[Federal Register Volume 60, Number 22 (Thursday, February 2, 1995)]
[Proposed Rules]
[Pages 6464-6466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2546]



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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 134

RIN 1515-AB61


Advance Notice of Proposed Customs Regulations Amendments 
Concerning the Country of Origin Marking Requirements for Frozen 
Produce Packages

AGENCY: Customs Service, Department of Treasury.

ACTION: Advance notice of proposed rulemaking; solicitation of 
comments.

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SUMMARY: This document provides advance notice of a proposal to amend 
the Customs Regulations to: Prescribe rules regarding a conspicuous 
place for the marking of country of origin on packages of frozen 
produce; and establish rules concerning the appropriate type size and 
style to be employed in marking frozen produce packages. The purpose of 
this document is to help determine whether a rulemaking is needed to 
ensure a uniform standard for conspicuous and legible country of origin 
marking for packages of frozen produce, and, if needed, the contents of 
that rulemaking.

DATES: Comments must be received on or before March 20, 1995.

ADDRESSES: Written comments (preferably in triplicate) may be addressed 
to the Regulations Branch, Office of Regulations and Rulings, U.S. 
Customs Service, Franklin Court, 1301 Constitution Ave., N.W., 
Washington, D.C. 20229. Comments submitted may be inspected at the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, Franklin Court, 1099 14th Street, N.W., Suite 4000, 
Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Wende Schuster, Special Classification 
and Marking Branch, Office of Regulations and Rulings (202-482-6980).

SUPPLEMENTARY INFORMATION:

Background

    Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), 
provides that, unless excepted, every article of foreign origin (or its 
container) imported into the U.S. shall be marked in a conspicuous 
place as legibly, indelibly, and permanently as the nature of the 
article (or its container) will permit, in such a manner as to indicate 
to the ultimate purchaser in the U.S. the English name of the country 
of origin of the article. Failure to mark an article in accordance with 
the requirements of 19 U.S.C. 1304 shall result in the levy of a duty 
of ten percent ad valorem. Part 134, Customs Regulations (19 CFR Part 
134), implements the country of origin marking requirements and 
exceptions of 19 U.S.C. 1304.

Customs Ruling and Court Action

    On May 9, 1988, Norcal Crosetti Foods, Inc. and other California 
packers of domestically-grown produce requested a ruling from Customs 
concerning what constituted conspicuous country of origin marking for 
packages of frozen produce, i.e., whether the marking should be located 
on the front or some other panel of the package and in what type size 
and style it should appear. Specifically, Customs was asked to 
determine whether packaged frozen produce was considered conspicuously 
marked if the marking did not appear on the front panel of the package 
in prominent lettering. Sample packages which were not marked on their 
front panels were submitted with the ruling request. On November 21, 
1988, Customs issued a ruling (Headquarters Ruling Letter (HRL) 
731830), stating that the country of origin markings on all of the 
samples submitted were in compliance with the country of origin marking 
requirements, as the packages were marked by names and words which 
appeared on the back panel of the packaging in close proximity to 
nutritional and other information.
    The packers appealed Customs determination in HRL 731830 to the 
Court of International Trade (CIT). Norcal/Crosetti Foods, Inc. v. U.S. 
Customs Service, 15 CIT 60, 758 F.Supp. 729 (1991) (Norcal I). In 
Norcal I, the court ruled that frozen produce is not marked in a 
conspicuous place unless it is marked on the front panel of the 
package. The court remanded the matter to Customs with directions to 
issue a new ruling. Pursuant to the court's order in Norcal I, Customs 
issued Treasury Decision (T.D.) 91-48 (56 FR 24115, May 28, 1991), 
which required the country of origin marking for frozen produce to be 
placed on the front panel of the package.
    Arguing that the CIT did not have jurisdiction to decide the case, 
the government appealed the CIT's decision to the Court of Appeals for 
the Federal 

[[Page 6465]]
Circuit. Norcal/Crosetti Foods, Inc. v. U.S., 963 F.2d 356 (Fed.Cir. 
1992) (Norcal II). In Norcal II, the court ruled on procedural grounds 
to reverse the judgment of the CIT and remand the case with 
instructions to dismiss the complaint for lack of jurisdiction. The 
appellate court reasoned that since the packers' had not exhausted 
their administrative remedies, their claims were not properly before 
the CIT. The court further indicated that a proper course would have 
been for the packers to initiate a proceeding before Customs under 
section 516 of the Tariff Act of 1930, as amended (19 U.S.C. 1516).

