points of entry abroad agreed upon between the cooperating sponsor and AID. Cooperating sponsors shall assure provision of proper facilities for the handling, storage, and internal transportation of commodities and shall be responsible for the maintenance of commodities in such manner as to assure distribution of the commodities in good condition to recipi

ents.

(c) Costs at discharge ports. Except as otherwise specifically provided in the Transfer Authorization, the cooperating sponsor shall be responsible for all costs after arrival of ship at port of discharge incident to discharging and distributing the commodity authorized in the Transfer Authorization to end users, including, but not limited to, demurrage, detention, lighterage, lightening, port charges, warehousing and inland transportation.

(d) Inland transportation. In the case of landlocked countries, all transportation costs, including discharge costs in the intermediate country may be paid by the United States to a designated inland point of entry. Where inland transportation charges are so paid, the United States shall be entitled to prosecute and retain the proceeds of all loss or damage claims against inland carriers, warehousemen, and others involved in the movement of the commodity to the designated inland point.

(e) Duty, taxes and consular invoices. Commodities shall be admitted duty free and exempt from all taxes. Consular invoices shall not be required unless specific provision is made in the Transfer Authorization. If required, they shall be issued without cost to the Government of the United States.

(f) Outturn reports. The cooperating sponsor shall furnish USAID or the Diplomatic Post with an outturn report on each shipment. Loss or damage shall be reported in accordance with paragraph (n) of this section.

(g) Distribution. Cooperating sponsors shall distribute commodities in accordance with plans approved in the Transfer Authorization.

(h) No discrimination. The commodities furnished hereunder shall not be utilized for the advancement or support of any religious faith or teaching nor shall such commodities be used in any manner which is discriminatory as to race, creed, color, political beliefs, or national origin.

After the

(i) Commodities borrowed. date of approval by AID/W, but before arrival at foreign destination of the first shipment of any commodity authorized therein, the cooperating sponsor may, with approval of the USAID or Diplomatic Post, borrow commodities from local sources to meet program requirements with the understanding that such of the commodities borrowed as are used in accordance with the terms of the applicable Transfer Authorization will be replaced in kind or on an equivalent value basis after arrival of the Title II commodities. Transfers of commodities between Title II programs, and between Title II programs and Title III programs, may be made to meet emergency disaster requirements or to serve the interest of the Food for Peace Program (for example, to meet temporary shortages due to delays in ocean shipments or inland transportation, or to provide for more rapid distribution of stocks in danger of deterioration). Such transfers must be approved by AID/W unless AID procedures specifically provide for approval by USAID or the Diplomatic Post, in which case AID/W should be advised promptly upon approval of a specific transfer.

(j) Program supervision.

Cooperat

ing sponsors shall provide adequate supervisory personnel for the efficient operation of the program, including personnel to organize, conduct, review, and control distribution of commodities. Voluntary agencies shall be represented by a U.S. citizen, resident in the country of distribution or other nearby country approved by AID/W, who is appointed by and responsible to the voluntary agency for distribution of commodities in accordance with the provisions of this part. Intergovernmental organizations shall be represented by a person appointed by and responsible to the intergovernmental organization for the supervision and control of the program in the country of distribution in accordance with the provisions of this part.

(k) No displacement of sales. The commodities furnished for these programs shall not result in increased availability for export by the foreign country of the same or like commodities and shall not interfere with or displace sales (including sales under Titles I and IV of P.L. 480) which might otherwise take place.

(1) Public recognition. (1) Adequate public recognition shall be given in the press, by radio, and other media that the commodities have been donated by the people of the United States (and, where applicable, under the Alliance for Progress Program). At distribution centers the cooperating sponsor shall, to the extent feasible, display banners, posters, or similar media which shall contain information similar to that prescribed for containers in § 211.7. cipients' individual identification cards shall also be imprinted to contain such information.

