29938 Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1485

Agreements for the Development of

Foreign Markets for Agricultural

Commodities

AGENCY: Commodity Credit Corporation,

USDA.

ACTION: Final rule.

SUMMARY: This final rule amends the

regulations applicable to the Market

Access Program (MAP) authorized by

section 203 of the Agricultural Trade

Act of 1978. This rule incorporates into

the MAP allocation process the level of

export contributions, including brand

promotion cost-share contributions,

made by U.S. industry participants;

authorizes reimbursement of certain

travel expenses for brand participants

and certain necessary packaging and

labeling design expenses; extends the

activity payment deadline following the

end of an activity plan year; establishes

a 5-year limit, per country, on CCC

assistance for brand promotion by single

companies, and permits reimbursement

to participants based upon issuance of

a credit memo as an alternative to a

transfer of funds.

EFFECTIVE DATE: June 2, 1998. See

Supplementary Information.

FOR FURTHER INFORMATION CONTACT:

Kent Sisson or Denise Fetters at (202)

720–4327.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule is issued in

conformance with Executive Order

12866. It has been determined that this

final rule will not have an annual

economic effect in excess of $100

million; will not cause a major increase

in costs to consumers, individual

industries, Federal, State, or local

government agencies, or geographic

regions; and will not have an adverse

effect on competition, employment,

investment, productivity, innovation, or

the ability of U.S.-based enterprises to

compete with foreign-based enterprises

in domestic or foreign markets.

Executive Order 12988

This final rule has been reviewed in

accordance with Executive Order 12988,

Civil Justice Reform. This rule would

have preemptive effect with respect to

any State or local laws, regulations or

policies which conflict with such

provisions or which otherwise impede

their full implementation; does not have

retroactive effect; and does not require

administrative proceedings before suit

may be filed.

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).

Regulatory Flexibility Act

It has been determined that the

Regulatory Flexibility Act is not

applicable to this final rule because CCC

is not required by any other provision

of law to publish a notice of rulemaking

with respect to the subject matter of this

rule.

Paperwork Reduction Act

The information collection

requirements for participating in the

MAP were approved for use by the

Office of Management and Budget

(OMB) through April 30, 2000, and

assigned OMB No. 0551–0027. This

final rule does not impose new

information collection requirements.

Background

The MAP is authorized by section 203

of the Agricultural Trade Act of 1978, as

amended (7 U.S.C. 5623), which directs

the Commodity Credit Corporation

(CCC) to establish ‘‘a program to

encourage the development,

maintenance, and expansion of

commercial markets for agricultural

commodities through cost-share

assistance to eligible trade

organizations.’’ CCC implements this

provision by entering into agreements

with non-profit trade associations,

private organizations, State agencies,

and cooperatives. These agreements

provide for sharing the costs of overseas

advertising, technical assistance, and

other export promotion activities, and

may include either generic or brand

promotions.

Summary and Analysis of Comments

On February 25, 1998, CCC published

a rule in the Federal Register (63 FR

9451) proposing several changes to the

regulations which govern the operations

of the MAP. That rule also requested

interested parties to submit comments

by March 27, 1998. CCC received 17

comments on the proposed rule.

Following is a summary of the

comments which specifically address

the proposed rule and CCC’s responses

to these comments. General comments

relating to the value of the program,

editorial suggestions, and nonsubstantive comments have been

omitted.

State and Industry Contributions

CCC received 14 comments on this

issue. None of these opposed the

inclusion of state and industry

contributions in the allocation process.

Comment: Matching funds provided

by companies for brand promotion

should be included as industry

contributions, and, in turn, be

considered in the MAP allocation

process.

Response: CCC agrees with the

commenters that company expenditures

on brand promotion should be included

as industry contributions. The focus of

this program has shifted somewhat,

with more emphasis being placed on

market entry and access for agricultural

cooperatives and small companies. For

the first time, the 1998 MAP will

include reimbursement for brand

promotion undertaken by only

cooperatives and small companies; large

companies are no longer eligible to

participate. By recognizing the

contributions to the program made by

such entities, and including those

contributions in the allocation process,

CCC expects that a greater number of

cooperatives and small businesses will

receive assistance through the MAP.

Therefore, CCC is amending the final

rule by removing § 1485.13(c)(3)(i),

which disallows all non-administrative

brand promotion expenditures as

eligible contributions. We also agree

that these non-administrative costs

should be included in the allocation

process in order to reflect the true

industry contribution to the market

development effort.

