[Federal Register Volume 62, Number 226 (Monday, November 24, 1997)]
[Notices]
[Pages 62559-62562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30783]


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DEPARTMENT OF COMMERCE

International Trade Administration


Export Trade Certificate of Review

ACTION: Notice of application.

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SUMMARY: The Office of Export Trading Company Affairs (``OETCA''), 
International Trade Administration, Department of Commerce, has 
received an application for an Export Trade Certificate of Review. This 
notice summarizes the conduct for which certification is sought and 
requests comments relevant to whether the Certificate should be issued.

FOR FURTHER INFORMATION CONTACT: Morton Schnabel, Acting Director, 
Office of Export Trading Company Affairs, International Trade 
Administration, (202) 482-5131. This is not a toll-free number.

SUPPLEMENTARY INFORMATION: Title III of the Export Trading Company Act 
of 1982 (15 U.S.C. 4001-21) authorizes the Secretary of Commerce to 
issue Export Trade Certificates of Review. A Certificate of Review 
protects the holder and the members identified in the Certificate from 
state and federal government antitrust actions and from private, treble 
damage antitrust actions for the export conduct specified in the 
Certificate and carried out in compliance with its terms and 
conditions. Section 302(b)(1) of the Act and 15 CFR 325.6(a) require 
the Secretary to publish a notice in the Federal Register identifying 
the applicant and summarizing its proposed export conduct.

Request for Public Comments

    Interested parties may submit written comments relevant to the 
determination of whether a Certificate should be issued. If the 
comments include any privileged or confidential business information, 
it must be clearly marked and a nonconfidential version of the comments 
(identified as such) should be included. Any comments not marked 
privileged or confidential business information will be deemed to be 
nonconfidential. An original and five (5) copies, plus two copies of 
the nonconfidential version, should be submitted no later than 20 days 
after the date of this notice to: Office of Export Trading Company 
Affairs, International Trade Administration, Department of Commerce, 
Room 1800H, Washington, D.C. 20230. Information submitted by any person 
is exempt from disclosure under the Freedom of Information Act (5 
U.S.C. 552). However, nonconfidential versions of the comments will be 
made available to the applicant if necessary for determining whether or 
not to issue the Certificate. Comments should refer to this application 
as ``Export Trade Certificate of Review, application number 97-00003.'' 
A summary of the application is as follows.

Summary of the Application

    Applicant: The Association for the Allocation of Rice Quotas, Inc. 
(``AARQ''), 3200 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 
75201-2997.
    Contacts: M. Jean Anderson, Esquire, Telephone: (202) 682-7217; 
Robert M. Bor, Esquire, Telephone: (202) 371-5730.
    Application No.: 97-00003.
    Date Deemed Submitted: November 14, 1997.
    Members (in addition to applicant): Affiliated Rice Milling, Inc., 
Alvin, Texas; American Rice, Inc., Houston, Texas; Brinkley Rice 
Milling Company, Brinkley, Arkansas; Broussard Rice Mill, Inc., 
Mermentau, Louisiana; Busch Agricultural Resources, Inc., St. Louis, 
Missouri; Cargill Rice Milling, Greenville, Mississippi; Connell Rice & 
Sugar Co., Westfield, New Jersey; Continental Grain Company, New York, 
New York; El Campo Rice Milling Company, Louise, Texas; Farmers' Rice 
Cooperative, Sacramento, California; Farmers Rice Milling Company, 
Inc., Lake Charles, Louisiana; Gulf Rice Milling, Inc., Houston, Texas; 
Liberty Rice Mill, Inc., Kaplan, Louisiana; Louis Dreyfus Corporation, 
Wilton, Connecticut; Newfield Partners Ltd., Miami, Florida; Producers 
Rice Mill, Inc., Stuttgart, Arkansas; Riceland Foods, Inc., Stuttgart, 
Arkansas; RiceTec, Inc., Alvin, Texas; Riviana Foods, Inc., Houston, 
Texas; SunWest Foods, Inc., Davis, California; Supreme Rice Mill, Inc., 
Crowley, Louisiana; The Rice Company, Roseville, California; and Uncle 
Ben's, Inc., Houston, Texas. AARQ seeks a Certificate to cover the 
following specific Export Trade, Export Markets, and Export Trade 
Activities and Methods of Operations.

Export Trade

    Products shipped under the TRQs will be semi-milled or wholly 
milled rice, whether or not polished or glazed (item 1006.30 of the 
Harmonized Tariff Schedules [HTS]), and husked (brown) rice (item 
1006.20 of the HTS). Distributions of the TRQ bid proceeds will be 
based on exports of the above types of rice and rice in the husk (paddy 
or rough) (item 1006.10 of the HTS).

