[Federal Register: March 26, 2003 (Volume 68, Number 58)]
[Proposed Rules]
[Page 14546-14558]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26mr03-11]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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[[Page 14546]]
DEPARTMENT OF AGRICULTURE
Foreign Agricultural Service
7 CFR Part 1599
RIN 0551-AA64
McGovern-Dole International Food for Education and Child
Nutrition Program
AGENCY: Foreign Agricultural Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Foreign Agricultural Service proposes to establish rules
governing the foreign donation of resources, including agricultural
commodities, to implement the McGovern-Dole International Food for
Education and Child Nutrition Program. This program would provide
agricultural commodities and financial and technical assistance to
carry out preschool and school food for education programs and
maternal, infant, and child nutrition programs, in foreign countries.
DATES: Submit comments on or before April 25, 2003.
ADDRESSES: Address all comments concerning this proposed rule to
William S. Hawkins, Director, Program Administration Division, Foreign
Agricultural Service, United States Department of Agriculture, 1400
Independence Ave., SW., Stop 1031, Washington, DC 20250-1031; telephone
(202) 720-3241.
You may submit comments and data by sending electronic mail (E-
mail) to: Lorie.Jacobs@usda.gov.
FOR FURTHER INFORMATION CONTACT: Lorie Jacobs, Branch Chief, Financial
Analysis Branch, Program Administration Division, Foreign Agricultural
Service, U.S. Department of Agriculture (USDA), Ag. Box 1034,
Washington, DC 20250-1031; telephone (202) 720-2074; FAX (202) 690-
1595. The USDA prohibits discrimination in its programs on the basis of
race, color, national origin, sex, religion, age, disability, political
beliefs and marital or familial status. Persons with disabilities who
require alternative means for communication of program information
(Braille, large print, audiotape, etc.) should contact the USDA Office
of Communications at (202) 820-5881 (voice) or (202) 720-7808 (TDD).
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This proposed rule is issued in conformance with Executive Order
12866. It has been determined to be significant under Executive Order
12866 and has been reviewed by the Office of Management and Budget. A
cost-benefit assessment has been completed and is available to the
public by contacting Lorie Jacobs at (202) 720-2074.
Executive Order 12988
This proposed rule has been reviewed in accordance with Executive
Order 12988, Civil Justice Reform. This proposed rule would have
preemptive effect with respect to any State or local laws, regulations
or policies which conflict with such provisions or which otherwise
impede their full implementation; does not have retroactive effect; and
does not require administrative proceedings before suit may be filed.
Executive Order 12372
This program 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 48 FR 29115).
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this proposed rule because FAS is not required by any
other provision of law to publish a notice of proposed rulemaking with
respect to the subject matter of this proposed rule.
Paperwork Reduction Act
This proposed rule would add new information collection
requirements applicable to the McGovern-Dole International Food for
Education and Child Nutrition Program. In accordance with the Paperwork
Reduction Act of 1995, the Foreign Agricultural Service (FAS) requests
approval of a new information collection in support of the McGovern-
Dole International Food for Education and Child Nutrition Program.
Title: McGovern-Dole International Food for Education and Child
Nutrition Program.
OMB Control Number: xxxx-xxxx.
Type of Request: Approval of an information collection.
Abstract: This information is needed to administer the McGovern-
Dole International Food for Education and Child Nutrition Program. The
information will be gathered from applicants desiring to receive grants
under the program to determine the viability of requests for resources
to implement school feeding and maternal and child nutrition programs
in foreign countries and other periodic reports during the course of
implementing the activities.
Estimate of Burden: Public reporting burden for this collection of
the additional information is estimated to average 74 hours per
applicant.
Respondents: Private voluntary organizations, shipping agents, ship
owners/brokers, and survey companies.
Estimated Number of Respondents: 156.
Estimated Number of Responses per Respondent: 7.
Estimated Total Annual Burden on Respondents: 11,607 hours.
Copies of the information collection may be obtained from Kimberly
Chisley, the Agency Information Collection Coordinator, at (202) 720-
2568.
Request for Comments: Send comments regarding (a) whether the
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
burden including the validity of the methodology and assumptions used;
(c) ways to enhance the quality, utility, and clarity of the
information to be collected; or (d) ways to minimize the burden of the
collection of information on those who are to respond, including the
use of appropriate automated, electronic, mechanical or other
technological collection techniques or other forms of information
technology.
