[Federal Register Volume 70, Number 13 (Friday, January 21, 2005)]
[Proposed Rules]
[Pages 3150-3155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1068]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 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.
 
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 

  Federal Register / Vol. 70, No. 13 / Friday, January 21, 2005 / 
Proposed Rules  

[[Page 3150]]


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DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR Part 1530

RIN 0551-AA65


The Sugar Re-Export Program, the Sugar-Containing Products Re-
Export Program, and the Polyhydric Alcohol Program

AGENCY: Foreign Agricultural Service (FAS), USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement Chapter 17 of the 
Harmonized Tariff Schedule of the United States (HTS), Additional U.S. 
Note 6, which authorizes entry of raw cane sugar under subheading 
1701.11.20 of the HTS for the production of polyhydric alcohols, except 
polyhydric alcohols for use as a substitute for sugar in human food 
consumption, or to be refined and re-exported 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 proposed 
rule would totally revise the current regulation at 7 CFR part 1530, 
effective February 12, 1999.

DATES: Comments should be received on or before March 22, 2005 to be 
assured of consideration.

ADDRESSES: Comments should be sent to the Director, Import Policies and 
Programs Division, Foreign Agricultural Service, U.S. Department of 
Agriculture, 1400 Independence Avenue, SW., Stop 1021, Washington, DC 
20250-1021. All comments received will be available for public 
inspection in room 5531.

FOR FURTHER INFORMATION CONTACT: Ron Lord, Acting Director, Import 
Policies and Programs Division, Foreign Agricultural Service, 1400 
Independence Avenue, SW., STOP 1021, by e-mail at [email protected], 
telephone at 202-720-2916, or fax at 202-720-0876.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    The rule has been determined to be significant under E.O. 12866 and 
has been reviewed by the Office of Management and Budget.

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 rule will have a significant favorable economic impact on small 
businesses participating in the program. Participation is voluntary. 
Direct and indirect costs are likely to be very small as a percentage 
of revenue and in terms of absolute costs. The regulatory requirements 
affect large and small businesses equally. The program's benefits 
should significantly improve the price competitiveness of exporters of 
sugar and sugar-containing products, and lower the cost of producing 
polyhydric alcohols.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988. The 
provisions of this rule would not have preemptive effect with respect 
to any State or local laws, regulations, or policies which conflict 
with such provision or which otherwise impede their full 
implementation. The rule would not have retroactive effect. Before any 
judicial action may be brought regarding this rule, all administrative 
remedies must be exhausted.

National Environmental Policy Act

    The Administrator has determined that this action will not have a 
significant effect on the quality of the human environment. Therefore, 
neither an Environmental Assessment nor an Environmental Impact 
Statement is necessary for this rule.

Unfunded Mandates Reform Act (Pub. L. 104-4)

    Public Law 104-4 requires consultation with State and local 
officials and Indian tribal governments. This rule does not impose an 
unfunded mandate or any other requirement on State, local, or tribal 
governments. Accordingly, these programs are not subject to the 
provisions of the Unfunded Mandates Reform Act.

Executive Order 12630

    This Order requires careful evaluation of governmental actions that 
interfere with constitutionally protected property rights. This rule 
would not interfere with any property rights and, therefore, does not 
need to be evaluated on the basis of the criteria outlined in Executive 
Order 12630.

Government Paperwork Elimination Act

    FAS is committed to compliance with the Government Paperwork 
Elimination Act, which requires Government agencies, in general, to 
provide the public the option of submitting information or transacting 
business electronically to the maximum extent possible.