Re

(2) When commodities are borrowed from local stocks, as provided in paragraph (i) of this section, suitable publicity shall be given and the containers shall be marked to the extent possible in accordance with § 211.7.

on

(m) Disposal of excessive stock of commodities. If commodities are hand which cannot be utilized in accordance with the approved transfer authorization, the cooperating sponsor shall promptly advise USAID or the Diplomatic Post of the quantities, location, and condition of such commodities. USAID or Diplomatic Post will then issue instructions for disposition. Transportation costs and other charges attributable to transferring commodities from one program to another within the country shall be the responsibility of the cooperating sponsor.

(n) Outturn reports for claims against ocean carriers. The United States shall be entitled to prosecute and retain the proceeds of all loss and damage claims against ocean carriers where the United States finances the ocean transportation. In order that claims against carriers may be filed promptly, the cooperating sponsor shall be responsible for providing USAID or the Diplomatic Post with an outturn report immediately following each vessel's discharge. Such report shall show (1) satisfactory delivery as to quantity and condition or (2) the amount of shortage or damage. Reports showing damage or short outturn must be certified by an independent cargo surveyor, a public health official, or similiar competent authority, or by a responsible official of the appropriate government ministry, and must be documented as fully as possible for pursuit of the claim and for collection.

(0) Liability for loss or damage (other than in ocean transportation) or improper distribution of commodities—(1) Responsibility passes to cooperating

sponsor. Responsibility for loss or damage shall pass to the cooperating sponsor upon acceptance of commodities at the port of entry abroad, or, in the case of land-locked countries (where transportation is paid by the United States to a designated inland point of entry) upon acceptance at the designated point of entry.

(2) Fault of cooperating sponsor. If the cooperating sponsor improperly distributes a commodity or permits it to be used for a purpose not approved in the Transfer Authorization or this part, or causes loss or damage to a commodity through failure to provide proper storage, care, or handling, the cooperating sponsor shall pay to the United States the value thereof. Claims by the USAID or the Diplomatic Post and payment by the cooperating sponsor shall be made in accordance with subparagraphs (5) and (6) of this paragraph unless it is determined by the USAID or Diplomatic Post that such improper distribution or use, or such loss or damage, could not have been prevented by proper exercise of the cooperating sponsor's responsibility under the terms of the agreement. Failure to maintain records of the receipt and distribution of commodities shall be prima facie evidence of improper distribution or use.

(3) Fault of others. The cooperating sponsor shall pursue all claims against third persons responsible for any loss, damage or diversion. Cooperating sponsors who fail to pursue claims or fail to provide for the right to assert such claims, shall be responsible to AID for the value of the commodities lost, damaged, or diverted, and shall promptly refund to AID an amount equal to the value of such lost, damaged or diverted commodities.

(4) Notification of USAID or Diplomatic Post. In all cases of loss, damage, or diversion from authorized use, the cooperating sponsor shall promptly notify USAID or the Diplomatic Post in writing of the circumstances pertaining to loss, damage, or diversion, including information as to the quantity, size, and type of containers, the time and place of diversion, loss, or damage, the

current location of the commodity, and the Transfer Authorization number, contract numbers, if known, or if unknown, all other identifying numbers printed on the commodity containers, the action taken by the cooperating sponsor with respect to recover or disposal, and the estimated value of the commodity.

(5) Determination of value. The value of commodities improperly distributed or used, or lost or damaged, shall be determined on the basis of the f.o.b. or f.a.s. commercial export price of the commodity at the time and place of export plus ocean freight charges and other costs incurred by the United States in making delivery to the cooperating sponsor: Provided, however, That at the request of the cooperating sponsor and/ or upon the recommendation of the USAID or Diplomatic Post, AID/W may determine that such value may be determined on some other justifiable basis.

(6) Method of payment. Payments made by the cooperating sponsor and by others to compensate for loss, damage, or diversion shall be deposited with the U.S. Disbursing Officer, American Embassy in local currencies at the official exchange rate applicable to dollar imports with instructions to credit the deposit to Account 20 FT 401. However, if the cooperating sponsor is a U.S. voluntary agency or an intergovernmental organization, payment shall be made in U.S. dollars (except where it is determined by the USAID or Diplomatic Post that the loss, damage, or diversion could not have been prevented by the proper exercise of the cooperating sponsor's responsibility under the terms of the agreement and collection is made from others in local currency, or where AID/W determines that payment in U.S. dollars is not possible) and deposited in Account 12 X 4336.

