Sugar to be Imported and Re-exported in Refined Form or in Sugar Containing Products or Used for the Production of Polyhydric Alcohol

[Federal Register Volume 61, Number 152 (Tuesday, August 6, 1996)]

[Proposed Rules]

[Pages 40749-40756]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 96-19521]

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Proposed Rules

Federal Register

________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of

the proposed issuance of rules and regulations. The purpose of these

notices is to give interested persons an opportunity to participate in

the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 61, No. 152 / Tuesday, August 6, 1996 /

Proposed Rules

[[Page 40749]]

DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR PART 1530

Sugar to be Imported and Re-exported in Refined Form or in Sugar

Containing Products or Used for the Production of Polyhydric Alcohol

AGENCY: Foreign Agricultural Service (FAS), USDA.

ACTION: Proposed rule.

SUMMARY: The Foreign Agricultural Service (FAS) proposes revising the

regulations governing the Refined Sugar Re-export Program, the Sugar

Containing Products Re-export Program and the Polyhydric Alcohol

Program. The regulations permit entry of imported raw cane sugar exempt

from the sugar tariff-rate quota for re-export in refined form or in a

sugar containing product or for the production of certain polyhydric

alcohols. The proposed rule will conform the regulations for the

programs to the United States' international obligations and would also

reduce the paperwork burden on program participants.

DATES: Interested parties are invited to submit written comments by or

before October 7, 1996.

ADDRESSES: Comments should be mailed or delivered to the Team Leader,

Sugar Team, Import Policies and Programs Division, Foreign Agricultural

Service, Room 5531, South Agriculture Building, U.S. Department of

Agriculture, Washington, D.C. 20250 and to the Desk Officer for

Agriculture, Office of Information and Regulatory Affairs, Office of

Management and Budget (OMB), Room 10235, New Executive Office Building,

Washington, DC 20503. Comments received may be inspected at Room 5531,

South Agriculture Building, U.S. Department of Agriculture, 14th Street

and Independence Avenue, SW, Washington, D.C. between 9 a.m. and 4:30

p.m., Mondays through Fridays, except holidays.

FOR FURTHER INFORMATION CONTACT: Stephen Hammond (Team Leader, Sugar

Team) at telephone number 202-720-1061.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been reviewed under USDA procedures

implementing E.O. 12866 and Departmental Regulation 1512-1 and the OMB

and has been classified as ``not significant.'' In conformity with this

designation, except for requirements under the Paperwork Reduction Act

of 1995, the rule has not been reviewed by the OMB. The Administrator,

FAS, has determined that the provisions of this proposed rule will not:

(1) result in an annual effect on the economy of $100 million or more;

(2) 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; or (3) regulate issues of human health, human safety, or

the environment. Further, the Administrator has determined that the

rule does not (1) create a serious inconsistency or otherwise interfere

with an action taken or planned by another agency; (2) materially alter

the budgetary impact of entitlement, grants, user fees, or loan

programs, or the rights and obligations of recipients; or (3) raise

novel legal or policy issues arising out of legal mandates, the

President's priorities, or the principles set forth in E.O. 12866.

Regulatory Flexibility Act

The Regulatory Flexibility Act ensures that regulatory and

information requirements are tailored to the size and nature of small

businesses, small organizations, and small governmental jurisdictions.

This proposed rule will not have a significant economic impact on a

substantial number of small entities. Participation in the programs is

voluntary. Direct and indirect costs are small as a percentage of

revenue and in terms of absolute costs. The minimal regulatory

compliance requirements are scaled to impact large and small businesses

equally, and the programs improve businesses' cash flow and liquidity.

Paperwork Reduction Act

The paperwork and recordkeeping requirements imposed by these

programs have been previously approved by the Office of Management and

Budget (OMB) under the Paperwork Reduction Act (approval number 0551-

0015). An Information Collection Request (IRC) has been prepared for

this rule by the USDA, and a copy may be obtained from Pam Hopkins,

Compliance Review Staff, USDA, 14th and Independence Ave. S.W.,

Washington, D.C., 20250 or by calling (202) 720-6713.

The IRC explains the necessity, quantity and burden of information

collection.

Need: This rule permits the entry of raw sugar, exempt from the

tariff-rate quota for other raw sugar imports and the related

requirements, on the condition that an equivalent amount of refined

sugar be exported or used in the production of polyhydric alcohol.

Compliance is assured through the accurate records and reports

maintained and submitted by program participants. Without such records

and reporting the FAS could not properly implement the programs.

Quantity: Information collection occurs at three (3) points:

initial licensing; the acquiring of sugar via import (for refiners) or

transfer (for sugar containing products manufacturers and producers of

polyhydric alcohol); and, the disposition of sugar via transfer (for

refiners), export (for refiners and sugar containing product

manufacturers) and use (for producers of polyhydric alcohol).

Persons desiring to participate in one of the programs must apply

for a license. Licensees may be refiners, sugar containing product

manufacturers or producers of polyhydric alcohol. Once licensed, under

the current regulations, each licensee notifies FAS of each import,

transfer, use or export of sugar on a transaction by transaction basis.

Under the proposed rule, licensees would report all transactions in

quarterly reports. The reports would contain specific information, in

chronological order, on imports, exports, transfers, use, loss

adjustments and a license balance. The information would be submitted

in electronic format with a certification as to the accuracy of the

report. Credits are effective on the date of export rather than when

recorded by the Licensing Authority. This means licensees must keep

track of their balance to stay within their license

[[Page 40750]]

balance or time limits or be subject to civil penalties.

Estimate of Burden: (1) ``application for a license'' would require

10 hours per response; (2) ``regular reporting'' would require between

10 and 15 minutes per transaction. The number of transactions per

respondent will vary.

