[Federal Register Volume 63, Number 110 (Tuesday, June 9, 1998)]
[Proposed Rules]
[Pages 31385-31398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15336]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 113 and 151

RIN 1515-AB60


Accreditation of Commercial Testing Laboratories; Approval of 
Commercial Gaugers

AGENCY: Customs Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations 
relating to the commercial testing and gauging of imported merchandise, 
pursuant to Customs modernization provisions of the North American Free 
Trade Agreement Implementation Act. The proposed regulations revise the 
general procedures for the accreditation/reaccreditation of commercial 
laboratories, the approval/reapproval of commercial gaugers, and the 
suspension and revocation of such accreditations/approvals. Further, 
the proposed regulations establish a reimbursable fee schedule that 
Customs will charge such laboratories/gaugers to accredit/ approve and 
periodically reaccredit/reapprove their commercial services, and make 
provision for the imposition of monetary penalties for failure to 
adhere to any of the provisions applicable to the examination, 
sampling, and testing of imported merchandise.

DATES: Comments must be received on or before August 10, 1998.

ADDRESSES: Written comments (preferably in triplicate) may be addressed 
to the Regulations Branch, Office of Regulations and Rulings, U.S. 
Customs Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229. 
Comments submitted may be inspected at the Regulations Branch, Office 
of Regulations and Rulings, U.S. Customs Service, Suite 3000, 1300 
Pennsylvania Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Ira Reese, Laboratories & Scientific 
Services, (202) 927-1060.

SUPPLEMENTARY INFORMATION:

Background

    On December 8, 1993, the United States enacted the North American 
Free Trade Agreement Implementation Act (the Act), Pub. L. 103-182, 107 
Stat. 2057. Title VI of the Act contains provisions pertaining to 
Customs Modernization (107 Stat. 2170); section 613 of Subtitle A to 
Title VI amends section 499 of the Tariff Act of 1930 (19 U.S.C. 1499), 
which provides Customs with the authority to conduct examinations and 
detain imported merchandise.

The Commercial Laboratory/Gauger Testing Provisions of Section 613

    The provisions of section 613, among other things, codify Customs 
regulations and administrative guidelines concerning the use of 
commercial laboratories and gaugers by adding a new paragraph (b) to 
section 499 (19 U.S.C. 1499(b)). Regarding the accreditation/approval 
aspects of commercial laboratories/gaugers, the provisions of new 
paragraph (b) authorize Customs to:
    (1) Set procedures for the accreditation of commercial laboratories 
in the United States, which may be used to perform tests relating to 
the admissibility, quantity, composition, or characteristics of 
imported merchandise, and the approval of commercial gaugers in the 
United States, which may be used to perform tests to establish the 
quantities of imported merchandise;
    (2) Impose reasonable charges for such accreditations/approvals and 
periodic reaccreditations/reapprovals; and
    (3) Establish the conditions regarding the suspension and 
revocation of such accreditations and approvals, which may include the 
imposition of monetary penalties not to exceed $100,000, in addition to 
penalties for any loss of revenue, in appropriate cases.
    Regarding the testing/gauging aspects of commercial laboratories/
gaugers, new paragraph (b) further provides that:
    (1) In the absence of Customs testing, Customs shall accept 
analysis and quantity results from Customs-accredited laboratories and 
Customs-approved gaugers; however, this circumstance does not limit or 
otherwise preclude Customs or any other Federal agency from 
independently testing, analyzing, or quantifying any sample or 
merchandise;
    (2) Testing procedures and methodologies will be made available 
upon request to any person, except when they are proprietary to the 
holder of a copyright or patent or developed by Customs for enforcement 
purposes; information resulting from any Customs testing will be made 
available to the importer of record and any agents thereof, except when 
the information meets the above specified exclusions from disclosure; 
and
    (3) Laboratories/gaugers may seek judicial review of any final 
Customs decision that adversely affects their accreditation/approval, 
i.e., denial, suspension, or revocation, or that

[[Page 31386]]

imposes a monetary penalty, by commencing an action within 60 days of 
such decision in the Court of International Trade.
    New paragraph (b) also provides that commercial laboratories/
gaugers already accredited/approved under current Customs regulations 
(see, 19 CFR 151.13) will not be required to reapply, but will be 
subject to reaccreditation/ reapproval procedures and requirements. 
Until the time for reaccreditation/reapproval, those commercial 
laboratories/gaugers already accredited/approved may conduct only those 
tests they were originally accredited/approved to perform.

