Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42651

(2) For any basic unit, we will allocate any

commingled production to such units in

proportion to our liability on the harvested

acreage for the unit.

(b) In the event of loss or damage covered

by this policy, we will settle your claim by:

(1) Multiplying the insured acreage by its

respective production guarantee;

(2) Multiplying each result in section

12(b)(1) by the respective price election;

(3) Totaling the results in section 12(b)(2);

(4) Multiplying the total production to be

counted of each type if applicable, (see

section 12(c)) by the respective price

election;

(5) Totaling the results in section 12(b)(4);

(6) Subtracting the results from the total in

section 12(b)(5) from the results in section

12(b)(3); and

(7) Multiplying the result in section

12(b)(6) by your share.

(c) The total production to count (in

pounds) from all insurable acreage on the

unit will include:

(1) All appraised production as follows:

(i) Not less than the production guarantee

per acre for the acreage:

(A) That is abandoned;

(B) Put to another use without our consent;

(C) That is damaged solely by uninsured

causes; or

(D) For which you fail to provide

acceptable production records;

(ii) Production lost due to uninsured

causes;

(iii) Unharvested production (mature

unharvested production may be adjusted for

quality deficiencies and excess moisture in

accordance with section 12(d)); and

(iv) Potential production on insured

acreage that you intend to put to another use

or abandon, if you and we agree on the

appraised amount of production. Upon such

agreement, the insurance period for that

acreage will end when you put the acreage

to another use or abandon the crop. If

agreement on the appraised amount of

production is not reached:

(A) If you do not elect to continue to care

for the crop, we may give you consent to put

the acreage to another use if you agree to

leave intact, and provide sufficient care for,

representative samples of the crop in

locations acceptable to us (The amount of

production to count for such acreage will be

based on the harvested production or

appraisals from the samples at the time

harvest should have occurred. If you do not

leave the required samples intact, or fail to

provide sufficient care for the samples, our

appraisal made prior to giving you consent to

put the acreage to another use will be used

to determine the amount of production to

count); or

(B) If you elect to continue to care for the

crop, the amount of production to count for

the acreage will be the harvested production,

or our reappraisal if additional damage

occurs and the crop is not harvested; and

(2) All harvested production from the

insurable acreage.

(d) Mature safflower may be adjusted for

excess moisture and quality deficiencies. If

moisture adjustment is applicable, it will be

made prior to any adjustment for quality.

(1) Production will be reduced by 0.12

percent for each 0.1 percentage point of

moisture in excess of 8 percent. We may

obtain samples of the production to

determine the moisture content.

(2) Production will be eligible for quality

adjustment if such production:

(i) Has a test weight below 35 pounds per

bushel;

(ii) Has seed damage in excess of 25

percent; or

(iii) Contains substances or conditions that

are identified by the Food and Drug

Administration or other public health

organizations of the United States as being

injurious to human or animal health.

(3) Quality will be a factor in determining

your loss only if:

(i) The deficiencies, substances, or

conditions resulted from a cause of loss

against which insurance is provided under

these crop provisions and that occurred

within the insurance period;

(ii) The deficiencies, substances, or

conditions result in a value per pound that

is less than the local market price;

(iii) All determinations of these

deficiencies, substances, or conditions are

made using samples of the production

obtained by us or by a disinterested third

party approved by us; and

(iv) The samples are analyzed by a grader

licensed to grade safflower under the

authority of the Agricultural Marketing Act

or the United States Warehouse Act with

regard to deficiencies in quality, or by a

laboratory approved by us with regard to

substances or conditions injurious to human

or animal health. Test weight for quality

adjustment purposes may be determined by

our loss adjuster.

(4) Safflower production that is eligible for

quality adjustment, as specified in sections

12(d)(2) and (3), will be reduced as follows:

(i) In accordance with the quality

adjustment factors contained in the Special

Provisions; or

(ii) If quality adjustment factors are not

contained in the Special Provisions:

(A) By determining the value per pound

and the local market price on the earlier of

the date such quality adjusted production is

sold or the date of final inspection for the

unit. Discounts used to establish the value

per pound will be limited to those which are

usual, customary, and reasonable. The value

per pound will not be reduced for:

(1) Moisture content;

(2) Damage due to uninsured causes; or

(3) Drying, handling, processing, or any

other costs associated with normal

harvesting, handling, and marketing of

safflower. We may obtain values per pound

from any buyer of our choice. If we obtain

values per pound from one or more buyers

located outside your local market area, we

will reduce such values per pound by the

additional costs required to deliver the

production to those buyers.

(B) Divide the value per pound by the local

market price to determine the quality

adjustment factor; and

(C) Multiply the adjustment factor by the

number of pounds of the damaged

production remaining after any reduction

due to excessive moisture to determine the

net production to count.

(e) Any production harvested from other

plants growing in the insured crop may be

counted as production of the insured crop on

a weight basis.

3. Written Agreement

Terms of this policy which are specifically

designated for the use of written agreement

may be altered by written agreement in

accordance with the following:

(a) You must apply in writing for each

written agreement no later than the sales

closing date, except as provided in section

13(e);

(b) The application for a written agreement

must contain all variable terms of the

contract between you and us that will be in

effect if the written agreement is not

approved;

(c) If approved by us, the written

agreement will include all variable terms of

the contract, including, but not limited to,

crop type or variety, the guarantee, premium

rate, and price election;

(d) Each written agreement will only be

valid for one year (If the written agreement

is not specifically renewed the following

year, insurance coverage for subsequent crop

years will be in accordance with the printed

policy); and

(e) An application for a written agreement

submitted after the sales closing date may be

approved if, after a physical inspection of the

acreage, it is determined that no loss has

occurred and the crop is insurable in

accordance with the policy and written

agreement provisions.

Signed in Washington, D.C., on August 4,

1997.

Kenneth D. Ackerman,

Manager, Federal Crop Insurance

Corporation.

[FR Doc. 97–20914 Filed 8–7–97; 8:45 am]

BILLING CODE 3410–08–P

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1493

RIN 0551–AA35

CCC Facility Guarantee Program (FGP)

AGENCY: Commodity Credit Corporation,

USDA.

ACTION: Interim rule with request for

comment.

SUMMARY: This interim rule provides for

facility payment guarantees to be issued

by the Commodity Credit Corporation

(CCC). The guarantees are to be issued

in connection with sales of goods or

services to establish or improve

agricultural-related facilities in

emerging markets to expand exports of

U.S. agricultural commodities or

products.

DATES: Effective date: August 8, 1997.

Comment date: Comments due on or

before October 7, 1997.

ADDRESSES: Comments must be

submitted in writing to L.T. McElvain,
42652 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations

Director, CCC Operations Division,

Foreign Agricultural Service, U.S.

Department of Agriculture (USDA), Stop

1035, Washington, DC 20250–1035;

FAX (202) 720–2949. All comments

received will be available for public

inspection at the U.S. Department of

Agriculture, Room 4523–S, 1400

Independence Avenue, SW,

Washington, DC 20250 during regular

business hours.

FOR FURTHER INFORMATION CONTACT:

William S. Hawkins, Branch Chief, or

Mark A. Rasmussen, Agricultural

Marketing Specialist, Export Programs

Survey & Review Branch, CCC

Operations Division, Foreign

Agricultural Service, U.S. Department of

Agriculture (USDA), Stop 1035,

Washington, DC 20250–1035; telephone

(202) 720-3241 or 720–1537; FAX (202)

720–0938.

SUPPLEMENTARY INFORMATION:

Executive Order 12291

This rule has been determined to be

significant and was reviewed by the

Office of Management and Budget

(OMB) under Executive Order 12866.

Regulatory Flexibility Act

It has been determined that the

Regulatory Flexibility Act is not

applicable to this interim rule since CCC

is not required by 5 U.S.C. 553 or any

other provision of law to publish a

notice of rulemaking with respect to the

subject matter of this rule.

Executive Order 12372

This program is not subject to the

provisions of Executive Order 12372,

which requires 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).

Environmental Evaluation

The Foreign Agricultural Service

(FAS) is excluded from the

requirements of preparing procedures to

implement the National Environmental

Policy Act and is categorically excluded

from the preparation of an

Environmental Assessment or

Environmental Impact Statement unless

the Administrator of FAS determines

that an action may have a significant

environmental effect. 7 CFR 1b.4(b)(7).

The Administrator has made no such

determination with respect to this

action.

Paperwork Reduction Act

In accordance with provisions of the

Paperwork Reduction Act of 1995, CCC

will submit an emergency information

collection request (ICR) for the

reinstatement of the Facility Guarantee

Program (FGP) submission.

Title: The Facility Guarantee Program.

OMB Control Number: 0551–0032.

Type of Request: Reinstatement, with

change, of previously-approved

collection for which approval has

expired.

Abstract: The information to be

collected under the Office of

Management and Budget (OMB)

Number 0551–0032 is needed to enable

the CCC to effectively administer the

FGP. The information collection will be

used by the CCC to determine the

eligibility of applications. CCC

considers this information to be

essential to prudent eligibility

determinations. Failure to make sound

decisions in providing payment

guarantees for the sale of goods and

services may negatively impact exports

of U.S. agricultural commodities and

products.

The FGP information collection is

similar to those for the Export Credit

Guarantee (GSM–102) Program and the

Intermediate Export Credit Guarantee

(GSM–103) Program (OMB control

number 0551–004). The information

collection for the FGP differs primarily

as follows:

(1) The applicant, in order to receive

a payment guarantee, provides

information evidencing that the

exported goods and services used to

develop improved infrastructure will

primarily benefit exports of U.S.

agricultural commodities and products;

(2) The applicant is required to certify

that the value of non-U.S. components

of goods and services is less than 50

percent of the contract value covered

under the payment guarantee.

Estimate of Burden: The public

reporting burden for this information

collection is estimated to average 0.6

hours per response.

Respondents: Agricultural equipment

manufacturers and exporters.

Estimated Number of Respondents:

25.

Estimated Number of Responses per

Respondent: 11.

Estimated Total Annual Burden on

Respondents: 159.

Topics for comments include: (a)

Whether the collection of information is

necessary for the proper performance of

the functions of the CCC, including

whether the information will have

practical utility; (b) the accuracy of the

CCC’s estimate of burden including the

validity of the methodology and

assumptions used; (c) ways to enhance

the quality, utility and clarity of the

information to be collected; and (d)

ways to minimize the burden of the

collection of information on those who

are to respond, including the use of

appropriate automated, electronic,

mechanical, or other technological

collection techniques or other forms of

information technology.

Comments should be submitted in

accordance with the Dates section above

and sent to the Desk Officer for

Agriculture, Office of Information and

Regulatory Affairs, Office of

Management and Budget, Washington,

D.C. 20503; and to L.T. McElvain,

Director, CCC Operations Division,

Foreign Agricultural Service, U.S.

