205.
Ocean freight differential--the amount, as determined by CCC, by
which the cost of ocean transportation is higher than would otherwise
be the case by reason of the requirement that the commodities be
transported on U.S.-flag vessels.
Program Agreement--an agreement entered into between CCC and
Cooperating Sponsors.
Program income--interest on sale proceeds and money received by the
Cooperating Sponsor, other than sales proceeds, as a result of carrying
out approved activities.
Recipient agency--an entity located in the importing country which
receives commodities or commodity sale proceeds from a Cooperating
Sponsor for the purpose of implementing activities.
Sale proceeds--money received by a Cooperating Sponsor from the
sale of commodities.
Section 416(b)--Section 416(b) of the Agricultural Act of 1949.
USDA--the United States Department of Agriculture.
Sec. 1499.2 General purpose and scope.
This part establishes the general terms and conditions governing
CCC's donation of commodities to Cooperating Sponsors under the section
416(b) and Food for Progress programs. This does not apply to donations
to intergovernmental agencies or organizations (such as the World Food
Program) unless CCC and such intergovernmental agency or organization
enters into an agreement incorporating this part.
Sec. 1499.3 Eligibility requirements for Cooperating Sponsor.
A Cooperating Sponsor may be either:
[[Page 60516]]
(a) A foreign government;
(b) An entity registered with the Agency for International
Development (AID) in accordance with AID regulations; or
(c) An entity that demonstrates to CCC's satisfaction:
(1) Organizational experience and resources available to implement
and manage the type of program proposed, i.e., targeted food assistance
or sale of commodities for economic development activities;
(2) Experience working in the targeted country; and
(3) Experience and knowledge on the part of personnel who will be
responsible for implementing and managing the program. CCC may require
that an entity submit a financial statement demonstrating that it has
the financial means to implement an effective donation program.
Sec. 1499.4 Availability of commodities from CCC inventory.
CCC will periodically announce the types and quantities of
agricultural commodities available for donation from CCC inventory for
the section 416(b) program.
Sec. 1499.5 Program Agreements and Plans of Operation.
(a) Plan of Operation. (1) Prior to entering into a section 416(b)
Program Agreement, a Cooperating Sponsor shall submit a Plan of
Operation to the Director, PDD and to the Agricultural Counselor or
Attache, if an Agricultural Counselor or Attache is resident in the
country where activities are to be implemented. After approval by CCC,
the Plan of Operation will be incorporated into the section 416(b)
Program Agreement as ``Attachment A.''
(2) CCC may require Cooperating Sponsors to submit a Plan of
Operation in connection with the Food for Progress program.
(3) A Plan of Operation shall be in the following format and
provide the following information:
1. Name and Address of Applicant:
2. Country of Donation:
3. Kind and Quantity of Commodities Requested:
4. Delivery Schedule:
5. Program Description:
Provide the following information:
(a) Activity objectives, including a description of any problems
anticipated in achieving the activities' objectives;
(b) Method for choosing beneficiaries of activities;
(c) Program administration including, as appropriate, plans for
administering the distribution or sale of commodities and the
expenditure of sale proceeds, and identification of the
administrative or technical personnel who will implement the
activities;
(d) Activity budgets, including costs that will be borne by the
Cooperating Sponsor, other organizations or local governments;
(e) The recipient agency, if any, that will be involved in the
program and a description of each recipient agency's capability to
perform its responsibilities as stated in the Plan of Operation;
(f) Governmental or nongovernmental entities involved in the
program and the extent to which the program will strengthen or
increase the capabilities of such entities to further economic
development in the recipient country;
(g) Method of educating consumers as to the source of the
provided commodities and, where appropriate, preparation and use of
the commodity; and
(h) Criteria for measuring progress towards achieving the
objectives of activities and evaluating program outcome.
6. Use of Funds or Goods and Services Generated:
When the activity involves the use of sale proceeds, the receipt
of goods or services from the barter of commodities, or the use of
program income, the following information must be provided:
(a) the quantity and type of commodities to be sold or bartered;
(b) extent to which any sale or barter of the agricultural
commodities provided would displace or interfere with any sales that
may otherwise be made;
(c) the amount of sale proceeds anticipated to be generated from
the sale, the value of the goods or services anticipated to be
generated from the barter of the agricultural commodities provided,
or the amount of program income expected to be generated;
(d) the steps taken to use, to the extent possible, the private
sector in the process of selling commodities;
(e) the specific uses of sale proceeds or program income and a
timetable for their expenditure; and
(f) procedures for assuring the receipt and deposit of sale
proceeds and program income into a separate special account and
procedures for the disbursement of the proceeds and program income
from such special account.
7. Distribution Methods:
(a) a description of the transportation and storage system which
will be used to move the agricultural commodities from the receiving
port to the point at which distribution is made to the recipient;
(b) a description of any reprocessing or repackaging of the
commodities that will take place; and
(c) a logistics plan that demonstrates the adequacy of port,
transportation, storage, and warehouse facilities to handle the flow
of commodities to recipients without undue spoilage or waste.
8. Duty Free Entry:
Documentation indicating that any commodities to be distributed
to recipients, rather than sold, will be imported and distributed
free from all customs, duties, tolls, and taxes.
9. Economic Impact:
Information indicating that the commodities can be imported and
distributed without a disruptive impact upon production, prices and
marketing of the same or like products within the importing country.
(b) Agreements. CCC and the Cooperating Sponsor will enter into a
written Program Agreement which will incorporate the terms and
conditions set forth in this part. The commodities provided by CCC, and
any packaging, will meet the specifications set forth in such Program
Agreement. A Program Agreement may contain special terms or conditions,
in addition to or in lieu of, the terms and conditions set forth in the
regulations in this part when CCC determines that such special terms or
conditions are necessary to effectively carry out the particular
Program Agreement.
Sec. 1499.6 Usual marketing requirements.
(a) A foreign government Cooperating Sponsor shall provide to the
Director, PDD, data showing commercial and non-commercial imports of
the types of agricultural commodities requested during the prior five
years, by country of origin, and an estimate of imports of such
commodities during the current year.
(b) CCC may require that a Program Agreement with a foreign
government include a ``usual marketing requirement'' that establishes a
specific level of imports for a specified period. The Program Agreement
may also include a prohibition on the export of provided commodities,
as well as of other similar commodities specified in the Program
Agreement.
Sec. 1499.7 Apportionment of costs and advances.
(a) CCC will bear the costs of processing, packaging,
transportation, handling and other incidental charges incurred in
delivering commodities to Cooperating Sponsors. CCC will deliver bulk
grain shipments f.o.b. vessel, and shipments of all other commodities
f.a.s. vessel or intermodal points. CCC will choose the point of
delivery based on lowest cost to CCC.