Comments should be sent to the Desk Officer for Agriculture, Office
of Information and Regulatory Affairs, Office of Management and Budget,
Washington, DC 20503 and to: William
[[Page 14547]]
S. Hawkins, Director, Program Administration Division, Foreign
Agricultural Service, United States Department of Agriculture, 1400
Independence Ave., SW., Stop 1031, Washington, DC 20250-1031; telephone
(202) 720-3241.
All responses to this notice will be summarized. All comments will
also become a matter of public record.
Government Paperwork Elimination Act
FAS is committed to compliance with the Government Paperwork
Elimination Act, which requires Government agencies, in general, to
provide the public the option of submitting information or transacting
business electronically to the maximum extent possible.
Background
Section 3107 of the Farm Security and Rural Investment Act of 2002,
Pub. L. 107-171, authorized the President to establish a program to be
known as the McGovern-Dole International Food for Education and Child
Nutrition Program. This program would provide agricultural commodities
and financial and technical assistance to carry out preschool and
school food for education programs and maternal, infant, and child
nutrition programs, in foreign countries. By Presidential Memorandum,
March 11, 2003, the President delegated the responsibility for
implementing this program to the Secretary of Agriculture and it has
been further delegated, within the Department of Agriculture, to the
Administrator, Foreign Agricultural Service. Congress directed that
$100 million of Commodity Credit Corporation (CCC) funds be used for
this program in fiscal year 2003. Thereafter, the program is subject to
annual appropriations.
In comparison to the pilot Global Food for Education Initiative,
there will be an increased emphasis on education and nutrition under
the McGovern-Dole International Food for Education and Child Nutrition
Program. The Farm Security and Rural Investment Act of 2002 (Farm Act
of 2002) indicates that funds should be used in part to improve
literacy and primary education, particularly with respect to girls, and
to put emphasis on identifying beneficiaries who are malnourished or
undernourished. In addition, cooperating sponsors should attempt to
coordinate supplementary feeding and nutrition programs with existing
programs that provide health-needs interventions.
The McGovern-Dole International Food for Education and Child
Nutrition Program is implemented under the authorities of the Foreign
Agricultural Service and, therefore, this new program will be subject
to regulations that are separate from other foreign assistance
commodity grant programs operated under the authority of the Commodity
Credit Corporation (CCC), i.e., section 416(b) and Food for Progress.
However, because there are many similarities between these programs and
it would be advisable to retain the same procedures and rules to the
extent practical, this proposed rule would adopt, and repeat in 7 CFR
part 1599, most of the regulations currently in 7 CFR part 1499 that
are applicable to the section 416(b) and Food for Progress programs.
Sections 1599.7 and 1599.8, which cover procedures that apply to
procuring ocean transportation, and arranging for entry and handling of
commodities in the foreign country, are nearly identical to 7 CFR part
1499. Comments are encouraged regarding whether using this identical
language could cause any unforeseen problems under the new program.
The legislation authorizing the new program would require certain
additional information to support proposals for funding and authorizes
certain expenditures not generally permitted under section 416(b) or
Food for Progress. Also, certain department-wide grant regulations not
presently applicable to CCC authorized grants would be applicable to
the McGovern-Dole International Food for Education and Child Nutrition
Program. These department-wide regulations are referenced in the
proposed rule. The applicability of these department-wide rules has
necessitated certain deviations from the rules applicable to section
416(b) and Food for Progress grants. Of particular note are the
provisions on advances, interest earned on advances, changes to Program
Budgets, and audit requirements.
Under the McGovern-Dole International Food for Education and Child
Nutrition Program, FAS may pay certain costs not permitted under the
earlier pilot Global Food for Education Initiative operated under the
authority of section 416(b). This includes costs for transportation,
storage and handling within the recipient country in non-emergency
situations when certain specified findings are met. FAS may also pay
administrative expenses of nongovernmental Cooperating Sponsors and
other costs of nongovernmental Cooperating sponsors that enhance the
effectiveness of program activities. These costs, to the extent FAS
agrees to pay them, would be detailed in the Program Operations Budget,
which becomes part of the program agreement. The Farm Act of 2002
provides for participation by the Food and Nutrition Service (FNS)
under the McGovern-Dole International Food for Education and Child
Nutrition Program, wherein FNS may provide technical advice on the
establishment and implementation of programs, including providing field
expertise in recipient countries.