Department of Agricultural (USDA),

Stop 1035, Washington, DC 20250–

1035. Copies of this information

collection can be obtained from Valerie

Countiss, Agency Information

Collection Coordinator, at telephone

(202) 720–6713.

OMB is required to make a decision

concerning the collection(s) of

information contained in these interim

regulations between 30 and 60 days

after the publication of this document in

the Federal Register. Therefore, a

comment to OMB is best assured of

having its full effect if OMB receives it

within 30 days of publication. This does

not affect the deadline for the public to

comment to the Department of

Agriculture on the FGP regulations.

All responses will be summarized and

included in the request for OMB

approval. All comments will also

become a matter of public record.

Executive Order 12778

This interim rule has been reviewed

under Executive Order 12778. Civil

Justice Reform. The interim rule has

preemptive effect with respect to any

state or local laws, regulations, or

policies which conflict with the

provisions of this rule. The rule does

not have a retroactive effect. The interim

rule requires that certain administrative

remedies be exhausted before suit may

be filed.

Summary of Benefit-Cost Analysis

The benefit-cost analysis identifies

and estimates potential benefits and

costs attributed to provisions of this

interim rule, which has been designated

as ‘‘Significant.’’ These provisions

include application requirements and

program procedures. The changes in the

program made by this rule are expected

to have only limited economic effect

and are not expected to increase

administrative workload of the Federal

Government. Provisions of the Federal

Agriculture Improvement and Reform

Act of 1996 (the 1996 Act) which target

emerging markets lower estimated

subsidy costs by $2.5 million in FY

1997. Proposed foreign content
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42653

provisions will provide participants

with fewer restrictions when negotiating

terms and conditions of a sales

transaction.

Request for Public Comment

The need for immediate action by

CCC is predicated by two of the 1996

Act’s amendments to the Food,

Agriculture, Conservation, and Trade

Act of 1990, as amended (1990 Act). The

1996 Act (1) expanded the field of

eligible countries to include emerging

markets and (2) provided the Secretary

of Agriculture the authority to

determine and select the emerging

markets. These changes reflect the

importance of CCC being able to quickly

respond to fleeting opportunities for

increasing U.S. agricultural exports to

emerging market countries, often in

volatile and unpredictable

circumstances, while at the same time

enhancing and helping stabilize the

rural business systems of those

countries whose economies are in

transition.

In addition, in order to implement a

program to make available such credit

in a timely manner and in a manner that

will provide a more uniform

distribution of funds in each fiscal year,

it has been determined that this rule

shall become effective upon publication

in the Federal Register. However,

comments are requested with respect to

the provisions of this rule and will be

taken into consideration in the

development of the final rule.

Comments should be submitted to the

person indicated in the section titled

ADDRESSES.

Background

A. Statutory Authority

CCC provides export credit guarantees

for export sales of U.S. agricultural

commodities under the Export Credit

Guarantee (GSM–102) program and the

Intermediate Export Credit Guarantee

(GSM–103) program. The programs are

authorized by section 202 of the

Agricultural Trade Act of 1978 as

amended (1978 Act). Section 1542(a) of

the 1990 Act provides that CCC make

available, for fiscal years 1996 through

2002, not less than $1 billion in direct

credits or export credit guarantees for

agricultural exports to emerging markets

available under the 1978 Act. A portion

of such credit guarantees must, in

accordance with section 1542(b) of the

1990 Act, be made available for the

export of goods and services for

agricultural facilities. Guarantees are to

be made available if the Secretary of

Agriculture determines that such

guarantees will primarily promote the

export of United States agricultural

commodities and products thereof.

Specifically, eligible projects must

provide for (1) the establishment or

improvement of agricultural facilities in

emerging markets, or (2) for the

provision of goods or services in

emerging markets, by U.S. persons to

improve handling, marketing,

processing, storage, or distribution of

imported agricultural commodities or

products in such markets. The phrase

‘‘establishment or improvement of

facilities’’ allows for varied types of

projects ranging from the sale of

equipment (e.g., refrigeration,

processing, transportation) and other

goods needed to alleviate impediments

to increasing export sales of U.S.

agricultural commodities, to providing

services, such as equipment installation,

testing, and training to facilitate

achievement of the same purposes.

Section 1542(b) further requires CCC

to give priority to projects that (1)

encourage the privatization of the

agricultural sector in emerging markets,

(2) benefit private farms or cooperatives

in emerging markets, and (3) are

supported by nongovernmental persons

who agree to assume a relatively larger

share of the costs.

Section 1542(f) of the 1990 Act

defines ‘‘emerging market’’ as any

country that the Secretary of Agriculture

determines (1) is taking steps towards a

market-oriented economy through food,

agriculture, or rural business sectors of

the economy of the country and (2) has

the potential to provide a viable and

significant market for United States

agricultural commodities or their

products.

B. Legislative History

CCC published an FGP interim rule

on March 1, 1993, (58 FR 11786) in

response to the 1990 Act. The 1990 Act

required CCC to develop an export

credit guarantee program for facilities in

countries that were determined by the

President to be emerging democracies.

However, the FGP was not made

operational before the authority expired

on September 31, 1995. Congress

changed the targeting of the FGP in the

1996 Act to countries determined by the

Secretary of Agriculture to be emerging

markets. The interim rule was deleted

effective November 18, 1994 when CCC

revised 7 CFR part 1493 and issued a

final rule on the GSM–102 and GSM–

103 programs.

C. Summary of Comments—1993

Interim Rule

The Commodity Credit Corporation

(CCC) received eleven comments from

eight different sources in response to the

Facility Guarantee Program (FGP)

Interim Rule published March 1, 1993

in the Federal Register. The

commenters included three equipment

manufacturers, three animal health

product manufacturers, the Office of the

Inspector General, and a market

research firm which submitted three

separate responses.

Three comments were project

proposals that did not comment on the

regulatory aspects of the rule.

Three comments addressed the

definition of ‘‘acceptable substitute.’’

This definition was required by law in

the 1990 Farm Act to be included in the

FGP rule. The commenters’ believed

that CCC misinterpreted the intent of

the law and requested that CCC change

the definition of acceptable substitute.

This recommendation now is

unnecessary. The term acceptable

substitute was deleted from the 1996

Farm Act. Accordingly, CCC has

dropped the definition from the rule

under consideration.

One commenter suggested that CCC

explain in the preamble of the

regulation how CCC arrived at defining

‘‘close geographical location of

countries’’ to be 1,000 miles from the

target country. The law states that CCC

may not provide credit guarantees to

projects that may primarily benefit

countries in close geographical location

to the target country. CCC believes this

definition does not improve the program

and has dropped this definition from

the interim rule. The objective of the

FGP is to primarily benefit U.S.

agricultural exports. In meeting this

objective, no country, except the U.S.,

without regard to geographic proximity

to the targeted emerging market, may

primarily benefit from a FGP project.

One commenter requested that CCC

provide 100 percent guarantee coverage

on principal and interest for letters of

credit extended by a foreign bank. CCC

disagrees. If CCC provides 100 percent

coverage on principal and interest it

loses the risk sharing mechanism

inherent in CCC’s export credit

programs. Risk sharing is necessary

because CCC does not have the

resources required to perform project

specific financial and risk analysis.

Therefore, to keep CCC’s default rate at

acceptable levels, risk sharing is

essential. CCC believes that risk sharing

in the FGP results in more efficient use

of its limited resources.

One commenter requested CCC

provide a statement in the regulations to

include grain/food processing

equipment as eligible projects under the

FGP. The commenter indicated that the

interim rule was unclear on this point.

CCC disagrees. The regulations provide
42654 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations

that the FGP may guarantee credit

extended for sales of equipment and

services that improve handling,

processing, storage or distribution of

imported agricultural commodities. This

program purpose clearly addresses sales

of grain/food processing equipment.

One commenter also suggested that

CCC qualify Russian banks other than

those qualified to participate under the

U.S. Export Import Bank (Eximbank)

programs. CCC reviews foreign banks

against an established set of eligibility

criteria. These criteria may include

financial and economic factors similar

to those reviewed by Eximbank. CCC

qualifies all foreign banks expressing a

desire to participate in our programs if

they meet these criteria.

One commenter recommended that

CCC reach out to the food processing

industries and agribusiness sector in

target countries to promote the use of

the program. The commenter pointed

out that linking agricultural equipment

sales to commodity sales may benefit

the U.S. equipment manufacturers and

agricultural export industries. CCC

agrees and will endeavor to promote the

FGP to these sectors in targeted

emerging markets.

One commenter suggested that CCC

adopt a competitive bidding process for

projects to ensure the most cost effective

bidder on a project receives the

guarantee. CCC disagrees. This

suggestion indicates a fundamental

misunderstanding of the program. CCC

does not plan to solicit FGP applications

for specific types of projects. FGP

applicants will propose projects and

CCC will determine if such projects

meet the criteria of the program.

One commenter suggested that project

requirements (the information requested

by CCC to determine if a FGP guarantee

will be approved) be published in the

regulation and not the program

announcement. CCC agrees and has

included such requirements in the

regulation (7 CFR 1493.240 and

1493.250).

One commenter suggested that CCC

explain why the application fee is $200

in the preamble of the interim rule. CCC

agrees. Simply, the $200 application fee

serves as a disincentive to the

submission of speculative applications,

and a means to defray a portion of CCC’s

administrative costs.

One commenter requested the FGP

application include detailed financial

information on the buyer. The

commenter also specifically

recommended the application require

plans for servicing the guaranteed loan

through field inspections, obtaining

periodic financial statements, a

description of any liens against the

buyer, information concerning litigation

against and defaults by the buyer, and

the use of consultants in preparing the

application. The commenter suggested

further that the application require a

description of planned insurance

coverage (i.e. life, hazard, flood) and the

names of foreign regulatory agencies

that would require permits, licenses, or

other clearances that would impact the

facility. CCC disagrees. The

commenter’s concern appears to be in

regard to assessing buyer or project risk.

Assessing the ability of the buyer to

successfully manage a facility or

whether the facility will succeed

financially is the role of the foreign

bank. CCC’s guarantee covers the risk of

default of the foreign bank on the

repayment obligation to the exporter or

their U.S. bank assignee.

Two commenters referred to the

application requirements concerning

evidence of primary benefits to U.S.

agricultural exports. One commenter

recommended that the application

requirements concerning primary

benefit not overburden the applicant.