Background

    The proposed rule at 7 CFR 1530 would revise the current regulation 
in effect since February 12, 1999, to improve program administration 
and reflect changes in the sugar sector. The Refined Sugar Re-export 
Program, the Sugar-containing Products Re-export Program, and the 
Polyhydric Alcohol Program permit licensed participants to purchase 
sugar on the world market for either export or use in the production of 
certain polyhydric alcohols. The raw equivalent of the program sugar 
exported or used may be replaced by raw cane sugar imported under HTS 
subheading 1701.11.20.
    The programs administered under 7 CFR 1530 were established in 1982 
when U.S. raw sugar imports were brought under import quota 
restriction. The programs were intended to assist the U.S. cane sugar 
refining industry to remain competitive in world markets and maintain 
refining volume in light of a shrinking domestic market. The 
regulations governing these programs were revised, consolidated, and 
reissued on February 12, 1999. The reissued rule required documentation 
agreements between FAS and licensees to facilitate program 
administration and oversight. Presently, 4 refiners, over 200 
manufacturers, and 17 polyhydric alcohol producers are licensed to 
participate in the programs under this part.
    Recent developments, including consolidation in the refining 
industry and the re-imposition of domestic marketing allotments, have 
altered

[[Page 3151]]

trading conditions applicable to sugar. On May 1, 2003, FAS published 
in the Federal Register (68 FR 23230) an Advance Notice of Proposed 
Rulemaking (ANPR) seeking public comments on a number of issues related 
to the administration of the sugar re-export programs. By incorporating 
changes that received favorable public comment, the proposed rule 
would:

--Prohibit refiners from claiming program credits for exports of 
domestically produced sugar that has not been reported to the Farm 
Service Agency as having been marketed during periods when marketing 
allotments are in effect. This prohibition would prevent the 
circumvention of domestic marketing allotments.
--Allow the transfer of export credits between refined sugar re-export 
licenses. This would allow a refiner that has not exported program 
sugar to purchase credits from a refiner that has, in order to import 
raw cane sugar.
--Allow polyhydric alcohol producers to purchase sugar to their 
specifications from refiners, without regard to polarity. The current 
regulation limits polyhydric producers to the purchase of sugar having 
a polarity of 99.5 degrees or more, which is higher than necessary for 
the production of some polyhydric alcohols.
--Allow holders of refined sugar re-export licenses to hold sugar-
containing product re-export licenses. Multiple licenses would not 
increase the refiner's overall license limit of credits and charges.
--Allow third-party exports. License holders, however, would be 
required to pre-register third-party exporters on their licenses and 
provide for the third-party export transactions in their documentation 
agreements.
--Allow toll refining. Licensed manufacturers of sugar-containing 
products would be allowed to buy raw cane sugar on the world market and 
pay a licensed refiner to enter it into the United States and refine it 
to contract specifications.

    In addition, the proposed rule would create a new class of licenses 
for entities that produce ingredients from sugar for the food industry. 
The license would be issued under the refined sugar re-export program 
and would allow the purchase of program sugar from refiners. Such 
ingredients could be sold only to holders of sugar-containing product 
re-export licenses. Holders of the new license would neither be able to 
import raw cane sugar nor export program sugar or sugar-containing 
products for program credits. This new class of license would be called 
a ``Class B Refined Sugar Re-export Program license'' to differentiate 
it from the regular refiner's license which is called a ``Class A 
Refined Sugar Re-export Program license.''
    The proposed rule would require licensees to provide independent 
laboratory verification of the sugar content of products transferred 
and/or exported upon request of the Licensing Authority.
    The Department invites comments on all aspects of the proposed rule 
including those described above.

List of Subjects in 7 CFR Part 1530

    Polyhydric alcohol, Raw and refined sugar, Re-exports.

Proposed Rule

    Accordingly, for the reasons described in the preamble, 7 CFR part 
1530--the Refined Sugar Re-export Program, the Sugar-containing 
Products Re-export Program, and the Polyhydric Alcohol Program, is 
proposed to be revised to read as follows:

PART 1530--THE REFINED SUGAR RE-EXPORT PROGRAM, THE SUGAR-
CONTAINING PRODUCTS RE-EXPORT PROGRAM, AND THE POLYHYDRIC ALCOHOL 
PROGRAM

Sec.
1530.100 General statement.
1530.101 Definitions.
1530.102 Nature of the license.
1530.103 Persons eligible to apply for licenses.
1530.104 License application procedures and the documentation 
agreement.
1530.105 Terms and conditions governing program transactions.
1530.106 Bonding requirements.
1530.107 Reporting to FAS.
1530.108 Records, certification, and documentation.
1530.109 Enforcement and penalties.
1530.110 Appeals of Licensing Authority's determinations.
1530.111 Non-punitive actions resulting in revocation, 
consolidation, and surrender of licenses.
1530.112 Waivers.
1530.113 Implementation.
1530.114 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.

