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Proposed Rule

Quality Samples Program

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Commodity Credit Corporation, USDA.


Proposed rule.


This proposed rule would establish regulations applicable to the Quality Samples Program (QSP). The proposed regulations set forth details concerning program administration, including participant eligibility, application requirements, review and allocation process, reimbursement rules and procedures, and program controls.


Comments concerning this rule should be received on or before October 2, 2006 to be assured consideration.


Comments must be submitted to Director, Marketing Operations Staff, Foreign Agricultural Service, U.S. Department of Agriculture, Stop 1042, 1400 Independence Ave., SW., Washington, DC 20250-1042; by phone at (202) 720-4327; by fax at (202) 720-9361; or by e-mail at

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Marketing Operations Staff by phone at (202) 720-4327; by fax at (202) 720-9361; or by e-mail at

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Executive Order 12866

This rule is issued in conformance with Executive Order 12866. It has been determined non-significant for the purposes of Executive Order 12866.

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not applicable to this rule because the Commodity Credit Corporation is not required by any provision of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule.

Executive Order 12988

This proposed rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. The rule would have preemptive effect with respect to any State or local laws, regulations or policies which conflict with such provisions or which otherwise impede their full implementation; would not have retroactive effect, and does not require administrative proceedings before suit may be filed.

Executive Order 12372

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local offices (See the notice related to 7 CFR part 3014, subpart V, published at 48 FR 29115).

The Unfunded Mandates Reform Act of 1995

This rule contains no Federal mandates under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) for State, local and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 204 of the UMRA.

Executive Order 13132

It has been determined that this rule does not have sufficient Federalism implications to warrant the preparation of a Federalism impact statement. The provisions contained in this rule will not have a substantial direct effect on States or their political subdivisions, or on the distribution of power and responsibilities among the various levels of government.Start Printed Page 43993

Paperwork Reduction Act of 1995

In accordance with section 3507(j) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Commodity Credit Corporation (CCC) requests approval of a new information collection in support of the Quality Samples Program.

Title: Quality Samples Program.

OMB Control Number: Not yet assigned.

Type of Request: Approval of an information collection.

Abstract: This information is needed to administer CCC's Quality Sample Program. The information will be gathered from applicants desiring to receive grants under the program to determine the viability of requests for funds.

Estimate of Burden: Public reporting burden for this collection of information is estimated to average 32 hours per year per respondent.

Respondents: U.S. government agencies, State government agencies, non-profit trade associations, agricultural cooperatives, and private companies.

Estimated Number of Respondents: 30.

Estimated Number of Responses per Respondent: 5.

Estimated Total Annual Burden on Respondents: 960 hours.

Proposed topics for comments are: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; or (d) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical or other technological collection techniques or other forms of information technology. Comments should be sent to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503 and to: Director, Marketing Operations Staff, Foreign Agricultural Service, Stop 1042, U.S. Department of Agriculture, 1400 Independence Ave., SW., Washington, DC 20250-1042.

Copies of this information collection may be obtained from Tamoria Thompson, FAS' Information Collection Coordinator, at (202) 690-1690.

Government Paperwork Elimination Act

The Foreign Agricultural Service is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies, in general, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. Accordingly, applications for participation in the Quality Samples Program may be submitted online. Payment transactions will be handled both electronically and in paper form.


Section 5(f) of the CCC Charter Act, 15 U.S.C. 714c(f) authorizes CCC to aid in the development and expansion of export markets for U.S. agricultural commodities. The QSP is intended to accomplish this market development by assisting U.S. entities provide commodity samples to potential foreign importers to promote better understanding and appreciation for the high quality of U.S. agricultural products. The QSP is administered by personnel of the Foreign Agricultural Service.

