Foreign Donation of Agricultural Commodities

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1499

Foreign Donation of Agricultural Commodities

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish regulations governing the

donation of agricultural commodities by Commodity Credit Corporation

for distribution in foreign countries pursuant to section 416(b) of the

Agricultural Act of 1949, or the Food for Progress Act of 1985.

DATES: Comments on the proposed rule must be submitted by March 16,

1994.

ADDRESSES: Comments should be submitted to: Director/PAD, Foreign

Agricultural Service, United States Department of Agriculture, 14th and

Independence Ave., SW., room 4079-S, Washington, DC 20250-1000.

All comments will be available for public inspection during regular

business hours in room 4079-S, U.S. Department of Agriculture, 14th and

Independence Avenue, SW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Director/PAD, Foreign Agricultural Service, United States Department of

Agriculture, 14th and Independence Avenue, SW., Washington, DC 20250-

1000; telephone (202) 720-3573.

SUPPLEMENTARY INFORMATION: This proposed rule is issued in conformance

with Executive Order 12866. Based on information compiled by the

Department, it has been determined that this proposed rule:

(1) Would have an annual effect on the economy of less than $100

million;

(2) Would not adversely affect in a material way the economy, a

sector of the economy, productivity, competition, jobs, the

environment, public health or safety, or State, local, or tribal

governments or communities;

(3) Would not create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency;

(4) Would not alter the budgetary impact of entitlements, grants,

user fees, or loan programs or rights and obligations of recipients

thereof; and

(5) Would not raise novel legal or policy issues arising out of

legal mandates, the President's priorities, or principles set forth in

Executive Order 12866.

This proposed rule deals primarily with requirements imposed upon

foreign governments and non-profit entities distributing relief

supplies overseas. Therefore, the proposed rule does not have a

significant impact upon a substantial number of small business entities

and Regulatory Impact Statement was not prepared. A copy of this

proposed rule has been sent to the Chief Counsel, Office of Advocacy,

U.S. Small Business Administration.

Paperwork Reduction Act

This proposed rule contains information collections which are

subject to review by the Office of Management and Budget (OMB) under

the Paperwork Reduction Act of 1980 (44 U.S.C. chapter 35). The

sections requiring information collections are shown below with an

estimate of the annual reporting and recordkeeping burdens. Included in

the estimate is the time for reviewing instructions, searching existing

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

and reviewing the collection of information.

------------------------------------------------------------------------

Estimated Estimated Estimated

annual Annual burden per annual

Section number of frequency response burden

respondents (hours) (hours)

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7 CFR 1499.5:

Existing\1\..... 35 N/A 56 1960

Incl. proposed

rule........... 30 N/A 40 1200

7 CFR 1499.8:

Existing........ 25 N/A 1 25

Incl. proposed

rule........... 25 N/A 1 25

7 CFR 1499.9:

Existing........ 25 N/A 8 200

Incl. proposed

rule........... 25 N/A 8 200

7 CFR 1499.11:

Existing........ 21 N/A 4 84

Incl. proposed

rule........... 21 N/A 4 84

7 CFR 1499.14:

Existing........ 5 N/A 2 10

Incl. proposed

rule........... 5 N/A 2 10

7 CFR 1499.16:

Existing........ 25 2 24 1200

Incl. proposed

rule........... 25 2 24 1200

Total Burden Hours Including Proposed Rule=2719

Total Existing Burden Hours=3479

Net Change in Burden Hours=(760)

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\1\Existing reporting and recordkeeping burdens refer to those

requirements that appear in the current standard form section 416(b)

and Food for Progress agreements.

As required by Section 3504(h) of the Paperwork Reduction Act of

1980, FAS has submitted a copy of this proposed rule to OMB for its

review of these information collection requirements. Other

organizations and individuals desiring to submit comments regarding

this burden estimate or any aspects of these information collection

requirements, including suggestions for reducing the burdens, should

direct them to the Acting General Sales Manager, FAS, USDA, at the

address above, and to the Office of Information and Regulatory Affairs,

OMB, New Executive Building, Washington, DC 20503, Attention: Desk

Officer for the Foreign Agricultural Service.

This rule is not subject to the provisions of Executive Order 12372

which requires intergovernmental consultation with state and local

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

published at 46 FR 29115 (June 24, 1983).

This proposed rule has been reviewed under the Executive Order

12778, Civil Justice Reform. The proposed rule would have pre-emptive

effect with respect to any state or local laws, regulations, or

policies which conflict with such provisions or which otherwise impede

their full implementation. The proposed rule would not have retroactive

effect. Administrative proceedings are not required before parties may

seek judicial review.

The Department of Agriculture is committed to carrying out its

statutory and regulatory mandates in a manner that best serves the

public interest. Therefore, where legal discretion permits, the

Department actively seeks to promulgate regulations that promote

economic growth, create jobs, are minimally burdensome and are easy for

the public to understand, use or comply with. In short, the Department

is committed to issuing regulations that maximize net benefits to

society and minimize costs imposed by those regulations. This principle

is articulated in Executive Orders 12291 and 12498. The Department

applies this principle to the full extent possible, consistent with

law.

The Department has developed and reviewed this regulatory proposal

in accordance with these principles. Nonetheless, the Department

believes that public input from all interested persons can be

invaluable to ensuring that the final regulatory product is minimally

burdensome and maximally efficient. Therefore, the Department

specifically seeks comments and suggestions from the public regarding

any less burdensome or more efficient alternative that would accomplish

the purposes described in the proposal. Comments suggesting less

burdensome or more efficient alternatives should be addressed to the

agency as provided in this Proposed Rule.

This proposed rule would govern the donation of agricultural

commodities overseas pursuant to section 416(b) of the Agricultural Act

of 1949 (7 U.S.C. 1431(b)) and the Food for Progress Act of 1985 (7

U.S.C. 1736o). These regulations contain many provisions that have been

standard terms of agreements with recipients, i.e., Cooperating

Sponsors, for a number of years. As of October 1, 1991, the Agency for

International Development no longer is a signatory to section 416(b)

program agreements and pursuant to E.O. 12752, 56 FR 8255, the

Secretary of Agriculture was delegated the President's responsibilities

under the Food for Progress Act. Accordingly, it is appropriate for the

Department of Agriculture to promulgate regulations to govern

operations under these two programs.

Generally, the regulatory provisions herein would apply equally to

both programs; however, certain provisions dealing with the sale of

commodities and the use of local currencies generated from such sales

apply only to the section 416(b) program.

Interested parties should carefully read the full proposed rule. Of

particular note are the following points:

1. Nominations of shipping agents for Cooperating Sponsors

participating in the Food for Progress Act will be made to USDA in

conformity with the conflict of interest provisions currently

applicable only to section 416(b) and of the Agricultural Trade

Development and Assistance Act of 1954 (Pub. L. 480). This will place

all USDA concessional export programs on the same basis regarding

conflict of interest reviews in connection with shipping agents. In

this regard, the proposed regulations include limitations on

commissions that may be paid to shipping agents that follow the

limitations currently proposed for shipping agents participating in the

title I, Public Law 480 program. See 57 FR 53607, November 12, 1992.

Comments received regarding these limitations are presently being

reviewed and will also be considered in relation to this proposed rule.

These proposed rules, however, would also limit the agents commission

to a percentage of the gross freight attributable to the ocean segment

of any movement that may be contracted on a through bill of lading or

involve obligations at discharge such as bagging grain. This limitation

is included because freight charges attributed to inland movements to

many destinations receiving section 416(b) and Food for Progress

commodities are relatively high due to various difficult conditions in

these countries. CCC does not have an effective mechanism to determine

the reasonableness of these charges.

2. These regulations apply only to agreements for the donation of

agricultural commodities and not to any sales to Cooperating Sponsors.

3. Specific criteria are established to govern the approval of

agreements or of activities under such agreements. Detailed information

is required in the Plan of Operation submitted in connection with a

section 416(b) agreement.

4. The proposed rule contains detailed procedures for the

procurement of ocean transportation including requirements for

competitive bidding in the fixture of vessels on charter terms.

5. The regulations include specific guidance for ocean carrier and

inland claims and for disposing of commodities unfit for intended use.

In this regard, the regulations would adopt procedures similar to those

in effect for title II, Public Law 480 shipments and should be familiar

to many Cooperating Sponsors.