Costs that ``enhance the effectiveness'' of activities is a vague
concept. FAS is proposing to give priority coverage of these costs to
those that would increase the likelihood of meeting the activities
objectives. Examples of costs that may enhance the effectiveness of a
school feeding program may be the purchase of text books, utensils and
food trays, the provision of incentives to teachers, as well as the use
of consultancies to provide technical assistance in the educational
improvement area when conducting teacher training. While monetization
proceeds could also be requested and used to cover any program costs
that are necessary to have a successful activity to enhance the
effectiveness of a program, organizations need to demonstrate that
monetization offers more benefits than a direct cash outlay.
Another significant difference between the McGovern-Dole
International Food for Education and Child Nutrition Program and the
prior pilot program is that the new authority requires that Cooperating
Sponsors demonstrate that the activities undertaken with program
resources must be sustainable after FAS assistance ends. Consequently,
FAS will require that proposals include sufficient information to allow
the Associate Administrator to make a determination that this will be
the case.
The development and implementation of the McGovern-Dole
International Food for Education and Child Nutrition Program helps to
meet the objective of supporting international economic development and
trade capacity building set forth in the USDA Strategic Plan for FY
2002-2007. Under that objective USDA provides targeted foreign food
assistance to developing countries to foster economic growth and
development.
USDA uses an interagency process to review food aid policies and
programs to ensure the necessary coordination and management of these
programs, and will continue to use this process for the McGovern-Dole
International Food for Education and Child Nutrition Program. FAS will
cooperate with USAID, FNS and other Federal Agencies in the
[[Page 14548]]
development and implementation of the McGovern-Dole International Food
for Education and Child Nutrition Program.
The Farm Act of 2002 stipulates that funds may be used to pay for
the packaging, enrichment, preservation, and fortification of
agricultural commodities under the McGovern-Dole International Food for
Education and Child Nutrition Program. This proposed rule contains that
information in Section 1599.6 (a) Apportionment of Costs and Advances,
in order to emphasize the intent of the Farm Act of 2002 to allow for
coverage of these costs.
List of Subjects in 7 CFR Part 1599
Agricultural commodities, Exports, Foreign aid.
Accordingly, the Foreign Agricultural Service proposes that chapter
XV of title 7 of the Code of Federal Regulations be amended by adding a
new part 1599 to read as follows:
PART 1599--MCGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD
NUTRITION PROGRAM
1599.1 What special definitions apply?
1599.2 What is the general purpose and scope of the regulations?
1599.3 Are there eligibility requirements for Cooperating Sponsors?
1599.4 How do I apply?
1599.5 When is a usual marketing requirement included?
1599.6 How are costs and advances apportioned?
1599.7 What procedures apply to procuring ocean transportation?
1599.8 Who arranges for entry and handling in the foreign country?
1599.9 What are the restrictions on commodity use and distribution?
Sec. 1599.10 Are there special requirements for agreements between
Cooperating Sponsor and Recipient Agencies?
1599.11 What procedures apply to sales and barter of commodities
provided and the use of proceeds?
1599.12 What procedures apply to the processing, packaging and
labeling of commodities in the foreign country?
1599.13 How does the Cooperating Sponsor dispose of commodities
unfit for authorized use?
1599.14 How is liability established for loss, damage, or improper
distribution of commodities?
1599.15 Are there special record keeping and reporting requirements?
1599.16 What are the Cooperating Sponsor's audit requirements?
1599.17 When may FAS suspend a program?
1599.18 Are there sample documents and guidelines available for
developing proposals and reports?
Authority: 7 U.S.C. 1736-1; Presidential Memorandum, March 11,
2003 (68 FR 12569).
Sec. 1599.1 What special definitions apply?
Activity--a Cooperating Sponsor's use of agricultural commodities
and financial and technical assistance provided under Program
Agreements.
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.
Associate Administrator--Associate Administrator, Foreign
Agricultural Service.
CCC--the Commodity Credit Corporation.
Commodities-- U.S. agricultural commodities or products.
Deputy Administrator--Deputy Administrator for Export Credits,
Foreign Agricultural Service, USDA.
Director, CCC-OD--the Director, CCC Operations Division, Foreign
Agricultural Service, USDA.
Director, PAD--the Director, Program Administration Division,
Foreign Agricultural Service, USDA.
Director, PPDED--the Director, Program Planning, Development &
Evaluation Division, Foreign Agricultural Service, USDA.
FAS--Foreign Agricultural Service, USDA.
Force Majeure--damage caused by perils of the sea or other waters;
collisions; wrecks; stranding 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.
