[Federal Register Volume 60, Number 208 (Friday, October 27, 1995)]
[Rules and Regulations]
[Pages 54939-54941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26718]



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DEPARTMENT OF THE TREASURY
19 CFR Part 12

[T.D. 95-87]
RIN 1515-AB44


Enforcement of ITC Exclusion Orders

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document amends 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 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.

EFFECTIVE DATE: November 27, 1995.

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

[[Page 54940]]


SUPPLEMENTARY INFORMATION:

Background

    Under section 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.

Customs Notice of Proposed Rulemaking

    On May 19, 1994, Customs published a Notice of Proposed Rulemaking 
in the Federal Register (59 FR 26151), which solicited comments on a 
proposal to amend the Customs Regulations so that they would reflect 
Customs authority to enforce seizure and forfeiture orders issued by 
the International Trade Commission. No comments were received in 
response to the NPRM.
    However, in its internal review of the proposed rule, Customs 
identified an inconsistency between the proposal and the statute's 
legislative history. The legislative history indicates that Congress 
intended to include ``like goods'' within the scope of section 337 
seizure orders. The addition of this phrase to the final regulation 
does not expand the final rule because Customs seizure and forfeiture 
authority only extends to articles and like articles which fall within 
the scope of the ITC order. The phrase merely serves to clarify the 
extent of that authority.

Summary of Amendment

    This document amends 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 amendment also sets forth the procedures that Customs, on 
behalf of the Secretary of the Treasury, will follow when enforcing the 
order. The 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, Customs 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 and like articles which have been denied entry by reason of an 
exclusion order, and for which the importer has been notified in 
writing.
    The amendment also contains procedures that are to be followed by 
parties having an interest in articles which are seized pursuant to ITC 
seizure orders and who wish to file a petition for relief.

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.

Amendment to the Regulations

    Accordingly, part 12, Customs Regulations (19 CFR part 12), is 
amended as set forth below: 

[[Page 54941]]


PART 12--SPECIAL CLASSES OF MERCHANDISE

    1. The general and relevant specific authority citations for part 
12 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 also issued under 19 U.S.C. 1337, 1623;
* * * * *
    2. Section 12.39 is amended by revising the heading of paragraph 
(b); by adding 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, port 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 Enforcement, Trade Compliance Division, 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 Sec. 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 or like articles into the United 
States;
    (ii) The article or like articles were 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 port director of the 
port 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 or like articles into the United States.
    (2) Upon receipt of any seizure order issued by the Commission in 
accordance with this paragraph, Customs 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 port director in the port in which the article was seized 
shall issue a notice of seizure to parties known to have an interest in 
the seized property. All interested parties 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.
* * * * *
George J. Weise,
Commissioner of Customs.

    Approved: October 10, 1995.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 95-26718 Filed 10-26-95; 8:45 am]
BILLING CODE 4820-02-P