The commenter recommended that CCC

streamline paperwork requirements and

reduce project approval lead time. The

second commenter recommended that

the interim rule require applicants to

provide evidence of how a project

proposal will benefit U.S. agricultural

exports. CCC believes that the overall

goal of the FGP is to promote U.S.

agricultural exports. Sufficient

information must be required from

applicants in order for CCC to fully

evaluate project proposals and the

effects projects will have on U.S.

agricultural exports. CCC has made

many improvements in the interim rule

to streamline the application process in

comparison to the process outlined by

the 1993 interim rule. However, CCC

remains open to recommendations that

specifically address how CCC may

streamline the application review

procedures and reduce project proposal

lead time.

One commenter suggested that CCC

request information from the applicant

regarding the procurement funding or

guarantees from sources outside of CCC.

CCC agrees and has included this

recommendation in the regulation

(§ 1493.240(a)(22)).

One commenter recommended that

the application include the names of

attorneys, accountants and other parties

engaged in preparing the application.

CCC disagrees. Applications submitted

under all CCC export programs are

required to be signed by a principal of

the company applying for a guarantee.

CCC believes this is sufficient in

addressing any concerns regarding the

veracity of the information contained in

the application.

One commenter suggested CCC

expand the definition of a ‘‘U.S. person’’

so that CCC may determine if the

applicant fulfills this criteria without

seeking additional information. CCC

believes that program qualifications

respond to the commenter’s concern.

CCC qualifies applicants following a

review of documents such as the articles

of incorporation, partnership or

registration of proprietorship that may

permit CCC to determine if an applicant

is a legally registered U.S. business

entity.

D. The FGP Addresses a Market Failure

The FGP is designed to address a

specific market failure. Many emerging

markets lack sufficient infrastructure to

support expansion of agricultural

commodity imports. The demand for

capital financing in emerging markets is

significant. Agri-business projects must

compete with other infrastructure

development for the limited capital

available. The market failure that arises

is that private sector financial

institutions may be unwilling to provide

credit to agri-business projects, at a

reasonable cost. This market failure may

be more pervasive for small and

medium size enterprises than for larger

companies. The availability of CCC’s

guarantee under the FGP provides an

opportunity for U.S. private sector

financial institutions to provide credit

to a foreign bank that will, in-turn,

finance infrastructure projects at a

reasonable cost. Such credit extension is

unlikely to occur without the benefit of

CCC’s credit guarantee.

The market failure that FGP

addresses, particularly for small and

medium size enterprises, is viewed as

normally being below the threshold

level for multi-lateral and the regional

development banks to consider

extending financing or guarantees.

E. Exporter and Project Eligibility

CCC will make export credit

guarantees available in the form of

facility payment guarantees. Section

1542(b) of the 1990 Act provides that an

exporter must be a ‘‘U.S. person’’ to be

eligible for a facility payment guarantee.

Under this interim rule, exporters must

also furnish certain information and

certifications to CCC in order to be

eligible to receive payment guarantees.

Eligible projects must establish or

improve agriculture-related facilities in

an emerging market. For CCC to approve

a facility payment guarantee such

projects must primarily promote the

export of U.S. agricultural commodities

or products. For CCC to make such a
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42655

determination, the exporter must

convince CCC that the issuance of a

facility payment guarantee will cause

exports of U.S. agricultural commodities

or products to the emerging market to

increase:

(1) To a greater degree than similar

exports from other countries;

(2) To levels significantly above those

expected in the absence of providing the

facility payment guarantee; and

(3) For five years or until the facility

payment guarantee expires, whichever

comes first.

F. Program Implementation

The FGP will be administered by the

Office of the General Sales Manager

(GSM), Foreign Agricultural Service,

U.S. Department of Agriculture, on

behalf of CCC. Initially, CCC will

consider projects of limited size in a

limited number of emerging markets.

The effectiveness of the program will be

assessed in view of the comments

received on the interim rule and after a

number of facility payment guarantees

have been issued. The GSM will

periodically issue program

announcements inviting submissions by

exporters of applications for facility

payment guarantees. These program

announcements will identify emerging

markets, indicate maximum guarantee

coverage, and provide other pertinent

information.

CCC will review applications and

provide to the exporter a preliminary

commitment letter if an application

meets the standards of the regulations

and appears to represent the best use of

CCC’s resources. CCC may also request

additional information to clarify or

supplement an application. CCC may

reject applications that do not appear to

meet program objectives or for other

sufficient reasons.

Upon receiving a letter of preliminary

commitment from CCC, the exporter has

six months to submit a final application.

Such final application must contain

information confirming, updating, and

supplementing information previously

provided. If CCC approves the final

application, it will issue a letter of final

commitment requiring the exporter to

pay an exposure fee before a facility

payment guarantee is issued. CCC will

issue a facility payment guarantee when

the amount of the exposure fee has been

paid in full.

G. Credit Terms and Risk Coverage

The terms of CCC’s coverage will be

set forth in each facility payment

guarantee. These will conform to

pertinent rules of the Organization for

Economic Cooperation and

Development (OECD) Arrangement on

Guidelines for Officially Supported

Export Credits (Arrangement). Copies of

the OECD Arrangement and

classification of country categories are

available from: The Director, Office of

Trade Finance, Department of Treasury,

Room 4448, 1500 Pennsylvania Avenue,

NW, Washington DC 20220. The OECD

Arrangement sets out the most favorable

terms allowable for government credits

and guarantees. For example, pursuant

to the Arrangement, the exporter must

oblige the importer to comply with

CCC’s initial payment requirement

(§ 1493.230(c)). This requires the

importer to pay the exporter at least 15

percent of the net contract value. The

net contract value is equal to the

contract value minus (a) the value of

goods that are not U.S. goods; and (b)

the cost of services that are not U.S.

services (except those services the

exporter requests CCC to determine are

vital to the success of the project and

approved to be included in the net

contract value (§ 1493.260(b)(1))).

CCC will initially offer facility

payment guarantee coverage of 95

percent of the facility base value. This

value is the amount of the net contract

value that remains after deducting the

amount paid in accordance with the

initial payment requirement, and the

value of any discounts or allowances

(§ 1493.260(b)(2)). CCC will also cover

interest on a variable rate basis. The

method of determining the variable

interest rate coverage will be indicated

in program announcements and in each

payment guarantee. The interim rule

also provides that the maximum interest

rate, when determined by CCC, will not

exceed the average investment rate of

the most recent Treasury 52-week bill

auction in effect at that time.

H. Guidelines for U.S. Content

CCC used certain guidelines relating

to the inclusion and valuation of goods

that are not U.S. goods, services that are

not U.S. services, and imported

components of U.S. goods in sales

transactions covered under this

program. The most important of these

guidelines are summarized below:

1. FGP payment guarantees are

derived only from that portion of an

exporter’s sales contract that represents

(a) U.S. goods, (b) U.S. services, and (c)

any services that are not U.S. services

that CCC determines are vital to the

success of the project and are approved

by CCC for coverage. This derived value

is called net contract value

(§ 1493.260(b)(1)). Any other goods or

services included in the exporter’s

contract (e.g., foreign goods that are not

components of U.S. goods, goods not

exported from the U.S., and foreign

services not approved by CCC) cannot

be included in net contract value.

2. U.S. goods may include imported

components that are assembled,

processed or manufactured into goods

within, and exported from, the U.S.

Services that are not U.S. services (e.g.,

foreign flag freight (e.g., ocean, air), and

related insurance, ship discharge

operations, inland transportation)

provided by persons who are not

citizens or legal residents of the U.S.

may receive guarantee coverage only if

approved by CCC. Most likely CCC will

approve such services if they are

determined to be vital to the success of

the project.

3. In addition to the above

requirements, CCC will issue a facility

payment guarantee only if the value of

covered imported components,

combined with the cost of covered

services that are not U.S. services, meet

the 50 percent minimum U.S. content

test (§ 1493.260(d)). This means that

those components and services must

represent less than 50 percent of the net

contract value. The 50 percent

determination is made on an aggregate

or cumulative basis as exports of goods

and services occur, not item by item.

For example, more than 50 percent of

the value of a single piece of equipment

may be comprised of imported

components so long as the total value of

covered imported components and cost

of services that are not U.S. services

remain less than 50 percent of net

contract value for all goods and services.

To make the above 50 percent

determination, imported components

are valued at their declared customs

value or, in the absence of specific

information regarding declared customs

value, the fair wholesale market value of

the components in the U.S. at the time

they are acquired by the exporter. The

costs of services that are not U.S.

services are the actual amounts paid by

the exporter for the services in an armslength transaction, or, in the absence of

such a transaction, the fair market value

of the services at the time the services

were provided.

4. Imported raw materials (such as

iron, steel, nuts, and bolts) which are

processed, assembled or manufactured

in the U.S. are automatically included

in CCC’s coverage and are not counted

as imported components for the purpose

of the 50 percent minimum U.S. content

test (§ 1493.260(d)). CCC will rely on

commercial practice and

communication with participants to

resolve issues that may arise regarding

raw materials.
42656 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations

I. CCC’s Payment Guarantee Mechanism

and Claims Procedure

CCC guarantees the exporter, or the

exporter’s assignee, against defaults by a

foreign bank under its irrevocable letter

of credit or related obligation. In the

event of such a default, the exporter or

the exporter’s assignee must notify CCC

within a ten day period, and may file a

claim with CCC within six months. CCC

will pay the guaranteed amount of the

claim plus eligible interest if all

required claims documentation has been

received, including an instrument

subrogating to CCC the rights of the

exporter and, if applicable, the

exporter’s assignee, to the amount of

payment in default. Recoveries made by

CCC pursuant to the subrogated rights,

or from any source whatsoever, are

shared between CCC and the exporter or

exporter’s assignee on a pro rata basis

determined by their respective interests

in such recoveries. In the event that

monies are recovered by the exporter or

the exporter’s assignee from any source

whatsoever, these must be paid to CCC

which will include them in pro rata

sharing. The Appendix to § 1493.320

contains an example of pro rata sharing

of recoveries.

J. Example: Typical Transaction

A typical transaction eligible for

coverage under a facility payment

guarantee could be as follows: CCC

issues a program announcement inviting

U.S. persons to apply for facility

payment guarantees in connection with

eligible projects in a specified emerging

market. The program announcement

states that the terms of coverage will be

95 percent of the facility base value

(§ 1493.260(b)(2)). An exporter responds

by submitting an application for the

export sale of goods and services to an

importer in the emerging market. The

goods and services have a contract value

of $2.2 million, of which $200,000

represents goods that are not U.S. goods

which are not further processed,

assembled, or manufactured into U.S.

goods and services that are not U.S.

services for which no CCC coverage is

sought. Those goods and services are

subtracted from the contract value to

provide the net contract value of $2.0

million (§ 1493.260(b)(1)). The exporter

does not expect any discounts and

allowances to be provided.

