Source: https://regulations.vlex.com/vid/facility-guarantee-program-573768270
Timestamp: 2020-08-09 23:49:31
Document Index: 670400960

Matched Legal Cases: ['art 1493', 'art 1493', 'art 1502', 'arts 1500', 'art 1493', 'art 1493']

Facility Guarantee Program - June 15, 2015 - Regulations - VLEX 573768270
Federal Register, Volume 80 Issue 114 (Monday, June 15, 2015)
Federal Register Volume 80, Number 114 (Monday, June 15, 2015)
Pages 34080-34097
FR Doc No: 2015-14449
SUMMARY: This proposed rule would revise and amend the regulations at 7 CFR 1493 subpart C used to administer the Facility Guarantee Program (FGP). Changes in this proposed rule incorporate statutory changes from the Food, Conservation, and Energy Act of 2008 and modifications intended to reduce burden on participants and improve program efficiency and effectiveness. Certain revisions will ensure the FGP is operated in compliance with the Organisation for Economic Cooperation and Development (OECD) Arrangement on Officially Supported Export Credits. Additionally, this proposed rule incorporates significant changes made to the regulations for the Export Credit Guarantee Program (GSM-102), that are also applicable to the FGP.
DATES: Comments concerning this proposed rule must be received by August 14, 2015 to be assured consideration.
ssquf E-Mail: GSMregs@fas.usda.gov.
ssquf Fax: (202) 720-2495, Attention: ``FGP Proposed Rule Comments''.
Comments may be inspected at 1400 Independence Avenue SW., Washington, DC, between 8:00 a.m. and 4:30 p.m., Monday through Friday, except holidays. A copy of this proposed rule is available through the Foreign Agricultural Service (FAS) homepage at: http://www.fas.usda.gov/topics/export-financing.
The Commodity Credit Corporation's (CCC) Facility Guarantee Program (FGP) 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; through the issuance of ``Program Announcements'' and ``Notices to Participants'' that are consistent with this program regulation; and in compliance with the requirements of the Arrangement on Officially Supported Export Credits of the Organisation for Economic Cooperation and Development (OECD). Under the FGP, CCC provides payment guarantees to facilitate the financing of manufactured goods and U.S. services to improve or establish agriculture-related facilities in emerging markets. By supporting such facilities, the FGP is designed to enhance sales of U.S. Agricultural Commodities and products to emerging markets where the demand for such commodities and products may be limited due to inadequate storage, processing, handling, or distribution capabilities for such products.
The current FGP regulations became effective on August 8, 1997. The Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246) (2008 Act) modified the program by including a ``construction waiver'' that allows the Secretary of Agriculture to waive requirements related to the use of U.S. goods in the construction of a proposed facility if the Secretary determines that ``(A) goods from the United States are not available; or (B) the use of goods from the United States is not practicable.''
On August 6, 2009, CCC published an advance notice of proposed rulemaking (ANPR) in the Federal Register (74 FR 39240). This notice was intended to solicit comments on improvements and changes to be made in the implementation and operation of the FGP program, with the intent of improving the FGP's effectiveness and efficiency and lowering costs. CCC received comments to the ANPR from five entities. One of the key comments was that program requirements, particularly the application process, are too burdensome on participants and prohibit its use. Further, program fees were consistent with those charged by the U.S. Export-Import Bank for similar products but coverage was inferior.
On November 18, 2014, CCC published a final rule for the Export Credit Guarantee (GSM-102) Program, found at 7 CFR 1493 subpart B. The GSM-102 and FGP Programs are similarly structured and many of the same requirements apply. For this reason, CCC completed the rulemaking process for the GSM-102 program prior to issuing this proposed rule so that relevant GSM-102 program changes could be incorporated into the FGP. The affected provisions include (but are not limited to) information and certifications required for program participation, letter of credit requirements, terms and requirements of the payment guarantee, assignments, notice of default and claims for default, payments and recoveries, additional obligations and requirements, dispute resolution and appeals, and miscellaneous provisions. Explanations of the changes incorporated in both the GSM-102 and FGP regulations can be found in the following documents:
GSM-102 Proposed Rule (July 27, 2011): https://www.federalregister.gov/articles/2011/07/27/2011-18403/ccc-export-credit-guarantee-gsm-102-program.
GSM-102 Proposed Rule (December 27, 2013): https://www.federalregister.gov/articles/2013/12/27/2013-29439/ccc-export-credit-guarantee-gsm-102-program-and-facility-guarantee-program-fgp.
GSM-102 Final Rule (November 18, 2014): https://federalregister.gov/a/2014-27129.
Key changes in the proposed rule are discussed below by topic. The numbering system of this proposed rule
differs from that in the current regulation. For the purposes of this discussion, the numbering of the proposed rule will be used. Capitalized terms are defined terms that are found in Sec. 1493.210, Definition of Terms.
