[Federal Register Volume 63, Number 79 (Friday, April 24, 1998)]
[Notices]
[Pages 20442-20444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10886]


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DEPARTMENT OF THE TREASURY

Customs Service


Announcement of Program Test: Importer Compliance Monitoring 
Program

AGENCY: Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: This notice announces Customs plan to conduct a test regarding 
the Importer Compliance Monitoring Program (formerly known as the 
Importer Self-Governance Program) with limited participation. The 
program is intended to promote compliance with Customs laws and 
regulations regarding cargo processing and will afford mutual benefits 
to both Customs and the import community. Public comments concerning 
any aspect of this planned test are solicited.

EFFECTIVE DATES: The program test will commence no earlier than July 1, 
1998, and will continue through June 30, 1999. Written requests to 
participate in, and comments on, the program test must be received by 
June 1, 1998.

ADDRESSES: Written requests to participate in the program test, and 
written comments regarding any aspect of the planned test, should be 
addressed to William F. Inch, Regulatory Audit Division, U.S. Customs 
Service, 1300 Pennsylvania Ave., N.W., Room 6.3A, Washington, D.C. 
20229.

FOR FURTHER INFORMATION CONTACT: William F. Inch, (202) 927-1100; 
Joseph C. Palmer, (312) 353-1213, Ext. 106; or Richard A. Fuller, (281) 
985-6781.

SUPPLEMENTARY INFORMATION:

Background

    Since passage of the Customs Modernization provisions (107 Stat. 
2170) contained in the North American Free Trade Agreement 
Implementation Act (Pub. L. 103-182, 107 Stat. 2057, December 8, 1993), 
the primary goal of the trade compliance process has been to maximize 
importer compliance with U.S. trade laws, while facilitating the 
importation and entry of admissible merchandise. To meet these 
challenges, Customs has undertaken a comprehensive effort to review, 
improve, and redesign the trade compliance process using established 
business practices, re-engineered tools, and new methodologies that 
improve customer service without compromising the enforcement aspect of 
the Customs mission.
    One of the new methodologies developed is the compliance assessment 
procedure. This procedure allows Customs to determine the level of

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compliance based on an overall assessment of a company's import 
operations. While the compliance assessment procedure provides both 
Customs and the company with an accurate benchmark concerning the 
adequacy of systems/internal controls and the degree of importer 
compliance, it focuses primarily on the company's last business year 
prior to the time the compliance assessment was conducted.
    Over time, however, events can occur within a company (e.g., 
mergers, system changes, loss of key personnel) that may potentially 
have an effect on its compliance. Accordingly, the Importer Compliance 
Monitoring Program (ICMP; formerly known as the Importer Self-
Governance Program) was developed to allow interested importers to 
assess their own compliance with Customs laws and regulations. Over the 
past several months and after public consultations, Customs has 
identified necessary policies and procedures as bases to test this new 
program, pursuant to Sec. 101.9(a) of the Customs Regulations (19 CFR 
101.9(a)), which permits the implementation of a test program or 
procedure designed to evaluate the effectiveness of new technology or 
operational procedures regarding the processing of passengers, vessels, 
or merchandise. The purpose of this document is to describe the 
proposed operation of the ICMP and to invite comments on, and requests 
to participate in, the planned ICMP test.

Proposed Importer Compliance Monitoring Program

    In general, the ICMP is designed to enhance the cargo processing of 
participating importers. The ICMP is voluntary and does not require a 
company to have undergone or be scheduled for a Customs compliance 
assessment. Once notified of acceptance into the program, a 
consultation process will begin with Customs. This is necessary to 
ensure that all parties have a mutual understanding of the importer's 
business practices and the importer's corresponding relationship to the 
program.
    Similar to a compliance assessment performed by Customs, the ICMP 
is a systemic overview of a company's import operations and includes 
both process and transactional reviews of those operations. Ideally, a 
group independent of the company's importing function should conduct 
these reviews; use of outside professionals for this purpose is not 
required but may be done at the discretion of the importer. Process 
reviews include an annual preparation or updating of the flowchart and 
narrative of the company's import process. In addition, a macro test of 
value information is conducted to ensure that the company's import 
transactions and those recorded in Customs systems are in general 
agreement. Transactional reviews utilize statistical sampling 
methodologies that are fully coordinated with Customs during the 
consultation process. Sampling errors will be evaluated based on the 
number of errors and their materiality and, where applicable, a 
compliance improvement plan will be prepared and submitted to Customs 
outlining actions taken or proposed to correct the cited deficiencies. 
Reports of sampling errors may be treated as prior disclosures under 
Part 162 of the Customs Regulations. Test participants are expected to 
retain all applicable documentation pertaining to these reviews. As 
necessary, Customs will validate the importer's ICMP process and 
transactional reviews.