[[Page 62560]]

Export Markets

    Rice for which TRQ awards have been made will be exported to the 
countries that comprise the European Union. Exports that will serve as 
a basis for distribution of the proceeds of the TRQ awards will be to 
the European Union as well as all parts of the world except the United 
States (the fifty states of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American 
Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the 
Trust Territory of the Pacific Islands).

Export Trade Activities and Methods of Operations

Purpose

    The Association for the Allocation of Rice Quotas, Inc. (``AARQ'') 
will manage on an open tender basis the tariff-rate quotas (``TRQs'') 
for milled and brown rice granted by the European Union (``EU'') to the 
United States under the U.S.-EU Enlargement Agreement signed July 22, 
1996, or any amended or successor agreement providing for EU rice TRQs 
(``the TRQ System'') and provide for distribution of the proceeds 
received from the tender process as set forth below.

Membership

    Any person or entity domiciled or incorporated in the United States 
may become a Member of AARQ upon (i) submission to the Administrator of 
an application accompanied by evidence that the applicant is a rice 
mill or has exported U.S. rice from the United States, (ii) execution 
of the AARQ Operating Agreement, and (iii) in the case of applications 
received after December 31, 1997, payment of a one-time, nonrefundable 
fee of $3,000 to AARQ. The fee may be waived for small exporters, as 
determined by the Board of Directors of AARQ.

TRQ Administrator; Implementation

    AARQ shall contract with an independent third party Administrator 
who is not engaged in the production, milling, distribution, or sale of 
rice, who shall bear responsibility for administering the TRQ System, 
subject to general oversight and supervision by the Board of Directors 
of AARQ.

Open Tender Process; Persons or Entities Eligible to Bid

    (a) AARQ shall offer TRQ Certificates for duty-free or reduced-duty 
shipments of rice to the EU on open tender to the highest bidders. All 
U.S. TRQ quantities (in metric tons) shall be allocated through the 
Open Tender Process for such tranches (``TRQ Tranches'') as may be 
provided for in the relevant EU regulations. The Open Tender Process 
shall constitute the sole and exclusive mechanism by which AARQ 
allocates TRQ quantities.
    (b) Any person or entity incorporated or domiciled in the United 
States, whether or not a Member of AARQ, shall be eligible to bid in 
any Open Tender Process.

Notice

    The Administrator will publish notice (``Notice'') of each Open 
Tender Process to be held for the allocation of TRQs for each TRQ 
Tranche in the Journal of Commerce, and at the discretion of AARQ in 
other publications of general circulation within the U.S. rice 
industry. The Notice will invite independent bids and will specify (i) 
the total amount (in metric tons) of each TRQ to be allocated pursuant 
to the applicable TRQ Tranche; and (ii) the date on which all bids for 
TRQ Certificates must be submitted to and received by the Administrator 
(the ``Bid Date''). The Notice will normally be published not later 
than 45 days prior to the opening of the TRQ Tranche; if EU decisions 
on the opening of TRQs or EU regulations necessitate a condensed 
timetable for notice and bidding, the Administrator will publish the 
required Notice as promptly as possible after the EU announcements, and 
will in any event specify a Bid Date that is at least 5 working days 
after publication of the Notice. Bids may be submitted by hand delivery 
or facsimile, and must be received by the Administrator by 5:00 p.m. 
EST on the Bid Date.