Comment: MAP participants should

not be held responsible for shortfalls in

industry or State contributions. Under

certain economic situations (e.g., crop

failure) it is prudent for an industry to

scale back its promotional efforts, and

penalizing a participant for its

industry’s wisdom would be illogical.

Response: MAP applicants compete

against each other for funds based, in

part, on the contributions promised in

their MAP applications. To maintain the

integrity of the competitive process, the

level of contributions specified in each

participant’s MAP application must be

met, regardless of the source of the

contributions. Because it is the

participant which applies for funding

and enters into the program agreement

with CCC, the participant must be held

responsible for reaching the

contribution level specified in the

application.

Comment: Contribution levels are

proposed in conjunction with allocation
Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations 29939

requests. When funds are allocated at

less than requested levels, the proposed

contribution levels should not be

considered commitments. CCC should

use a contribution rate rather than an

absolute level.

Response: Each applicant has the

option of submitting in the application

its contribution level in the form of a

percentage of CCC resources expended

or an absolute dollar value. When an

applicant chooses to submit a

contribution level as a percentage of

CCC resources expended, the applicant

is not required to spend an absolute

dollar amount, but a specified

percentage of the resources reimbursed

by CCC. When an applicant chooses to

submit an absolute dollar value in its

application, the absolute dollar value

prevails irrespective of the amount

reimbursed by CCC. If a participant is

not able to meet its percentage

contribution requirement, it has two

options available. The first is to curtail

expenditures of CCC resources in order

to maintain the specified ratio of

contributions to expenditures. The

second option is to repay CCC the

difference between the amount it has

contributed and the amount specified.

Therefore, CCC is adopting the rule as

proposed.

Packaging, Labeling, and Origin

Identification

CCC received 10 comments on this

issue.

Comment: If market-specific labels are

required and developed, can the

company claim production costs in

perpetuity for all reprints?

Response: No, companies can claim

only costs for production of labels to be

used during the activity plan year in

which the expenditure is made. CCC has

revised the final rule to clarify this

point.

Comment: Where package and label

design changes are implemented to

comply with local laws, it is difficult to

isolate those costs attributable solely to

regulation compliance from those

attributed to ‘‘creative artwork and

design’’.

Response: Because other comments

indicated that isolating such costs was

possible and no evidence was provided

in this comment to show otherwise, the

proposed rule is adopted in this regard.

To clarify, this rule allows for

reimbursement of costs associated with

the design and production of packaging,

labeling, and origin identification when

changes are necessary to meet another

country’s importing requirements. Any

costs of design and production which

are not necessary to meet such

requirements are not reimbursable.

Comment: A written statement from

an importer detailing packaging,

labeling, or origin identification

requirements, rather than copies of

actual laws or regulations, should be

considered sufficient documentation of

a foreign country’s import requirements.

Response: In order to keep

reimbursement of these expenses

auditable, participants will need to

maintain copies of foreign government

documents detailing packaging,

labeling, or origin identification

requirements. Other comments

indicated that acquiring such

documentation would be possible. A

written statement from an importer may

be helpful in understanding the

requirements, but such a statement

cannot be considered adequate

documentation to support a

reimbursement claim.

Comment: Importers sometimes

reimburse costs of this type. It is

inappropriate for this program to

reimburse costs that importers already

cover.

Response: If an importer reimburses

or will reimburse such a cost, requesting

reimbursement from CCC would violate

§ 1485.16(a)(3), which provides that a

participant may seek reimbursement for

expenditures on activities if there has

not been and will not be reimbursement

from another source. Also,

§ 1485.13(a)(2)(i)(G) requires

participants to certify that MAP funds

will not be used to supplant any other

contributions to program activities.

Consequently, this provision only

applies to situations in which a

participant would not be reimbursed by

any other source and the funds would

not supplant any other contributions to

program activities.

Extension of Deadline for Transferring

Payments After Completion of Activity

Plan Year

CCC received 6 comments on this

issue, all of which favored the proposed

change.

Comment: Does this extension apply

to both generic and brand promotion?

Response: Yes; unless otherwise

specified, the reimbursement rules

apply to both generic and brand

promotion activities. The rule is

adopted as proposed.

Trade Show Travel for Brand

Participants

CCC received 11 comments on this

issue, all of which favored the proposed

change.

Comment: CCC needs to be cautious

that companies don’t claim trade show

travel that would have been performed

with or without assistance.

Response: Again, § 1485.13(a)(2)(i)(G)

requires participants to certify that MAP

funds will not be used to supplant any

other contributions to program

activities. However, many small

companies have said that the high costs

associated with international travel have

prevented their participation in foreign

trade shows. For such companies, this

rule change facilitates market access.