    This part provides regulations for the Refined Sugar Re-export 
Program, the Sugar-containing Products Re-Export Program, and the 
Polyhydric Alcohol Program. These provisions authorize FAS to license 
refiners to enter raw cane sugar under the HTS subheading 1701.11.20 
unrestricted by the quantitative limit established for the raw sugar 
tariff-rate quota or the requirements of certificates for quota 
eligibility provided for in 15 CFR part 2011, as long as an equivalent 
quantity of sugar regulated by the program is either exported or used 
in the production of certain polyhydric alcohols. Stocks of sugar 
blocked by domestic marketing allotments are disqualified from 
participation in the programs of this part. All refined sugar (whether 
derived from sugar beets or sugarcane) marketed in the United States 
may qualify as program sugar.


Sec.  1530.101  Definitions.

    Affiliated persons means two or more persons where one or more of 
said persons directly or indirectly controls or has the power to direct 
or limit the business decisions of the other(s) regarding program 
transactions under this part.
    Bond or letter of credit means an insurance agreement pledging 
surety for the entry of raw sugar or the transfer of program sugar.
    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.
    Co-packer means a person who owns and operates a facility within 
the U.S. Customs Territory that adds value to a manufacturer's product 
or produces a product for export by a manufacturer using the 
manufacturer's program sugar.
    Date of entry means the date raw sugar enters the U.S. Customs 
Territory.
    Date of export means the date program sugar is exported from the 
U.S. Customs Territory, or if exported to a restricted foreign trade 
zone, the date shown on the U.S. Customs Service form designating the 
product as restricted for export.
    Date of transfer means the date that program sugar is transferred 
from one licensee to another licensee.
    Day means calendar day. When the day for complying with an 
obligation under this part falls on a weekend or Federal holiday, the 
obligation may be completed on the next business day.
    Documentation agreement means a signed and notarized letter from a 
licensee specifying documents that the licensee shall obtain and 
maintain on file before said licensee requests from FAS a license 
balance update.

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    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.
    Export means the conveyance (shipment) of a product to a country 
outside the U.S. Customs Territory, or to a restricted foreign trade 
zone.
    Ingredient producer means a person who owns and operates a facility 
within the U.S. Customs Territory that uses program sugar to make 
specified ingredients.
    Licensing Authority means a person designated by the Deputy 
Administrator, International Trade Policy, Foreign Agricultural 
Service, USDA.
    Manufacturer means a person who makes, or orders others to make, 
sugar-containing products within the U.S. Customs Territory.
    Notice of Transfer means a document recording the transfer of a 
quantity of program sugar from one licensee to another licensee that is 
dated and signed by both parties.
    Person means any individual, partnership, corporation, association, 
estate, trust, or any other business enterprise or legal entity.
    Polyhydric alcohol producer means a person who owns and operates a 
facility within the U.S. Customs Territory that produces (other than by 
distillation) polyhydric alcohols, other than polyhydric alcohols for 
use as a substitute for sugar in human food consumption.
    Program sugar means sugar that has been charged or credited to the 
license of a program participant in conformity with the provisions of 
this part.
    Program transaction means an appropriate entry, transfer, use, or 
export of program sugar.
    Refiner means any person who owns and operates a facility in the 
U.S. Customs Territory that refines raw cane sugar through affination 
or defecation, clarification, and further purification by absorption or 
crystallization.
    Sugar-containing product means any product, other than those 
normally marketed by refiners, that is produced using program sugar, or 
to which program sugar has been added as an ingredient.
    Specified ingredient means any product, other than those normally 
marketed by refiners, that is produced using program sugar and sold 
exclusively to manufacturers per their contract specifications.
    Third-party exporter means a person who purchases and exports 
program sugar or sugar-containing products from a licensed refiner or 
manufacturer.
    Transfer means the transfer of program sugar from one license to 
another license subject to a Notice of Transfer.
    Unique number means a number established by a licensee for the 
purpose of tracking each program transaction and for identifying the 
specific file maintained by the licensee containing all supporting 
documentation for the program transaction.