Respondents: Sugar refiners, manufacturers of sugar containing

products and producers of polyhydric alcohol.

Estimated Number of Respondents: 250.

Estimated Total Burden Hours on Respondents: 3866.

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Refiners SCP PhA

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Burden per transaction (minutes): \1\

New License....................... N/A.................... 10(hrs)................ 10(hrs)

Import............................ 10..................... N/A.................... 10

Transfer.......................... 10..................... 10..................... N/A

Exports........................... 15..................... 15..................... N/A

Use............................... N/A.................... N/A.................... 10

Transactions:

New License....................... 0...................... 20..................... 1

Imports........................... 72..................... N/A.................... 23 \3\

Transfer.......................... 5170................... 2300 \2\............... N/A

Exports........................... 6371................... 4610 \2\............... N/A

Use............................... N/A.................... N/A.................... 120

Annual Burden Hours (multiply the

cells of the above tables):

New License....................... 0...................... 200.................... 10

Imports........................... 12..................... 0...................... 3.85

Transfers......................... 861.66................. 383.33................. 0

Exports........................... 1592.75................ 1152.5................. 0

Use............................... 0...................... 0...................... 20

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\1\ Unless otherwise indicated numbers are for fiscal year 1994.

\2\ Numbers are for the calendar year 1995. Transfers are different between refiners and manufacturers because

of different accounting methodologies: refiners generally report each shipment as a distinct transfer where

sugar containing products manufacturers will aggregate shipments from a single refiner to a single

manufacturer.

\3\ Under the current regulations polyhydric alcohol producers have an import license which is used by refiners,

on behalf of the polyhydric alcohol producer, to import raw sugar. Under the proposed regulations sugar

polyhydric alcohol producers would not have refiners import and refine their sugar. Instead, they would be

issued transfer licenses which would work similarly to those of the sugar containing product manufacturers.

Consequently, this number would remain the same, but would be a burden resulting from transfers accepted, not

imports.

Impact: The proposed rule will decrease the burden on program

participants in three ways. First, it will reduce reporting and result

in some reduction in information collection. Second, it will decrease

the government's burden of entering data manually, thereby permitting

more time for program support and compliance review. Third, it will

simplify self-tracking of license balances so that program

participation happens in real- time, instead of licensees waiting on

action by government employees.

The agency has submitted a copy of the proposed rule to OMB in

accordance with section 3507(d) of the Paperwork Reduction Act (44

U.S.C. 3507(d)) for its review of these information collections.

Interested persons are invited to send comments regarding this burden

estimate or any other aspect of this collection of information,

including (1) An evaluation of whether the proposed collection of

information ensures that the collection of information is necessary for

the proper performance of the functions of the agency; (2) an

evaluation of the accuracy of the agency's estimate of burden of the

proposed collection of information; (3) ways to enhance the quality,

utility, and clarity of the information to be collected; and (4) how to

minimize the burden of the collection of information, including through

the use of appropriate automated, electronic, mechanical or other

technological collection techniques or other forms of information

technology.

Comments should be sent to the Team Leader, Sugar Team, Import

Policies and Programs Division, Foreign Agricultural Service, Room

5531, South Building, U.S. Department of Agriculture, Washington, DC

20250 and to the Desk Officer for Agriculture, Office of Information

and Regulatory Affairs, OMB, Room 10235, New Executive Office Building,

Washington, DC 20503. Comments on the issues covered by the Paperwork

Reduction Act are most useful to OMB if received within 30 days of

publication of the Notice of Proposed Rulemaking, but must be submitted

no later than 60 days from the date of publication to be assured of

consideration.

National Environmental Policy Act

The Administrator has determined that this action will not have a

significant affect on the quality of the human environment. Therefore,

neither an Environmental Assessment nor an Environmental Impact

Statement is necessary for this rule.

Executive Orders Nos. 12372 and 12875 and the Unfunded Mandates Reform

Act (P.L. 104-4)

These Orders require intergovernmental review of programs. Neither

the Refined Sugar Re-export Program, the Sugar Containing Products

Program nor the Polyhydric Alcohol Program impose an unfunded mandate

or any other requirement on State, local or tribal governments.

Further, the programs are national in scope and involve a power

delegated to the United States by the Constitution. Accordingly, these

programs are not subject to the provisions of either Executive Order

No. 12372 or No. 12875 or the Unfunded Mandates Reform Act.

Executive Order No. 12612

Executive Order No. 12612 requires implications of ``federalism''

be considered in the development of regulations. The Administrator

certifies that this proposed rule has been reviewed in light of E.O.

12612 and that it is consistent with the principles, criteria, and

requirements stated in sections 2 through 5 of this Executive Order.

The Administrator further certifies that this rule would impose no

additional cost or burden on the states, nor affect the state's

abilities to

[[Page 40751]]

discharge traditional State governmental functions.

Executive Order No. 12606

Executive Order No. 12606 requires that government action include

consideration of maintaining stability and strengthening the family.

The FAS has determined, under the principles and criteria established

in E.O. 12606, that this rule will have no effect on the family.

Executive Order No. 12630

This Order requires careful evaluation of governmental actions that

interfere with constitutionally protected property rights. This rule

does not interfere with any property rights and, therefore, does not

need to be evaluated on the basis of the criteria outlined in E.O.

12630.

Background

On October 12, 1990, the Department of Agriculture published an

interim rule (55 FR 41487) to revise three programs for imports of raw

cane sugar exempt from the tariff-rate quota: ``Sugar To Be Re-exported

in Refined Form'' (7 CFR 1530.100 et seq.), ``Sugar To Be Re-exported

in Sugar Containing Products'' (7 CFR 1530.200 et seq.), and ``Sugar

for the Production of Polyhydric Alcohol'' (7 CFR 1530.300 et seq.). A

final rule, published on July 8, 1991 (56 FR 30857) adopted the interim

rule as final with modifications to various provisions. Since the

promulgation of the final rule, the results of multilateral trade

negotiations require the modification of certain provisions of the

regulations. Some additional proposed revisions in the regulations

result from program management and efficiency considerations.