6. Responsibility for section 416(b) program oversight in recipient

countries falls to the resident or regional Agricultural Attache/

Counselor or, in the absence thereof, a representative designated by

the United States Department of Agriculture.

List of Subjects in 7 CFR Part 1499

Agricultural commodities, Exports, Foreign aid.

Accordingly, title 7 of the Code of Federal Regulations is proposed

to be amended by adding a new part 1499 to read as follows:

PART 1499--FOREIGN DONATION PROGRAMS

Sec.

1499.1 Definitions.

1499.2 General purpose and scope.

1499.3 Eligibility requirements for cooperating sponsor.

1499.4 Availability of commodities from CCC inventory.

1499.5 Program agreements.

1499.6 Criteria for entering into program agreements.

1499.7 Apportionment of costs.

1499.8 Ocean transportation.

1499.9 Restrictions on commodity use and distribution.

1499.10 Agreement between Cooperating Sponsor and Recipient

Agencies.

1499.11 Liability of the Cooperating Sponsor.

1499.12 Sales, barter, and use of monetized proceeds and program

income.

1499.13 Usual marketing requirements.

1499.14 Processing, packaging and labeling of section 416(b)

commodities in the foreign country.

1499.15 Arrangements for entry and handling in the foreign country.

1499.16 Disposition of commodities unfit for authorized use.

1499.17 Liability for loss, damage, or improper distribution of

commodities--claims and procedures.

1499.18 Records and reporting requirements.

1499.19 Termination of program.

1499.20 Sample documents/guidelines for developing proposals and

reports.

Authority: 7 U.S.C. 1431(b); 7 U.S.C. 1736o; E.O. 12752.

Sec. 1499.1 Definitions.

Activity--An action undertaken by a Cooperating Sponsor involving

the use of agricultural commodities donated under Program Agreements or

the use of monetized proceeds.

Agricultural Counselor or Attache--A United States Department of

Agriculture representative stationed abroad responsible for the country

where agricultural commodities donated under Program Agreements are to

be distributed.

CCC--The Commodity Credit Corporation.

Commodities--Agricultural commodities or products donated under

Program Agreements.

Cooperating Sponsor--An entity with which CCC enters into a Program

Agreement, including both foreign government and private nongovernment

entities.

Director, P.L. 480-OD--The Director, Pub. L. 83-480 Operations

Division, Foreign Agricultural Service, USDA.

Director, PAD--The Director, Program Analysis Division, Foreign

Agricultural Service, USDA.

Director, PDD--The Director, Program Development Division, Foreign

Agricultural Service, USDA.

Food for Progress Program --The donation of commodities under the

authority of the Food for Progress Act of 1985.

General Sales Manager--General Sales Manager and Associate

Administrator, Foreign Agricultural Service, USDA, who is the Vice

President, CCC.

KCCO--Kansas City Commodity Office, Agricultural Stabilization and

Conservation Service, USDA, P.O. Box 419205, Kansas City, Missouri,

64141-6205.

KCFMO--Kansas City Financial Management Office, Agricultural

Stabilization and Conservation Service, USDA, P.O. Box 419205, Kansas

City, Missouri, 64141-6205.

Monetization--The sale of commodities by Cooperating Sponsors.

Monetized proceeds--The local currency proceeds generated from

monetization.

Plan of Operation--A description of the activities the Cooperating

Sponsor will undertake utilizing the donated commodities or monetized

proceeds.

Program income--Money received by the Cooperating Sponsor as a

result of carrying out approved activities, including voluntary

contributions from recipients of agricultural commodities in the

importing country or interest received on monetized proceeds.

Program Agreement--A foreign donation agreement entered into

between CCC and Cooperating Sponsors.

Recipient agency--An entity located in the importing country which

receives commodities or monetized proceeds from a Cooperating Sponsor

for the purpose of carrying out responsibilities of the Cooperating

Sponsor under a Program Agreement.

Shipping Agent--Any person engaged by a Cooperating Sponsor to

arrange for transportation services.

Section 416(b) program--The donation of agricultural commodities

under the authority of section 416(b) of the Agricultural Act of 1949.

USDA--The United States Department of Agriculture.

Sec. 1499.2 General purpose and scope.

This part contains the general terms governing agreements between

CCC and Cooperating Sponsors providing for the donation of agricultural

commodities to carry out programs of assistance outside the United

States under the authority of section 416(b) of the Agricultural Act of

1949, or support of developing countries and countries that have made

commitments to introduce or expand free enterprise elements in their

agricultural economies under the authority of the Food for Progress Act

of 1985. Program Agreements may contain other provisions when CCC

determines that such provisions are necessary to effectively carry out

a particular Program Agreement. Except as otherwise specified herein,

these regulations apply to only donations to Cooperating Sponsors under

both the section 416(b) and Food for Progress programs. However, these

regulations do not apply to donations to intergovernmental agencies

(such as the World Food Program) or organizations unless CCC and such

intergovernmental agency or organization enters into a Program

Agreement incorporating this part.

Sec. 1499.3 Eligibility requirements for Cooperating Sponsor.

All entities registered with the Agency for International

Development under 22 CFR part 203, are eligible to be Cooperating

Sponsors. Other entities may be requested to furnish CCC evidence

sufficient to demonstrate their capabilities to implement proposed

activities prior to entering into a Program Agreement.

Sec. 1499.4 Availability of commodities from CCC inventory.

CCC will, to the extent practicable, announce prior to the

beginning of each fiscal year the types and quantities of agricultural

commodities available for donation from CCC inventory. The quality of

agricultural commodities donated by CCC and packaging will be in

accordance with the specifications set forth in the Program Agreements.

Sec. 1499.5 Program Agreements.

(a) Agreements. The Cooperating Sponsor must enter into a written

Program Agreement with CCC which will incorporate by reference the

terms and conditions set forth in this Part.

(b) Section 416(b) Plan of Operation. Prior to entering into a

section 416(b) Program Agreement, each Cooperating Sponsor shall submit

to the Agricultural Counselor or Attache, and to the Director, PDD, a

Plan of Operation describing the activities it proposes to undertake.

When approved by CCC, the Plan of Operation will be incorporated into

the section 416(b) Program Agreement as Attachment A. In case of a

conflict between the approved Plan of Operation and other terms of the

Program Agreement, such other terms in the Program Agreement will

prevail. The Plan of Operation must follow the format and provide the

information as follows:

Appendix I to Sec. 1499.5--Section 416(b) Program Plan of Operation

(Attachment A)

1. Name and Address of Applicant:

2. Country:

3. Kind and Quantity of Commodities Requested:

4. Delivery Schedule:

5. Program Description:

a. Program objectives and expected outcomes, including a

description of opportunities and constraints to achieving program

objectives and criteria for measuring progress toward these

objectives.

b. Program recipients or participants and how they were chosen.

c. Detailed description of program methodology and approaches,

including, as appropriate:

--plans for distribution, selling commodities, how local

currencies will be spent, and administrative of technical persons

involved in each phase;

--transportation and storage systems that will be used to move

the agricultural products from the receiving port to the point of

distribution, or to where the product is reprocessed, packaged or

sold;

--any reprocessing or repackaging or the commodity;

--logistics plan demonstrating the adequacy of port,

transportation, and storage facilities to deliver commodities to

recipients or to sell the commodities, without undue risk of

spoilage or waste.

d. Governmental or nongovernmental institutions and entities

involved in the program and the extent to which the program will

strengthen or increase the capabilities of institutions or entities

in the recipient country.

e. Method of educating recipients or participants of donation

source, program requirements, and, where appropriate, preparation

and use of the commodity.

f. Describe records, accountability methods and supervisory

activities for controlling and monitoring distribution of products,

sales of commodities, and use of generated proceeds. Describe plans

for evaluating program outcome.

g. Information indicating that the host or local government

supports the program.

h. Detailed budget for program, including costs that will be

covered by the applicant, other organizations or local governments;

which activities monetized proceeds will cover; and any request for

USDA administrative funds. The budget should include how costs of

administration, storage, transportation, processing and repackaging

will be financed.