(b) When the General Sales Manager approves in advance and in
writing, CCC may agree to bear all or a portion of reasonable costs
associated with:
(1) Transportation from U.S. ports to designated ports or points of
entry abroad, maritime survey costs, and in cases of urgent and
extraordinary relief requirements, transportation from designated ports
or points of entry abroad to designated storage and distribution sites;
(2) In cases of urgent and extraordinary relief requirements,
[[Page 60517]]
reasonable storage and distribution costs; and
(3) Under the Food for Progress Program, administration or
monitoring of food assistance programs, or technical assistance
regarding sales of commodities provided by CCC.
(c) CCC will not pay any costs incurred by the Cooperating Sponsor
prior to the date of the Program Agreement.
(d) Except as provided in paragraph (b) of this section, the
Cooperating Sponsor shall ordinarily bear all costs incurred subsequent
to CCC's delivery of commodities at U.S. ports or intermodal points.
(e) A Cooperating Sponsor seeking agreement by CCC to bear the
costs identified in paragraphs (b)(2) or (b)(3) of this section shall
submit to the Director, PDD, a Program Operation Budget detailing such
costs. If approved, the Program Operation Budget shall become part of
the Program Agreement. The Cooperating Sponsor may make adjustments
between line items of an approved Program Operation Budget up to 20
percent of the total amount approved or $1,000, whichever is less,
without any further approval. Adjustments beyond these limits must be
specifically approved by the Controller and the General Sales Manager.
(f) The Cooperating Sponsor may request advance of up to 85 percent
of the amount of an approved Program Operating Budget. However, CCC
will not approve any request for an advance received earlier than 60
days after the date of a previous advance made in connection with the
same Program Agreement.
(g) Funds advanced shall be deposited in an interest bearing
account until expended. Interest earned may be used only for the
purposes for which the funds were advanced.
(h) The Cooperating Sponsor shall return to CCC any funds not
obligated as of the 180th day after being advanced, together with any
interest earned on such unexpended funds. Funds and interest shall be
returned within 30 days of such date.
(i) The Cooperating Sponsor shall, not later than 10 days after the
end of each calendar quarter, submit a financial statement to the
Director, CCCPSD, accounting for all funds advanced and all interest
earned.
(j) CCC will pay all other costs for which it is obligated under
the Program Agreement by reimbursement. However, CCC will not pay any
cost incurred after the final date specified in the Program Agreement.
Sec. 1499.8 Ocean transportation.
(a) Cargo preference. Shipments of commodities provided under
either the section 416(b) or Food for Progress programs are subject to
the requirements of sections 901(b) and 901b of the Merchant Marine
Act, 1936, regarding carriage on U.S.-flag vessels. CCC will endeavor
to meet these requirements separately for each program for each 12-
month compliance period. A Cooperating Sponsor shall comply with the
instructions of CCC regarding the quantity of commodities that must be
carried on U.S. flag vessels.
(b) Freight procurement requirements. In all cases where the
Cooperating Sponsor arranges ocean transportation, whether by U.S. or
non-U.S. flag vessel and CCC is financing any portion of the ocean
freight:
(1) The Cooperating Sponsor shall arrange ocean transportation
through competitive bidding and shall obtain approval of all
invitations for bids from the offices specified in the Program
Agreement prior to issuance.
(2) Invitations for bids shall be issued through the Transportation
News Ticker (TNT), New York, and at least one other comparable means of
trade communication.
(3) Freight invitations for bids shall include specified procedures
for payment of freight, including the party responsible for the freight
payments, and expressly require that:
(i) Offers include a contract canceling date no later than the last
contract layday specified in the invitation for bids;
(ii) Offered rates be quoted in U.S. dollars per metric ton;
(iii) If destination bagging or transportation to a point beyond
the discharge port is required, the offer separately state the total
rate and the portion thereof attributable to the ocean segment of the
movement;
(iv) Any non-liner U.S. flag vessel 15 years or older offer, in
addition to any other offered rate, a one-way rate applicable in the
event the vessel is scrapped or transferred to foreign flag registry
prior to the end of the return voyage to the United States;
(v) In the case of packaged commodities, U.S. flag carriers specify
whether delivery will be direct breakbulk shipment, container shipment,
or breakbulk transshipment and identify whether transshipment
(including container relays) will be via U.S. or foreign flag vessel;
(vi) Vessels offered subject to Maritime Administration approval
will not be accepted; and
(vii) Offers be received by a specified closing time, which must be
the same for both U.S. and non-U.S. flag vessels.
(4) In the case of shipments of bulk commodities and non-liner
shipments of packaged commodities, the Cooperating Sponsor shall open
offers in public in the United States at the time and place specified
in the invitation for bids and consider only offers that are responsive
to the invitation for bids without negotiation, clarification, or
submission of additional information. Late offers shall not be
considered or accepted.
(5) All responsive offers received for both U.S. flag and foreign
flag service shall be presented to KCCO which will determine the extent
to which U.S.-flag vessels will be used.
(6) The Cooperating Sponsor shall promptly furnish the Director,
Public Law 480-OD, or other official specified in the Program
Agreement, copies of all offers received with the time of receipt
indicated thereon. The Director, Public Law 480-OD, or other official
specified in the Program Agreement, will approve all vessel fixtures.
The Cooperating Sponsor may fix vessels subject to the required
approval; however, the Cooperating Sponsor shall not confirm a vessel
fixture until advised of the required approval and the results of the
Maritime Administration's guideline rate review. The Cooperating
Sponsor shall not request guideline rate advice from the Maritime
Administration. The Cooperating Sponsor will, promptly after receipt of
vessel approval, issue a public notice of the fixture details on the
TNT or other means of communication approved by the Director, Public
Law 480-OD.
(7) Non-Vessel Operating Common Carriers may not be employed to
carry shipments on either U.S. or foreign-flag vessels.
(8) The Cooperating Sponsor shall promptly furnish the Director
Public Law 480-OD, a copy of the signed laytime statement and statement
of facts at the discharge port.
(c) Shipping agents. (1) The Cooperating Sponsor may appoint a
shipping agent to assist in the procurement of ocean transportation.
The Cooperating Sponsor shall nominate the shipping agent in writing to
the Deputy Administrator, Room 4077-S, Foreign Agricultural Service,
U.S. Department of Agriculture, Washington, DC 20250-1031, and include
a copy of the proposed agency agreement. The Cooperating Sponsor shall
specify the time period of the nomination.
(2) The shipping agent so nominated shall submit the information
and
[[Page 60518]]
certifications required by 7 CFR 17.5 to the Deputy Administrator.
(3) A person may not act as a shipping agent for a Cooperating
Sponsor unless the Deputy Administrator has notified the Cooperating
Sponsor in writing that the nomination is accepted.
(d) Commissions. (1) When any portion of the ocean freight is paid
by CCC, total commissions earned on U.S. and foreign flag bookings by
all parties arranging vessel fixtures, shall not exceed 2\1/2\ percent
of the total freight costs.