Changes in Response to the 2008 Act
The 2008 Act contains a ``construction waiver'' that allows the Secretary of Agriculture to waive requirements related to the use of U.S. goods in the construction of a proposed facility if the Secretary determines that ``(A) goods from the United States are not available; or (B) the use of goods from the United States is not practicable.''
To implement this provision, CCC proposes to permit a Seller to request a Coverage Waiver in the application for Payment Guarantee. As described in Sec. 1493.290(f)(1), the Seller may request a Coverage Waiver to allow for coverage of non-U.S. Goods or to waive the U.S. Content Test. The U.S. Content Test states that CCC will issue a Payment Guarantee only if the value of Eligible Non-U.S. Goods and Eligible Imported Components are less than 50 percent of the sum of the Net Contract Value plus the value of approved Local Costs. CCC included criteria in Sec. 1493.290(f)(2) that will be the basis for CCC to issue a Coverage Waiver. A Seller must rely on one or more of these criteria as the basis for justifying a Coverage Waiver. By allowing the Seller to request a waiver and obtain coverage of non-U.S. Goods and/or imported components, CCC intends to provide maximum flexibility in approving goods, services and projects that will meet the requirement to primarily promote the export of U.S. Agricultural Commodities.
Changes To Reduce Burden and Improve Program Effectiveness and Efficiency
Application for Payment Guarantee
CCC proposes to expand the current Payment Guarantee application process. This change is designed to reduce the burden on the Seller by allowing the Seller to supply information to CCC in stages and obtain conditional approval before moving to the next step of the application process. It also may expedite the application process by allowing CCC to focus its time on proposals meeting FGP criteria.
In Sec. 1493.260(a), CCC added an optional ``letter of interest.'' Prior to submitting an initial application for a Payment Guarantee, the Seller may choose to submit a letter of interest to CCC describing a proposed transaction. CCC will review information submitted and provide preliminary feedback on whether the proposed transaction may be eligible for FGP coverage. In doing so, CCC hopes to reduce the burden on participants by ruling out ineligible projects prior to the Seller providing in-depth information required in the Payment Guarantee application. A short letter of interest form will be available on the FAS Web site and must be accompanied by a non-refundable fee that will be deducted from the final guarantee fee if the application results in a payment guarantee.
The first required step in the application process is the submission of the initial application. Information submitted with the initial application will include the details of the proposed export, project or facility as specified in Sec. 1493.260(b), including a description of all goods and services for which coverage is sought and information about environmental impact. If applicable, the Seller will also request a Coverage Waiver. This stage of the application process will require an in-depth review and analysis by FAS to determine whether the proposal meets requirements for coverage. To avoid tying up the Seller's full guarantee fee during this time, CCC will not require the guarantee fee with the initial application. Instead, the Seller must submit a non-refundable initial application fee. If CCC determines to issue a Payment Guarantee for the transaction, this fee will be deducted from the final guarantee fee. Both the letter of intent and initial application fees are designed to ensure that the Seller is serious about the particular transaction and the associated Payment Guarantee before FAS expends resources on review and analysis.
CCC will review the information submitted in the initial application and determine whether to approve the application as is or with amendments, and also whether to grant any requested coverage waiver. If CCC approves the initial application, the Seller will have 30 calendar days in which to submit information in a final application (Sec. 1493.260(c)). The Seller needs CCC's feedback on the initial application to determine most of the elements in the final application. CCC will require the Seller to submit the full guarantee fee (less the letter of interest and initial application fees) with the final application.
Promoting the Export of U.S. Agricultural Commodities
The Food, Agriculture, Conservation, and Trade Act of 1990, as amended, allows for the provision of export credit guarantees for ``(A) the establishment or improvement of facilities, or (B) the provision of services or United States products goods, in emerging markets by United States persons to improve handling, marketing, processing, storage, or distribution of imported agricultural commodities and products thereof if the Secretary of Agriculture determines that such guarantees will primarily promote the export of United States agricultural commodities . . .'' (emphasis added). To meet this requirement, the current FGP regulation requires significant information and analysis to be included in the Seller's application, including projected prices, quantities, and country of origin of the agricultural commodities that will benefit from the goods, services or facility over a five-year period.
CCC determined that this requirement is too burdensome on Sellers whose expertise is more likely in constructing facilities or exporting equipment than in agricultural commodities. CCC modified the requirements of the Application for Payment Guarantee (Sec. 1493.260(b)(7)) to now require the Seller to provide only a list of agricultural commodities or products to be used by the proposed project and a description of how the goods and/or Services will specifically benefit exporters of U.S. Agricultural Commodities. As part of the application review process, FAS will perform an analysis to determine whether the proposed project will primarily benefit U.S. Agricultural Commodity exporters. FAS will reach out to other areas of USDA and to relevant commodity organizations, state/regional trade groups, and exporters, as needed, for assistance in collecting data and conducting this analysis.