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List of Subjects in 7 CFR Part 1483

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Accordingly, CCC proposes to amend Title 7 of the Code of Federal Regulations by adding a new part 1483 to read as follows:

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What is the Quality Samples Program?
What special definitions apply to the QSP?
Who can apply to the QSP?
What type of activity is appropriate for the QSP?
What may be reimbursed under the QSP?
What is the process for submitting proposals?
How are proposals evaluated?
How are agreements formalized?
How are payments made?
What are the reporting requirements?
How is program compliance monitored?
Miscellaneous provisions
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Authority: Section 5(f) of CCC Charter Act, 15 U.S.C. 714(c)(f).

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What is the Quality Samples Program?

The Quality Samples Program (QSP) is designed to encourage the development and expansion of export markets for U.S. agricultural commodities by assisting U.S. entities in providing commodity samples to potential foreign importers to promote a better understanding and appreciation for the high quality of U.S. agricultural commodities. The QSP is administered by personnel of the Foreign Agricultural Service (FAS). Under the QSP, a participant would provide information to target audiences regarding the attributes, characteristics, and proper use of U.S agricultural commodities.

What special definitions apply to the QSP?

For purposes of this part, the following definitions apply:

Activity—A project undertaken to provide an appropriate sample of a U.S. agricultural commodity and appropriate technical assistance to a foreign importer, or a group of foreign importers, in a given market.

Affiliate—Any partnership, association, company, corporation, trust, or any other such party in which the participant or its membership has an investment, other than in a mutual fund.

CCC—Commodity Credit Corporation.

Eligible Organization—Any United States private or government entity with a demonstrated role or interest in exporting U.S. agricultural commodities.

FAS—Foreign Agricultural Service, United States Department of Agriculture.

QSP—Quality Samples Program.

Sample—A U.S. agricultural commodity provided to a foreign importer, or group of foreign importers in quantities less than a typical commercial sale and limited to the amount sufficient to achieve the goals of an activity approved by CCC.

UES—Unified Export Strategy.

Who can apply to the QSP?

Any United States private or government entity with an interest in exporting U.S. agricultural commodities may apply to the program. Government organizations include Federal, State, and local agencies. Private organizations include non-profit trade associations, universities, agricultural cooperatives, state regional trade groups, and profit-making entities.

What type of activity is appropriate for the QSP?

(a) In order to be approved for funding under this part:

(1) A QSP activity must provide broad benefit to the represented U.S. industry and not to a specific company or brand;

(2) A QSP activity must target a single market/commodity combination and develop a new market for a U.S. Start Printed Page 43994product, promote a new U.S. product, or promote a new use for a U.S. product, rather than promote the substitution of one established U.S. product for another;

(3) Samples provided under a QSP activity must represent commodities that are in sufficient supply and available on a commercial basis;

(4) A QSP activity shall either subject the commodity sample to further processing or substantial transformation in the importing country, or the sample must be used in technical seminars designed to demonstrate to an appropriate target audience the proper preparation or use of the sample in the creation of an end product;

(5) Samples provided in a QSP activity shall not be directly used as part of a retail promotion or supplied directly to consumers. However, the end product, i.e., the product resulting from further processing, substantial transformation, or a technical seminar, may be provided to end-use consumers to demonstrate to importers consumer preference for that end product; and,

(6) A QSP activity must include the provision of technical assistance to facilitate successful use of the sample by the target audience.

(b) QSP activities shall target foreign importers or entities that meet at least one of the following criteria:

(1) Have not previously purchased the U.S. commodity that will be sampled under the QSP;

(2) Are unfamiliar with the variety, quality attribute, or end-use characteristic of the U.S. commodity which will be sampled under the QSP;

(3) Have been unsuccessful in previous attempts to import, process, and market the U.S. commodity which will be sampled under the QSP (because of improper specification, blending, or formulation; or sanitary or phytosanitary issues); or

(4) Need technical assistance in processing or using the U.S. commodity that will be sampled under the QSP.

What may be reimbursed under the QSP?