Draft Program Manual

    For those companies interested in participating in this test, as 
well as those companies wishing only to provide comments to Customs, a 
draft ICMP manual will be available on Customs Internet Website. The 
Universal Resource Locator (URL) or address for the Customs Internet 
Website is http://www.customs.ustreas.gov. The manual provides detailed 
ICMP policies and procedures, including additional information 
regarding anticipated program benefits accruing to both participants 
and Customs. Customs welcomes any and all comments regarding this 
document and its contents.

Selection of Test Participants

    The test will continue for a period of one year. No more than 50 
companies will be allowed to participate in the ICMP test, and Customs 
will select the participants in accordance with the criteria set forth 
below.
    There are three primary selection criteria that will be applied in 
the following order:
    (1) Companies residing within the Top 250 importers ranked by 
entered value in descending order within a Primary Focus Industry (PFI) 
that have a Customs assigned Account Manager;
    (2) Companies residing within the Top 250 importers ranked by 
entered value in descending order within a PFI that do not have a 
Customs assigned Account Manager; and
    (3) Companies not ranked within the Top 250 importers of any of the 
PFI's will be selected on the basis of the highest total entered value.

Under criteria (1) and (2), if companies have the same numerical 
ranking in different PFI's, then the company with the highest total 
entered value will be selected.
    Customs will notify each company in writing of its acceptance or 
nonselection to participate in this test no later than June 15, 1998; 
companies not selected will be informed of the general reason(s) for 
non-selection. If an applicant is denied participation, the applicant 
may appeal in writing to Director, Regulatory Audit Division, Office of 
Strategic Trade, U.S. Customs Service, 1300 Pennsylvania Avenue, N.W., 
Washington, D.C. 20229, within 10 days of notification by Customs.
    To assure the best results possible for evaluation purposes, it is 
anticipated that those companies selected to participate in the ICMP 
test will complete all related requirements during the one-year test 
period. However, because of the voluntary nature of this program, a 
company may discontinue its participation in the test at any time.

Removal From Test Participation

    During the one-year test period, the appropriate field director of 
Regulatory Audit may remove a company from participation in the test 
for misconduct involving the following:
    (1) Failure by the company to comply with ICMP requirements; or
    (2) The presence of documented or alleged fraud, other 
investigative activity, or failing to follow applicable Customs laws 
and regulations.
    Any decision proposing to remove a company from participation in 
the test may be appealed in writing to the Director, Regulatory Audit 
Division, Office of Strategic Trade, U.S. Customs Service, 1300 
Pennsylvania Avenue, N.W., Washington, D.C. 20229 within 30 days of 
such action. The notice of proposed removal will apprise the company of 
the facts or conduct warranting removal. Should the company appeal the 
notice of proposed removal, it should address the facts or conduct 
charges contained in the notice and state how it does or will achieve 
compliance. However, in the case of willfulness or where public health 
interests or safety are concerned, the removal may be effective 
immediately.

Program Consultation

    One of the cornerstones of the ICMP is consultation afforded the 
importer by Customs. Prior to beginning the test, Customs will meet 
with each selected participant to discuss the company's

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import operations. At this meeting, the nature and frequency of work to 
be accomplished during the test period will be identified, thus, 
assuring effective planning and assignment of company and Customs 
resources and timely completion of the test.

Comments and Evaluation of Test

    Customs will review all public comments received concerning any 
aspect of the proposed program test and finalize requirements and 
procedures in light of those comments before commencing the test. 
Approximately 90 days after conclusion of the test, evaluations of the 
test will be conducted and final results will be made available to the 
public upon request.

    Dated: April 20, 1998.
William F. Inch,
Director, Regulatory Audit Division.
[FR Doc. 98-10886 Filed 4-23-98; 8:45 am]
BILLING CODE 4820-02-P