End-Use Certificate Program

DEPARTMENT OF AGRICULTURE

Agricultural Stabilization and Conservation Service

7 CFR Part 782

RIN 0560-AD77

End-Use Certificate Program

AGENCY: Agricultural Stabilization and Conservation Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to implement a U.S. end-use certificate

program for wheat and barley imported from any foreign country or

instrumentality that as of April 8, 1994, requires end-use certificates

for imports of U.S.-produced wheat and barley, respectively, as

required by section 321(f) of the North American Free Trade Agreement

Implementation Act (the Act).

A notice requesting comments regarding a U.S. end-use certificate

system was published in the Federal Register on April 13, 1994, at 59

FR 17495. Comments were solicited with respect to the alternatives and

issues that need to be addressed in implementing such a program. These

comments were taken into consideration by the Agricultural

Stabilization and Conservation Service (ASCS) with respect to the

development of this proposed rule.

DATES: Comments must be received by November 21, 1994 to be assured of

consideration.

ADDRESSES: Comments must be mailed to Deputy Administrator, Commodity

Operations, ASCS, P.O. Box 2415, Washington, DC 20013-2415. All written

comments will be available for public inspection in room 5755, South

Building, U.S. Department of Agriculture, 14th Street and Independence

Avenue, SW., Washington, DC, between 8 a.m. and 5 p.m., Monday through

Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Steve Gill, Chief, Inventory

Management Branch, Commodity Operations Division, ASCS, P.O. Box 2415,

Washington, DC 20013-2415; phone 202-720-6500 or FAX 202-690-2221.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be significant and was reviewed by

the Office of Management and Budget (OMB) under Executive Order 12866.

Executive Order 12778

This proposed rule has been reviewed in accordance with Executive

Order 12778. The provisions of this proposed rule do not preempt State

laws, are not retroactive, and do not involve administrative appeals.

Environmental Evaluation

It has been determined by an environmental evaluation that this

action will not have a significant impact on the quality of the human

environment. Therefore, neither an Environmental Assessment nor an

Environmental Impact Statement is needed.

Executive Order 12372

This program/activity is not subject to the provisions of Executive

Order 12372, which requires intergovernmental consultation with State

and local officials. See notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115 (June 24, 1983).

Paperwork Reduction Act

This proposed rule contains new reporting and recordkeeping

requirements. The public reporting burden for the information

collection contained in this proposed rule with respect to a U.S. end-

use certificate program is estimated to average 10 minutes for each

end-use certificate and six and one-half hours for each quarterly

report, including the time for reviewing instructions, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collection of information. These new

reporting and recordkeeping requirements will be submitted to OMB for

expedited approval under the provisions of 44 U.S.C. 35 (see appendix

A). Send comments regarding this collection of information to:

Department of Agriculture, Clearance Office, Office of Information

Resources Management, Room 404-W, Washington, DC 20250, and Regulatory

Affairs of OMB, Attention: Desk Officer for USDA, Room 3201, New

Executive Office Building, Washington, DC 20503.

Preliminary Regulatory Impact Analysis

The Preliminary Regulatory Impact Analysis describing the options

considered in developing this proposed rule and the impact of the

implementation of each option is available on request from Craig

Jagger, Grains Analysis Division, ASCS, P.O. Box 2415, Washington, DC

20013-2415; phone 202-720-4418. The analysis can be summarized as

follows:

The North American Free Trade Agreement Implementation Act requires

that end-use certificates be established for wheat and barley imported

into the U.S. from any foreign country that requires end-use

certificates for imports from the U.S. Currently, Canada is the only

such country. Three options are considered for the implementation of

end-use certificates:

Option 1: Border Certificate. Importers would file these

certificates to show the intended use of the grain. No additional

reporting or storage and handling requirements would apply.

Option 2: Identity Preserve and Track Commingled Grain.

Certificates showing the intended use would accompany the grain to the

end user. Imported grain could be commingled with U.S.-origin grain and

the commingled grain would be treated as imported grain that would have

to be stored separately from 100-percent U.S.-origin grain. Holders of

grain would file quarterly reports with USDA.