(2) Address commissions are prohibited.
(e) Contract terms. When CCC is paying any portion of the ocean
freight, charter parties and liner booking contracts must conform to
the following requirements, as applicable:
(1) Packaged commodities on liner vessels shall be shipped on the
basis of full berth terms with no demurrage or despatch;
(2) Shipments of bulk liquid commodities may be contracted in
accordance with trade custom. Other bulk commodities, including
shipments that require bagging or stacking for the account of the
vessel, shall be shipped on the basis of vessel load, free out, with
demurrage and despatch applicable at load and discharge ports; except
that, if bulk commodities require further inland distribution, they
shall be shipped on the basis of vessel load with demurrage and
despatch at load and berth terms discharge, i.e., no demurrage,
despatch, or detention at discharge. Demurrage and despatch shall be
settled between the ocean carrier and commodity suppliers at load port
and between the ocean carrier and charterers at discharge ports. CCC is
not responsible for resolving disputes involving the calculation of
laytime or the payment of demurrage or despatch.
(3) If the Program Agreement requires the Cooperating Sponsor to
arrange an irrevocable letter of credit for ocean freight, the
Cooperating Sponsor shall be liable for detention of the vessel for
loading delays attributable solely to the decision of the ocean carrier
not to commence loading because of the failure of the Cooperating
Sponsor to establish such letter of credit. Charter parties and liner
booking contracts may not contain a specified detention rate. The ocean
carrier shall be entitled to reimbursement, as damages for detention
for all time so lost, for each calendar day or any part of the calendar
day, including Saturdays, Sundays and holidays. The period of such
delay shall not commence earlier than upon presentation of the vessel
at the designated loading port within the laydays specified in the
charter party or liner booking contract, and upon notification of the
vessel's readiness to load in accordance with the terms of the
applicable charter party or liner booking contract. The period of such
delay shall end at the time that operable irrevocable letters of credit
have been established for ocean freight or the time the vessel begins
loading, whichever is earlier. Time calculated as detention shall not
count as laytime. Reimbursement for such detention shall be payable no
later than upon the vessel's arrival at the first port of discharge.
(4) Charges including, but not limited to charges for inspection,
fumigation, and carrying charges, attributable to the failure of the
vessel to present before the canceling date will be for the account of
the ocean carrier.
(5) Ocean freight is earned under a charter party when the vessel
and cargo arrive at the first port of discharge, Provided, That if a
force majeure prevents the vessel's arrival at the first port of
discharge, 100% of the ocean freight is payable or, if the charter
party provides for completing additional requirements after discharge
such as bagging, stacking, or inland transportation, not more than 85%
of the ocean freight is payable, at the time the General Sales Manager
determines that such force majeure was the cause of nonarrival; and
(6) When the ocean carrier offers delivery to destination ports on
U.S.-flag vessels, but foreign-flag vessels are used for any part of
the voyage to the destination port without first obtaining the approval
of the Cooperating Sponsor, KCCO, and any other approval that may be
required by the Program Agreement, the ocean freight rate will be
reduced to the lowest responsive foreign-flag vessel rate offered in
response to the same invitation for bids and the carrier agrees to pay
CCC the difference between the contracted ocean freight rate and the
freight rate offered by such foreign-flag vessel.
(f) Coordination between CCC and the Cooperating Sponsor. When a
Program Agreement specifies that the Cooperating Sponsor will arrange
ocean transportation:
(1) KCCO will furnish the Cooperating Sponsor, or its agent, with a
Notice of Commodity Availability (Form CCC-512) which will specify the
receiving country, commodity, quantity, and date at U.S. port or
intermodal delivery point.
(2) The Cooperating Sponsor shall complete the Form CCC-512
indicating name of steamship company, vessel name, vessel flag and
estimated time of arrival at U.S. port; and shall sign and return the
completed form to KCCO, with a copy to the Director, P.L. 480-OD. If
CCC agrees to pay any part of the ocean transportation for liner
cargoes, the Cooperating Sponsor shall also indicate on the Form CCC-
512 the applicable Federal Maritime Commission tariff rate, and tariff
identification.
(3) KCCO will issue instructions to have the commodity delivered
f.a.s. or f.o.b. vessel, U.S. port of export or intermodal delivery
point, consigned to the Cooperating Sponsor.
(g) Documents required for payment of freight--(1) General rule. To
receive payment for ocean freight, the following documents shall be
submitted to the Director, CCCPSD:
(i) One copy of completed Form CCC-512;
(ii) Four copies of the original on-board bills of lading
indicating the freight rate and signed by the originating carrier;
(iii) For all non-containerized grain cargoes,
(A) One copy of the Federal Grain Inspection Service (FGIS)
Official Stowage Examination Certificate (Vessel Hold Certificate);
(B) One copy of the National Cargo Bureau Certificate of Readiness
(Vessel Hold Inspection Certificate); and
(C) One copy of the National Cargo Bureau Certificate of Loading;
(iv) For all containerized grain and grain product cargoes, one
copy of the FGIS Container Condition Inspection Certificate;
(v) One signed copy of liner booking note or charter party covering
ocean transportation of cargo;
(vi) For charter shipments, a notice of arrival at first discharge
port submitted by the Cooperating Sponsor;
(vii) Four copies of either:
(A) A request by the Cooperating Sponsor for reimbursement of ocean
freight or ocean freight differential indicating the amount due, and
accompanied by a certification from the ocean carrier that payment has
been received from the Cooperating Sponsor; or
(B) A request for direct payment to the ocean carrier, indicating
amount due; or
(C) A request for direct payment of ocean freight differential to
the ocean carrier accompanied by a certification from the carrier that
payment of the Cooperating Sponsor's portion of the ocean freight has
been received.
(2) In cases of force majeure. To receive payment in cases where
the General Sales Manager determines that circumstances of force
majeure have prevented the vessel's arrival at the first port of
discharge, the Cooperating
[[Page 60519]]
Sponsor shall submit all documents required by paragraph (g)(1) of this
section except for the notice of arrival required by paragraph
(g)(1)(vi) of this section.
(h) CCC payment of ocean freight or ocean freight differential--(1)
General rule. CCC will pay, not later than 30 days after receipt in
good order of the required documentation, 100 percent of either the
ocean freight or the ocean freight differential, whichever is specified
in the Program Agreement.
(2) Additional requirements after discharge. Where the charter
party or liner booking note provide for the completion of additional
services after discharge, such as bagging, stacking or inland
transportation, CCC will pay, not later than 30 days after receipt in
good order of the required documentation, either not more than 85
percent of the total freight charges or 100 percent of the ocean
freight differential, whichever is specified in the Program Agreement.
CCC will pay the remaining balance, if any, of the freight charges not
later than 30 days after receipt of notification from the Cooperating
Sponsor that such additional services have been provided; except that
CCC will not pay any remaining balance where the GSM determines that
the vessel's arrival at first port of discharge was prevented by force
majeure.