(a) Each QSP participant is responsible for procuring (or arranging for the procurement of) commodity samples, transporting the samples from the point of purchase to the destination, and providing at the destination the technical assistance necessary to facilitate successful use of the samples by the target audience. Participants that are funded under this annoucement may seek reimbursement for the sample purchase price and the costs of transporting the samples domestically to the port of export and then to the foreign port, or point of entry. Transportation costs from the foreign port, or point of entry to the final destination will not be eligible for reimbursement. CCC will not reimburse the costs incidental to purchasing and transporting samples, for example, inspection or documentation fees. Although providing technical assistance is required for all projects, CCC will not reimburse the costs of providing technical assistance. A QSP participant will be reimbursed after CCC reviews its reimbursement claim and determines that the claim is complete.

(b) The number of activities per participant will not be limited. However, individual activities will be limited to $75,000 of QSP reimbursement. Activities comprised of technical preparation seminar, i.e., projects that do not include further processing or substantial transformation, will be limited to $15,000 of QSP reimbursement as these projects require smaller samples. CCC will not reimburse expenditures made prior to approval or a proposal or unreasonable expenditures.

What is the process for submitting proposals?

(a) CCC will periodically announce that it is accepting proposals for participation in the QSP. The announcement will contain relevant information such as application deadlines. Proposals must be submitted in accordance with the terms of the announcement.

(b) Organizations can submit applications to CCC through FAS' Unified Export Strategy (UES) application Internet Web site. Applicants also have the option of submitting electronic versions in the UES format (along with two paper copies) of their applications. However, the UES format is not required.

(c) To be considered for the QSP, an applicant must submit information detailed in this part. In addition, all applicants must submit a Dun and Bradstreet Data Universal Numbering System (DUNS) number. An applicant may request a DUNS number at no cost by calling the dedicated toll-free DUNS number request line at 1-866-705-5711. Incomplete applications and applications which do not otherwise conform to this part will not be accepted for review.

(d) Applicants to the QSP are not required to submit proposals in any specific format; however, proposals should contain, at a minimum, the following:

(1) Organizational information, including:

(i) Organization's name, address, Chief Executive Officer (or designee), Federal Tax Identification Number (TIN), and DUNS number;

(ii) Type of organization;

(iii) Name, telephone number, fax number, and e-mail address of the primary contact person;

(iv) A description of the organization and its membership;

(v) A description of the organization's prior export promotion experience; and

(vi) A description of the organization's experience in implementing an appropriate trade/technical assistance component;

(2) Market information, including:

(i) An assessment of the market;

(ii) A long-term strategy in the market; and

(iii) U.S. export value, volume and market share (historic and goals) for the time period specified in the applicable announcement;

(3) Project information, including:

(i) A brief activity title;

(ii) Amount of funding requested;

(iii) A brief description of the specific market development trade constraint or opportunity to be addressed by the activity, performance measures for the time period specified in the applicable announcement, which will be used to measure the effectiveness of the project, a benchmark performance measure as specified in the applicable announcement, the viability of long term sales to this market, the goals of the activity, and the expected benefits to the represented industry;

(iv) A description of the activities planned to address the constraint or opportunity, including how the sample will be used in the end-use performance trial, the attributes of the sample to be demonstrated and its end-use benefit, and details of the technical servicing component (including who will provide and who will fund this component);

(v) A sample description (i.e., commodity, quantity, quality, type, and grade), including a justification for selecting a sample with such characteristics (this justification should explain in detail why the activity could not be effective with a smaller sample);

(vi) An itemized list of all estimated costs associated with the activity for which reimbursement will be sought;

(vii) The importer's role in the activity, including its handling and processing of the commodity sample; and

(viii) Information indicating all funding sources and amounts to be contributed by each entity that will supplement implementation of the proposed project. This may include the organization that submitted the Start Printed Page 43995proposal, private industry entities, host governments, foreign third parties, CCC, FAS, or other Federal agencies. Contributed resources may include cash or goods and services.

How are proposals evaluated?

