[Federal Register Volume 65, Number 26 (Tuesday, February 8, 2000)]
[Proposed Rules]
[Pages 6062-6065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2725]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 12 and 113

RIN 1515-AC43


Amended Bond Procedures for Articles Subject to Exclusion Orders 
Issued by the U.S. International Trade Commission

AGENCY:  U.S. Customs Service, Treasury.

ACTION:  Notice of proposed rulemaking.

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SUMMARY:  This document proposes to amend the Customs Regulations to 
reflect the statutory provisions regarding bond procedures for the 
entry of articles subject to exclusion orders issued by the U.S. 
International Trade Commission (``Commission''). This document also 
proposes to include the text of a new special importation and entry 
bond in the Customs Regulations. These proposed changes reflect the 
terms of section 337 of the Tariff Act of 1930, as amended by section 
321 of the Uruguay Round Agreements Act. As amended,

[[Page 6063]]

section 337 requires that the bond prescribed by the Secretary of the 
Treasury must be in an amount determined by the Commission to be 
sufficient to protect the complainant from any injury and that if the 
Commission later determines that the respondent has violated the 
provisions of section 337, the bond may be forfeited to the 
complainant.

DATES:  Comments must be received on or before April 10, 2000.

ADDRESSES:  Written comments (preferably in triplicate), regarding both 
the substantive aspects of this proposal as well as the clarity of the 
proposed rule and how it may be made easier to understand, may be 
submitted to and inspected at the Regulations Branch, Office of 
Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania 
Avenue, NW, 3rd Floor, Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT:  Glen Vereb, Entry Procedures and 
Carriers Branch, (202) 927-1327.

SUPPLEMENTARY INFORMATION:

Background

U.S. International Trade Commission Investigations Under Section 337 of 
the Tariff Act of 1930 (19 U.S.C. 1337)

    Under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), the 
Commission has the authority to conduct investigations into certain 
alleged unfair practices in import trade. Most complaints filed under 
this provision involve allegations of patent infringement, trademark 
infringement, or misappropriation of trade secrets. The Commission may 
determine that section 337 has been violated or, during the course of 
an investigation, that there is reason to believe that section 337 has 
been violated.

Exclusion From Entry Into the U.S. of Articles that are the Subject of 
an Unfair Trade Practice Determination

    If the Commission finds a violation, or reason to believe there is 
a violation, of section 337, it may direct the Secretary of the 
Treasury to exclude the subject articles from entry into the U.S.

Entry Under Bond of Excluded Articles

    During the period the Commission' s exclusion order remains in 
effect, and prior to the date that the Commission's determination of a 
violation of section 337 becomes final, articles otherwise excluded may 
be entered under a single entry bond prescribed by the Secretary of the 
Treasury.

Statutory Amendments to Sections 337(e)(1) and (j)(3) Require 
Amendments to the Customs Regulations

    Certain statutory changes to section 337 of the Tariff Act of 1930 
were enacted pursuant to the Uruguay Round Agreements Act (URAA), Pub. 
L. 103-465, 108 Stat. 4809 (December 8, 1994). Paragraphs (e)(1) and 
(j)(3) of section 337, as respectively amended by sections 321(a)(3) 
and (6) of the URAA, provide that articles subject to a Commission 
exclusion order may be entered under bond prescribed by the Secretary 
of the Treasury in an amount determined by the Commission to be 
sufficient to protect the complainant from any injury and that if the 
Commission later determines that the respondent has violated the 
provisions of section 337, the bond may be forfeited to the 
complainant.
    Customs has determined that the amendments to section 337 effected 
by section 321 of the URAA, as described above, require changes to the 
Customs Regulations. It is Customs view that these amendments also 
warrant inclusion of the text of a special bond that indemnifies a 
complainant pursuant to the terms of section 337, as amended.

Present Regulatory Provisions

    Section 12.39 of the Customs Regulations (19 CFR 12.39) sets forth 
provisions regarding imported articles involving unfair methods of 
competition or trade practices. Section 12.39(b)(1) identifies the 
manner by which such articles may be excluded from entry into the 
United States. Section 12.39(b)(2) provides that such excluded articles 
may be entitled to entry under a single entry bond in an amount 
determined by the Commission.
    Section 113.62 of the Customs Regulations (19 CFR 113.62) sets 
forth basic importation and entry bond conditions. Section 113.62(l) 
identifies the consequence of default on certain agreements by which 
merchandise is released conditionally from Customs custody. Section 
113.62(l)(1) provides, in pertinent part, that if a principal defaults 
on an agreement involving merchandise subject to an exclusion order of 
the Commission under 19 U.S.C. 1337 which has been released before such 
order becomes final, the obligors agree to pay the amount specified in 
the order for failure to redeliver such merchandise.