A. Proposed Amendments Concerning Accrediting Commercial Laboratories

    Heretofore, Customs accredited commercial laboratories to perform 
selected tests on certain imported merchandise entered under chapters 
27 (pertaining to mineral fuels, mineral oils and products of their 
distillation; bituminous substances; and mineral waxes) and 29 
(pertaining to organic chemicals) of the Harmonized Tariff Schedule of 
the United States (HTSUS). The proposed amendments will expand the 
scope of accreditation to allow laboratories to perform the majority of 
tests vested in, or delegated to, the Customs Service; accreditation 
will extend to the performance of functions for determining the 
admissibility, quantity, composition, or characteristics of imported 
merchandise. Accordingly, more importers may now choose, at their 
expense, to have merchandise tested by Customs-accredited laboratories 
whose test results will be accepted by Customs, if the importer 
certifies that the sample tested was taken from the merchandise in the 
entry. This could result in the earlier availability of test results 
and should assist in the proper classification and entry of imported 
merchandise.
    The proposed regulations do not preclude Customs from testing 
merchandise from a shipment which has already been tested by an 
accredited laboratory at the importer's expense. Occasionally, Customs 
may request sample splits (discussed below) retained by accredited 
laboratories to test. In cases where merchandise has been analyzed by 
both Customs and an accredited laboratory, Customs actions will be 
based upon the analysis provided by Customs, unless other action is 
indicated by the Director, Laboratories & Scientific Services 
(Director).
    Merchandise samples tested by accredited laboratories will be from 
an importer's actual importations. Customs will release to the importer 
a representative sample of the merchandise, which will be taken and 
split into two essentially equal parts under Customs supervision at the 
port of entry. Each part will be of sufficient size so that complete 
testing for Customs purposes can be performed. The accredited 
laboratory will test one part and retain the second sample and any 
remnants from the testing, under proper storage conditions, for a 
period of one year from the date of the laboratory's final analysis 
report, unless other instructions are issued in writing by Customs. At 
the end of the one-year retention time period the accredited laboratory 
may dispose of the retained samples and sample remnants in a manner 
consistent with federal, state, and local statutes; perishable samples 
and sample remnants may be disposed of more expeditiously, if done in 
accordance with acceptable laboratory procedures.
    Commercial laboratories will be accredited to perform accepted 
industry and Customs-specified tests on merchandise by commodity groups 
that parallel the chapters and subheadings contained in the HTSUS. 
These commodity groups are set forth in the proposed rule. Laboratories 
may be accredited to perform testing in more than one of these 
commodity groups. Further, because certain tests require expensive, 
highly-specialized equipment or narrow technical expertise, and because 
any given commodity group may involve many different chemical, 
physical, or mechanical tests, Customs will consider, upon application, 
granting accreditation for subgroups of tests within a commodity group. 
Customs may expand the list of commodity groups for accreditation.
    While Customs recognizes that many laboratory-accreditation systems 
perform accreditation by fields of testing, such as chemical, 
biological, mechanical, etc., Customs is not proposing to adopt this 
method of accreditation. Instead, Customs proposes to perform 
accreditation by commodity groups and subgroups because of Customs 
technical requirements and because many commodities require testing in 
more than one traditional field. Accordingly, laboratories seeking 
Customs accreditation should become aware of Customs testing 
requirements and seek accreditation in the multiple fields required to 
test a particular commodity for Customs purposes. For example, a 
metals-testing laboratory, in order to obtain Customs accreditation, 
will need to have the ability to perform both chemical and mechanical 
testing.
    Specific testing methods for accreditation will be designated in 
Commodity Group Brochures available from Customs to ensure that the 
importer-client is aware of the appropriate test procedures for Customs 
purposes. Some of these testing methods may reference general industry 
standards, published by such organizations as the American Society for 
Testing and Materials (ASTM) and the American Petroleum Institute 
(API). It is recognized that different test methods may produce 
different results, and it is imperative for this program that Customs 
laboratories and Customs-accredited laboratories utilize the same test 
methods.
    To become a Customs-accredited laboratory, individuals or 
commercial organizations must submit a letter of application to Customs 
requesting accreditation to perform testing for specific commodity 
groups, e.g., textiles or metals. The technical and operational 
requirements for accreditation include having an appropriate facility 
properly equipped to perform the designated tests and staff capable of 
performing these tests. In addition to reviewing an applicant's overall 
physical plant and management system, specific review and testing will 
be conducted for each commodity group in which accreditation is sought. 
Customs evaluation of an applicant's professional abilities will be in 
accordance with the general criteria contained in ASTM E548: Standard 
Guide for General Criteria Used for Evaluating Laboratory Competence. 
Customs determination of an applicant's overall competence, 
independence, and character will be based on the information contained 
in the application submitted by the Laboratory and by conducting on-
site inspections and background investigations.
    Applicants will be required to retain certain records so that 
Customs can evaluate and verify all Customs-related work performed. The 
normal record-retention period under the Customs Regulations is five 
years (see, present Sec. 151.13(i)). However, should litigation arise 
within the five-year record-retention-period of time that involves 
certain laboratory records, those records may be required by Customs to 
be maintained for a longer period of time. Should laboratory operations 
cease, the laboratory shall inform Customs where the records will be 
located. Failure to properly safeguard or account for analysis records 
and laboratory testing/gauger measurement results will make the 
accredited laboratory/approved