(3) No demurrage. CCC will not pay demurrage. Sec. 1499.9
Arrangements for entry and handling in the foreign country.
(a) The Cooperating Sponsor shall make all necessary arrangements
for receiving the commodities in the recipient country, including
obtaining appropriate approvals for entry and transit. The Cooperating
Sponsor shall store and maintain the commodities from time of delivery
at port of entry or point of receipt from originating carrier in good
condition until their distribution, sale or barter.
(b) When CCC has agreed to pay costs of transporting, storing, and
distributing commodities from designated points of entry or ports of
entry, the Cooperating Sponsor shall arrange for such services, by
through bill of lading, or by contracting directly with suppliers of
services, as CCC may approve. If the Cooperating Sponsor contracts
directly with the suppliers of such services, the Cooperating Sponsor
may seek reimbursement by submitting documentation to CCC indicating
actual costs incurred. All supporting documentation must be sent to the
Director, CCCPSD. CCC, at its option, will reimburse the Cooperating
Sponsor for the cost of such services in U.S. dollars at the exchange
rate in effect on the date of payment by CCC, or in foreign currency.
Sec. 1499.10 Restrictions on commodity use and distribution.
(a) The Cooperating Sponsor may use the commodities provided only
in accordance with the terms of the Program Agreement.
(b) Commodities shall not be distributed within the importing
country on the basis of political affiliation, geographic location, or
the ethnic, tribal or religious identity or affiliations of the
potential consumers or recipients.
(c) Commodities shall not be distributed, handled or allocated by
military forces without specific CCC authorization.
Sec. 1499.11 Agreement between cooperating sponsor and recipient
agencies.
(a) The Cooperating Sponsor shall enter into a written agreement
with a recipient agency prior to the transfer of any commodities, sale
proceeds or program income to the recipient agency. Copies of such
agreements shall be provided to the Agricultural Counselor or Attache,
and the Director, PDD. Such agreements shall require the recipient
agency to pay the Cooperating Sponsor the value of any commodities,
sale proceeds or program income that are used for purposes not
expressly permitted under the Program Agreement, or that are lost,
damaged, or misused as result of the recipient agency's failure to
exercise reasonable care;
(b) CCC may waive the requirements of paragraph (a) of this section
where it determines that such an agreement is not feasible or
appropriate.
Sec. 1499.12 Sales and barter of commodities provided and use of
proceeds.
(a) Commodities may be sold or bartered without the prior approval
of CCC where damage has rendered the commodities unfit for intended
program purposes and sale or barter is necessary to mitigate loss of
value.
(b) A Cooperating Sponsor may, but is not required to, negotiate an
agreement with the host government under which the commodities imported
for a sale or barter may be imported, sold, or bartered without
assessment of duties or taxes. In such cases and where the commodities
are sold, they shall be sold at prices reflecting prevailing local
market value.
(c) The Cooperating Sponsor shall deposit all sale proceeds into an
interest-bearing account unless prohibited by the laws or customs of
the importing country or CCC determines that to do so would constitute
an undue burden. Interest earned on such deposits shall only be used
for approved activities.
(d) Except as otherwise provided in this part the Cooperating
Sponsor may use sale proceeds and resulting interest only for those
purposes approved in the applicable Plan of Operation.
(e) CCC will approve the use of sale proceeds and interest to
purchase real and personal property where local law permits the
Cooperating Sponsor to retain title to such property, but will not
approve the use of sale proceeds or interest to pay for the
acquisition, development, construction, alteration or upgrade of real
property that is;
(1) Owned or managed by a church or other organization engaged
exclusively in religious activity, or
(2) Used in whole or in part for sectarian purposes; except that, a
Cooperating Sponsor may use such sale proceeds or interest to pay for
repairs or rehabilitation of a structure located on such real property
to the extent necessary to avoid spoilage or loss of provided
commodities but only if such structure is not used in whole or in part
for any religious or sectarian purposes while the provided commodities
are stored in such structure. When not approved in the Plan of
Operation, such use may be approved by the Agricultural Counsellor or
Attache.
(f) The Cooperating Sponsor shall follow commercially reasonable
practices in procuring goods and services and when engaging in
construction activity in accordance with the approved Plan of
Operation. Such practices shall include procedures to prevent fraud,
self-dealing and conflicts of interest, and shall foster free and open
competition to the maximum extent practicable.
(g) To the extent required by the Program Agreement, the
Cooperating Sponsor shall submit to the Controller, CCC, and to the
Director, PDD, an inventory of all assets acquired with sale proceeds
or interest or program income. In the event that its participation in
the program terminates, the Cooperating Sponsor shall dispose, at the
direction of the Director, PDD, of any property, real or personal, so
acquired.
Sec. 1499.13 Processing, packaging and labeling of section 416(b)
commodities in the foreign country.
(a) Cooperating Sponsors may arrange for the processing of
commodities provided under a section 416(b) Program Agreement, or for
packaging or repackaging prior to distribution. When a third party
provides such processing, packaging or repackaging, the
[[Page 60520]]
Cooperating Sponsor shall enter into a written agreement requiring that
the provider of such services maintain adequate records to account for
all commodities delivered and submit periodic reports to the
Cooperating Sponsor. The Cooperating Sponsor shall submit a copy of the
executed agreement to the Agricultural Counselor or Attache.
(b) If, prior to distribution, the Cooperating Sponsor arranges for
packaging or repackaging commodities provided under section 416(b), the
packaging shall be plainly labeled in the language of the country in
which the commodities are to be distributed with the name of the
commodity and, except where the commodities are to be sold or bartered
after processing, packaging or repackaging, to indicate that the
commodity is furnished by the people of the United States of America
and not to be sold or exchanged. If the commodities are not packaged,
the Cooperating Sponsor shall, to the extent practicable, display
banners, posters or other media containing the information prescribed
in this paragraph.
(c) CCC will reimburse Cooperating Sponsors that are nonprofit
private voluntary organizations or cooperatives for expenses incurred
for repackaging if the packages of commodities provided under section
416(b) are discharged from the vessel in damaged condition, and are
repackaged to ensure that the commodities arrive at the distribution
point in wholesome condition. No prior approval is required for such
expenses equaling $500 or less. If such expense is estimated to exceed
$500, the authority to repackage and incur such expense must be
approved by the Agricultural Counselor or Attache in advance of
repackaging.
Sec. 1499.14 Disposition of commodities unfit for authorized use.
