[Federal Register Volume 60, Number 83 (Monday, May 1, 1995)]
[Rules and Regulations]
[Pages 21037-21039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10600]



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DEPARTMENT OF AGRICULTURE
7 CFR Part 1494


Export Bonus Programs

AGENCY: Commodity Credit Corporation (CCC), USDA.

ACTION: Final rule.

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SUMMARY: CCC is issuing this final rule to amend its regulations to: 
(1) Delete the export experience requirement for qualification to 
participate in the Export Enhancement Program (EEP) and the Dairy 
Export Incentive Program (DEIP) and (2) establish the time at which new 
program participants would be eligible to receive bonus payments. These 
amendments are intended to provide the opportunity for a greater number 
of U.S. exporters to participate in the EEP and the DEIP. The final 
rule also amends several provisions of the regulations to make them 
clearer, easier to read, and more consistent with the regulations that 
apply to some of the other CCC export programs.

EFFECTIVE DATE: May 31, 1995.

FOR FURTHER INFORMATION CONTACT: L.T. McElvain, Director, CCC 
Operations Division, Foreign Agricultural Service, U.S. Department of 
Agriculture, AG Box 1035, Washington D.C., 20250-1035; Fax (202) 720-
2949; Telephone (202) 720-6211. The U.S. Department of Agriculture 
(USDA) prohibits discrimination in its programs on the basis of race, 
color, national origin, sex, religion, age, disability, political 
beliefs, and marital or familial status. Persons with disabilities who 
require alternative means for communication of program information 
(braille, large print, audiotape, etc.) should contact the USDA Office 
of Communications at (202) 720-5881 (voice) or (202) 720-7808 (TDD).

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final rule is issued in conformance with Executive Order 
12866. It has been determined to be neither significant nor 
economically significant for the purposes of E.O. 12866 and, therefore, 
has not been reviewed by the Office of Management and Budget (OMB).

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this final rule since CCC is not required by 5 U.S.C. 553 
or any other provision of law to publish a notice of rulemaking with 
respect to the subject matter of this rule.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372, which requires intergovernmental consultation with State and 
local officials. See notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Environmental Evaluation

    It has been determined by an environmental evaluation that this 
action will not have a significant impact on the quality of the human 
environment. Therefore, neither an Environmental Assessment nor an 
Environmental Impact Statement is needed.

Paperwork Reduction Act

    The information collection requirements contained in this rule have 
previously been submitted to OMB for review under the Paperwork 
Reduction Act and were assigned OMB control numbers 0551-0028 and 0551-
0029.

Executive Order 12778

    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This final rule will have preemptive effect with 
respect to any [[Page 21038]] state or local laws, regulations, or 
policies which conflict with such provisions or which otherwise impede 
their full implementation. The rule will not have retroactive effect. 
The regulations currently require that certain administrative remedies 
be exhausted before suit may be filed, and this final rule does not 
change this requirement.
    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.

Background

    CCC published a proposed rule in the Federal Register of January 
18, 1995 (60 FR 3564) that would amend 7 CFR part 1494 to delete the 
export experience requirement for qualification to participate in the 
EEP and the DEIP and establish the time at which new program 
participants would be eligible to receive bonus payments. In addition, 
CCC proposed that changes be made to the regulations to require a 
certification from exporters seeking to qualify for program 
participation; to delete unnecessary or redundant language; and to 
inform qualified exporters in a more direct fashion that they have a 
duty to update information they have provided to CCC pursuant to 7 CFR 
1494.301(a) to ensure that it is current and accurate. The proposed 
rule also contained other minor, non-substantive changes intended to 
make the rule clearer, easier to read, and more consistent with the 
regulations that apply to some of the other CCC export programs.