6. Use of Funds or Goods and Services Generated:

When the activity involves the use of monetized proceeds, the

receipt of goods or services from the barter of commodities, or

program income, the following information must be provided:

a. The quantity and type of commodities to be sold or bartered;

b. The amount of monetized proceeds anticipated to be generated

from the same, or the value of the goods or services anticipated to

be generated from the barter, of the donated agricultural

commodities; except that where such amount or value cannot be

estimated, the Cooperating Sponsor will describe the method to be

used to ensure that a fair return of cash, goods or services will be

received for the commodities;

c. The steps taken to use the private sector in the process of

selling commodities;

d. The amount of program income expected to be generated;

e. The specific uses of sale proceeds or program income and a

timetable for their expenditure;

f. Procedures for assuring the receipt and deposit of monetized

proceeds and program income into a separate special account and for

the disbursement of the proceeds and program income;

g. Information concerning the extent to which any sale or barter

of the donated agricultural commodities would displace or interfere

with any sales that may otherwise be made; and

h. 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.

7. Distribution Methods:

a. A thorough description of the transportation and storage

system which will be used to move the agricultural commodities from

the receiving port to the point at which distribution is made to the

recipient;

b. A thorough description of any reprocessing or repackaging of

the commodities that will take place; and

c. A logistics plan that demonstrates the adequacy of port,

transportation, storage, and warehouse facilities to handle the flow

of commodities to recipients without undue spoilage or waste.

8. Duty Free Entry:

Information indicating that commodities to be directly

distributed to recipients will be imported and distributed free from

all customs, duties, tolls, and taxes.

9. Economic Impact:

Information indicating that the commodities can be imported and

distributed without negative impact upon domestic production, prices

and marketing of same or like products.

Sec. 1499.6 Criteria for entering into Program Agreements.

(a) Section 416(b). (1) In determining whether to enter into a

section 416(b) Program Agreement, CCC will give priority consideration

to the donation of commodities to support activities designed to meet

emergency situations, followed by non-emergency humanitarian feeding

activities, and, finally, activities using monetized proceeds. Within

this prioritization, CCC will consider the following evaluation

criteria:

(i) Applicant Capability

(A) Organizational experience and current institutional capacity to

implement and manage the type of program proposed (targeted food

distribution, targeted food distribution and monetization, or

monetization for economic and other development activities).

(B) Experience working in the targeted country.

(C) Experience and capability level of personnel who will be

responsible for implementing and managing the program.

(ii) Quality and technical soundness of proposal

(A) Assessment of need and rationale are well presented and

demonstrate actual need.

(B) Program objectives and expected outcomes are reasonable and

realistic and show an understanding of the opportunities and

constraints to achieving the program objectives.

(C) Plan for achieving program objectives is completely and clearly

described and is logical for the type of program being implemented and

includes, where appropriate, the following:

(1) Description of transportation mechanisms, facilities, storage

and warehousing plans, distribution methods, recipients or

participants, and local institutions or entities involved with the

project.

(2) Description of how the commodity will be sold and any

reprocessing or repackaging.

(3) For the use of monetized proceeds, description of activities or

costs that will be paid for by the generated local currencies.

(4) Appropriateness and adequacy of organizational structure for

the management of the agreement, including the clear articulation of

lines of authority and relationships between the applicant and the

various institutions and entities it proposes to involve.

(D) Records and accountability methods for monitoring the program,

including the distribution of commodities or use of local currencies,

and the method by which the Cooperating Sponsor intends to evaluate the

success of the proposal are clearly described and appropriate.

(E) Demonstrates that the program will contribute to strengthening

institutions, entities, or capabilities in the recipient country.

(iii) USDA Management responsibilities

USDA assessment of commodity need and acceptability in terms of

cost, storability, acceptability, and nutritional impact of proposed

commodities.

(b) Food for Progress. In determining whether to enter into a Food

for Progress Foreign Donation Agreement, CCC will consider the extent

to which the recipient country is committed to carry out, or is

carrying out, policies that promote economic freedom, private domestic

production of food commodities for domestic consumption, and the

creation and expansion of efficient private domestic markets for the

purchase and sale of such commodities. CCC shall require Cooperating

Sponsors to submit a Plan of Operation similar to the Plan of Operation

described in Sec. 1499.5(b) when CCC determines such would be necessary

to identify specific activities to be undertaken by the Cooperating

Sponsor in order to accomplish the purposes of the Food for Progress

program. In such case, proposed activities will be evaluated in

accordance with the criteria set forth at Sec. 1499.6(a)(2).

Sec. 1499.7 Apportionment of costs.

(a) CCC will pay that costs of processing, packaging, transporting,

handling, and other incidental charges incurred in making commodities

available to Cooperating Sponsors.

(b)(1) Title to all commodities shall pass to the Cooperating

Sponsor at the time and place of delivery f.o.b. vessel at U.S. port in

the case of bulk grain shipments, or f.a.s. vessel at U.S. port or at

the intermodal point for all other commodities.

(2) The Cooperating Sponsor shall bear all costs and expenses

incurred subsequent to the transfer of title, except that, when

specifically provided in the Program Agreement or upon the

determination by CCC that it is the best interest of the program to do

so, CCC may pay or make reimbursement for all or a portion of the

reasonable transportation costs from U.S. ports to designated ports or

points of entry abroad, and in the case of urgent and extraordinary

relief requirements, all or a portion of the reasonable transportation

costs from designated points of entry abroad to storage and

distribution sites, and reasonable associated storage and distribution

costs.

(3) (i) In the case of countries receiving commodities under the

Food for Progress Program, CCC may agree to make payments to

Cooperating Sponsors to assist in the administration, sale, and

monitoring of food assistance programs to strengthen private sector

agriculture in such countries. The Program Agreement will specify the

maximum dollar amount of funding that CCC will pay the Cooperating

Sponsor for such costs. Payment of the above funds will only be made to

the Cooperating Sponsor in such amounts, and for such purposes, as may

be specifically approved in writing by the Controller, CCC and the

General Sales Manager.

(ii) CCC may, at its option, advance to the Cooperating Sponsor not

more than 85 percent of the total dollar amount specified in the

Program Agreement for the costs identified in paragraph (b)(3)(i) of

this section. Funds committed but not advanced will be paid on a

reimbursement basis. Prior to the advance of any funds by CCC, the

Cooperating Sponsor shall submit to the Director, PAD and to the

Controller, CCC, a Program Operations Budget detailing all storage,

distribution, monitoring and administrative costs to be incurred. The

budget line items must represent reasonable costs, for which written

approval from the Controller, CCC and the General Sales Manager was

obtained prior to program implementation. Any revisions of these

expenditures must also be approved by the Controller, CCC and the

General Sales Manager.

(iii) Unless otherwise specifically permitted by CCC, CCC will not

advance funds for expenditures by the Cooperating Sponsor that have

been incurred prior to the date of the Program Agreement, that will be

incurred earlier than 60 days following the date of any previous

advance, or that will be incurred after a date specified in the Program

Agreement.

(iv) The Cooperating Sponsor must submit to the Controller, CCC,

invoices supporting the charges incurred against the advance, or for

which reimbursement is claimed, within 60 days from the date the

service is received. All charges must be reasonable and foreign

currency transactions must be supported by evidence of the specific

exchange rate incurred. A delay in receipt, or non-receipt, of

supporting documentation by the Controller, CCC, may result in CCC's

refusal to release future advances. The Cooperating Sponsor shall

promptly refund to CCC all funds advanced, together with all interest

earned on such funds, if either not utilized within 180 days after the

advance for purposes for which the funds were advanced, or for which

documentation supporting the expenditure is not supplied to CCC.

(v) All CCC advances must be deposited in an interest bearing

account with interest earned on the funds advanced used for the purpose

for which the funds were advanced. The Cooperating Sponsor shall submit

a monthly Federal Funds Cash Report (SF-272) and a quarterly financial

statement to the Controller, CCC, 10 working days past the end of the

month or quarter, respectively, detailing the use and status (including

interest earned on funds not yet utilized) of all funds advanced by CCC

to Cooperating Sponsor.

(4) If the Program Agreement specifies that CCC will finance only

the ocean freight differential (``OFD'') on U.S. flag vessels, the

Director, Public Law 480-OD will compute OFD as follows:

(i) when non-U.S.-flag vessels are offered, the OFD will be the

difference between the weighted average freight rate(s) of non-U.S.

flag vessel(s) fixed or offered that could carry the quantity of cargo

absent the requirement to use U.S.-flag vessels, and the rate for the

U.S. flag vessel(s) fixed; or the rate(s) offered (including any lower

rates negotiated) by U.S.-flag vessels(s) which could have carried the

required tonnage and represents the lowest land cost (U.S. flag basis).