The combined value or cost of

covered imported components

contained in U.S. goods and services

that are not U.S. services for which CCC

coverage is requested is $650,000. This

represents 32.5 percent of the net

contract value. Because this is less than

50 percent, the sale meets the U.S.

content test (§ 1493.260(d)). The

exporter indicates that the importer, in

order to comply with the initial

payment requirement (15 percent of the

net contract value), will pay the

exporter $300,000.

The net contract value ($2 million)

minus the initial payment requirement

($300,000), minus discounts and

allowances (zero), equals the facility

base value ($1,700,000) to which CCC’s

rate of coverage applies. The payment

guarantee would thus show a

guaranteed value of 95 percent of

$1,700,000, or $1,615,000 as shown

below. The facility payment guarantee

would also indicate how eligible

interest would be covered on a variable

rate basis, consistent with relevant

program announcements.

Example

(1) Contract Value .................... $2,200,000

(a) minus: Goods and

services that are not

U.S. goods and services

and are not approved

for coverage by CCC ..... 200,000

(2) Equals: Net Contract Value 2,000,000

(a) minus: Initial Payment

(15% of net contract

value) ............................. 300,000

(b) minus: Discounts and

Allowances .................... 0

(3) equals: Facility Base Value 1,700,000

(4) Guaranteed Value (95 percent of $1,700,000) ............... 1,615,000

Exporters should recognize that the

maximum liability for a claim

(§ 1493.310(b)), under certain

circumstances, may turn out to be less

than $1,615,000. Under § 1493.310(b),

CCC’s liability is limited to the lesser of:

(1) The guaranteed value as provided in

the facility payment guarantee, plus

eligible interest, or (2) the guaranteed

percentage of a value called the

exported value indicated in the

evidence of export report(s), plus

eligible interest. The exported value is

the net contract value of the goods or

services exported minus (a) the initial

payment and (b) the dollar amount of

any discounts and allowances

(§ 1493.280(a)(7)). Thus, if for any

reason, the exported value decreases,

the dollar amount of coverage would

decrease. For example, the exported

value would be less if fewer goods and

services are exported; if the value of

goods and services exported decreases

from the value originally reported to

CCC; if discounts or allowances, not

foreseen at the time of application, are

provided; or if payments by the

importer exceed the initial payment

requirement.

List of Subjects in 7 CFR Part 1493

Administrative practice and

procedures, Agricultural commodities,

Agriculture, Banks, Banking, Business

and industry, Credit, Exports, Finance,

Foreign banks, Guaranteed loans,

Reporting and recordkeeping

requirements.

Accordingly, Part 1493 of Title 7 is

amended as follows:

PART 1493—[AMENDED]

1. The authority citation for Part 1493

continues to read as follows:

Authority: 7 U.S.C. 5602, 5622, 5661, 5662,

5663, 5664, 5676, 15 U.S.C. 714b(d), 714c(f).

2. By adding a new subpart C to read

as follows:

Subpart C—CCC Facility Guarantee

Program (FGP) Operations

Sec.

1493.200 General statement.

1493.210 Definition of terms.

1493.220 Exporter eligibility.

1493.230 Eligible transactions.

1493.240 Initial application and letter of

preliminary commitment.

1493.250 Final application and issuance of

a facility payment guarantee

1493.260 Facility payment guarantee.

1493.270 Certifications.

1493.280 Evidence of export report.

1493.290 Proof of entry.

1493.300 Notice of default and claims for

loss.

1493.310 Payment for loss.

1493.320 Recovery of losses.

1493.330 Miscellaneous provisions.

Subpart C—CCC Facility Guarantee

Program (FGP) Operations

§ 1493.200 General statement.

This subpart governs the Commodity

Credit Corporation’s (CCC) Facility

Guarantee Program (FGP). CCC will

issue facility payment guarantees for

project applications meeting the terms

and conditions of the Facility Guarantee

Program (FGP) and where private sector

financing is otherwise not available.

This subpart describes the criteria and

procedures for applying for a facility

payment guarantee, and contains the

general terms and conditions of such a

guarantee. These general terms and

conditions may be supplemented by

special terms and conditions specified

in program announcements or notices to

participants published prior to the

issuance of a facility payment guarantee

and, if so, will be incorporated by

reference on the face of the facility

payment guarantee issued by CCC.

§ 1493.210 Definition of terms.

Terms set forth in this subpart will

have the following meaning:
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42657

Assignee. A financial institution in

the United States which, for adequate

consideration given, has obtained the

legal rights to receive payment under

the facility payment guarantee.

CCC. The Commodity Credit

Corporation, an agency and

instrumentality of the United States

within the U.S. Department of

Agriculture, authorized pursuant to the

Commodity Credit Corporation Charter

Act of 1948, as amended, 15 U.S.C. 714

et seq., and subject to the general

supervision and direction of the

Secretary of Agriculture.

Contacts P/R. A notice issued by

Foreign Agricultural Service, U.S.

Department of Agriculture (FAS/USDA)

by public press release which contains

specific names, addresses, and

telephone and facsimile numbers of

contacts within FAS/USDA and CCC.

The Contacts P/R also contains details

about where to submit information

required to qualify for program

participation, to apply for payment

guarantees, to request amendments of

facility payment guarantees, to submit

evidence of export reports, and to give

notices of default and file claims for

loss.

Contract value. The total negotiated

dollar amount for the export sale of

goods and services to emerging markets.

Date of export for goods. The onboard date of an ocean bill of lading or

an airway bill, the on-board ocean

carrier date of an intermodal bill of

lading; or, if exported by rail or truck,

the date of entry shown on an entry

certificate or similar document issued

and signed by an official of the

government of the importing country.

Date of export for services. The date

interest begins to accrue on credit

extended to cover payment for services,

except for freight and marine insurance

where the date of export is the same

date as for the goods exported.

Discounts and allowances. Any

consideration provided directly or

indirectly, by or on behalf of an

exporter, to an importer in connection

with a sale of goods or services, in

excess of the value of such goods or

services. Discounts or allowances

include, but are not limited to, the

provision of additional goods, services

or benefits; the promise to provide

additional goods, services or benefits in

the future; financial rebates; the

assumption of any financial or

contractual obligation; or the whole or

partial release of the importer from any

financial or contractual obligation.

Facility. An opportunity or project

that improves the handling, marketing,

processing, storage, or distribution of

imported agricultural commodities or

products.

GSM. The General Sales Manager,

Foreign Agricultural Service, U.S.

Department of Agriculture, acting in his

capacity as Vice President, CCC; or his

designee.

U.S. goods. Goods that are assembled,

processed or manufactured in, and

exported from, the United States

including goods which contain

imported raw materials or imported

components.

U.S. services. Services performed by

citizens or legal residents of the United

States, including those temporarily

residing outside the United States.

§ 1493.220 Exporter eligibility.

An exporter may apply for a facility

payment guarantee if such exporter:

(a) Is a citizen or legal resident of the

United States or is a business organized

under the laws of any state of the United

States or the District of Columbia;

(b) Has an established place of

business in the United States;

(c) Has a registered agent for service

of process in the United States; and

(d) Is not suspended or debarred, or

owned or controlled by a person who is

suspended or debarred, from contracting

with, or participating in programs

administered by, a U.S. Government

agency.

§ 1493.230 Eligible transactions.

(a) Program announcements. From

time to time CCC will issue program

announcements indicating the

availability of facility payment

guarantees in connection with sales of

goods or services to emerging markets.

The announcements will specify the

emerging markets, the maximum

amount, in U.S. dollars, of guarantee

exposure that CCC will undertake, and

may specify special terms or conditions

that will be applicable.

(b) Sale requirements. CCC will issue

facility payment guarantees only in

connection with projects that CCC

determines will benefit primarily

exports of U.S. agricultural commodities

and products, and only where there is

a firm contract for the sale of goods or

services for the establishment or

improvement of an agriculture-related

facility. The contract may be contingent,

however, on the issuance of a CCC

facility payment guarantee.

(c) Initial payment requirement. The

contract for sale of goods or services

between the exporter and the importer

shall oblige the importer to make an

initial payment(s) to the exporter of at

least 15 percent of the net contract value

in § 1493.260(b)(1). Such initial

payment(s) shall be in U.S. dollars or

instruments having a definite value in

U.S. dollars, and shall be made prior to

the export of the goods or services.

(d) Required method of payment. CCC

will issue a facility payment guarantee

only in connection with a sale in which

payment will be made under either:

(1) An irrevocable foreign bank letter

of credit specifically stating the deferred

payment terms under which the foreign

bank is obligated to make payments in

U.S. dollars as payments become due; or

(2) An irrevocable foreign bank letter

of credit supported by a related

obligation specifically stating the

deferred payment terms under which

the foreign bank is obligated to make

payment in U.S. dollars as such

payments become due.

(e) Form of letter of credit. The foreign

bank letter of credit referred to in

paragraph (d) of this section shall be an

irrevocable commercial letter of credit,

subject to the revision of the

International Chamber of Commerce

Uniform Customs and Practices for

Documentary Credits in effect when

the letter of credit is issued, providing

for payment in U.S. dollars against

stipulated documents and issued in

favor of the exporter by a CCC-approved

foreign banking institution.

(f) Form of related obligation. The

related obligation referred to in

paragraph (d) of this section shall be in

one of the following forms:

(1) A letter of credit including a

specific promise to pay on deferred

payment terms as a special instruction

from the issuing bank directly to the

U.S. financial institution to refinance

the amounts paid by the U.S. financial

institution for obligations financed

according to the tenor of the letter of

credit;

(2) A separate document specifically

identified and referred to in the letter of

credit as the agreement under which the

foreign bank is obligated to repay the

U.S. financial institution on deferred

payment terms;

(3) A separate document setting forth

the related obligation, or in a duly

executed amendment thereto, as having

been financed by a U.S. financial

institution pursuant to, and subject to,

repayment in accordance with the terms

of such related obligation; or

(4) A promissory note executed by a

foreign bank issuing the letter of credit

in favor of the financial institution.

§ 1493.240 Initial application and letter of

preliminary commitment.