Sec.  1530.102  Nature of the license.

    (a) A license issued by the Licensing Authority allows a person to 
participate in the programs under this part according to the terms and 
conditions of the license.
    (b) The license authorizes a special account at FAS for monitoring 
imports, transfers and exports, and in the case of polyhydric alcohol 
producers, usage. FAS adds to the account balance ``charges'' for 
imports (entries) and transfers received from other licensees and 
subtracts from the balance ``credits'' for exports and transfers to 
other licensees, and in the case of polyhydric alcohol producers, 
usage.
    (c) A Class A license under the Refined Sugar Re-export Program 
permits the holder to:
    (1) Enter raw cane sugar under subheading 1701.11.20 of the HTS;
    (2) Transfer program sugar;
    (3) Receive transfers of program sugar; and
    (4) Export program sugar.
    (d) A Class B license under the Refined Sugar Re-export Program 
permits the holder to:
    (1) Receive transfers of program sugar; and
    (2) Transfer specified ingredients to holders of Sugar-containing 
Products Re-export Program licenses.
    (e) A license under the Sugar-containing Products Re-export Program 
permits the holder to:
    (1) Receive transfers of program sugar from holders of Class A 
licenses and specified ingredients from holders of Class B licenses 
described in paragraphs (c) and (d) of this section;
    (2) Export an equivalent quantity of program sugar as an ingredient 
in sugar-containing products; and
    (3) Import raw cane sugar and take delivery of an equivalent 
quantity of program sugar by Notice of Transfer under the terms of a 
toll refining contract with a licensed refiner. Imports must be charged 
to the refiner's license.
    (f) A license under the Polyhydric Alcohol Program permits the 
holder to:
    (1) Receive transfers of program sugar; and
    (2) Use an equivalent quantity of program sugar in the production 
of certain polyhydric alcohols.


Sec.  1530.103  Persons eligible to apply for licenses.

    (a) Any refiner may apply for a Class A license to participate in 
the Refined Sugar Re-export Program.
    (b) Any ingredient producer may apply for a Class B license to 
participate in the Refined Sugar Re-export Program.
    (c) Any manufacturer may apply for a license to participate in the 
Sugar-containing Products Re-export Program.
    (d) Any polyhydric alcohol producer may apply for a license to 
participate in the Polyhydric Alcohol Program.
    (e) No one person, nor any two or more affiliated persons, may 
apply for or hold more than one license of any kind under this part.
    (f) Notwithstanding paragraph (e) of this section, any person 
holding a Class A Refined Sugar Re-export Program license may hold one 
or more licenses under paragraph (c) of this section, as long as the 
combined license balance limit for all licenses held by that person 
does not exceed 50,000 metric tons, raw value.
    (g) The Licensing Authority may permit the holder of a license to 
assign the use of the license to another person upon receiving a 
written request from the holder accompanied by the written concurrence 
of the person to whom the license will be assigned.


Sec.  1530.104  License application procedures and the documentation 
agreement.