Qualification of Program Participants
To reduce the burden on program participants, CCC proposes to ease or eliminate FGP qualification requirements on certain participants already qualified to participate in the GSM-102 Program. In accordance with Sec. 1493.220(c), Sellers who are qualified exporters under the GSM-102 program will only be required to submit additional information specific to the FGP in order to qualify as a Seller under the FGP. U.S. Financial Institutions qualified under the GSM-102 program are automatically qualified to participate in the FGP.
Due to the longer tenors and corresponding higher risk under the FGP, Foreign Financial Institutions will be required to apply separately for participation, even if already qualified under the GSM-
102 Program. As explained in Sec. 1493.240, CCC will establish specific dollar participation
limits for Foreign Financial Institutions qualifying for the FGP. These participation limits will be separate from any participation limits that may be established under the GSM-102 program.
Compliance With the OECD Arrangement on Officially Supported Export Credits
The United States is a participant in the OECD Arrangement on Officially Supported Export Credits (``the Arrangement''). The Arrangement seeks to foster a level playing field for official export credits and applies ``to all official support provided by or on behalf of a government for export of goods and/or services, including financial leases, which have a repayment term of two years or more.'' All FGP activity with a repayment term of two years or more, therefore, must comply with the provisions of the Arrangement. The Arrangement is updated periodically by OECD Participants. The most recent version can be found at http://www.oecd.org/tad/xcred/arrangement.htm.
Aspects of the FGP that are governed by the Arrangement include, but are not limited to, the following:
Environmental and Social Impact Screening
The OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence provides guidelines for addressing environmental and social issues related to exports of capital goods and/or services and the location for which they are destined. The primary purpose of these guidelines is to encourage OECD members to prevent and mitigate adverse environmental and social impacts of projects receiving official support. To support this goal, the OECD provides guidelines for screening applications for official support.
CCC will screen all FGP Payment Guarantee applications for any negative environmental and social impact. In accordance with Sec. 1493.260(b), Sellers must submit a completed environmental screening document with each initial application for a Payment Guarantee. The screening document will be available on the USDA Web site. CCC will review the screening document to determine whether the transaction is likely to have significant adverse environmental and/or social impacts. If CCC determines that a transaction has potential adverse impact, the transaction will be subject to an in-depth environmental and social review. CCC may reject an application based on the results of this review.
The Arrangement prescribes minimum fees to be charged based on country risk, obligor risk, tenor, percentage of cover, and other factors. Guarantee fees for the FGP will be available on the USDA Web site and will be consistent with rules of the Arrangement.
The Arrangement requires a minimum downpayment to be made by the Buyer prior to the start of the credit. The minimum amount of the required Initial Payment (as a percentage of the Net Contract Value) will be available on the USDA Web site. The current requirement under the Arrangement is 15 percent.
The Arrangement prescribes a limit on the maximum amount of official support for local costs. Local Costs are defined in Sec. 1493.210 as ``expenditures for goods in the Destination Country that are necessary for executing the Firm Sales Contract and that are within scope of the Firm Sales Contract.'' CCC will consider providing coverage for Local Costs within the limits of the Arrangement, but because Local Costs are non-U.S. Goods, the Seller must also request and receive from CCC a Coverage Waiver for these costs. The maximum amount of Local Costs permitted (as a percentage of the Net Contract Value) will be available on the USDA Web site. The current maximum under the Arrangement is 30 percent.
Maximum tenor (repayment term) under the Arrangement is determined by country of destination. Maximum tenors under FGP will be available on the USDA Web site and may be less than prescribed by the Arrangement as determined appropriate by CCC.
This proposed rule is issued in conformance with Executive Order 12866. It has been determined to be not significant for the purposes of Executive Order 12866 and was not reviewed by OMB. A cost-benefit assessment of this rule was not completed.
This proposed rule has been reviewed in accordance with Executive Order 12988. This proposed rule would not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this proposed rule. Before any judicial action may be brought concerning the provisions of this proposed rule, the appeal provisions of 7 CFR part 1493.200 would need to be exhausted. This rulemaking would not be retroactive.
This proposed rule has been reviewed under Executive Order 13132, ``Federalism.'' The policies contained in this proposed 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 proposed 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 proposed 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 proposed rule do not have tribal implications that preempt tribal law.
CCC has determined that this proposed 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 part 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 will be prepared.
This proposed rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA). Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.
In accordance with the Paperwork Reduction Act of 1995, CCC is requesting comments from all interested individuals and organizations on a proposed revision to the currently approved information collection for this program. This revision includes the proposed change in information collection activities related to the regulatory changes in this proposed rule.
OMB Control Number: 0551-0032.