Option 3: Identity Preserve and Track Imported Grain. Certificates

showing the in ended use would accompany the grain to the end user.

Imported grain would not be allowed to be commingled with U.S.-origin

grain. Imported grain would be identity preserved and holders of the

grain would file quarterly reports with USDA. This option most closely

matches the Canadian system.

The impacts of the options considered depend on import levels, the

number of certificates issued, possible changes in import practices and

the proportion of imported grain that is already identity preserved.

Impacts would result from compliance costs for certificate filing,

quarterly reporting, and storage and handling costs needed for identity

preservation. Market impacts would result from reduced imports and

higher domestic market prices. Because of differences among warehouses

in storage capacity and involvement in government export assistance

programs, it is not clear whether, in practice, costs would be higher

or lower under Option 2 rather than Option 3 so costs are assumed to be

similar under the two options. The potential impacts of the end-use

certificate options considered are summarized below:

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Option 1 Option 2 or 3

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Compliance Costs:

Certificate Filing.................... $35,775 to $143,000.............. $4,450 to $143,000.

Quarterly Reporting................... ................................. $39,000 to $117,000.

Maximum Storage and Handling.......... ................................. $800,000 to $3,900,000.

Market Impacts: ($ Million)

Producer Income....................... ................................. 12.5.

Program Costs......................... ................................. -46.5.

Buyers' Loss \1\...................... ................................. -62.5.

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\1\Buyers' Loss results from buyers purchasing less grain at higher prices.

Reduced program costs and higher producer income would almost

offset the increased costs to buyers, for a net impact for Options 2

and 3 of about $3.5 million.

An Initial Regulatory Flexibility Analysis indicates that the

compliance requirements of the program will disproportionately affect

small entities. Option 1 would have the least impact because it does

not require identity preservation.

Regulatory Flexibility Act

It has been determined under the Regulatory Flexibility Act that

this proposed rule will have an adverse effect on a substantial number

of small businesses. The analysis discussing these impacts is available

on request from Craig Jagger, at the address and telephone number noted

above. The analysis can be summarized as follows:

Warehousemen with average annual receipts of $12.5 million or less

are considered small entities. Warehousemen in the states of Montana,

North Dakota, South Dakota, Washington, Idaho, and Minnesota are most

apt to be affected by an end-use certificate program. About 85 percent

of the warehousemen located in these states are estimated to be small

warehousemen. Of all small warehousemen, only those who import Canadian

grain would be directly affected by an end-use certificate program.

Because small warehousemen are likely to have a disproportionate

share of truck-delivered imports and each entry would require an end-

use certificate, small warehousemen will likely need to file more end-

use certificates than large importers under all options considered.

Because small warehousemen can be expected to have fewer separate

storage and handling facilities and because they are less likely to be

already identity preserving imported grain, costs of identity

preservation under Options 2 and 3 will likely also affect a

disproportionately large share of small warehousemen. And if identity-

preservation requirements under Options 2 and 3 reduce the quantity of

grain imported, the resulting reduction in storage, handling, and

merchandising income will likely be felt most heavily by small

warehousemen.

Background

This proposed rule establishes a new 7 CFR part 782 to set forth

regulations with respect to a U.S. end-use certificate program. Section

321(f) of the Act established an end-use certificate requirement for

imports into the U.S. of wheat and barley from any foreign country or

instrumentality that as of April 8, 1994, requires end-use certificates

for imports of U.S.-produced wheat or barley, respectively. Canada

currently is the only foreign country or instrumentality that requires

such certificates. The Act is not otherwise specific regarding the type

of end-use certificate program to be implemented or the particular

information to be collected.

A notice requesting comments on the implementation of an end-use

certificate program was published on April 13, 1994, at 59 FR 17495.

The notice:

(1) Compared the U.S. and Canadian marketing systems,

(2) Described the Canadian end-use system,

(3) Identified three basic alternatives that ASCS could consider in

implementing an end-use certificate program, and

(4) Described current rules and policies used by ASCS to procure

U.S.-produced commodities for donation or sale under domestic and

export food assistance programs.

Forty-one comments were received in response to the notice

requesting comments.