Explanation of Amendments

    The specific regulatory amendments proposed in this document are 
explained in more detail below.

Section 12.39

    As mentioned previously, Sec. 12.39(b)(2) provides that during the 
period the Commission's exclusion order remains in effect, excluded 
articles may be entered under a single entry bond in an amount 
determined by the Commission. This document proposes to amend 
Sec. 12.39(b)(2) to provide that the bond must be in an amount 
determined by the Commission to be sufficient to protect the 
complainant from any injury and, if the Commission later determines 
that the respondent has violated the provisions of section 337, the 
bond may be forfeited to the complainant. These proposed changes 
reflect the amendments to sections 337(e)(1) and (j)(3) of the Tariff 
Act of 1930 enacted pursuant to sections 321(a)(3) and (6) of the URAA. 
The statutory amendments were enacted to bring Commission practice with 
respect to bonding requirements into closer conformity with district 
court practice. ]
    It is further proposed that Sec. 12.39(b)(2) be amended by deleting 
reference to Customs Form (CF) 301 and to the bond conditions set forth 
in Sec. 113.62. The deletion of these terms reflects the fact that a CF 
301 and Sec. 113.62 pertain to basic importation and entry bonds. The 
single entry bond contemplated by Sec. 12.39(b)(2), as amended, is a 
special importation and entry bond, not under cover of basic 
importation and entry bonds because the bond does not inure to the 
Treasury, but rather to the complainant, in the event of forfeiture.
    It is proposed to add two new paragraphs to Sec. 12.39(b)(2) which 
set forth the procedures for importing merchandise subject to the 
bonding requirements of sections 337(e)(1) and (j)(3). The first 
paragraph, (b)(2)(i), requires that a bond, in the amount determined by 
the Commission and containing the conditions identified in the text of 
the newly created special importation and entry bond, set forth in 
appendix B to part 113 of this chapter, be filed with the port director 
prior to entry. Paragraph (b)(2)(ii) directs that in the event of a 
forfeiture of this bond, Sec. 210.50(d) of the United States 
International Trade Commission Regulations, (19 CFR 210.50(d)), will 
apply.

Section 113.62

    Section 113.62 is proposed to be amended by striking that portion 
of the existing introductory paragraph which reads, ``except that a 
bond taken in the case of merchandise subject to an exclusion order of 
the International

[[Page 6064]]

Trade Commission under 19 U.S.C. 1337 shall be a single entry bond.''
    Section 113.62(l)(1) is proposed to be amended by striking that 
portion of the existing text which reads, ``except that in the case of 
merchandise subject to an exclusion order of the International Trade 
Commission under 19 U.S.C. 1337 which has been released before such 
order becomes final, the obligors agree to pay liquidated damages in 
the amount specified in the order for failure to redeliver such 
merchandise.''
    These two proposed amendments reflect that Sec. 113.62 is to 
pertain only to basic importation and entry bonds and that the bond 
taken in the case of merchandise subject to an exclusion order of the 
Commission under 19 U.S.C. 1337 will be a special entry bond. 
Accordingly, all references to the bond taken out in regard to 19 
U.S.C. 1337 are proposed to be removed from Sec. 113.62.

Section 113.74

    It is proposed to create a new provision at Sec. 113.74 which sets 
forth that a bond to indemnify a complainant under section 337 of the 
Tariff Act of 1930, as amended, is contained in appendix B to part 113. 
Section 113.74 would provide that the bond must be filed in accordance 
with the provisions set forth in Sec. 12.39(b)(2), must be a single 
entry bond that contains the conditions listed in appendix B to part 
113 and, for the forfeiture or return of the bond, the provisions of 19 
CFR 210.50(d) will apply. The bond set forth in appendix B to part 113 
is, of course, in addition to any other Customs requirements for the 
importation of merchandise subject to a section 337 exclusion order.

Appendix B to Part 113

    It is proposed to add an appendix B to part 113 which sets forth 
the bond conditions for a bond to indemnify a complainant under section 
337 of the Tariff Act of 1930, as amended. The introductory paragraph 
to appendix B to part 113 would state that the provisions contained in 
Secs. 12.39(b)(2) and 113.74 of the Customs Regulations and 
Sec. 210.50(d) of the U.S. International Trade Commission Regulations 
will apply.
    In consideration of the fact that the regulatory proposals 
discussed above include documentation requirements for the entry of 
merchandise covered by a Commission exclusion order, the ``(a)(1)(A)'' 
list set forth in the appendix to part 163 of the Customs Regulations 
(19 CFR part 163) will be modified accordingly if these proposed 
regulatory changes are adopted as a final rule.