(a) Initial Application. An exporter

may apply for a facility payment

guarantee by submitting the following

information:
42658 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations

(1) A cover sheet with the title:

‘‘Application for a Facility Payment

Guarantee—Preliminary Commitment’’;

(2) The program announcement

number;

(3) The emerging market;

(4) The name, contact person, address,

and telephone number and, if

applicable, facsimile number and E-mail

address of:

(i) The exporter;

(ii) The exporter’s registered agent for

service of process in the United States;

(iii) The exporter’s assignee, if

applicable;

(iv) The importer;

(v) The end-user of the goods or

services if other than the importer;

(vi) The foreign bank expected to

issue the letter of credit or related

obligation; and

(vii) The financial institution in the

United States expected to provide

financing;

(5) A statement on letterhead from a:

(i) Foreign bank indicating an interest

in guaranteeing payment, in U.S.

dollars, for goods or services to be

exported under the facility payment

guarantee at least equal to the net

contract value listed in paragraph (a)(14)

of this section, less the initial payment

requirement listed in paragraph (a)(15)

of this section; and

(ii) Financial institution in the U.S.

indicating an interest in financing the

export sales of goods or services under

the facility payment guarantee for an

amount at least equal to the net contract

value listed in paragraph (a)(14) of this

section less the initial payment

requirement listed in paragraph (a)(15)

of this section. The financial institution

must state that such financing would

not otherwise be available without an

FGP payment guarantee;

(6) The period for which credit is

being extended to finance the sale of

goods or services covered by the facility

payment guarantee;

(7) The exporter’s sales number

pertinent to this application and a

description of the status of the intended

sale;

(8) A description (e.g., a process flow

diagram) of the agriculture-related

facility that will use the goods or

services to be covered by the facility

payment guarantee and an explanation

of how these goods and services will be

used to improve handling, marketing,

processing, storage, or distribution of

agricultural commodities or products;

(9) A brief description of each good or

service to be covered by the facility

payment guarantee including, where

applicable, brand name, model number,

Standard Industrial Classification (SIC)

or the North American Industry

Classification System (NAICS) code, and

contract specifications;

(10) The final date for export of goods

or services. If applicable, include

construction start date, milestones (e.g.,

installation), and contractual deadline

for completion of project;

(11) The contract value for the sale of

goods or services and the basis of sale

for goods to be exported (e.g., FOB, CFR,

CIF);

(12) The description and value of the

goods or cost of services listed in

paragraph (a)(11) of this section that are

not U.S. goods or services;

(13) Identification and cost of, and

justification for, those services listed in

paragraph (a)(12) of this section for

which the exporter requests CCC to

provide coverage;

(14) The net contract value in

§ 1493.260(b)(1) obtained by subtracting

paragraph (a)(12) of this section from

paragraph (a)(11) of this section, and

adding paragraph (a)(13) of this section;

(15) The amount to be paid in

accordance with the initial payment

requirement (§ 1493.230(c));

(16) The description and dollar

amount of discounts and allowances

provided in connection with the sale of

goods or services covered by the facility

payment guarantee;

(17) The facility base value in

§ 1493.260(b)(2) obtained by subtracting

paragraphs (a)(15) and (a)(16) of this

section from paragraph (a)(14) of this

section;

(18) The maximum guaranteed value

under the facility payment guarantee

determined by multiplying the facility

base value listed in paragraph (a)(17) of

this section by the guarantee rate of

coverage announced by CCC in

§ 1493.260(b)(3);

(19) A map or other description of the

facility’s location and distance from

major population centers of neighboring

countries;

(20) For all principal agricultural

commodities or products (inputs) to be

handled, marketed, processed, stored, or

distributed, by the proposed project

after completion, provide:

(i) A list or table identifying such

principal inputs;

(ii) The likely countries of origin for

each input;

(iii) Estimated annual quantities, in

metric tons, of each input listed in

paragraph (a)(20)(i) of this section to be

used by the project for five years from

the final date of export or until the

expiration of the facility payment

guarantee, whichever comes first; and

(iv) An analysis, including price, cost,

and other assumptions (the reasons why

U.S. agricultural commodities or

products will be more competitive

inputs than commodities or products

from other sources, and whether the

projected use of U.S. agricultural

commodities or products depends on

the availability of U.S. export bonus or

credit guarantee programs), of which

inputs listed in paragraph (a)(20)(i) of

this section will represent increased

imports of U.S. agricultural

commodities or products:

(A) To a greater degree than imports

of agricultural commodities or products

from other countries;

(B) To or at levels significantly above

those expected in the absence of the

project; and

(C) For a period of five years from the

final date of export or until expiration

of the facility payment guarantee,

whichever comes first.

(21) If applicable, a list of agricultural

outputs or final products of the

proposed project and:

(i) Projected annual quantities (for

five years or until the expiration of the

facility payment guarantee, whichever

comes first), in metric tons, of each

output to be marketed;

(A) Within the emerging market; and

(B) In any other country;

(ii) Quantities, by country of origin, of

products imported into the emerging

market during the past year which

would compete with such outputs; and

(iii) An analysis of whether products

of the project will significantly displace

U.S. exports of similar agricultural

commodities or products in any market;

(22) If applicable, a description of any

arrangements or understandings with

other U.S. or foreign government

agencies, or with financial institutions

or entities, private or public, providing

financing to the exporter in connection

with this export sale, and copies of any

documents relating to such

arrangements;

(23) A description of the exporter’s

experience selling goods or providing

services similar to those for which the

exporter seeks to obtain facility payment

guarantee coverage;

(24) A statement of how this project

may encourage privatization of the

agricultural sector, or benefit private

farms or cooperatives, in the emerging

market. Include in the statement the

share of private sector ownership of the

project;

(25) The exporter’s signature.

(b) Application fee. The exporter shall

pay the application fee specified in the

program announcement at the time the

application is submitted. An application

will not be considered without payment

of the specified fee. The application fee

is nonrefundable.

(c) Letter of preliminary commitment.

CCC will determine whether, in its
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42659

judgment, the project in connection

with which the exporter seeks a facility

payment guarantee is likely to increase

exports of U.S. agricultural commodities

or products to an emerging market; and

whether the project is likely to benefit

primarily U.S. agricultural commodities

or products as opposed to commodities

or products originating in other

countries. If necessary, CCC may seek

additional information from an

applicant prior to making its

determination. If CCC determines that

an application meets these standards

and appears to represent, in CCC’s

judgment, the best use of available

resources, CCC will respond to the

applicant with a letter of preliminary

commitment indicating CCC’s interest

in issuing a facility payment guarantee

conditioned on its approval of the

exporter’s final application.

§ 1493.250 Final application and

issuance of facility payment guarantee.

(a) Final application. An exporter

who has received a letter of preliminary

commitment may, within six months of

the date of such letter, submit a final

application to CCC for a facility

payment guarantee which shall include

the following information:

(1) A cover sheet with the title:

‘‘Application for a Facility Payment

Guarantee—Final Commitment.’’

(2) A letterhead statement from the

importer’s bank or other documentation

confirming the importer has the

financial ability to comply with the

initial payment requirement in

§ 1493.230(c);

(3) Written evidence of a firm sale

signed by the exporter and the importer,

specifying at minimum, the following

information: Goods or services to be

exported, quantities of such items,

delivery terms (e.g., FOB, CFR, CIF),

delivery period(s), contract value,

payment terms, and date of sale. A sales

contract may be contingent upon

obtaining a facility payment guarantee;

(4) A description of any changes in

the information submitted in the

preliminary application; and

(5) The exporter’s signature;

(b) Additional information. CCC shall

have the right to request the exporter to

furnish any other information and

documentation it deems pertinent to the

evaluation of the exporter’s final

application for a final commitment. CCC

may request from the exporter an

independent engineering study or

economic feasibility study relating to

the project.

(c) Final commitment letter. After

making a favorable determination on the

exporter’s submissions, CCC will issue a

final commitment letter indicating the

applicable exposure fee rate and stating

that CCC is prepared to issue a facility

payment guarantee upon receiving full

payment of the exposure fee within an

allotted time. The letter will also

indicate the key terms and coverage of

the guarantee to be issued. CCC will also

inform exporters in writing when it

denies their request for a facility

payment guarantee.

(d) Exposure fee. The exposure fee is

calculated by multiplying the requested

guaranteed value (up to the maximum

established by CCC’s final commitment

letter) by the exposure fee rate. Once the

facility payment guarantee is issued to

the exporter, CCC will ordinarily not

refund the exposure fee. If CCC does not

issue a facility payment guarantee, or

issues a guarantee for only part of the

coverage requested, CCC will make a

full or pro rata refund of the exposure

fee, as appropriate.

(e) Issuance of the facility payment

guarantee. Upon receipt of the exposure

fee, CCC will issue a facility payment

guarantee.

§ 1493.260 Facility payment guarantee.

(a) CCC’s maximum obligation. CCC

will agree to pay the exporter or the

exporter’s assignee an amount not to

exceed the guaranteed value stipulated

on the face of the facility payment

guarantee, plus eligible interest, in the

event that the foreign bank fails to pay

under the foreign bank letter of credit or

related obligation. The exact amount of

CCC’s liability in the event of default

will be determined in accordance with

§ 1493.310(b).

(b) Calculation of maximum

guarantee coverage. CCC will determine

the maximum amount of its obligation

under a facility payment guarantee by

calculating a:

(1) Net contract value equal to the

contract value minus:

(i) The value of goods that are not U.S.

goods; and

(ii) The cost of services that are not

U.S. services (except those services the

exporter requests CCC to determine are

vital to the success of the project and

approved to be included in the net

contract value);

(2) Facility base value equal to net

contract value minus:

(i) The amount to be paid in

accordance with the initial payment

requirement in § 1493.230(c); and

(ii) The amount of discounts and

allowances; and

(3) Maximum guaranteed value equal

to:

(i) A principal amount determined by

multiplying the facility base value (as

determined in § 1493.260(b)(2)) by the

guaranteed percentage specified in the

program announcement; and

(ii) Interest on such principal amount

at the rate specified in the applicable

program announcement, not to exceed

the investment rate of the most recent

Treasury 52-week bill auction in effect

at that time.

(c) Value and cost. For the purposes

of this section:

(1) Value means declared customs

value of the goods; or, in the absence of

specific information regarding declared

customs value, the fair market

wholesale value of the imported goods

in the United States at the time they

were acquired by the participant; and

(2) Cost means actual amount paid by

the exporter for the services in an armslength transaction; or in the absence of

an arms-length transaction, the fair

market value of the services at the time

the services were provided.

(d) U.S. content test. (1) CCC will

issue a guarantee only if the following

items collectively represent less than 50

percent of the net contract value in

§ 1493.260(b)(1):

(i) The value of imported components

(except for raw materials) that are

assembled, processed, or manufactured

into U.S. goods included in the net

contract value;

(ii) The cost of services that are not

U.S. services (including freight on

foreign flag carriers and transportation

insurance registered with foreign agents)

that, at the request of the exporter, CCC

determines are vital to the success of the

project and approves their inclusion in

the net contract value;

(2) For purpose of this subsection,

minor or cosmetic procedures (e.g.,

affixing labels, cleaning, painting,

polishing) do not qualify as assembling,

processing or manufacturing;

(3) For purpose of this subsection,

local services which involve costs for

hotels, meals, transportation, and other

similar services incurred in the

emerging market are not U.S. services.