(a) All proposals will be reviewed against the evaluation criteria contained herein and funds will be awarded on a competitive basis. FAS will use the following criteria in evaluating proposals:

(1) The ability of the organization to provide an experienced staff with the requisite technical and trade experience to execute the proposal;

(2) The extent to which the proposal is targeted to a market in which the United States is generally competitive;

(3) The potential for expanding commercial sales in the proposed market;

(4) The nature of the specific market constraint or opportunity involved and how well it is addressed by the proposal;

(5) The extent to which the importer's contribution in terms of handling and processing enhances the potential outcome of the project;

(6) The amount of reimbursement requested and the organization's willingness to contribute resources, including cash and goods and services of the U.S. industry and foreign third parties; and

(7) How well the proposed technical assistance component assures that performance trials will effectively demonstrate the intended end-use benefit.

(b) Highest priority for funding will be given to meritorious proposals that target countries that meet either of the following criteria:

(1) Per capita income as set forth in the applicable announcement; and population greater than 1 million. Proposals may address suitable regional groupings, for example, the islands of the Caribbean Basin; or

(2) U.S. market share of imports of the commodity identified in the proposal of 10 percent or less.

(c) Proposals will be evaluated by the applicable FAS commodity division. The divisions will review each proposal against the factors described above. The purpose of this review is to identify meritorious proposals, recommend an appropriate funding level for each proposal based upon these factors, and submit the proposals and funding recommendations to the Deputy Administrator, Commodity and Marketing Programs.

How are agreements formalized?

(a) Under the QSP, CCC enters into agreements with approved participants to share the costs of certain overseas marketing and promotion activities. Funding for successful proposals will be provided through specific agreements. These agreements will incorporate the regulations of this part 1483 and the proposal as approved by CCC. Amendments to these agreements are only valid if approved by CCC in writing.

(b) CCC, through FAS, will notify each applicant in writing of the final disposition of its application. CCC will send an approval letter and agreement to each approved applicant. The approval letter and agreement will specify the terms and conditions applicable to the project, including the levels of QSP funding and any cost-share contribution requirements. Agreements may also outline specific responsibilities of the participant, including, but not limited to, arranging for transportation of the commodity sample within a time limit specified in the agreement and timely and effective implementation of technical assistance.

(c) Termination of agreements: CCC reserves the right to unilaterally terminate QSP agreements where CCC has a reasonable basis for concluding that there has been a violation of any requirements in this part.

How are payments made?

Financial assistance will be made available on a reimbursement basis; that is, cash advances will not be made available to any QSP participant.

(a) Following the implementation of an activity for which CCC has agreed to provide funding, a participant may submit claims for reimbursement of eligible expenses to the extent that CCC has agreed to pay such expenses. Any changes to approved activities must be approved in writing, and in advance, by CCC before any reimbursable expenses associated with the change can be incurred. A participant will be reimbursed after CCC reviews the claim and determines that it is complete.

(b) All claims for reimbursement must be received no later than 90 calendar days following the expiration or termination date of the project agreement.

(c) Participants shall maintain complete records which fully identify all project expenditures by QSP agreement number, project year, country or region, activity number and cost category. Such records shall be accompanied by original documentation which supports the expenditures and shall be made available to CCC upon request.

(d) Participants shall maintain all records and documents relating to QSP projects, including the original documentation which supports expenditures and reimbursement claims, for a period of three calendar years following the expiration or termination date of the project agreement, and shall make such records and documents available upon request to authorized officials of the U.S. Government. Such records and documents will be subject to verification by the FAS Compliance Review Staff (CRS).

(e) CCC may deny a claim for reimbursement or may disallow a claim for reimbursement that has already been paid for any of the following reasons:

(1) The claim for reimbursement is not supported by acceptable documentation;

(2) Project funds were spent on unapproved activities:

(3) The participant violated a provision of these regulations, including section 1483.12(b).

(f) In the event that a reimbursement claim is overpaid or is disallowed after payment has been made, the participant shall return the overpayment amount or the disallowed amount to the CCC within 30 days after realizing the overpayment or receiving notification of the overpayment or disallowed amount, unless the participant avails itself of the procedures set forth in § 1483.11(d)-(i).

What are the reporting requirements?

The QSP participant must submit a written evaluation report within 90 days of the expiration of its QSP agreement. Evaluation reports should address all performance measures that were presented in the proposal.

How is program compliance monitored?