Comments

    Before adopting this proposal as a final rule, consideration will 
be given to any written comments timely submitted to Customs. Comments 
submitted will be available for public inspection in accordance with 
the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4 of the Treasury 
Department Regulations (31 CFR 1.4), and Sec. 103.11(b) of the Customs 
Regulations (19 CFR 103.11(b)), on regular business days between the 
hours of 9 a.m. and 4:30 p.m. at the Regulations Branch, Office of 
Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania 
Avenue, NW, 3rd Floor, Washington, DC.

Inapplicability of the Regulatory Flexibility Act and Executive 
Order 12866

    Because these proposed amendments to the Customs Regulations 
regarding bond procedures for articles subject to exclusion orders 
issued by the Commission merely reflect the terms of the statute, 
pursuant to the provisions of the Regulatory Flexibility Act, 5 U.S.C. 
601 et seq., it is certified that, if adopted, the proposed amendments 
will not have a significant impact on a substantial number of small 
entities. Further, these proposed amendments do not meet the criteria 
for a ``significant regulatory action'' as specified in E.O. 12866.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
(OMB) for review in accordance with the Paperwork Reduction Act of 1995 
(44 U.S.C. 3507). Comments on the collection of information should be 
sent to OMB, Attention: Desk Officer for the Department of the 
Treasury, Office of Information and Regulatory Affairs, Washington, DC 
20503. A copy should also be sent to the Regulations Branch at the 
address set forth above. Comments should be submitted within the time 
frame that comments are due regarding the substance of the proposal.
    Comments are invited on:
    (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 the information 
collection burden;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the information collection burden on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start up costs and costs of operations, 
maintenance, and purchase of services to provide information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    The collection of information in these proposed regulations is in 
appendix B to part 113. The information requested is necessary to 
enable Customs to permit entry under a bond to indemnify a complainant 
under section 337 of the Tariff Act of 1930, as amended. The likely 
respondents are individuals or commercial organizations who seek to 
import merchandise which is the subject of a section 337 exclusion 
order into the U.S.
    Estimated total annual reporting and/or recordkeeping burden: 25 
hours.
    Estimated average annual burden per respondent/recordkeeper: 30 
minutes.
    Estimated number of respondents and/or recordkeepers: 50.
    Estimated annual frequency of response: 2.
    Part 178 of the Customs Regulations (19 CFR part 178), which lists 
the information collections contained in the regulations and control 
numbers assigned by OMB, will be amended accordingly if this proposal 
is adopted.

Drafting Information

    The principal author of this document was Suzanne Karateew, Office 
of Regulations and Rulings, U.S. Customs Service. However, personnel 
from other offices participated in its development.

List of Subjects

19 CFR Part 12

    Bonds, Customs duties and inspection, Entry of merchandise, 
Imports, Reporting and recordkeeping requirements, Restricted 
merchandise, Unfair competition.

19 CFR Part 113

    Bonds, Customs duties and inspection, Exports, Imports, Reporting 
and recordkeeping requirements, Surety bonds.

Proposed Amendments to the Regulations

    For the reasons stated in the preamble, parts 12 and 113 of the 
Customs Regulations (19 CFR parts 12 and 113) are proposed to be 
amended as follows:

[[Page 6065]]

PART 12--SPECIAL CLASSES OF MERCHANDISE

    1. The general authority citation for part 12 and the specific 
authority citation for Sec. 12.39 continue to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624.

* * * * *
    Section 12.39 is also issued under 19 U.S.C. 1337, 1623.
* * * * *
    2. It is proposed to revise Sec. 12.39(b)(2) to read as follows:


Sec. 12.39  Imported articles involving unfair methods of competition 
or practices.

