[Federal Register Volume 63, Number 65 (Monday, April 6, 1998)]
[Rules and Regulations]
[Pages 16683-16685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8940]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 118
[T.D. 98-29]
RIN 1515-AC07
Centralized Examination Stations
AGENCY: Customs Service, Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs Regulations regarding the
establishment and scope of operation of Centralized Examination
Stations (CESs). To reflect Customs interest in maximizing compliance
with export control laws and regulations without unduly impeding the
movement of outbound merchandise, the definition of a CES is expanded
to allow merchandise intended to be exported as well as imported
merchandise to be handled by a CES. The amendment allows outbound cargo
to be inspected at CESs at ports other than the shipment's designated
port of exit. Further, to make the CES application procedure more
amenable to local conditions, this amendment provides CES applicants
with more flexibility regarding the time frame to conform a facility to
meet Customs security or other physical or equipment requirements.
Lastly, this amendment removes one of the criteria on the application
to operate a CES because Customs believes it is too subjective. These
changes are made in order to keep the CES program responsive to both
Customs and the trade community's demands for the facilitated
examinations of trade merchandise.
DATES: Effective: May 6, 1998.
FOR FURTHER INFORMATION CONTACT:
For Policy Inquiries: Steven T. Soggin, Office of Field Operations,
(202) 927-0765;
For Legal Inquiries: Jerry Laderberg, Office of Regulations and
Rulings, Entry Procedures and Carriers Branch, (202) 927-2269.
SUPPLEMENTARY INFORMATION:
Background
In 1993, Customs amended the Customs Regulations to provide for the
establishment, operation, and termination of Centralized Examination
Stations (CESs). A CES is a privately-operated facility, not in the
charge of a Customs officer, at which imported merchandise is made
available to Customs officers for physical examination. Because
merchandise intended to be exported is subject to examination, Customs
wanted CESs to be authorized to provide inspectional facilities for
this merchandise as well. Accordingly, on August 19, 1997, Customs
published a Notice of Proposed Rulemaking in the Federal Register (62
FR 44102) that proposed to amend the Customs Regulations regarding the
establishment and scope of operation of CESs.
In order to reflect Customs' interest in maximizing compliance with
export control laws and regulations without unduly impeding the
movement of outbound merchandise, the Notice proposed to expand the
definition of a
[[Page 16684]]
CES to allow merchandise intended to be exported as well as imported
merchandise to be handled by a CES. Further, the document proposed to
allow for the inspection of outbound cargo at CESs at ports other than
the shipments' designated ports of exit. To make the CES application
procedure more amenable to local conditions, the document proposed more
flexibility regarding the time frame for an applicant to conform a
facility to meet Customs security or other physical or equipment
requirements. Lastly, Customs proposed to amend one of the criteria on
the application to operate a CES because of Customs' belief that it is
too subjective. These changes were proposed in order to keep the CES
program responsive to both Customs' and the trade community's demands
for the facilitated examinations of trade merchandise. These proposed
changes to the regulations affected Secs. 118.0, 118.22, and 118.23 of
the Customs Regulations (19 CFR 118.0, 118.22, and 118.23). The
document solicited comments concerning these changes.
The comment period closed on October 20, 1996. Six comments were
received. The comments and Customs responses to them follow.
Discussion of Comments
The comments received were from a major manufacturing corporation
involved with importing/exporting its products; a trade association
representing 1,000 member firms engaged in all aspects of international
trade; an exporter of merchandise; a manufacturer that exports its
product; a CES operator; and an association representing insurance and
surety companies.
Comment: Four commenters opposed the use of CESs for outbound
inspections because they stated that expansion of the CES program to
exports will mean that the burdens (needless delays and cost overruns)
routinely experienced on the import side with CESs will also occur with
examination of exports. These commenters argue that similar processing
delays could result in missing the time for lading the merchandise to
be exported, which may result in the loss of export sales, leading to a
negative impact on the country's balance of trade.
Customs response: Customs disagrees. Inspection time involved with
export examinations is considerably less than the inspection time
involved with import examinations due to less paperwork being required.