(e) Period of guarantee coverage. The

payment guarantee will apply to the

period beginning on the date(s) of

export(s) and will continue during the

credit term specified in the facility

payment guarantee. For goods, the

period of coverage will also apply from

the date on which interest begins to

accrue, if earlier than the date of export.

The final payments of principal and

interest by the foreign bank must come

due within the period of guarantee

coverage.

(f) Terms of the CCC facility payment

guarantee. The terms of CCC’s coverage

will be set forth in the facility payment

guarantee and will include the

provisions of this subpart, which may
42660 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations

be supplemented by any program

announcement(s) or notice(s) to

participants in effect at the time the

facility payment guarantee is approved

by CCC.

(g) Final date to export. The final date

to export will be stated in the facility

payment guarantee.

(h) Ineligible exports. Goods or

services with a date of export prior to

the date CCC issues the facility payment

guarantee are ineligible for coverage

unless approved by the GSM.

(i) Additional requirements. The

facility payment guarantee may contain

such additional terms, conditions, and

limitations as are deemed necessary or

desirable by the GSM. Such additional

terms, conditions or qualifications, as

stated in the facility payment guarantee,

are binding on the exporter or the

exporter’s assignee.

(j) Amendments. Exporters must

notify CCC of any amendments

concerning contracts covered by a

facility payment guarantee. CCC will

determine if the contract amendments

will require amendments to the facility

payment guarantee. Amending the

facility payment guarantee may result in

an increase to the exposure fee.

Requests made by the exporter to amend

the facility payment guarantee so as to

change the guaranteed value must have

the concurrence of the assignee when an

assignment has been made.

(k) Effective date. The facility

payment guarantee shall become

effective on the date of export of the

goods or services.

Appendix to Section 1493.260—

Illustration of FGP Coverage of

Imported Raw Materials, Components,

and Services That Are Not U.S.

Services

The following example illustrates CCC’s

regulations and policy options with regard to

issuing a payment guarantee for a project

which includes imported raw materials,

imported components, and services that are

not U.S. services:

1. Ten grain trucks and one truck scale are

to be exported from the U.S. to an emerging

market. The trucks will provide the ability to

purchase larger quantities of grain from the

U.S. The contract value totals $2,025,000,

cost, insurance and freight (CIF) basis.

2. The fenders, hoods and doors of the

trucks have been manufactured and

assembled in the U.S. and contain some

imported raw materials (sheet metal).

3. Imported components consist of starters

and alternators, with a U.S. customs

valuation of $149,000. These items are

installed into the trucks in the U.S.

4. The truck scale was imported from

Canada into the U.S. with a U.S. customs

valuation of $20,000.

5. A U.S. citizen, will travel on a foreign

airline carrier to the emerging market (airfare

is $1,000) to instruct mechanics in repair and

maintenance of the trucks. He will be paid

a salary for this service and, in addition, will

be reimbursed separately for local costs in

the emerging market (e.g., hotel, meals,

transportation) which are estimated to be

$5,000.

6. The trucks are to be shipped on foreign

flag vessels, and the marine insurance is to

be placed with a foreign agent. The combined

cost of these services that are not U.S.

services for which the exporter seeks

coverage is estimated to be $500,000.

CCC’s Approval of Services that are Not U.S.

Services

CCC agrees to include in the net contract

value the foreign flag freight and marine

insurance ($500,000) and the airfare ($1,000)

of the U.S. instructor (§ 1493.260(b)(1)).

Calculation of Net Contract Value

CCC will calculate the net contract value

by subtracting from the contract value

($2,025,000) the U.S. customs value of the

truck scale ($20,000) in accordance with

§ 1493.260(b)(1)(I) and the local costs to be

incurred by the U.S. instructor ($5,000) in

accordance with § 1493.260(b)(1)(ii) to equal

$2,000,000.

CCC’s Determination of U.S. Content

Eligibility

The imported components and services

that are not U.S. services approved for

coverage total $650,000 (i.e., $149,000 for

starters and alternators, $1,000 for airfare,

$500,000 for freight and insurance; or 32.5

percent of the net contract value of

$2,000,000 (§ 1493.260(b)(1)). Since this is

less than 50 percent of the net contract value

the transaction meets the U.S. content test

(§ 1493.260(d)).

§ 1493.270 Certifications.

(a) Exporter’s signature. The

exporter’s signature on documentation

submitted to CCC under this subpart, is

the exporter’s certification that:

(1) There have not been and are no

arrangements for any payments in

violation of the Foreign Corrupt

Practices Act of 1977, as amended, or

other U.S. Laws;

(2) All information submitted to CCC

is true and correct; and

(3) The exporter is in compliance with

this subpart.

(b) False certification. False

certifications under this subpart may

result in the termination of the facility

payment guarantee, suspension or

debarment, or civil or criminal action.

§ 1493.280 Evidence of export report.

(a) Report of export. The exporter is

required to provide CCC an evidence of

export report for each shipment of goods

or provision of services covered under

the facility payment guarantee. Each

report must be numbered in

chronological order and contain the

following information in the order

prescribed below:

(1) The facility payment guarantee

number;

(2) The date goods or services were

exported or provided;

(3) The exporter’s sale number, bill of

lading numbers, or identification of

other documents that may be submitted

to establish the contract value of the

goods or services exported or provided;

(4) The net contract value of the

exported goods or services as

determined in accordance with

§ 1493.260(b)(1);

(5) The amount paid in accordance

with the initial payment requirement

(§ 1493.230 (c));

(6) A description and dollar value of

discounts and allowances, if any;

(7) The exported value of the

shipment which is the net contract

value of the goods or services exported

in paragraph (a)(4) of this section minus:

(i) The initial payment requirement

listed in paragraph (a)(5) of this section;

and

(ii) The dollar amount of any

discounts and allowances listed in

paragraph (a)(6) of this section;

(8) The name of the carrier and, if

applicable, the name of the vessel;

(9) The final payment schedule

showing the payment due dates and

amounts of principal, and payment due

dates for interest accrual. If the payment

schedule is unknown, the exporter must

indicate in writing that: ‘‘The payment

schedule will be provided in an

amendment to the evidence of export

report when the payment schedule has

been determined;’’

(10) Written statements that:

(i) The goods exported or services

provided were included in the final

application for a final commitment as

approved by CCC for coverage under the

facility payment guarantee and this

subpart;

(ii) The specifications and quantity of

goods or services exported conform to

the information contained in the

exporter’s application documents for a

facility payment guarantee, or if

different, that CCC has approved of such

changes;

(iii) A letter of credit has been opened

in favor of the exporter by the foreign

bank shown on the facility payment

guarantee to cover the dollar amount of

the sale of goods or services exported

less the amount paid in accordance with

the initial payment requirement and less

discounts and allowances; and

(11) The exporter’s signature.

(b) Final report of export. The final

evidence of export report submitted

under a facility payment guarantee must

contain:

(1) A written statement that exports

under the facility payment guarantee

have been completed;
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42661

(2) The information requested in

§ 1493.280(a) for the shipment(s)

included in the final report; and

(3) The combined total of all dollar

amounts reported under § 1493.280 (a)

and (b) for all reports.

(c) Time limit for submission of

evidence of export report. Unless

extended by CCC for good cause, the

exporter must submit to CCC an

evidence of export report:

(1) Within 60 days of the date goods

are exported by rail or truck;

(2) Within 30 days of the date goods

are exported by any other carrier; or

(3) Within 30 days of the date of

export of services.

(d) Late reports. If the evidence of

export report is not received by CCC

within the time period for filing, the

facility payment guarantee will become

null and void only if and only to the

extent that failure to make timely filing

resulted, or would likely result, in:

(1) Significant financial harm to CCC;

(2) The undermining of an essential

regulatory purpose of the FGP;

(3) The obstruction of the fair

administration of the FGP; or

(4) A threat to the integrity of the FGP.

§ 1493.290 Proof of entry.

(a) Diversion. The diversion of goods

covered by a facility payment guarantee

to a country other than that shown on

the facility payment guarantee is

prohibited, unless expressly authorized

by the GSM.

(b) Records of proof of entry.

Exporters must obtain and maintain

records of an official or customary

commercial nature and grant authorized

USDA officials access to such

documents or records as may be

necessary to demonstrate the arrival of

the goods authorized by the facility

payment guarantee. Records

demonstrating proof of entry must be in

English or be accompanied by a certified

or other translation acceptable to CCC.

Records acceptable to meet this

requirement include:

(1) For goods: An original certificate,

signed by a duly authorized customs or

port official of the emerging market, by

the importer, by an agent or

representative of the vessel or ship line

which delivered the goods to the

emerging market, or by a private

surveyor in the emerging market, or

other documentation deemed acceptable

by CCC:

(i) Showing that the goods entered the

emerging market;

(ii) Identifying the export carrier;

(iii) Describing the goods; and

(iv) Indicating date and place the

goods were unloaded in the emerging

market.

§ 1493.300 Notice of default and claims for

loss.

(a) Notice of default. If the foreign

bank issuing the letter of credit fails to

make payment pursuant to the terms of

the foreign bank letter of credit or

related obligation, the exporter or the

exporter’s assignee must submit a notice

of default to CCC as soon as possible,

but not later than ten days after the date

that payment was due from the foreign

bank (the due date). A notice of default

must be submitted in writing to the

Treasurer, CCC, at the address specified

in the Contacts P/R. If the exporter or

the exporter’s assignee fails to promptly

notify CCC of defaults in accordance

with this paragraph, CCC may make the

facility payment guarantee null and

void with respect to any payment(s)

applicable to such default. This time

limit may be extended only under

extraordinary circumstances and if

approved by the Controller, CCC. The

notice of default must include:

(1) Facility payment guarantee

number;

(2) Name of the emerging market;

(3) Name of the defaulting bank;

(4) Payment due date;

(5) Total amount of the defaulted

payment due, indicating separately the

amounts for principal and interest;

(6) Date of foreign bank’s refusal to

pay, if applicable; and

(7) Reason for the foreign bank’s

refusal to pay, if known.

(b) Filing a claim for loss. A claim for

a loss by the exporter or the exporter’s

assignee will not be paid if it is made

later than six months from the due date

of the defaulted payment. A claim for

loss must be submitted in writing to the

Treasurer, CCC, at the address specified

in the Contacts P/R. The claim for loss

must include the following information

and documents:

(1) Facility payment guarantee

number;

(2) A certification that the scheduled

payment has not been received;

(3) A certification of the amount of

accrued interest in default, the date

interest began to accrue and the interest

rate on the foreign bank obligation

applicable to the claim; and

(4) A copy of each of the following

documents, with a cover document

containing a signed certification by the

exporter or the exporter’s assignee that

each page of each document is a true

and correct copy:

(i)(A) The foreign bank’s letter of

credit securing the export sale, and;

(B) If applicable, the document(s)

evidencing the related obligation owed

by the foreign bank to the assignee

financial institution which is related to

the foreign bank’s letter of credit issued

in favor of the exporter.