(a) Prior to delivery to Cooperating Sponsor at discharge port or
point of entry. If the commodity is damaged prior to delivery to a
governmental Cooperating Sponsor at discharge port or point of entry
overseas, the Agricultural Counselor or Attache will immediately
arrange for inspection by a public health official or other competent
authority. If the commodity is damaged prior to delivery to a
nongovernmental Cooperating Sponsor at the discharge port or point of
entry, the nongovernmental Cooperating Sponsor shall arrange for such
inspection. If inspection discloses the commodity to be unfit for the
use authorized in the Program Agreement, the Agricultural Counselor or
Attache or the nongovernmental Cooperating Sponsor shall dispose of the
commodities in accordance with the priority set forth in paragraph (b)
of this section. Expenses incidental to the handling and disposition of
the damaged commodity will be paid by CCC from the sale proceeds or
from an appropriate CCC account designated by CCC. The net proceeds of
sales shall be deposited with the U.S. Disbursing Officer, American
Embassy, for the credit of CCC in an appropriate CCC account designated
by CCC; however, if the commodities are provided for a sales program,
the net sale proceeds, net of expenses incidental to handling and
disposition of the damaged commodity, shall be deposited to the special
account established for sale proceeds. The Cooperating Sponsor shall
consult with CCC regarding the inspection and disposition of
commodities and accounting for sale proceeds in the event the
Cooperating Sponsor executed a sales agreement under which title passed
to the purchaser prior to delivery to the Cooperating Sponsor.
(b) After delivery to Cooperating Sponsor. (1) If after arrival in
a foreign country and after delivery to a Cooperating Sponsor, it
appears that the commodity, or any part thereof, may be unfit for the
use authorized in the Program Agreement, the Cooperating Sponsor shall
immediately arrange for inspection of the commodity by a public health
official or other competent authority approved by the Agricultural
Counselor or Attache. If no competent local authority is available, the
Agricultural Counselor or Attache may determine whether the commodities
are unfit for the use authorized in the Program Agreement and, if so,
may direct disposal in accordance with this paragraph (b) of this
section. The Cooperating Sponsor shall arrange for the recovery of that
portion of the commodities designated during the inspection as suitable
for authorized use. If, upon inspection, the commodity (or any part
thereof) is determined to be unfit for the authorized use, the
Cooperating Sponsor shall notify the Agricultural Counselor or Attache
of the circumstances pertaining to the loss or damage. With the
concurrence of the Agricultural Counselor or Attache, the commodity
determined to be unfit for authorized use shall be disposed of in the
following order of priority:
(i) By transfer to an approved section 416(b) program for use as
livestock feed. CCC shall be advised promptly of any such transfer so
that shipments from the United States to the livestock feeding program
can be reduced by an equivalent amount;
(ii) Sale for the most appropriate use, i.e., animal feed,
fertilizer, or industrial use, at the highest obtainable price. When
the commodity is sold, all U.S. Government markings shall be
obliterated or removed;
(iii) By donation to a governmental or charitable organization for
use as animal feed or for other non-food use; or
(iv) If the commodity is unfit for any use or if disposal in
accordance with paragraph (b)(1) (i), (ii) or (iii) of this section is
not possible, the commodity shall be destroyed under the observation of
a representative of the Agricultural Counselor or Attache, if
practicable, in such manner as to prevent its use for any purpose.
(2) Actual expenses incurred, including third party costs, in
effecting any sale may be deducted from the sale proceeds and, if the
commodities were intended for direct distribution, the Cooperating
Sponsor shall deposit the net proceeds with the U.S. Disbursing
Officer, American Embassy, with instructions to credit the deposit to
an appropriate CCC account as designated by CCC. If the commodities
were intended to be sold, the Cooperating Sponsor shall deposit the
gross proceeds into the special interest bearing account and, after
approved costs related to the handling and disposition of damaged
commodities are paid, shall use the remaining funds for purposes of the
approved program. The Cooperating Sponsor shall promptly furnish to the
Agricultural Counselor or Attache a written report of all circumstances
relating to the loss and damage on any commodity loss in excess of
$5,000; quarterly reports shall be made on all other losses. If the
commodity was inspected by a public health official or other competent
authority, the report and any supplemental report shall include a
certification by such public health official or other competent
authority as to the condition of the commodity and the exact quantity
of the damaged commodity disposed. Such certification shall be obtained
as soon as possible after the discharge of the cargo. A report must
also be provided to the Chief, Debt Management Division, KCFMO, of
action taken to dispose of commodities unfit for authorized use.
Sec. 1499.15 Liability for loss, damage, or improper distribution of
commodities--claims and procedures.
(a) Fault of Cooperating Sponsor prior to loading on ocean vessel.
The Cooperating Sponsor shall immediately notify KCCO, Chief, Export
Operations Division if the Cooperating Sponsor will not have a vessel
for loading at the U.S. port of export in accordance with the
[[Page 60521]]
agreed shipping schedule. CCC will determine whether the commodity will
be: moved to another available outlet; stored at the port for delivery
to the Cooperating Sponsor when a vessel is available for loading; or
disposed of as CCC may deem proper. The Cooperating Sponsor shall take
such action as directed by CCC and shall reimburse CCC for expenses
incurred if CCC determines that the expenses were incurred because of
the fault or negligence of the Cooperating Sponsor.
(b) Fault of others prior to loading on ocean vessel. The
Cooperating Sponsor shall immediately notify the Chief, Debt Management
Office, KCFMO, when any damage or loss to the commodity occurs that is
attributable to a warehouseman, carrier, or other person between the
time title is transferred to a Cooperating Sponsor and the time the
commodity is loaded on board vessel at the designated port of export.
The Cooperating Sponsor shall promptly assign to CCC any rights to
claims which may arise as a result of such loss or damage and shall
promptly forward to CCC all documents pertaining thereto. CCC shall
have the right to initiate claims, and retain the proceeds of all
claims, for such loss or damage.
(c) Survey and outturn reports related to claims against ocean
carriers. (1) If the Program Agreement provides that CCC will arrange
for an independent cargo surveyor to attend the discharge of the cargo,
CCC will require the surveyor to provide a copy of the report to the
Cooperating Sponsor.
(2)(i) If the Cooperating Sponsor arranges for an independent cargo
surveyor, the Cooperating Sponsor shall forward to the Chief, Debt
Management Office, KCFMO, any narrative chronology or other commentary
it can provide to assist in the adjudication of ocean transportation
claims and shall prepare such a narrative in any case where the loss is
estimated to be in excess of $5,000.00. The Cooperating Sponsor may, at
its option, also engage the independent surveyor to supervise clearance
and delivery of the cargo from customs or port areas to the Cooperating
Sponsor or its agent and to issue delivery survey reports thereon.