(ii) When non U.S. flag vessels are not offered, or when offered,

have specifications which preclude their use, the rate to be used in

computing OFD will be determined by using any market data deemed

relevant.

(iii) When the recipient country employs its own flag vessels or

other flag vessels under its control, the non-U.S. flag rate to be used

in computing OFD will be determined using any market data deemed

relevant.

Sec. 1499.8 Ocean transportation.

(a) Cargo Preference. Shipments of commodities donated under the

section 416(b) and Food for Progress programs are subject to the

requirements of sections 901(b) and 901b of the Merchant Marine Act,

1936, regarding carriage on U.S.-flag vessels. CCC will endeavor to

meet these requirements separately for each program for each 12-month

compliance period.

(b) Coordination between CCC and the Cooperating Sponsor. When the

Program Agreement specifies that the Cooperating Sponsor will arrange

ocean transportation:

(1) KCCO will furnish the Cooperating Sponsor with a Notice of

Commodity Availability (Form CCC-512) which will specify the receiving

country, commodity, quantity, and date at U.S. port or intermodal

delivery point.

(2) The Cooperating Sponsor will arrange ocean transportation in

accordance with the procedures specified in paragraph (c) of this

section and shall comply with the instructions of CCC regarding the

quantity of commodities that must be carried on U.S. flag vessels. U.S.

ports of export will be selected on the basis of the lowest cost to

CCC.

(3) The Cooperating Sponsor will complete the Form CCC-512

indicating name of steamship company, vessel name, vessel flag and

estimated time of arrival at U.S. port, sign and return the completed

form to KCCO, with a copy to the Director, Public Law 480-OD. For liner

cargoes, if CCC has agreed to pay any part of the ocean transportation,

the Form CCC-512 must also contain the ocean freight rate as stated in

the Federal Maritime Commission tariff, with tariff identification.

(4) KCCO will issue instructions to have the commodity shipped

f.a.s. or f.o.b. vessel, U.S. port of export, or to an intermodal

delivery point, and consigned to the Cooperating Sponsor specified in

the Form CCC-512.

(b) Shipping agents. (1) The Cooperating Sponsor may appoint a

shipping agent to assist in the procurement of ocean transportation. If

a shipping agent is to be used, the Cooperating Sponsor must nominate

the shipping agent in writing to the General Sales Manager, room 4071-

S, Foreign Agricultural Service, U.S. Department of Agriculture,

Washington, DC 20250-1000. The written nomination shall specify the

period of time to be covered by the nomination. A copy of the proposed

agency agreement must also be provided. A Cooperating Sponsor may

submit a single written nomination for a shipping agent for more than

one program or may submit separate written nominations for each

program.

(2) The shipping agent must submit the information and

certifications required by 7 CFR 17.5.

(3) A person may not act as shipping agent for a Cooperating

Sponsor unless the Assistant General Sales Manager has notified the

Cooperating Sponsor in writing that the nomination is accepted.

(c) Freight procurement requirements. The following requirements

apply when the Cooperating Sponsor arranges ocean transportation and

CCC is financing any portion of the ocean freight.

(1) Freight invitations for bids must be issued for the

solicitation of freight offers through the Transportation News Ticker

(TNT), New York, plus at least one other means of communication, to

assure the broadest possible market coverage and adequate notice to

interested parties.

(2) The Cooperating Sponsor must obtain approval of all invitations

for bids as specified in the Program Agreement prior to their issuance.

(3) Freight invitations for bids must provide: (i) That offers have

a canceling date no later than the last contract layday specified in

the invitation for bids;

(ii) that offered rates be quoted in U.S. dollars per metric ton,

and if destination bagging or transportation to a point beyond the

discharge port is required, offered rates shall separately state the

total rates and the portion of the rates attributable to the ocean

segment of the movement;

(iii) that any non-liner U.S. flag vessel 15 years or older must

furnish, in addition to any other offered rate, a one way rate to be

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;

(iv) specify the procedures for payment of freight, including the

party responsible for the freight payments;

(v) require, in the case of packaged commodities, that 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) provide that vessels offered subject to Maritime

Administration approval will not be accepted; and

(vii) specify a closing time for the submission of offers and state

that late offers will not be accepted.

(4) In the case of shipments of bulk commodities, the Cooperating

Sponsor shall open offers in public in the United States at the time

and place specified in the invitation for bids and consider only offers

that are responsive to the invitation for bids without negotiation,

clarification, or submission of additional information. All responsive

offers received for both U.S. flag and foreign flag service must be

presented to KCCO which will determine the extent to which U.S.-flag

vessels will be used.

(5) The Director, Public Law 480-OD, or another official specified

in the Program Agreement, must approve all vessel fixtures. The

Cooperating Sponsor may fix vessels subject to that approval of the

Director, Public Law 480-OD, or such other official. The Cooperating

Sponsor shall not confirm a vessel fixture until the Director, Public

Law 480-OD, or such other official, advises the Cooperating Sponsor 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.

(6) Non-Vessel Operating Common Carriers may not be employed to

carry U.S.-flag shipments.

(d) Commissions. (1) Total commissions earned on U.S. and foreign

flag bookings by all parties arranging vessel fixtures, when any

portion of the ocean freight is paid by CCC, shall not exceed 2\1/2\

percent of that portion of the gross freight attributable to the ocean

segment of the cargo movement.

(2) Total commissions to a shipping agent shall not exceed \2/3\ of

2\1/2\ percent of that portion of the gross freight attributable to the

ocean transportation segment of the movement.

(3) The Cooperating Sponsor shall require liner carriers to assure

that tariffs on file at the Federal Maritime Commission reflect the

maximum commissions payable under this paragraph.

(4) Address commissions are prohibited.

(e) Contract terms. (1) The Cooperating Sponsor shall assure that,

when CCC is paying any portion of the ocean freight, charter parties

and liner booking contracts contain clauses that implement the

following paragraphs:

(i) packaged commodities on liner vessels shall be shipped on the

basis of full berth terms with no demurrage or despatch;

(ii) bulk commodities shall be shipped on the basis of vessel load,

free out, with demurrage and despatch applicable at load and discharge

ports. Laytime accounts are to be settled between the ocean carrier and

export elevators at load port and between the ocean carrier and

charterers at discharge ports. CCC is not responsible for resolving

disputes involving the calculation of laytime or the payment of

demurrage or despatch.

(iii) if the Program Agreement requires the Cooperating Sponsor to

open 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, 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.

(iv) charges attributable to the failure of the vessel to present

before the canceling date including, but not limited to inspection,

fumigation, and carrying charges, will be for the account of the ocean

carrier.

(v) 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 as described in paragraph (f)(3) below prevents the

vessels arrival at the first port of discharge, 95% 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, 85% of the ocean freight is payable, at the time

the General Sales Manager determines that such force majeure was the

cause of nonarrival; and

(vi) when the ocean carrier offers delivery to destination ports on

U.S.-flag vessels, but foreign-flag vessels are used for any part of

the voyage to the destination port, without first obtaining the

approval of the Cooperating Sponsor, KCCO, and any other approval that

may be required by the Program Agreement, the ocean freight rate will

be reduced to the lowest responsive foreign-flag vessel rate offered in

response to the same invitation for bids and the carrier agrees to pay

CCC the difference between the contracted ocean freight rate and the

freight rate offered by such foreign-flag vessel.

(f) Freight Payment by CCC. When the Program Agreement provides

that CCC will pay any portion of the ocean freight:

(1) 100% of the ocean freight is payable upon receipt of the

documents specified in paragraph (g) of this section, unless the

charter party or liner booking note provides for completing additional

requirements after discharge such as bagging, stacking, or inland

transportation, in which case 85% of the ocean freight is payable. The

balance of freight remaining will be paid upon receipt of notification

from the Cooperating Sponsor that the vessel has fulfilled all the

requirements of the charter party or liner booking contract in a

successful manner.

(2) Demurrage will not be paid or reimbursed by CCC.

(3) CCC will waive the requirement in paragraph (g) of this section

for a notice of arrival if the General Sales Manager determines upon

submission of evidence on the part of the ocean carrier that the vessel

is lost or unable to proceed to destination after completion of loading

as a result of one or more of the following causes (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, rulers, or peoples without the fault of the ocean carrier;

wars; public disorders; captures; or detention of public authority in

the interest of public safety. If the General sales Manager determines

that a force majeure prevents the vessels arrival at the first port of

discharge, 95% 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, 85% of the ocean freight

is payable upon submission of the documents specified in paragraph (g)

of this section, except that the notice of arrival need not be

submitted. The balance of ocean freight shall not be due or payable.

