End-Use Certificate Program

DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 782

RIN 0560-AF64

End-Use Certificate Program

AGENCY: Farm Service Agency, USDA.

ACTION: Final rule.

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SUMMARY: This final rule will amend regulations governing the End-Use

Certificate Program for imported Canadian wheat to allow the Farm

Service Agency (FSA) to collect additional information regarding

distinguishing characteristics of imported wheat. This rule also will

revise the definition of importer to include only the importer of

record as recognized by the U.S. Customs Service. Lastly, the deadline

for submission of the End-Use Certificate will be revised from 15 work

days to 10 work days after the date of entry. These changes are

necessary to facilitate a cooperative effort between FSA and the U.S.

Customs Service to make End-Use Certificates a part of the official

entry summary package. These changes will also help ensure that

Canadian wheat will not benefit from U.S. export programs. This rule

takes into consideration the comments received on a January 13, 1999

proposed rule (64 FR 2152).

EFFECTIVE DATE: March 16, 1999.

FOR FURTHER INFORMATION CONTACT: Timothy R. Murray, Chief, Inventory

Management Branch, U.S. Department of Agriculture, Farm Service Agency,

STOP 0553, 1400 Independence Avenue, SW, Washington, DC 20250-0553;

telephone (202) 720-6125; FAX (202) 690-0014; E-mail

Tim__M[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule is issued in conformance with Executive Order 12866 and

has been determined not significant and therefore has not been reviewed

by the Office of Management and Budget under Executive Order 12866.

Executive Order 12778

This rule has been reviewed in accordance with Executive Order

12778. The provisions of this final rule do not preempt State laws, are

not retroactive, and do not involve administrative appeals.

Paperwork Reduction Act

The amendments to 7 CFR part 782 set forth in this proposed rule

involve a change in the existing information collection requirements

which were previously cleared by OMB under the provisions of 44 U.S.C.

35. In accordance with Sec. 3507(j) of the Paperwork Reduction Act of

1995 (44 U.S.C. 3501 et seq.), the information collection and

recordkeeping requirements were included in the proposed rule and a

request for emergency approval was submitted to the Office of

Management and Budget (OMB). OMB has assigned control number 0560-0151

to the information collection and recordkeeping requirements. A regular

submission of the information collection will be forwarded to OMB at

the end of the comment period.

Regulatory Flexibility Act

On January 26, 1995, FSA published a final rule that established

program requirements for the End-Use Certificate Program. A copy of

this Regulatory Flexibility Analysis is available upon request from

Timothy Murray, Warehouse and Inventory Division, FSA, STOP 0553, 1400

Independence Avenue, Washington, DC 20250-0553; telephone (202) 690-

4321.

Because these changes will not have an adverse impact on a

substantial number of small businesses, a Regulatory Flexibility

Assessment is not required.

Environmental Evaluation

It has been determined by an environmental evaluation that this

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

environment. Therefore, neither an Environmental Assessment nor an

Environmental Impact Analysis is needed.

Executive Order 12988

This final rule has been reviewed in accordance with Executive

Order 12988. The provisions of this rule are not retroactive and do not

preempt any State laws.

Executive Order 12372

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

Order 12372, which requires intergovernmental consultation with State

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

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

Background

This final rule amends the regulations at 7 CFR Part 782 with

respect to the U.S. End-Use Certificate Program. Since February 27,

1995, the effective date for the implementation of the End-Use

Certificate Program, several items have been identified that could

improve the effectiveness and the efficiency of the End-Use Certificate

Program. To further ensure that Canadian wheat does not benefit from

U.S. export programs, End-Use Certificates will include distinguishing

characteristics of grade, protein content, moisture content, dockage

and date of sale in addition to the class and/or varietal information

currently collected for each shipment. These additional data are deemed

necessary because imported wheat may benefit from U.S. export programs

even if the imported wheat itself is not directly eligible for use

under such programs. Such benefit may accrue if wheat of the type or

quality used under U.S. export programs (including humanitarian

assistance programs) is imported into the United States in anticipation

of, or as a result of use of a similar type or quality of U.S. wheat

under the U.S. program. Indeed, the Department of Agriculture is

frequently implored not to take action to facilitate sales of U.S.

wheat out of a concern that such sales will only encourage off-setting

imports of Canadian wheat. This rule provides for the collection of

necessary information to monitor for such an occurrence and potentially

allow appropriate actions to minimize such an occurrence. In addition,

these additional data will help facilitate effective program audits

while minimizing the burden on importers of Canadian wheat.

This rule will also replace the current definition used for

``Importer'' found at 7 CFR 782.2 with the same definition

[[Page 12885]]

used by the U.S. Customs Service and found at 19 U.S.C. 1484(a).

The U.S. Customs Service has amended the provisions of their basic

import bond to allow for the assessment of damages if there is a

failure to provide the End-Use Certificate in the time period provided

by FSA.