All 41 respondents commented on one or more of the three basic

alternatives that ASCS could consider in implementing an end-use

certificate program. The key issue separating the alternatives involves

the issue of commingling vs. separate storage (i.e., identity

preservation) of Canadian and U.S.-produced grain. In brief, the

alternatives described in the notice are as follows:

(1) Allow commingling of Canadian and U.S. grain. Require that a

certificate which sets forth all relevant information be collected at

the U.S. border on imported grain. Continue (or modify) current rules

and policies used by ASCS to procure U.S.-produced commodities for U.S.

Government-assisted programs;

(2) Allow commingling of Canadian and U.S. grain. Require that such

commingled grain be stored separately from U.S.-origin grain until

delivered to the end-user; or

(3) Prohibit commingling of Canadian and U.S. grain. Require that

Canadian grain be stored separately from U.S.- origin grain until

delivered to the end-user.

Of 41 respondents, 34 respondents recommended that ASCS adopt

alternative 3, which would prohibit the commingling of Canadian and

U.S. grain. Three respondents recommended adoption of either

alternative 2 or 3, but not alternative 1; two respondents recommended

adoption of alternative 1; and two respondents did not recommend

adoption of one alternative over another.

After full consideration of all comments, this rule proposes to

adopt a program similar to the actions now taken by Canada with respect

to imports of U.S. wheat and barley. Therefore, this proposed rule

would adopt alternative 3, requiring importers of Canadian wheat and

barley to store such imported grain separately from U.S.-produced grain

until delivered to the end-user. Presently only Canada requires end-use

certificates on U.S. grain entering that country. Therefore, this

requirement by the U.S. would be imposed only on imports of wheat and

barley originating in Canada. Although ASCS would prefer to adopt its

current rules and policies used to procure commodities for donation or

sale under the Food for Progress Program; programs authorized by Titles

II and III of Pub. L. 83-480; and foreign food assistance programs

authorized by section 416(b) of the Agricultural Act of 1949, and

amended, as well as for domestic food assistance programs (i.e., the

physical commingling of U.S.-produced grain with non-U.S.-produced

grain is allowed, provided that at the time of delivery to the

Commodity Credit Corporation (CCC) the grain merchant has a sufficient

quantity and quality of U.S.-produced grain available at the location

where loading occurs to account for the grain sold to CCC and upon

delivery to CCC such U.S. origin stocks are reduced by the quantity

delivered to CCC), the Statement of Administrative Action approved by

Congress with the Act states that the purpose of the U.S. end-use

requirement is to ensure that foreign agricultural commodities do not

benefit from U.S. export programs.

Accordingly, in addition to the identity preservation requirement,

this proposed rule would require importers to complete form ASCS-750,

End-Use Certificate for Grain, for each entry of Canadian wheat and

barley, and to submit the certificate to the Kansas City Commodity

Office (KCCO), ASCS, within 10 days from the date of entry.

These regulations allow the importation of Canadian wheat and

barley for purposes of resale by the importer.

Information collected on the certificate would include:

(1) Name, address, and telephone number of the importer,

(2) Commodity and the class of such commodity being imported,

(3) Intended use of the commodity, including resale,

(4) Quantity imported, in net metric tons, rounded to the nearest

hundredth of a metric ton,

(5) Storage location of the commodity,

(6) Name, address, and telephone number of the end-user, if known,

(7) Mode of transportation and name of the transportation company

used to import the commodity, and

(8) A certification.

In addition to the information provided by the importer, the

Commissioner of Customs would assist ASCS in administering an end-use

certificate program by informing KCCO when Canadian wheat and barley is

imported into the U.S.

This proposed rule would make the importer responsible for ensuring

that all applicable end-users and subsequent buyers are informed that

the commodity being purchased originated in Canada. The importer must

inform end-users, in writing, that the imported commodity must not be

used for any purpose other than the use specified on the end-use

certificate. The importer must provide the end-user with a photocopy of

the end-use certificate. If the commodity is intended for resale, any

sales contracts entered into between the importer and a subsequent

buyer must contain terms that notify the subsequent buyer that:

(1) The commodity being purchased originated in Canada;

(2) The commodity being purchased is deemed ineligible for use

under CCC and U.S. Department of Agriculture-assisted export programs;

(3) The subsequent buyer shall preserve, on an origin-basis, the

identity of the commodity being purchased;

(4) The commodity may not be commingled or blended with U.S.-

produced commodities until such time as the commodity is delivered to

an end-user;

(5) The end-user or subsequent buyer must file quarterly reports as

described below; and

(6) Any sales contracts entered into between any subsequent buyers

must contain the same terms specified herewith.