(g) Documentation required for payment or reimbursement of freight

charges by CCC.

(1) One copy of completed Form CCC-512;

(2) Three copies of ``on board'' bills of lading indicating the

freight rate and signed by originating carrier;

(3) National Cargo Bureau vessel hold inspection and certificate of

loading as applicable;

(4) Two signed copies of liner booking note or charter party

covering ocean transportation of cargo;

(5) For charter movements, a notice of arrival at first discharge

point, to be submitted by the Cooperating Sponsor;

(6)(i) Request by the Cooperating Sponsor for reimbursement of

ocean freight indicating amount due, accompanied by a certification

from the ocean carrier that payment has been made;

(ii) Request for direct payment of ocean freight to the ocean

carrier, indicating amount due; or

(iii) 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.

Sec. 1499.9 Restrictions on commodity use and distribution.

(a) The Cooperating Sponsor may use the donated commodities only in

accordance with the terms of the Program Agreement.

(b) Donated commodities may not be distributed within the importing

country on the basis of political affiliation, geographic location, or

the ethnic, tribal or religious identify or affiliations of the

potential consumers or recipients.

(c) Donated commodities may not be distributed, handled or

allocated by military forces except where such activities are

specifically authorized by CCC.

Sec. 1499.10 Agreement between Cooperating Sponsor and Recipient

Agency(ies).

(a) The Cooperating Sponsor shall, prior to the transfer of any

donated commodities, monetized proceeds or program income, enter into

and formally execute an agreement with each recipient agency engaged

for the purpose of the distribution of commodities or for the

implementation of any other approved activity. Copies of such

agreements shall be provided to the appropriate Agricultural Counselor

or Attache. Such agreements shall include the following terms:

(1) a requirement that the recipient agency pay the Cooperating

Sponsor the value of any commodities, monetized proceeds or program

income that is used for purposes not expressly permitted under the Plan

of Operation;

(2) a requirement that the recipient agency pay the Cooperating

Sponsor for any commodities, monetized proceeds or program income that

is lost, damaged, or misused as result of the recipient agency's

failure to exercise reasonable care;

(3) a provision expressly incorporating the terms and conditions of

this part which govern the implementation of the approved Plan of

Operation, the use of funds, record keeping, inspection and audit.

(b) Upon request, CCC may, within its sole discretion, elect to

waive the requirement of paragraph (a) of this section where it

determines that such an agreement is not feasible or appropriate for

any reason, including the nature of the recipient agency, or the amount

of commodities, monetized proceeds or program income that may be

transferred to the recipient agency. In any case where waiver is

granted, however, such waiver shall not otherwise affect or diminish

the Cooperating Sponsor's obligations or responsibilities with respect

to program commodities, monetized proceeds or program income.

Sec. 1499.11 Liability of the Cooperating Sponsor.

(a) The Cooperating Sponsor shall be required to reimburse CCC for

all costs incurred by CCC, including the cost of acquisition of the

donated commodity where such Cooperating Sponsor has either:

(1) Failed to export the commodities from the United States;

(2) Been responsible for the reentry of the commodity into the

United States; or

(3) Used the commodities, monetized proceeds or sale profits in a

manner inconsistent with program requirements.

(b) [Reserved]

Sec. 1499.12 Sales, barter, and use of monetized proceeds and program

income.

(a) Section 416(b). (1) Except as provided in paragraph (a)(3) of

this section, commodities donated under a section 416(b) Program

Agreement may be sold or bartered only in accordance with an approved

Plan of Operation. Such sales or barters may be approved by CCC on a

case-by-case basis for the following purposes only:

(i) to finance the distribution, handling or processing costs of

the donated commodities in the importing country or in a country

through which the commodities must be transshipped, or other activities

in the importing country that are consistent with providing food

assistance to needy people;

(ii) in the case of sales of commodities furnished to nonprofit and

voluntary agencies, or cooperatives, to generate proceeds to be used to

transport, store, distribute and otherwise enhance the effectiveness of

the use of commodities, and to implement income generating community

development, health, nutrition, cooperative development, agricultural

program, and other development activities;

(iii) to cover expenses of the type identified in section 406 of

the Agricultural Trade Development and Assistance Act of 1954; or

(iv) for any other use specifically authorized by statute.

(2) Commodities may be sold or bartered only in the importing

country or other country specifically approved by CCC. Monetized

proceeds must be expended within either the country of origin or in

other countries as necessary to expedite transportation of commodities,

or in countries which generally accept the type of currency generated

by the sale. Monetized proceeds must be expended within one year of

acquisition unless CCC specifically agrees that a longer period is

necessary to achieve the purposes of paragraph (a)(1)(i) and (ii) of

section.

(3) Notwithstanding paragraphs (a) (1) and (2) of this section,

commodities may be sold or bartered without prior approval of CCC where

damage has occurred to the commodity rendering it unfit for the

intended program purposes, and sale or barter is necessary to mitigate

the loss of the value of the damaged commodity.

(4) Cooperating Sponsors who sell or barter commodities must enter

into a written agreement with the other party to the sale transaction.

A copy of the executed agreement must be provided to the Agricultural

Counselor or Attache.

(5) All monetized proceeds shall be deposited into a special

interest bearing account for control and monitoring unless interest

bearing accounts are prohibited by the laws or customs of the importing

country or such requirement would impose an undue burden on the

Cooperating Sponsor. Any accrued interest shall be used only for

approved activities.

(6) Cooperating Sponsors shall not be required to monitor, manage,

report on, or account for the distribution or use of such sold or

bartered commodities after all sales proceeds have been fully deposited

in a special account and title to the commodities has passed to buyers

or other third parties pursuant to a sale or barter transaction. The

sales proceeds and the uses thereof, however, must be monitored,

managed, reported and accounted for as provided in the relevant

sections of this part 1499.

(7) Commodities approved for sale or barter need not be imported

and sold free of all duties and taxes, but nongovernmental Cooperating

Sponsors may negotiate agreements with the host government permitting

the duty and tax-free import and sale of such commodities. Even where

the Cooperating Sponsor negotiates such exempt status, the prices at

which the Cooperating Sponsor sells the commodities to the purchaser

shall reflect prices that would be obtained in a competitive commercial

transaction, i.e., the prices would include the cost of duties and

taxes, so that the amounts normally paid for duties and taxes would

accrue for the benefit of the Cooperating Sponsor's approved program.

(8) No part of the proceeds or services realized from sales or

barters may be used for operating and overhead expenses, other than for

personnel and administrative costs of local cooperatives. Operating and

overhead expenses are costs attributable to the overall administration

and management expenses of the Cooperating Sponsor in its regional,

national, or U.S. offices, including rent, taxes, insurance, utilities,

telephone, office supplies, and depreciation, and in the case of

nonprofit private and voluntary agencies and cooperatives, costs of

monitoring, evaluation, auditing, and travel within the host country

except where such costs are directly related to a specific activity and

essential to the effective implementation of the activity.

(9) The Cooperating Sponsor shall use commercially reasonable

procurement practices in purchasing goods or services and in

construction activities using monetization proceeds or program income,

and shall employ procedures that prevent fraud, self-dealing, and

conflicts of interest and provide for free and open competition to the

maximum extent practicable. Title to real and personal property

acquired with monetization proceeds and program income shall be vested

in the Cooperating Sponsor, with the Cooperating Sponsor providing the

Controller, CCC with an inventory list of all assets valued at one

thousand dollars (USD) or more. The Cooperating Sponsor shall dispose

of such property as directed by the Agricultural Counselor or Attache

in the event the program terminates or is transferred to another

Cooperating Sponsor.

(10) Monetized proceeds and program income may not be used to

acquire, develop, construct, alter or upgrade land, buildings or other

real property improvements or structures that are either:

(i) owned or managed by a church or other organization engaged

exclusively in religious activity, or

(ii) used in whole or in part for sectarian purposes.