(a) QSP agreements are subject to review and verification by the CRS. Upon request, a QSP participant shall provide to CCC the original documents which support the participant's reimbursement claims.

(b) CRS performs periodic on-site reviews of QSP participants to ensure compliance with this part, applicable federal regulations, and the terms of the project agreement.

(c) The Director, CRS, will notify a QSP participant through a compliance report when, in the opinion of the Director, CRS, it appears based on CRS' review or other acceptable sources of information, including but limited to, USDA's Office of the Inspector General Start Printed Page 43996or other federal or state government agencies, that CCC is entitled to recover funds from the participant. The report will state the basis for this action. Upon receipt of the compliance report, that participant will return the funds to CCC within 30 days as set forth in § 1483.9(f), unless the participant wishes to pursue the procedures set forth below in paragraphs (d) through (i) of this section.

(d) A participant may within 60 days of the date of the compliance report, submit a written response to the Director, CRS. The Director, CRS, at his or her discretion, may extend the period for response up to an additional 30 days. The response shall include:

(1) Repayment of any funds determined to be due to CCC;

(2) Submission of documentation or evidence or any other required action; or

(3) A request for reconsideration of any finding and the supporting justification for the request.

(e) If after review of the compliance report and response, the Director, CRS determines that the participant owes money to CCC, the Director, CRS, will so inform the participant and provide a detailed basis for the decision. The participant has 30 days from the date of the Director's, CRS, determination to submit any money owed to CCC or to request reconsideration.

(f) If the participant does not respond to the compliance report within the required time period, the Director, CRS, may initiate action to collect any amount owed to CCC pursuant to 7 CFR part 1403, Debt Settlement Policies.

(g) A participant may appeal the determinations of the Director, CRS, to the Deputy Administrator, CMP. The request must be in writing and be submitted to the Office of the Deputy Administrator, CMP, within 30 days following the date of the original determination. The participant may request a hearing.

(h) If the participant submits its appeal and requests a hearing, the Deputy Administrator, or the Deputy Administrator's designee, will set a date and time, generally within 60 days. The hearing will be an informal proceeding. A transcript will not ordinarily be prepared unless the participant bears the cost of the transcript; however, the Deputy Administrator or designee may have a transcript prepared at FAS's expense.

(i) The Deputy Administrator or the Deputy Administrator's designee will base the determination on appeal upon information contained in the administrative record and will endeavor to make a determination within 60 days after submission of the appeal, hearing, or receipt of any transcript, whichever is later. The determination of the Deputy Administrator will be the final determination of FAS. The participant must exhaust all administrative remedies contained in this section before pursuing judicial review of a determination by the Deputy Administrator.

Miscellaneous provisions.

(a) Disclosure of Program Information.

(1) Documents submitted to CCC by participants are subject to the provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7 CFR part 1, subpart A—Official Records, and specifically 7 CFR 1.11, “Handling Information from a Private Business.”

(b) Ethical Conduct.

(1) A participant shall conduct business overseas in accordance with the laws and regulations of the country in which an activity is carried out.

(2) A participant shall not use program activities or program funds to promote private self-interests or to conduct private business.

(3) Participants, members of the participating organization, and their affiliates are prohibited from using any association with this program to make export sales of any agricultural commodities or products covered under the terms of the agreement and from using any association with this program to charge a fee for facilitating an export sale of any agricultural commodities or products covered under the terms of the agreement. A participant may, however, collect check-off funds and membership fees that are required for membership in the participating organization.

(4) A participant shall immediately report any actions or circumstances that have a bearing on the propriety of the program in writing to the FAS.

(c) Additional Program Requirements. QSP participants are required to comply with cargo preference requirements (shipment on U.S. flag vessels, as required) and compliance with Fly America Act requirements (shipment on U.S. air carriers, as required).

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Dated: July 21, 2006.

Michael W. Yost,

Administrator, Foreign Agricultural Service, and Vice President, Commodity Credit Corporation.

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[FR Doc. 06-6652 Filed 8-2-05; 8:45 am]