Public Comments

A proposed rule was published in the Federal Register (64 FR 2152)

on January 13, 1999. Comments from interested parties were due on or

before January 25, 1999. A total of 12 comments were received from 7

different sectors as follows: 5 Industry Associations; 2 State

Agriculture Departments; 1 Interested Party; 1 Grain Company; 1 Foreign

Government; 1 Foreign Wheat Board; 1 U.S. Government Official. Of the

above comments 4 were against the proposed rule, and 8 were in favor of

the proposed rule.

Comments opposing the proposed rule addressed different aspects as

follows:

1. Reduction to 10 days for submission of Certificate

Issue: Impracticality in transactions involving multiple parties (1

Comment).

Response: Only one of the parties (the importer of record) is

responsible for the submission.

2. Additional identifying characteristics

Issue: Sensitivity of proprietary information (2 Comments).

Response: We agree that this data is proprietary and is therefore

exempt from disclosure under 5 U.S.C 552(b)(4) as confidential

commercial or financial information.

Issue: Changes will exacerbate trade conflicts between U.S. and

Canada (2 Comments).

Response: This data will provide valuable insight that should help

mitigate some of the misinformation and misunderstanding surrounding

the Canadian Wheat Board's sales into the United States. In response to

previous requests from the United States for this type of information,

Canadian officials have encouraged the United States to use its own

data gathering sources.

Issue: Domestic Origin regulations are sufficient to cover this

issue (1 Comment).

Response: All U.S. export programs authorized under the

Agricultural Trade Act of 1978, as amended, require that any

agricultural commodity benefitting from the particular program be

entirely produced in the United States. Enforcement of this rigorous

standard requires additional information to facilitate identification

of the distinguishing characteristics of Canadian wheat. With respect

to other programs, a vendor or exporter would only have to demonstrate

access to an amount of U.S. wheat equivalent to that exported in the

transaction to satisfy the applicable origin requirement. To the extent

such origin requirements rely on inventory accounting of a fungible,

commingled mass, collection of information on distinguishing

characteristics of Canadian wheat will facilitate proper accounting.

Issue: Most sales are based on destination weights and grades (1

Comment).

Response: The contractual terms (i.e. minimum grades and factors)

should be sufficient for tracking purposes.

Issue: Date of Sale is too ambiguous to be useful (1 Comment).

Response: We agree that the date of sale could be an issue of

interpretation. Consequently, if there is a contract for sale giving

rise to the particular import, the date of the contract is required. If

no contract for sale exists, the date of entry will be accepted.

The opposition comments also pointed out that there is no evidence

that Canadian wheat is benefitting, either directly or indirectly, from

any USDA programs. Our response is that with this additional data we

will be better able to ascertain whether that is true.

Other comments were received that did not directly address the

proposed changes. These comments are summarized as follows:

1. Collect information regarding total damage and vitreous kernel

content to enhance identification of the imported wheat.

Response: Total damage is integral to the U.S. grade and standards

that will be collected. Dark, hard, and vitreous kernel count (DHV) is

integral in the classing of spring wheat and durum.

2. Utility grade ``feed wheat'' should be denatured because grade

factors will not be available.

Response: Not within the scope of this rulemaking.

3. Standardize the testing procedures between NAFTA participants.

e.g. moisture/protein relationships, dockage removal, and Near Infrared

Reflectance Technology (NIRT) testing for protein.

Response: Not within the scope of this rulemaking.

4. Require licensed Inspection Certificates for all imported grain

(especially Canadian wheat).

Response: Not within the scope of this rulemaking.

List of Subjects in 7 CFR Part 782

Administrative practice and procedure, Barley, Reporting and

Recordkeeping, Wheat.

Accordingly, the provisions of 7 CFR part 782 are amended as

follows:

PART 782--END-USE CERTIFICATE PROGRAM

1. The authority citation for part 782 continues to read as

follows:

Authority: 19 U.S.C. 3391(f).

2. Amend Sec. 782.2 to revise the definition for ``Importer'' to

read as follows:

Sec. 782.2 Definitions

* * * * *

Importer means a party qualifying as an Importer of Record pursuant

to 19 U.S.C. 1484(a).

* * * * *

3. Amend Sec. 782.12(a) as follows:

A. Revise the first sentence to read as follows:

``Each entity that imports wheat originating in Canada shall, for

each entry into the U.S., obtain form FSA-750, End-Use Certificate for

Wheat, from Kansas City Commodity Office, Warehouse Contract Division,

P.O. Box 419205, Kansas City, MO 64141-6205, and submit the completed

original form FSA-750 to KCCO within 10 workdays following the date of

entry or release.''

B. Redesignate paragraph (a)(6) through (a)(9) as paragraphs (a)(8)

through (a)(11), and add new paragraphs (a)(6) and (a)(7) to read as

follows:

Sec. 782.12 FSA, End-Use Certificate for Wheat.

(a) * * *

(6) Grade, protein content, moisture content, and dockage level of

wheat being imported,

(7) If imported as a result of a contract for sale, the date of

such contract.

* * * * *

Signed at Washington, DC, on March 11, 1999.

Keith Kelly,

Administrator, Farm Service Agency.

[FR Doc. 99-6381 Filed 3-15-99; 8:45 am]

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