[Federal Register Volume 71, Number 67 (Friday, April 7, 2006)]
[Proposed Rules]
[Pages 17767-17768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-5089]


 ========================================================================
 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. 71, No. 67 / Friday, April 7, 2006 / Proposed 
Rules  

[[Page 17767]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1496

RIN 0560-AH39


Procurement of Commodities for Foreign Donation

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rule; supplemental.

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SUMMARY: This proposed rule proposes additional changes related to a 
proposed rule published by the Commodity Credit Corporation (CCC) on 
December 16, 2005, entitled ``Procurement of Commodities for Foreign 
Donation,'' to specifically recognize CCC's obligations under the cargo 
preference legislation of the Merchant Marine Act, 1936 and to clarify 
the ``extenuating circumstances'' that may preclude awards on the basis 
of lowest-landed cost. CCC is also re-opening and extending the comment 
period on the proposed rule to accord interested persons an opportunity 
to comment thereon.

DATES: Comments on this proposed rule and the proposed rule published 
December 16, 2005 (70 FR 74717-74721) must be received on or before May 
8, 2006 in order to be assured consideration.

ADDRESSES: Comments may be submitted by any of the following methods:
     E-Mail: Send comments to [email protected].
     Fax: Submit comments by facsimile transmission to: (202) 
690-2221.
     Mail: Send comments to: Director, Commodity Procurement 
Policy & Analysis Division, Farm Service Agency, United States 
Department of Agriculture (USDA), Rm. 5755-S, 1400 Independence Avenue, 
SW., Washington, DC 20250-0551.
     Hand Delivery or Courier: Deliver comments to the above 
address.
     Federal Rulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.

FOR FURTHER INFORMATION CONTACT: Richard Chavez, phone: (202) 690-0194; 
E-Mail: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    CCC procures agricultural commodities for donation overseas under 
various food aid authorities. These authorities include Title II of the 
Agricultural Trade Development and Assistance Act of 1954 (Pub. L. 
480), which is administered by the U.S. Agency for International 
Development (USAID), and the Food for Progress and the McGovern-Dole 
International Food for Education and Child Nutrition Programs, which 
are administered by the Foreign Agricultural Service within USDA. On 
December 16, 2005, CCC published a proposed rule proposing to change 
the bid evaluation process used in connection with the purchase of 
commodities for these programs. See 70 FR 74717-74721. Generally, as 
discussed in the preamble to that proposed rule, CCC proposed a one-
step bid evaluation process for these procurements that would analyze 
actual freight offers together with commodity offers to arrive at an 
overall lowest-landed cost. The comment period for the proposed rule 
ended March 9, 2006. See 71 FR 3442.
    In reviewing the proposed rule after interagency discussions, CCC 
believes it would be helpful to clarify two points regarding the 
proposed procurement process. First, CCC should state that it will 
administer any new procurement system in a manner consistent with its 
obligations under the cargo preference legislation of the Merchant 
Marine Act, 1936. Secondly, CCC should clarify the ``extenuating 
circumstances'' that may preclude awards on the basis of lowest-landed 
cost.
    CCC will, of course, comply with cargo preference requirements. The 
existing regulations at 7 CFR 1496.5(a)(1), which were unchanged by the 
proposed rule, specify that lowest-landed cost will be calculated on 
the basis of U.S. flag rates and service for that portion of the 
commodities being purchased that CCC determines is necessary and 
practicable to meet cargo preference requirements * * *. It is deemed 
advisable to more closely relate this point to the bid award. 
Therefore, CCC is revising proposed Sec.  1496.7(b) to include specific 
acknowledgments of cargo preference requirements in regard to awarding 
bids.
    The proposed rule also included an exception to the lowest-landed 
cost principle when ``extenuating circumstance'' justified using vessel 
services other than single voyage contracts or f.o.b. and f.a.s. vessel 
delivery terms. In such cases there would be no separate vessel offers 
to match with commodity offers. Under the earlier proposed rule, 
examples of such extenuating circumstances ``may include, but are not 
limited to, internal strife at the foreign destination or urgent 
humanitarian conditions threatening the lives of persons at the foreign 
destination.'' It was CCC's intent that such extenuating circumstances 
would always be of the nature of the examples cited and CCC is revising 
Sec.  1496.7(b) of the proposed rule to clarify this point.
    In order to obtain full public input on this proposed rule, CCC 
encourages respondents to provide information and data on the economic 
effects of the proposed adoption of a one-step procurement system on 
their business operations. CCC would welcome comments on these effects 
from all participants in international food aid transactions such as 
ocean carriers, commodity suppliers, ports, railroads, and private 
relief agencies. These comments should include data appropriate for 
economic analysis.
    CCC will continue to be engaged in providing outreach and 
assistance efforts in association with transition to a one-step 
procurement process. In this regard, we are interested in learning what 
types of information would be of interest to the public to help in 
understanding the new system, as well as a means for providing that 
information