    (a) A person may request a license by submitting a written 
application to the Licensing Authority that includes:
    (1) The applicant's name and address, and the name(s) and 
address(es) of any affiliated person(s), who may use the license;
    (2) The address where the applicant will maintain the records 
required under Sec.  1530.108;
    (3) The address(es) of the facility(ies), which will refine program 
sugar, produce specified ingredients, manufacture sugar-containing 
products, including those of any co-packer(s), or produce polyhydric 
alcohols;
    (4) In the case of a product marketed by refiners or ingredient 
producers, the polarity of the product and the formula proposed by the 
refiner or ingredient producer for calculating the program sugar in the 
product;
    (5) In the case of a sugar-containing product, the percentage of 
program sugar (100 degrees polarity) on a dry weight basis in the 
product;
    (6) In the case of polyhydric alcohol, the quantity of program 
sugar used to produce a certain volume of polyhydric alcohol; and
    (7) A statement disclosing any associations or relationships 
relevant for

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determining whether or not an affiliation exists between the applicant 
and any other licensee under this part. The statement shall describe 
any interlocking directorships, joint management structures, ownership 
interests, and family connections that may exist with other licensees, 
and it shall explain the use of any shared facilities, equipment, or 
employees. In the case of a relevant association or relationship, the 
statement shall explain the degree of control or influence that the 
other licensee(s) may have on the business decisions of the applicant. 
If there are no such associations, the application shall include the 
following statement: ``No associations or relationships exist with 
other licensees under the regulations at 7 CFR part 1530 that are 
relevant for making a determination regarding affiliation.''
    (b) The applicant shall propose a documentation agreement for 
auditing program transactions. Charges and credits to the license 
balance will be made only for transactions covered by the agreement. A 
representative list of program transactions follows:
    (1) Entry of raw cane sugar (refiners only);
    (2) Transfer of program sugar or specified ingredients;
    (3) Direct export of program sugar or sugar-containing products to:
    (i) Mexico;
    (ii) Canada;
    (iii) A restricted foreign trade zone;
    (iv) U.S. military exchanges; or
    (v) All other destinations.
    (4) Third-party exports of program sugar or sugar-containing 
products to:
    (i) Mexico;
    (ii) Canada;
    (iii) A restricted foreign trade zone;
    (iv) U.S. military exchanges; or
    (v) All other destinations.
    (5) Use of program sugar (polyhydric alcohol producers only).
    (c) For each transaction that is proposed, the applicant shall 
provide to the Licensing Authority sample documents corroborating the 
transaction.
    (1) Commercial documents are suitable for confirming the sale, 
transit, and use of program sugar and sugar-containing products within 
the U.S. Customs Territory.
    (2) Official documents generated by the U.S., Canadian, or Mexican 
governments are necessary to confirm the entry of raw cane sugar and 
the export of program sugar and sugar-containing products.
    (3) Signed Notices of Transfer confirm the transfer of program 
sugar between license holders.
    (4) Export transactions also require documenting the name(s) of 
carrier(s) and vessel(s), the numbers of containers, and the contact 
information of agents, consignees, and foreign purchasers.
    (5) Exports of program sugar to Mexico shall be declared as U.S. 
re-export program sugar upon entry into Mexico.
    (d) The applicant shall register third-party exporters by providing 
their names and contact information in the documentation agreement.
    (e) The Licensing Authority shall inspect the sample documents and 
notify the applicant if they are suitable for auditing transaction 
reports submitted under Sec.  1530.107. If not, the Licensing Authority 
will notify the applicant and suggest alternative documentation.
    (f) Once the Licensing Authority and the applicant agree upon a 
list of transactions and supporting documents, the applicant shall 
submit a notarized letter confirming the agreement and certifying that 
the documentation identified in the agreement will be kept on file, 
identifiable by a unique number, and available for inspection pursuant 
to Sec.  1530.108, to support all charges and credits made pursuant to 
Sec.  1530.107.
    (g) If any of the information required by this section changes, the 
licensee shall promptly notify the Licensing Authority.


Sec.  1530.105  Terms and conditions governing program transactions.