Notwithstanding the preceding sentence, monetized proceeds or program

income may be used to finance repair or rehabilitation of an existing

structure owned or managed by a church or organization engaged

exclusively in religious activity to the extent necessary to avoid

spoilage or loss of donated commodities, provided that the structure is

not used in whole or in part for any sectarian purpose while donated

commodities are stored in it. The use of monetized proceeds or program

income to finance construction of such a structure may be approved in

the operational plan or by the Agricultural Counselor or Attache if the

structure is needed and will be used for the storage of donated

commodities for a sufficient period of time to warrant the expenditure

of monetized proceeds or program income and the structure will not be

used for any sectarian purpose during this period.

(b) Food for Progress. Unless the Food for Progress Program

Agreement provides otherwise, commodities donated under Food for

Progress may be sold within the recipient country without restriction

or special procedural requirements.

Sec. 1499.13 Usual marketing requirements.

A foreign government Cooperating Sponsor shall provide data showing

commercial and non-commercial imports of the types of agricultural

commodities requested for the past five years, by country of origin,

and an estimate of expected imports of such commodities during the

current year. A Program Agreement with a foreign government may include

a usual marketing requirement and shall prohibit the re-export of

donated commodities, as well as of other related commodities specified

in the Program Agreement.

Sec. 1499.14 Processing, packaging and labeling of section 416(b)

commodities in the foreign country.

(a) Cooperating Sponsors may arrange for the processing of

commodities donated under a section 416(b) Program Agreement and for

packaging or repackaging prior to distribution. When a third party

provides such processing, packaging, or repackaging, the Cooperating

Sponsor shall enter into written agreements for such services. The

agreement shall require that the provider of such services (1) shall

fully account to the Cooperating Sponsor for all commodities delivered

or otherwise be liable for the value of all unaccounted commodities and

(2) shall maintain adequate records and submit periodic reports

pertaining to performance under the agreements. Copies of the executed

agreements shall be provided to the Agricultural Counselor or Attache.

(b) If, prior to distribution, the Cooperating Sponsor arranges for

packaging or repackaging commodities donated under section 416(b), the

cartons, sacks, or other containers in which the commodities are packed

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 donated commodities are to be sold or bartered

pursuant to an approved Plan of Operation after processing, packaging

or repackaging, 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, to the extent practicable, the

Cooperating Sponsor shall display banners, posters or other media and

provide individual identification cards containing the information

prescribed in this paragraph.

(c) If the packages of commodities donated under section 416(b) are

discharged from vessel in a damaged condition, and are repackaged to

ensure that the commodities arrive at the distribution point in

wholesome condition, CCC will reimburse Cooperating Sponsors who are

nonprofit private voluntary organizations and cooperatives for approved

expenses incurred for such repackaging. No prior approval is required

for such expenses equaling $500 or less. If such expense is estimated

to exceed $500, the authority to repackage and incur such expense must

be approved by the Agricultural Counselor or Attache in advance of

repackaging.

Sec. 1499.15 Arrangements for entry and handling in the foreign

country.

(a) The Cooperating Sponsor shall make all necessary arrangements

for receiving the donated commodities in the recipient country,

including obtaining appropriate approvals for entry and transit, and

shall ensure that agricultural commodities which are to be distributed

to recipients in direct feeding programs shall be admitted duty free

and exempt from all taxes. The Cooperating Sponsor shall be responsible

for storing and maintaining the commodities from time of delivery at

port of entry or point of receipt from originating carrier in such

manner as to ensure that the commodities remain in good condition until

their distribution, sale or barter.

(b) The Cooperating Sponsor may use either of the following methods

to arrange for the transport, storage, and distribution from designated

points of entry or ports of entry when CCC has agreed to pay costs of

such services:

(1) Through bill of lading; or

(2) Contract directly with suppliers of services, and submit a

billing, with supporting documentation, to CCC indicating actual costs

incurred. All supporting documentation must be sent to the Director,

Public Law 480-OD. Payment will be made, at the option of CCC, in

dollars at the exchange rate as of the date of payment by CCC, or in

foreign currency.

Sec. 1499.16 Disposition of commodities unfit for authorized use.

(a) Prior to delivery to Cooperating Sponsor at discharge port or

point of entry. If the commodity is damaged prior to delivery to a

governmental Cooperating Sponsor at discharge port or point of entry

overseas, the Agricultural Counselor or Attache, or CCC designated

representative, shall immediately arrange for inspection by a public

health official or other competent authority. A nongovernmental

Cooperating Sponsor shall arrange for such inspection of commodities

damaged prior to delivery. If the commodity is determined to be unfit

for the use authorized in the Program Agreement, the commodities shall

be disposed of in accordance with the priority set forth in paragraph

(b) of this section. Expenses incidental to the handling and

disposition of the damaged commodity shall be paid by CCC from the

sales proceeds or from an appropriate CCC account as determined by CCC.

The net proceeds of sales shall be deposited with the U.S. Disbursing

Officer American Embassy, for the credit of CCC in an appropriate CCC

account as determined by CCC. However, if the commodities were donated

for monetization programs, the net sales proceeds, after deducting

expenses incidental to handling and disposition of the damaged

commodity, shall be deposited to the special account established for

monetized proceeds, and the Cooperating Sponsor is responsible for

documenting the amount of the sales proceeds from the sale of damaged

commodities deposited to the special account. The Cooperating Sponsor

shall seek guidance from CCC regarding sales proceeds in the event the

Cooperating Sponsor executed a sales agreement under which title passed

to the purchaser prior to delivery.

(b) After delivery to Cooperating Sponsor. If after arrival in a

foreign country 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 paragraphs (b) (1) through (4) of this section. The Cooperating

Sponsor shall arrange for the recovery for authorized use of that part

designated during the inspection as suitable for authorized use. If,

after inspection, the commodity (or any part thereof) is determined to

be unfit for 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:

(1) By transfer to an approved section 416(b) program for use as

livestock feeding feed. CCC shall be advised promptly of any such

transfer so that shipments from the United States to the livestock

feeding program can be reduced by an equivalent amount;

(2) 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;

(3) By donation to a governmental or charitable organization for

use as animal feed or for other non-food use; or

(4) If the commodity is unfit for any use or if disposal in

accordance with paragraph (b)(1), (2) or (3) 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.

Expenses incidental to the handling and disposition of the damaged

commodity shall be paid by the Cooperating Sponsor unless it is

determined by the Agricultural Counselor or Attache that the damage

could not have been prevented by the Cooperating Sponsor under the

terms of the Program Agreement. Actual expenses incurred, including

third party costs, in effecting any sale may be deducted from the sales

proceeds and, except for monetization programs, the net proceeds shall

be deposited with the U.S. Disbursing Officer, American Embassy, with

instructions to credit the deposit to an appropriate CCC account as

determined by CCC. In monetization programs, the gross proceeds shall

be deposited in the special interest bearing account and after approved

costs related to the handling and disposition of damaged commodities

are paid, remaining funds used 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. The report and any supplemental report shall

include a certification by a public health official or other competent

authority of the exact quantity of the damaged commodity disposed of

because it was determined to be unfit for the use authorized in the

Program Agreement. A report must also be provided to the Chief, Debt

Management Division, KCFMO, of action taken to dispose of commodities

unfit for authorized use.

Sec. 1499.17 Liability for loss, damage, or improper distribution of

commodities--claims and procedures.

(a) Fault of Cooperating Sponsor prior to loading on ocean vessel.

If the Cooperating Sponsor fails to have a vessel for loading at the

U.S. port of export in accordance with the agreed shipping schedule,

the Cooperating Sponsor shall immediately notify KCCO, Chief, Export

Operations Division. CCC will determine whether the commodity shall be:

Moved to another available outlet; stored at the port for delivery to

the Cooperating Sponsor when a vessel is available for loading; or

disposed of as CCC may deem proper. The Cooperating Sponsor shall take

such action as directed by CCC and shall reimburse CCC for expenses

incurred.

(b) Fault of others prior to loading on ocean vessel. When any

damage or loss to the commodity occurs which 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 designated port of export, the Cooperating

Sponsor shall immediately notify KCFMO, Chief, Debt Management Office.

The Cooperating Sponsor shall promptly assign to CCC any rights to

claims which may accrue 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, prosecute, and retain the proceeds of all

claims for such loss or damage.

(c) Survey and outturn reports. (1) Unless the Program Agreement

provides otherwise, CCC shall arrange for an independent cargo surveyor

to attend the discharge of the cargo and to report on the quantity and

condition of the commodities discharged and the probable cause of any

damage. All cargoes provided under an agreement shall be surveyed. If

practicable, the examination of the cargo shall be conducted jointly by

the surveyor, the consignee, and the ocean carrier, and the survey

report shall be signed by all parties.

