[Federal Register: November 29, 1996 (Volume 61, Number 231)]
[Rules and Regulations]
[Page 60513-60524]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
                                                                                                                                            

SUMMARY

DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation

7 CFR Part 1499

Foreign Donation of Agricultural Commodities

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Final rule.

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 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

Comments: 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

Comments: 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

Comments: 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

Comments: 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

Comments: 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

Comments: 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.

Comments: 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 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

Comments: 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.  [Text] [.pdf]
1499.2 General purpose and scope.  [Text] [.pdf]
1499.3 Eligibility requirements for Cooperating Sponsors.  [Text] [.pdf]
1499.4 Availability of commodities from CCC inventory.  [Text] [.pdf]
1499.5 Program Agreements and Plans of Operation.  [Text] [.pdf]
1499.6 Usual marketing requirements.  [Text] [.pdf]
1499.7 Apportionment of costs and advances.  [Text] [.pdf]
1499.8 Ocean transportation.  [Text] [.pdf]
1499.9 Arrangements for entry and handling in the foreign country.  [Text] [.pdf]
1499.10 Restrictions on commodity use and distribution.  [Text] [.pdf]
1499.11 Agreement between Cooperating Sponsor and Recipient Agencies.  [Text] [.pdf]
1499.12 Sales and barter of commodities provided and use of proceeds.  [Text] [.pdf]
1499.13 Processing, packaging and labeling of section 416(b) commodities in the foreign country.  [Text] [.pdf]
1499.14 Disposition of commodities unfit for authorized use.  [Text] [.pdf]
1499.15 Liability for loss, damage, or improper distribution of commodities--claims and procedures.  [Text] [.pdf]
1499.16 Records and reporting requirements.  [Text] [.pdf]
1499.17 Audits.  [Text] [.pdf]
1499.18 Suspension of the program.  [Text] [.pdf]
1499.19 Sample documents and guidelines for developing proposals and reports.  [Text] [.pdf]
1499.20 Paperwork reduction requirement.  [Text] [.pdf]

Authority: 7 U.S.C. 1431(b); 7 U.S.C. 1736o; E.O. 12752 [Revised as of January 1, 2001].

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

Last modified: Monday, April 14, 2008 06:13:23 PM