The importer must provide the subsequent buyer with a copy of the end-

use certificate.

This proposed rule would also require the importer to submit to

KCCO, within 10 workdays after delivery of the commodity to the end-

user, a copy of the bill of lading acknowledging receipt of the

commodity by the end-user and the date the commodity was received at

the end-user's facility. If the commodity is imported for purposes of

resale, the importer must submit to KCCO, within 10 workdays from date

of sale, its subsequent buyer's name, address, and telephone number,

and the quantity sold.

This proposed rule would require end-users to report to KCCO the

status of the imported grain on form ASCS-751, End-Use Certificate for

Grain Quarterly Report, until the commodity is fully used. Subsequent

buyers would be required to report to KCCO the status of the imported

grain on form ASCS-751, End-Use Certificate for Grain Quarterly Report,

until the commodity is resold.

Information called for on the quarterly report would include:

(1) The name, address, and telephone number of the end-user or

subsequent buyer,

(2) The name and address of the importer,

(3) The End-Use Certificate for Grain serial number,

(4) The commodity and class of such commodity,

(5) The storage location of the commodity,

(6) The date the commodity was received at the end-user's or

subsequent buyer's facility,

(7) The quantity of the commodity received, in net metric tons,

rounded to the nearest hundredth of a metric ton,

(8) The quantity of the commodity used by the end-user or sold to a

subsequent buyer,

(9) The quantity remaining, and

(10) A certification.

Quarterly reports must be received in KCCO within 15 workdays

following full consumption or resale of the commodity. For partial

resales or partial consumption, submit form ASCS-751 to KCCO within 15

workdays following:

(1) March 31,

(2) June 30,

(3) September 30, and

(4) December 31.

Forms ASCS-750, End-Use Certificate for Grain, and ASCS-751, End-

Use Certificate for Grain Quarterly Report, may be obtained from KCCO.

This proposed rule also incorporates the statutory requirement that it

is a violation of 18 U.S.C. 1001 for an entity to engage in fraud with

respect to or knowingly violate the provisions set forth in the

regulations.

List of Subjects in 7 CFR Part 782

Administrative practice and procedure, Barley, Reporting and

recordkeeping requirements, Wheat.

It is proposed that subchapter D, chapter VII of title 7 of the

Code of Federal Regulations be amended by adding part 782 to read as

follows:

PART 782--END-USE CERTIFICATE PROGRAM

Subpart A--General

Sec.

782.1 Basis and purpose.

782.2 Definitions.

782.3 Administration.

782.4 OMB control numbers assigned pursuant to the Paperwork

Reduction Act.

Subpart B--Implementation of End-Use Certificate Program

782.10 Identification of commodities subject to end-use certificate

regulations.

782.11 Extent to which commodities are subject to end-use

certificate regulations.

782.12 Filing ASCS-750, End-Use Certificate for Grain.

782.13 Importer responsibilities.

782.14 Identity preservation.

782.15 Filing ASCS-751, End-Use Certificate for Grain Quarterly

Report.

782.16 Intended use.

782.17 Commodities purchased for resale.

782.18 Penalty for noncompliance.

Subpart C--Records and Reports

782.20 Importer records and reports.

782.21 End-user records and reports.

782.22 Subsequent buyer records and reports.

782.23 Failure to file end-use certificates or quarterly reports.

782.24 Recordkeeping and examination of records.

782.25 Length of time records are to be kept.

Authority: Section 321(f) of Pub. L. 103-182; 107 Stat. 2057 (19

U.S.C. 3391(f)).

Subpart A--General

Sec. 782.1 Basis and purpose.

