[Federal Register Volume 59, Number 96 (Thursday, May 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12272]


[[Page Unknown]]

[Federal Register: May 19, 1994]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR PART 12

RIN 1515-AB44

 

Enforcement of ITC Exclusion Orders

AGENCY: Customs Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes an amendment of the Customs Regulations 
regarding unfair competition to reflect Customs authority to enforce 
seizure and forfeiture orders issued by the United States International 
Trade Commission (ITC). These orders would be issued for articles which 
had previously been denied entry pursuant to an ITC exclusion order. 
Such seizure and forfeiture orders may be issued only when the owner, 
importer or consignee of such articles has previously attempted to 
import articles subject to an exclusion order into the U.S.; the 
articles have previously been denied entry; and the owner, importer or 
consignee has been notified in writing of the previous denial of entry. 
The proposed amendment sets forth the procedures Customs will follow 
when seizures are made for violations of the ITC exclusion orders. It 
also describes the appeal rights and procedures available to parties 
who have an interest in the seized property.

DATES: Comments must be received on or before July 18, 1994.

ADDRESSES: Comments (preferably in triplicate) may be submitted to U.S. 
Customs Service, Attn: Regulations Branch, Franklin Court, 1301 
Constitution Avenue NW., Washington, DC 20229, and may be inspected at 
the Regulations Branch, 1099 14th Street NW., suite 4000, Washington, 
DC.

FOR FURTHER INFORMATION CONTACT: Vicki Allums, Intellectual Property 
Rights Branch (202) 482-6960.

SUPPLEMENTARY INFORMATION:

Background

    Under Sec. 337 of the Tariff Act of 1930 (19 U.S.C. 1337), the 
International Trade Commission applies U.S. statutory law and the 
common law of unfair competition to the importation of products into 
the United States and their subsequent sale in the United States. 
Section 337 declares unlawful unfair methods of competition and unfair 
acts in the importation and sale of products in the United States, the 
threat or effect of which is to destroy or substantially injure a 
domestic industry, prevent establishment of such an industry, or 
restrain or monopolize trade and commerce in the United States. Section 
337 also declares as unlawful per se infringement of a valid and 
enforceable U.S. patent, copyright, registered trademark, or mask work; 
no resulting injury need be found. To obtain relief under section 337, 
the affected U.S. industry must file a complaint with the United States 
International Trade Commission (ITC). A formal hearing before an 
administrative law judge will then be conducted in order to determine 
whether a violation under section 337 exists. The administrative law 
judge then issues an initial determination. The initial determination 
is subject to discretionary review by the ITC, which may affirm, 
reverse, modify, set aside, or remand the initial determination to the 
administrative law judge for further proceedings. If it is determined 
that a violation exists, the ITC may order that any articles found to 
be in violation of the Act be excluded from entry into the U.S.
    Section 1342(a)(5)(B) of the Omnibus Trade and Competitiveness Act 
of 1988 amended section 337 of the Tariff Act by inserting a new 
subsection (i). That subsection authorizes the ITC to issue an order 
providing that any article determined to be imported in violation of 
the provisions of the law relating to unfair methods of competition and 
unfair acts in the importation of articles into the United States 
should be seized and forfeited when certain conditions stated in the 
law have been met. Any such order issued is to be enforced by the 
Secretary of the Treasury.
    For such an order to be valid, the law provides that the following 
conditions must be met:
    (a) The owner, importer, or consignee of the article must have 
previously attempted to import the article into the United States;
    (b) The article must have been denied entry into the United States 
by reason of an order issued under 19 U.S.C. 1337 (d); and
    (c) Upon such previous denial of entry, the Secretary of the 
Treasury must have provided the owner, importer, or consignee of the 
article with written notice of--

    (i) Such order, and
    (ii) That seizure and forfeiture would result from any further 
attempt to import the article into the United States.

    Section 12.39, Customs Regulations (19 CFR 12.39) currently 
describes the role of the ITC in determining whether an importer has 
engaged in unfair methods of competition or practices, and the actions 
the ITC can order in response to the finding of such practices. Among 
those actions are exclusion from entry and entry under bond of articles 
imported in violation of fair trade provisions, both of which are cited 
in Sec. 12.39(b). The authority of the ITC to exclude articles from 
entry into the United States under section 337 is described in 
Sec. 12.39(b)(1). Section 12.39(b)(2) permits excluded articles to be 
entered under a single entry bond pending the finalization of the ITC 
determination. Finally, Sec. 12.39(b)(3) requires, among other things, 
that district directors notify each importer or consignee of articles 
entered under bond pursuant to Sec. 12.39(b)(2) when the determination 
becomes final, and indicate that the entry of articles is refused.
    This document proposes to amend Sec. 12.39(b), Customs Regulations 
(19 CFR 12.39(b)) to reflect both the authority of the ITC to issue 
seizure and forfeiture orders against articles and like articles for 
which exclusion orders have been issued under certain conditions and 
the authority of the Secretary of the Treasury to enforce those orders.
    The proposed amendment also sets forth the procedures that Customs, 
on behalf of the Secretary of the Treasury, will follow when enforcing 
the order. The proposed procedures provide that when the three 
statutory conditions are met that allow the ITC to issue a seizure and 
forfeiture order, and the ITC notifies the Secretary of the Treasury of 
the issuance of such order, the Assistant Commissioner, Commercial 
Operations, will notify all ports of entry of the order and identify 
both the article subject to the order and the owners, importers or 
consignees who are subject to the order.
    These seizure orders would be issued by the ITC against specific 
importers, or their agents and consignees, and would apply only to 
articles which have been denied entry, and for which the importer has 
been notified in writing.
    The proposed amendment also contains procedures that are to be 
followed by parties having a proprietary interest in articles which are 
seized pursuant to ITC seizure orders and who wish to file a petition 
for relief.