Requirements of the North American Free Trade Agreement

North American Free Trade Agreement Implementation Act of 1993

(Public Law No. 103-182, 107 Stat. 2057), Presidential Proclamation No.

6641 of December 15, 1993 (58 FR 66867), implemented the North American

Free Trade Agreement (NAFTA). Paragraph 22(a) of Section A of Annex

703.2 of the NAFTA provides for the duty-free entry of raw cane sugar

from Mexico for refining in the United States and re-export to Mexico

and for the duty-free entry of refined sugar from Mexico that has been

refined from raw sugar produced in the United States (NAFTA U-turn

provision). U.S. note 17(b) to subchapter VI of chapter 99 of the HTS

incorporates this provision into U.S. statutory law.

The two noteworthy sections of this rule are (1) That sugar

imported under this provision must be re-exported in refined form, and

not as a sugar containing product, within 18 months of the date of

entry, and; (2) sugar entered under this provision will have no affect

on the refiner's license balance.

The Foreign Agricultural Service proposes amending the current

rules to permit the Sugar Team to implement the NAFTA U-turn provision.

Changes in Chapter 17 of the HTS

Presidential Proclamation No. 6763 of December 23, 1994 (60 FR

1007) amended the HTS, effective January 1, 1995, in order to carry out

the tariff modifications provided for by the Uruguay Round Agreements

Act. Former tariff subheading 1701.11.02, which provided for the quota-

exempt sugar entries and is cited repeatedly in the regulations, was

replaced by a new subheading 1701.11.20. Moreover, former additional

U.S. note 3(c) was replaced by a revised additional U.S. note 6, which

now reads as follows:

Raw cane sugar classifiable in subheading 1701.11.20 shall be

entered only to be used for the production (other than by

distillation) of polyhydric alcohols, except polyhydric alcohols for

use as a substitute for sugar in human food consumption, or to be

refined and reexported in refined form or in sugar-containing

products, or to be substituted for domestically produced raw cane

sugar that has been or will be exported. The Secretary of

Agriculture may issue licenses for such entries and may promulgate

such regulations (including any terms, conditions, certifications,

bonds, civil penalties, or other limitations) as are appropriate to

ensure that sugar entered under this subheading is used only for

such purposes.

Authorization of civil penalties is a new provision.

The President's Regulatory Reinvention Initiative, Memorandum of

March 4, 1995, obliges department heads, including the Secretary of

Agriculture, to incorporate flexibility into the administration of

civil penalties. Current regulations use liquidated damages to protect

the domestic sugar program against injury from unauthorized use of the

Refined Sugar Re-export Program, the Sugar Containing Products Re-

export Program or the Polyhydric Alcohol Program. However, the

liquidated damages currently in the regulations provide no flexibility

in the assessment of damages. Presidential Proclamation No. 6763 grants

the Secretary of Agriculture the authority to institute civil penalties

for non-compliance with the re-export program. Civil penalties could be

imposed for certifying inaccurate information to the Licensing

Authority or violating the terms of the license, including the license

balance limit.

Under the proposed rule, civil penalties will be imposed in the

following situations, in ascending order of severity: (1) for failure

to submit quarterly reports in a timely manner; (2) for submitting

reports with incorrect information; (3) for exceeding the license

limits on charges or credits; (4) for exceeding the time limits within

which licensees must credit their license. The latter two require that

the licensee maintain its balance within the license limits at all

times.

The availability of civil penalties as an enforcement mechanism

reduces the need to require that a licensee post a bond. Combined with

changes in license limits outlined below the bond requirement is no

longer necessary; accordingly, FAS proposes to remove the bond

requirements.

Thus, FAS proposes amending the regulations (1) to change

references to additional U.S. note 3 and subheading 1701.11.02 to

references to additional U.S. note 6 and subheading 1701.11.20,

respectively, (2) to convert from liquidated damages to civil penalties

as a means of enforcement of the regulatory requirements, and (3) to

eliminate the bond requirement.

Changes in Drawback

Section 404(e)(5) of the Uruguay Round Agreements Act amended

section 313 of the Tariff Act of 1930 to provide, in a new subsection

(w), that ``no drawback shall be available with respect to an

agricultural product subject to the over-quota rate of duty established

under a tariff-rate quota, except pursuant to subsection (j)(1).'' This

provision will prevent the drawback of over-quota import duties in all

cases except where imported sugar is re-exported without any

substitution or processing. Accordingly, FAS proposes eliminating all

references to customs duty drawback in the current regulations.

Transitional Provisions

Current regulations provided transitional provisions for the period

during which the former absolute import quota was converted to a

tariff-rate quota and licenses were replaced. Since these provisions no

longer have any relevance, FAS proposes deleting them.

Polyhydric Alcohol Program

FAS proposes converting the licenses of polyhydric alcohol

manufacturers from import licenses into ``transfer'' licenses under

which licensees would contract with refiners for transfers of refined

sugar rather than import foreign sourced raw sugar directly. This

change

[[Page 40752]]

would enable licensees to receive the benefits of polarity adjustments,

and it would extend the time period for use of program sugar by moving

the start of the period from the date of entry of the imported raw

sugar to the later date of transfer of the refined sugar. The change

would also facilitate program administration.

Other Changes

FAS is proposing changes in the current maximum license balance

amounts. The changes to increase the credit limit and reduce the

maximum limit on charges will alleviate the need for bonds. In

addition, FAS is proposing the creation of a consolidated license that

would cover both a parent corporation and its wholly-owned subsidiaries

under one license. The proposed rule authorizes the use of co-packers

in certain circumstances; the licensees would be responsible for

license transactions and activities of co-packers acting on their

behalf.