The regulations contained in this part are issued pursuant to and

in accordance with Section 321(f) of the North American Free Trade

Agreement Implementation Act. These regulations govern the

establishment of the end-use certificate program, the completion of

end-use certificates, the identification of commodities requiring end-

use certificates, the submission of reports, and the keeping of records

and making of reports incident thereto.

Sec. 782.2 Definitions.

As used in this part and in all instructions, forms, and documents

in connection therewith, the words and phrases defined in this section

shall have the meanings herein assigned to them unless the context or

subject matter requires otherwise. References contained herein to other

parts of this chapter or title shall be construed as references to such

parts and amendments now in effect or later issued.

Date of entry means the effective time of entry of the merchandise,

as defined in 19 CFR part 101.

End-user means the entity that uses the commodities specified in

Sec. 782.10(b) for milling, brewing, malting, distilling,

manufacturing, or other use, except resale, as determined by ASCS.

Entity means a legal entity including, but not limited to, an

individual, joint stock company, corporation, association, partnership,

cooperative, trust, and estate.

Entry means that documentation required by 19 CFR part 142 to be

filed with the appropriate U.S. Customs officer to secure the release

of imported merchandise from U.S. Customs custody, or the act of filing

that documentation.

Importer means the person primarily liable for the payment of any

duties on the merchandise, or an authorized agent acting on his behalf.

The importer may be:

(1) The consignee, or

(2) The importer of record, or

(3) The actual owner of the merchandise, if an actual owner's

declaration and superseding bond has been filed in accordance with 19

C.F.R. part 141, or

(4) The transferee of the merchandise, if the right to withdraw

merchandise in a bonded warehouse has been transferred in accordance

with 19 CFR part 144.

Intended use means the purpose for which the commodity is being

imported, including milling, brewing, malting, distilling,

manufacturing, or other use, including resale.

Metric ton means a unit of measure that equals 2204.6 pounds.

Origin basis is defined in Title 19, U.S.C.

Subsequent buyer means an entity other than the end-user that

purchases a commodity from an importer or subsequent buyer with the

intent to resell the commodity.

Sec. 782.3 Administration.

(a) The end-use certificate program will be administered under the

general supervision and direction of the Administrator, Agricultural

Stabilization and Conservation Service (ASCS), U.S. Department of

Agriculture (USDA), through the Office of the Deputy Administrator,

Commodity Operations (DACO), ASCS, Washington, D.C., and the Kansas

City Commodity Office (KCCO), ASCS, Kansas City, MO, in coordination

with the Commissioner of Customs.

(b) DACO, or a designee, may waive or modify deadlines and other

program requirements in cases where failure to meet requirements does

not adversely affect the enforcement of the end-use certificate

program.

Sec. 782.4 OMB control numbers assigned pursuant to the Paperwork

Reduction Act.

The information collection requirements contained in these

regulations (7 CFR part 782) have been submitted to the Office of

Management and Budget (OMB) in accordance with the provisions of 44

U.S.C. 35 and will be assigned an OMB control number.

Subpart B--Implementation of the End-Use Certificate Program

Sec. 782.10 Identification of commodities subject to end-use

certificate regulations.

(a) These regulations are applicable to wheat and barley,

respectively, imported into the U.S. from any foreign country or

instrumentality that as of April 8, 1994, requires end-use certificates

for imports of U.S.-produced wheat or barley.

(b) The following foreign countries, instrumentalities, and

commodities are affected by these regulations:

(1) Wheat originating in Canada.

(2) Barley originating in Canada.

(c) The commodities specified in paragraph (b) of this section are

ineligible for use under Commodity Credit Corporation (CCC) and USDA-

assisted export programs.

Sec. 782.11 Extent to which commodities are subject to end-use

certificate regulations.

(a) The provisions of these regulations apply to all commodities

specified in Sec. 782.10(b).

(b) To the extent that the foreign countries or instrumentalities

specified in Sec. 782.10(b) eliminate the requirement for end-use

certificates on imports from the U.S., the provisions of these

regulations shall be suspended 30 calendar days following the date the

foreign country or instrumentality eliminates its end-use certificate

requirement.

Sec. 782.12 Filing ASCS-750, End-Use Certificate for Grain.

