[Federal Register Volume 63, Number 18 (Wednesday, January 28, 1998)]
[Notices]
[Pages 4220-4224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2056]


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DEPARTMENT OF COMMERCE

International Trade Administration, Commerce


Export Trade Certificate of Review

ACTION: Notice of Issuance of an Export Trade Certificate of Review, 
Application No. 97-00003.

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SUMMARY: The Department of Commerce has issued an Export Trade 
Certificate of Review to The Association for the Administration of Rice 
Quotas, Inc. (``AARQ''). This notice summarizes the conduct for which 
certification has been granted.

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. The regulations implementing 
Title III are found at 15 CFR Part 325 (1997).
    The Office of Export Trading Company Affairs (``OETCA'') is issuing 
this notice pursuant to 15 CFR 325.6(b), which requires the Department 
of Commerce to publish a summary of a Certificate in the Federal 
Register. Under Section 305(a) of the Act and 15 CFR 325.11(a), any 
person aggrieved by the Secretary's determination may, within 30 days 
of the date of this notice, bring an action in any appropriate district 
court of the United States to set aside the determination on the ground 
that the determination is erroneous.

Description of Certified Conduct

Export Trade

    Semi-milled or wholly milled rice, whether or not polished or 
glazed (item 1006.30 of the Harmonized Tariff

[[Page 4221]]

Schedules (HTS)), and husked (brown) rice (item 1006.20 of the HTS).

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

    1. Purpose. 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 for the United States and provide 
for distribution of the proceeds received from the tender process based 
on exports of milled and brown rice, and rice in the husk (paddy or 
rough) as set forth below (``the TRQ System'').
    2. Implementation.

A. Administrator

    AARQ shall contract with a neutral 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.

B. 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.

C. 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.

D. 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. The Notice will provide information on 
how to obtain forms to be used to submit bids. 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.

E. 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 lowest successful bid for each TRQ Tranche.

F. 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 to pay the 
full amount of the bid on a timely

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basis, 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 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.

G. Delivery of TRQ Certificates

    (a) Promptly after receiving the full amount of a successful bid, 
the Administrator shall transmit to the successful bidder(s) 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.

H. 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 former member of 
RMA's former export trade certificate of review (96-00003) (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 
former 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 former 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) 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 (iii) 
of this subparagraph, of Members' exports to the EU during that year.
    (ii) Thirty-nine percent (39%) shall be distributed to Members 
exporting U.S. paddy, brown, and/or milled rice to all non-EU Export 
Markets, based on their percentage shares by volume, adjusted as 
provided in item (iii) of this subparagraph, of Members' non-EU Export 
Markets exports during that year.
    (iii) 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) (i) and (ii) on Members' exports during calendar year 
1997.

I. 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.

J. 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.

K. Arbitration of Disputes

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

[[Page 4223]]

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. Decisions by 
arbitrators shall not be incorporated by reference in this Certificate 
of Review. Any change to the Export Trade Activities and Methods of 
Operation listed in this certificate as a result of arbitration shall 
not be covered by this Certificate of Review unless certified by an 
amendment to this Certificate of Review.

L. 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.

M. 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.
    3. 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.
    4. 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 discuss 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.

Terms and Conditions of Certificate

    1. Except as authorized in Paragraphs 2.E(d) and H(c) and (d) of 
the Export Trade Activities and Methods of Operation, in engaging in 
Export Trade Activities and Methods of Operation, neither AARQ, the 
Administrator, any Member, nor any neutral third party shall 
intentionally disclose, directly or indirectly, to any Member 
(including parent companies, subsidiaries, or other entities related to 
any Member) any information regarding any other Member's costs, 
production, inventories, domestic prices, domestic sales, capacity to 
produce Products for domestic sale, domestic orders, terms of domestic 
marketing or sale, or U.S. business plans, strategies, or methods, 
unless such information is already generally available to the trade or 
public.
    2. AARQ and its Members will comply with requests made by the 
Secretary of Commerce on behalf of the Secretary or the Attorney 
General for information or documents relevant to conduct under the 
Certificate. The Secretary of Commerce will request such information or 
documents when either the Attorney General or the Secretary of Commerce 
believes that the information or documents are required to determine 
that the Export Trade, Export Trade Activities and Methods of Operation 
of a person protected by this Certificate of Review continue to comply 
with the standards of section 303(a) of the Act.

Definition

    Neutral third party, as used in this Certificate of Review, means a 
party not otherwise associated with AARQ or any of its Members and who 
is not engaged in the production, milling, distribution, or sale of 
rice.

Members (Within the Meaning of Section 325.2(1) of the Regulations)

    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, Inc. for the activities of its division, 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.

Protection Provided by Certificate

    This Certificate protects AARQ, its Members, and directors, 
officers, and employees acting on behalf of AARQ and its Members from 
private treble damage actions and government criminal and civil suits 
under U.S. federal and state antitrust laws for the export conduct 
specified in the Certificate and carried out during its effective 
period in compliance with its terms and conditions.

Effective Period of Certificate

    This Certificate continues in effect from the effective date 
indicated below until it is relinquished, modified, or revoked as 
provided in the Act and the Regulations.

Other Conduct

    Nothing in this Certificate prohibits AARQ and its Members from 
engaging

[[Page 4224]]

in conduct not specified in this Certificate, but such conduct is 
subject to the normal application of the antitrust laws.

Disclaimer

    The issuance of this Certificate of Review to AARQ by the Secretary 
of Commerce with the concurrence of the Attorney General under the 
provisions of the Act does not constitute, explicitly or implicitly, an 
endorsement or opinion by the Secretary of Commerce or by the Attorney 
General concerning either (a) the viability or quality of the business 
plans of AARQ or its Members or (b) the legality of such business plans 
of AARQ or its Members under the laws of the United States (other than 
as provided in the Act) or under the laws of any foreign country.
    The application of this Certificate to conduct in export trade 
where the United States Government is the buyer or where the United 
States Government bears more than half the cost of the transaction is 
subject to the limitations set forth in Section V.(D.) of the 
``Guidelines for the Issuance of Export Trade Certificates of Review 
(Second Edition),'' 50 Fed. Reg. 1786 (January 11, 1985).
    In accordance with the authority granted under the Act and 
Regulations, this Certificate of Review is hereby granted to 
Association for the Administration of Rice Quotas, Inc.
    A copy of this certificate will be kept in the International Trade 
Administration's Freedom of Information Records Inspection Facility 
Room 4102, U.S. Department of Commerce, 14th Street and Constitution 
Avenue, N.W., Washington, D.C. 20230.

    Dated: January 22, 1998.
Morton Schnabel,
Acting Director, Office of Export Trading Company Affairs.
[FR Doc. 98-2056 Filed 1-27-98; 8:45 am]
BILLING CODE 3510-DR-P