FAS would also welcome comments on whether quantities of sugar

transferred by a refiner to sugar containing products manufacturers and

polyhydric alcohol producers should be counted against the refiner's

maximum license balance limit.

List of Subjects in 7 CFR Part 1530

Sugar, Agriculture, Agricultural trade, International trade,

Exports, Imports.

Accordingly, FAS is proposing to revise 7 CFR part 1530 to read as

follows:

PART 1530--REFINED SUGAR RE-EXPORT PROGRAM, THE SUGAR CONTAINING

PRODUCTS RE-EXPORT PROGRAM AND THE POLYHYDRIC ALCOHOL PROGRAM

1530.100 General statement.

1530.101 Definitions.

1530.102 Nature of the license.

1530.103 License eligibility.

1530.104 Application for a license.

1530.105 Terms and conditions.

1530.106 License charges and credits.

1530.107 Expiration or surrender of licenses.

1530.108 Reporting and certification.

1530.109 Records and documentation.

1530.110 Enforcement and penalties.

1530.111 Administrative appeals.

1530.112 Waivers.

1530.113 Paperwork Reduction Act assigned number.

Authority: Additional U.S. note 6 to chapter 17 of the

Harmonized Tariff Schedule of the United States (19 U.S.C. 1202); 19

U.S.C. 3314; Proc. 6641, 58 FR 66867, 3 CFR, 1994 Comp., p. 172;

Proc. 6763, 60 FR 1007, 3 CFR, 1995 Comp., p. 146.

Sec. 1530.100 General statement.

Under the provisions of the regulations of this part, raw sugar may

be imported unrestricted by the quantitative limit established for the

tariff-rate quota for importation of raw cane sugar and not subject to

the certificate of quota eligibility requirements provided for in 15

CFR part 2011, as long as an equivalent quantity of refined sugar is

exported, either as refined sugar or as an ingredient in a sugar

containing product, or is used in the production of certain polyhydric

alcohols. A raw cane sugar refiner may receive a license to import raw

sugar under the provisions of these regulations, which becomes program

sugar and is charged against the refiner's license balance. Refiners

may receive credit to their license balance by selling sugar in the

world market or by transferring sugar to a licensed manufacturer of a

sugar containing product or licensed producer of polyhydric alcohol. A

manufacturer of a sugar containing product may receive a license to

accept transfers of refined program sugar from licensed refiners which

will be charged against its license balance. A manufacturer may receive

credit to its license balance for exports of program sugar in sugar

containing products. A producer of polyhydric alcohol may receive a

license to accept transfers of refined program sugar from licensed

refiners which will be charged against its license balance. A producer

may receive credit to its license balance for use of sugar in the

production of certain polyhydric alcohols. For all licensees, credits

shall be made within the time-limits and the balance shall be within

the quantity limits set forth in this part. For the purposes of these

programs, program sugar and non-program sugar are substitutable.

Sec. 1530.101 Definitions.

Additional U.S. note 6 means additional U.S. note 6 to chapter 17

of the HTS.

Affiliated person means two or more persons where one or more of

said persons directly or indirectly control or have the power to

control the other(s), or, a third person controls or has the power to

control the rest. Indicia of control include, but are not limited to:

interlocking management or ownership, identity of interests among

family members, shared facilities and equipment, and common use of

employees.

Certain polyhydric alcohols means any polyhydric alcohol, except

polyhydric alcohol produced by distillation or polyhydric alcohol used

as a substitute for sugar as a sweetener in human food.

Date of entry means the date of entry on the relevant U.S. Customs

Service entry form.

Date of export means (1) The on-board date of an ocean going

carrier bill of lading or an airway bill of lading; (2) if export

occurs by rail or truck, the date on the inland bill of lading; or (3)

if exported to a foreign trade zone, the date of entry shown on the

U.S. Customs Service form designating the product as restricted for

export.

Date of transfer means the date of shipment on a relevant inland

bill of lading or the date of a relevant warehouse receipt.

Day means calendar day.

Enter or entry means importation into the U.S. customs territory,

or withdrawal from warehouse, for consumption, as those terms are used

by the U.S. Customs Service.

HTS means the Harmonized Tariff Schedule of the United States.

Licensing Authority means the Team Leader, Sugar Team, Import

Policies and Programs Division, Foreign Agricultural Service, USDA, or

the Team Leader's designee.

Manufacturer of a sugar containing product means a person who owns

and operates a food processing facility that is used in the manufacture

of a sugar containing product.

Materially incorrect includes mistakes in reporting the customs

entry number or information required from the bill of lading, or errors

that affect the license balance.

Notice of transfer means a document certifying transfer of a

specified quantity of program sugar, in form and substance satisfactory

to the Licensing Authority.

Person means any individual, partnership, corporation, association,

estate, trust or any other business enterprise or legal entity.

Polyhydric Alcohol Program means the licensing program provided for

in this part for manufacturers of polyhydric alcohols, including all of

the terms conditions and requirements applicable to such licensees.

Program sugar means sugar that has been imported, transferred,

exported, either in refined form or as an ingredient in a sugar

containing product, or used in the production of certain polyhydric

alcohols in conformity with the provisions of this part.

Program transaction means an appropriate entry, export, either in

refined form or as an ingredient in a sugar containing product,

transfer, acceptance of transfer or production of certain polyhydric

alcohols.

[[Page 40753]]

Refined sugar means any product that is produced by a refiner by

refining raw cane sugar and that can be marketed as commercial,

industrial or retail sugar.

Refined Sugar Re-export Program means the licensing program

provided for in this part for refiners of raw cane sugar, including all

of the terms conditions and requirements applicable to such licensees.