    (a) All refining, production of specified ingredients, 
manufacturing, and polyhydric alcohol production must be accomplished 
in the U.S. Customs Territory and within time frames and quantity 
limitations prescribed in this part. Sugar transferred, exported, or 
used as program sugar does not need to be the same physical sugar 
produced by refining raw sugar entered under subheading 1701.11.20 of 
the HTS.
    (b) The holder of a Class A Refined Sugar Re-export Program 
license:
    (1) May enter raw sugar or receive program sugar in anticipation of 
the export or transfer of an equivalent quantity of program sugar not 
to exceed the value of the bond or letter of credit, which must be 
established pursuant to Sec.  1530.106 of this part.
    (2) May export or transfer program sugar prior to the date that 
either an equivalent quantity of raw sugar is entered or that an 
equivalent quantity of program sugar is received by transfer.
    (3) May receive credits for exports of program sugar made by a 
third-party exporter registered on the licensee's documentation 
agreement.
    (4) May not carry a license balance for charges or credits of 
program sugar exceeding 50,000 metric tons, raw value, at any time 
during the year.
    (5) Shall export or transfer, not later than 90 days after entering 
a quantity of raw cane sugar under subheading 1701.11.20 of the HTS, an 
equivalent quantity of program sugar, if the entry results in a 
positive license balance.
    (c) The holder of a Class B Refined Sugar Re-export Program 
license:
    (1) May only transfer program sugar prior to the date that an 
equivalent quantity of program sugar is received.
    (2) May not carry a license balance for credits of program sugar 
exceeding 3,000 short tons, refined value, at any time during the year.
    (d) A holder of a Sugar-containing Products Re-export Program 
license:
    (1) May receive a transfer of program sugar in anticipation of the 
export of an equivalent quantity of program sugar in a sugar-containing 
product not to exceed the value of the bond or letter of credit, which 
must be established pursuant to Sec.  1530.106 of this part.
    (2) May export program sugar in a sugar-containing product prior to 
the date that an equivalent quantity of program sugar is received by 
transfer.
    (3) May receive credits for exports of program sugar in a sugar-
containing product made by a third-party exporter registered on the 
licensee's documentation agreement.
    (4) May not carry a license balance for charges or credits of 
program sugar exceeding 10,000 short tons, refined value, at any time 
during the year.
    (5) Shall export, not later than 18 months from the date of 
transfer of a quantity of program sugar, an equivalent quantity of 
program sugar as an ingredient in a sugar-containing product, if the 
transfer results in a positive license balance.
    (e) A holder of a Polyhydric Alcohol Program license:
    (1) May receive a transfer of program sugar in anticipation of the 
use of an equivalent quantity of program sugar in the production of 
certain polyhydric alcohols not to exceed the value of the bond or 
letter of credit, which must be established pursuant to Sec.  1530.106 
of this part.
    (2) May use program sugar in the production of certain polyhydric 
alcohols prior to the date that an equivalent quantity of program sugar 
is received by transfer.
    (3) May not carry a license balance for charges or credits of 
program sugar exceeding 10,000 short tons, refined value, at any time 
during the year.
    (4) Shall use, not later than 18 months from the date of transfer 
of a quantity of program sugar, an equivalent quantity of program sugar 
in the production of

[[Page 3154]]

certain polyhydric alcohols, if the transfer results in a positive 
license balance.
    (f) The Licensing Authority may impose such conditions, limitations 
or restrictions on program transactions at such time and in such manner 
as the Licensing Authority determines to be necessary or appropriate to 
prevent circumvention of the domestic sugar program.


Sec.  1530.106  Bonding requirements.