KCCO--Kansas City Commodity Office, Farm Services Agency, USDA,
P.O. Box 419205, Kansas City, Missouri, 64141-6205.
KCMO/DMD--Debt Management Division, Kansas City Management Office,
Farm Services Agency, USDA, P.O. Box 419205, Kansas City, Missouri,
64141-6205.
Ocean freight differential--the amount, as determined by FAS, 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 by FAS and Cooperating
Sponsors to implement the McGovern-Dole International Food for
Education and Child Nutrition Program.
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.
USDA--the United States Department of Agriculture.
Sec. 1599.2 What is the general purpose and scope of the regulations?
(a) This part establishes the general terms and conditions
governing the donation of commodities and financial and technical
assistance to Cooperating Sponsors under the McGovern-Dole
International Food for Education and Child Nutrition Program. This part
does not apply to donations to intergovernmental agencies or
organizations (such as the World Food Program) unless FAS and such
intergovernmental agency or organization enter into an agreement
incorporating this part. Cooperating Sponsors should also familiarize
themselves with regulations at 7 CFR part 3019-Uniform Administrative
Requirements for Grants and Agreements with Institutions of Higher
Education, Hospitals and Other Non-Profit Organizations.
(b) In addition to the regulations in this part 1599, grants
awarded to non-governmental Cooperating Sponsors by FAS are subject to
7 CFR 3015.205, 7 CFR part 3019 and 7 CFR part 3052.
Sec. 1599.3 Are there eligibility requirements for Cooperating
Sponsors?
A Cooperating Sponsor may be either:
(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 FAS'' satisfaction:
(1) Organizational experience and resources available to implement
and manage the type of program proposed, i.e., targeted food
assistance, activities that improve the food security, health and
nutrition of women and children, and 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. FAS may require
[[Page 14549]]
that an entity submit a financial statement demonstrating that it has
the financial means to implement an effective donation program.
Sec. 1599.4 How do I apply?
To apply for this program, a Cooperating Sponsor shall submit an
SF-424, a Program Introduction, a Plan of Operation, and a Budget
Proposal to the Director, PPDED and to the Agricultural Counselor or
Attache responsible for the country where activities are to be
implemented. Electronic submissions of these items are preferred,
particularly through the FAS on-line system. If on-line submission is
not available, e-mail or hard copy are acceptable.
(a) Submit an SF-424.
(b) Program Introduction shall include the following:
(1) Information about the organization's past food aid activities
with particular emphasis on school feeding, maternal child health or
other relevant development activities, its experience within the
country where the program is proposed, and any other relevant
information to demonstrate its capability to implement the program in
the country, with particular emphasis on the organizations ability to:
(i) Identify and assess the needs of beneficiaries, especially
malnourished or undernourished mothers and their children who are 5
years of age or younger, and school-age children who are malnourished,
undernourished, or do not regularly attend school;
(ii) In the case of preschool and school-age children, target low-
income areas where children's enrollment and attendance in school is
low or girls' enrollment and participation in preschool or school is
low;
(iii) Incorporate developmental objectives for improving literacy
and primary education (especially with girls); and,
(iv) In the case of maternal and child nutrition activities,
coordinate supplementary feeding and nutrition programs with existing
or newly established maternal, infant, and child programs that meet
maternal, prenatal, postnatal, and newborns health needs;
(2) Reasons for the need for the food aid and in particular a
school feeding program in the country. The organization shall include
statistics on poverty, food deficits, and related items such as
literacy rates for the target population; percentage of school age
children attending schools, especially females; malnutrition rates;
public expenditures on primary education; country's current school
feeding operations, if they exists, along with current funding
resources; any information regarding teacher training, community
infrastructure (PTAs), health, nutrition, and water and sanitation
information; and lastly, other potential donors;
(3) Verification that the national government is committed to or is
working toward, through a national action plan, the goals of the World
Declaration on Education for All convened in 1990 in Jomtien, Thailand,
and the follow-up Dakar Framework for Action of the World Education
Forum, convened in 2000;
(4) Steps to graduate the program from food aid and address
sustainability, or sustainable program components, which will continue
after the end of food aid donations. In addressing graduation or
sustainability, address how the program will sustain the benefits of
the education, enrollment, and attendance of children in schools in the
targeted communities when the provision of commodities and assistance
to a recipient country under FFE terminates; and estimate the time
required until the recipient country or eligible organizations will be
able to provide sufficient assistance without additional assistance
under FFE; or in the absence of sustainability explain how the program
will provide other long term benefits to targeted populations of the
recipient country;
(5) Information on methods used to involve indigenous institutions
as well as local communities and governments in the development and
implementation of the programs and activities to foster local capacity
building and leadership;
(6) An explanation of how each requested expenditure identified in
Sec. 1599.6(b)(4)(i) would enhance the effectiveness of the activities
implemented under this subpart. For purposes of this section,
``expenditures that would enhance the effectiveness of the activities
implemented under this subpart'' are those expenditures which would
increase the likelihood of meeting the objectives of the activities as
stated in the Plan of Operation. Examples of costs that may enhance the
effectiveness of a school feeding program may be the purchase of
utensils and food trays, text books, and incentives for teachers, as
well as the use of consultancies to provide technical assistance in the
educational improvement area when conducting teacher training. These
costs may include a limited amount to procure locally produced foods.