Further, the proposed amendments were designed to keep CESs responsive
to the trade community's demands for facilitating examinations. Since
the number of export shipments is expected to increase 6% per year,
reaching a total value of $1.2 trillion by the year 2003, Customs
believes that centralizing outbound examinations will facilitate
inspections. As Customs will be able to conduct the outbound
examination before merchandise is loaded for transport to a port of
exit, unnecessary delays of shipments will be prevented by sparing
exporters the expense and delay involved in unloading shipments at
dispersed ports of exit for inspection.
Comment: One commenter stated that the proposed amendment to the
Customs custodial bond provision of Sec. 118.4(g) is unnecessary. The
commenter stated that the obligation envisioned by the new language,
that CES operators will accept and keep safe all merchandise delivered
to the CES for examination, currently exists and that unless the
amendment serves some significant, but unstated, need, it should be
deleted from the final rule.
Customs response: Customs disagrees with the proposition that the
proposed amendment is not necessary because it speaks to an existing
obligation. The proposed amendment to Sec. 118.4(g) clarifies Customs
policy that a CES operator will accept all merchandise delivered to the
CES for examination, thus, eliminating any assumption that CES
operators have discretion whether to accept merchandise delivered to
the facility for Customs examination. Accordingly, Customs believes
that the proposed amendment to Sec. 118.4(g) is necessary.
Conclusion
After analysis and review of the comments and further consideration
by Customs, Customs has determined to adopt the final rule as it was
proposed.
Regulatory Flexibility Act
Pursuant to provisions of the Regulatory Flexibility Act (5 U.S.C.
601 et seq.), it is certified that the amendments will not have a
significant economic impact on a substantial number of small entities,
because the amendments would operate to confer new benefits on
potential CES operations, by allowing them to perform more services.
Accordingly, the amendments are not subject to the regulatory analysis
or other requirements of 5 U.S.C. 603 and 604.
Executive Order 12866
This document does not meet the criteria for a ``significant
regulatory action'' as defined in E.O. 12866.
List of Subjects in 19 CFR Part 118
Administrative practice and procedure, Customs duties and
inspection, Examination stations, Exports, Imports, Licensing,
Reporting and recordkeeping requirements.
Amendments to the Regulations
For the reasons stated above, part 118, Customs Regulations (19 CFR
part 118), is amended as set forth below:
PART 118--CENTRALIZED EXAMINATION STATIONS
1. The authority citation for part 118 is revised to read as
follows:
Authority: 19 U.S.C. 66, 1499, 1623, 1624; 22 U.S.C. 401; 31
U.S.C. 5317.
2. In Sec. 118.1, the first sentence is amended by removing the
word ``imported'', and a new sentence is added at the end to read as
follows:
Sec. 118.1 Definition.
* * * To present outbound cargo for inspection at a CES at a port
other than the shipment's designated port of exit, either proof of the
shipper's consent to the inspection must be furnished or a complete set
of transportation documents must accompany the shipment to evidence
that exportation of the goods is imminent and that the goods are
committed to export, thereby, making them subject to Customs
examination.
3. In Sec. 118.4, paragraph (g) is amended by adding a new second
sentence to read as follows:
Sec. 118.4 Responsibilities of a CES operator.
* * * * *
(g) * * * The CES operator will accept and keep safe all
merchandise delivered to the CES for examination. * * *
* * * * *
Sec. 118.11 [Amended]
4. In Sec. 118.11, the second sentence in paragraph (b) is amended
by removing the words ``, and the port director may allow, up to an
additional 30 calendar days after tentative selection to conform the
facility to such requirements, but in such a case the agreement
referred to in Sec. 118.3 of this part shall not be executed until
those requirements are met'' and adding, in their place, the words
``time to conform the facility to such requirements. The agreement
referred to in Sec. 118.3 of this part shall not be executed, in any
event, until the facility is conformed to meet the requirements''; and
paragraph (g) is amended by removing the words ``, or a commitment to
acquire that knowledge''.
[[Page 16685]]
Approved: March 13, 1998.
Samuel H. Banks,
Acting Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-8940 Filed 4-3-98; 8:45 am]
BILLING CODE 4820-02-P