Con

(p) Containers—(1) Labels. tainers in which commodities are received may be disposed of by cooperating sponsors by sale or exchange for commercial uses after all labelings identifying them with a U.S. Government program are removed or obliterated. Also, cooperating sponsors may distribute the containers to needy persons for their personal use; in which case markings need not be obliterated.

(2) Use of funds. Unless otherwise approved by AID/W funds accruing from the sale of containers shall be used

sponsors

(r) Reports. Cooperating shall submit to USAID or the Diplomatic Post:

(1) Periodic reports concerning the arrival, receipt, and distribution of commodities in foreign countries, and

(2) Such other periodic and final reports relating to progress made in the implementation of the program as may be required from time to time by AID/W, or as may be agreed upon between the USAID or Diplomatic Post and the cooperating sponsor and approval by AID/W.

(s) Inspection and audit. Cooperating sponsors shall cooperate with and give reasonable assistance to USAID/Controller or other U.S. Government representatives to enable them at any reasonable time to examine activities of the cooperating sponsors, processors, or others pertaining to the receipt, distribution, processing, repackaging, and use of commodities; to inspect commodities in storage, or the facilities used in the handling or storage of commodities; to inspect and audit records, including financial records and reports pertaining to storage, transportation, processing, repackaging, distribution, and use of commodities; the deposit of and use of any local currencies; and to review or audit the procedures and methods used in carrying out the requirements of this part.

§ 211.7 Processing, repackaging, and labeling commodities.

(a) Commercial processing or repackaging. Cooperating sponsors may arrange for processing commodities into different end products and for packaging or repackaging commodities prior to

distribution. When commercial facilities are used for processing, packaging, or repackaging cooperating sponsors shall enter into written agreements for such services. The agreements must

have the prior approval of USAID or the Diplomatic Post in the country of distribution and of AID/W. Copies of the executed agreements, with English translations, shall be forwarded to AID/W. Agreements for such services shall provide as a minimum that:

(1) No part of the commodities delivered to the processing, packaging, or repackaging company shall be used to defray processing, packaging, repackaging, or other costs, except as provided in subparagraph (2) of this paragraph (a).

(2) When the milling of grain is authorized in the cooperating country, the United States will not pay any part of the processing costs, directly or indirectly, except that with the prior approval of AID/W, the value of the offal may be used to offset such part of the processing costs as it may cover.

(3) The company providing such services shall:

(i) Fully account for all commodities delivered into its possession and shall maintain adequate records and submit periodic reports pertaining to the performance of the agreement;

(ii) Be liable for the value of all commodities not accounted for;

(iii) Return the containers to cooperating sponsor to use or dispose of the containers in which the commodity is received upon instructions from the cooperating sponsor in accordance with § 211.6(p);

(iv) Plainly label cartons, sacks, or other containers in accordance with paragraph (c) of this section.

(b) Use of cooperating sponsor facilities. When cooperating sponsors utilize their own facilities to process, package, or repackage commodities into different end products, the containers of such products which are distributed for consumption off the premises of the cooperating sponsor shall be plainly labeled as provided in paragraph (c) of this section and banners, posters, or similar media, which shall contain information similar to that prescribed in paragraph (c) of this section, shall be displayed at the distribution center. Recipients' individual identification cards shall also be imprinted to contain such information.

(c) Labeling. If prior to distribution, the cooperating sponsor arranges for packaging or repackaging Title II commodities the cartons, sacks, or other containers in which the commodities are packed shall be plainly labeled with the AID emblem, and where applicable the Alliance for Progress emblem, in the language of the country in which the commodities are to be distributed, with the following information:

(1) Name of commodity.

(2) "Donated (or furnished) by the people of the United States of America." (3) "Not to be sold or exchanged" (where applicable).

(d) Where commodity containers are not used. When the usual practice in a country is not to enclose the end product in a container, wrapper, sack, etc., the cooperating sponsor shall, to the extent possible, display banners, posters, or other media, and imprint on individual recipient identification cards information similar to that prescribed in paragraph (c) of this section.