(7) If your proposal includes monetization or barter, demonstrate
that monetization or bartering of commodities offers more benefits than
a direct cash outlay.
(c) A Plan of Operation shall provide the following information:
(1) Country of donation.
(2) Kind, quantity and delivery schedule of commodities requested.
(3) Activity objectives. Briefly state what the goals to be
accomplished for the program are.
(4) Program description shall include the following:
(i) Fully describe the steps involved in program implementation;
(ii) Method for choosing beneficiaries of activities;
(iii) Program administration, including a description of the
Cooperating Sponsors plan to develop, implement, monitor, report on,
and provide accountability for activities. The Cooperating Sponsor
shall also include, 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;
(iv) Activity budgets, including costs that will be borne by the
Cooperating Sponsor, other organizations or local governments. If a
nongovernmental Cooperating Sponsor requests FAS to fund costs
identified in Sec. 1599.6 (b)(4)(i), the Cooperating Sponsor shall
include a detailed description of:
(A) The costs for which funding is requested; and,
(B) The amount of funding requested for each cost;
(v) 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;
(vi) 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. The Cooperating Sponsor shall also include a
description of the steps that the government of the host country is
taking to improve the preschool and school systems in the country;
(vii) Method of educating consumers as to the source of the
provided commodities and, where appropriate, preparation and use of the
commodity; and
(viii) Criteria for measuring progress towards achieving the
objectives of activities and evaluating program outcome, including
health, nutrition and education.
(5) Use of funds or goods and services generated. If the activity
involves the use of sale proceeds, the receipt of
[[Page 14550]]
goods or services from the barter of commodities, or the use of program
income, the cooperating sponsor shall provide the following
information:
(i) The quantity and type of commodities to be sold or bartered;
(ii) Extent to which any sale or barter of the agricultural
commodities provided would displace or interfere with any sales that
may otherwise be made;
(iii) 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;
(iv) The steps taken to use, to the extent possible, the private
sector in the process of selling commodities;
(v) The specific uses of sale proceeds or program income and a
timetable for their expenditure; and
(vi) 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.
(6) Distribution methods:
(i) 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;
(ii) A description of any reprocessing or repackaging of the
commodities that will take place; and
(iii) 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.
(7) 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.
(8) 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.
(d) Budget Proposals shall include funds requested, from either
cash or monetization resources, to fund administrative, ITSH, technical
and financial assistance costs. Budget proposals shall be submitted in
a spreadsheet format.
(e) After submission and approval by FAS, a Program Agreement will
be developed. The Program Agreement, which will incorporate the terms
and conditions set forth in this Part, the commodities provided by FAS,
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 FAS determines that such
special terms or conditions are necessary to effectively carry out the
particular Program Agreement. The Plan of Operation, Budget Proposal,
and Commodity specifications will be incorporated into the Program
Agreement as Attachments.
Sec. 1599.5 When is a usual marketing requirement included?
(a) A foreign government Cooperating Sponsor shall provide to the
Director, PPDED, 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) FAS 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. 1599.6 How are costs and advances apportioned?
(a) FAS will bear the costs of the packaging, enrichment,
preservation, and fortification of agricultural commodities, and the
processing, transportation, handling and other incidental charges
incurred in delivering commodities to Cooperating Sponsors. FAS will
deliver bulk grain shipments f.o.b. vessel, and shipments of all other
commodities f.a.s. vessel or intermodal points. FAS will choose the
point of delivery based on lowest cost to FAS.