Comments

    Before adopting the proposed amendment, 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, Treasury Regulations (31 
CFR 1.4), and Sec. 103.11(b), 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, 1099 14th Street NW., Suite 4000, Washington, 
DC.

Regulatory Flexibility Act

    For the reasons set forth in the preamble, pursuant to the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.), 
it is certified that the amendment will not have a significant economic 
impact on a substantial number of small entities. Accordingly, it is 
not subject to the regulatory analysis or other requirements of 5 
U.S.C. 603 and 604.

Executive Order 12866

    This amendment does not meet the criteria for a ``significant 
regulatory action'' as specified in E.O. 12866.

Drafting Information

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

List of Subjects in 19 CFR Part 12

    Customs duties and inspection, Imports.

Proposed Amendment to the Regulations

    Accordingly, it is proposed to amend part 12, Customs Regulations 
(19 CFR part 12), as set forth below:

PART 12--SPECIAL CLASSES OF MERCHANDISE

    1. The general and relevant specific authority citation for part 12 
continues to read as follows:

    Authority: 5 U.S.C. 301, 19 U.S.C. 66, 1202 (General Note 17, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624;
* * * * *
    Section 12.39 also issued under 19 U.S.C. 1337, 1623;
* * * * *
    2. Section 12.39 is amended by revising the heading of paragraph 
(b); by inserting a new paragraph (b)(4); by redesignating paragraphs 
(c) and (d) as paragraphs (d) and (e); and by adding a new paragraph 
(c) to read as follows:


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

* * * * *
    (b) Exclusion from entry; entry under bond; notice of exclusion 
order.
* * * * *
    (4) In addition to the notice given to importers or consignees of 
articles released under bond, district directors shall provide written 
notice to all owners, importers or consignees of articles which are 
denied entry into the United States pursuant to an exclusion order that 
any future attempt to import such articles may result in the articles 
being seized and forfeited. Copies of all such notices are to be 
forwarded to the Commercial Compliance Branch, Office of Trade 
Operations, at Customs Headquarters, and to the Office of The General 
Counsel, USITC, 500 E Street SW., Washington DC 20436 by the district 
directors.
    (c) Seizure and Forfeiture Orders. (1) In addition to issuing an 
exclusion order under paragraph (b)(1) of this section, the Commission 
may issue an order providing that any article determined to be in 
violation of section 337 be seized and forfeited to the United States. 
Such order may be issued if:
    (i) The owner, importer, or consignee of the article previously 
attempted to import the article into the United States;
    (ii) The article was previously denied entry into the United States 
by reason of an exclusion order issued under paragraph (b)(1) of this 
section; and
    (iii) Upon such previous denial of entry, the district director of 
the district in which the entry was attempted had notified the owner, 
importer, or consignee of the article in writing of both the exclusion 
order and that seizure and forfeiture would result from any further 
attempt to import the article into the United States.
    (2) Upon receipt of any seizure order issued by the Commission in 
accordance with this paragraph, the Assistant Commissioner, Commercial 
Operations shall immediately notify all ports of entry of the property 
subject to the seizure order and identify the persons notified under 
paragraph (b)(4) of this section.
    (3) The district director in the district in which the article was 
seized shall issue a notice of seizure to parties known to have a 
proprietary interest in the seized property. All claimants to the 
property shall have an opportunity to petition for relief under the 
provisions of 19 CFR part 171. All petitions must be filed within 30 
days of the date of issuance of the notice of seizure, and failure of a 
claimant to petition will result in the commencement of administrative 
forfeiture proceedings. All petitions will be decided by the 
appropriate Customs officer, based upon the value of the articles under 
seizure.
    (4) If seized articles are found to be not includable in an order 
for seizure and forfeiture, then the seizure and the forfeiture shall 
be remitted in accordance with standard Customs procedures.
    (5) Forfeited merchandise shall be disposed of in accordance with 
the Customs laws.
* * * * *
    Approved: May 6, 1994.
Samuel H. Banks,
Acting Commissioner of Customs.
Dennis M. O'Connell,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 94-12272 Filed 5-18-94; 8:45 am]
BILLING CODE 4820-02-P