Comment: Requirements such as trip

reports, keeping original tickets, and

mandatory use of U.S. carriers should be

eliminated because they would be

burdensome on small companies. Also,

trip reports would contain business

confidential information.

Response: Trip reports are essential to

maintaining sufficient records for

program evaluation. CCC believes it is

in the best interest of the program as a

whole to file a report of activities during

trade show participation. CCC will

protect business confidential

information to the extent permitted by

law. Travel would not be so frequent, or

records so voluminous, as to constitute

a burden on small business. CCC applies

the U.S. Federal Travel Regulations and

the Fly America Act, which generally

require the use of U.S. carriers. Thus,

the rule is adopted as proposed.

Comment: What must brand

representatives do at a foreign trade

show for their travel expenses to qualify

for reimbursement?

Response: CCC intends to reimburse

travel and per diem costs only for those

company representatives (maximum of

two) who devote their time and efforts

to exhibiting their company’s products

at a booth at the trade show. The booth

could be for the company alone or for

a group including the company, but the

representatives must be exhibiting their

own products, not the products of other

companies. CCC will not reimburse

company representatives who attend

trade shows as visitors. CCC has revised

the final rule to clarify this point.

Comment: CCC should allow for

reimbursement of overland

transportation costs to trade shows, not

just airfare. Sometimes it is easier and

less expensive to get to a trade show by

other means.

Response: CCC agrees with this

comment and will amend the proposed

regulation to provide for

reimbursement, consistent with the U.S.

Federal Travel Regulations, of other

means of transportation to international

trade shows. For consistency, CCC will

also amend § 1485.16(c)(8) to provide

reimbursement for other means of

international travel for generic

promotion activities.
29940 Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations

Five Year Brand Graduation

CCC received 9 comments on this

issue. Eight of these opposed the rule.

Comment: The rule proposes to limit

brand promotion assistance to a

company in a country to five years. Does

‘‘assistance’’ refer to reimbursements or

allocations?

Response: Assistance refers to the

MAP as a whole. CCC will not approve

or reimburse activities for the same

company for brand promotions in the

same country for more than five years.

No further clarification is required in

the final rule.

Comment: Because market entry and

growth cannot always be achieved in

five years, particularly for companies

with multiple products, the proposal to

move to a five year assistance limit per

company should be rejected.

Response: CCC recognizes that

individual companies may not achieve

market entry or growth for all products

in a country within five years. However,

CCC must operate and manage this

program with limited resources. In order

to provide the opportunity for the

greatest number of companies to reap

the benefits of the MAP, it is necessary

to graduate companies from countries

after five years of assistance.

Comment: Some branded participants

have formulated their marketing

strategies and plans believing that their

companies would be able to remain in

their current markets by switching their

promoted products after five years.

Thus, promotional activities which

occurred prior to the 1998 activity plan

year should not be counted toward the

five year company limit.

Response: The MAP is administered

on a year-to-year basis. Funding and

program commitments are made on a

program year basis. Although some

participants may make plans assuming

a continuing program, CCC has not

made commitments beyond one

program year. Companies may, of

course, continue to promote their

products in the country after five years;

however, such activities must be

supported with their own resources.

Therefore, CCC is adopting the rule as

proposed.

Use of Credit Memos as Proof of Eligible

Promotion Expenditures

CCC received 9 comments on this

issue, all of which favor the proposed

change. The final rule is adopted

accordingly.

This rule includes other conforming

and clarifying changes to accompany

the substantive changes discussed

herein.

Effective Date

This rule is effective June 2, 1998 but

it only applies to authorized activities

beginning with the 1998 program.

Therefore, present participants will not

be required to revise previously

approved activity plans in order to

comply with the new rules.

List of Subjects in 7 CFR Part 1485

Agricultural commodities, Exports.

In consideration of the foregoing, 7

CFR part 1485 is amended as follows:

PART 1485—COOPERATIVE

AGREEMENTS FOR THE

DEVELOPMENT OF FOREIGN

MARKETS FOR AGRICULTURAL

COMMODITIES

1. The authority citation for 7 CFR

1485 continues to read as follows:

Authority: 7 U.S.C. 5623; 7 U.S.C. 5662–

5663 and sec. 1302, Pub. L. 103–66, 107 Stat.

330.

Subpart B—Market Access Program

2. Section 1485.11 is amended by

deleting the paragraph designations and

adding the following two new

definitions in alphabetical order:

§ 1485 Definitions.

* * * * *

Credit memo—a notice that a vendor

has decreased an amount owned for

promotional expenditures at the time

the notice is issued.