(2) (i) If the Cooperating Sponsor arranges for an independent

cargo surveyor, the Cooperating Sponsor shall obtain a certification by

a public health official or similar competent authority as to the

condition of the commodity in any case where a damaged commodity

appears to be unfit for the use authorized in the Program Agreement;

and a certificate of disposition in the event the commodity is

determined to be unfit for its intended use. Such certificates shall be

obtained as soon as possible after discharge of the cargo. The

Cooperating Sponsor shall forward 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 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 and 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,

the reason should be stated and the method of weight determination

fully described;

(B) Estimate the quantity of cargo, if any, lost during discharge

through carrier negligence;

(C) Advise on the quality of sweepings;

(D) Obtain copies of port or vessel records, if possible, showing

quantity discharged; and

(E) Provide immediate notification to the Cooperating Sponsor if

additional services are necessary to protect cargo interests of if

surveyor has reason to believe that the correct quantity was not

discharged. In the case of shipments arriving in container vans,

Cooperating Sponsors shall require the independent surveyor to 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 the contents as

soon as possible after opening.

(iii) Cooperating Sponsors shall send copies to KCFMO, Chief, Debt

Management Office of all reports and documents pertaining to the

discharge of commodities.

(iv) CCC will reimburse the Cooperating Sponsor for incurred costs

upon receipt of the survey report and the surveyor's invoice or other

documents that establish the survey cost. CCC shall not reimburse a

Cooperating Sponsor for the costs of only a delivery survey, in the

absence of a discharge survey, or for any other survey not taken

contemporaneously with the discharge of the vessel, unless such

deviation is justified to the satisfaction of CCC.

(3) Survey contracts shall be let on a competitive bid basis unless

CCC determines that the use of competitive bids would not be

practicable. CCC may preclude the use of certain surveyors because of

conflicts of interest or lack of demonstrated capability to properly

carry out surveying responsibilities.

(d) Ocean carrier loss and damage. (1) Notwithstanding transfer of

title to the Cooperating Sponsor, the CCC shall have the right to file,

pursue, and retain the proceeds of collection from claims arising from

ocean transportation cargo loss and damage, including loss and damage

occurring between the time of transfer of title and loading aboard a

vessel. CCC assumes general average contributions and 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. Where 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.

(2) The Cooperating Sponsor 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 foregoing,

the Cooperating Sponsors 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 Cooperating Sponsors determine that the cost of filing and

collecting the claim will exceed the amount of the claim. Cooperating

Sponsors shall transmit to KCFMO, Chief, Debt Management Office

information and documentation on such lost or damaged shipments when no

claim is to be filed. When General Average has been declared,

Cooperating Sponsors need not file or collect claims for loss of, or

damage to, commodities.

(3) Amounts collected by Cooperating Sponsors on claims against

ocean carriers which are less than $200 may be retained by the

Cooperating Sponsor. On claims involving loss of damage of $200 or more

the 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 to include attorneys fees, fees of

collection agencies, and similar costs. In no event will CCC pay

collection costs in excess of the amount collected on the claim.

(4) The Cooperating Sponsors 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 Cooperating Sponsor has incurred on the lost

or damaged commodity and which are included in the claims and paid by

the liable party.

(5) The Cooperating Sponsor may redetermine claims on the basis of

additional documentation or information not considered when the claims

were originally filed when such documentation or information clearly

changes the ocean carrier's liability. Approval of such changes by CCC

is not required regardless of amount. However, copies of redetermined

claims and supporting documentation or information shall be furnished

to CCC.

(6) The 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 approved in

writing by CCC. When a claim is compromised, the 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, the Cooperating

Sponsor may terminate collection activity when it is determined that

pursuit of such claims will not be economically sound. Approval for

such termination by CCC is not required; however, the Cooperating

Sponsor shall notify KCFMO, Chief, Debt Management Division when

collection activity on a claim is terminated.

(7) All amounts collected in excess of the amounts authorized

herein to be retained shall be remitted to CCC. For the purpose of

determining the amount to be retained by the 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 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 liable party or parties, the rights of the Cooperating

Sponsor to the claim shall be assigned 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, the Cooperating

Sponsor shall 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, the 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 below, pay to the

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 Cooperating Sponsor.

(9) When a Cooperating Sponsor fails to file a claim, permit a

claim to become time-barred, or fail to take timely actions to insure

the right of CCC to assert such claims, and CCC determines that the

Cooperating Sponsor failed to properly exercise its responsibilities

under the Agreement, the 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. The

Cooperating Sponsor shall pay to CCC the value of the commodities,

proceeds or program income lost, damaged, or misused (or may, with

prior Agricultural Counselor or Attache approval, replace such

commodities with similar commodities of equal value). If the

Cooperating Sponsor:

(1) improperly distributed a commodity;

(2) uses a commodity, monetized proceeds from the sale thereof or

program income for purposes not permitted under the Program Agreement,

the approved Plan of Operation or this part 1499;

(3) causes loss or damage to a commodity or loss of monetized

proceeds or program income through any act or omission; or

(4) fails to provide proper storage, care, and handling. The

Cooperating Sponsor may be excused of its obligations for such payment

or replacement if it is determined by CCC that such improper

distribution or use, or such loss or damage, could not have been

prevented by proper exercise of the Cooperating Sponsor's

responsibility under the terms of the Program Agreement. Normal

commercial practices in the country of distribution shall be considered

in determining whether there was a proper exercise of the Cooperating

sponsor's responsibility. Payment by the Cooperating Sponsor shall be

made in accordance with paragraph (g) of this section.

(f) Fault of others in country of distribution and in intermediate

country. (1) In addition to survey or outturn reports to determine

ocean carrier loss and damage, the Cooperating Sponsor shall, in the

case of landlocked countries, arrange for an independent survey at the

point of entry into the recipient country and make a report as set

forth in paragraph (c)(1) of this section. CCC will reimburse the

Cooperating Sponsor for the costs of survey as set forth in paragraph

(c)(2)(iv) of this section.

(2) Where any damage to or loss of the commodity or any loss of

monetized proceeds or program income is attributable to a warehouseman,

carrier or other person, the Cooperating Sponsor shall make every

reasonable effort to pursue collection of claims for such loss or

damage. The Cooperating Sponsor shall furnish a copy of the claim and

related documents to the Agricultural Counselor or Attache. Cooperating

Sponsors who fail to file or pursue such claims shall be liable to CCC

for the value of the commodities or loss of monetized proceeds or

program income is attributable to a warehouseman, carrier or other

person, the Cooperating Sponsor shall make every reasonable effort to

pursue collection of claims for such loss or damage. The Cooperating

Sponsor shall furnish a copy of the claim and related documents to the

Agricultural Counselor or Attache. Cooperating Sponsors who fail to

file or pursue such claims shall be liable to CCC for the value of the

commodities or monetized 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 monetized 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) At a minimum, the Cooperating Sponsor shall pursue any claim by

initial billings and with three progressively stronger demands at not

more than 30 day intervals. If these efforts fail to elicit a

satisfactory response, legal action in the judicial system of the

cooperating country shall be pursued unless:

(i) Liability of the third party is not provable,

(ii) The cost of pursuing the claim would exceed the amount of the

claim,

(iii) The third party would not have enough assets to satisfy the

claim after a judicial decision favorable to the cooperating sponsor,

or

(iv) Maintaining legal action in the country's judicial system

would seriously impair the Cooperating Sponsor's ability to conduct an

effective program in the country.

A Cooperating Sponsor's decisions not to take legal action, and

reasons therefore, must be submitted in writing to the Agricultural

Counselor or Attache for review and approval, and the Agricultural

Counselor or Attache may require the Cooperating Sponsor to obtain the

opinion of competent legal counsel to support its decision. A

Cooperating Sponsor may request approval to terminate legal action

after it has commenced for any of the exceptions described above or if

CCC determines that it is otherwise appropriate to terminate legal

action prior to judgment. In each instance the Agricultural Counsel or

Attache must provide the Cooperating Sponsor with a written explanation

of its decision. If the Agricultural Counselor or Attache approves a

Cooperating Sponsor's decision not to take further action on the claim

for reasons described in paragraph (f)(3)(iv) of this section, the

Cooperating Sponsor shall assign the claim to CCC and shall provide to

CCC all documentation relating to the claim.