* * * * *
    (b) * * *
    (2) During the period the Commission's exclusion order remains in 
effect, excluded articles may be entered under a single entry bond in 
an amount determined by the International Trade Commission to be 
sufficient to protect the complainant from any injury. On or after the 
date that the Commission's determination of a violation of section 337 
becomes final, as set forth in paragraph (a) of this section, articles 
covered by the determination will be refused entry. If a violation of 
section 337 is found, the bond may be forfeited to the complainant 
under terms and conditions prescribed by the Commission. To enter 
merchandise that is the subject of a Commission exclusion order, 
importers must:
    (i) File with the port director prior to entry a bond in the amount 
determined by the Commission that contains the conditions identified in 
the special importation and entry bond set forth in appendix B to part 
113 of this chapter; and
    (ii) Comply with the terms set forth in 19 CFR 210.50(d) in the 
event of a forfeiture of this bond.
* * * * *

PART 113--CUSTOMS BONDS

    1. The general authority citation for part 113 continues to read as 
follows, and a new authority citation is added for Sec. 113.74:

    Authority:  19 U.S.C. 66, 1623, 1624.

* * * * *
    Sec. 113.74 also issued under 19 U.S.C. 1337.
    2. In Sec. 113.62:
    a. The introductory paragraph is proposed to be amended by removing 
that portion of the text which reads, ``except that a bond taken in the 
case of merchandise subject to an exclusion order of the International 
Trade Commission under 19 U.S.C. 1337 shall be a single entry bond''.
    b. Paragraph (l)(1) is proposed to be amended by removing the words 
``except that in the case of merchandise subject to an exclusion order 
of the International Trade Commission under 19 U.S.C. 1337 which has 
been released before such order becomes final, the obligors agree to 
pay liquidated damages in the amount specified in the order for failure 
to redeliver such merchandise''.
    3. It is proposed that a new Sec. 113.74 be added to read as 
follows:


Sec. 113.74  Bond conditions to indemnify a complainant under section 
337 of Tariff Act of 1930, as amended.

    A bond to indemnify a complainant under section 337 of the Tariff 
Act of 1930, as amended, must contain the conditions listed in appendix 
B to this part. The bond must be a single entry bond and must be filed 
in accordance with the provisions set forth in 19 CFR 12.39(b)(2). For 
the forfeiture or return of this bond, the provisions of 19 CFR 
210.50(d) will apply.
    4. It is proposed to add appendix B to part 113 to read as follows:

Appendix B to Part 113--Bond to Indemnify Complainant Under Section 
337, Tariff Act of 1930, as Amended

    This appendix contains the bond to indemnify a complainant under 
section 337 of the Tariff Act of 1930, as amended. The provisions 
contained in Secs. 12.39(b)(2) and 113.74 of the Customs Regulations 
(19 CFR Chapter I) and Sec. 210.50(d) of the U.S. International 
Trade Commission Regulations (19 CFR Chapter II) apply.

Bond to Indemnify Complainant Under Section 337, Tariff Act of 1930, as 
Amended

    ______ as principal and ______ as surety, are held and bound to 
the complainant of unfair practices or methods of competition in 
import trade in violation of section 337, Tariff Act of 1930, as 
amended, in the sum of ______ dollars ($______), for payment of 
which we bind ourselves, our heirs, executors, administrators, 
successors, and assigns, jointly and severally, by these conditions.
    Pursuant to the provisions of section 337, Tariff Act of 1930, 
as amended, the principal and surety recognize that the U.S. 
International Trade Commission has, according to the conditions 
described in its order, excluded from, or authorized, entry into the 
United States of the following merchandise.

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    The principal and surety recognize that the Commission has 
excluded that merchandise from entry until its investigation is 
completed, or until its decision that there is a violation of 
section 337 becomes final.
    The principal and surety recognize that certain merchandise 
excluded from entry by the Commission was, or may be, offered for 
entry into the United States while the Commission's prohibition is 
in effect.
    The principal and surety recognize that the principal desires to 
obtain a release of that merchandise pending a final determination 
of the merchandise's admissibility into the United States, as 
provided under section 337, and, for that purpose, the principal and 
surety execute this stipulation:
    If it is determined, as provided in section 337 of the Tariff 
Act of 1930, as amended, to exclude that merchandise from the United 
States, then, on notification from the port director of Customs, the 
principal is obligated to export or destroy under Customs 
supervision the merchandise released under this stipulation within 
30 days from the date of the port director's notification.
    The principal and surety agree that if the principal defaults on 
that obligation, the principal and surety shall pay to the 
complainant an amount equal to the face value of the bond as may be 
demanded by him/her under the applicable law and regulations.
    Witness our hands and seals this ______ day of ______(month), 
______ (year).

(seal)-----------------------------------------------------------------
Principal

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Surety

Raymond W. Kelly,
Commissioner of Customs.
    Approved: October 21, 1999.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.

[FR Doc. 00-2725 Filed 2-7-00; 8:45 am]
BILLING CODE 4820-02-P