Comments

    The deadline for submitting comments on the proposed rule was March 
20, 1995. CCC received comments from six U.S. exporters, two producer 
associations, and one U.S. trade association. These nine parties made 
approximately 12 separate and significant comments regarding the 
proposed rule.
    Five commenters expressed support for CCC's proposal to delete the 
export experience requirement. One commenter stated that the export 
experience requirement has seriously limited participation in the DEIP 
by certain exporters. Another commenter felt that this requirement has 
had the effect of creating a monopoly which reduced the competitive 
edge of U.S. exports. Furthermore, this respondent felt that the 
experience requirement has forced novice exporters to have to deal with 
export sales agents qualified under the EEP or DEIP. This additional 
layer, in the view of the commenter, decreases the efficiency of the 
export sale. One commenter felt that a firm that has the contacts and 
resources to do business overseas should be allowed the opportunity to 
do international business, through its participation in the programs, 
in the same way that it has the opportunity to do business in the 
domestic market.
    Another commenter felt that the experience requirement has 
restricted the ability of many U.S. dairy product companies to export 
and that dispensing with this requirement will broaden the potential 
exporter base for U.S. dairy products. This respondent, however, was 
opposed to CCC's proposal to defer payment of bonuses to new program 
participants until they have demonstrated their ability to participate 
successfully in a program. This commenter expressed the opinion that 
this provision of the proposed rule is discriminatory because the 
timing of the receipt of the export bonus and the performance security 
requirements work to the competitive disadvantage of novice exporters 
and the advantage of experienced exporters.
    Four commenters disagreed with the proposal to delete the export 
experience requirement. These commenters were concerned that removal of 
this requirement would, in some way, threaten the integrity of the EEP 
and DEIP and the image of the United States as a reliable export 
supplier. One commenter felt that the qualification requirements in the 
current DEIP regulations are not onerous and can be readily satisfied 
by parties who are seriously interested in developing export business. 
One commenter expressed the opinion that the deletion of the experience 
requirement could encourage export transactions by parties that lack 
the experience and financial standing to successfully execute such 
transactions. One commenter felt that removal of the experience 
requirement would open the programs to potential fraud. This commenter 
advocated that even more controls be placed on program participation.
    Another respondent felt that, if the experience requirement is 
deleted, the market would be plagued with companies and brokers that 
are inexperienced and perhaps less than honest. Program particiaption 
by inexperienced companies would, in the long run, cause small domestic 
producers to shy away from the international market, because of bad 
experiences, and foreign buyers to buy solely from large companies. 
However, this commenter did express support for the change in the 
proposed rule such that an exporter would simply qualify one time to be 
eligible for a program and could thereafter export any eligible 
commodity under that program.
    CCC did not receive comments on any of the other proposed changes 
to 7 CFR part 1494.

Discussion

    After considering all of the significant comments, CCC has 
determined to make the changes to 7 CFR 1494.201 and 1494.301 as 
proposed. CCC agrees with those commenters that expressed the view that 
the deletion of the export experience requirement will permit 
additional companies to participate in the EEP and DEIP and increase 
competition for export business.
    CCC does not agree with those commenters that felt that the 
additional exporters that will participate in the EEP and DEIP as a 
result of this change will present an increased threat to the programs 
as a result of abuse or fraud. CCC will continue to require performance 
security from exporters and take aggressive action in the face of any 
apparent program violations. In addition, CCC does not agree with the 
commenters' views that allowing inexperienced exporters to participate 
in the programs will adversely affect other small exporters' 
participation or domestic suppliers' relationships with exporters, 
because domestic suppliers can take steps to evaluate individual 
exporters and to protect themselves from nonperformance and other 
potential exporter problems.
    The proposed timing of the bonus payments to new program 
participants will provide a means of allowing exporters to gain 
experience within the program, yet protect CCC from paying a bonus 
until the product arrives in the eligible country. CCC's intention, in 
adopting this bonus mechanism, is to address the types of concerns 
about potential program abuse raised by some commenters. Furthermore, 
while the timing of the bonus payment is different for qualified 
exporters and those without proven program participation, the amount of 
performance security required and the timing of the release of the 
performance security for both categories of exporters will be the same. 
Therefore, CCC has designed a mechanism which will impose the minimal 
additional burden on new [[Page 21039]] program participants necessary 
to protect CCC's interests.

List of Subjects in 7 CFR Part 1494

    Administrative practice and procedure, Agricultural commodities, 
Exports, Government contracts, Reporting and recordkeeping 
requirements.
    Accordingly, 7 CFR part 1494 is amended to read as follows:

PART 1494--EXPORT BONUS PROGRAMS

Subpart B--Export Enhancement Program Operations

    1. The authority citation for 7 CFR part 1494, subpart B, continues 
to read as follows:
    Authority: 7 U.S.C. 5602, 5651, 5661, 5662, 5676; 15 U.S.C. 
714c.
    2. Paragraph (q) of Sec. 1494.201 is revised to read as follows:


Sec. 1494.201  Definitions of terms.