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule because CCC is not 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

    The environmental impacts of this rule have been considered 
consistent with the provisions of the National Environmental Policy Act 
of 1969

[[Page 17768]]

(NEPA), 42 U.S.C. 4321 et seq., the regulations of the Council on 
Environmental Quality (40 CFR parts 1500-1508), and the FSA regulations 
for compliance with NEPA, 7 CFR part 799. FSA concluded that the rule 
requires no further environmental review because it is categorically 
excluded. No extraordinary circumstances or other unforeseeable factors 
exist which would require preparation of an environmental assessment or 
environmental impact statement.

Executive Order 12988

    This proposed 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 proposed 
rule.

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 3014, subpart V, 
published at 48 FR 29115 (June 24, 1983).

Unfunded Mandates Reform Act of 1995

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, local, and tribal governments or the private sector. 
Thus, this rule is not subject to the requirements of sections 202 and 
205 of the UMRA.

Paperwork Reduction Act

    This supplemental proposed rule does not affect the information 
collection described in the December 16, 2005 proposed rule. The 
proposed rule invited public comment on the information collection and 
the comments have been summarized and included in the request for OMB 
approval under the Paperwork Reduction Act of 1995.

Government Paperwork Elimination Act

    FSA is committed to compliance with the Government Paperwork 
Elimination Act, which requires Federal Government agencies to provide 
the public the option of submitting information or transacting business 
electronically to the maximum extent possible. The KCCO is now in the 
process of updating its computer bid-evaluation systems that would 
accommodate a more unified one step bid evaluation. Freight invitations 
would call for bids to be submitted through a web-based entry system.
    Most of the information collections required by this rule are fully 
implemented for the public to conduct business with FSA electronically. 
However, a few may be completed and saved on a computer, but must be 
printed, signed and submitted to FSA in paper form.

Executive Order 12612

    This rule does not have sufficient Federalism implications to 
warrant the preparation of a Federalism Assessment. The provisions 
contained in this rule will not have a substantial direct effect on 
States or their political subdivisions, or on the distribution of power 
and responsibilities among the various levels of government.

List of Subjects in 7 CFR Part 1496

    Agricultural commodities, Exports, Foreign aid.

    Accordingly, CCC proposes to amend 7 CFR 1496.7 as set forth in the 
proposed rule published December 16, 2005 (70 FR 74717-74721) as 
follows:

PART 1496--PROCUREMENT OF PROCESSED AGRICULTURAL COMMODITIES FOR 
DONATION UNDER TITLE II, PUB. L. 480

    1. The authority citation for part 1496 is revised to read as 
follows:

    Authority: 7 U.S.C. 1431(b); 1721-1726a; 1731-1736g-2; 1736o; 
1736o-1; 15 U.S.C. 714b and 714c; 46 U.S.C. App. 1241(b), and 
1241(f).

    2. In Sec.  1496.7, paragraph (b) is revised to read as follows:


Sec.  1496.7  Final contract determinations.

* * * * *
    (b) Combination of bids. CCC will determine which combination of 
commodity bids and bids for ocean freight rates result in the lowest-
landed cost of delivery of the commodity to the foreign destination. 
CCC will award the contract for the purchase of the commodity that 
results in the lowest-landed cost and would be transported in 
compliance with cargo preference requirements. The Contracting Officer 
may determine that extenuating circumstances preclude awards on the 
basis of lowest-landed cost, or efficiency and cost-savings justify the 
use of types of ocean service that would not involve an analysis of 
freight bids for each of CCC's commodity purchases; however, in all 
such cases, commodities would be transported in compliance with cargo 
preference requirements. Examples of extenuating circumstances are 
events such as internal strife at the foreign destination or urgent 
humanitarian conditions threatening the lives of persons at the foreign 
destination. Other types of services may include, but are not limited 
to, multi-trip voyage charters, indefinite delivery/indefinite quantity 
(IDIQ), delivery Cost and Freight (C & F), delivery Cost Insurance and 
Freight (CIF), and indexed ocean freight costs. Before contracts are 
awarded for other than a lowest-landed cost, the Contracting Officer 
shall consult with the applicable program agencies, and set forth, in 
writing, the reasons the contracts should be awarded on other than a 
lowest-landed cost.
* * * * *

    Signed at Washington, DC, on March 31, 2006.
Thomas B. Hofeller,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. E6-5089 Filed 4-6-06; 8:45 am]
BILLING CODE 3410-05-P