Form of Bid; Performance Security

    (a) A bid shall be submitted on a form provided by the 
Administrator and shall state (i) the name, address, telephone, and 
facsimile or telex number of the bidder; (ii) the form of rice and 
quantity in metric tons bid, with a minimum bid quantity of twenty (20) 
metric tons; (iii) the bid price in U.S. dollars per metric ton; and 
(iv) the total value of the bid.
    (b) The bid form shall contain a provision, signed by the bidder, 
that the bidder agrees that any dispute that may arise relating to the 
bidding process or the award of TRQ Certificates shall be settled by 
arbitration administered by the American Arbitration Association in 
accordance with its Commercial Arbitration Rules, and judgment on the 
award rendered by the arbitrator may be entered in any court having 
jurisdiction thereof.
    (c) The bidder shall submit with its bid(s) a performance bond, 
irrevocable letter of credit drawn on a U.S. bank, cashier's check, 
wire transfer, or equivalent performance security, in a form approved 
by AARQ and for the benefit of an account designated by the 
Administrator, in the amount of $50,000 or the total value of its 
bid(s), whichever is less. Such performance security shall be forfeited 
if the bidder fails timely to pay for TRQ Certificates awarded to it. 
At the option of a successful bidder, its performance security may be 
applied to the price of its successful bid(s), or retained as security 
for a subsequent Open Tender Process. Any performance security not 
forfeited, applied to a bid price, or retained as future security shall 
be returned to the bidder promptly after the close of the Open Tender 
Process.
    (d) The contents of the bids shall be treated by the Administrator 
as confidential and may be disclosed only to another neutral third 
party as necessary to ensure the effective operation of the TRQ System; 
provided, however, that after issuance of all TRQ Certificates in an 
Open Tender Process, the Administrator shall promptly notify all 
bidders of and release to the public (i) the total tonnage for which 
TRQ Certificates were awarded under the milled rice TRQ Tranche and the 
brown rice TRQ Tranche, respectively, and (ii) the price per metric ton 
of the highest successful bid for each TRQ Tranche.

TRQ Certificate Awards

    (a) Following the close of the bidding period, after having 
carefully reviewed each apparently high bid to ensure its conformity 
with applicable requirements, the Administrator shall notify each high 
bidder that its bid(s) have been determined to be high bid(s). If two 
or more bidders have submitted identically priced high bids that 
together cover more than the available tonnage, the Administrator shall 
divide the award among those bidders in proportion to the quantities of 
their bids and offer the proportionate shares to each of those bidders. 
If any of those bidders rejects all or part of the quantity offered, it 
shall be offered first to the remaining such bidder(s) and then to the 
next highest bidder.
    (b) Promptly after issuance of the notification that its bid is a 
high bid, a bidder shall pay the full amount of the bid to the 
Administrator either by certified check or by wire transfer to an 
account designated by the Administrator. If the bidder fails timely to 
pay the full amount of the bid, the Administrator shall revoke the 
award, and grant the award to the next highest bidder.
    (c) If the total bids received cover less than the tonnage of the 
relevant TRQ Tranche, the unused portion shall, to

[[Page 62561]]

the extent consistent with EU regulations, be carried over to a 
succeeding Tranche. In any Tranche as to which EU regulations prohibit 
such carry-over, should total bids received cover less than the total 
tonnage available in the Tranche, the unused portion shall be offered 
to all successful bidders, in proportion to the size of their 
respective awards, at the lowest successful bid price.
    (d) The full amounts received from successful bidders shall be 
deposited in an interest-bearing account designated by the 
Administrator in a financial institution approved by the Board of 
Directors of AARQ.

Delivery of TRQ Certificates

    (a) Promptly after receiving the full amount of a successful bid, 
the Administrator shall transmit to the successful bidder a TRQ 
Certificate that designates the quantity and form of rice covered by 
the bid and any known expiration date pursuant to EU regulations.
    (b) To facilitate monitoring of shipments of packaged rice pursuant 
to EU regulations, the TRQ Certificate shall include a space for 
designation by the exporter of the type of packaging, if any, of the 
rice covered by the TRQ Certificate.
    (c) TRQ Certificates issued to successful bidders shall be freely 
transferable.