Abstract: This information collection is required to support the existing regulations and proposed changes to 7 CFR part 1493, subpart C, ``CCC Facility Guarantee Program (FGP) Operations,'' which establishes the requirements for participation in CCC's FGP program. This revised collection incorporates changes in estimated burden to program participants as a result of certain revised requirements in this proposed rule for (1) seller and U.S. and foreign financial institution qualification; (2) applications for payment guarantees; (3) notices of assignment; (4) evidence of performance reports; and (5) appeals. This information collection is necessary for CCC to manage, plan and evaluate the program and to ensure the proper and judicious use of government resources.
Estimate of Burden: The public reporting burden for this collection of information is estimated to average 0.819 hours per response.
Respondents: U.S. exporters (sellers), U.S. financial institutions, and foreign financial institutions.
Estimated Number of Respondents: 18 per year.
Estimated Number of Responses per Respondent: 13.4 per year.
Estimated Total Annual Burden on Respondents: 197.4 hours.
Comments on this information collection may be submitted to CCC in accordance with the instructions for submitting comments to this proposed rule. All comments received in response to this notice will be a matter of public record.
For the reasons stated in the preamble, CCC proposes to amend 7 CFR part 1493 as follows:
Authority: 7 U.S.C. 5602, 5622, 5661-5664, 5676; 15 U.S.C. 714b(d), 714c(f).
(a) Overview. The FGP of the Commodity Credit Corporation (CCC) was developed to expand U.S. Agricultural Commodity exports by making available Payment Guarantees to encourage U.S. private sector financing to establish or improve facilities or provide Services or goods in emerging markets to improve handling, marketing, processing, storage, or distribution of imported agricultural commodities and products. Such guarantees will primarily promote the export of U.S. Agricultural Commodities. CCC will give priority to projects that encourage privatization of the agricultural sector or that benefit private farms and cooperatives in emerging markets, and for which nongovernmental persons agree to assume a relatively larger share of costs. The Payment Guarantee issued under FGP is an agreement by CCC to pay the Seller, or the U.S. Financial Institution that may take assignment of the Payment Guarantee, specified amounts of principal and interest in case of default by the Foreign Financial Institution that issued the Letter of Credit for the sale covered by the Payment Guarantee. The program is targeted toward those countries that have sufficient financial strength so that foreign exchange will be available for scheduled payments. In providing this program, CCC seeks to expand and/or maintain market opportunities for U.S. agricultural exporters and assist long-term market development for U.S. Agricultural Commodities.
(b) Program administration. The FGP is administered under the direction of the General Sales Manager and Vice President, CCC, pursuant to this subpart, subpart A of this part, any Program Announcements issued by CCC, and, as applicable, the Organisation for Economic Cooperation and Development's (OECD) Arrangement on Officially Supported Export Credits. From time to time, CCC may issue a notice to participants on the USDA Web site to remind participants of the requirements of the FGP or to clarify the program requirements contained in these regulations in a
manner not inconsistent with this subpart and subpart A of this part. Program information, such as approved U.S. and Foreign Financial Institutions, is available on the USDA Web site.
(c) Country and regional program announcements. From time to time, CCC will issue a Program Announcement on the USDA Web site to announce the FGP for a specific country or region. The Program Announcement will contain any requirements applicable to that country or region as determined by CCC.
Sec. 1493.21 Definition of terms.
Buyer's Representative. An entity having a physical office and that is either organized under the laws of or registered to do business in the Destination Country or region specified in the Payment Guarantee and that is authorized to act on the Buyer's behalf with respect to the sale described in the Firm Sales Contract.
Destination Country. The location (country) of the agricultural-
related facility that will use the goods and/or Services covered by the Payment Guarantee. If the Payment Guarantee covers goods not intended for a specific facility, then the country where the goods will be delivered and utilized.
(1) The project meets the U.S. Content Test in Sec. 1493.290(e); or
(2) A complete description of all goods associated with the project. For goods to be covered by the Payment Guarantee, include the brand name and model number, country where the good was manufactured and country from which the good will be exported (if applicable), quantity, value, and Incoterms (if applicable);
(3) A complete description of all Services associated with the project. For Services to be covered by the Payment
Guarantee, include the supplier and cost;
(5) The date and evidence of agreement between Buyer and Seller.
Foreign Financial Institution Letter of Credit or Letter of Credit. An irrevocable documentary letter of credit, subject to the current revision of the Uniform Customs and Practices (UCP) for Documentary Credits (International Chamber of Commerce Publication No. 600, or latest revision), and if electronic documents are to be utilized, the current revision of the Supplement to the Uniform Customs and Practice for Documentary Credits for Electronic Presentation (eUCP) providing for payment in U.S. dollars against stipulated documents and issued in favor of the Seller by a CCC-approved Foreign Financial Institution.