(ii) Depending upon the method of

shipment, the negotiable ocean carrier

or intermodal bill(s) of lading signed by

the shipping company with the onboard

ocean carrier date for each shipment,

the airway bill; or, if shipped by rail or

truck, the entry certificate or similar

document signed by an official of the

emerging market;

(iii) The exporter’s sales invoice(s)

showing the value and basis of sale (e.g.,

FOB, CFR, or CIF) or, if services are

billed separately, documents that the

exporter or its assignee relied upon in

extending the credit to the issuing

foreign bank;

(iv) An instrument, in form and

substance satisfactory to CCC,

subrogating to CCC the respective rights

of the exporter and the exporter’s

assignee, if applicable, to the amount of

payment in default. The instrument

must reference the applicable foreign

bank letter of credit and the related

obligation, if applicable; and

(v) A copy of the evidence of export

report(s) previously submitted by the

exporter to CCC pursuant to § 1493.280.

(c) Subsequent claims for defaults on

installments. The exporter or an

exporter’s assignee need only provide

one claim which meets full

documentation requirements relating to

a covered transaction. For subsequent

claims relating to such failures of the

foreign bank to make scheduled

installments on the same export, the

exporter or the exporter’s assignee need

only submit to CCC a notice of such

failure containing the information stated

in paragraphs (b) (1), (2), and (3) of this

section; an instrument of subrogation as

per paragraph (b)(4)(iv) of this section,

and the date the original claim was filed

with CCC.

§ 1493.310 Payment for loss.

(a) Determination of CCC’s liability.

Upon receipt in good order of the

information and documents required

under § 1493.300, CCC will determine

whether or not a loss has occurred for

which CCC is liable under the facility

payment guarantee, this subpart,

program announcement(s) and notice(s)

to participants. If CCC determines that

it is liable to the exporter or the

exporter’s assignee, CCC will pay the

exporter or the exporter’s assignee in

accordance with paragraphs (b) and (c)

of this section.

(b) Amount of CCC’s liability. CCC’s

maximum liability for any claims for

loss submitted with respect to any

facility payment guarantee, not

including any late interest payments

due in accordance with paragraph (c) of
42662 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations

this section, will be limited to the lesser

of:

(1) The guaranteed value as stated in

the facility payment guarantee, plus

eligible interest; or

(2) The guaranteed percentage (as

indicated in the facility payment

guarantee) of the exported value

indicated in the evidence of export

report (§ 1493.280(a)(7)), plus eligible

interest.

(c) Late interest payment. If a claim is

not paid within one day of receipt of a

claim which CCC has determined to be

in good order, late interest will accrue

in favor of the exporter or the exporter’s

assignee beginning with the first day

after the claim was found by CCC to be

in good order and continuing until and

including the date that payment is made

by CCC. Late interest will be paid on the

guaranteed amount, as determined by

paragraphs (b)(1) and (2) of this section,

and will be calculated based on the

latest average investment rate of the

most recent Treasury 91-day bill auction

as announced by the Department of

Treasury as of the due date.

(d) Accelerated payments. CCC will

pay claims only for losses on amounts

not paid as scheduled. CCC will not pay

claims for amounts due under an

accelerated payment clause in the

export sales contract, the foreign bank’s

letter of credit, or any obligation owed

by the foreign bank to the assignee U.S.

financial institution which is related to

the foreign bank’s letter of credit issued

in favor of the exporter, unless it is

determined to be in the best interest of

CCC by the Controller, CCC.

Notwithstanding the foregoing, CCC at

its option may declare the entire amount

of the unpaid balance, plus accrued

interest, in default and make payment to

the exporter or the exporter’s assignee in

addition to such other claimed amount

as may be due from CCC.

(e) Action against the assignee.

Notwithstanding any other provision in

this subpart to the contrary, with regard

to the value of goods or services covered

by a facility payment guarantee, CCC

will not hold the assignee responsible or

take any action or raise any defense

against the assignee for any action,

omission or statement by the exporter of

which the assignee has no knowledge,

provided that:

(1) The exporter complies with the

reporting requirements under

§ 1493.270 and § 1493.280 excluding

post-export adjustments (i.e.,

corrections of evidence of export

reports); and

(2) The exporter or the exporter’s

assignee furnishes the statements and

documents specified in § 1493.300.

§ 1493.320 Recovery of losses.

(a) Notification. Upon payment of loss

to the exporter or the exporter’s

assignee, CCC will notify the foreign

bank of CCC’s rights under the

subrogation agreement to recover all

monies in default.

(b) Receipt of monies. (1) In the event

that monies for a defaulted payment are

recovered by the exporter or the

exporter’s assignee from the importer,

the foreign bank or any other source

whatsoever, such monies shall be

immediately paid to the Treasurer, CCC.

If such monies are not received by CCC

within 15 days from the date of recovery

by the exporter or the exporter’s

assignee, the exporter or the exporter’s

assignee will owe to CCC interest from

the date of recovery to the date of

receipt by CCC. This interest will be

calculated based on the latest average

investment rate of the most recent

Treasury 91-day auction, as announced

by the Department of Treasury, in effect

on the date of recovery and will accrue

from such date to the date of payment

by the exporter or the exporter’s

assignee to CCC. Such interest will be

charged only on CCC’s share of the

recovery.

(2) If CCC recovers monies that should

be applied to a facility payment

guarantee for which a claim has been

paid by CCC, CCC will pay the holder

of the facility payment guarantee its pro

rata share immediately, provided that

the required information necessary for

determining pro rata distribution has

been furnished. If payment is not made

by CCC within 15 days from the date of

recovery or 15 days from receiving the

required information for determining

pro rata distribution, whichever is later,

CCC will pay interest calculated on the

latest average investment rate of the

most recent Treasury 91-day bill

auction, as announced by the

Department of Treasury, in effect on the

date of recovery and will accrue from

such date to the date of payment by

CCC. The interest will apply only to the

portion of the recovery payable to the

holder of the facility payment guarantee.

(c) Allocation of recoveries.

Recoveries made by CCC from the

importer or the foreign bank, and

recoveries received by CCC from the

exporter, the exporter’s assignee or any

other source whatsoever, will be

allocated by CCC to the exporter or the

exporter’s assignee and to CCC on a pro

rata basis determined by their respective

interests in such recoveries. The

respective interest of each party will be

determined on a pro rata basis, based on

the combined amount of principal and

interest in default. Once CCC has paid

out a particular claim under a facility

payment guarantee, CCC prorates any

collections it receives and shares these

collections proportionately with the

holder of the guarantee until both CCC

and the holder of the guarantee have

been reimbursed in full. Appendix to

§ 1493.320 provides an example of the

methodology used by CCC in applying

this paragraph (c).

(d) Liabilities to CCC.

Notwithstanding any other terms of the

facility payment guarantee, the exporter

may be liable to CCC for any amounts

paid by CCC under the facility payment

guarantee when and if it is determined

by CCC that the exporter engaged in

fraud, or has been or is in breach of any

contractual obligation, certification or

warranty made by the exporter for the

purpose of obtaining the facility

payment guarantee or for fulfilling

obligations under the FGP. Further, the

exporter’s assignee may be liable to CCC

for any amounts paid by CCC under the

facility payment guarantee when and if

it is determined by CCC that the

exporter’s assignee engaged in fraud or

otherwise violated program

requirements.

(e) Good faith. The violation by an

exporter of the certifications in

§ 1493.270 or the failure of an exporter

to comply with the provisions of

§ 1493.290 or § 1493.330(e) will not

affect the validity of any facility

payment guarantee with respect to an

assignee which had no knowledge of

such violation or failure to comply at

the time such exporter applied for the

facility payment guarantee or at the time

of assignment of the facility payment

guarantee.

(f) Cooperation in recoveries. Upon

payment by CCC of a claim to the

exporter or the exporter’s assignee, the

exporter or the exporter’s assignee will

cooperate with CCC to effect recoveries

from the foreign bank or the importer.

Appendix to § 1493.320—Illustration of

Pro Rata Allocation of Recoveries

The following example illustrates CCC’s

policy, as set forth in § 1493.320, regarding

pro rata sharing of recoveries made for claims

filed under the FGP. For the purpose of this

example only, even though CCC interest

coverage is on a floating rate basis, a constant

rate of interest is assumed. A typical case

might be as follows:

1. The U.S. bank enters into a $300,000

three-year credit arrangement for the export

sale of goods and services with the foreign

bank calling for equal semi-annual payments

of principal and semi-annual payment of

interest at a rate of 10 percent per annum and

a penalty interest rate of 12 percent per

annum on overdue amounts until the

overdue amount is paid.

2. Exported value reported to CCC equals

$300,000.
Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations 42663

3. The foreign bank fails to make the final

principal payment of $50,000 and an interest

payment of $2,493.15, both due on January

31.

4. On February 10, the U.S. bank files a

notice of default and claim in good order

with CCC.

5. CCC’s guarantee states that CCC’s

maximum liability is limited to 95 percent of

the principal amount due ($47,500) and

interest at a rate of 8 percent per annum

(basis 365 days) on 95 percent of the

principal ($1,894.80).

6. CCC pays the claim on February 22.

7. The latest investment rate of the 91-day

Treasury Bill auction average which has been

published by the Department of Treasury in

effect on the date of nonpayment by CCC

(February 11) is 7 percent.

Computation of Obligations

Using the above case, CCC’s payment to the

holder of the facility payment guarantee

would be computed as follows:

1. CCC’s Obligation under the

Facility Payment Guarantee:

(a) Principal coverage—

(95% × $50,000) ............ $47,500.00

(b) Interest coverage—(8%

× $47,500 × 182/365) .... 1,894.80

Total ........................... 49,394.80

(c) Late interest due from

CCC (7% per annum for

11 days × $49,394.80) ... 104.20

(d) Amount paid by CCC

on February 22 .............. 49,499.00

2. Foreign Bank’s Obligation

under the Letter of Credit or

the Related Obligation:

(a) Principal due January

31 ................................... 50,000.00

Interest due January

31 (10% × $ 50,000

× 182/365) .............. 2,493.15

Amount owed by foreign bank as of January 31 ................... 52,493.15

(b) Penalty interest due

(12% per annum for 22

days × $ 50,000) ............ 361.64

(c) Amount owed by foreign bank as of February 22 ......................... 52,854.79

3. Amount of Foreign Bank’s

Obligation Not Covered by

CCC’s Payment Guarantee: .. 3,355.79.