(a) Each entity which imports any of the commodities specified in

Sec. 782.10(b) shall, for each entry, obtain form ASCS-750, End-Use

Certificate for Grain, from KCCO, P.O. Box 419205, Kansas City, MO

64141-6205, and submit the original form ASCS-750 to KCCO within 10

days from the date of entry. Each form ASCS-750 shall set forth, among

other things, the:

(1) Name, address, and telephone number of the importer,

(2) Commodity and class of such commodity that is being imported,

(3) Intended use of the commodity, including resale,

(4) Quantity imported, in net metric tons, rounded to the nearest

hundredth of a metric ton,

(5) Storage location of the commodity,

(6) Name, address, and telephone number of the end-user, if known,

(7) Mode of transportation and the name of the transportation

company used to import the commodity, and

(8) A certification.

(b) The original form ASCS-750 and one copy of form ASCS-750 shall

be signed and dated by the importer.

(c) Distribution of form ASCS-750 will be as follows:

(1) The original shall be forwarded to KCCO, P.O. Box 419205,

Kansas City, MO 64141-6205, by the importer,

(2) One copy shall be retained by the importer,

(3) The importer shall provide a photocopy to the end-user, or if

the commodity is purchased for purposes of resale, the subsequent

buyer(s).

(d) The completion and filing of an end-use certificate does not

relieve the importer of other legal requirements pertaining to the

importation, such as those imposed by other U.S. agencies.

Sec. 782.13 Importer responsibilities.

The importer shall:

(a) Inform the end-user, in writing, that the imported commodity

shall not be used for any purpose other than the use specified on the

end-use certificate.

(b) If the commodity is imported for purposes of resale,

incorporate the provisions of Sec. 782.17 (b) and (c) into the sales

contract entered into between the importer and subsequent buyer,

(c) Submit to KCCO, within 10 workdays:

(1) After delivery of the commodity to the end-user, a bill of

lading acknowledging receipt of the commodity by the end-user and the

date the commodity was received at the end-user's facility.

(2) If the commodity is imported for purposes of resale, from the

date of sale, its subsequent buyer's name, address, and telephone

number, and the quantity sold.

Sec. 782.14 Identity preservation.

(a) The importer and all subsequent buyers of the imported

commodity shall preserve, on an origin-basis, the identity of the

commodities specified in Sec. 782.10(b) and may not commingle or blend

them with U.S.-produced commodities until such time as the imported

commodity is delivered to an end-user.

(b) Failure to meet the requirements in paragraph (a) of this

section shall constitute noncompliance by the importer or subsequent

buyer for the purposes of this part.

Sec. 782.15 Filing ASCS-751, End-Use Certificate for Grain Quarterly

Report.

(a) For purposes of providing information relating to the

disposition of commodities specified in Sec. 728.10(b), a form ASCS-

751, End-Use Certificate for Grain Quarterly Report, shall be filed

with KCCO by each:

(1) Importer, if the importer has control of the commodity on the

date specified in paragraph (c) of this section.

(2) End-user.

(3) Subsequent buyer.

(b) The information required on form ASCS-751 is as follows:

(1) The name, address, and telephone number of the end-user or

subsequent buyer,

(2) The name and address of the importer, if known,

(3) The End-Use Certificate for Grain serial number,

(4) The commodity and class of such commodity,

(5) The storage location of the commodity,

(6) The date the commodity was received at the end-user's or

subsequent buyer's facility,

(7) The quantity of the commodity received, in net metric tons,

rounded to the nearest hundredth of a metric ton,

(8) The quantity of the commodity used by the end-user or sold to a

subsequent buyer,

(9) The quantity remaining, and

(10) A certification.

(c) End-users and subsequent buyers shall submit form ASCS-751 to

KCCO within 15 workdays following full consumption or resale of the

commodity specified on the ASCS-750. For partial resales or partial

consumption, submit form ASCS-751 to KCCO within 15 workdays following:

(1) March 31,

(2) June 30,

(3) September 30, and

(4) December 31.

(d) The end-user shall continue to submit form ASCS-751 to KCCO

until the commodity has been utilized in accordance with these

regulations.

(e) A subsequent buyer shall continue to submit form ASCS-751 to

KCCO until the commodity has been resold.

(f) Importers shall submit form ASCS-751 to KCCO within 15 workdays

following March 31, June 30, September 30, and December 31, if the

importer has control of the imported commodity on these dates.

Sec. 782.16 Intended use.

(a) No entity shall knowingly use any commodities specified in

Sec. 782.10(b) for any use other than the use specified on the

applicable form ASCS-750.

(b) If the use specified on the applicable form ASCS-750 is

``Resale'', the imported commodity may continue to be resold until

delivered to an end-user, at which time the end-user must use such

commodity for one or more of the intended uses, except resale.

Sec. 782.17 Commodities purchased for resale.

(a) This section applies to an importer or subsequent buyer who

imports or purchases a commodity specified in Sec. 782.10(b) for the

purpose of reselling the commodity.

(b) Any sales contracts entered into between the importer and a

subsequent buyer, or a contract entered into between subsequent buyers,

must contain terms that notify the subsequent buyer that:

(1) The commodity being purchased originated in Canada,

(2) The commodity being purchased is deemed ineligible for use

under CCC and USDA-assisted export programs,

(3) The subsequent buyer shall preserve, on an origin-basis, the

identity of the commodity being purchased,

(4) The commodity may not be commingled or blended with U.S.-

produced commodities until such time as the commodity is delivered to

an end-user, and

(5) The subsequent buyer is responsible for filing form ASCS-751 in

accordance with Sec. 782.15.

(c) The importer or subsequent buyer shall submit to KCCO, within

10 workdays from the date of sale, its subsequent buyer's name,

address, and telephone number, and the quantity sold.

(d) The subsequent buyer shall provide its purchaser with a

photocopy of the form ASCS-750 submitted to KCCO by the importer in

accordance with Sec. 782.12(a).

Sec. 782.18 Penalty for noncompliance.

It shall be a violation of 18 U.S.C. 1001, which provides for a

fine of not more than $10,000 or imprisonment for not more than 5

years, or both, for any entity to engage in fraud with respect to or

knowingly violate the provisions set forth in this part.

Subpart C--Records and Reports

Sec. 782.20 Importer records and reports.

(a) The importer shall retain a copy of each form:

(1) ASCS-750, End-Use Certificate for Grain, that is submitted to

KCCO in accordance with Sec. 782.12(a).

(2) ASCS-751, End-Use Certificate for Grain Quarterly Report, that

is submitted to KCCO in accordance with Sec. 782.15(a)(1).

(b) The importer shall retain a copy of:

(1) Each bill of lading that is filed with KCCO in accordance with

Sec. 782.13(c)(1).

(2) The information with respect to subsequent buyers provided to

KCCO in accordance with Sec. 782.13(c)(2).

(c) The importer shall maintain records to verify that the

commodity specified on the end-use certificate was identity-preserved

until such time as the imported commodity was delivered to the end-user

or a subsequent buyer.

(d) Copies of the documents, information, and records required in

paragraphs (a), (b), and (c) of this section shall be kept on file at

the importer's headquarters office or other location designated by the

importer for the period specified in Sec. 782.25.

Sec. 782.21 End-user records and reports.

(a) The end-user shall retain a copy of each form ASCS-751, End-Use

Certificate for Grain Quarterly Report, that is filed with KCCO in

accordance with Sec. 782.15(a)(2).

(b) The end-user shall retain a copy of each form ASCS-750, End-Use

Certificate for Grain, and written notification on the intended use of

the commodity provided to the end-user by the importer in accordance

with Sec. 782.12(c)(3).

(c) Copies of the documents required in paragraphs (a) and (b) of

this section shall be kept on file at the end-user's headquarters

office or other location designated by the end-user for the period

specified in Sec. 782.25.

Sec. 782.22 Subsequent buyer records and reports.

(a) The subsequent buyer shall retain a copy of each form ASCS-751,

End-Use Certificate for Grain Quarterly Report, that is filed with KCCO

in accordance with Sec. 782.15(a)(3).

(b) The subsequent buyer shall retain a copy of each form ASCS-750,

End-Use Certificate for Grain, provided to the subsequent buyer in

accordance with Secs. 782.12(c)(3) or 782.17(d).