Refiner means any person in the U.S. customs territory that refines

raw sugar through:

(1) Affination or defecation;

(2) Clarification; and

(3) Further purification by absorption or crystallization.

Sugar containing product means any product, other than those

products normally marketed by cane sugar refiners, that is produced

from refined sugar or to which refined sugar has been added as an

ingredient.

Sugar Containing Products Re-export Program means the licensing

program provided for in this part for manufacturers of sugar containing

products, including all of the terms conditions and requirements

applicable to such licensees.

Transfer means the transfer of physical possession or legal title

of program sugar from a licensed refiner to a licensed manufacturer of

a sugar containing product or a licensed producer of polyhydric

alcohol.

USDA means the United States Department of Agriculture.

Sec. 1530.102 Nature of the licenses.

(a) A person who wants to participate in the Refined Sugar Re-

export Program, the Sugar Containing Products Re-export Program, or the

Polyhydric Alcohol Program must obtain a license from the USDA, through

the Licensing Authority.

(b) A license granted to a refiner under the Refined Sugar Re-

export Program permits the refiner to receive entries of imported raw

cane sugar under subheading 1701.11.20 of the HTS, which are not

subject to the quantitative limitations or certificate of quota

eligibility requirements of the tariff-rate quota for imports of raw

cane sugar. Such license requires a refiner licensee to refine raw

sugar within the U.S. customs territory and export or transfer a

quantity of refined sugar equivalent to the quantity of raw sugar

imported within the required time-frames.

(c) A license granted to a manufacturer of a sugar containing

product under the Sugar Containing Products Re-export Program permits

the manufacturer to receive transfers of refined sugar from licensed

refiners. Such license requires a manufacturer licensee to export an

equivalent quantity of sugar as an ingredient in a sugar containing

product that has been manufactured in the U.S. customs territory within

the required time-frames.

(d) A license granted to a producer of polyhydric alcohol under the

Polyhydric Alcohol Program permits the producer to receive transfers of

refined sugar from licensed refiners. Such license requires the

producer licensee use an equivalent quantity of sugar in the production

of certain polyhydric alcohols in the U.S. customs territory within the

required time-frames.

(e) Program participants may use sugar to produce certain

polyhydric alcohols, transfer sugar, or export sugar, whether in

refined form or as an ingredient in a sugar containing product, in

anticipation of future purchases of program sugar as long as such

transactions maintain license balances within permitted license limits.

Sec. 1530.103 License eligibility.

(a) Any refiner with a facility within the U.S. customs territory

is eligible for a license to participate in the Refined Sugar Re-export

Program.

(b) Any manufacturer of a sugar containing product with a facility

within the U.S. customs territory is eligible for a license to

participate in the Sugar Containing Products Re-export Program.

(c) Any producer of certain polyhydric alcohol with a facility

within the U.S. customs territory is eligible for a license to

participate in the Polyhydric Alcohol Program.

(d) No person may apply for or hold more than one license including

a license held by an affiliated person.

(e)(1) Notwithstanding paragraph (d) of this section, a corporation

which owns one or more wholly-owned subsidiary corporations that would

otherwise qualify for an individual license is eligible for a

consolidated license to cover the program transactions and other

program activities of both the parent corporation and the subsidiary

corporation(s).

(2) For purposes of the regulations in this part, the program

transactions and other program activities of the subsidiary

corporations covered by a consolidated license will be treated as the

activities of the corporation holding the consolidated license.

(3) The maximum license balance limits for a consolidated license

will be two times larger than the limits provided for in

Sec. 1530.105(g).

Sec. 1530.104 Application for a license.

(a) A person seeking a license may apply in writing to the

Licensing Authority and shall submit the following information:

(1) The name and address of the applicant;

(2) The address at which the applicant will maintain the records

required under Sec. 1530.108;

(3) The address(es) of the applicant's processing plant(s),

including those of any co-packers;

(4) A description of the applicant's product(s), and

(i) In the case of a refined sugar product, the polarity of the

product and the formula proposed by the refiner for calculating the raw

value of the product;

(ii) In the case of a sugar containing product, the percentage of

refined sugar (100 degree polarity), on a dry weight basis, contained

in such product(s); or

(iii) In the case of polyhydric alcohol, the quantity of refined

sugar used producing such polyhydric alcohol; and

(5) A certification that the applicant is not affiliated to any

other licensee.

(b) If any of the information required by paragraph (a) of this

section changes, the licensee shall promptly apply to the Licensing

Authority to amend the application including such changes.

Sec. 1530.105 Terms and conditions.

(a) A refiner who holds a license under the Refined Sugar Re-export

Program shall, not later than 18 months after the entry of a quantity

of raw cane sugar under subheading 1701.11.20 of the HTS:

(1) export an equivalent quantity of refined sugar; or

(2) transfer an equivalent quantity of refined sugar to a licensed

manufacturer of a sugar containing product or to a licensed producer of

polyhydric alcohol.

(b) A manufacturer of a sugar containing product who holds a

license under the Sugar Containing Products Re-export Program shall,

not later than 18 months from the date of transfer of a quantity of

refined sugar from a licensed refiner, export an equivalent quantity of

refined sugar as an ingredient in a sugar containing product.

(c) A producer of polyhydric alcohol who holds a license under the

Polyhydric Alcohol Program shall, not later than 18 months from the

date of transfer of a quantity of refined sugar from a licensed

refiner, use an equivalent quantity of refined sugar in the production

of certain polyhydric alcohols.

(d) Notwithstanding paragraphs (a) through (d) of this section,

licensees

[[Page 40754]]

may receive credit for the exportation or transfer of refined sugar,

the exportation of a sugar containing product or the production of

certain polyhydric alcohols prior to the corresponding date of entry of

raw cane sugar or the date of transfer of refined sugar to a

manufacturer of a sugar containing product or to a producer of certain

polyhydric alcohols.