* * * * *

Expenditure—either the transfer of

funds, or payment via a credit memo in

lieu of a transfer of funds.

* * * * *

3. In section 1485.13, paragraph

(c)(3)(i) is removed and paragraphs

(c)(3)(ii) through (c)(3)(xii) are

redesignated as paragraphs (c)(3)(i)

through (c)(3)(xi) respectively.

4. Section 1485.14 is amended by

removing paragraph (d)(3) and revising

paragraphs (c)(4) and the first sentence

of (d)(2) to read as follows:

§ 1485.14 Application approval and

formation of agreements.

* * * * *

(c) * * *

(4) Level of participant’s, State’s, and

industry’s contributions;

* * * * *

(d) * * *

(2) CCC will not provide assistance to

a single company for brand promotion

in a single country for more than five

years. * * *

* * * * *

Section 1485.16 is amended by

removing paragraph (a)(2); redesignating

paragraph (a)(3) as paragraph (a)(2);

adding paragraph (b)(11); and revising

paragraphs (a)(1), (b)(6), (b)(7), (b)(9),

(c)(8), (c)(25), (d)(3), and (h)(3) to read

as follows:

§ 1485.16 Reimbursement rules.

(a) * * *

(1) The expenditure was made in

furtherance of an approved activity; and

* * * * *

(b) * * *

(b) Expenditures, other than travel

expenditures, associated with retail,

trade, and consumer exhibits and

shows; seminars; and educational

training; including participation fees,

booth construction, transportation of

related materials, rental of space and

equipment, and duplication of related

printed materials;

(7) International air travel, not to

exceed the full fare economy rate, or

other means of international

transportation, and per diem, as allowed

under the U.S. Federal Travel

Regulations (41 CFR parts 301 through

304) for no more than two

representatives of a single brand

participant to exhibit their company’s

products at a foreign trade show.

* * * * *

(9) Part-time contractors such as

demonstrators, interpreters, translators

and receptionists to help with the

implementation of promotional

activities such as trade shows, in-store

promotions, food service promotions,

and trade seminars;

* * * * *

(11) The design and production of

packaging, labeling or origin

identification, to be used during the

activity plan in which the expenditure

is made, if such packaging, labeling or

origin identification are necessary to

meet the importing requirements in a

foreign country; and

(c) * * *

(8) International travel expenses plus

passports, visas and inoculations subject

to the limitation that CCC will not

reimburse any portion of air travel in

excess of the full fare economy rate or

when the participant fails to notify the

Attache/Counselor in the destination

country in advance of the travel unless

the Deputy Administrator determines its

was impractical to provide such

notification;

* * * * *

(25) Travel expenditures associated

with trade shows, seminars, and

educational training conducted in the

United States; and

* * * * *

(d) * * *
Federal Register / Vol. 63, No. 105 /Tuesday, June 2, 1998 /Rules and Regulations 29941

(3) The design and production of

packaging, labeling or origin

identification, except as described in

paragraph (b)(11) of this section.

* * * * *

(h) * * *

(3) All expenditures were made for

the activity within 6 months following

the end of the activity plan year.

6. Section 1485.20 is amended by

revising paragraph (a)(3)(vi) to read as

follows:

§ 1485.20 Financial management, reports,

evaluations and appeals.

(a) * * *

(3) * * *

(vi) Documentation with

accompanying English translation

supporting each reimbursement claim,

including original evidence to support

the financial transactions such as

canceled checks, receipted paid bills,

contracts or purchase orders, per diem

calculations, travel vouchers, and credit

memos; and

* * * * *

7. Section 1485.21 is revised to read

as follows:

§ 1485.21 Failure to make required

contribution.

An MAP participant’s contribution

requirement will be specified in the

MAP allocation letter and the activity

plan approval letter. The amount

specified will be the amount of

contribution to be furnished by the

applicant and other sources as directed

in the participant’s application. The

MAP participants shall pay CCC in

dollars the difference between the

amount actually contributed and the

amount specified in the allocation

approval letter. An MAP participant

shall remit such payment within 90

days after the end of its activity plan

year.

Signed at Washington, DC, on May 11,

1998.

Lon Hatamiya,

Adminstrator, Foreign Agricultural Service

and Vice President, Commodity Credit

Corporation.

[FR Doc. 98–14522 Filed 6–1–98; 8:45 am]

BILLING CODE 3410–01–M

DEPARTMENT OF ENERGY

10 CFR Part 600

RIN 1991–AB4I

Assistance Regulations: Technical

Amendment

AGENCY: Department of Energy (DOE).