(b) When the Associate Administrator approves in advance and in
writing, FAS 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;
(2) Maritime survey costs;
(3) Transportation from designated ports or points of entry abroad
to designated storage and distribution sites, and reasonable storage
and distribution costs if the recipient country is a low income, net
food-importing country that:
(i) Meets the poverty criteria established by the International
Bank for Reconstruction and Development for Civil Works Preference; and
(ii) Has a national government that is committed to or is working
toward, through a national action plan, the goals of the World
Declaration on Education for All and the Dakar Framework for Action of
the World Education Forum; and
(4) The costs of a nongovernmental Cooperating Sponsor:
(i) In the recipient country that enhance the effectiveness of the
activities including packaging, enrichment, preservation and
fortification of agricultural commodities; and
(ii) For administrative or monitoring expenses specified in the
program agreement.
(5) The administrative expenses of any Federal agency implementing
or assisting in the implementation of the McGovern-Dole International
Food for Education and Child Nutrition Program, including the
administrative costs of the Food and Nutrition Service to provide
technical advice on the establishment and implementation of programs,
including providing field expertise in recipient countries.
(c) FAS 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 FAS' delivery of commodities at U.S. ports or intermodal points.
(e) A Cooperating Sponsor seeking agreement by FAS to bear the
storage and distribution costs identified in paragraph (b)(3) or the
costs identified in paragraph (b)(4) of this section shall submit to
the Director, PPDED, a Program Operation Budget detailing such costs.
If approved, the Program Operation Budget shall become part of the
Program Agreement. The non-governmental Cooperating Sponsor may make
adjustments between line items of an approved Program Operation Budget
up to 10 percent of the total amount of the budget as last approved
without any further approval. Adjustments beyond these limits must be
specifically approved by the Director, PPDED.
(f) The Cooperating Sponsor may request advance of up to 100
percent of the amount of an approved Program Operating Budget if FAS
determines that the Cooperating Sponsor's financial management system
meets the
[[Page 14551]]
requirements of 7 CFR 3019.21. However, FAS 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 on advance of funds must be
returned to FAS.
(h) The Cooperating Sponsor shall return to FAS any funds not
obligated as of the 180th day after being advanced, together with
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, PPDED, accounting for all funds advanced and all interest
earned.
(j) FAS will pay all other costs for which it is obligated under
the Program Agreement by reimbursement. However, FAS will not pay any
cost incurred after the final date specified in the Program Agreement.
(k) Program income may be used to further eligible activity
objectives.
Sec. 1599.7 What procedures apply to procuring ocean transportation?
(a) Cargo preference. Shipments of commodities are subject to the
requirements of sections 901(b) and 901b of the Merchant Marine Act,
1936, regarding carriage on U.S.-flag vessels. A Cooperating Sponsor
shall comply with the instructions of FAS regarding the quantity of
commodities that must be carried on U.S. flag vessels.
(b) Freight procurement requirements. When FAS is financing any
portion of the ocean freight, whether on U.S. flag or non-U.S. flag
vessels, and the Cooperating Sponsor arranges ocean transportation:
(1) The Cooperating Sponsor shall arrange ocean transportation
through competitive bidding and shall obtain approval of all
invitations for bids from the Director, CCC-OD.
(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. 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,
CCC-OD, or other official specified in the Program Agreement, copies of
all offers received with the time of receipt indicated thereon. The
Director, CCC-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, CCC-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
CCC-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 certifications required by 7 CFR 17.4 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 FAS, 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 FAS 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. FAS is
not responsible for resolving disputes involving the
[[Page 14552]]
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 Associate
Administrator 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
FAS the difference between the contracted ocean freight rate and the
freight rate offered by such foreign-flag vessel.
(f) Coordination between FAS and the Cooperating Sponsor. When a
Program Agreement specifies that the Cooperating Sponsor will arrange
ocean transportation:
(1) FAS will provide that KCCO furnishes the Cooperating Sponsor,
or its agent, a Notice of Commodity Availability (Form FAS-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 FAS-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, CCC-OD. If FAS
agrees to pay any part of the ocean transportation for liner cargoes,
the Cooperating Sponsor shall also indicate on the Form FAS-512 the
applicable Federal Maritime Commission tariff rate, and tariff
identification.