(e) Transfers between licensees require a notice of transfer.

(1) A licensed refiner that transfers program sugar to a

manufacturer of a sugar containing product or a producer of polyhydric

alcohol shall send two signed copies of the notice of transfer to the

transferee within 7 days of the date of transfer.

(2) A licensed manufacturer of a sugar containing product or

producer of polyhydric alcohol that accepts a transfer of program sugar

shall retain one copy of the notice of transfer and shall endorse and

return the other copy to the transferring refiner not later than one

month from date of transfer.

(3) Refiners shall retain the returned notice of transfer.

(f) At any given time, charges to a license pursuant to

Sec. 1530.106 shall not be greater than or less than credits to the

license pursuant to such section by more than the following limits:

(1) For refiners, except for entries of raw sugar from Mexico for

refining and re-export to Mexico:

(i) Credits shall not exceed charges by more than 75,000 metric

tons; and

(ii) Charges shall not exceed credits by more than 25,000 metric

tons;

(2) For manufacturers of a sugar containing product:

(i) Credits shall not exceed charges by more than 15,000 short

tons; and

(ii) Charges shall not exceed credits by more than 5,000 short

tons; and

(3) For producers of polyhydric alcohol:

(i) Credits may not exceed charges by more than 15,000 short tons,

and

(ii) Charges shall not exceed credits by more than 5,000 short

tons.

(g) For the purposes of the programs governed by this part, sugar

is fully substitutable. The refined sugar exported or transferred does

not need to be the same sugar produced by refining the raw sugar

entered under subheading 1701.11.20 of the HTS, and the sugar used in

the production of sugar containing products or polyhydric alcohol does

not need to be the same sugar that was transferred by a licensed

refiner.

(h) A licensee may use an agent to carry out the requirements of

participation in the program. Agents may include brokers, shippers,

freight forwarders, expediters and co-packers.

(i) A license may be assigned only with the written permission of

the Licensing Authority and subject to such terms and conditions as the

Licensing Authority may impose.

(j) The Licensing Authority may impose such conditions, limitations

or restrictions in connection with the use of a license at such time

and in such manner as the Licensing Authority, in his or her

discretion, determines to be necessary or appropriate to achieve the

purposes of the relevant program.

(k) Measuring time for complying with license obligations: The date

of completion for complying with an obligation under this part is the

same numbered day in the later month from which the obligation is

measured; except that where there is not the same numbered day in the

later month, the final date for completion shall be the last day of the

later month. Where the final date for completion falls on a weekend or

on a federal holiday, the obligation may be completed on the next

business day.

Sec. 1530.106 License charges and credits.

(a) A refiner's license shall be charged for the quantity of raw

cane sugar entered, and credited for the quantity of refined sugar

exported or transferred.

(b) A manufacturer of a sugar containing product's license shall be

charged for the quantity of refined sugar accepted as a transfer, and

credited for the quantity of sugar exported as an ingredient in a sugar

containing product.

(c) A polyhydric alcohol producer's license shall be charged for

the quantity of refined sugar accepted as a transfer, and credited for

the quantity of sugar used in the production of certain polyhydric

alcohols.

(d) All charges and credits will be made on a 100 deg. polarity

refined sugar, dry weight basis. Quantities of sugar not on that basis

will be adjusted, for the purpose of calculating charges and credits,

using the formulae set forth in paragraph (f) of this section.

(e) Charges and credits will be effective as of the following

dates:

(1) charges for entries, as of the date of entry;

(2) charges and credits for transfers, as of the date of transfer;

(3) credits for exports, as of the date of export; and

(4) credits for production of certain polyhydric alcohols, as of

the date of production.

(f)(1) Quantities of raw cane sugar entered shall be adjusted to a

100 deg., Refined Sugar, dry weight basis as follows:

(i) Determine the quantity, on a raw value basis, of the imported

sugar by multiplying the polarity, on a dry weight basis, by 0.0175; by

subtracting 0.68 from the resulting product; and then by multiplying

the resulting difference by the weight of the imported sugar; and

(ii) Divide the quantity of sugar, raw value basis, determined in

paragraph (f)(1)(i) of this section by 1.07.

(2) Quantities of transferred sugar, or sugar exported by refiners,

shall be adjusted to a 100 deg., 100% sucrose or sucrose equivalent-

refined, dry weight basis.

(3) Quantities of sugar exported by manufacturers of a sugar

containing product shall be adjusted to a 100 deg., 100% sucrose or

sucrose equivalent-refined, dry weight basis.

(4) Quantities of sugar used by producers of certain polyhydric

alcohols shall be adjusted to a 100 deg., 100% sucrose or sucrose

equivalent-refined, dry weight basis.

(g) Credits for exports of sugar as refined sugar or as an

ingredient in a sugar containing product that are subsequently returned

to the U. S. customs territory without a substantial transformation

will be revoked.

Sec. 1530.107 Expiration or surrender of licenses.

(a) A license will expire:

(1) If there have been no charges or credits on the license in any

consecutive 18 month period; or

(2) Upon written notice by the Licensing Authority.

(b) A licensee may surrender a license at any time if credits

exceed charges or, if charges exceed credits, only on terms and

conditions acceptable to the Licensing Authority.

Sec. 1530.108 Reporting and certification.

(a) A licensee shall submit a quarterly report to the Licensing

Authority not later than three months after the close of the reporting

period.

(1) Each report shall be certified as true and correct and shall

certify that the charges and credits are made pursuant to Sec. 1530.106

and documented pursuant to Sec. 1530.109.

(2) The certification shall contain the licensee's name, address,

and license number and be signed by a person acting on behalf of the

licensee.

