[Federal Register Volume 79, Number 246 (Tuesday, December 23, 2014)]
[Proposed Rules]
[Pages 76919-76927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29807]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 79, No. 246 / Tuesday, December 23, 2014 / 
Proposed Rules

[[Page 76919]]



DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR Part 6

RIN 0551-AA82


Dairy Tariff-Rate Import Quota Licensing Program

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would amend the regulation that provides 
for the issuance of licenses to import certain dairy articles under 
tariff-rate quotas (TRQs) as set forth in the Harmonized Tariff 
Schedule of the United States. The three most significant changes to 
the rule would be to suspend for an additional seven years, the 
historical license reduction provision, which currently expires with 
the beginning of quota year 2016; to modify procedures for collecting 
licensing fees in order to better align the fee collection to the costs 
of administering the program; and to exclusively use electronic 
communications in the application, reporting and payment processes. The 
expected outcome from the implementation of the proposed changes would 
be to allow license holders to adjust to changing market conditions 
impacting the dairy sector; increase the Department's ability to more 
closely align cost recovery with the actual costs of administering the 
program; and allow the Department to reduce lag times, minimize paper 
files, and increase the efficiency of the program operations.

DATES: Submit comments on this proposed rule on or before February 23, 
2015.

ADDRESSES: Comments should include the Regulation Identifier Number 
(RIN) and volume, date, and page number of this issue of the Federal 
Register. You may submit comments by any of the following methods:
    Federal eRulemaking Portal: Go to http://www.regulations.gov. 
Follow the online instructions for submitting comments.
    Mail, hand delivery, or courier: Abdelsalam El-Farra, Agricultural 
Marketing Specialist, Sugar and Dairy Branch, Import Programs and 
Export Reporting Division, Office of Trade Programs, Foreign 
Agricultural Service, U.S. Department of Agriculture, Room 5526, 1400 
Independence Avenue SW., Washington, DC 20250-1021, (202) 720-9439; fax 
(202) 720-0876; <a href="/cdn-cgi/l/email-protection#a1c5c0c8d3d8fec8cdd2e1c7c0d28fd4d2c5c08fc6ced7"><span class="__cf_email__" data-cfemail="f19590988388ae989d82b1979082df84829590df969e87">[email protected]</span></a>.
    Comments will be available for inspection online at 
www.regulations.gov and at the mail address listed above between 8 a.m. 
and 4:30 p.m., Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: Abdelsalam El-Farra, Agricultural 
Marketing Specialist, Sugar and Dairy Branch, Import Programs and 
Export Reporting Division, Office of Trade Programs, Foreign 
Agricultural Service, U.S. Department of Agriculture, (202) 720-9439; 
fax (202) 720-0876; <a href="/cdn-cgi/l/email-protection#abcfcac2d9d2f4c2c7d8ebcdcad885ded8cfca85ccc4dd"><span class="__cf_email__" data-cfemail="6105000813183e080d12210700124f141205004f060e17">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    The proposed rule has been determined to be not significant under 
E.O. 12866 and has been reviewed by the Office of Management and 
Budget.

Regulatory Flexibility Act

    The Regulatory Flexibility Act ensures that regulatory and 
information requirements are tailored to the size and nature of small 
businesses, small organizations, and small governmental jurisdictions. 
This proposed rule will not have a significant economic impact on small 
businesses participating in the program.

Executive Order 12988

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

National Environmental Policy Act

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

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

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

Executive Order 12630

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

Government Paperwork Elimination Act

    The United States Department of Agriculture (USDA) is committed to 
compliance with the Government Paperwork Elimination Act, which 
requires Government agencies, in general, to provide the public the 
option of submitting information or transacting business electronically 
to the maximum extent possible.

Background

    The Foreign Agricultural Service (FAS), under a delegation of 
authority from the Secretary of Agriculture, administers the Dairy 
Tariff-Rate Import Quota Licensing regulation codified at 7 CFR 6.20 
through 6.37 that provides for the issuance of licenses to import 
certain dairy articles under tariff-rate quotas (TRQs) as set forth in 
certain notes in Chapter 4 of the Harmonized Tariff Schedule of the 
United States. These dairy articles may only be entered into the United 
States at the low-tier tariff by or for the account of a person, as 
defined in the regulation, to whom

[[Page 76920]]

such licenses have been issued and only in accordance with the terms 
and conditions of the regulation. Licenses are issued on a calendar 
year basis, and each license authorizes the licensee to import a 
specified quantity and type of dairy article from a specified country 
of origin.
    Under TRQs, a low tariff rate, commonly referred to as the in-quota 
rate, applies to imports up to a specified quantity. A higher tariff 
rate, commonly referred to as the over-quota rate, applies to any 
imports in excess of that amount. No license is required to import 
products at the over-quota tariff rate.
    USDA issues three types of licenses: Historical, nonhistorical 
(lottery), and designated. For all three license types, the current 
regulation provides that persons must apply each year between September 
1 and October 15. Historical and designated licensees may apply for 
lottery licenses, subject to certain limitations, if they are 
affiliated or associated with another company holding a license for 
that same item from the same country of origin. Licensees may fail to 
qualify for a license for a specific item from a specific country in 
the following year, if they do not meet certain requirements. Licensees 
must (i) apply for the license each year, (ii) pay an annual fee, and 
(iii) have imported at least 85 percent of the final license amount 
from the previous year. To avoid ineligibility due to the 85 percent 
rule, licensees may surrender up to 100 percent of the license, but 
must import 85 percent of any quantity not surrendered. Section 
6.25(b)(1)(i) of the regulation currently provides that beginning with 
the 2016 quota year, any historical licensee who surrenders more than 
50 percent of the license amount for the same item from the same 
country during at least three of the most recent five years will be 
issued a license thereafter in an amount equal to the average amount 
imported under that license for those five quota years.
    This proposed rule would provide historical license holders 
additional time to adjust to changing market conditions by suspending 
the Sec.   6.25(b)(1)(i) provision through the end of quota year 2022. 
The proposed rule would provide that reporting, payment, and 
application for licenses be made only by electronic submission in order 
to reduce the use of paper and streamline operations. Additionally, the 
rule proposes to modify procedures for collecting licensing fees in 
order to better align the fee collection with the costs of 
administering the program.
    The current regulations allow applicants to apply for a license, 
generating administrative costs for the USDA, and then choose not to 
pay for the license, thus resulting in non-recovered administrative 
expenses. The proposed rule would impose financial consequences for 
such non-payment, which should increase USDA's ability to recover 
program expenses.
    The proposed rule does not make any modifications to the appendices 
to this subpart.

Discussion of Comments

    On February 6, 2013, USDA published in the Federal Register (78 FR 
8434) an advanced notice of proposed rulemaking (ANPR) soliciting 
comment on all aspects of the current dairy import licensing rule. 
Specifically, USDA invited comment on the following questions: (1) Does 
the historical and nonhistorical license system still serve a purpose? 
(2) Should any provisions of the current regulation be modified in 
light of significant advances in technology and telecommunications? (3) 
Should methods be developed for issuing licenses that would increase 
competition among importers? (4) Should licenses be auctioned or issued 
on another basis? (5) Should Sec.  6.25(b)(1)(i) regarding historical 
license reductions be eliminated, revised, or indefinitely suspended? 
(6) Should the basis upon which license fees are assessed be changed 
from the current flat-fee per license? (7) Should the deadlines for the 
surrender and reallocation of licenses in Sec.  6.26 be changed to 
allow earlier reallocations? USDA received comments from 46 
respondents, all of whom hold licenses and receive an economic benefit 
from the program or represent license holders who benefit from the 
program. The 46 respondents consisted of: 33 private importers; 7 
associations; 3 foreign governments; and 3 other private concerns with 
vested interests in the outcome of the regulation review.
    Many of the comments were general in nature, focusing on the 
following three themes: Support for the current program, administrative 
management of the program, and the allocation of licenses. Below is a 
summary of their comments by respondents who addressed the seven 
specific questions posed in the ANPR including the relevant section 
number in the current rule where applicable.

Does the historical and nonhistorical license system still serve a 
purpose? (Sec. Sec.  6.20 through 6.23)

    Of the 39 respondents who commented on this issue, 32 supported 
continuation of a license system. Respondents claimed that the system 
supports the importer's ability to develop distribution networks; 
ensures adequate food safety; allows the license holder to foster 
investment in distribution systems, brand identity and marketing; and 
supports consumer choice, competition and the development of domestic 
artisan products. Seven respondents commented that the system no longer 
served any purpose, stating that the system increases the difficulty of 
obtaining licenses by new entrants; supports a growing concentration of 
historical license in fewer hands; and adds additional costs and 
burdens; and acts as an impediment to free trade. One respondent 
proposed abolishing the license systems. A quota-holding foreign 
government proposed revisions such as: Combining all three licenses 
types; allowing the exporting nation to manage its quotas; implementing 
a first-come-first-serve system for eligible importers; phasing out the 
category of nonhistorical licenses in favor of designated licenses; and 
combining historical and designated licenses into a single category.
    Upon consideration of all comments supporting and opposing the 
current licensing system, no changes to the fundamental structure of 
the licensing system are proposed at this time.

Should any provisions of the current regulation be modified in light of 
significant advances in technology and telecommunications? (Sec. Sec.  
6.24 through 6.26; Sec. Sec.  6.32 through 6.34)

    Of the 21 respondents who commented on this issue, 16 favored 
technological improvements that would allow the streamlining of the 
application process and improved administrative processes that would 
allow an earlier reallocation. Five respondents opposed to modifying 
the current regulation cite the success of the current program as it 
is.
    The Department recognizes the desire for a more technologically 
advanced and streamlined reporting system for administering licenses, 
reallocations, surrenders, applications, reporting and payment of fees. 
The Department is currently working to implement the February 19, 2014 
Executive Order--Streamlining the Export/Import Process for America's 
Businesses--calling for the completion of the International Trade Data 
System (ITDS) by December 2016. The USDA, Foreign Agricultural Service, 
is mandated to be a Participating Government Agency (PGA) of the 
Automated Commercial Exchange (ACE) project of the International Trade 
Data System. Over the next two years, the Department will be required 
to re-

[[Page 76921]]

program and update the dairy import licensing computer systems, in 
order to comply with the Federal Government's Single Window Initiative 
for all trade agencies. The Department will be making fundamental 
changes to the computer systems, which will take several years to 
accomplish. Without these structural changes to the underlying computer 
systems, required as part of the ITDS project, USDA would not be able 
to implement most of the other changes proposed in the comments, such 
as changing the dates by which fees are due or by which reallocation of 
licenses may be issued. At an appropriate time and once the computer 
systems have been moved to the ACE platform, the Department will again 
request comments for additional improvements and changes to the 
program.
    The Department proposes moving to strictly electronic 
communications in the application, reporting and payment processes to 
streamline operations, reduce the need for paper and to increase the 
efficiency of the program. The proposed change toward greater 
electronic submissions in the application, allocation, reporting and 
payment process will allow USDA to reduce lag-times, minimize paper 
files, streamline operations and increase the efficiency of the program 
operations.

Should methods be developed for issuing licenses that would increase 
competition among importers? (Sec.  6.25)

    Of the 21 respondents who commented on this issue, 15 opposed 
increasing competition among importers, citing that the most 
significant competition comes from other premium cheeses and that 
increasing competition among importers would weaken the system and 
reduce the incentive to invest in the necessary marketing, distribution 
network, and food safety. The six respondents favoring increased 
competition were divided in their approach. One proposed to eliminate 
the licensing system altogether; another proposed implementing a first-
come-first-served system; and one proposed to combine categories, 
giving greater influence over the quotas to the foreign countries.
    At this time, the Department does not propose any changes that 
directly alter the level of competition among importers.

Should licenses be auctioned or issued on another basis? (Sec.  6.25)

    Of the 33 respondents who commented on this issue, none supported 
auctioning licenses. The two associations and foreign government that 
responded to this question commented that auctioning licenses would 
lead to a decrease in the fill rates. The Department does not propose 
any change to the existing basis for issuing licenses.

Should Sec.  6.25(b)(1)(i), regarding the historical license reduction 
provision, be eliminated, revised, or indefinitely suspended? (Sec.  
6.25)

    Of the 39 respondents who commented on this issue, 37 were licenses 
holders or associations who supported the elimination of Sec.  
6.25(b)(1)(i). A common theme of these comments was that market forces 
outside their control have prevented them from importing the volumes 
required to prevent license reductions, and they believe they should 
not be penalized for market forces beyond their control. Thirty-three 
respondents stated that Sec.  6.25(b)(1)(i) threatens their business of 
importing specialty cheeses. One respondent supported changing the 
basis for this provision to 50 percent of the overall TRQ fill rate; in 
other words, if a licensee's fill rate was above the industry average 
fill rate, no license reduction would occur.
    The Department previously suspended Sec.  6.25(b) three times: In 
1999 for five years, in 2008 for two years, and in 2010 for five more 
years. The association representing historical licensees argues that 
the use of the term ``suspend'' is not appropriate. They argue that 
once the suspension period is over and the provision comes back into 
force, the previous five years are used as a basis for calculating 
historical license amounts, i.e., tracking is not suspended. 
Nonetheless the Department will continue to use the term 
``suspension,'' because even though tracking occurs, the license 
reductions themselves are suspended.
    The two respondents commenting in favor of maintaining Sec.  
6.25(b)(1)(i) cite the benefits of moving TRQ amounts from the 
historical to the lottery category, where it is available to other 
applicants. They stated that historical licenses have become 
increasingly concentrated in fewer companies, and claim that it is 
increasingly difficult for new companies to enter the dairy importing 
business due to the difficulty of obtaining licenses. One respondent 
questioned why only certain importers should have access to historical 
licenses while others are effectively barred from holding such 
licenses, many of which were issued in the 1950s.
    Significant market changes have occurred in the U.S. and global 
dairy markets in the past five years. The United States has been 
transformed from being a net importer of dairy products to being a 
large net exporter. Many of the unfilled licenses are types of cheese 
for which demand has diminished or for which U.S. production has 
increased, leading to reduced import demand. There have been policy 
changes in major dairy exporting countries, in some cases reducing 
export supply. For the majority of dairy products subject to 
significant historical license reductions in recent years, if they had 
been in force, a transfer of the license from the historical to the 
lottery category would not have resulted in an increased TRQ fill rate.
    Nonetheless, the basic concept of the historical license reduction 
provision--that some mechanism be in place to provide for at least the 
potential movement of license from the historical to the lottery 
category--serves a public purpose. Therefore, the Department believes 
that this provision needs to be retained. However, to allow more time 
for adjustments to these new market conditions, the Department proposes 
suspending the Sec.  6.25(b)(1)(i) provision for an additional seven 
years, through the 2022 quota year, and the provision would come back 
into effect for 2023.

Should the basis upon which license fees are assessed be changed from 
the current flat-fee per license?

    Of the 15 respondents who commented on this issue, eight commented 
that the current flat fee system is adequate, simple, and 
straightforward, while seven respondents supported a change. Those 
supporting a change cited an issue of equity, preferring to charge a 
fee based on the size of the licenses.
    The basis for the fee is to recover the costs of administering the 
dairy licensing program. The cost of administering each license is the 
same, whether the license quantity is small or large. Therefore, the 
Department will retain keeping the same fee for each license. Under the 
current regulation, eligible parties can request and be awarded a 
license and then decide not to pay for it, thus forfeiting the license. 
The administrative costs are incurred during the application, 
eligibility determination, and allocation process, as well as in 
administering the license after it is issued. Therefore, the Department 
proposes to require payment of the fee for each license requested and 
awarded, instead of the current system where the fee can be avoided if 
the license is returned. To ensure compliance with this provision, an 
applicant who fails to pay all fees for all licenses requested and 
awarded will forfeit all licenses.

[[Page 76922]]

Should the deadlines for the surrender and reallocation of licenses in 
section 6.26 be changed to allow earlier reallocations?

    Of the 21 respondents who commented on this issue, 19 supported an 
early as possible surrender and reallocation date, citing that more 
time is needed to make the commercial arrangements necessary to utilize 
the reallocated quantities. The other two respondents found the current 
timeline adequate.
    The Department seriously considered many options for changing the 
dates for surrender and reallocation, but given the interaction of the 
surrender and reallocation process with other timelines, such as for 
fee payments, it is not feasible to accommodate an earlier surrender 
and reallocation period within the current reporting system. The 
Department will make no modification to deadlines for the surrender and 
allocation process.

Summary of Proposed Changes to Rule

    The following is a summary of the proposed substantive changes to 
the current regulation:
    The name of the program has been corrected throughout the document 
to read ``Dairy Tariff-Rate Quota Import Licensing.''
    References to the process used for the initial allocation of 
licenses, which took place based on the 1997 quota year, have been 
removed throughout this proposed rule due to the fact that current 
allocations are now based on the preceding quota year. References to 
the 1997 quota year allocations are removed from the following 
sections: Sec. Sec.   6.20(b), 6.23(b)(2), 6.23(b)(3), 6.23(b)(4), 
6.23(b)(5), 6.25(a)(1), 6.25(a)(2), 6.25(a)(3), and 6.26(f).
    Section 6.21 Definitions has been updated to include several 
modifications. The definition of ``Article other than cheese or cheese 
products'' now specifies that the article is a dairy product. The 
definition of ``EC'' no longer lists the current members, because new 
members may be added at any time. Therefore, the definition of ``EC'' 
is defined to be those countries listed in Additional U.S. Note 2 to 
Chapter 4 of the Harmonized Tariff Schedule, because this is published 
annually and maintained current. ``Customs'' has been replaced 
throughout the proposed rule with ``CBP'' which stands for Customs and 
Border Protection. The definition of ``Licensing Authority'' removes 
reference to a specific USDA division. The definition of ``Other 
Countries'' deletes the reference to the Harmonized Tariff Schedule. 
The definition of ``Postmark'' is deleted from this section, given that 
physical mail will no longer be accepted. This proposed rule would 
require that all communications, applications, reporting and payment 
will be made electronically as designated by the Licensing Authority. 
Therefore, references to physical mail, postmarks, mailing addresses, 
or physical locations have been deleted throughout the rule. The 
references to physical mail delivery that have been deleted are found 
in the following sections: Sec. Sec.  6.24(a), 6.24(b)(1), 6.24(c), 
6.25(d)(1), 6.26(a), 6.26(c), 6.28(b), 6.33(b), 6.33(c), 6.35(b), and 
6.36(b). Additionally, a valid email address is now being required for 
eligibility. The requirement for an email address has been added to 
Sec.  6.23(a)(3).
    Section 6.22(b) was deleted from the rule because these references 
to General Note 15 provisions of the HTS are not covered, nor in any 
way affected, by the dairy import licensing program.
    Section 6.24(c) was deleted because it primarily applied to mailed 
hardcopy applications. The information submitted through the current 
electronic application system obviates the need for submitting this 
additional information.
    Section 6.25(a)(1) through (3) was deleted because the historic 
allocation process is no longer relevant. New quota year allocations 
are made based on the preceding year's allocations and usage.
    Section 6.25(b)(1)(i) extends the date of the suspension of the 
historical licenses reduction provision for an additional seven years, 
expiring with the beginning of quota year 2023.
    Section 6.25(d)(1)(ii) requires, for Appendix 3 allocations, that 
countries designate the allocations of specific articles to importers 
in kilograms. This requirement will reduce any disputes arising from 
converting percentages into weights.
    Section 6.26(c) was rewritten to clarify the surrender and 
allocation process for persons who were issued an import license for a 
cheese or cheese product article versus a person who was issued an 
import license for an article other than cheese or cheese products.
    Section 6.28(b) requires that all license holders who intend to 
convey their business and are requesting USDA to transfer a license, 
submit the required documentation by email. The option to send 
documents via physical mail or courier is no longer available.
    Section 6.33(b) tightens the timeline for making payments and 
requires payment in full within 10 days from the date of the issuance 
of the license, rather than the current 30 day period. This change 
would allow USDA to accelerate some of its administrative functions of 
operating the licensing program because the use of electronic payment 
does not require the longer lag time necessary for processing paper 
checks.
    Section 6.33(c) requires that an applicant who applies for and is 
issued a license pay for all licenses issued, or a hold will be placed 
on all licenses of such applicant. If after receiving a warning letter 
via email from the Licensing Authority, the applicant does not pay in 
full within 10 days for all licenses issued, then all licenses issued 
to the licensee, paid or unpaid, will be revoked.
    Section 6.33(d) is deleted pursuant to the previous clause (Sec.  
6.33(c)) and no longer permits licensees not to accept or pay for 
certain licenses issued to them. The cost of administering the 
licensing program is incurred by USDA during the application and 
allocation process; therefore, applicants will be required to pay for 
licenses issued in accordance with Sec.  6.33(c) or have all licenses 
revoked.

List of Subjects in 7 CFR Part 6

    Agricultural commodities, Dairy, Cheese, Imports, Procedural rules, 
Application requirements, Tariff-rate Quota, Reporting and 
recordkeeping requirements.

    Accordingly, for reasons described in the preamble, 7 CFR part 6 is 
proposed to be amended as follows:

PART 6--IMPORT QUOTAS AND FEES

Subpart--Dairy Tariff-Rate Quota Import Licensing

0
1. The authority citation for Subpart--Dairy Tariff-Rate Quota Import 
Licensing continues to read as follows:

    Authority: Additional U.S. Notes 6, 7, 8, 12, 14, 16-23 and 25 
to Chapter 4 and General Note 15 of the Harmonized Tariff Schedule 
of the United States (19 U.S.C. 1202), Pub. L. 97-258, 96 Stat. 
1051, as amended (31 U.S.C. 9701), and secs. 103 and 404, Pub. L. 
103-465, 108 Stat. 4819 (19 U.S.C. 3513 and 3601).

0
2. The heading for ``Subpart--Dairy Tariff-Rate Import Quota 
Licensing'' is revised to read as set forth above.
0
3. Sections 6.20 through 6.36 are revised to read as follows:
* * * * *
6.20 Introduction.
6.21 Definitions.
6.22 Requirement for a license.
6.23 Eligibility to apply for a license.
6.24 Application for a license.
6.25 Allocation of licenses.
6.26 Surrender and reallocation.
6.27 Limitations on use of license.
6.28 Transfer of license.

[[Page 76923]]

6.29 Use of licenses.
6.30 Record maintenance and inspection.
6.31 Debarment and suspension.
6.32 Globalization of licenses.
6.33 License fee.
6.34 Adjustment of appendices.
6.35 Correction of errors.
6.36 Miscellaneous.
* * * * *


Sec.  6.20  Introduction.

    (a) Presidential Proclamation 6763 of December 23, 1994, modified 
the Harmonized Tariff Schedule of the United States affecting the 
import regime for certain articles of dairy products. The Proclamation 
terminated quantitative restrictions that had been imposed pursuant to 
section 22 of the Agricultural Adjustment Act of 1933, as amended (7 
U.S.C. 624); proclaimed tariff-rate quotas for such articles pursuant 
to Pub. L. 103-465; and specified which of such articles may be entered 
only by or for the account of a person to whom a license has been 
issued by the Secretary of Agriculture.
    (b) Effective January 1, 1995, the prior regime of absolute quotas 
for certain dairy products was replaced by a system of tariff-rate 
quotas. The articles subject to licensing under the tariff-rate quotas 
are listed in Appendices 1, 2, and 3 of this subpart. Licenses permit 
the holder to import specified quantities of the subject articles into 
the United States at the applicable in-quota rate of duty. If an 
importer has no license for an article subject to licensing, such 
importer will, with certain exceptions, be required to pay the 
applicable over-quota rate of duty.
    (c) The Secretary of Agriculture has determined that this subpart 
will, to the fullest extent practicable, result in fair and equitable 
allocation of the right to import articles subject to such tariff-rate 
quotas. The subpart will also maximize utilization of the tariff-rate 
quotas for such articles, taking due account of any special factors 
which may have affected or may be affecting the trade in the articles 
concerned.


Sec.  6.21  Definitions.

    As used in this subpart and the appendices thereto, the following 
terms are defined as follows:
    Article. One of the products listed in Appendices 1, 2, or 3, which 
are the same as those described in Additional U.S. Notes 6, 7, 8, 12, 
14, 16-23 and 25 to Chapter 4 of the Harmonized Tariff Schedule.
    Article other than cheese or cheese products. Any article that is a 
dairy product, but not a cheese or cheese product.
    CBP. United States Customs and Border Protection, U.S. Department 
of Homeland Security.
    Cheese or cheese products. Articles in headings 0406, 1901.90.34, 
and 1901.90.36 of the Harmonized Tariff Schedule.
    Commercial entry. Any entry except those made by or for the account 
of the United States Government or for a foreign government, for the 
personal use of the importer or for sampling, taking orders, research, 
or the testing of equipment.
    Country. Country of origin as determined in accordance with CBP 
rules and regulations, except that ``EC'', and ``Other countries'' 
shall each be treated as a country.
    Dairy products. Articles in headings 0401 through 0406, margarine 
cheese listed under headings 1901.90.34 and 1901.90.36, ice cream 
listed under heading 2105, and casein listed under heading 3501 of the 
Harmonized Tariff Schedule.
    Department. The United States Department of Agriculture.
    EC. Those countries listed in Additional U.S. Note 2 to Chapter 4 
of the Harmonized Tariff Schedule.
    Enter or Entry. To make or making entry for consumption, or 
withdrawal from warehouse for consumption in accordance with CBP 
regulations and procedures.
    Harmonized Tariff Schedule or HTS. The Harmonized Tariff Schedule 
of the United States.
    Licensee. A person to whom a license has been issued under this 
subpart.
    Licensing Authority. Any officer or employee of the U.S. Department 
of Agriculture designated to act in this position by the Director of 
the Division charged with managing the Dairy Tariff-Rate Quota Import 
Licensing System.
    Other countries. Countries not listed by name as having separate 
tariff-rate quota allocations for an article.
    Person. An individual, firm, corporation, partnership, association, 
trust, estate or other legal entity.
    Process or processing. Any additional preparation of a dairy 
product, such as melting, grating, shredding, cutting and wrapping, or 
blending with any additional ingredient.
    Quota year. The 12-month period beginning on January 1 of a given 
year.
    Tariff-rate quota amount or TRQ amount. The amount of an article 
subject to the applicable in-quota rate of duty established under a 
tariff-rate quota.
    United States. The customs territory of the United States, which is 
limited to the 50 states, the District of Columbia, and Puerto Rico.


Sec.  6.22  Requirement for a license.

    A person who seeks to enter, or cause to be entered an article as a 
commercial entry, shall obtain a license, in accordance with this 
subpart.


Sec.  6.23  Eligibility to apply for a license.

    (a) In general. To apply for any license, a person shall have:
    (1) A business office, and be doing business, in the United States, 
and
    (2) An agent in the United States for service of process, and
    (3) An email address to be used for correspondence regarding 
licensing activities and reports.
    The licensee shall at all times maintain a valid email address with 
the Licensing Authority.
    (b) Eligibility for 2014 and subsequent quota years. (1) Historical 
licenses (Appendix 1). A person issued a historical license for an 
article for the current quota year may apply for a historical license 
(Appendix 1) for the next quota year for the same article from the same 
country, if such person was, during the 12-month period ending August 
31 prior to the quota year, either:
    (i) Where the article is cheese or cheese product,
    (A) The owner of and importer of record for at least three separate 
commercial entries of cheese or cheese products totaling not less than 
57,000 kilograms net weight, each of the three entries not less than 
2,000 kilograms net weight;
    (B) The owner of and importer of record for at least eight separate 
commercial entries of cheese or cheese products, from at least eight 
separate shipments, totaling not less than 19,000 kilograms net weight, 
each of the eight entries not less than 450 kilograms net weight, with 
a minimum of two entries in each of at least three quarters during that 
period; or
    (C) The owner or operator of a plant listed in Section II or listed 
in Section I as a processor of cheese of the most current issue of 
``Dairy Plants Surveyed and Approved for USDA Grading Service'' and had 
processed or packaged at least 450,000 kilograms of cheese or cheese 
products in its own plant in the United States; or
    (ii) Where the article is not cheese or cheese product,
    (A) The owner of and importer of record for at least three separate 
commercial entries of dairy products totaling not less than 57,000 
kilograms net weight, each of the three entries not less than 2,000 
kilograms net weight;
    (B) The owner of and importer of record for at least eight separate 
commercial entries of dairy products, from at least eight separate 
shipments,

[[Page 76924]]

totaling not less than 19,000 kilograms net weight, each of the eight 
entries not less than 450 kilograms net weight, with a minimum of two 
entries in each of at least three quarters during that period;
    (C) The owner or operator of a plant listed in the most current 
issue of ``Dairy Plants Surveyed and Approved for USDA Grading 
Service'' and had manufactured, processed or packaged at least 450,000 
kilograms of dairy products in its own plant in the United States; or
    (D) The exporter of dairy products in the quantities and number of 
shipments required under (A) or (B) above.
    (2) Nonhistorical licenses for cheese or cheese products (Appendix 
2). A person may annually apply for a nonhistorical license for cheese 
or cheese products (Appendix 2) if such person meets the requirements 
of paragraph (b)(1)(i) of this section.
    (3) Nonhistorical licenses for articles other than cheese or cheese 
products (Appendix 2). A person may annually apply for a nonhistorical 
license for articles other than cheese or cheese products (Appendix 2) 
if such person meets the requirements of paragraph (b)(1)(ii) of this 
section.
    (4) Designated license (Appendix 3). A designated license may be 
issued to a person who has applied for a license, has met the 
requirements of paragraph (b)(1)(i) of this section, and is designated 
by the government of a country for such license according to Sec.  
6.25(d).
    (c) Exceptions. (1) A licensee that fails in a quota year to enter 
at least 85 percent of the amount of an article permitted under a 
license shall not be eligible to receive a license for the same article 
from the same country for the next quota year. For the purpose of this 
paragraph, the amount of an article permitted under the license will 
exclude any amounts surrendered pursuant to Sec.  6.26(a), but will 
include any additional allocations received pursuant to Sec.  6.26(b).
    (2) Paragraph (c)(1) of this section will not apply where the 
licensee demonstrates to the satisfaction of the Licensing Authority 
that the failure resulted from breach by a carrier of its contract of 
carriage, breach by a supplier of its contract to supply the article, 
act of God or force majeure.
    (3) Paragraph (c)(1) of this section may not apply in the case of 
historical or nonhistorical licenses, where the licensee demonstrates 
to the satisfaction of the Licensing Authority that the country 
specified on the license maintains or permits an export monopoly to 
control the dairy articles concerned and the licensee petitions the 
Licensing Authority to waive this requirement. The licensee shall 
submit evidence that the country maintains an export monopoly as 
defined in this paragraph. For the purposes of this paragraph ``export 
monopoly'' means a privilege vested in one or more persons consisting 
of the exclusive right to carry on the exportation of any article of 
dairy products from a country to the United States.
    (4) The Licensing Authority will not issue a nonhistorical license 
(Appendix 2) for an article from a country during a quota year to an 
applicant who is affiliated with another applicant to whom the 
Licensing Authority is issuing a non-historical license for the same 
article from the same country for that quota year. Further, the 
Licensing Authority will not issue a nonhistorical license for butter 
to an applicant who is affiliated with another applicant to whom the 
Licensing Authority is issuing a historical butter license of 57,000 
kilograms or greater. For the purpose of this paragraph, an applicant 
will be deemed affiliated with another applicant if:
    (i) The applicant is the spouse, brother, sister, parent, child or 
grandchild of such other applicant;
    (ii) The applicant is the spouse, brother, sister, parent, child or 
grandchild of an individual who owns or controls such other applicant;
    (iii) The applicant is owned or controlled by the spouse, brother, 
sister, parent, child or grandchild of an individual who owns or 
controls such other applicant.
    (iv) Both applicants are 5 percent or more owned or directly or 
indirectly controlled, by the same person;
    (v) The applicant, or a person who owns or controls the applicant, 
benefits from a trust that controls such other applicant.
    (5) The Licensing Authority will not issue a nonhistorical license 
(Appendix 2) for an article from a country during a quota year to an 
applicant who is associated with another applicant to whom the 
Licensing Authority is issuing a nonhistorical license for the same 
article from the same country for that quota year. Further, the 
Licensing Authority will not issue a nonhistorical license for butter 
to an applicant who is associated with another applicant to whom the 
Licensing Authority is issuing a historical butter license for 57,000 
kilograms or greater. For the purpose of this paragraph, an applicant 
will be deemed associated with another applicant if:
    (i) The applicant is an employee of, or is controlled by an 
employee of, such other applicant;
    (ii) The applicant manages or is managed by such other applicant, 
or economically benefits, directly or indirectly, from the use of the 
license issued to such other applicant.
    (6) The Licensing Authority will not issue a nonhistorical license 
for an article from a country during a quota year, for which the 
applicant receives a designated license.


Sec.  6.24  Application for a license.

    (a) Application for license shall be made on electronic forms 
designated for the purpose by the Licensing Authority. All parts of the 
application shall be completed. The application shall be transmitted no 
earlier than September 1 and no later than midnight October 15 of the 
year preceding that for which license application is made. The 
Licensing Authority will not accept incomplete applications.
    (b)(1) Where the applicant seeks to establish eligibility on the 
basis of imports, applications shall include identification of entries 
sufficient to establish the applicant as the importer of record of 
entries required under Sec.  6.23, during the 12-month period ending 
August 31 prior to the quota year for which license is being sought.
    (2) Where the applicant seeks to establish eligibility on the basis 
of exports, applications shall include:
    (i) Census Form 7525 or a copy of the electronic submission of such 
form, and
    (ii) The commercial invoice or bill of sale for the quantities and 
number of export shipments required under Sec.  6.23, during the 12-
month period ending August 31 prior to the quota year for which license 
is being sought.
    (c) An applicant requesting more than one nonhistorical license 
must rank order these requests by the applicable Additional U.S. Note 
number. Cheese and cheese products must be ranked separately from dairy 
articles other than cheese or cheese products.


Sec.  6.25  Allocation of licenses.

    (a) Licensing Authority. The Licensing Authority will issue 
historical, nonhistorical and designated licenses.
    (b) Historical licenses for the 2014 and subsequent quota years 
(Appendix 1). A person issued a historical license for the current 
quota year will be issued a historical license in the same amount for 
the same article from the same country for the next quota year except 
that beginning with the 2023 quota year, a person who has surrendered 
more than 50 percent of such historical license in at least three of 
the prior 5 quota years will thereafter be issued a license in an 
amount equal to the

[[Page 76925]]

average annual quantity entered during those 5 quota years.
    (c) Nonhistorical licenses (Appendix 2). The Licensing Authority 
will allocate nonhistorical licenses on the basis of a rank-order 
lottery system, which will operate as follows:
    (1) The minimum license size shall be:
    (i) Where the article is cheese or cheese product:
    (A) The total amount available for nonhistorical license where such 
amount is less than 9,500 kilograms;
    (B) 9,500 kilograms where the total amount available for 
nonhistorical license is between 9,500 kilograms and 500,000 kilograms, 
inclusive;
    (C) 19,000 kilograms where the total amount available for 
nonhistorical license is between 500,001 kilograms and 1,000,000 
kilograms, inclusive;
    (D) 38,000 kilograms where the total amount available for 
nonhistorical license is greater than 1,000,000 kilograms; or
    (E) An amount less than the minimum license size established in 
paragraphs (c)(1)(i) (A) through (D) of this section, if requested by 
the licensee;
    (ii) Where the article is not cheese or cheese product:
    (A) The total amount available for nonhistorical license where such 
amount is less than 19,000 kilograms;
    (B) 19,000 kilograms where the total amount available for 
nonhistorical license is between 19,000 kilograms and 550,000 
kilograms, inclusive;
    (C) 38,000 kilograms where the total amount available for 
nonhistorical license is between 550,001 kilograms and 1,000,000 
kilograms, inclusive; and
    (D) 57,000 kilograms where the total amount available for 
nonhistorical license is greater than 1,000,000 kilograms;
    (E) An amount less than the minimum license sizes established in 
paragraphs (c)(1)(i) (A) through (D) of this section, if requested by 
the licensee.
    (2) Taking into account the order of preference expressed by each 
applicant, as required by Sec.  6.24(c), the Licensing Authority will 
allocate licenses for an article from a country by a series of random 
draws. A license of minimum size will be issued to each applicant in 
the order established by such draws until the total amount of such 
article in Appendix 2 has been allocated. An applicant that receives a 
license for an article will be removed from the pool for subsequent 
draws until every applicant has been allocated at least one license, 
provided that the licenses for which they applied are not already fully 
allocated. Any amount remaining after the random draws which is less 
than the applicable minimum license size may, at the discretion of the 
Licensing Authority, be prorated equally among the licenses awarded for 
that article.
    (d) Designated licenses (Appendix 3). (1) With respect to an 
article listed in Appendix 3, the government of the applicable country 
may, not later than October 31 prior to the beginning of a quota year, 
submit directly by email to the Licensing Authority:
    (i) The names, addresses and emails of the importers that it is 
designating to receive licenses; and
    (ii) The amount, in kilograms, of such article for which each such 
importer is being designated. Where quantities for designation result 
from both Tokyo Round concessions and Uruguay Round concessions, the 
designations should be made in terms of each.
    (2) To the extent practicable, the Licensing Authority will issue 
designated licenses to those importers, and in those amounts, indicated 
by the government of the applicable country, provided that the importer 
designated meets the eligibility requirements set forth in Sec.  6.23. 
Consistent with the international obligations of the United States, the 
Licensing Authority may disregard a designation if the Licensing 
Authority determines that the person designated is not eligible for any 
of the reasons set forth in Sec.  6.23(c)(1) or (2).
    (3) If a government of a country which negotiated in the Uruguay 
Round for the right to designate importers has not done so, but 
determines to designate importers for the next quota year, it shall 
indicate its intention to do so directly and in writing to the 
Licensing Authority not later than July 1 prior to the beginning of 
such next quota year. Furthermore, if a government that has designated 
importers for a quota year determines that it will not continue to 
designate importers for the next quota year, it shall so indicate 
directly and in writing to the Licensing Authority, not later than July 
1 prior to such next quota year.


Sec.  6.26  Surrender and reallocation.

    (a) If a licensee determines that it will not enter the entire 
amount of an article permitted under its license, such licensee shall 
surrender its license right to enter the amount that it does not intend 
to enter. Surrender shall be made to the Licensing Authority no later 
than October 1. Any surrender shall be final and shall be only for that 
quota year, except as provided in Sec.  6.25(b). The amount of the 
license not surrendered shall be subject to the license use 
requirements of Sec.  6.23(c)(1).
    (b) For each quota year, the Licensing Authority will, to the 
extent practicable, reallocate any amounts surrendered.
    (c) Any person who qualified for or was issued a cheese or cheese 
product license for a quota year may apply to receive additional 
license, or addition to an existing license for a portion of the amount 
being reallocated. A person who did not qualify for a cheese or cheese 
product license for a quota year, but qualified only for a license for 
articles other than cheese or cheese products, may only apply to 
receive an additional license for articles other than cheese or cheese 
products, or addition to an existing license for articles other than 
cheese or cheese products for a portion of the amount being 
reallocated. The application shall be submitted to the Licensing 
Authority no earlier than September 1 and not later than September 15, 
and shall specify:
    (1) The name and control number of the applicant;
    (2) The article and country being requested, the applicable HTS 
Additional U.S. Note number and, if more than one article is requested, 
a rank-order by Additional U.S. Note number; and
    (3) If applicable, the number of the license issued to the 
applicant for that quota year permitting entry of the same article from 
the same country.
    (d) The Licensing Authority will reallocate surrendered amounts 
among applicants as follows:
    (1) The minimum license size, or addition to an existing license, 
will be the total amount of the article from a country surrendered, or 
10,000 kilograms, whichever is less;
    (2) Minimum size licenses, or additions to an existing license, 
will be allocated among applicants requesting articles on the basis of 
the rank-order lottery system described in Sec.  6.25(c);
    (3) If there is any amount of an article from a country left after 
minimum size licenses have been issued, the Licensing Authority may 
allocate the remainder in any manner it determines equitable among 
applicants who have requested that article; and
    (4) No amount will be reallocated to a licensee who has surrendered 
a portion of its license for the same article from the same country 
during that quota year unless all other licensees applying for a 
reallocated quantity have been allocated a license;
    (e) However, if the government of an exporting country chooses to 
designate eligible importers for surrendered amounts under Appendix 3, 
the Licensing Authority shall issue the licenses in accordance with 
Sec.  6.25(d)(2), provided that the government of the

[[Page 76926]]

exporting country notifies the Licensing Authority of its designations 
no later than September 1. Such notification shall contain the names 
and addresses of the importers that it is designating and the amount in 
percentage terms of such article for which each importer is being 
designated. In such case the requirements of paragraph (c) of this 
section shall not apply.


Sec.  6.27  Limitations on use of license.

    (a) A licensee shall not obtain or use a license for speculation, 
brokering, or offering for sale, or permit any other person to use the 
license for profit.
    (b) A licensee who is eligible as a manufacturer or processor, 
pursuant to Sec.  6.23, shall process at least 75 percent of its 
licensed imports in such person's own facilities and maintain the 
records necessary to so substantiate.


Sec.  6.28  Transfer of license.

    (a) If a licensee sells or conveys its business involving articles 
covered by this subpart to another person, including the complete 
transfer of the attendant assets, the Licensing Authority will transfer 
to such other person the historical, nonhistorical or designated 
license issued for that quota year. Such sale or conveyance must be 
unconditional, except that it may be in escrow with the sole condition 
for return of escrow being that the Licensing Authority determines that 
such sale does not meet the requirements of this paragraph.
    (b) The parties seeking transfer of license shall give written 
notice to the Licensing Authority of the intended sale or conveyance 
described in paragraph (a) of this section by email. The notice must be 
received by the Licensing Authority at least 20 working days prior to 
the intended consummation of the sale or conveyance. Such written 
notice shall include copies of the documents of sale or conveyance. The 
Licensing Authority will review the documents for compliance with the 
requirements of paragraph (a) of this section and advise the parties in 
writing of its findings by the end of the 20-day period. The parties 
shall have the burden of demonstrating to the satisfaction of the 
Licensing Authority that the contemplated sale or conveyance complies 
with the requirements of paragraph (a) of this section. Within 15 days 
of the consummation of the sale or conveyance, the parties shall email 
the final documents to the Licensing Authority. The Licensing Authority 
will not transfer the licenses unless the documents are submitted in 
accordance with this paragraph.
    (c) The eligibility for a license of a person to whom a business is 
sold or conveyed will be determined for the next quota year in 
accordance with Sec.  6.23. For the purposes of Sec.  6.23(b)(1) the 
person to whom a business is sold or conveyed shall be deemed to be the 
person to whom the historical licenses were issued during the quota 
year in which the sale or conveyance occurred. Further, for the 
purposes of Sec.  6.23(b) and (c), the entries made under such licenses 
by the original licensee during the year in which the sale of 
conveyance is made, shall be considered as having been made by the 
person to whom the business was sold or conveyed.


Sec.  6.29  Use of licenses.

    (a) An article entered under a license shall be an article produced 
in the country specified on the license.
    (b) An article entered or withdrawn from warehouse for consumption 
under a license must be entered in the name of the licensee as the 
importer of record by the licensee or its agent, and must be owned by 
the licensee at the time of such entry.
    (c) If the article entered or withdrawn from warehouse for 
consumption was purchased by the licensee through a direct sale from a 
foreign supplier, the licensee shall present, at the time of entry:
    (1) A true and correct copy of a through bill of lading from the 
country; and
    (2) A commercial invoice or bill of sale from the seller, showing 
the quantity and value of the product, the date of purchase and the 
country; or
    (3) Where the article was entered into warehouse by the foreign 
supplier, CBP Form 7501 endorsed by the foreign supplier, and the 
commercial invoice.
    (d) If the article entered was purchased by the licensee via sale-
in-transit, the licensee shall present, at the time of entry:
    (1) A true and correct copy of a through bill of lading endorsed by 
the original consignee of the goods;
    (2) A certified copy of the commercial invoice or bill of sale from 
the foreign supplier to the original consignee of the goods; and
    (3) A commercial invoice or bill of sale from the original 
consignee to the licensee.
    (e) If the article entered was purchased by the licensee in 
warehouse, the licensee shall present, at the time of entry:
    (1) CBP Form 7501 endorsed by the original consignee of the goods;
    (2) A certified copy of the commercial invoice or bill of sale from 
the foreign supplier to the original consignee of the goods; and
    (3) A commercial invoice or bill of sale from the original 
consignee to the licensee.
    (f) The Licensing Authority may waive the requirements of 
paragraphs (c), (d) or (e), if it determines that because of strikes, 
lockouts or other unusual circumstances, compliance with those 
requirements would unduly interfere with the entry of such articles.
    (g) Nothing in this subpart shall prevent the use of immediate 
delivery in accordance with the provisions of CBP regulations relating 
to tariff-rate quotas.


Sec.  6.30  Record maintenance and inspection.

    A licensee shall retain all records relating to its purchases, 
sales and transactions governed by this subpart, including all records 
necessary to establish the licensee's eligibility, for five years 
subsequent to the end of the quota year in which such purchases, sales 
or transactions occurred. During that period, the licensee shall, upon 
reasonable notice and during ordinary hours of business, grant 
officials of the U.S. Department of Agriculture full and complete 
access to the licensee's premises to inspect, audit or copy such 
records.


Sec.  6.31  Debarment and suspension.

    The provisions in 7 CFR part 3017--Governmentwide Debarment and 
Suspension (Nonprocurement) and Government Requirements for Drug-Free 
Workplace (Grants), subparts A through E, apply to this subpart.


Sec.  6.32  Globalization of licenses.

    If the Licensing Authority determines that entries of an article 
from a country are likely to fall short of that country's allocated 
amount as indicated in appendices 1, 2, and 3, the Licensing Authority 
may permit, with the approval of the Office of the United States Trade 
Representative, the applicable licensees to enter the remaining balance 
or a portion thereof from any country during that quota year. Requests 
for consideration of such adjustments must be submitted to the 
Licensing Authority no later than September 1. The Licensing Authority 
will obtain prior consent for such an adjustment of licenses from the 
government of the exporting country for quantities in accordance with 
the Uruguay Round commitment of the United States. No globalization 
requests will be considered prior to April 1 of each year.


Sec.  6.33  License fee.

    (a) A fee will be assessed each quota year for each license to 
defray the Department's costs of administering the

[[Page 76927]]

licensing system. To the extent practicable, the fee will be announced 
by the Licensing Authority in a notice published in the Federal 
Register no later than August 31 of the year preceding the quota year 
for which the fee is assessed.
    (b) The license fee for each license issued is due and payable in 
full no later than March 15 of the year for which the license is 
issued. The fee for any license issued after March 15 of any quota year 
is due and payable in full no later than 10 days from the date of 
issuance of the license. Fee payments are payable to the Treasurer of 
the United States and shall be made utilizing the electronic software 
designated for the purpose by the Licensing Authority as provided in 
Sec.  6.36(b).
    (c) If the license fees for all licenses issued to a licensee are 
not paid by the final payment date, a hold will be placed on the use of 
all licenses issued to the licensee and no articles will be permitted 
entry under those licenses. The Licensing Authority shall send a 
warning letter by email advising the licensee that if payment is not 
made in accordance with Sec.  6.36(b) and received within 10 calendar 
days from the date of the email, all licenses issued to that licensee 
will be revoked. Where the license at issue is a historical license, 
this will result, pursuant to Sec.  6.23(b), in the person's loss of 
historical eligibility for such license.


Sec.  6.34  Adjustment of appendices.

    (a) Whenever a historical license (Appendix 1) is not issued to an 
applicant pursuant to the provisions of Sec.  6.23, is permanently 
surrendered or is revoked by the Licensing Authority, the amount of 
such license will be transferred to Appendix 2.
    (b) The cumulative annual transfers to Appendix 2 made in 
accordance with paragraph (a) will be published in the Federal 
Register. If a transfer results in the addition of a new article, or an 
article from a country not previously listed in Appendix 2, the 
Licensing Authority shall afford all eligible applicants for that quota 
year the opportunity to apply for a license for such article.


Sec.  6.35  Correction of errors.

    (a) If a person demonstrates, to the satisfaction of the Licensing 
Authority, that errors were made by officers or employees of the United 
States Government, the Licensing Authority will review and rectify the 
errors to the extent permitted under this subpart.
    (b) To be considered, a person must provide sufficient 
documentation regarding the error to the Licensing Authority by email, 
not later than August 31 of the calendar year following the calendar 
year in which the error was alleged to have been committed.
    (c) If the error resulted in the loss of a historical license by a 
license holder, the Licensing Authority will transfer the amount of 
such license from Appendix 2 to Appendix 1 in order to provide for the 
issuance of such license in the calendar year following the calendar 
year for which the license was revoked. The cumulative annual transfers 
to Appendix 1 in accordance with this paragraph will be published in 
the Federal Register.


Sec.  6.36  Miscellaneous.

    (a) If any deadline date in this subpart falls on a Saturday, 
Sunday, or a Federal holiday, then the deadline shall be the next 
business day.
    (b) All applications and fee payments required under this subpart 
shall be made utilizing the electronic software designated for this 
purpose by the Licensing Authority, and official correspondence with 
the Licensing Authority, except as provided under Sec.  6.28(b), shall 
be by email.


Sec.  6.37  [Removed]

0
4. Section 6. 37 is removed.

    Dated: August 21, 2014.
Philip C. Karsting,
Administrator, Foreign Agricultural Service.
[FR Doc. 2014-29807 Filed 12-22-14; 8:45 am]
BILLING CODE 3410-10-P


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