Guaranteed Value. The maximum amount indicated on the face of the Payment Guarantee, exclusive of interest, that CCC agrees to pay the Holder of the Payment Guarantee. The Guaranteed Value is calculated by deducting the Initial Payment and any Discounts and Allowances from the Net Contract Value and adding to that result the value of Local Costs that CCC has approved for coverage. The resulting figure is then multiplied by the guaranteed percentage (up to the maximum percentage allowable in the applicable country or regional Program Announcement).
Initial Payment. The amount that the Buyer is required to pay the Seller prior to CCC's approval of the Payment Guarantee, expressed as a percentage (specified on the USDA Web site) of the Net Contract Value.
Local Costs. Expenditures for goods in the Destination Country that are necessary for executing the Firm Sales Contract and that are within scope of the Firm Sales Contract.
Program Announcement. An announcement issued by CCC on the USDA Web site that provides information on specific country and regional programs and may identify eligible projects and countries, length of credit periods which may be covered, and other information.
U.S. Content Test. A determination of the value of total Eligible Non-U.S. Goods and Eligible Imported Components as a percentage of the total Value of Goods and Cost of Services to be covered under the Payment Guarantee, as specified in Sec. 1493.290(e).
Value of Goods or Components in Goods. The price derived for goods or components in goods, determined by:
Sellers must apply and be approved by CCC to be eligible to participate in the FGP.
(a) Qualification requirements. To qualify for participation in the FGP, an applicant must submit the following information to CCC in the manner specified on the USDA Web site:
(c) Previous qualification. Any Seller that is currently qualified under subpart B of this part, Sec. 1493.30 need only provide the information requested in Sec. 1493.220(a)(4). Once CCC receives that information, CCC will notify the Seller that the Seller is qualified under this section to submit applications for a FGP Payment Guarantee, and the other information provided by the Seller pursuant to Sec. 1493.30 will be deemed to also have been provided under this section. Any Seller not submitting an application for a GSM-102 or FGP Payment Guarantee for two consecutive U.S. Government fiscal years must resubmit a qualification application containing the information specified in Sec. 1493.220(a) to CCC to participate in the FGP. If at any time the information required by paragraph (a) of this section changes, the Seller must promptly contact CCC to update this information and certify that the remainder of the
information previously provided under paragraph (a) of this section has not changed.
U.S. Financial Institutions must apply and be approved by CCC to be eligible to participate in the FGP.
(a) Qualification requirements. To qualify for participation in the FGP, a U.S. Financial Institution must submit the following information to CCC in the manner specified on the USDA Web site:
(c) Previous qualification. Any U.S. Financial Institution that is qualified under subpart B, Sec. 1493.40 is qualified under this section, and the information provided by the U.S. Financial Institution pursuant to Sec. 1493.40 will be deemed to also have been provided under this section. Any U.S. Financial Institution not participating in the GSM-102 or FGP programs for two consecutive U.S. Government fiscal years must resubmit the information and certifications specified in paragraph (a) of this section to CCC to participate in the FGP. If at any time the information required by paragraph (a) of this section changes, the U.S. Financial Institution must promptly notify CCC to update this information and certify that the remainder of the information previously provided under paragraph (a) of this section has not changed.
Foreign Financial Institutions must apply and be approved by CCC to be eligible to participate in the FGP.
(a) Qualification requirements. To qualify for participation in the FGP, a Foreign Financial Institution must submit the following information to CCC in the manner specified on the USDA Web site:
(c) Participation limit. If, after review of the information submitted and other publicly available information, CCC determines that the Foreign Financial Institution is eligible for participation in the FGP, CCC will establish an FGP dollar participation limit for the institution. This limit will be the maximum amount of FGP exposure CCC agrees to undertake with respect to this Foreign Financial Institution at any point in time. CCC may change or cancel this dollar participation limit at any time based on any information submitted or any publicly available information.
(d) Previous qualification and submission of annual financial statements. Each qualified Foreign Financial Institution shall submit annually to CCC the certifications in Sec. 1493.250 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 must 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
information annually may cause CCC to decrease or cancel the Foreign Financial Institution's dollar participation limit. Any Foreign Financial Institution not participating in the FGP 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) of this section has not changed.
(a) Letter of interest. Prior to submitting an initial application for a Payment Guarantee in accordance with paragraph (b) of this section, the Seller may, solely at the Seller's option, submit a letter of interest to CCC describing a transaction for which FGP coverage may be sought. The letter of interest must contain all of the information specified on the USDA Web site. A letter of interest fee, which will be specified on the USDA Web site, must accompany the letter of interest. CCC will review the letter of interest and provide preliminary feedback to the Seller on whether the transaction may be eligible for coverage under the FGP. However, CCC's determination whether to issue a Payment Guarantee will be based on the Seller's applications submitted pursuant to paragraphs (b) and (d) of this section.
(b) Initial application for Payment Guarantee. A Firm Sales Contract must exist before a Seller may submit an initial application for a Payment Guarantee. An initial application for a Payment Guarantee must be submitted in writing to CCC in the manner specified on the USDA Web site, and be accompanied by the application fee in accordance with Sec. 1493.300(b). Each initial application for a Payment Guarantee must also include a completed environmental screening document, which can be found on the USDA Web site. An initial application must identify the name and address of the Seller and include the following information:
(2) The name and address of the Buyer. If the Buyer is not physically located in the Destination Country or region, it must have a Buyer's Representative in the Destination Country or region taking receipt of the goods and Services covered by the Payment Guarantee. If applicable, provide the name and address of the Buyer's Representative.
(6) A description (including location, i.e., address, city, port, and/or GPS coordinates, if available) of the agriculture-related facility that will use the goods and/or Services to be covered by the Payment Guarantee and an explanation of how the goods and/or Services will be used to improve handling, marketing, processing, storage, or distribution of U.S. Agricultural Commodities. If the Payment Guarantee covers goods not
intended for a specific facility, describe where the goods will be delivered in the Destination Country.
(7) List of all agricultural commodities or products (inputs) to be handled, marketed, processed, stored, or distributed by the proposed project after completion, and an explanation of why and how the facility or goods and/or Services will specifically benefit exporters of U.S. Agricultural Commodities.
(v) For U.S. goods, the Value of imported Components used in the U.S. good's manufacture;
(11) A description and Date of Performance of each Contractual Event, as specified in the Firm Sales Contract.
(16) A statement of how this project may encourage privatization of the agricultural sector, or benefit private farms or cooperatives, in the Destination Country. Include in the statement the share of any private sector ownership of the project.
(17) An estimate of how many U.S. Persons will be or have been hired because of the Firm Sales Contract and/or how many U.S Persons are required to fulfill the Firm Sales Contract.
(c) Review of initial application.
(1) An initial application may receive conditional approval from CCC as submitted, be conditionally approved with modifications agreed to by the Seller, or be rejected by CCC. CCC's review will include, but not be limited to, the following criteria:
(ii) If, based upon a price review, the unit sales price of any good(s) and/or Service(s) does not fall within the prevailing commercial market level ranges, as determined by CCC, the initial application will not be approved as submitted.
(iii) All initial applications submitted will be screened to determine their potential environmental and social impacts. Any application determined to have potentially significant adverse environmental and/or social impacts will be subject to an environmental and social review consistent with the provisions of the OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence. CCC may reject an initial application for Payment Guarantee based on the results of this environmental and social review.
(d) Final application for Payment Guarantee. CCC must receive the Seller's final application for a Payment Guarantee within 30 calendar days of CCC's approval of the initial application, unless a longer timeframe is agreed to by CCC in writing. The final application for Payment Guarantee must be submitted in writing to CCC in the manner specified on the USDA Web site, and be accompanied by the full guarantee fee (less the letter of interest fee, if applicable, and the initial application fee). The final application must identify the name and address of the Seller and include the following information:
(4) A description of each good and U.S. Service, along with the Value of the Good and Cost of the Service, for which guarantee coverage is requested, based on CCC's feedback on the Seller's initial application. If CCC approved a coverage waiver to provide guarantee coverage of only the U.S. components used in the assembly of U.S. Goods, provide the Value of the U.S. Components.
(6) Amount of the Initial Payment and evidence that the Initial Payment has been made by the Buyer to the Seller.
(8) Guaranteed Value.
(9) Guarantee fee.
(10) The Seller's statement, ``All certifications set forth in Sec. 1493.270 are hereby being made by the Seller in this application'' which, when included in the application by the Seller, will constitute a certification that it is in compliance with all the requirements set forth in Sec. 1493.270 with respect to both the initial and final applications.
(e) A final application for a Payment Guarantee may be approved as submitted, approved with modifications agreed to by the Seller, or rejected by CCC. CCC shall have the right to request the Seller to furnish any other information and documentation it deems pertinent to the evaluation of the Seller's application. In the event that the final application is approved, the Director will cause a Payment Guarantee
to be issued in favor of the Seller. Such Payment Guarantee will become effective at the time specified in Sec. 1493.290(b).
By providing the statement in Sec. 1493.260(d)(10), the Seller is certifying that the information provided in the initial and final applications is true and correct and, further, that all requirements set forth in this section have been met. The Seller will be required to provide further explanation or documentation with regard to final applications that do not include this statement. If the Seller 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 goods not yet exported and Services not yet performed and/or to commence legal action and/or administrative proceedings against the Seller. The Seller, in submitting an application for a Payment Guarantee and providing the statement set forth in Sec. 1493.260(d)(10), certifies that:
(B) The Letter of Credit stipulates presentation of electronic documents per paragraph (a)(ii) of this section.