§ 211.8 Disposition of commodities unfit for authorized use.

(a) After delivery to cooperating sponsor. If after delivery to the cooperating sponsor it appears that the commodity, or any part thereof, may be unfit for the use authorized in the Transfer Authorization, the cooperating sponsor shall immediately arrange for inspection of the commodity by a public health official or other competent authority approved by USAID or the Diplomatic Post. If, after inspection, the commodity is determined to be unfit for authorized use, the cooperating sponsor shall notify USAID or the Diplomatic Post of the circumstances pertaining to the loss or damage as prescribed in § 211.6(o) (4). With the concurrence of USAID or the Diplomatic Post, the commodity shall be disposed of in the following order of priority:

(1) By transfer to an approved Title II program for use as livestock feed. AID/W shall be advised promptly of any such transfer so that shipments from the United States to the livestock feeding program can be reduced by an equivalent amount.

(2) Sale for the most appropriate use, i.e., animal feed or industrial use, at the highest obtainable price. When the commodity is sold all U.S. Government markings shall be obliterated.

(3) By donation to a governmental or charitable organization for use as animal feed or for other nonfood use.

(4) If the commodity is unfit for any use, or if disposal in accordance with subparagraph (1), (2), or (3) of this paragraph, is not possible, the commodity shall be destroyed, under the observation of a representative of USAID or a Diplomatic Post if practicable, in such manner as to prevent its use for any purpose. Expenses incidental to the handling and disposition of the damaged commodity shall be paid by the cooperating sponsor unless it is determined by the USAID or the Diplomatic Post that the damage could not have been prevented by the proper exercise of the cooperating sponsor's responsibility under the terms of the Transfer Authorization. Actual expenses incurred in effecting any sale may be deducted from the sales proceeds and the net proceeds shall be deposited with the U.S. Disbursing Officer, American Embassy, with instructions to credit the deposit to Account No. 20 FT 401. The cooperating sponsor shall promptly furnish USAID or the Diplomatic Post a written report of all circumstances relating to the loss and damage and shall include in this report, or a supplemental report, a certification by a public health official or other competent authority of the exact quantity of the damaged commodity disposed of because it was determined to be unfit for human consumption.

(b) Prior to delivery to cooperating sponsor at port of entry. If the commodity is damaged prior to delivery to the cooperating sponsor the USAID or Diplomatic Post shall immediately arrange for inspection by a public health official or other competent authority. If the commodity is determined to be unfit for human consumption it shall be disposed of in accordance with the priority set forth in paragraph (a) of this section.

Expenses incidental to the handling and disposition of the damaged commodity shall be paid by USAID or the Diplomatic Post from the sales proceeds, from CCC Account No. 20 FT 401

or from special Title II, P.L. 480 Agricultural Commodity Account. The net proceeds or sales shall be deposited with the USDO for the credit of CCC account No. 20 FT 401.

§ 211.9 Termination of program.

All or any part of the assistance provided under the program, including commodities in transit may be terminated by AID at its discretion if the cooperating sponsor fails to comply with the provisions of the transfer authorization or this part, or if it is determined that because of changed conditions the continuation of such assistance is unnecessary or undesirable. Under such circumstances title to commodities which have been transferred to the cooperating sponsor shall at the written request of USAID, the Diplomatic Post, or AID/W, be retransferred to the U.S. Government by the cooperating sponsor. Any excess commodities on hand at the time the program is terminated shall be disposed of in accordance with § 211.6 (m). If it is determined that any commodity to be supplied under the Transfer Authorization is no longer available for P.L. 480, Title II programs, such authorization shall terminate with respect to any commodities which, as of the date of such determination have not been delivered f.o.b. or f.a.s. vessel.

AID may waive, withdraw, or amend, at any time, any or all of the provisions of this Part 211. Any cooperating sponsor which has failed to comply with the provisions of this part or any instructions or procedures issued in connection herewith, or any agreements entered into pursuant hereto may at the discretion of AID be suspended or disqualified from further participation in any distribution program. Reinstatement inay be made at the option of AID. Disqualification shall not prevent AID from taking other action through other available means when considered necessary.