[Federal Register Volume 68, Number 41 (Monday, March 3, 2003)]
[Proposed Rules]
[Pages 9944-9947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-4574]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Parts 1405 and 1499

AGENCY FOR INTERNATIONAL DEVELOPMENT

22 CFR Part 211

RIN 0560-AG49


Ocean Freight Claims Administrative Appeal Process

AGENCIES: Commodity Credit Corporation, USDA, and Agency for 
International Development.

[[Page 9945]]


ACTION: Proposed rule.

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SUMMARY: This rule would establish an administrative appeals procedure 
that would be used by the Commodity Credit Corporation (CCC) with 
respect to ocean transportation cargo loss and damage claims arising 
under shipments of agricultural commodities made available by CCC under 
various foreign donation programs. Whether or not title to the 
commodities has passed from CCC to a cooperating sponsor, which may be 
a foreign government, private voluntary organization, or private 
entity, CCC either retains the right or may be assigned the right to 
initiate, prosecute, and, with certain limited exceptions, retain the 
proceeds of cargo loss and damage claims. The rule would require that 
any recipient of CCC-donated commodities must include in the contract 
for the ocean transportation of the commodities a provision that the 
maritime carrier agrees to participate in this administrative appeal 
process.
    For CCC claims initiated on behalf of the United States Agency for 
International Development (USAID), the rule would also require 
consultations between agencies and the crediting of funds collected 
into USAID accounts.

DATES: Comments must be submitted on or before April 2, 2003, to be 
assured of consideration.

ADDRESSES: All comments concerning these proposed regulations should be 
addressed to Steve Mikkelsen, Director, Procurement and Donations 
Division, USDA/FSA/PDD/STOP 0551, 1400 Independence Avenue, SW., 
Washington, DC 20250-0551 or sent electronically to: 
[email protected]. Persons with disabilities who require 
alternative means for communication (braille, large print, audiotape, 
etc.) should contact USDA's Target Center at (202) 720-2600 (voice and 
TDD).
    Comments concerning USAID programs should also be addressed to 
Lauren Landis, Director, Office of Food For Peace, Bureau for 
Democracy, Conflict, and Humanitarian Assistance, U.S. Agency for 
International Development, Room 7.06-157, Ronald Reagan Building, 1300 
Pennsylvania Avenue, NW., Washington, DC 20523 or sent electronically 
to: [email protected].

FOR FURTHER INFORMATION CONTACT: Steve Mikkelsen of CCC on (202) 720-
5074, or Jeffrey Drummond of USAID on (202) 712-0238.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule is issued in conformance with Executive Order 
12866 and has been determined to be not significant.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule because neither CCC nor the United States 
Agency for International Development (USAID) is required by 5 U.S.C. 
553 or any other provision of law to publish a notice of proposed 
rulemaking with respect to the subject matter of this rule.

Environmental Evaluation

    It has been determined by an environmental evaluation that this 
action will have no significant impact on the quality of the human 
environment. Therefore, neither an environmental assessment nor an 
Environmental Impact Statement is needed.

Executive Order 12372

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

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988. The provisions of this rule preempt State laws to the extent 
such laws are inconsistent with the provisions of this rule. Before any 
judicial action may be brought concerning the provisions of this rule, 
the administrative remedies must be exhausted.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their proposed and final rules with Federal mandates that 
may result in expenditures to State, local, or tribal governments, or 
the private sector, in the aggregate of $100 million or more in any 1 
year. This rule contains no Federal mandates under the regulatory 
provisions of title II of the UMRA for State, local, and tribal 
governments or the private sector. Therefore, this rule is not subject 
to the requirements of sections 202 and 205 of the UMRA.

Paperwork Reduction Act

    The information collection requirements imposed by this rule have 
been previously submitted to the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1980 (44 U.S.C. chapter 35). OMB 
has assigned control number 0051-0035 for this information collection. 
This regulation does not change any of the information collection 
requirements.