(3) Reports shall be submitted in electronic format acceptable to

the Licensing Authority. Applicants unable to submit a report in

electronic format may seek a waiver permitting them to submit the

report in hard copy.

(4) Reports may be submitted in person, by U.S. mail, by private

courier, or by other method acceptable to the Licensing Authority.

Reports will be

[[Page 40755]]

deemed submitted when sent, as identified by postmark or other

appropriate date stamp, with sufficient postage affixed. Certified

postal receipt or private courier receipt are acceptable as proof of

filing.

(5) Initial reporting periods will be determined by the Licensing

Authority.

(b)(1) The report shall be in an integrated spreadsheet format with

all program transactions in chronological order including, as

appropriate, entries of raw cane sugar, transfers of refined sugar,

exports of refined sugar or a sugar containing product, and the

production of certain polyhydric alcohols. A copy of this format may be

obtained from the Licensing Authority;

(2) Reports from a refiner shall identify the date and type of each

program transaction, the license balance (keeping a separate balance

for sugar imported from Mexico that will be refined and re-exported to

Mexico) resulting from such transaction, and the following data, as

appropriate:

(i) For entries:

(A) Quantity of program sugar entered (commercial weight--MT);

(B) Polarization;

(C) Refined sugar equivalent, 100 degree, dry weight basis (MT);

(D) Customs entry number;

(E) Warehouse release number where applicable;

(F) Port of entry; and

(G) Country of origin.

(ii) For transfers:

(A) Quantity of refined program sugar transferred (pure sugar, dry

weight basis--cwt);

(B) Sugar content or polarity;

(C) Commercial weight (cwt);

(D) Notice of transfer number; and

(E) Transferee's license number.

(iii) For exports:

(A) Quantity exported (refined sugar, 100 degree, dry weight

basis--MT);

(B) Sugar content or polarity;

(C) Commercial weight (MT);

(D) Port of export;

(E) Country of destination;

(F) Export carrier;

(G) Vessel name;

(H) On-board ocean-going or airway bill of lading number; or where

exports are to Canada or Mexico by rail or truck, inland bill of lading

number; or where exports are to a foreign trade zone, U.S. Customs

Service entry number;

(I) Container number, where the export is by sea;

(J) Name of the freight forwarder or non-vessel operating common

carrier;

(K) Bill of lading number on the bill of lading issued by the agent

identified in paragraph (b)(2)(iii)(J) of this section; and

(L) Consignee or foreign customer.

(3) Reports from a manufacturer of a sugar containing product shall

identify the date and type of each program transaction, the license

balance resulting from such transaction, and the following data, as

appropriate:

(i) For transfers:

(A) Quantity of program sugar transferred (pure sugar, dry weight

basis--cwt);

(B) Sugar content or polarity;

(C) Commercial weight (cwt);

(D) Notice of transfer number; and

(E) Refiner's license number.

(ii) For exports:

(A) Quantity exported (pure sugar, dry weight basis--lbs.);

(B) Percentage sugar contained in the sugar containing product;

(C) Commercial weight of the exported sugar containing product;

(D) Description of the product;

(E) Port of export;

(F) Country of destination;

(G) Export carrier;

(H) Vessel name;

(I) On-board ocean-going or airway bill of lading number; or where

exports are to Canada or Mexico by rail or truck, inland bill of lading

number; or where exports are to a foreign trade zone, U.S. Customs

Service entry number;

(J) Container number, where the export is by sea;

(K) Name of the freight forwarder or non-vessel operating common

carrier;

(L) Bill of lading number on the bill of lading issued by the agent

identified in paragraph (b)(3)(ii)(K) of this section; and

(M) Consignee or foreign customer.

(4) Reports from a producer of polyhydric alcohol shall identify

the date and type of each program transaction; the license balance

resulting from such transaction; and the following data, as

appropriate:

(i) For transfers:

(A) Quantity of program sugar transferred (pure sugar, dry weight

basis--cwt);

(B) Sugar content or polarity;

(C) Commercial weight (cwt);

(D) Notice of transfer number; and

(E) Refiner's license name and number.

(ii) For use in the production of polyhydric alcohol:

(A) Quantity of sugar used (pure sugar, dry weight basis--lbs.);

(B) Percentage sugar contained in the polyhydric alcohol product;

(C) Quantity of product produced (lbs.); and

(D) description of the polyhydric product.

(c) Licensees have an affirmative and continuing duty to maintain

the accuracy of previously certified reports. Upon discovery, licensees

shall immediately charge back erroneously claimed credits and promptly

notify the Licensing Authority. Charge backs shall be as of the date of

the erroneously claimed credit.

Sec. 1530.109 Records and documentation.

(a) Obtaining license credit requires that a licensee obtain and

maintain in their possession the following records pertaining to a

program transaction for thirty-six (36) months from the date of such

program transaction:

(1) For entries:

(i) The U.S. Customs Service entry form; and

(ii) The laboratory polarity and weight out-turn tests used by the

raw sugar seller and the refiner to adjust for polarity.

(2) For transfers: a notice of transfer.

(3) For use of sugar in the production of polyhydric alcohol:

company accounts and records relating to the production of certain

polyhydric alcohol and the use of sugar in such production, including

the sugar content per unit of production and logs identifying total

production.

(4) For exports:

(i) Sales invoice, purchase order, or sales contract identifying

the consignee or foreign purchaser; and

(ii) on-board ocean-going or airway bill of lading; or where

exports are to Canada or Mexico by rail or truck, the inland bill of

lading and foreign country entry document; or where exports are to a

foreign trade zone, U.S. Customs entry form. The Licensing Authority

will maintain a list of acceptable Mexican or Canadian entry documents.

(b) Refiners shall retain, where feasible, the U.S. Customs Service

Form 7512.