(3) FAS will arrange for KCCO to 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 Cooperating Sponsor shall submit
the following documents to the Director, CCC-OD:
(i) One signed copy of completed Form FAS-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 signed copy of the Federal Grain Inspection Service (FGIS)
Official Stowage Examination Certificate (Vessel Hold Certificate);
(B) One signed copy of the National Cargo Bureau Certificate of
Readiness (Vessel Hold Inspection Certificate); and
(C) One signed 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 signed notice of arrival at first
discharge port submitted by the Cooperating Sponsor;
(vii) For all liner cargoes, a copy of the tariff page;
(viii) 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.
(ix) Each request to FAS for payment must provide a document, on
letterhead and signed by an official or agent of the requester, the
name of the entity to receive payment, the bank ABA number to which
payment is to be made; the account number for the deposit at the bank;
the requester's taxpayer identification number; and the type of the
account into which funds will be deposited.
(2) In cases of force majeure. To receive payment in cases where
the Associate Administrator determines that circumstances of force
majeure have prevented the vessel's arrival at the first port of
discharge, the Cooperating 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) FAS payment of ocean freight or ocean freight differential. (1)
General rule. FAS 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, FAS 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.
FAS 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;
[[Page 14553]]
except that FAS will not pay any remaining balance where the Associate
Administrator determines that the vessel's arrival at first port of
discharge was prevented by force majeure.
(3) No demurrage. FAS will not pay demurrage.
Sec. 1599.8 Who arranges 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 FAS 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 FAS may approve. If the Cooperating Sponsor contracts
directly with the suppliers of such services, the Cooperating Sponsor
may seek reimbursement by submitting documentation to FAS indicating
actual costs incurred. All supporting documentation must be sent to the
Director, CCC-OD. FAS, 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 FAS, or in foreign currency.
Sec. 1599.9 What are the 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) In the event that its participation in the program terminates,
the nongovernmental Cooperating Sponsor will safeguard any
undistributed commodities and sales proceeds and dispose of such
commodities and proceeds as directed by FAS.
Sec. 1599.10 Are there special requirements for agreements 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, PPDED. 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 a result of the recipient agency's failure to
exercise reasonable care;
(b) FAS may waive the requirements of paragraph (a) of this section
where it determines that such an agreement is not feasible or
appropriate.
Sec. 1599.11 What procedures apply to sales and barter of commodities
provided and the use of proceeds?
(a) Commodities may be sold or bartered without the prior approval
of FAS 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 FAS 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) FAS 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 Counselor 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 Director, PPDED, 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, PPDED, of any property, real or personal, so acquired.
Sec. 1599.12 What procedures apply to the processing, packaging and
labeling of commodities in the foreign country?
(a) Cooperating Sponsors may arrange for the processing of
commodities provided under the Program Agreement, or for packaging or
repackaging prior to distribution. When a third party provides such
processing, packaging or repackaging, the 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, 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) FAS will reimburse Cooperating Sponsors that are nonprofit
private voluntary organizations or cooperatives for expenses incurred
for repackaging if the packages of commodities are
[[Page 14554]]
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. 1599.13 How does the Cooperating Sponsor dispose 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 FAS from the sale proceeds or
from an appropriate FAS account designated by FAS. The net proceeds of
sales shall be deposited with the U.S. Disbursing Officer, American
Embassy, in an account designated by FAS; 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 FAS 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. 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 USDA sponsored program for use as
livestock feed. FAS 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 account as designated by FAS. 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, KCMO/DMD, of action
taken to dispose of commodities unfit for authorized use.
Sec. 1599.14 How is liability established for loss, damage, or
improper distribution of commodities?
(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 agreed
shipping schedule. FAS 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 FAS may deem proper. The Cooperating Sponsor shall take
such action as directed by FAS and shall reimburse FAS for expenses
incurred if FAS 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, KCMO/DMD, 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
[[Page 14555]]
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, KCMO/DMD, 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, KCMO/DMD, 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 KCMO/DMD, Chief,
Debt Management Office of all reports and documents pertaining to the
discharge of commodities.
(iv) FAS 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. FAS 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 FAS
determines that such action was justified in the circumstances.
(3) Survey contracts shall be let on a competitive bid basis unless
FAS determines that the use of competitive bids would not be
practicable. FAS 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. FAS 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 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 KCMO/DMD, Chief, Debt Management Office
information and documentation on such lost or damaged shipments when no
claim is to be filed. In the event of a declaration of General Average:
(i) The Cooperating sponsor shall assign all claim rights to CCC
and shall provide CCC all documentation relating to the claim, if
applicable;
(ii) CCC shall be responsible for settling general average and
marine salvage claims;
(iii) FAS has sole authority to authorize any dispositions of
commodities which have not commenced ocean transit or of which the
ocean transit is interrupted;
(iv) FAS will receive and retain any monetary proceeds resulting
from such disposition;
(v) CCC will initiate, prosecute, and retain all proceeds of cargo
loss and damage against ocean carriers and any allowance in general
average; and
(vi) FAS will pay any general average or marine salvage claims
determined to be due.