Background

    The regulations set forth at 7 CFR part 1499 establish the general 
terms and conditions governing CCC's donation of commodities to 
cooperating sponsors under section 416(b) of the Agricultural Act of 
1949 and the Food for Progress programs. Under 7 CFR 1499.15(d)(1), 
notwithstanding the transfer of title, CCC has the right to file, 
pursue and, with certain exceptions, retain the proceeds from claims 
arising from ocean transportation cargo loss and damage arising out of 
shipments of commodities provided to governmental cooperating sponsors. 
Under 7 CFR 1499.15(d)(8), if a nongovernmental cooperating sponsor is 
unable to effect collection of a claim or negotiate an acceptable 
compromise, the nongovernmental cooperating sponsor is required to 
assign its rights to the claim to CCC. Nongovernmental cooperating 
sponsors must also assign their claim rights to CCC upon CCC's request.
    The regulations set forth at 22 CFR part 211 establish the general 
terms and conditions governing the U.S. Agency for International 
Development's (USAID) food donation programs under title II, Public Law 
480. CCC makes the agricultural commodities available to USAID for use 
in these programs. Under 22 CFR 211.9(c)(2)(i), whether or not title to 
commodities is transferred from CCC to the cooperating sponsor, if 
USAID contracted for the ocean transportation, CCC has the right to 
initiate, prosecute, and retain the proceeds of all claims against 
maritime carriers for cargo loss and damage arising out of shipments of 
commodities made available by CCC. Under 22 CFR 211.9(c)(2)(ii)(F), if 
a nongovernmental cooperating sponsor is unable to effect collection of 
a claim or negotiate an acceptable compromise, the nongovernmental 
cooperating sponsor is required to assign its rights to the claim to 
CCC. Nongovernmental sponsors must also assign their claim rights to 
CCC upon CCC's request.
    If the commodity is lost or damaged in transit due to the fault of 
the carrier, existing admiralty law principles control whether the 
party contracting for the transportation of the goods may recover 
damages from the carrier. The provisions of the Carriage of Goods by 
Sea Act (46 U.S.C. 1300 et seq.) either

[[Page 9946]]

apply by law, or are incorporated by reference into the cargo bookings 
and charter parties.
    CCC does not have an established administrative appeal process to 
handle the internal review of these cargo claims before the claims are 
referred to the U.S. Department of Justice for collection through 
litigation. This rule would establish an administrative appeal process. 
CCC intends that independent hearing officers would make written 
determinations with respect to the claims. Once the administrative 
appeal was completed, if the carrier was determined to be liable for 
the loss and damage to cargo, CCC would follow the CCC debt settlement 
policies and procedures set forth in 7 CFR part 1403 to collect the 
debt. This would include but would not be limited to the administrative 
offset of the amount of the debt against other freight earned by the 
carrier which had not been paid or freight earned in the future.
    Section 212(e) of the Federal Crop Insurance Reform and Department 
of Agriculture Reorganization Act of 1994 (Pub. L. 103-354) provides 
that, notwithstanding any other provision of law, a person shall 
exhaust all administrative appeal procedures established by the 
Secretary of Agriculture before a person may bring an action in a court 
of competent jurisdiction against the Secretary, the Department of 
Agriculture, or agency, office, officer or employee of the Department. 
Therefore, a carrier would have to participate in the administrative 
appeals procedure before it could file an action in court contesting 
the establishment of the debt or possible subsequent offset of the 
debt. The court's review would be limited to the administrative record 
established in the administrative appeal.
    This rule also establishes a consultative process between USAID and 
CCC for claims pursued under title II, Public Law 480 food donation 
programs. It also requires CCC to credit the appropriate title II 
account for any funds collected by or remitted to CCC pursuant to 22 
CFR 211.9(c)(2).

List of Subjects

7 CFR Part 1405

    Administrative practice and procedure, Agricultural commodities, 
Cargo claims, Cooperating sponsor, Maritime carriers.

7 CFR Part 1499

    Agricultural commodities, Cooperating sponsor.

22 CFR Part 211

    Agricultural commodities, Cooperating sponsor.
    Accordingly, for the reasons set forth in the preamble, CCC 
proposes to amend 7 CFR parts 1405 and 1499, and USAID proposes to 
amend 22 CFR part 211 as follows:

7 CFR CHAPTER XIV

PART 1405--LOANS, PURCHASES AND OTHER OPERATIONS

    1. The authority citation for 7 CFR part 1405 continues to read as 
follows:

    Authority: 15 U.S.C. 714(b) and 714(c).

    2. Add Sec.  1405.100 to read as follows:


Sec.  1405.100  Cargo claims appeal process.