(ii) In the event of cargo loss and damage, the Cooperating Sponsor
shall provide to the Chief, Debt Management Office, KCFMO, the names
and addresses of individuals who were present at the time of discharge
and during survey and who can verify the quantity lost or damaged. For
bulk grain shipments, in those cases where the Cooperating Sponsor is
responsible for survey and outturn reports, the Cooperating Sponsor
shall obtain the services of an independent surveyor to:
(A) Observe the discharge of the cargo;
(B) Report on discharging methods including scale type,
calibrations and any other factor which may affect the accuracy of
scale weights, and, if scales are not used, state the reason therefore
and describe the actual method used to determine weights;
(C) Estimate the quantity of cargo, if any, lost during discharge
through carrier negligence;
(D) Advise on the quality of sweepings;
(E) Obtain copies of port or vessel records, if possible, showing
quantity discharged;
(F) Provide immediate notification to the Cooperating Sponsor if
additional services are necessary to protect cargo interests or if the
surveyor has reason to believe that the correct quantity was not
discharged; and
(G) In the case of shipments arriving in container vans, list the
container van numbers and seal numbers shown on the container vans, and
indicate whether the seals were intact at the time the container vans
were opened, and whether the container vans were in any way damaged. To
the extent possible, the independent surveyor should observe discharge
of container vans from the vessel to ascertain whether any damage to
the container van occurred and arrange for surveying as container vans
are opened.
(iii) Cooperating Sponsors shall send copies to KCFMO, Chief, Debt
Management Office of all reports and documents pertaining to the
discharge of commodities.
(iv) CCC will reimburse the Cooperating Sponsor for costs incurred
upon receipt of the survey report and the surveyor's invoice or other
documents that establish the survey cost. CCC will not reimburse a
Cooperating Sponsor for the costs of a delivery survey unless the
surveyor also prepares a discharge survey, or for any other survey not
taken contemporaneously with the discharge of the vessel, unless CCC
determines that such action was justified in the circumstances.
(3) Survey contracts shall be let on a competitive bid basis unless
CCC determines that the use of competitive bids would not be
practicable. CCC may preclude the use of certain surveyors because of
conflicts of interest or lack of demonstrated capability to properly
carry out surveying responsibilities.
(4) If practicable, all surveys shall be conducted jointly by the
surveyor, the consignee, and the ocean carrier, and the survey report
shall be signed by all parties.
(d) Ocean carrier loss and damage. (1) Notwithstanding transfer of
title, CCC shall have the right to file, pursue, and retain the
proceeds of collection from claims arising from ocean transportation
cargo loss and damage arising out of shipments of commodities provided
to governmental Cooperating Sponsors; however, when the Cooperating
Sponsor pays the ocean freight or a portion thereof, it shall be
entitled to pro rata reimbursement received from any claims related to
ocean freight charged. CCC will pay general average contributions for
all valid general average incidents which may arise from the movement
of commodity to the destination ports. CCC shall receive and retain all
allowances in general average.
(2) Nongovernmental Cooperating Sponsors shall: file notice with
the ocean carrier immediately upon discovery of any cargo loss or
damage; promptly initiate claims against the ocean carriers for such
loss and damage; take all necessary action to obtain restitution for
losses, and (iv) provide CCC copies of all such claims. Notwithstanding
the preceding sentence the nongovernmental Cooperating Sponsor need not
file a claim when the cargo loss is less than $100, or in any case when
the loss is between $100 and $300 and the nongovernmental Cooperating
Sponsor determines that the cost of filing and collecting the claim
will exceed the amount of the claim. The nongovernmental Cooperating
Sponsor shall transmit to KCFMO, Chief, Debt Management Office
information and documentation on such lost or damaged shipments when no
claim is to be filed. When General Average has been declared,
Cooperating Sponsors need not file or collect claims for loss of, or
damage to, commodities.
(3) Amounts collected by nongovernmental Cooperating Sponsors on
claims against ocean carriers which are less than $200 may be retained
by the nongovernmental Cooperating Sponsor. On claims involving loss or
damage of $200 or more, nongovernmental Cooperating Sponsors may retain
from collections received by them, either $200 plus 10 percent of the
difference between $200 and the total amount collected on the claim, up
to a maximum of $500; or the actual administrative expenses incurred in
collection of the claim, provided retention of such administrative
expenses is approved by CCC. Allowable collection costs shall not
include attorneys fees, fees of collection agencies, and similar costs.
In no event
[[Page 60522]]
will CCC pay collection costs in excess of the amount collected on the
claim.
(4) A nongovernmental Cooperating Sponsor also may retain from
claim recoveries remaining after allowable deductions for
administrative expenses of collection, the amount of any special
charges, such as handling and packing costs, which the nongovernmental
Cooperating Sponsor has incurred on the lost or damaged commodity and
which are included in the claims and paid by the liable party.
(5) A nongovernmental Cooperating Sponsor may redetermine claims on
the basis of additional documentation or information not considered
when the claims were originally filed when such documentation or
information clearly changes the ocean carrier's liability. Approval of
such changes by CCC is not required regardless of amount. However,
copies of redetermined claims and supporting documentation or
information shall be furnished to CCC.
(6) A nongovernmental Cooperating Sponsor may negotiate compromise
settlements of claims of any amount, provided that proposed compromise
settlements of claims having a value of $5,000 or more shall require
prior approval in writing by CCC. When a claim is compromised, a
nongovernmental Cooperating Sponsor may retain from the amount
collected, the amounts authorized in paragraph (d)(3) of this section,
and in addition, an amount representing such percentage of the special
charges described in paragraph (d)(4) of this section as compromised
amount is to the full amount of the claim. When a claim is less than
$600, a nongovernmental Cooperating Sponsor may terminate collection
activity when it is determined that pursuit of such claims will not be
economically sound. Approval for such termination by CCC is not
required; however, the nongovernmental Cooperating Sponsor shall notify
KCFMO, Chief, Debt Management Division when collection activity on a
claim is terminated.
(7) All amounts collected in excess of the amounts authorized in
this section to be retained shall be remitted to CCC. For the purpose
of determining the amount to be retained by a nongovernmental
Cooperating Sponsor from the proceeds of claims filed against ocean
carriers, the word ``claim'' shall refer to the loss and damage to
commodities which are shipped on the same voyage of the same vessel to
the same port destination, irrespective of the kinds of commodities
shipped or the number of different bills of lading issued by the
carrier.
(8) If a nongovernmental Cooperating Sponsor is unable to effect
collection of a claim or negotiate an acceptable compromise settlement
within the applicable period of limitation or any extension thereof
granted in writing by the party alleged responsible for the damage, the
nongovernmental Cooperating Sponsor shall assign its rights to the
claim to CCC in sufficient time to permit the filing of legal action
prior to the expiration of the period of limitation or any extension
thereof. Generally, a nongovernmental Cooperating Sponsor should assign
claim rights to CCC no later than 60 days prior to the expiration of
the period of limitation or any extension thereof. In all cases, a
nongovernmental Cooperating Sponsor shall keep CCC informed of the
progress of its collection efforts and shall promptly assign their
claim rights to CCC upon request. Subsequently, if CCC collects on or
settles the claim, CCC shall, except as indicated in this paragraph pay
to a nongovernmental Cooperating Sponsor the amount to which it would
have been entitled had it collected on the claim. The additional 10
percent on amounts collected in excess of $200 will be payable,
however, only if CCC determines that reasonable efforts were made to
collect the claim prior to the assignment, or if payment is determined
to be commensurate with the extra efforts exerted in further
documenting the claim. If documentation requirements have not been
fulfilled and the lack of such documentation has not been justified to
the satisfaction of CCC, CCC will deny payment of all allowances to the
nongovernmental Cooperating Sponsor.