(c) The licensee shall, upon request, make the records covered by

this section available for inspection and copying by the Licensing

Authority, the Compliance Review Staff of the Foreign Agricultural

Service, USDA, the Office of the Inspector General, USDA, or the

Department of Justice.

Sec. 1530.110 Enforcement and penalties.

(a) The Licensing Authority will impose civil penalties for late

reports, materially incorrect reports, exceeding a maximum license

balance limit, or exceeding an applicable time-frame. The Licensing

Authority may also revoke credits granted on a license.

(b) The Administrator of the Foreign Agricultural Service, USDA,

may suspend or revoke a license. Suspension of a license will be

governed by 7 CFR part 3017, subpart D and debarment will be governed

by 7 CFR part 3017, subpart

[[Page 40756]]

C. Suspension or revocation of a license will apply to an individual

human being as well as the corporation or other person who held the

license, such that an individual may not simply form a new corporation

or partnership and obtain a new license.

(c) The imposition of civil penalties is not exclusive, and

licensees may be liable for criminal sanctions in the event that

criminal statutes are violated.

(d) Reports not submitted in a timely manner will subject the

licensee to civil penalties. The civil penalties for reports submitted

after the proper filing date will be:

(1) Fifty (50) dollars, if the report is submitted within the first

month after the applicable deadline; and

(2) If more than one month late, an additional fifty (50) dollars

for each week after the end of the first month.

(e) Reports that are incorrect subject the licensee to civil

penalties. The civil penalty for:

(1) Incorrect reports, where the error is not material, will be

$50.00;

(2) The first materially incorrect report submitted will be

$300.00; and

(3) Subsequent materially incorrect reports, where the prior

materially incorrect submission occurred in the last 12 months, will be

$500.00.

(f) Exceeding license limits will subject licensees to loss of

credit or civil penalties.

(1) Where license credits are greater than license charges by more

than the maximum license balance limit, licensees shall forfeit credit

in excess of the maximum license balance limit.

(2) Where license charges are greater than license credits by more

than the license balance, licensees shall pay a civil penalty of 15

cents per pound.

(g) Not crediting a license against prior charges within the time

limits set forth in Secs. 1530.102 (c), (d) and (f) will subject the

licensee to civil penalties of 15 cents per pound.

Sec. 1530.111 Administrative appeals.

(a) This section provides for administrative appeal of a

determination by the Licensing Authority to revoke a credit on a

license, or impose civil penalties. The decision on such appeal shall

be made by the Director, Import Policies and Programs Division, Foreign

Agricultural Service (``Director''), or his or her designee. Appeals

for suspension and debarment will be governed by Sec. 3017.515 of this

title.

(b) The licensee may appeal the Licensing Authority's determination

by filing a written notice of appeal, signed by the licensee or the

licensee's agent, with the Director. The appeal may be filed in the

office of the Director, or by mail with a postmark dated, not later

than 30 days after the date of the Licensing Authority's determination.

The licensee should submit a written argument in support of its

position at the time it files its appeal. If the licensee does not make

a timely appeal, any license credit revocation, civil penalty, or other

proposed administrative determination will take effect in accordance

with the Licensing Authority's determination. If the licensee seeks an

informal hearing, it shall so request in its notice of appeal. The

licensee may request that the informal hearing be scheduled within 30

days of the filing date of its notice of appeal.

(c)(1) Ordinarily, informal hearings will be held only at the

request of the licensee. If no informal hearing is requested, the

Director will make his or her determination on the basis of the written

submission and any other available information. The hearing shall be

held at the place and time determined by the Director, except that it

shall be held within 30 days of the filing date of the notice of appeal

if the licensee so requests.

(2) Hearings will be conducted by the Director in a manner as

informal as practicable, consistent with the principles of fundamental

fairness.

(3) The licensee may be represented by counsel.

(4) The licensee shall have a full opportunity to present any

relevant evidence, documentary or testimonial, and to make arguments in

support of its position. The Director may permit other individuals to

present evidence at the hearing, and the licensee shall have an

opportunity to question those witnesses.

(5) A verbatim transcript of the hearing may be made at the

direction of the Director, or at the request of the licensee. If the

licensee requests a transcript be made, it shall be responsible for

arranging for a professional reporter and shall pay all attendant

expenses.

(d) The Director shall make the determination on appeal, and may

affirm, reverse, modify or remand the Licensing Authority's

determination. The Director shall notify the licensee in writing of the

determination on appeal and of the basis thereof. The determination on

appeal exhausts the licensee's administrative remedies.

Sec. 1530.112 Waivers.

(a) Upon written application of the licensee or at the discretion

of the Licensing Authority and for good cause, the Licensing Authority

may extend the period for transfer or export, may temporarily increase

the maximum license balance limit, may extend the period for submitting

regularly scheduled reports and certifications, or may temporarily

waive or modify any other requirement imposed by this part if the

Licensing Authority determines that such a waiver will not undermine

the purpose of the relevant program or adversely affect domestic sugar

policy objectives. The Licensing Authority may specify additional

requirements or procedures in place of the requirements or procedures

waived or modified.

(b) Waivers of civil penalties will be disfavored and only issued

under extraordinary circumstances.

Sec. 1530.113 Paperwork Reduction Act assigned number.

Licensees are not required to respond to requests for information

unless the form for collecting information displays a currently valid

Office of Management and Budget control number. The Office of

Management and Budget has approved the information collection

requirements contained in this part in accordance with 44 U.S.C.

chapter 35 and OMB number 0551-0015 has been assigned and will expire

August 31, 1997.

Signed at Washington, DC on July 17, 1996.

Timothy J. Galvin,

Acting Administrator, Foreign Agricultural Service.

[FR Doc. 96-19521 Filed 8-5-96; 8:45 am]

BILLING CODE 3410-10-P