    (a) A program participant must establish a bond or a letter of 
credit in favor of USDA prior to receiving program sugar in 
anticipation of its export or transfer, or in the case of polyhydric 
alcohol producers, its use. Such a condition exists whenever charges 
exceed credits, resulting in a positive license balance.
    (b) Only the licensee may be the principal on the bond or letter of 
credit covering program sugar. The surety or sureties shall be among 
those listed by the Secretary of the Treasury as acceptable on Federal 
bonds.
    (c) The bond or letter of credit shall cover entries or transfers 
made during the period of time specified in the bond (a term bond). The 
obligation under the bond or letter of credit shall be made effective 
no later than the date that the license balance becomes positive. If 
the bond is allowed to expire while the license balance is positive, 
the licensee shall be barred from entering or receiving transfers of 
program sugar until such time as the bond is renewed, or the licensee 
reports to FAS credits sufficient to reduce the license balance below 
zero.
    (d) The amount of the bond or letter of credit shall be equal to 15 
cents per pound of program sugar for any positive balance up to the 
maximum license limit establish by this part.
    (e) If a licensee fails to qualify for credit to a license within 
the specified time period of the date of export or use of corresponding 
program sugar in an amount sufficient to offset the charge to the 
license for that corresponding program sugar, payment shall be made to 
the U.S. Treasury. The payment shall be equal to the difference between 
the Number 11 contract price and the Number 14 contract price (New York 
Board of Trade) in effect on the last market day before the date of 
entry of the sugar or the last market day before the end of the period 
during which export or use was required, whichever difference is 
greater. The difference shall be multiplied by the quantity of refined 
sugar, converted to raw value, that should have been exported in 
compliance with this part. If there was not a Number 11 or a Number 14 
contract price for the relevant market day, the Licensing Authority may 
estimate the relevant prices, as he or she deems appropriate.


Sec.  1530.107  Reporting to FAS.

    (a) All program transactions during the following calendar quarters 
shall be reported to FAS on or before the date indicated in order for 
the account balance to receive charges or credits:
    (1) January-March: June 30.
    (2) April-June: September 30.
    (3) July-September: December 31.
    (4) October-December: March 31.
    (b) FAS shall provide licensees with reporting formats and methods 
that allow for the use of suitable information technologies.
    (c) Reports shall be identified by the name and license number of 
the licensee and provide the following for all program transactions:
    (1) A unique number for the transaction.
    (2) The date of the transaction or use.
    (3) The quantity transacted adjusted to a dry weight basis.
    (i) Refiner quantities shall be adjusted to raw value.
    (A) For entries of raw cane sugar, refiners shall provide the 
initial and final polarization, and the final weight (when available).
    (B) To adjust the raw value for sugar with a polarization of less 
than 92 degrees, divide the total sugar content by 0.972 (polarization 
x outturn weight/0.972).
    (C) To adjust the raw value for sugar with polarization of 92 
degrees or above, multiply the polarization times 0.0175, subtract 
0.68, and multiply the difference by the outturn weight (((polarization 
x 0.0175)-0.68) x outturn weight).
    (D) To determine the quantity of refined sugar that must be 
transferred or exported to equal a corresponding quantity of entered 
raw sugar charged to a license, divide the quantity of entered raw 
sugar by 1.07 (raw quantity/1.07).
    (ii) Ingredient producer, manufacturer, and polyhydric alcohol 
producer quantities shall be adjusted to 100 degrees polarity.
    (4) The license number of the recipient of a transfer.
    (5) The country of origin, if an entry, and final destination, if 
an export, using country codes designated by the Licensing Authority.
    (6) In the case of program sugar exports to Mexico, the following 
signed statement: ``The customer has provided written certification 
that the program sugar will be substantially transformed in Mexico, as 
defined by General Note 12 of the HTS.''
    (d) Licensees have an affirmative and continuing duty to maintain 
the accuracy of the information contained in previously submitted 
reports.
    (1) Holders of Class A Refined Sugar Re-export Program licenses or 
Sugar-containing Products Program Re-export licenses shall immediately 
notify the Licensing Authority and request that previously claimed 
credits be charged back upon discovery that exports were re-entered 
into the U.S. Customs Territory without substantial transformation, 
falsely declared, or made but did not satisfy regulatory requirements 
or the documentation agreement.
    (2) Holders of Polyhydric Alcohol Program licenses shall 
immediately notify the Licensing Authority and promptly request that 
previously claimed credits be charged back upon discovery that the 
program sugar was not used for the production of certain polyhydric 
alcohols.
    (3) Charge backs shall be as of the date of the erroneously claimed 
credit.


Sec.  1530.108  Records, certification, and documentation.