(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 will FAS 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
[[Page 14556]]
claims were originally filed when such documentation or information
clearly changes the ocean carrier's liability. Approval of such changes
by FAS is not required regardless of amount. However, copies of
redetermined claims and supporting documentation or information shall
be furnished to FAS.
(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 FAS. 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 FAS is not
required; however, the nongovernmental Cooperating Sponsor shall notify
KCMO/DMD, 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, FAS may require the Cooperating Sponsor to pay to the United
States the value of the commodities, sale proceeds or program income
lost, damaged or misused, or undertake other remedies FAS deems
appropriate. FAS 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)(l) of this section. FAS 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 FAS
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 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 forward all documentation relating to the
claim to CCC.
[[Page 14557]]
(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
FAS designated representative. (1) The Cooperating Sponsor shall
promptly notify the Agricultural Counselor or Attache or FAS 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 procurement 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 above-required
information can not 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 FAS
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 account as determined by FAS,
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
FAS account as determined by FAS. 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. 1599.15 Are there special recordkeeping and reporting
requirements?
(a) Records and reports--general requirements. The Cooperating
Sponsor shall maintain records for a period of three (3) years from the
final date specified in the program agreement. FAS 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, PPDED, FAS/USDA, Washington, DC 20250-1034, covering the
receipt of commodities. Cooperating sponsors must submit reports on
Form CCC-620 and submit the first report by May 16 for agreements
signed during the period, October 1 through March 31, or by November 16
for agreements signed during the period, April 1 through September 30.
The first report must cover the time period from the date of signing
and subsequent reports must be provided at six months intervals
covering the period from the due date of the last report until all
commodities have been distributed or sold and such distribution or sale
reported to FAS. 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;
(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 benefitting from the
distribution.
(2) Program Agreements will require Cooperating Sponsors to report
periodically, against collected, established baseline indicators, on
the
[[Page 14558]]
number of meals served, enrollment levels, total attendance numbers,
including female attendance levels, learning developments, nutrition
and health progress of mothers and children, and progress towards
sustaining the feeding program.
(3) 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, PPDED, FAS/USDA, Washington,
DC 20250-1034, covering the deposits into and disbursements from the
special account for the purposes specified in the Program Agreement.
Cooperating Sponsors must submit reports on Form CCC-621 and submit the
first report by May 16 for agreements signed during the period, October
1 through March 31, or by November 16 for agreements signed during the
period, April 1 through September 30. The first report must cover the
time period from the date of signing and subsequent reports must be
provided at six months intervals covering the period from the due date
of the last report until all funds generated from commodity sales have
been distributed and such distribution reported to FAS. 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; and
(vi) Any balance carried forward in the special account from the
previous reporting period.
(4) The Cooperating Sponsor shall furnish FAS such additional
information and reports relating to this agreement as FAS may
reasonably request.
Sec. 1599.16 What are the Cooperating Sponsor's audit requirements?
Non-governmental Cooperating Sponsors are subject to the audit
requirements of OMB Circular A-133 as implemented in USDA by 7 CFR part
3052, ``Audits of States, Local Governments, and Non-Profit
Organizations.'' 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. 1599.17 When may FAS suspend a program?
All or any part of the assistance provided under a Program
Agreement, including commodities in transit, may be suspended by FAS
if:
(a) The Cooperating Sponsor fails to comply with the provisions of
the Program Agreement or this part;
(b) FAS determines that the continuation of such assistance is no
longer necessary or desirable; or
(c) FAS 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. 1599.18 Are there sample documents and guidelines available for
developing proposals and reports?
FAS has developed guidelines to assist the Cooperating Sponsors
with effective reporting on program logistics and commodity sales.
Cooperating Sponsors may obtain these guidelines from the Director,
PPDED.
Signed March 19th, 2003, in Washington, DC.
Kenneth J. Roberts,
Acting Administrator, Foreign Agricultural Service.
[FR Doc. 03-7028 Filed 3-25-03; 8:45 am]
BILLING CODE 3410-10-P