(4) As an alternative to legal action in the judicial system of the

country with regard to claims against a public entity of the government

of the cooperating country, the Cooperating Sponsor and the cooperating

country may agree in writing to settle disputed claims by an

appropriate administrative procedure or arbitration.

(g) Determination of value. When payment is to be made for

commodities misused, lost or damaged, the value shall be determined 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 value of misused, lost or damaged commodities may be determined on

some other justifiable basis, at the request of the Cooperating Sponsor

or upon the recommendation of the Agricultural Counselor or Attache or

CCC designated representative. When replacement is made, the value of

commodities misused, lost or damaged shall be their value at the time

and place the misuse, loss, or damage occurred and the value of the

replacement commodities shall be their value at the time and place

replacement is made.

(h) Reporting losses to the Agricultural Counselor or Attache or

CCC designated representative. (1) The Cooperating Sponsor shall

promptly notify the Agricultural Counselor or Attache or CCC designated

representative, in writing, of the circumstances pertaining to any

loss, damage, or misuse of commodities valued at $500 or more occurring

within the country of distribution or intermediate country. The report

shall be made as soon as the Cooperating Sponsor has adequately

investigated the circumstances, but in no event more than ninety (90)

days from the date the loss became known to the Cooperating Sponsor.

The report shall identify the party in possession of the commodities

and the party responsible for the loss, damage or misuse; the kind and

quantities of commodities; the size and type of containers; the time

and place of misuse, loss, or damage; the current location of the

commodity; the Program Agreement number, the CCC contract numbers, or

if unknown, other identifying numbers printed on the commodity

containers; the action taken by the Cooperating Sponsor with respect to

recovery or disposal; and the estimated value of the commodity. The

Cooperating Sponsor shall explain the unavailability of any of the

above information. The Cooperating Sponsor shall also report the

details regarding any loss or misuse of monetized proceeds or program

income.

(2) The Cooperating Sponsor shall report quarterly to the

Agricultural Counselor or Attache any loss, damage to or misuse of

commodities resulting in loss of less than $500. The Cooperating

Sponsor shall inform the Agricultural Counselor or Attache or CCC

designated representative if it has reason to believe there is a

pattern or trend in the loss, damage, or misuse of such commodities and

submit a report on the basis described in paragraph (h)(1) of this

section together with such other information as the Cooperating Sponsor

has available to it. The Agricultural Counselor or Attache may require

additional information about any commodities lost, damaged or misused

if it believes such information is necessary in order to maintain the

integrity of the program.

(i) Handling claims proceeds. Claims against ocean carriers shall

be collected in U.S. dollars (or in currency in which freight is paid,

or a pro data share of either) and shall be remitted (less amounts

authorized to be retained) by Cooperation Sponsors to CCC. Claims

against Cooperating Sponsors shall be paid to CCC in U.S. dollars. With

respect to commodities lost, damaged or misused, amounts paid by

Cooperating Sponsors and third parties in the country of distribution

shall be deposited with the U.S. Disbursing Officer, American Embassy,

preferably, in U.S. dollars with instructions to credit the deposit to

an appropriate CCC account as determined by CCC, or in local currency

at the official exchange rate applicable to dollar imports at the time

of deposit with instructions to credit the deposit to an appropriate

CCC account as determined by CCC. With respect to monetized proceeds

and program income, amounts recovered may be deposited in the same

account as the monetized proceeds and may be used for purposes of the

program.

Sec. 1499.18 Records and reporting requirements.

(a) Records and reports--general requirements. (1) The Cooperating

Sponsor shall maintain records and documents in a manner which

accurately reflects all transactions pertaining to the receipt,

storage, distribution sale, inspection and use of commodities and the

receipt and disbursement of any monetized proceeds and program income,

including interest and fees. Such records shall be retained for a

period of three years from the close of the U.S. fiscal year to which

they pertain. The Cooperating Sponsor shall provide CCC with any

records, or copies thereof, requested by CCC.

(2) The Cooperating Sponsor shall cooperate with and assist to U.S.

government representatives to enable examination of any activities,

facilities or records of the Cooperating Sponsor pertaining to the

receipt, storage, distribution, sale, inspection and use of commodities

and the receipt and disbursement of any monetized proceeds and program

income, including interest and fees.

(b) Evidence of export. The Cooperating Sponsor shall, within

thirty (30) days after export, furnish evidence of export of the

agricultural commodities to the Director, P.L. 480-OD. If export is by

sea or air, two copies of the on board carrier's bill of lading or

consignee's receipt authenticated by a representative of the U.S.

Customs Service shall be furnished. The evidence of export must show

the kind and quantity of agricultural commodities exported, the date of

export, and the destination country.

(c) Special reports required under section 416(b). (1) The

Cooperating Sponsor shall submit a semiannual Logistics Report to the

Director, PAD, and to the Agricultural Counselor or Attache or CCC

designated representative. The first logistics report shall be

submitted on or before the date specified in the section 416(b) Program

Agreement and shall cover the full period since the date of that

agreement. Subsequent reports shall be made at six month intervals

during the period in which commodities received are being distributed

by the Cooperating Sponsor. The logistics report shall contain the

following information:

(i) Receipts of agricultural commodity including the name of each

vessel, discharge ports, 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 and in transit during the

reporting period;

(iv) Status of claims for commodity losses both resolved and

unresolved during the reporting period; and

(v) Quantity of commodity damaged or declared unfit during the

reporting period.

(2) In the event that an approved program calls for the

monetization of all, or any portion of the donated agricultural

commodities, the Cooperating Sponsor shall also submit a semiannual

monetization report to the Director, PAD, containing the information

specified below, and a quarterly report to the Controller, CCC,

containing the information specified in paragraphs (c)(2)(i) through

(iv) of this section. The first monetization report shall be submitted

by the date specified in the section 416(b) Program Agreement and shall

cover the full period from the date of that agreement. Reports

thereafter should cover each subsequent semiannual or quarterly period

in which commodities received are being distributed, or monetized

proceeds are being held or disbursed, by the Cooperating Sponsor. The

monetization report must contain the following data:

(i) The quantity of each type of commodity furnished for the

purpose of sale or barter, and the actual amount sold or bartered;

(ii) The amount of funds and value of services generated from sales

and barter of the commodities, in both local currency and U.S. dollar

equivalent.

(iii) Deposits into and disbursements from the special account, the

total amount of funds used to date, and balance in special account, in

both local currencies and U.S. dollar equivalents.

(iv) The amount of generated currencies not yet programmed that

will be used and an estimate of when they will be disbursed.

(v) A thorough description of how the funds and services generated

were or will be used, including information regarding project goals,

accomplishments, and the number of beneficiaries.

(vi) Quantity of commodities as yet unsold, and an estimate of when

sales and barter will be completed.

(vii) A thorough description of the effectiveness of sales and

barter provisions in facilitating the distribution of commodities and

products to targeted recipients.

(viii) A description of the extent, if any, that sales, barter or

use of section 416(b) commodities:

(A) affected the usual marketing of the United States;

(B) displaced or interfered with commercial sales of the United

States;

(C) disrupted world commodity prices or normal patterns of trade

with friendly countries; and

(D) discouraged local production and marketing of commodities in

the recipient country;

(ix) An explanation of the extent to which agreement objectives

were achieved.

(x) Recommendations for improving sale, barter, or use provisions

of future section 416(b) programs.

Sec. 1499.19 Termination of program.

All or any part of the assistance provided under a Program

Agreement, including commodities in transit, may be suspended or

terminated by CCC if:

(a) The Cooperating Sponsor fails to comply with the provisions of

the Program Agreement or this part;

(b) It is determined by CCC that the continuation of such

assistance is no longer necessary or desirable; or

(c) CCC determines that storage facilities are inadequate to

prevent spoilage or waste or that distribution of commodities will

result in substantial disincentive to, or interfere with, domestic

production or marketing in the recipient country.

Sec. 1499.20 Sample documents and guidelines for developing proposals

and reports.

To assist with effective reporting on program logistics and

monetization, etc., guidelines have been developed. Examples of these

guidelines may be obtained from the Director, PAD.

Signed this 7th day of February 1994, in Washington, DC.

Christopher E. Goldthwait,

General Sales Manger, FAS, and Vice President, Commodity Credit

Corporation.

[FR Doc. 94-3212 Filed 2-11-94; 8:45 am]

BILLING CODE 3410-10-M