(e) U.S. Content Test. Except as allowed under Sec. 1493.290(f), CCC will issue a Payment Guarantee only if the following items collectively represent less than 50 percent of the sum of the Net Contract Value and the value of approved Local Costs:
(1) The value of Eligible Non-U.S. Goods; and
(2) The value of Eligible Imported Components.
(f) Coverage Waiver.
(1) The Seller may request a Coverage Waiver for any of the following:
(i) To allow for guarantee coverage of non-U.S. Goods;
(ii) The U.S. Content Test, electing for guarantee coverage of only the U.S. components used in the assembly of U.S. Goods; and/or
(iii) The U.S. Content Test, allowing for guarantee coverage of non-U.S. Goods and imported components in U.S. Goods in excess of the value permitted under the U.S. Content Test.
(2) To request a Coverage Waiver on any of the bases specified in paragraph (1) of this sub-section, the Seller must submit with the initial application for a Payment Guarantee a justification of why the non-U.S. Goods and/or imported components in U.S. Goods are essential to the completion of the FGP project. This justification must be based on one of the following:
(1) Contractual Events with a Date of Performance prior to the date of receipt by CCC of the Seller's written application for a Payment Guarantee;
(k) Amendments to the Payment Guarantee. A request for an amendment of a Payment Guarantee may be submitted only by the Seller, with the written concurrence of the Assignee, if any, and must be accompanied by the revised Firm Sales Contract, if applicable. 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 Seller 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 certification in Sec. 1493.310(c)(1)(i) or Sec. 1493.330(e).
(e) Payment of guarantee fee. The Seller shall remit, with his final application, the full amount of the guarantee fee, less the letter of interest fee, if applicable, and the initial application fee. CCC will not issue a Payment Guarantee until the full amount of the guarantee fee has been received by CCC. The Seller's wire transfer or check for the guarantee fee shall be made payable to CCC and be submitted in the manner specified on the USDA Web site.
(1) The U.S. Financial Institution must include the following certifications on the notice of assignment: ``I certify, that:
(i) Name of Assignee has verified that the Foreign Financial Institution, at the time of submission of the notice of
assignment, does not appear as an excluded party on the SAM list; and
(f) Repurchase agreements.
(1) The Holder of the Payment Guarantee may enter into a Repurchase Agreement, to which the following requirements apply:
(iii) The following written certification: ``Name of Holder of the Payment Guarantee has entered into a Repurchase Agreement that meets the provisions of 7 CFR Sec. 1493.310(f)(1) and, prior to entering into this agreement, verified that name of other party to the Repurchase Agreement does not appear as an excluded party on the SAM list.''
(6) Value of the Contractual Event covered by the Payment Guarantee;
(7) Description and value of Discounts and Allowances, if any;
(8) The Seller's statement, ``All certifications set forth in Sec. 1493.330 are hereby made by the Seller in this evidence of performance'' which, when included in the evidence of performance by the Seller, will constitute a certification that it is in compliance with all the requirements set forth in Sec. 1493.330; and
(9) In addition to all of the above information, the final evidence of performance report for the Payment Guarantee must include the following:
(b) Time limit for submission of evidence of performance.
(1) The Seller must provide a written report to CCC in the manner specified on the USDA Web site within 30 calendar days from the Date of Performance.
By providing the statement contained in Sec. 1493.320(a)(8), the Seller is certifying that the information provided in the evidence of performance report is
true and correct and, further, that all requirements set forth in this section have been met. The Seller will be required to provide further explanation or documentation with regard to reports that do not include this statement. If the Seller 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 Contractual Events that have not yet occurred and/or to commence legal action and/or administrative proceedings against the Seller. The Seller, in submitting the evidence of performance and providing the statement set forth in Sec. 1493.230(a)(8), certifies that:
(a) Diversion. The diversion of goods covered by an FGP Payment Guarantee to a country other than that shown on the Payment Guarantee is prohibited, unless expressly authorized in writing by the Director.
(b) Records of proof of entry.
(1) Sellers must obtain and maintain records of an official or customary commercial nature that demonstrate the arrival of the goods sold in connection with the FGP in the Destination Country. At the Director's request, the Seller must submit to CCC records demonstrating proof of entry. Records demonstrating proof of entry must be in English or be accompanied by a certified or other translation acceptable to CCC. Records acceptable to meet this requirement include an original certification of entry signed by a duly authorized customs or port official of the Destination Country, by an agent or representative of the vessel or shipline that delivered the goods to the Destination Country, or by a private surveyor in the Destination Country, or other documentation deemed acceptable by the Director showing:
(a) Filing a claim. A claim by the Holder of the Payment Guarantee for a defaulted payment will not be paid if it is made later than 180 calendar days from the due date of the defaulted payment. A claim must be submitted in writing to CCC in the manner specified on the USDA Web site. The claim must
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include the following documents and information:
(d) Accelerated payments. CCC will pay claims only on amounts not paid as
scheduled. CCC will not pay claims for amounts due as a result of the claimant invoking an accelerated payment clause in the Firm 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 Seller, 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 Sec. 1493.360, and make payment to the Holder of the Payment Guarantee in addition to such other claimed amount as may be due from CCC.