(9) When a nongovernmental Cooperating Sponsor permits a claim to
become time-barred, or fails to take timely actions to insure the right
of CCC to assert such claims, and CCC determines that the
nongovernmental Cooperating Sponsor failed to properly exercise its
responsibilities under the Agreement, the nongovernmental Cooperating
Sponsor shall be liable to the United States for the cost and freight
value of the commodities lost to the program.
(e) Fault of Cooperating Sponsor in country of distribution. If a
commodity, sale proceeds or program income is used for a purpose not
permitted by the Program Agreement, or if a Cooperating Sponsor causes
loss or damage to a commodity, sale proceeds, or program income through
any act or omission or failure to provide proper storage, care and
handling, the cooperating sponsor shall pay to the United States the
value of the commodities, sale proceeds or program income lost, damaged
or misused. CCC will consider normal commercial practices in the
country of distribution in determining whether there was a proper
exercise of the Cooperating Sponsor's responsibility. Payment by the
Cooperating Sponsor shall be made in accordance with paragraph (g) of
this section.
(f) Fault of others in country of distribution and in intermediate
country. (1) In addition to survey or outturn reports to determine
ocean carrier loss and damage, the Cooperating Sponsor shall, in the
case of landlocked countries, arrange for an independent survey at the
point of entry into the recipient country and make a report as set
forth in paragraph (c)(1) of this section. CCC will reimburse the
Cooperating Sponsor for the costs of survey as set forth in paragraph
(c)(2)(iv) of this section.
(2) Where any damage to or loss of the commodity or any loss of
sale proceeds or program income is attributable to a warehouseman,
carrier or other person, the Cooperating Sponsor shall make every
reasonable effort to pursue collection of claims for such loss or
damage. The Cooperating Sponsor shall furnish a copy of the claim and
related documents to the Agricultural Counselor or Attache. Cooperating
Sponsors who fail to file or pursue such claims shall be liable to CCC
for the value of the commodities or sale proceeds or program income
lost, damaged, or misused: Provided, however, that the Cooperating
Sponsor may elect not to file a claim if the loss is less than $500.
The Cooperating Sponsor may retain $150 of any amount collected on an
individual claim. In addition, Cooperating Sponsors may, with the
written approval of the Agricultural Counselor or Attache, retain
amounts to cover special costs of collection such as legal fees, or pay
such collection costs with sale proceeds or program income. Any
proposed settlement for less than the full amount of the claim requires
prior approval by the Agricultural Counselor or Attache. When the
Cooperating Sponsor has exhausted all reasonable attempts to collect a
claim, it shall request the Agricultural Counselor or Attache to
provide further instructions.
(3) The Cooperating Sponsor shall pursue any claim by initial
billings and at least three subsequent demands at not more than 30 day
intervals. If these efforts fail to elicit a satisfactory response, the
Cooperating Sponsor shall pursue legal action in the judicial system of
country unless otherwise agreed by the Agricultural Counselor or
Attache. The Cooperating Sponsors
[[Page 60523]]
must inform the Agricultural Counselor or Attache in writing of the
reasons for not pursuing legal action; and the Agricultural Counselor
or Attache may require the Cooperating Sponsor to obtain the opinion of
competent legal counsel to support its decision prior to granting
approval. If the Agricultural Counselor or Attache approves a
Cooperating Sponsor's decision not to take further action on the claim,
the Cooperating Sponsor shall assign the claim to CCC and shall provide
to CCC all documentation relating to the claim.
(4) As an alternative to legal action in the judicial system of the
country with regard to claims against a public entity of the government
of the cooperating country, the Cooperating Sponsor and the cooperating
country may agree in writing to settle disputed claims by an
appropriate administrative procedure or arbitration.
(g) Determination of value. The Cooperating Sponsor shall determine
the value of commodities misused, lost or damaged on the basis of the
domestic market price at the time and place the misuse, loss or damage
occurred. When it is not feasible to determine such market price, the
value shall be the f.o.b. or f.a.s. commercial export price of the
commodity at the time and place of export, plus ocean freight charges
and other costs incurred by the U.S. Government in making delivery to
the Cooperating Sponsor. When the value is determined on a cost basis,
the Cooperating Sponsor may add to the value any provable costs it has
incurred prior to delivery by the ocean carrier. In preparing the claim
statement, these costs shall be clearly segregated from costs incurred
by the Government of the United States. With respect to claims other
than ocean carrier loss or damage claims, the Cooperating Sponsor may
request the Agricultural Counselor or Attache to approve a commercially
reasonable alternative basis to value the claim.
(h) Reporting losses to the Agricultural Counselor or Attache or
CCC designated representative. (1) The Cooperating Sponsor shall
promptly notify the Agricultural Counselor or Attache or CCC designated
representative, in writing, of the circumstances pertaining to any
loss, damage, or misuse of commodities valued at $500 or more occurring
within the country of distribution or intermediate country. The report
shall be made as soon as the Cooperating Sponsor has adequately
investigated the circumstances, but in no event more than ninety days
from the date the loss became known to the Cooperating Sponsor. The
report shall identify the party in possession of the commodities and
the party responsible for the loss, damage or misuse; the kind and
quantities of commodities; the size and type of containers; the time
and place of misuse, loss, or damage; the current location of the
commodity; the Program Agreement number, the CCC contract numbers, or
if unknown, other identifying numbers printed on the commodity
containers; the action taken by the Cooperating Sponsor with respect to
recovery or disposal; and the estimated value of the commodity. The
report shall explain why any of the information required by this
paragraph cannot be provided. The Cooperating Sponsor shall also report
the details regarding any loss or misuse of sale proceeds or program
income.
(2) The Cooperating Sponsor shall report quarterly to the
Agricultural Counselor or Attache any loss, damage to or misuse of
commodities resulting in loss of less than $500. The Cooperating
Sponsor shall inform the Agricultural Counselor or Attache or CCC
designated representative if it has reason to believe there is a
pattern or trend in the loss, damage, or misuse of such commodities and
submit a report as described in paragraph (h)(1) of this section,
together with any other relevant information the Cooperating Sponsor
has available to it. The Agricultural Counselor or Attache may require
additional information about any commodities lost, damaged or misused.
