§ 1499.9 Damage to or loss of donated commodities. ( a ) CCC will be responsible for the donated commodities prior to the transfer of title to the donated commodities to the recipient. The recipient will be responsible for the donated commodities while the recipient has title to the donated commodities. The title will transfer as specified in the agreement.
( b ) ( 1 ) A recipient must inform CCC, in the manner set forth in the agreement, of any damage to or loss of donated commodities that occurs while the recipient has title to the donated commodities. The recipient must comply with the following procedures when reporting such damage to or loss of donated commodities: ( i ) If the amount of the damage or loss is estimated to exceed $20,000, the recipient must notify CCC in writing immediately after becoming aware of such damage or loss and, in this notification, provide detailed information about the circumstances surrounding such damage or loss, the quantity of damaged or lost donated commodities, and the amount of the damage or loss;
( ii ) If the amount of the damage or loss is estimated to exceed $1,000 but not to exceed $20,000, the recipient must notify CCC in writing of the damage or loss within 15 days after the date that the recipient becomes aware of it and then provide detailed information about the damage or loss in the first report required to be filed under § 1499.13(c) that is due after the date that the recipient becomes aware of such damage or loss; and
( iii ) If the amount of the damage or loss is estimated not to exceed $1,000, the recipient must notify CCC, and provide detailed information about the damage or loss, in the first report required to be filed under § 1499.13(c) that is due after the date that the recipient becomes aware of such damage or loss.
( 2 ) The recipient must take all steps necessary to protect its interests and the interests of CCC with respect to any damage to or loss of the donated commodities that occurs while the recipient has title to the donated commodities.
( c ) A recipient will be responsible for arranging for an independent cargo surveyor to inspect the donated commodities upon discharge from the ocean carrier and prepare a survey or outturn report. The report must show the quantity and condition of the donated commodities discharged from the ocean carrier and must indicate the most likely cause of any damage noted in the report. The report must also indicate the time and place when the survey took place. All discharge surveys must be conducted contemporaneously with the discharge of the ocean carrier, unless CCC determines that failure to do so was justified under the circumstances. For donated commodities shipped on a through bill of lading, the recipient must also obtain a delivery survey. All surveys obtained by the recipient must, to the extent practicable, be conducted jointly by the surveyor, the recipient, and the ocean carrier, and the survey report must be signed by all three parties. The recipient must obtain a copy of each discharge or delivery survey report within 45 days after the completion of the survey. The recipient must make each such report available to CCC upon request, or in the manner specified in the agreement. CCC will reimburse the recipient for the reasonable costs of these services, as determined by CCC.
( d ) If donated commodities are damaged or lost during the time that they are in the care of the ocean carrier: ( 1 ) The recipient must ensure that any reports, narrative chronology, or other commentary prepared by the independent cargo surveyor, and any such documentation prepared by a port authority, stevedoring service, or customs official, or an official of the transit or target country government or the transportation company, are provided to CCC;
( 2 ) The recipient must provide to CCC the names and addresses of any individuals known to be present at the time of discharge or unloading, or during the survey, who can verify the quantity of damaged or lost donated commodities;
( 3 ) If the damage or loss occurred with respect to a bulk shipment on an ocean carrier, the recipient must ensure that the independent cargo surveyor: ( i ) Observes the discharge of the cargo;
( ii ) Reports on discharging methods, including scale type, calibrations and any other factors that may affect the accuracy of scale weights, and, if scales are not used, states the reason therefor and describes the actual method used to determine weight;
( iii ) Estimates the quantity of cargo, if any, lost during discharge through ocean carrier negligence;
( iv ) Advises on the quality of sweepings;
( v ) Obtains copies of port or ocean carrier records, if possible, showing the quantity discharged; and
( vi ) Notifies the recipient immediately if the surveyor has reason to believe that the correct quantity was not discharged or if additional services are necessary to protect the cargo; and
( 4 ) If the damage or loss occurred with respect to a container shipment on an ocean carrier, the recipient must ensure that the independent cargo surveyor lists the container numbers and seal numbers shown on the containers, indicates whether the seals were intact at the time the containers were opened, and notes whether the containers were in any way damaged.
( e ) If donated commodities to which a recipient has title sustain damage in excess of $5,000 at any time prior to their distribution or sale under the agreement, regardless of the party at fault, the recipient must immediately arrange for an inspection by a public health official or other competent authority approved by CCC and provide to CCC a certification by such public health official or other competent authority regarding the exact quantity and condition of the damaged donated commodities. The value of the donated commodities prior to the damage must be determined on the basis of the commodity acquisition, transportation, and related costs incurred by CCC with respect to such commodities, as well as such costs incurred by the recipient and paid by CCC. The recipient must inform CCC of the results of the inspection and indicate whether the damaged donated commodities are: ( 1 ) Fit for the use authorized in the agreement and, if so, whether there has been a diminution in quality; or
( 2 ) Unfit for the use authorized in the agreement.
( f ) ( 1 ) If a recipient has title to the donated commodities, the recipient must arrange for the recovery of that portion of the donated commodities designated as fit for the use authorized in the agreement. The recipient must dispose of donated commodities that are unfit for such use in the following order of priority: ( i ) Sale for the most appropriate use, *i.e.,* animal feed, fertilizer, industrial use, or another use approved by CCC, at the highest obtainable price;
( ii ) Donation to a governmental or charitable organization for use as animal feed or another non-food use; or
( iii ) Destruction of the donated commodities if they are unfit for any use, in such manner as to prevent their use for any purpose.
( 2 ) A recipient must arrange for all U.S. Government markings to be obliterated or removed before the donated commodities are transferred by sale or donation under paragraph (f)(1) of this section.
( g ) A recipient may retain any proceeds generated by the disposal of the donated commodities in accordance with paragraph (f)(1) of this section and must use the retained proceeds for expenses related to the disposal of the donated commodities and for activities specified in the agreement.
( h ) A recipient must notify CCC immediately and provide detailed information about the actions taken in accordance with paragraph (f) of this section, including the quantities, values and dispositions of donated commodities determined to be unfit.
[81 FR 62605, Sept. 12, 2016, as amended at 87 FR 53367, Aug. 31, 2022]