Disposition of Tender Proceeds

    (a) The proceeds of Open Tender Processes shall be applied and 
distributed as provided in paragraphs (b) through (g) below.
    (b) Operating expenses of AARQ, including legal, accounting, and 
administrative costs of establishing and operating the TRQ System, 
shall be paid as incurred from tender proceeds as they become 
available, pursuant to authorization by the AARQ Board of Directors.
    (c) From the remaining proceeds of tenders as soon as available--
    (i) The U.S. Rice Industry Coalition for Exports, Inc. (``US 
RICE'') shall be reimbursed for its documented TRQ-related legal 
expenses up to $450,000.
    (ii) The Rice Millers' Association (``RMA'') shall be reimbursed up 
to $450,000 (A) for its documented TRQ-related legal and administrative 
expenses, (B) for payment of up to $100,000 to the Committee for Fair 
Allocation of Rice Quotas for its documented TRQ-related legal 
expenses, (C) for payment of up to $25,000 to each individual member of 
the RMA/ETCR for its documented third party legal expenses in calendar 
years 1996 and 1997 in connection with the establishment of an ETC for 
administration of the TRQs, and (D) for payment of $25,000 to each 
member of the RMA/ETCR that documents that it shipped a minimum of 500 
metric tons of milled or brown rice to the EU in calendar year 1996 and 
has not received a distribution under item (C). If there are 
insufficient funds available to make payments provided for in 
subparagraphs (c)(ii)(C) and (D), the amount that each RMA/ETCR member 
would otherwise be entitled to receive will be reduced by a pro-rata 
amount so that the total distribution will be equal to the amount 
available for this purpose.
    (d) From the proceeds of tenders in each of the first two years of 
operations, each Member of AARQ that documents to the Administrator 
exports of milled or brown rice to Austria, Sweden, or Finland during 
1990-1994 shall be paid up to $75 per metric ton of its documented 
1990-1994 annual average of such shipments, provided, however, that the 
total amount paid to all eligible Members under this provision may not 
exceed $1,800,000 in each of the two years. If $1,800,000 is 
insufficient to permit payments of $75 per metric ton, the amount that 
each eligible Member would otherwise be entitled to receive will be 
reduced pro rata so that the total distribution will be equal to the 
amount available for this purpose. Any documented costs previously 
incurred by the RMA in reviewing and analyzing documentation of member 
shipments to Austria, Finland, or Sweden during 1990-1994 shall be 
considered a cost of administering the TRQ System, pursuant to 
paragraph (b) above.
    (e) Of the proceeds remaining at the end of each year of 
operations--
    (i) Twenty-two percent (22%) shall be distributed to the Rice 
Foundation, its successors, or assigns, solely for research purposes 
and expenses related thereto. Disbursement of the funds by the Rice 
Foundation is the subject of a separate agreement between the Rice 
Foundation and the State Rice Producer Legislative Groups of Arkansas, 
California, Louisiana, Mississippi, Missouri, and Texas, and any 
dispute under that agreement shall not be a matter for resolution under 
this Operating Agreement.
    (ii) Thirty-nine percent (39%) shall be distributed to Members 
exporting U.S. paddy, brown, and/or milled rice to the EU based on 
their percentage shares by volume, adjusted as provided in item (iv) of 
this subparagraph, of Members' exports to the EU during the year.
    (iii) Thirty-nine percent (39%) shall be distributed to Members 
exporting U.S. paddy, brown, and/or milled rice to all non-EU world 
destinations, based on their percentage shares by volume, adjusted as 
provided in item (iv) of this subparagraph, of Members' non-EU 
worldwide exports during the year.
    (iv) The computation of Members' exports under this paragraph (e) 
shall be made on a milled rice equivalent basis using U.S. Department 
of Agriculture standard equivalency factors.
    (f) A year shall be the calendar year, except that if an Open 
Tender Process occurs in 1997, the first year of operations shall be 
the period from the date of that tender through December 31, 1998.
    (g) Notwithstanding the foregoing provisions of this paragraph, 
promptly upon implementation of the TRQ System by the EU, the Board of 
Directors shall consider and may direct distributions during 1998 of 
proceeds from tenders of a major portion of the TRQ tonnage to be 
offered in the first year of operations, basing distributions pursuant 
to paragraph (e)(ii) and (iii) on Members' exports during calendar year 
1997.

Eligibility for Distributions; Submission of Export Documentation.

    Any Member of AARQ will be eligible to participate in distributions 
of tender proceeds if: (i) it is a member under the ETCR issued to AARQ 
by the U.S. Department of Commerce on the date of a distribution or its 
membership under the ETCR is the subject of an ETCR amendment pending 
with the Department of Commerce on that date, and (ii) it has timely 
submitted the required export documentation to the Administrator.

Distribution of Tender Proceeds

    Within sixty (60) days of the submission of the required 
documentation for the year or as soon as practicable thereafter, the 
Administrator shall notify each Member, on a confidential basis, of its 
percentage share of U.S. rice exports by Members to the EU and/or non-
EU destinations, as applicable, for the previous year, and the dollar 
amount of its distribution. As promptly as possible following such 
notification, the Administrator shall cause the distributions to be 
made to eligible Members. If an amendment to include an eligible Member 
under the ETCR is pending at the Department of Commerce, the 
Administrator shall cause such Member's distribution to be held for 
distribution promptly upon issuance of the amendment.

Arbitration of Disputes

    Any controversy or claim arising out of or relating to the TRQ 
System or to

[[Page 62562]]

the AARQ Operating Agreement, or the breach thereof, including inter 
alia a Member's qualification for a distribution, the interpretation of 
documents, or the distribution itself, shall be settled by arbitration 
administered by the American Arbitration Association in accordance with 
its Commercial Arbitration Rules, and judgment on the award rendered by 
the arbitrator may be entered in any court having jurisdiction thereof.