(i) Handling claims proceeds. Claims against ocean carriers shall
be collected in U.S. dollars (or in the currency in which freight is
paid) and shall be remitted (less amounts authorized to be retained) by
Cooperating Sponsors to CCC. Claims against Cooperating Sponsors shall
be paid to CCC in U.S. dollars. With respect to commodities lost,
damaged or misused, amounts paid by Cooperating Sponsors and third
parties in the country of distribution shall be deposited with the U.S.
Disbursing Officer, American Embassy, preferably in U.S. dollars with
instructions to credit the deposit to an appropriate CCC account as
determined by CCC, or in local currency at the highest rate of exchange
legally obtainable on the date of deposit with instructions to credit
the deposit to an appropriate CCC account as determined by CCC. With
respect to sale proceeds and program income, amounts recovered may be
deposited in the same account as the sale proceeds and may be used for
purposes of the program.
Sec. 1499.16 Records and reporting requirements.
(a) Records and reports--general requirements. The Cooperating
Sponsor shall maintain records for a period of three (3) years from the
date of export of the commodities that accurately reflect the receipt
and use of the commodities and any proceeds realized from the sale of
commodities. The Government of the Exporting Country may, at reasonable
times, inspect the Cooperating Sponsor's records pertaining to the
receipt and use of the commodities and proceeds realized from the sale
of the commodities, and have access to the Cooperating Sponsor's
commodity storage and distribution sites and to locations of activities
supported with proceeds realized from the sale of the commodities.
(b) Evidence of export. The Cooperating Sponsor's freight forwarder
shall, within thirty (30) days after export, submit evidence of export
of the agricultural commodities to the Chief, Export Operations
Division, KCCO. If export is by sea or air, the Cooperating Sponsor's
freight forwarder shall submit five copies of the carrier's on board
bill of lading or consignee's receipt authenticated by a representative
of the U.S. Customs Service. The evidence of export must show the kind
and quantity of agricultural commodities exported, the date of export,
and the destination country.
(c) Reports. (1) The Cooperating Sponsor shall submit a semiannual
logistics report to the Agricultural Counselor or Attache and to the
Director, CCC Program Support Division, FAS/USDA, Washington, DC 20250-
1031, covering the receipt of commodities. The first report shall be
submitted by the date specified in the Program Agreement, and cover the
time period specified in the Program Agreement. Reports thereafter will
cover each subsequent six (6) month period until all commodities have
been distributed or sold. The report must contain the following data:
(i) Receipts of agricultural commodities including the name of each
vessel, discharge port(s) or point(s) of entry, the date discharge was
completed, the condition of the commodities on arrival, any significant
loss or damage in transit; advice of any claim for, or recovery of, or
reduction of freight charges due to loss or damage in transit on U.S.
flag vessels;
(ii) Estimated commodity inventory at the end of the reporting
period;
(iii) Quantity of commodity on order during the reporting period;
[[Page 60524]]
(iv) Status of claims for commodity losses both resolved and
unresolved during the reporting period;
(v) Quantity of commodity damaged or declared unfit during the
reporting period; and
(vi) Quantity and type of the commodity that has been directly
distributed by the Cooperating Sponsor, distribution date, region of
distribution, and estimated number of individuals benefiting from the
distribution.
(2) If the Program Agreement authorizes the sale or barter of
commodities by the Cooperating Sponsor, the Cooperating Sponsor shall
also submit a semiannual monetization report to the Agricultural
Counselor or Attache and to the Director, CCC Program Support Division,
FAS/USDA, Washington, DC 20250-1031, a monetization report covering the
deposits into and disbursements from the special account for the
purposes specified in the Program Agreement. The first report shall be
submitted by the date specified in the Program Agreement, and cover the
time period specified in the Program Agreement. Reports thereafter will
cover each subsequent six (6) month period until all commodities have
been distributed, bartered, or sale proceeds disbursed. The report must
contain the following information and include both local currency
amounts and U.S. dollar equivalents:
(i) Quantity and type of commodities sold;
(ii) Proceeds generated from the sale;
(iii) Proceeds deposited to the special account including the date
of deposit;
(iv) Interest earned on the special account;
(v) Disbursements from the special account, including date, amount
and purpose of the disbursement;
(vi) Any balance carried forward in the special account from the
previous reporting period; and
(vii) In connection with a section 416(b) Program Agreement only, a
description of the effectiveness of sales and barter provisions in
facilitating the distribution of commodities and products to targeted
recipients, and a description of the extent, if any, that sales, barter
or use of commodities:
(A) Affected the usual marketings of the United States;
(B) Displaced or interfered with commercial sales of the United
States;
(C) Disrupted world commodity prices or normal patterns of trade
with friendly countries;
(D) Discouraged local production and marketing of commodities in
the recipient country;
(E) Achieved the objectives of the Program Agreement; and
(F) Could be improved in future agreements.
(3) The Cooperating Sponsor shall furnish the Government of the
Exporting Country such additional information and reports relating to
the agreement as the Government of the Exporting Country may reasonably
request.
Sec. 1499.17 Audits.
Nongovernmental Cooperating Sponsors shall assure that audits are
performed to assure compliance with Program Agreements and the
provisions of this part. An audit undertaken in accordance with OMB
Circular A-133, shall fulfill the audit requirements of this section.
Audits shall be performed at least annually until all commodities have
been distributed and sale proceeds expended. Both the auditor and the
auditing standards to be used by the Cooperating Sponsor must be
acceptable to CCC. The Cooperating Sponsor is also responsible for
auditing the activities of recipient agencies that receive more than
$25,000 of provided commodities or sale proceeds. This responsibility
may be satisfied by relying upon independent audits of the recipient
agency or upon a review conducted by the Cooperating Sponsor.
Sec. 1499.18 Suspension of the program.
All or any part of the assistance provided under a Program
Agreement, including commodities in transit, may be suspended by CCC
if:
(a) The Cooperating Sponsor fails to comply with the provisions of
the Program Agreement or this part;
(b) CCC determines that the continuation of such assistance is no
longer necessary or desirable; or
(c) CCC determines that storage facilities are inadequate to
prevent spoilage or waste, or that distribution of commodities will
result in substantial disincentive to, or interference with, domestic
production or marketing in the recipient country.
Sec. 1499.19 Sample documents and guidelines for developing proposals
and reports.
CCC has developed guidelines to assist the Cooperating Sponsors in
developing proposals and reporting on program logistics and commodity
sales. Cooperating Sponsors may obtain these guidelines from the
Director, PDD.
Sec. 1499.20 Paperwork reduction requirement.
The paperwork and record keeping requirements imposed by this part
have been previously submitted to the Office of Management and Budget
(OMB) for review under the Paperwork Reduction Act of 1995. OMB has
assigned control number 0551-0035 for this information collection.
Signed this November 18, 1996, in Washington, D.C.
Christopher E. Goldthwait,
General Sales Manager, FAS, and Vice President, Commodity Credit
Corporation.
[FR Doc. 96-30032 Filed 11-27-96; 8:45 am]
BILLING CODE 3410-10-P