The 516 Petition and Agency Action (1993)

    A 516 petition (the Norcal petition) was initiated by letters dated 
January 13 and January 29, 1993, and filed with Customs under 19 U.S.C. 
1516 and Part 175, Customs Regulations (19 CFR Part 175). The 
petitioners were Norcal Crosetti Foods, Inc. and Patterson Frozen 
Foods, Inc., California packers of produce grown domestically. The 
International Brotherhood of Teamsters, on behalf of its Local 912, 
submitted a letter dated February 24, 1993, supporting the Norcal and 
Patterson petition. The Norcal petition asked Customs to reconsider its 
position in HRL 731830, and to adopt the findings of the CIT in Norcal 
I.
    The petitioners contended that imported frozen produce is not 
marked in a conspicuous place in accordance with the requirements of 19 
U.S.C. 1304. The petitioners argued that under a correct application of 
19 U.S.C. 1304, the indication of country of origin must appear on the 
front panel of a package to be considered as marked in a conspicuous 
place. These domestic producers argued further that Customs standards 
for the size and prominence of such country of origin markings were not 
in conformity with 19 U.S.C. 1304.
    Customs published a notice in the Federal Register on September 9, 
1993 (58 FR 47413), advising the public of the petitioners' contentions 
and soliciting public comments on the issues raised in the petition. 
Also in this notice, Customs effectively suspended the effective date 
of T.D. 91-48 by reinstating HRL 731830. Seventy-one comments were 
submitted in response to the petitions.
    In T.D. 94-5 (58 FR 68743, December 29, 1993), Customs issued a 
final interpretive ruling based on the comments which were received in 
response to the September 9 Federal Register notice. T.D. 94-5 stated 
that back panel marking was insufficient and front panel country of 
origin marking was prescribed in a specified type size and style 
designed to match the net weight or net quantity of contents marking of 
the product under the Food Labeling Regulations (21 CFR 101.105). In 
T.D. 94-5, Customs modified T.D. 91-48 by requiring that conspicuous 
marking within the meaning of T.D. 91-48, shall be limited to marking 
which complies with the additional specifications for type size and 
style set forth in T.D. 94-5. The effective date initially established 
for the decision in T.D. 94-5 was May 8, 1994, in order to allow 
importers time to modify their packaging. On March 29, 1994, however, 
Customs issued two Federal Register documents: One (59 FR 14458) 
suspending the compliance date of May 8, 1994, for parties adversely 
affected by the country of origin marking requirements specified in 
T.D. 94-5, and the other (59 FR 14579) giving notice of its intention 
to adopt a new compliance date of January 1, 1995, and soliciting 
comments on both the proposed compliance date and on the specifications 
regarding type size and style.
    In response to T.D. 94-5, however, an action was filed with the 
Court of International Trade on behalf of American Frozen Food 
Institute, Inc. and National Food Processors Association, which 
challenged Customs decision. In American Frozen Food Institute, Inc., 
et al. v. The United States, Slip Op. 94-97 (June 9, 1994), the CIT 
ruled that because Customs had chosen to promulgate front panel marking 
in combination with other requirements needing APA [Administrative 
Procedure Act, 5 U.S.C. 553] rulemaking procedures, the entirety of 
T.D. 94-5 could not stand. The court stated that it expected Customs to 
formulate a rational rule based on comments received in connection with 
this matter before publishing any proposed rule.
    The court further concluded that, because the full rulemaking 
process had not yet been followed, it would not rule on whether T.D. 
94-5 was acceptable substantively. Since the court declared T.D. 94-5, 
in its entirety, null and void, there is no decision on the January 
1993 petition filed by Norcal Crosetti Foods, Inc. and Patterson Frozen 
Foods, Inc. The decision on the 516 petition will be held in abeyance. 
Publication of this document is without prejudice to an ultimate 
decision on the 516 petition.