Confidential Information

    Confidential export documentation and any other confidential 
information submitted to AARQ by an applicant for membership, by a 
Member in connection with qualifying for a distribution, or by any 
person in connection with the TRQ System shall be marked 
``Confidential'' and submitted to the Administrator, who shall maintain 
its confidentiality. The Administrator shall not disclose such 
confidential information to any Member other than the submitter, or to 
any officers, agents, or employees of any Member other than the 
submitter, and shall not disclose such confidential information to any 
other person except to another neutral third party as necessary to make 
the determination for which the information was submitted, to process 
distributions, or in connection with the arbitration of a dispute.

Annual Reports

    In accordance with its Bylaws, AARQ shall publish an annual report, 
including a statement of the operating expenses and aggregate data on 
the distribution of proceeds, as reflected in the audited financial 
statement of the AARQ TRQ System.

Amendments

    During the first eight years of the operation of the TRQ System, 
any amendment to the following fundamental provisions of the TRQ System 
shall take effect only upon the unanimous approval by all Voting 
Members of AARQ: provisions relating to (i) qualification for 
membership in AARQ, except the amount of the nonrefundable fee, (ii) 
the paragraph entitled ``Open tender process; Persons or entities 
eligible to bid,'' and (iii) the disposition of tender proceeds. In 
addition, no reduction may be made in the distribution required to be 
made to the Rice Foundation for research and expenses related thereto, 
unless approved by unanimous consent of the Rice Producer Legislative 
Groups of Arkansas, California, Louisiana, Mississippi, Missouri, and 
Texas. The Board of Directors of AARQ shall otherwise have authority to 
amend the provisions of the TRQ System as set forth in the Bylaws of 
AARQ.

Cooperation With the U.S. Government and the European Commission

    AARQ will provide whatever information and consultations may be 
useful in order to ensure effective consultations between the U.S. 
Government and the European Commission concerning the implementation 
and operation of the TRQ System. In particular, while maintaining the 
confidentiality of confidential information submitted by bidders and 
Members, AARQ will provide its annual report, regular reports following 
the tender for each TRQ Tranche, reports on distributions of tender 
proceeds, and/or any other information that might be requested by the 
U.S. Government. Directly or through the U.S. Government, AARQ will 
endeavor to accommodate any information requests from the Commission 
(while protecting confidential data), and will consult with the 
Commission as appropriate.

Miscellaneous Implementing Provisions

    AARQ and/or its members may (i) meet, discuss and provide for an 
administrative structure to implement the foregoing tariff rate quota 
management system, assess its operations and provide modifications as 
necessary to improve its workability, (ii) meet, exchange and discuss 
information regarding the structure and method for implementing the 
foregoing tariff rate quota management system, (iii) meet, exchange and 
discuss the types of information needed regarding the bidding process, 
distribution of the bid proceeds, and past export transactions that are 
necessary for implementation of the system, (iv) meet, exchange and 
discuss information concerning U.S. and foreign agreements, legislation 
and regulations affecting the TRQ management system, (v) and otherwise 
meet, discuss and exchange information as necessary to implement the 
activities described above and take the necessary action to implement 
the foregoing TRQ management system.

Abbreviated Amendment Procedures

    New AARQ members may be incorporated as Members in the Certificate 
through an abbreviated amendment procedure. Under the procedure, AARQ 
will notify the Secretary of Commerce and the Attorney General, in 
writing, of those members of AARQ that wish to be included as Members 
in the Certificate. The notification will include a certification from 
each such member of its domestic and export sales of Products in its 
preceding fiscal year. Notice of the members so identified shall be 
published in the Federal Register. If 30 days or more following 
publication in the Federal Register, the Secretary of Commerce, with 
the concurrence of the Attorney General, determines that the 
incorporation in the Certificate of the members through the abbreviated 
amendment procedure is consistent with the standards of the Act, the 
Secretary of Commerce shall amend the Certificate to incorporate such 
members, effective as of the date on which the application for 
amendment is deemed submitted. If the Secretary of Commerce does not so 
amend the Certificate within 60 days of publication in the Federal 
Register, such amendment must be sought through the normal amendment 
procedure.

    Dated: November 19, 1997.
Morton Schnabel,
Acting Director, Office of Export Trading Company Affairs.
[FR Doc. 97-30783 Filed 11-21-97; 8:45 am]
BILLING CODE 3510-DR-P