    * * * * *
    (q) Eligible exporter. A person that has been notified by CCC that 
such person is qualified to submit offers in response to Invitations.
    * * * * *
    3. Section 1494.301 is amended by revising the section introductory 
text and the paragraph (a) introductory text; by removing paragraph 
(a)(1) and redesignating paragraphs (a)(2) through (a)(6) as paragraphs 
(a)(1) through (a)(5), respectively; by adding a new paragraph (a)(6); 
by removing paragraph (b) and redesignating paragraphs (c) through (g) 
as paragraphs (b) through (f), respectively; by revising newly 
designated paragraphs (b), (d), (e) and (f); and by adding a new 
paragraph (g) to read as follows:


Sec. 1494.301  Information required for program participation.

    Before CCC will consider an offer from an interested person, such 
person must qualify for participation in the program. Based upon 
information submitted by the interested person and available from 
public sources, CCC will determine whether the interested person is 
eligible for participation in the program.
    (a) Submission of documentation. An interested person that wishes 
to qualify as an eligible exporter must furnish the following 
information or documentation to CCC at the address referenced in the 
Notice to Exporters--EEP Contacts:
    * * * * *
    (6) The following certification: ``I certify, to the best of my 
knowledge and belief, that neither [name of interested person] nor any 
of its principals has been debarred, suspended, or proposed for 
debarment from contracting with or participating in programs 
administered by any U.S. Government agency. [``Principals,'' for the 
purpose of this certification, means officers; directors; owners of 
five percent or more of stock; partners; and persons having primary 
management or supervisory responsibility within a business entity 
(e.g., general manager, plant manager, head of a subsidiary division or 
business segment, and similar positions).] I further agree that, should 
any such debarment, suspension, or notice of proposed debarment occur 
in the future, [name of interested person] will immediately notify 
CCC.''
    (b) Necessity to qualify. An interested person may not submit an 
offer, and CCC will not consider any such offer, until CCC has notified 
the interested person that such person has qualified as an eligible 
exporter.
    * * * * *
    (d) Previous performance. CCC may request additional information 
with respect to the interested person's performance under any U.S. 
Government programs or in connection with any contracts or agreements 
with the U.S. Government during the past three years.
    (e) Ineligibility for program participation. A person may be 
ineligible to participate in the EEP if such person:
    (1) Is currently debarred, suspended or proposed for debarment from 
contracting with or participating in any program administered by a U.S. 
Government agency; or
    (2) Is controlled or can be controlled, in whole or in part, by any 
individuals or entities currently debarred, suspended or proposed for 
debarment from contracting with or participating in programs 
administered by a U.S. Government agency.
    (f) Duty to update information provided to CCC. An eligible 
exporter is under a continuing obligation to inform CCC of any changes 
in the information or documentation submitted to CCC pursuant to 
paragraph (a) of this section and to provide current and accurate 
information to CCC.
    (g) Payment of bonus to exporters without proven EEP participation. 
An eligible exporter that has not yet demonstrated its ability to 
participate successfully in the EEP will be eligible to receive a bonus 
payment(s) only after the eligible commodity specified in an EEP 
Agreement has entered into the eligible country. Such an exporter must 
furnish performance security under ``Option B'' of the applicable 
Invitation and follow the procedure specified in Sec. 1494.701(d) to 
request the payment of the bonus. An eligible exporter may demonstrate 
its ability to participate successfully in the EEP by entering or 
causing to be entered into the eligible country at least 95% of the 
quantity of the eligible commodity specified in any one EEP Agreement. 
CCC will consider that an exporter has proven its ability to 
participate successfully in the EEP as of the date on which CCC pays to 
the exporter a bonus for entry of a quantity that brings the total 
entered quantity for any one EEP Agreement to at least 95%. For all EEP 
Agreements that such exporter enters into with CCC subsequent to that 
date, the exporter may furnish performance security under ``Option A'' 
of the applicable Invitation and will be eligible to receive bonus 
payments in accordance with Sec. 1494.701(c).

    Signed this 25th day of April, 1995 at Washington, DC.

Christopher E. Goldthwait,
General Sales Manager and Vice President, Commodity Credit Corporation.
[FR Doc. 95-10600 Filed 4-28-95; 8:45am]
 BILLING CODE 3410-10-F