ACTION: Final rule; Technical

amendment.

SUMMARY: The Department of Energy is

amending the Department of Energy

Assistance Regulations, 10 CFR Part

600, to remove provisions dealing with

the audit of State and local government

recipients of financial assistance that

were rendered obsolete by a common

rule published on August 29, 1997 (62

FR 45937). The common rule, which

DOE incorporated through an

amendment to Part 600, implements the

Single Audit Act Amendments of 1996

and subsequent revisions to the Office

of Management and Budget (OMB)

Circular A–133, ‘‘Audits of States, Local

Governments, and Non-Profit

Organizations.’’

EFFECTIVE DATE: This final rule will be

effective June 2, 1998.

FOR FURTHER INFORMATION CONTACT:

Richard Langston, Department of

Energy, Office of Procurement and

Assistance Policy, HR–51, 1000

Independence Ave. SW., Washington,

D.C. 20585–0705, (202) 586–8247.

SUPPLEMENTARY INFORMATION:

I. Explanation of Revisions.

II. Procedural Requirements.

A. Review Under Executive Order 12612.

B. Review Under Executive Order 12866.

C. Review Under Executive Order 12988.

D. Review Under the National

Environmental Policy Act.

E. Review Under the Paperwork Reduction

Act.

F. Review Under the Regulatory Flexibility

Act.

G. Review Under the Small Business

Regulatory Enforcement Fairness Act.

H. Review Under the Unfunded Mandates

Act.

I. Explanation of Revisions

The Department of Energy Assistance

Regulations, 10 CFR part 600, Subpart

E—Audits of State and Local

Governments, implemented the Single

Audit Act of 1984 and OMB Circular A–

128, Single Audits of State and Local

Governments. The Single Audit Act

Amendments of 1996 (Pub. L. 104–156,

110 Stat. 1396) and the June 24, 1997,

revision of OMB Circular A–133,

‘‘Audits of States, Local Governments,

and Non-Profit Organizations,’’ (62 FR

35278), required agencies to adopt the

standards in revised Circular A–133 by

August 29, 1997, so that they would

apply to audits of fiscal years beginning

after June 30, 1996. Agencies, including

DOE, promulgated a common rule on

August 29, 1997 (62 FR 45937) to codify

the new requirements. DOE

accomplished this, for state and local

governments, by amending 10 CFR

600.226 (Subpart C—Uniform

Administrative Requirements for Grants

and Cooperative Agreements to State

and Local Governments). As a

consequence of these changes, existing

Subpart E was rendered obsolete. This

final rule removes 10 CFR part 600,

Subpart E, from the Code of Federal

Regulations.

II. Procedural Requirements

A. Review Under Executive Order 12612

Executive Order 12612, entitled

‘‘Federalism,’’ 52 FR 41685 (October

30,1987), requires that regulations,

rules, legislation, and any other policy

actions be reviewed for any substantial

direct effects on States, on the

relationship between the Federal

Government and the States, or in the

distribution of power and

responsibilities among various levels of

government. If there are sufficient

substantial direct effects, then the

Executive Order requires preparation of

a federalism assessment to be used in all

decisions involved in promulgating and

implementing a policy action. DOE has

determined that this rule will not have

a substantial direct effect on the

institutional interests or traditional

functions of States.

B. Review Under Executive Order 12866

This regulatory action has been

determined not to be a ‘‘significant

regulatory action’’ under Executive

Order 12866, ‘‘Regulatory Planning and

Review,’’ 58 FR 51735 (October 4,1993).

Accordingly, this action was not subject

to review, under that Executive Order,

by the Office of Information and

Regulatory Affairs of OMB.

C. Review Under Executive Order 12988

With respect to the review of existing

regulations and the promulgation of

new regulations, section 3(a) of

Executive Order 12988, ‘‘Civil Justice

Reform,’’ 61 FR 4729 (February 7,1996),

imposes on Executive agencies the

general duty to adhere to the following

requirements: (1) eliminate drafting

errors and ambiguity; (2) write

regulations to minimize litigation; and

(3) provide a clear legal standard for

affected conduct rather than a general

standard and promote simplification

and burden reduction. With regard to

the review required by section 3(a),

section 3(b) of Executive Order 12988

specifically requires that Executive

agencies make every reasonable effort to

ensure that the regulation: (1) clearly

specifies the preemptive effect, if any;

(2) clearly specifies any effect on

existing Federal law or regulation; (3)

provides a clear legal standard for

affected conduct while promoting

simplification and burden reduction; (4)