Issues for Consideration in Determining Whether Customs Should 
Issue a Notice of Proposed Rulemaking With Regard to Specific 
Country of Origin Marking of Frozen Produce

    The Customs Service is considering issuing a notice of proposed 
rulemaking to amend the Customs Regulations to prescribe rules 
regarding a conspicuous location for the country of origin marking on 
packages of frozen produce and to require that such marking meet 
certain type size and style specifications. Although relevant comments 
were received in response to the Federal Register notices pertaining to 
T.D. 94-5, there are several other issues on which we would like to 
receive additional public comments before deciding whether to propose 
rulemaking on this matter. In addition to general comments, interested 
parties are invited to comment on the following specific issues:
    (1) Is there a need for Customs to initiate a proposed rulemaking 
regarding country of origin marking of frozen produce?
    (2) Whether there are current abuses in the country of origin 
marking of imported packages of frozen produce. If so, whether such 
abuses require that Customs prescribe country of origin marking 
requirements by rules applicable to all packages of frozen produce, or 
whether the abuses should be handled on a case-by-case basis.
    (3) For purposes of the marking statute and regulations, are there 
sound reasons of public policy for treating frozen produce differently 
from produce packaged in other ways (e.g., canned goods)?
    (4) Whether the front panel of frozen produce is the only 
``conspicuous place'' on the package for country of origin marking.
    (5) Whether a specified location on another panel (e.g., the back 
panel) where the country of origin marking is demarcated by, for 
example, a box, a header, bold print, margins, a contrasting 
background, or other graphic devices, would constitute a ``conspicuous 
place'' for purposes of the marking statute.
    (6) Whether Customs should prescribe, by regulation, certain type 
size and style specifications for the country of origin marking of 
frozen produce. If so, whether the regulations should specify one type 
size for all packages of frozen produce, or different type sizes 
depending upon the size of the package. If one type size is prescribed 
for all packages of frozen produce, what type size should be 
recommended and why? 

[[Page 6466]]

    (7) Whether for purposes of country of origin marking, the term 
``produce'' should be defined to include both fruits and vegetables.
    (8) Where frozen produce packaging contains produce sourced from 
multiple countries, should this have any bearing on the placement of 
the country of origin marking?
    (9) Whether the particular conditions of the frozen food section in 
a store impact on the likelihood that a consumer will notice label 
information regarding country of origin without this information being 
given special prominence. If so, whether there is any empirical 
evidence of such consumer behavior.
    (10) Whether consumer behaviors and attitudes toward country of 
origin marking of frozen produce can be documented with studies or 
surveys. If so, how much time would be needed for a study or survey to 
be conducted and for the data to be analyzed?
    (11) If Customs goes forward with a notice of proposed rulemaking, 
what should be a sufficient period of time for public comment?
    (12) If Customs issues a notice of proposed rulemaking, should a 
public hearing be held in connection with such proposed rulemaking?
    (13) If Customs proposes and adopts new country of origin marking 
regulations, what would be an appropriate time frame between the 
publication of the final rule and the effective date of such 
regulations?
    (14) What other issues should be addressed in the proposed 
rulemaking in order to afford a full opportunity for public comment?

Comments

    In order to assist Customs in determining whether to proceed with a 
notice of proposed rulemaking to prescribe rules regarding the country 
of origin marking for packages of frozen produce, and the appropriate 
type size and style specifications for such marking, this notice 
invites written comments on the issues raised in this document as well 
as any other issues in connection with this matter. Consideration will 
be given to any comments that are 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), section 1.4, Treasury 
Department Regulations (31 CFR 1.4), and section 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, Office of 
Regulations and Rulings, U.S. Customs Service, 1099 14th Street, N.W., 
Suite 4000, Washington, D.C.
William F. Riley,
Acting Commissioner of Customs.
    Approved: January 27, 1995.
Ronald K. Noble,
Under Secretary of the Treasury.
[FR Doc. 95-2546 Filed 2-1-95; 8:45 am]
BILLING CODE 4820-02-P