    (a) Applicability. (1) The administrative appeals process set forth 
in this section is applicable to all ocean transportation cargo loss 
and damage claims arising under shipments of agricultural commodities 
made available by CCC under section 416(b) of the Agricultural Act of 
1949, the Food for Progress Act of 1985, and Title II of the 
Agricultural Trade Development and Assistance Act of 1954, commonly 
known as Public Law 480, and any other regulation or contract that 
incorporates by reference the provisions of this section. This includes 
the movement of cargoes under through bills of lading to inland 
destinations.
    (2) This section is applicable to any determination made by CCC 
relating to the resolution of disputed cargo loss and damage claims 
between CCC and the maritime carrier.
    (b) Delegations of authority. (1) The Deputy Vice President, CCC, 
who is Deputy Administrator for Commodity Operations of the Farm 
Service Agency (Deputy Administrator), shall be responsible for 
administering this section. The Deputy Administrator may delegate the 
authority provided in this section in the manner deemed appropriate by 
the Deputy Administrator.
    (2) The Executive Vice President, CCC, who is the Administrator for 
the Farm Service Agency, may modify or reverse any action of the Deputy 
Administrator or a designee of the Deputy Administrator made with 
respect to this section.
    (c) Appeal procedure. (1) If CCC determines that a maritime carrier 
is liable for loss and damage that occurred during the transportation 
of commodities made available by CCC, CCC will notify the carrier in 
writing of the nature of the violation. The carrier will be given 30 
days in which to appeal the determination to CCC and request either a 
hearing before a hearing officer or a hearing by telephone. CCC will 
provide to the carrier a written acknowledgment of their appeal and 
request for a hearing.
    (2) If the carrier requests to pursue an appeal but not a hearing, 
CCC will allow the carrier to submit, in writing, the reasons why the 
carrier believes the determination of CCC to be in error. The carrier 
will be given 30 days from the receipt of the acknowledgment to file 
any statements and documents in support of its appeal. The carrier will 
be given an additional 15 days to respond to any new issues raised by 
CCC in response to the carrier's initial submission.
    (3) If the carrier requests to pursue an appeal and requests a 
hearing, CCC will notify the carrier of the date of the hearing. All 
hearings will be held at the Kansas City Commodity Office of the Farm 
Service Agency, 6501 Beacon Drive, Kansas City, Missouri 64133-4675, 
except as may be determined by CCC. If a hearing is requested, the 
carrier will be notified of the date of the hearing and will be 
afforded 30 days from the receipt of the notification of the scheduling 
of the hearing to submit any statements and documents in support of the 
appeal. The carrier will be given an additional 15 days following the 
date of the hearing to submit any additional material that may have 
been determined necessary due to issues raised at the hearing.
    (4) Determinations of the hearing officer shall be final and no 
further appeal within CCC shall be available except as may be specified 
in the final determination of the hearing officer.
    (d) Exhaustion of administrative remedy. A carrier may not initiate 
an action in any court of competent jurisdiction prior to the 
exhaustion of the administrative appeal process set forth in this 
section.

PART 1499--FOREIGN DONATION PROGRAMS

    3. The authority citation for 7 CFR part 1499 continues to read as 
follows:

    Authority: 7 U.S.C. 1431(b), 7 U.S.C. 1736o, E.O. 12752.

    4. Amend Sec.  1499.15 by adding paragraph (j) to read as follows:


Sec.  1499.15  Liability for loss, damage, or improper distribution of 
commodities--claims and procedures.

* * * * *
    (j) Required contract term. Any cooperating sponsor must include 
the following provision in the contract for the transportation of the 
commodity made available by CCC: ``The provisions

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of 7 CFR 1405.100 shall be applicable to this contract and are 
incorporated by reference in their entirety.''

22 CFR CHAPTER II

PART 211--TRANSFER OF FOOD COMMODITIES FOR FOOD USE IN DISASTER 
RELIEF, ECONOMIC DEVELOPMENT AND OTHER ASSISTANCE

    5. The authority citation for 22 CFR part 211 continues to read as 
follows:

    Authority: Section 207(c) of the Agricultural Trade Development 
and Assistance Act of 1954, as amended; see Public Law 101-624, 104 
Stat. 3632, 3641, 7 U.S.C. 1726a(c).

    6. Amend Sec.  211.9 by adding paragraph (c)(2)(v) to read as 
follows:


Sec.  211.9  Liability for loss damage or improper distribution of 
commodities.

* * * * *
    (c) * * *
    (2) * * *
    (v) Any funds collected by or remitted to CCC pursuant to this 
section shall be credited to the appropriate Title II account. CCC 
shall also consult with USAID's Office of Food For Peace in Washington, 
DC (USAID/FFP) before it authorizes the settlement, compromise, or 
termination of a claim. CCC shall also consult with USAID/FFP before it 
authorizes a CS to compromise a claim pursuant to paragraph 
(c)(2)(ii)(E) of this section.
* * * * *
    (i) Required contract term. Any cooperating sponsor must include 
the following provision in the contract for carriage of the commodity 
donated by CCC: ``The provisions of 7 CFR 1405.100 shall be applicable 
to this contract and are incorporated by reference in their entirety.''

    Dated: February 18, 2003.
James R. Little,
Executive Vice President, Commodity Credit Corporation.
    Dated: January 17, 2003.
Roger P. Winter,
Assistant Administrator, DCHA, Agency for International Development.
[FR Doc. 03-4574 Filed 2-28-03; 8:45 am]
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