(c) The subsequent buyer shall retain a copy of the sales contract

which contains the terms of Sec. 782.17 (b) and (c) when the imported

commodity is resold.

(d) The subsequent buyer shall maintain records to verify that the

commodity specified on the end-use certificate was identity-preserved

during the time that the subsequent buyer maintained control of the

imported commodity.

(e) Copies of the documents and records required in paragraphs (a)

through (d) of this section shall be kept on file at the subsequent

buyer's headquarters office or other location designated by the

subsequent buyer for the period specified in Sec. 782.25.

Sec. 782.23 Failure to file end-use certificates or quarterly reports.

Failure by importers, end-users, and subsequent buyers to file form

ASCS-750, End-Use Certificate for Grain, and form ASCS-751, End-Use

Certificate for Grain Quarterly Report, as applicable, and retain or

maintain related copies and records shall constitute noncompliance for

the purposes of Sec. 782.18.

Sec. 782.24 Recordkeeping and examination of records.

(a) Examination. For the purpose of verifying compliance with the

requirements of this part, each importer, end-user, and subsequent

buyer shall make available at one place at all reasonable times for

examination by representatives of USDA, all books, papers, records,

bills of lading, contracts, scale tickets, settlement sheets, invoices,

written price quotations, or other documents related to the importation

of the commodities specified in Sec. 782.10(b) that are within the

control of such entity.

(b) Orderly retention of records. To facilitate examination and

verification of the records and reports required by this part, copies

of form ASCS-750, End-Use Certificate for Grain, shall be filed in

numerical order, and copies of form ASCS-751, End-Use Certificate for

Grain Quarterly Report, shall be filed in chronological order.

Sec. 782.25 Length of time records are to be kept.

The records required to be kept under this part shall be retained

for 3 years following the filing date of the applicable record. Records

shall be kept for such longer period of time as may be requested in

writing by USDA representatives.

[Note: The following appendix forms will not appear in the Code

of Federal Regulations.]

Signed at Washington, DC on October 14, 1994.

Alan King,

Acting Administrator, Agricultural Stabilization and Conservation

Service.

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General Information

The United States Department of Agriculture (USDA)

provides end-use certificates for persons requiring these

certificates for the importation of Canadian-produced wheat and

barley into the United States.

Regulations governing the End-Use Certificate Program

can be found at 7 CFR Part 782.

Wheat and barley covered by an end-use certificate is

not eligible for use under CCC and USDA-assisted export programs.

ASCS-750, End-Use Certificates are required for each

entry of Canadian-produced wheat and barley, and must be submitted

to the Kansas City Commodity Office within 10 days from the date of

entry.

Copies of forms ASCS-750 (End-Use Certificate for

Grain) and ASCS-751 (End-Use Certificate for Grain Quarterly Report)

can be obtained from the Kansas City Commodity Office, P.O. Box

419205, Kansas City, MO 64141-6205

For grain delivered to an end-user, the importer shall

provide the Kansas City Commodity Office, within 10 workdays of

delivery of the commodity to the end-user, a copy of the bill of

lading on which the end-user's authorized representative has

acknowledged receipt of the grain, and the date of receipt of the

grain at the end-user's facility.

For grain sold to a subsequent buyer, the importer

shall provide the Kansas City Commodity Office, within 10 workdays

of the date of sale, the subsequent buyer's name, address, telephone

number, and the quantity sold.

Importers, end-users and subsequent buyers are

responsible for providing quarterly reports to the Kansas City

Commodity Office until the grain is either resold or fully consumed

at the end-user's facility.

Follow these instructions when completing this form.

Only those items requiring explanation are described below:

Item 4--Enter the intended use by the end-user, if known. If

``Other'' is marked, provide the intended use in the space provided.

Item 7--If the commodity will be held in storage to be sold at a

later date, enter the storage location.

Items 8 and 9--If known at the time of importation, enter the

end-user or subsequent buyer's name, address and telephone number.

Otherwise, leave blank.

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TP20OC94.002

[FR Doc. 94-25961 Filed 10-17-94; 1:50 pm]

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