[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]


 ========================================================================
 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.
 
 ========================================================================
 

  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.

----------------------------------------------------------------------------------------------------------------
                                                Refiners                   SCP                      PhA         
----------------------------------------------------------------------------------------------------------------
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                    
----------------------------------------------------------------------------------------------------------------
\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