Computation of Pro Rata Sharing in Recovery

of Losses

In establishing each party’s respective

interest in any recovery of losses, the total

amount due under the foreign bank

obligation would be determined as of the

date the claim is paid by CCC (February 22).

Using the above example in which the

amount owed by the foreign bank is

$52,854.79, CCC would be entitled to 93.65

percent ($49,499.00 divided by $52,854.79)

and the holder of the facility payment

guarantee would be entitled to 6.35 percent

($3,355.79 divided by $52,854.79) of any

recoveries of losses after settlement of the

claim. Since in this example, the losses were

recovered after the claim had been paid by

CCC, § 1493.320(b) would apply.

§ 1493.330 Miscellaneous provisions.

(a) Assignment. (1) The exporter may

assign the proceeds which are, or may

become, payable by CCC under a facility

payment guarantee or the right to such

proceeds only to a financial institution

in the U.S. The assignment must cover

all amounts payable under the facility

payment guarantee not already paid,

may not be made to more than one

party, and may not, unless approved in

advance by CCC, be subject to further

assignment. Any assignment may be

made to one party as agent or trustee for

two or more parties participating in the

assignment.

(2) An original and two copies of the

written notice of assignment signed by

the parties thereto must be filed by the

assignee with the Treasurer, CCC, at the

address specified in the Contacts P/R.

(3) Receipt of the notice of assignment

will ordinarily be acknowledged to the

exporter and its assignee in writing by

an officer of CCC. In cases where a

financial institution is determined to be

ineligible to receive an assignment, in

accordance with paragraph (b) of this

section, CCC will provide notice thereof

to such financial institution and to the

exporter issued the facility payment

guarantee in lieu of an acknowledgment

of assignment.

(4) The name and address of the

assignee must be included on the

written notice of assignment.

(b) Ineligibility of financial

institutions to receive an assignment. A

financial institution will be ineligible to

receive an assignment of proceeds

which may become payable under a

facility payment guarantee if, at the time

of assignment, such financial

institution:

(1) Is not in sound financial

condition, as determined by the

Treasurer of CCC; or

(2) Is the financial institution issuing

the letter of credit or a branch, agency

or subsidiary of such institution; or

(3) Is owned or controlled by an entity

that owns or controls the financial

institution issuing the letter of credit; or

(4) Is the U.S. parent of the foreign

bank issuing the letter of credit.

(c) Ineligibility of financial

institutions to receive proceeds. A

financial institution will be ineligible to

receive proceeds payable under a

facility payment guarantee approved by

CCC if such financial institution:

(1) At the time of assignment of a

facility payment guarantee, is not in

sound financial condition, as

determined by the Treasurer of CCC;

(2) Is the financial institution issuing

the letter of credit or a branch, agency,

or subsidiary of such institution; or

(3) Is owned or controlled by an entity

that owns or controls the financial

institution issuing the letter of credit; or

(4) Is the U.S. parent of the foreign

bank issuing the letter of credit.

(d) Alternative satisfaction of facility

payment guarantees. CCC may, with the

agreement of the exporter (or if the right

to proceeds payable under the facility

payment guarantee has been assigned,

with the agreement of the exporter’s

assignee), establish procedures, terms or

conditions for the satisfaction of CCC’s

obligations under a facility payment

guarantee other than those provided for

in this subpart if CCC determines that

those alternative procedures, terms or

conditions are appropriate in

rescheduling the debts arising out of any

transaction covered by the facility

payment guarantee and would not result

in CCC paying more than the amount of

CCC’s obligation.

(e) Maintenance of records and access

to premises. (1) For a period of five

years after the date of expiration of the

coverage of a facility payment

guarantee, the exporter or the exporter’s

assignee, as applicable, must maintain

and make available all records

pertaining to sales and deliveries of and

extension of credit for goods or services

exported in connection with a facility

payment guarantee, including those

records generated and maintained by

agents, and related companies involved

in special arrangements with the

exporter. The Secretary of Agriculture

and the Comptroller General of the

United States, through their authorized

representatives, must be given full and

complete access to the premises of the

exporter or the exporter’s assignee, as

applicable, during regular business

hours from the effective date of the

facility payment guarantee until the

expiration of such five-year period to

inspect, examine, audit, and make

copies of the exporter’s, exporter’s

assignee’s, or a related company’s

books, records, and accounts concerning

transactions relating to the facility

payment guarantee, including, but not

limited to, financial records and

accounts pertaining to sales, inventory,

manufacturing, processing, and

administrative and incidental costs,

both normal and unforeseen.

(2) The exporter must maintain the

proof of entry required by § 1493.290(b),
42664 Federal Register / Vol. 62, No. 153 / Friday, August 8, 1997 / Rules and Regulations

and must provide access to such

document if requested by the Secretary

of Agriculture or his authorized

representative for the five-year period

specified in paragraph (e)(1) of this

section.

(f) Responsibility of program

participants. It is the responsibility of

all program participants to review, and

fully acquaint themselves with, this

subpart, program announcement(s), and

notice(s) to participants relating to the

FGP, as applicable. Applicants for

facility payment guarantees under this

program are hereby on notice that they

will be bound by any terms contained

in applicable program announcement(s)

or notice(s) to participants issued prior

to the date of approval of a facility

payment guarantee.

(g) Submission of documents by

principal officers. All required

submissions, including certifications,

applications, reports, or requests (i.e.,

requests for amendments), by exporters

or exporters’ assignees under this

subpart must be signed by a principal or

officer of the exporter or exporter’s

assignee or their authorized designee(s).

In cases where the designee is acting on

behalf of the principal or the officer, the

signature must be accompanied by:

(1) Wording indicating the delegation

of authority or, in the alternative, by a

certified copy of the delegation of

authority; and

(2) The name and title of the

authorized person or officer. Further,

the exporter or exporter’s assignee must

ensure that all information/reports

required under this subpart are

submitted within the required time

limits. If requested in writing, CCC will

acknowledge receipt of a submission by

the exporter or the exporter’s assignee.

If acknowledgment of receipt is

requested, the exporter or exporter’s

assignee must submit an extra copy of

each document and a stamped selfaddressed envelope for return by U.S.

mail. If courier services are desired for

the return receipt, the exporter or

exporter’s assignee must also submit a

self-addressed courier service order

which includes the recipient’s billing

code for such service.

(h) Officials not to benefit. No

member of or delegate to Congress, or

resident Commissioner, shall be

admitted to any share or part of the

facility payment guarantee or to any

benefit that may arise therefrom, but

this provision shall not be construed to

extend to the facility payment guarantee

if made with a corporation for its

general benefit.

(i) Deadlines. (1) Where a deadline is

fixed in terms of days, it means business

days and excludes Saturdays, Sundays

and federal holidays.

(2) Where a deadline is fixed in terms

of months, the deadline falls on the

same day of the month as the day

triggering the deadline period, or if

there is no same day, the last day of the

month; and

(3) Where a deadline would otherwise

fall on a Saturday, Sunday or federal

holiday, the deadline shall be the next

business day.

Signed this 1st day of August, 1997 at

Washington, DC.

Christopher E. Goldthwait,

General Sales Manager, Commodity Credit

Corporation.

[FR Doc. 97–20761 Filed 8–7–97; 8:45 am]

BILLING CODE 3410–10–P

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection

Service

9 CFR Part 94

[Docket No. 97–007–2]

Change in Disease Status of The

Netherlands Because of Hog Cholera

AGENCY: Animal and Plant Health

Inspection Service, USDA.

ACTION: Affirmation of interim rule as

final rule.

SUMMARY: We are adopting as a final

rule, without change, an interim rule

that amended the regulations by

removing The Netherlands from the list

of countries free from hog cholera. We

took this action based on reports we

have received from The Netherlands

that an outbreak of hog cholera has

occurred in The Netherlands. As a result

of this action, there are additional

restrictions on the importation of pork

and pork products into the United

States from The Netherlands, and the

importation of swine from The

Netherlands is prohibited.

EFFECTIVE DATE: The interim rule was

effective on February 21, 1997.

FOR FURTHER INFORMATION CONTACT: Dr.

John Cougill, Staff Veterinarian, Animal

Products Program, National Center for

Import and Export, VS, APHIS, suite

3B05, 4700 River Road Unit 39,

Riverdale, MD 20737–1231, (301) 734–

3399; or e-mail:

jcougill@aphis.usda.gov.

SUPPLEMENTARY INFORMATION:

Background

In an interim rule effective February

21, 1997, and published in the Federal

Register on February 27, 1997 (62 FR

8867–8868, Docket No. 97–007–1), we

amended §§ 94.9(a) and 94.10(a) of the

regulations by removing The

Netherlands from the list of countries

declared to be free from hog cholera.

Comments on the interim rule were

required to be received on or before

April 28, 1997. We did not receive any

comments. The facts presented in the

interim rule still provide a basis for the

rule.

This action also affirms the

information contained in the interim

rule concerning Executive Order 12866

and the Regulatory Flexibility Act,

Executive Order 12988, and the

Paperwork Reduction Act.

Further, for this action, the Office of

Management and Budget has waived the

review process required by Executive

Order 12866.

List of Subjects in 9 CFR Part 94

Animal diseases, Imports, Livestock,

Meat and meat products, Milk, Poultry

and poultry products, Reporting and

recordkeeping requirements.

PART 94—RINDERPEST, FOOT-ANDMOUTH DISEASE, FOWL PEST (FOWL

PLAGUE), EXOTIC NEWCASTLE

DISEASE, AFRICAN SWINE FEVER,

HOG CHOLERA, AND BOVINE

SPONGIFORM ENCEPHALOPATHY:

PROHIBITED AND RESTRICTED

IMPORTATIONS

Accordingly, we are adopting as a

final rule, without change, the interim

rule that amended 9 CFR 94 and that

was published at 62 FR 8867–8868 on

February 27, 1997.

Authority: 7 U.S.C. 147a, 150ee, 161, 162,

and 450; 19 U.S.C. 1306; 21 U.S.C. 111, 114a,

134a, 134b, 134c, 134f, 136, and 136a; 31

U.S.C. 9701; 42 U.S.C. 4331 and 4332; 7 CFR

2.22, 2.80, and 371.2(d).

Done in Washington, DC, this 4th day of

August 1997.

Terry L. Medley,

Administrator, Animal and Plant Health

Inspection Service.

[FR Doc. 97–20996 Filed 8–7–97; 8:45 am]

BILLING CODE 3410–34–P

SECURITIES AND EXCHANGE

COMMISSION

17 CFR Part 240

General Rules and Regulations,

Securities Exchange Act of 1934

CFR Correction

In title 17 of the Code of Federal

Regulations, part 240 to end, revised as

of April 1, 1997, on page 369, in

§ 240.17a–5, paragraph (g)(1) is

corrected to read as follows: