Source: https://www.federalregister.gov/documents/2014/11/18/2014-27129/ccc-export-credit-guarantee-gsm-102-program-and-facility-guarantee-program-fgp
Timestamp: 2017-10-24 11:44:53
Document Index: 236202160

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Federal Register :: CCC Export Credit Guarantee (GSM-102) Program and Facility Guarantee Program (FGP)
A Rule by the Commodity Credit Corporation on 11/18/2014
68589-68609 (21 pages)
Subpart B—CCC Export Credit Guarantee (GSM-102) Program Operations
Section 1493.20 Definition of Terms
Eligible Export Sale
Firm Export Sales Contract
Foreign Financial Institution Letter of Credit or Letter of Credit
Importer's Representative
Intervening Purchaser
Section 1493.50 Information Required for Foreign Financial Institution Participation
Section 1493.60 Certifications Required for Program Participation
Section 1493.70 Application for Payment Guarantee
Section 1493.80 Certification Requirements for Obtaining Payment Guarantee
Section 1493.90 Special Requirements of the Foreign Financial Institution Letter of Credit and the Terms and Conditions Document, if Applicable
Section 1493.100 Terms and Requirements of the Payment Guarantee
Section 1493.110 Guarantee Fees
Section 1493.130 Evidence of Export
Section 1493.140 Certification Requirements for the Evidence of Export
Section 1493.160 Notice of Default
Section 1493.170 Claims for Default
Section 1493.180 Payment for Default
Section 1493.191 Additional Obligations and Requirements
Subpart A—Restrictions and Criteria for Export Credit Guarantee Program
https://www.federalregister.gov/d/2014-27129 https://www.federalregister.gov/d/2014-27129
Start Preamble Start Printed Page 68589
Effective Date: This final rule is effective December 18, 2014.
Applicability Date: The provisions of this final rule will be applied by CCC as follows:
(1) For any payment guarantee associated with an application for payment guarantee received by CCC on or after December 18, 2014, the provisions of this final rule shall immediately apply in their entirety.
(2) For any payment guarantee associated with an application for payment guarantee received by CCC prior to December 18, 2014, the provisions of the previous rule governing the Export Credit Guarantee (GSM-102) Program shall apply.
(3) Notwithstanding (2) above, the provisions of §§ 1493.30, 1493.40, 1493.50, 1493.60, and 1493.192 shall apply to all program participants as of December 18, 2014.
Amy Slusher, Deputy Director, Credit Programs Division, Foreign Agricultural Service, U.S. Department of Agriculture, 1400 Independence Ave. SW., Stop 1025, Room 5509, Washington, DC 20250-1025; telephone (202) 720-6211.
The Commodity Credit Corporation's (CCC) Export Credit Guarantee (GSM-102) Program is administered by the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA) on behalf of CCC, pursuant to program regulations codified at 7 CFR Part 1493, and through the issuance of “Program Announcements” and “Notices to Participants” that are consistent with this regulation. The previous regulation became effective on November 18, 1994. Since that time, CCC has implemented numerous operational changes to improve the efficiency of the program, including an automated, Internet-based system for participants and revised program controls to improve program quality, reduce costs, and protect against waste and fraud. Also since that time, agricultural trade and finance practices have evolved. This final rule is intended to reflect these changes and to enhance the overall clarity and integrity of the program. In addition, the 2008 Act repealed the authority to operate the GSM-103 Program, and this change is reflected in the final rule.
On July 27, 2011, CCC published a Proposed Rule in the Federal Register (Vol. 76, No. 144, pages 44836-44855). In response to comments received, CCC made several significant changes and issued a second proposed rule on December 27, 2013 (Federal Register Vol. 78, No. 249, pages 79254-79282). The deadline for comments on the second proposed rule was January 27, 2014. CCC received comments on the second proposed rule from seven parties, including U.S. exporters and U.S. banks. Comments received on the December 27, 2013, proposed rule and changes made by CCC are discussed below in the Section-by-Section Analysis.
The section-by-section analysis below includes a summary of comments received on the December 27, 2013, proposed rule (hereafter “proposed rule”), CCC's responses to those comments, and a discussion of any additional changes made by CCC. In some instances, the numbering systems differ between the proposed and final rules. For purposes of this discussion, the numbering system of the final rule will be used, except where otherwise indicated. Defined terms found in the final rule are capitalized.
One commenter expressed concern that the proposed rule preamble added requirements to the definition of Eligible Export Sale. Because the Exporter is required to certify that a GSM-102 transaction is an Eligible Export Sale, the commenter requested clarification regarding whether the preamble language constitutes additional conditions not contained in the body of the regulation.
The language in the preamble to the proposed rule was intended to explain the reasons for the new requirement that a GSM-102 transaction be an Eligible Export Sale. The preamble itself does not impose additional conditions on participants. An Exporter certifying that a sale is an Eligible Export Sale is specifically certifying that the export sale meets the definition in the rule (i.e., that it is “an export sale of U.S. Agricultural Commodities in which the obligation of payment for the portion registered under the GSM-102 program arises solely and exclusively from a Foreign Financial Institution Letter of Credit or Terms and Conditions Document issued in connection with a Payment Guarantee.”). The Exporter is not required to certify that a sale Start Printed Page 68590constitutes an expansion of U.S. exports or would not have occurred without the GSM-102 program, nor is this definition intended to preclude brokerage arrangements. CCC will provide clarification on a case-by-case basis to any Exporter as needed to determine whether a particular transaction meets this requirement.
CCC received two comments on the definition of Firm Export Sales Contract. One commenter understood CCC to be requiring the Importer to be the party taking physical possession of and nationalizing the U.S. Agricultural Commodities for customs clearance in the destination country or region. This understanding was based on language in the proposed rule and its preamble referencing the Importer (or Importer's Representative) as “taking receipt” of the U.S. Agricultural Commodities shipped under the Payment Guarantee. The commenter noted that this requirement could dramatically reduce Exporters' ability to utilize the program, as often the Exporter sells to a related entity (currently the Importer under the Payment Guarantee), who sells on to the final buyer taking physical possession of the goods. This structure enables the Exporter to pass on greater program benefits to the final buyer and enables multiple commodity shipments to be registered under a single Payment Guarantee, reducing administrative costs. The commenter suggested adding a definition of an “exporter's representative”—an entity related to the Exporter that sells the commodities to the final buyer in the destination country or region. This new term would meet CCC's objective of requiring the Importer to be the party taking physical possession of the goods while retaining the Exporter's ability to utilize the program. With this new term, the definition of Firm Export Sales Contract would be redefined as a contract between the Exporter and either the “exporter's representative” or the Importer.
CCC does not intend to require that the Importer in a GSM-102 transaction be the final buyer taking physical possession of the commodities in the destination country or region. However, CCC agrees that certain language in the proposed rule and preamble, in particular reference to the Importer “taking receipt of the goods,” could lead to a misunderstanding regarding CCC's intent. To address this misunderstanding, CCC revised the definition of Importer and modified the provisions of § 1493.70(a)(2) and (3). Those changes are discussed in the relevant sections of this preamble. No changes are necessary to the definition of Firm Export Sales Contract in response to this comment.
A second commenter expressed concern that a Firm Export Sales Contract must be physically signed by both the Exporter and Importer when the Exporter submits an application for a Payment Guarantee. A requirement for a physically signed document at time of application in accordance with § 1493.70(a) could be problematic, as it can take several weeks to obtain final signatures. The commenter clarified that a firm sale always exists at the time of application for the Payment Guarantee as evidenced by acknowledgements or other documentation, but may not include signatures of both the Exporter and Importer at that point.
CCC acknowledges this concern but notes that the definition of Firm Export Sales Contract does not require a physically signed document. The definition states that “Written evidence of a sale may be in the form of a signed sales contract, a written offer and acceptance between parties, or other documentary evidence of sale.” Provided the documentation demonstrates evidence of the sale and contains the minimum required information stated in the definition, such documentation need not be physically signed by both parties. No changes are needed to the rule in response to this comment.
CCC received one comment on the increasing use of electronic bills of lading (e-BLs) through providers such as Electronic Shipping Solutions (ESS) and Bolero, with a request that the GSM-102 rule specifically allow for e-BLs. CCC agrees and made a number of modifications to the final rule to accommodate e-BLs. The definition of Foreign Financial Institution Letter of Credit requires the Letter of Credit to be subject to the current revision of the Uniform Customs and Practices for Documentary Credits (UCP). The current revision, UCP 600, includes a Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic Presentation (eUCP) to accommodate presentation of electronic records alone or in combination with paper documents. CCC modified the Letter of Credit definition in the final rule to include that, if applicable (i.e., if electronic records are to be used under the Letter of Credit), the provisions of the current revision of eUCP shall apply.
One commenter suggested modifying this definition to allow the Importer to enter a Firm Export Sales Contract with an “exporter's representative for onward sale to the Importer. . . .” This suggestion was made in conjunction with proposed modifications to the definition of Firm Export Sales Contract and addition of an “exporter's representative.” As noted in the analysis of the definition of Firm Export Sales Contract, CCC determined that it is not necessary to add “exporter's representative” to the rule, and this change is not needed to the Importer definition. However, CCC modified the definition of Importer in response to participant concerns that CCC is now requiring the Importer to be the final buyer in the destination country or region. The revised definition allows for the U.S. Agricultural Commodities “to be shipped from the United States to the destination country or region under the Payment Guarantee.” CCC believes this change will allow a final buyer other than the Importer to physically receive the goods in the destination country or region.
One commenter noted that some countries do not require registration of an Importer's Representative and requested the definition be modified to allow this entity to “be organized under the laws of” the destination country or region. CCC agrees and has modified this definition accordingly.
One commenter suggested modifying this definition to allow the Intervening Purchaser to enter a Firm Export Sales Contract with an Exporter and sell the same commodities to either an Importer or an “exporter's representative.” This suggestion was made in conjunction with proposed modifications to the definition of Firm Export Sales Contract and addition of an “exporter's representative.” As noted in the analysis of the definition of Firm Export Sales Contract, CCC determined that it is not necessary to add “exporter's representative” to the rule, and this change is not needed to the Intervening Purchaser definition.
The proposed rule required participants to make certifications in certain submissions that neither the Importer, the Intervening Purchaser, nor the Foreign Financial Institution is present on the OFAC or the U.S. Government's System for Awards Management (SAM) Web site. SAM is Start Printed Page 68591the primary database of vendors doing business with the Federal Government, including entities that are excluded from doing business with the government. Since publication of the proposed rule, CCC determined that SAM fully incorporates all excluded entities from the OFAC list; therefore, it is not necessary for participants to check separately for entities on the OFAC list and certify that they have done so. Checking the SAM list is sufficient. CCC removed all references to OFAC in the final rule.
CCC clarified the certifications in §§ 1493.80(d), 1493.120(c)(1)(i) and (f)(2)(iii), and 1493.140(d) requiring confirmation that certain entities are not present on the SAM list. SAM not only includes entities that are excluded from doing business with the Federal Government, but also entities that are registered and eligible to do business with the Federal Government. An excluded entity is denoted in SAM as “Exclusion.” The certifications were modified to state that the GSM-102 participant has verified that the relevant entity “is not present as an excluded party on the SAM list.”
One commenter asked for clarification regarding when Exporters are required to check SAM and what proof the Exporter should maintain to document this check.
The Exporter must certify on the application for Payment Guarantee that neither the Importer nor the Intervening Purchaser is present on the SAM list (§ 1493.80(d)). To make this certification, the Exporter must perform this check immediately prior to submitting the application for Payment Guarantee. Similarly, the Exporter should perform this check, if required, just prior to submitting an Evidence of Export report, consistent with § 1493.140(d). The Exporter need not maintain specific documentation that the SAM list has been checked. In accordance with government-wide suspension and debarment regulations found at 2 CFR Part 180, CCC will check SAM for all parties after receiving an application for Payment Guarantee, a notice of assignment, and an Evidence of Export report (if applicable). Sufficient information is available in SAM or through contact with other U.S. Government agencies to determine when an entity was excluded through SAM, and thus to determine whether the Exporter likely checked these lists as required. An Exporter wishing to maintain such documentation, however, might consider keeping printouts of SAM searches.
In paragraph (d) of this section, CCC added that when a Foreign Financial Institution (FFI) submits annual year-end financial statements for CCC to determine continued eligibility, the FFI must also re-submit the certifications in § 1493.60. This change is consistent with requirements on Exporters and U.S. Financial Institutions throughout the rule, who must re-certify the information provided at qualification when certain documents are submitted to CCC. CCC also added Foreign Financial Institutions to the provision in § 1493.191(c) (Submission of documents by Principals), as CCC requires these certifications to be made by a Principal (or designee) of the Foreign Financial Institution.
One commenter asked whether adherence (and documentation of adherence) to the Foreign Corrupt Practices Act is a requirement of Foreign Financial Institutions in addition to U.S. Financial Institutions and Exporters.
The certification for program participation found in § 1493.60(b)(2), which must be made by all U.S. and Foreign Financial Institutions, states that “All U.S. operations of the applicant and its U.S. Principals are in compliance with U.S. anti-money laundering and terrorist financing statutes including, but not limited to, the USA Patriot Act of 2001, and the Foreign Corrupt Practices Act of 1977.” Therefore, to the extent that a Foreign Financial Institution has U.S. operations and U.S. Principals, these operations and Principals are required to adhere to the Foreign Corrupt Practices Act and otherwise be in compliance with U.S. law as specified in this certification. There is no particular documentation required by the U.S. or Foreign Financial Institution to demonstrate such compliance.
One commenter suggested modifying paragraph (a)(2) of this section to require either the name of the Importer or the “exporter's representative,” consistent with suggested changes to the Firm Export Sales Contract definition. As noted in the analysis of the Firm Export Sales Contract definition, CCC believes it is unnecessary to add “exporter's representative” to the rule and this change is not needed. However, CCC modified this provision in response to concerns that CCC is now requiring the Importer to be the final buyer in the destination country or region. Consistent with the change to the Importer definition, CCC removed the reference to the Importer or Importer's Representative “taking receipt” of goods in the destination country or region. Instead, the Importer (or Importer's Representative, if applicable) must be physically located in the country or region of destination.
CCC received one comment on paragraph (a)(3) expressing concern that this statement lacks clarity, specifically with respect to regional programs. The commenter is concerned that if the Importer (or Importer's Representative) under a regional program is located in a country other than where goods are discharged, the Importer (or Importer's Representative) cannot take receipt of the goods. CCC agrees and modified this statement to reflect that the goods must be “shipped directly to the destination country or region.” This change eliminates the requirement that either the Importer or Importer's Representative take physical receipt of the goods, and allows for these entities to be located anywhere in the destination country or region. This modification also accounts for cases where the final buyer of the goods—who may not be the Importer—may take physical receipt of the goods at destination.
One commenter requested that because paragraph (a)(4) allows the Letter of Credit to be opened by a party other than the Importer, CCC consider modifying the current language on the GSM-102 Payment Guarantee, which states “The contractual obligation of the foreign importer to the exporter for the portion of the port value of the export sale(s) for which credit is extended to the foreign bank must be secured by an irrevocable letter of credit.” CCC agrees and will review the GSM-102 Payment Guarantee to determine whether other changes are needed as a result of new regulatory language.
One commenter suggested modifying paragraph (a)(8) of this section to require either the name of the Importer or the “exporter's representative,” consistent with suggested changes to the Firm Export Sales Contract definition. As noted in the analysis of the Firm Export Sales Contract definition, CCC believes it is unnecessary to add “exporter's representative” to the rule and this change is not needed.
CCC received one comment requesting elimination of the requirement in paragraph (a)(9) for the Exporter to ensure the commodity grade and quality specified in the Exporter's Start Printed Page 68592application for Payment Guarantee is consistent with the Firm Export Sales Contract and Letter of Credit. The commenter contended that this provision is inconsistent with standard banking practice and the UCP 600, and emphasized that the Exporter or Holder of the Payment Guarantee must be assured CCC will honor the payment guarantee if documents are accepted for payment under the Letter of Credit.
CCC opted to maintain paragraph (a)(9) in the final rule. In response to comments received to the first proposed rule, CCC moved this provision from § 1493.90 (Special Requirements of the Foreign Financial Institution Letter of Credit and the Terms and Conditions Document, if applicable). In doing so, CCC acknowledged that the sales contract is a separate transaction from the Letter of Credit, and therefore the U.S. Financial Institution should not be responsible for ensuring consistency of the Letter of Credit with the underlying sales contract. However, CCC believes this requirement is important to avoid defaults based on failure to comply with the underlying terms of the sale and will maintain the requirement in § 1493.70(a)(9). CCC notes that § 1493.191(b) requires all Exporters and U.S. and Foreign Financial Institutions to review and be fully acquainted with all GSM-102 program regulations. As the Exporter should be working with the Importer, U.S. and Foreign Financial Institutions, and other parties (such as the Letter of Credit applicant) prior to application for the Payment Guarantee, all parties to the transaction should be familiar with this requirement.
CCC did modify paragraph (a)(9) in the final rule, changing “consistent with” to “correspond with.” Article 18 of the UCP 600 uses this language, requiring that the “Description of the goods, services or performance in a commercial invoice must correspond with that appearing in the credit.” It is not CCC's intent that the Letter of Credit contain every detail of a commodity description, as CCC acknowledges that certain commodities have very detailed and lengthy specifications. However, CCC expects commodity descriptions across the Firm Export Sales Contract, application for Payment Guarantee, and Letter of Credit to contain the commodity's primary price determining characteristics and to correspond closely enough that they are reasonably considered the same grade and type of commodity. CCC also added a requirement that the commodity description include the six-digit Harmonized System commodity classification code utilized by the Exporter. This addition will assist CCC with better tracking of commodities under the program.
The Agricultural Act of 2014 eliminated authority for the Dairy Export Incentive Program. As a result, paragraph (a)(18) of this section was deleted and the final rule renumbered.
CCC received one comment on the certification in paragraph (b) of this section. The commenter is concerned that this certification might preclude transactions where the Exporter is obligated to pay a commission or other compensation to an agent of the Importer or final buyer. The commenter requested that CCC clarify that arms-length payments to agents are not “items extraneous to the transaction.”
CCC previously issued clarification in a notice to participants that when an Importer requires an Exporter to employ and compensate a specified agent as a condition of concluding an export sale, such commissions/compensation are treated by CCC as Discounts and Allowances that must be reported in accordance with § 1493.70(a)(12) and deducted from both the Exported Value and Port Value in accordance with § 1493.10. Such commissions/compensation are therefore not considered by CCC to be “items extraneous to the transaction.” Although CCC understands the need for clarity, it is not possible to include in the rule all items that might constitute “items extraneous to the transaction.” CCC is not making any changes to this certification but will examine specific items on a case-by-case basis.
CCC received three comments on the requirement that the Letter of Credit stipulate presentation of at least one original clean on board bill of lading as a required document (paragraph (a)(1) in the proposed rule). Two commenters noted that this requirement would jeopardize program utilization. Export sales to destinations with short transit times typically utilize copies of shipping documents for the Letter of Credit. Original documents are provided directly to the destination for safe keeping, to be released to the appropriate party once payment is received under the Letter of Credit. This process helps to avoid demurrage charges that could accrue if parties are waiting for the arrival of original documents. Requiring that an original bill of lading be presented under the Letter of Credit would slow import procedures and negate the potential value offered by the GSM-102 program. One commenter requested this provision be deleted. A third commenter agreed with CCC that requiring presentation of an original bill of lading in the Letter of Credit will help to prevent non-Eligible Export Sales, but noted there are legitimate cases when original clean on board bills of lading are not available due to time, technical or administrative constraints. This commenter suggested CCC make an exception to this requirement when the Exporter is indicated as the shipper on the clean onboard bill of lading. In this instance, the Letter of Credit could allow for copies of the bill of lading.
CCC's intent in requiring the Letter of Credit to stipulate presentation of an original bill of lading is to prevent non-Eligible Export Sales. Although the final rule includes a provision specifically prohibiting non-Eligible Export Sales, CCC believes additional provisions are necessary. However, CCC agrees that where the Exporter is the shipper on the bill of lading, this would indicate that the GSM-102 transaction is an Eligible Export Sale and therefore an original bill of lading need not be required under the Letter of Credit. CCC has modified § 1493.90(a) to allow for this exception, including when a company related to the Exporter (as reported in § 1493.30(a)(5)) is indicated as the shipper on the bill of lading.
CCC also modified paragraph (a) of this section to account for the use of electronic bills of lading (eBLs). CCC acknowledges that when utilizing eBLs, the only “original” bill of lading is the electronic version—which is only accessible to parties with access to the eBL vendor. Therefore, in cases where the Letter of Credit allows for presentation of electronic documents, the Letter of Credit may stipulate that a copy of the bill of lading is acceptable.
CCC received one comment on paragraph (a)(3)(ii) of this section in the proposed rule, requesting that CCC modify this provision to clarify that the Terms and Conditions Document is between the Foreign and U.S. Financial Institutions, as the Exporter will not be a party to this document. No changes were made in response to this comment. There is no requirement that the Exporter assign a Payment Guarantee to a U.S. Financial Institution. If there is no assignment, the Exporter would remain the Holder of the Payment Guarantee and be a party to any Terms and Conditions Document.
One commenter noted concern with § 1493.90(b)(2) in the proposed rule, Start Printed Page 68593which requires a clause in the Letter of Credit regarding specific jurisdiction in any legal action or proceeding under the Letter of Credit. The commenter stated that the Exporter will not know when applying for the Payment Guarantee whether the Foreign Financial Institution is willing to include this language in the Letter of Credit, which could in turn cause delays in issuing the Letter of Credit. The commenter further asked that CCC refund the guarantee fees to the Exporter if the Foreign Financial Institution refuses to issue the Letter of Credit because of this language, or if the Letter of Credit cannot be issued within 30 days of the Date of Export due to this language.
CCC believes that the Foreign Financial Institution should know in advance whether it is willing to include this language in the Letter of Credit, and, therefore, whether it is willing to participate in the transaction. Section 1493.191(b) requires all Exporters and U.S. and Foreign Financial Institutions to review and be fully acquainted with all regulations related to the GSM-102 program. All participating Foreign Financial Institutions should be aware of this requirement, and should not agree to participate in the transaction if unwilling to include this language in the Letter of Credit. CCC will not agree in advance to refund guarantee fees to an Exporter in cases where the Foreign Financial Institution cannot include the required language in the Letter of Credit or issue the Letter of Credit within the required timeframe. As specified in § 1493.110(d), fees will only be refunded if the Director determines that a refund is in the best interest of CCC. All determinations on fee refunds will be made on a case-by-case basis.
CCC received one comment on paragraph (e) of this section, requesting that the latest date to release reserves be amended to the latter of 45 days from the final date to export or 30 days from the date of issuance of the Letter of Credit. When bulk products are sold in one shipment for delivery to multiple buyers, the individual bills of lading are often not available until near the time the vessel reaches its destination, which could be 30-40 days from the time the vessel leaves the load port. Until all bills of lading are issued, the Exporter is unable to determine what reserve coverage is needed for a particular guarantee and cannot file the necessary amendment to the Payment Guarantee. Furthermore, the 21 calendar day requirement for filing for reserves is inconsistent with the 30 calendar days permitted for Letter of Credit issuance.
CCC does not agree with the suggestion to allow 45 days from the final date to export (or 30 days from the date of issuance of the Letter of Credit) to file amendments for reserve coverage. As noted in the preamble to the proposed rule, reserve coverage permits an Exporter to hold program allocation that may not be utilized and could be made available to other Exporters. Given that CCC allows reserve coverage of up to ten percent of the Port Value of the sale, this reserve may be a substantial amount. However, CCC acknowledges that an Exporter may need more than 21 calendar days from the final date to export to compile documents and determine reserves needed, and also that there is logic in having similar timeframes related to reserve coverage, evidence of export report, and Letter of Credit issuance timeframes. Therefore, CCC increased the timeframe for filing an amendment for reserve coverage to 30 calendar days from the date of final export. CCC also changed the language in this paragraph to state that if the amendment to the guarantee and additional fee for reserves is not received within this 30 calendar days, CCC may (instead of “will”) cancel the reserve coverage. This change will provide more flexibility in cases where unusual circumstances exist.
CCC received one comment requesting that the timeframe for issuance of the Letter of Credit be extended to 60 days from the Date of Export under paragraph (g)(3) of this section. The commenter noted that the time needed to obtain bills of lading, the internal and external financial institution processes related to issuance and approval of the Letter of Credit, and new language required by CCC in the Letter of Credit or Terms and Conditions Document may result in delays in Letter of Credit issuance. The Exporter will be unable to predict these delays at the time of application for a Payment Guarantee. The commenter also questioned how a delay in issuance of the Letter of Credit increases CCC's risk and expressed concern about forfeiture of guarantee fees when this timeframe cannot be met.
CCC addressed these concerns in the preamble to the proposed rule in response to similar comments. This provision is intended to eliminate cases where Exporters clearly have not worked with the parties in the transaction before submitting an application for Payment Guarantee and where the Letter of Credit ultimately may not be issued. The “cost” of such cancellations is that other Exporters who may have utilized the allocation are unable to do so. This provision is not related to CCC's risk profile, nor is it intended to reduce CCC's risk. The final rule permits the Director to waive this requirement and/or to permit a refund of the guarantee fee if determined to be in CCC's best interest. Furthermore, as previously noted, § 1493.191(b) requires all Exporters and U.S. and Foreign Financial Institutions to review and be fully acquainted with all regulations and other documents related to the GSM-102 program. As the Exporter should be working with the Importer and U.S. and Foreign Financial Institutions prior to application for the Payment Guarantee, all parties to the transaction should be familiar with this requirement in advance of negotiation of the Letter of Credit. CCC made no changes to the final rule in response to this comment.
CCC received one comment regarding § 1493.100(f)(6) in the proposed rule, noting a perceived discrepancy between the language in the proposed rule (which prohibits coverage of an export sale that has been guaranteed by CCC under another Payment Guarantee) and language in the preamble to the proposed rule, which indicates CCC does not believe an exporter could certify that a particular transaction has not been registered by another entity. The commenter did not understand why CCC maintained a certification related to duplicate registrations when the preamble indicates an Exporter could not make such a certification.
CCC believes there is confusion regarding § 1493.100(f)(6). This is not a certification required of the Exporter, but rather a statement that a particular type of transaction is prohibited under the program. CCC agrees that an Exporter registering a particular sale has no way to know if another Exporter has done the same. The introduction to paragraph (f) of this section states that “An export sale (or portion thereof) is ineligible for Payment Guarantee coverage if at any time CCC determines that: . . . .” CCC would make a determination of duplicate registrations based on information that only CCC may have. For this reason, CCC is not asking the Exporter to make a certification to this effect.
In reviewing this section, however, CCC determined that this provision is better suited to paragraph (g) of this section. Paragraph (g) defines particular exports that are ineligible under an otherwise valid Payment Guarantee. A single export (shipment) under a Payment Guarantee may be ineligible for coverage under paragraph (g), whereas other exports (shipments) under the Start Printed Page 68594same guarantee may remain eligible for coverage. CCC believes that it is possible for a particular export (shipment) to be registered more than once, even if the entire value of the Payment Guarantee is not. Paragraph (f)(6) in the proposed rule has therefore been moved to paragraph (g)(4) in the final rule. CCC has also added clarification that if such duplicate guarantees (or applications for guarantees) are found to exist, CCC will determine which guarantee (or application) constitutes an Eligible Export Sale.
One commenter requested that CCC assure Exporters that if the requirements of § 1493.100(g)(3) or § 1493.90(b)(2) are not met, CCC will refund the guarantee fees paid by the Exporter. CCC will not make a “blanket” assurance that Exporters will receive a refund of guarantee fees if these requirements are not met. CCC will consider all requests for guarantee fee refunds on a case-by-case basis, granting them only if the Director determines in a particular case that a refund is in the best interest of CCC, consistent with § 1493.110(d).
The Agricultural Act of 2014 eliminated authority for the Dairy Export Incentive Program. Paragraph (a)(11) of this section was deleted and the final rule renumbered.
Similar to the addition in § 1493.70(a)(9), CCC added a requirement that the commodity description reported on the evidence of export report include the six-digit Harmonized System commodity classification code utilized by the Exporter. This addition will assist CCC with better tracking of commodities under the program.
CCC received one comment on paragraph (b)(1) of this section, requesting that CCC extend the timeframe for submitting evidence of export reports (EOEs) from 21 calendar days to the latter of 45 days from the final date to export or 30 days from the date of Letter of Credit issuance. The commenter noted that the issues applying to reserve coverage (discussed under § 1493.100) also apply to filing EOEs. As noted in the discussion of § 1493.100(e), CCC acknowledges that Exporters may need more than 21 calendar days from the Date of Export to compile documents and submit an EOE, and also that there is logic in having similar timeframes related to reserve coverage, EOE, and Letter of Credit issuance timeframes. Therefore, CCC increased the timeframe for submitting an EOE to 30 calendar days from the Date of Export.
Similar to the change in § 1493.70(a)(3), CCC modified the certification at § 1493.140(b) to reflect that the goods were “shipped directly to the country or region specified on the Payment Guarantee.” This change is explained in the discussion of § 1493.70 (Application for Payment Guarantee).
CCC received one comment on paragraph (c) of this section. The commenter expressed concern that an Exporter's sales contract may be jeopardized if the Importer is unable to find a different Foreign Financial Institution (FFI) to issue the letter of credit (following a default by the original FFI on the Payment Guarantee). The commenter noted that CCC should honor any Payment Guarantees already issued, as CCC performs a financial analysis of each FFI, and should not issue a Payment Guarantee if there is doubt as to the FFI's creditworthiness.
As stated in the preamble to the proposed rule, CCC recognizes that this provision creates some risk for the exporter who may have conditioned the export sale upon the guarantee. In response to comments on the first proposed rule, CCC modified this provision to allow continued coverage if the Letter of Credit has already been issued. However, CCC has a responsibility to protect against additional loss of taxpayer resources following the default of an FFI on another CCC-guaranteed transaction. CCC does perform a financial analysis of each FFI and will not issue a payment guarantee if there is doubt as to the FFI's creditworthiness, but the economic and financial situation of countries and financial institutions can change rapidly. CCC believes the need to protect taxpayer resources against a certain default is paramount in this case and made no changes in response to this comment.
CCC received one comment requesting that the requirement for a “negotiable” bill of lading as a claims document under paragraph (a)(3)(iii) of this section be eliminated, specifically to accommodate electronic bills of lading (copies of which are non-negotiable). CCC determined that it is not necessary to require a “negotiable” bill of lading under any GSM-102 transaction; therefore, the word “negotiable” was eliminated. CCC maintained the provision that the bill of lading must be signed. As noted in elsewhere in the rule, when e-BLs (or other electronic documents) are utilized in the transaction, the Letter of Credit must so stipulate and is subject to the current version of eUCP. Because the eUCP allows for electronic signatures, CCC will accept e-BLs with electronic signature as “signed” bills of lading. CCC added a sentence specifying that if an e-BL is utilized, a print-out of the e-BL from the electronic system with an electronic signature is acceptable.
CCC received one comment requesting the addition of a provision that the Payment Guarantee is binding in cases where payments received by the Assignee from the Foreign Financial Institution (FFI) are subsequently required to be returned due to a law, provision or decree in the FFI's country. Such a law or provision may particularly result from bankruptcy or insolvency proceedings. The commenter notes that although such “clawback” situations are rare, the absence of such a provision could undermine U.S. Financial Institutions' faith in the CCC guarantee.
The authorizing statute for the GSM-102 program (Section 202(a) of the Agricultural Trade Act of 1978, as amended (7 U.S.C. 5622(a)), provides that “the Commodity Credit Corporation may guarantee the repayment of credit made available to finance commercial export sales of agricultural commodities.” Under a “clawback” scenario, the FFI has already repaid the portion of the credit that an insolvency or bankruptcy proceeding subsequently seeks to recoup through law. It is CCC's view that the authorizing statute does not extend to indemnification for all losses arising as a result of bankruptcy or insolvency law or proceedings; therefore, this provision was not added to the final rule.
One commenter requested clarification on language in the proposed rule preamble related to paragraph (e) of this section. The preamble language stated that “If a prohibited transaction were registered under a payment guarantee, CCC would take action against the exporter, if warranted, but not against the assignee, provided the assignee had no knowledge that the transaction was prohibited.” The commenter asked if the Assignee must depend on CCC taking action against the Exporter in order to receive payment on a submitted claim.
Per 1493.180(e), CCC's determination that an Assignee is to be held harmless Start Printed Page 68595for any action, omission or statement by the Exporter is based on whether all required claim documents “appear on their face to confirm with the requirements” of § 1493.170 and whether the Assignee had any knowledge of the action, omission or statement by the Exporter. CCC's decision to take action against an Exporter is wholly separate from a decision to hold the Assignee harmless and pay a claim. CCC does not believe any clarification is needed to paragraph (e) of this section.
CCC modified paragraph (c) of this section to include Foreign Financial Institutions. All submissions by a Foreign Financial Institution must be signed by a Principal or authorized designee.
This rule has been reviewed in accordance with Executive Order 12988. This rule would not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. Before any judicial action may be brought concerning the provisions of this rule, the appeal provisions of 7 CFR part 1493.192 would need to be exhausted. This rule would not be retroactive.
This rule has been reviewed under Executive Order 13132, “Federalism.” The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various levels of government, nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.
The United States has a unique relationship with Indian Tribes as provided in the Constitution of the United States, treaties, and Federal statutes. On November 5, 2009, President Obama signed a Memorandum emphasizing his commitment to “regular and meaningful consultation and collaboration with tribal officials in policy decisions that have tribal implications including, as an initial step, through complete and consistent implementation of Executive Order 13175.” This rule has been reviewed for compliance with E.O. 13175 and CCC worked directly with the Office of Tribal Relations in the rule's development. The policies contained in this rule do not have tribal implications that preempt tribal law.
The Regulatory Flexibility Act does not apply to this rule because CCC is not required by 5 U.S.C. 553 or any other law to publish a notice of rulemaking with respect to the subject matter of this rule.
CCC has determined that this rule does not constitute a major State or Federal action that would significantly affect the human or natural environment. Consistent with the National Environmental Policy Act (NEPA), 40 CFR 1502.4, “Major Federal Actions Requiring the Preparation of Environmental Impact Statements” and the regulations of the Council on Environmental Quality, 40 CFR parts 1500-1508, no environmental assessment or environmental impact statement was prepared.
This rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandate Reform Act of 1995 (UMRA). Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.
The information collection and record keeping requirements contained in this regulation have been approved by OMB in accordance with the Paperwork Reduction Act of 1995 under OMB Control Number 0551-0004.
Purposes of programs.
Restrictions on programs and cargo preference statement.
Criteria for country and regional allocations.
Criteria for agricultural commodity allocations.
§ 1493.1
This subpart sets forth the restrictions that apply to the issuance and use of Payment Guarantees under the Commodity Credit Corporation (CCC) Export Credit Guarantee (GSM-102) Program and Facility Guarantee Program (FGP), the criteria considered by CCC in determining the annual allocations of Payment Guarantees to be made available with respect to each participating country and region, and the criteria considered by CCC in the review and approval of proposed allocation levels for specific U.S. Agricultural Commodities to these countries and regions.
§ 1493.2
CCC is authorized to issue Payment Guarantees:
(a) To increase exports of U.S. Agricultural Commodities and expand access to trade finance;
(b) To assist countries, particularly developing countries and emerging markets, in meeting their food and fiber needs;
(c) To establish or improve facilities and infrastructure in emerging markets Start Printed Page 68596to expand exports of U.S. Agricultural Commodities; or
(d) For such other purposes as the Secretary of Agriculture determines appropriate.
§ 1493.3
§ 1493.4
§ 1493.5
The criteria considered by CCC in determining U.S. Agricultural Commodity allocations within a specific country or regional allocation will include, but not be limited to, the following:
(a) Potential benefits that the extension of Payment Guarantees would provide for the development, expansion or maintenance of the market in the importing country for the particular U.S. Agricultural Commodity under consideration;
(b) The best use to be made of the Payment Guarantees in assisting the importing country in meeting its particular needs for food and fiber, as may be determined through consultations with private buyers and/or representatives of the government of the importing country; and
(c) Evaluation, in terms of program purposes, of the relative benefits of providing Payment Guarantee coverage for sales of the U.S. Agricultural Commodity under consideration compared to providing coverage for sales of other U.S. Agricultural Commodities.
Information required for Exporter participation.
1493.100
1493.110
1493.120
1493.130
1493.140
Certification requirements for the evidence of export.
1493.150
1493.180
1493.191
Additional obligations and requirements
1493.192
1493.195
§ 1493.10
(c) Country and regional program announcements. From time to time, CCC will issue a Program Announcement on the USDA Web site to announce a GSM-102 program for a specific country or region. The Program Announcement for a country or region will designate specific U.S. Agricultural Commodities or products thereof, or designate that all eligible U.S. Agricultural Commodities are available under the announcement. The Program Announcement will contain any Start Printed Page 68597requirements applicable to that country or region as determined by CCC.
§ 1493.20
CCC Late Interest. Interest payable by CCC pursuant to § 1493.180(c).
Exporter. A seller of U.S. Agricultural Commodities that is both qualified in accordance with the provisions of § 1493.30 and the applicant for the Payment Guarantee.
Firm Export Sales Contract. The written sales contract entered into between the Exporter and the Importer (or, if applicable, the written sales contracts between the Exporter and the Intervening Purchaser and the Intervening Purchaser and the Importer) which sets forth the terms and conditions of an Eligible Export Sale of the eligible U.S. Agricultural Commodity from the Exporter to the Importer (or, if applicable, the sale of the eligible U.S. Agricultural Commodity from the Exporter to the Intervening Purchaser and from the Intervening Purchaser to the Importer). Written evidence of a sale may be in the form of a signed sales contract, a written offer and acceptance between parties, or other documentary evidence of sale. The written evidence of sale for the purposes of the GSM-102 program must, at a minimum, document the following information: The eligible U.S. Agricultural Commodity, quantity, quality specifications, delivery terms (FOB, C&F, FCA, etc.) to the eligible country or region, delivery period, unit price, payment terms, Date of Sale, and evidence of agreement between Importer (and Intervening Purchaser, if applicable) and Exporter. The Firm Export Sales Contract between the Exporter and the Importer (or, if Start Printed Page 68598applicable, between the Exporter and the Intervening Purchaser and between the Intervening Purchaser and the Importer) may be conditioned upon CCC's approval of the Exporter's application for a Payment Guarantee.
Repayment Obligation. A contractual commitment by the Foreign Financial Institution issuing the Letter of Credit in connection with an Eligible Export Sale to make payment(s) on principal amount(s), plus any Ordinary Interest and Post Default Interest, in U.S. dollars, to an Exporter or U.S. Financial Institution on deferred payment terms consistent with those permitted under Start Printed Page 68599CCC's Payment Guarantee. The Repayment Obligation must be documented using one of the methods specified in § 1493.90.
Terms and Conditions Document. A document specifically identified and referred to in the Foreign Financial Institution Letter of Credit which may contain the Repayment Obligation and other special requirements specified in § 1493.90.
§ 1493.30
(7) A statement that: “All certifications set forth in 7 CFR 1493.60(a) are hereby made in this application” which, when included in the application, will constitute a certification that the applicant is in compliance with all of the requirements set forth in § 1493.60(a). The applicant will be required to provide further explanation or documentation if not in compliance with these requirements or if the application does not include this statement.
(c) Previous qualification. Any Exporter not submitting an application to CCC for a Payment Guarantee for two consecutive U.S. Government fiscal years must resubmit a qualification application containing the information specified in § 1493.30(a) to CCC to Start Printed Page 68600participate in the GSM-102 program. If at any time the information required by paragraph (a) of this section changes, the Exporter must promptly contact CCC to update this information and certify that the remainder of the information previously provided pursuant to paragraph (a) has not changed.
§ 1493.40
(9) A statement that: “All certifications set forth in 7 CFR 1493.60 are hereby made in this application” which, when included in the application, will constitute a certification that the applicant is in compliance with all of the requirements set forth in § 1493.60. The applicant will be required to provide further explanation or documentation if not in compliance with these requirements or if the application does not include this statement.
§ 1493.50
(6) A statement that: “All certifications set forth in 7 CFR 1493.60 are hereby made in this application” which, when included in the application, will constitute a certification that the applicant is in compliance with all of the requirements set forth in § 1493.60. The applicant will be required to provide further explanation or documentation if not in compliance with these requirements or if the application does not include this statement.
(d) Previous qualification and submission of annual financial statements. Each qualified Foreign Financial Institution shall submit annually to CCC the certifications in § 1493.60 and its audited fiscal year-end financial statements in accordance with the accounting standards established by the applicant's regulators, in English, so that CCC may determine the continued ability of the Foreign Financial Institution to adequately service CCC guaranteed debt. If the Foreign Financial Institution is not subject to a banking or other financial regulatory authority, it should submit year-end, audited financial statements in accordance with prevailing accounting standards, in English, for the applicant's most recent fiscal year. Failure to submit this Start Printed Page 68601information annually may cause CCC to decrease or cancel the Foreign Financial Institution's dollar participation limit. Any Foreign Financial Institution not participating in the GSM-102 program for two consecutive U.S. Government fiscal years may have its dollar participation limit cancelled. If this participation limit is cancelled, the Foreign Financial Institution must resubmit the information and certifications requested in paragraph (a) of this section to CCC when reapplying for participation. Additionally, if at any time the information required by paragraph (a) of this section changes, the Foreign Financial Institution must promptly contact CCC to update this information and certify that the remainder of the information previously provided under paragraph (a) has not changed.
§ 1493.60
(a) When making the statement required by §§ 1493.30(a)(7), 1493.40(a)(9), or 1493.50(a)(6), each Exporter, U.S. Financial Institution and Foreign Financial Institution applicant for program participation is certifying that, to the best of its knowledge and belief:
(2) The applicant and any of its principals (as defined in 2 CFR 180.995) or affiliates (as defined in 2 CFR 180.905) have not within a three-year period preceding this application been convicted of or had a civil judgment rendered against them for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, State, or local) transaction or contract under a public transaction; violation of Federal or State antitrust statues or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property;
(b) Additional certifications for U.S. and Foreign Financial Institution applicants. When making the statement required by § 1493.40(a)(9) or § 1493.50(a)(6), each U.S. and Foreign Financial Institution applicant for program participation is certifying that, to the best of its knowledge and belief:
§ 1493.70
(14) Guaranteed Value.Start Printed Page 68602
(15) Guarantee fee, either as announced on the Web site per § 1493.110(a)(1), or the competitive fee bid per § 1493.110(a)(2), depending on the type of fee charged by CCC for the country or region.
(18) The Exporter's statement, “All certifications set forth in 7 CFR 1493.80 are hereby being made by the Exporter in this application.” which, when included in the application by the Exporter, will constitute a certification that it is in compliance with all the requirements set forth in § 1493.80.
(b) An application for a Payment Guarantee may be approved as submitted, approved with modifications agreed to by the Exporter, or rejected by the Director. In the event that the application is approved, the Director will cause a Payment Guarantee to be issued in favor of the Exporter. Such Payment Guarantee will become effective at the time specified in § 1493.100(b). If, based upon a price review, the unit sales price of the commodity does not fall within the prevailing commercial market level ranges, as determined by CCC, the application will not be approved.
§ 1493.80
By providing the statement in § 1493.70(a)(18), the Exporter is certifying that the information provided in the application is true and correct and, further, that all requirements set forth in this section have been met. The Exporter will be required to provide further explanation or documentation with regard to applications that do not include this statement. If the Exporter makes false certifications with respect to a Payment Guarantee, CCC will have the right, in addition to any other rights provided under this subpart or otherwise as a matter of law, to revoke guarantee coverage for any commodities not yet exported and/or to commence legal action and/or administrative proceedings against the Exporter. The Exporter, in submitting an application for a Payment Guarantee and providing the statement set forth in § 1493.70(a)(18), certifies that:
(e) The Exporter is fully in compliance with the requirements of § 1493.130(b) for all existing Payment Guarantees issued to the Exporter or has requested and been granted an extension per § 1493.130(b)(3); and
(f) The information provided pursuant to § 1493.30 has not changed and the Exporter still meets all of the qualification requirements of § 1493.30.
§ 1493.90
(A) The Exporter, or a related company previously reported to CCC by the Exporter pursuant to § 1493.30(a)(5), is named as the shipper on the clean on board bill of lading. If the Exporter or a related company is named the shipper on the bill of lading, the Letter of Credit may stipulate a copy or photocopy of an original clean on board bill of lading; or
§ 1493.100
(b) Period of guarantee coverage. (1) The Holder of the Payment Guarantee may, with respect to a series of Start Printed Page 68603shipments made within a 30 calendar day period, elect to have the Payment Guarantee coverage being on the Weighted Average Export Date for such shipments. The first allowable 30 calendar day period for bundling of shipments to compute the Weighted Average Export Date for such shipments begins on the first Date of Export for transactions covered by the Payment Guarantee. Shipments within each subsequent 30 calendar day period may be bundled with other shipments made within the same 30 calendar period to determine the Weighted Average Export Date for such shipments.
(i) Amendments. A request for an amendment of a Payment Guarantee may be submitted only by the Exporter, with the written concurrence of the Assignee, if any. The Director will consider such a request only if the amendment sought is consistent with this subpart and any applicable Program Announcements and sufficient budget authority exists. Any amendment to the Payment Guarantee, particularly those that result in an increase in CCC's liability under the Payment Guarantee, may result in an increase in the guarantee fee. CCC reserves the right to request additional information from the Exporter to justify the request and to charge a fee for amendments. Such fees will be announced and available on the USDA Web site. Any request to amend the Foreign Financial Institution on the Payment Guarantee will require that the Holder of the Payment Guarantee resubmit to CCC the certifications in § 1493.120(c)(1)(i) or § 1493.140(d).
§ 1493.110
(a) Guarantee fee rates. Payment Guarantee fee rates charged may be one of the following two types:Start Printed Page 68604
§ 1493.120
(ii) To the best of my knowledge and belief, the information provided pursuant to § 1493.40 has not changed and [name of Assignee] still meets all of the qualification requirements of § 1493.40.”
(iii) The Holder of the Payment Guarantee must file all documentation required by §§ 1493.160 and 1493.170 in case of a default by the Foreign Financial Institution under the Payment Guarantee.
§ 1493.130
(2) Evidence of export report number (e.g., Report 1, Report 2) reflecting the report's chronological order of submission under the particular Payment Guarantee;Start Printed Page 68605
(11) The Exporter's statement, “All certifications set forth in 7 CFR 1493.140 are hereby being made by the Exporter in this Evidence of Export.” which, when included in the evidence of export by the Exporter, will constitute a certification that it is in compliance with all the requirements set forth in § 1493.140; and
(c) Failure to comply with time limits for submission. CCC will not accept any new applications for Payment Guarantees from an Exporter under § 1493.70 until the Exporter is fully in compliance with the requirements of paragraph (b) of this section for all existing Payment Guarantees issued to the Exporter or has requested and been granted an extension per paragraph (b)(3) of this section.
§ 1493.140
By providing the statement contained in § 1493.130(a)(11), the Exporter is certifying that the information provided in the evidence of export report is true and correct and, further, that all requirements set forth in this section have been met. The Exporter will be required to provide further explanation or documentation with regard to reports that do not include this statement. If the Exporter makes false certifications with respect to a Payment Guarantee, CCC will have the right, in addition to any other rights provided under this subpart or otherwise as a matter of law, to annul guarantee coverage for any commodities not yet exported and/or to commence legal action and/or administrative proceedings against the Exporter. The Exporter, in submitting the evidence of export and providing the statement set forth in § 1493.130(a)(11), certifies that:
(f) The information provided pursuant to §§ 1493.30 and 1493.70 has not changed (except as agreed to and amended by CCC) and the Exporter still meets all of the qualification requirements of § 1493.30.
§ 1493.150
§ 1493.160
(a) Notice of default. If the Foreign Financial Institution issuing the Letter Start Printed Page 68606of Credit fails to make payment pursuant to the terms of the Letter of Credit or the Terms and Conditions Document, the Holder of the Payment Guarantee must submit a notice of default to CCC as soon as possible, but not later than 5 Business Days after the date that payment was due from the Foreign Financial Institution (the due date). A notice of default must be submitted in writing to CCC in the manner specified on the USDA Web site and must include the following information:
§ 1493.170
(v) The evidence of export report(s) previously submitted by the Exporter to CCC in conformity with the requirements of § 1493.130(a); and
(vi) If the defaulted payment was part of a transaction executed under a Repurchase Agreement, written evidence that the repurchase occurred as required under § 1493.120(f)(1)(ii).
(c) Subsequent claims for defaults on installments. If the initial claim is found in good order, the Holder of the Payment Guarantee need only provide all of the required claims documents with the initial claim relating to a Start Printed Page 68607covered transaction. For subsequent claims relating to failure of the Foreign Financial Institution to make scheduled installments on the same export shipment, the Holder of the Payment Guarantee need only submit to CCC a notice of such failure containing the information stated in paragraph (a)(1)(i) and (ii) and (a)(1)(iii)(A) and (B) of this section; an instrument of subrogation as per paragraph (a)(2) of this section; and the date the original claim was filed with CCC.
§ 1493.180
(a) Determination of CCC's liability. Upon receipt in good order of the information and documents required under § 1493.170, CCC will determine whether or not a default has occurred for which CCC is liable under the applicable Payment Guarantee. Such determination shall include, but not be limited to, CCC's determination that all documentation conforms to the specific requirements contained in this subpart, and that all documents submitted for payment conform to the requirements of the Letter of Credit and, if applicable, the Terms and Conditions Document. If CCC determines that it is liable to the Holder of the Payment Guarantee, CCC will pay the Holder of the Payment Guarantee in accordance with paragraphs (b) and (c) of this section.
(d) Accelerated payments. CCC will pay claims only on amounts not paid as scheduled. CCC will not pay claims for amounts due under an accelerated payment clause in the Firm Export Sales Contract, the Foreign Financial Institution Letter of Credit, the Terms and Conditions Document (if applicable), or any obligation owed by the Foreign Financial Institution to the Holder of the Payment Guarantee that is related to the Letter of Credit issued in favor of the Exporter, unless it is determined to be in the best interests of CCC. Notwithstanding the foregoing, CCC at its option may declare up to the entire amount of the unpaid balance, plus accrued Ordinary Interest, in default, require the Holder of the Payment Guarantee to invoke the acceleration provision in the Foreign Financial Institution Letter of Credit or, if applicable, in the Terms and Conditions Document, require submission of all claims documents specified in § 1493.170, and make payment to the Holder of the Payment Guarantee in addition to such other claimed amount as may be due from CCC.
§ 1493.190
(2) If CCC recovers monies that should be applied to a Payment Guarantee for which a claim has been paid by CCC, CCC will pay the Holder of the Payment Guarantee its pro rata share, if any, provided that the required information necessary for determining pro rata distribution has been furnished. If a required payment is not made by CCC within 15 Business Days from the date of recovery or 15 business days from receiving the required information for determining pro rata distribution, whichever is later, CCC will pay interest calculated at a rate equal to 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 interest will accrue from such date to the date of payment by CCC. The interest will apply only to the Start Printed Page 68608portion of the recovery payable to the Holder of the Payment Guarantee.
(e) Cooperation in recoveries. Upon payment by CCC of a claim to the Holder of the Payment Guarantee, the Holder of the Payment Guarantee and the Exporter will cooperate with CCC to effect recoveries from the Foreign Financial Institution and/or the Importer. Cooperation may include, but is not limited to, submission of documents to the Foreign Financial Institution (or its representative) to establish a claim; participation in discussions with CCC regarding the appropriate course of action with respect to a default; actions related to accelerated payments as specified in § 1493.180(d); and other actions that do not increase the obligation of the Holder of the Payment Guarantee or the Exporter under the Payment Guarantee.
§ 1493.191
(d) Misstatements or noncompliance by Exporter may lead to rescission of Payment Guarantee. CCC may cancel a Payment Guarantee in the event that an Exporter makes a willful misstatement in the certifications in §§ 1493.80(b) and 1493.140(c) or if the Exporter fails to comply with the provisions of § 1493.150 or paragraph (a) of this section. However, notwithstanding the foregoing, CCC will not cancel its Payment Guarantee, if it determines, in its sole discretion, that an Assignee had no knowledge of the Exporter's misstatement or noncompliance at the time of assignment of the Payment Guarantee.
§ 1493.192
(2) The Exporter or the Assignee may seek reconsideration of a determination made by the Director by submitting a letter requesting reconsideration to the Director within 30 calendar days of the date of the determination. For the purposes of this section, the date of a determination will be the date of the letter or other means of notification to the Exporter or the Assignee of the determination. The Exporter or the Assignee may include with the letter requesting reconsideration any additional information that it wishes the Director to consider in reviewing its request. The Director will respond to the request for reconsideration within 30 calendar days of the date on which the request or the final documentary evidence submitted by the Exporter or the Assignee is received by the Director, whichever is later, unless the Director extends the time permitted for response. If the Exporter or the Assignee fails to request reconsideration of a determination by the Director, then the Start Printed Page 68609determination of the Director will be deemed final.
§ 1493.195
This document was received for publication by the Office of the Federal Register on November 12, 2014.
[FR Doc. 2014-27129 Filed 11-17-14; 8:45 am]