(e) Action against the Assignee. If an Assignee submits a claim for default pursuant to Section Sec. 1493.360 and all documents submitted appear on their face to conform with the requirements of such section, CCC will not hold the Assignee responsible or take any action or raise any defense against the Assignee for any action, omission, or statement by the Seller of which the Assignee has no knowledge.
(b) Receipt of monies.
(1) In the event that monies related to the obligation in default are recovered by the Seller or the Assignee from or on behalf of the defaulting party, the Buyer, or any source whatsoever (excluding payments between CCC, the Seller and the Assignee), such monies shall be immediately paid to CCC. Any monies derived from insurance or through the liquidation of any security or collateral after the claim is filed with CCC shall be deemed recoveries that must be paid by the Seller and/or Assignee to CCC. If such monies are not received by CCC within 15 Business Days from the date of recovery by the Seller or the Assignee, such party will also owe to CCC interest from the date of recovery of such funds to the date of CCC's receipt of such funds. This interest will be 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 will accrue from such date to the date of payment by the Seller or the Assignee to CCC. Such interest will be charged only on CCC's share of the recovery. If there has been no 91-day auction within 90 calendar days of the date interest begins to accrue, CCC will apply an alternative rate in a manner to be described on the USDA Web site.
(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 Seller will cooperate with CCC to effect recoveries from the Foreign Financial Institution and/or the Buyer. 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 Sec. 1493.370(d); and other actions that do not increase the obligation of the Holder of the Payment Guarantee or the Seller under the Payment Guarantee.
(a) Maintenance of records and access to premises, and responding to CCC inquiries. For a period of five years after the date of expiration of the coverage of a Payment Guarantee, the Seller and the Assignee, if applicable, must maintain and make available all records and respond completely to all inquiries pertaining to sales and deliveries of and extension of credit for goods and Services sold in connection with a Payment Guarantee, including those records generated and maintained by agents and related companies involved in special arrangements with the Seller. The Secretary of Agriculture and the Comptroller General of the United States, through their authorized representatives, must be given full and complete access to the premises of the Seller and the Assignee, as applicable, during regular business hours from the effective date of the Payment Guarantee until the expiration of such five-year period to inspect, examine, audit, and make copies of the Seller's, Assignee's, agent's, or related company's books, records and accounts concerning transactions relating to the Payment Guarantee, including, but not limited to, financial records and accounts pertaining to sales, inventory, processing, and administrative and incidental costs, both normal and unforeseen. During such period, the Seller and the Assignee may be required
to make available to the Secretary of Agriculture or the Comptroller General of the United States, through their authorized representatives, records that pertain to transactions conducted outside the program, if, in the opinion of the Director, such records would pertain directly to the review of transactions undertaken by the Seller in connection with the Payment Guarantee.
(c) Submission of documents by Principals. All required submissions, including certifications, applications, reports, or requests (i.e., requests for amendments), by Sellers, Assignees, or Foreign Financial Institutions under this subpart must be signed by a Principal of the Seller, Assignee, or Foreign Financial Institution or their authorized designee(s). In cases where the designee is acting on behalf of the Principal, the signature must be accompanied by wording indicating the delegation of authority or, in the alternative, by a certified copy of the delegation of authority, and the name and title of the authorized person or officer. Further, the Seller, Assignee, or Financial Institution must ensure that all information and reports required under these regulations are timely submitted.
(d) Misstatements or noncompliance by Seller may lead to rescission of Payment Guarantee. CCC may cancel a Payment Guarantee in the event that a Seller makes a willful misstatement in the certifications in Sec. Sec. 1493.270(a) and 1493.330(d) or if the Seller fails to comply with the provisions of Sec. 1493.340 or Sec. 1493.385(a). 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 Seller's misstatement or noncompliance at the time of assignment of the Payment Guarantee.
(3) If the Seller or the Assignee requests reconsideration of a determination by the Director pursuant to subparagraph (a)(2) of this section, and the Director upholds the original determination, then the Seller or the Assignee may appeal the Director's final determination to the GSM in accordance with the procedures set forth in paragraph (b) of this section. If the Seller or the Assignee fails to appeal the Director's final determination within 30 calendar days, as provided in section Sec. 1493.390(b)(1), then the Director's decision becomes the final determination of CCC.
(a) Officials not to benefit. No member of or delegate to Congress, or Resident Commissioner, shall be admitted to any share or part of the Payment Guarantee
or to any benefit that may arise therefrom, but this provision shall not be construed to extend to the Payment Guarantee if made with a corporation for its general benefit.
FR Doc. 2015-14449 Filed 6-12-15; 8:45 am