    (a) The licensee shall maintain the documentation established in 
the documentation agreement for 5 years from the date of the program 
transaction.
    (b) The licensee shall request customers to provide annual written 
certification as required by Sec.  1530.107(c)(6) and maintain the 
documentation for 5 years.
    (c) Upon request, the licensee shall make the records described in 
the documentation agreement available for inspection and copying by the 
Licensing Authority; the Compliance Review Staff, FAS; the Inspector 
General, USDA; the U.S. Department of Justice; and/or any U.S. 
Government regulatory or investigative office.
    (d) The Licensing Authority may request licensees to provide, at 
their expense, independent laboratory verification of the information 
provided under Sec.  1530.104(a)(4) and (5) regarding the sugar content 
of articles transferred and exported.


Sec.  1530.109  Enforcement and penalties.

    (a) Violation or disregard of the regulations under this part are 
cause for enforcement actions and penalties.
    (b) The Licensing Authority may:
    (1) Revoke credits from a license if the credits were unauthorized 
by the regulations under this part or undocumented, and the licensee 
does not voluntarily charge back the credits erroneously claimed.

[[Page 3155]]

    (2) Temporarily suspend a license for non-compliance with the 
bonding requirements under Sec.  1530.106.
    (3) Recommend that the Administrator revoke a license, if the 
licensee has consistently provided false or misleading information 
under Sec.  1530.107(d) of this part.
    (c) The FAS Administrator 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 C.


Sec.  1530.110  Appeals of Licensing Authority's determinations.

    (a) The licensee may appeal the Licensing Authority's determination 
to revoke credits by filing a written notice of appeal, signed by the 
licensee or the licensee's agent, with the Deputy Administrator, 
International Trade Policy, FAS, or his or her designee. The decision 
on such an appeal shall be made by the Deputy Administrator and will be 
governed by Sec.  3017.515 of this title. The appeal must be filed not 
later than 30 days after the date of the Licensing Authority's 
determination, and shall contain the licensee's written argument.
    (b) The licensee may request an informal hearing. The Deputy 
Administrator shall arrange a place and time for the hearing, except 
that it shall be held within 30 days of the filing date of the notice 
of appeal if the licensee so requests.
    (c) The licensee may be represented by counsel, and shall have full 
opportunity to present any relevant evidence, documentary, or 
testimonial. The Deputy Administrator may permit other individuals to 
present evidence at the hearing, and the licensee shall have an 
opportunity to question those witnesses.
    (d) The licensee may arrange and pay for a professional reporter to 
provide a verbatim transcript of the hearing.
    (e) The Deputy Administrator shall make the determination on 
appeal, and may affirm, reverse, modify, or remand the Licensing 
Authority's determination. The Deputy Administrator 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.  1530.111  Non-punitive actions resulting in revocation, 
consolidation, and surrender of licenses.

    (a) The Licensing Authority may revoke a license held by an 
ineligible party.
    (b) The Licensing Authority may consolidate two or more licenses 
upon determination that the persons holding the licenses are 
affiliated.
    (c) A licensee may surrender a license when the sum of all credits 
is equal to or greater than the sum of all charges. The licensee may 
request the Licensing Authority to transfer any outstanding credits to 
another license holder.


Sec.  1530.112  Waivers.

    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, export, or production; may 
temporarily increase a maximum license limit for a period of up to 6 
months to facilitate a tolling arrangement; and/or may extend the 
period for submitting regularly scheduled reports. The Licensing 
Authority may specify additional requirements or procedures in place of 
the requirements or procedures waived or modified.


Sec.  1530.113  Implementation.

    Current licensees qualify under this rule which is effective 
[effective date of final rule].


Sec.  1530.114  Paperwork Reduction Act assigned number.

    Licensees are not required to respond to requests for information 
unless the form for collecting information displays the currently valid 
Office of Management and Budget (OMB) control number 0551-0015. OMB has 
approved the information collection requirements contained in this part 
in accordance with 44 U.S.C. chapter 35.

    Dated: January 12, 2005.
A. Ellen Terpstra,
Administrator, Foreign Agricultural Service.
[FR Doc. 05-1068 Filed 1-19-05; 8:45 am]
BILLING CODE 3410-10-P