[[Page 31387]]

gauger subject to liquidated damages in the amount of the bond 
(discussed below) or, in the event of bankruptcy, render the surety 
liable for such damages.
    Further, applicants will be required to obtain a bond executed in 
accordance with part 113 of the Customs Regulations (19 CFR part 113). 
The limits of liability on the bond will be established by the Customs 
port nearest to the applicant's main office in consultation with the 
Director.
    Following Customs evaluation of a laboratory's overall competence 
to become an accredited laboratory, Customs will notify the laboratory 
in writing of its approval/nonselection; in the case of nonselection, 
specific reasons will be given. Laboratories receiving an adverse 
accreditation determination, and wishing to appeal the decision must 
file an appeal within 30 days to the Director. Within 30 days of 
receipt of the appeal, the Director will make a determination and 
notify the laboratory in writing. If the Director reaffirms the 
nonselection, again citing specific reasons, the applicant may then 
choose to either submit a new application to the Director after waiting 
90 days from the date of the Director's last decision; or commence an 
action in the Court of International Trade within 60 days after 
issuance of Customs decision or order.
    Once accredited, laboratories may apply to expand their 
accreditation at any time. Extensions of accreditation may be requested 
to add a new site and/or to increase the number of accredited commodity 
groups or subgroups at a previously accredited site. The procedure for 
extensions of accreditation is essentially the same as that for 
accreditation; certain initial processing steps, e.g., background 
investigations and review of educational credentials, however, may not 
need to be repeated. The reaccreditation fee will be adjusted 
accordingly. Customs-accredited laboratories must undergo 
reaccreditation every three years. Regarding adverse reaccreditation 
determinations and any suspension/revocation/penalty decisions 
(discussed below), the appeal procedures discussed above will apply.
    Once accredited, a laboratory must maintain its accreditation 
credentials by maintaining its overall physical plant and management 
system, as well as by remaining proficient at performing approved 
methods of analysis. In particular, accredited laboratories will be 
required to perform periodic analyses of check samples and to submit 
the results to Customs. Check samples are samples which have been 
distributed by Customs to test proficiency in a certain area of 
accreditation. The results must demonstrate that the laboratory has the 
continuing ability to produce a work product that assists in the proper 
classification and entry of imported merchandise.
    In addition to establishing the requirements and procedures for 
laboratories to receive and maintain accreditation, the proposed 
regulations make provision for the suspension or revocation of such 
accreditation, and the imposition of monetary penalties not to exceed $ 
100,000 in addition to the recovery of any loss of revenue that may 
have occurred. Customs will seek to recover lost revenue from 
accredited laboratories in cases where the laboratory intentionally 
falsified the analysis in collusion with the importer. Customs may 
assess monetary penalties on an accredited laboratory for failure to 
adhere to any of the regulatory requirements imposed on accredited 
commercial laboratories. Otherwise, Customs will not assess penalties 
nor seek to recover lost revenue merely because of a good-faith 
difference of professional opinion. Via a separate Federal Register 
document, Customs will publish guidelines governing penalties and any 
mitigating factors it will consider in imposing such penalties.

B. Proposed Amendments Concerning Approving Commercial Gaugers

    The regulatory amendments proposed separately provide for the 
approval of commercial gaugers and the acceptance of reports from 
Customs-approved commercial gaugers. The commercial gauger-approval 
amendments generally parallel those concerning laboratory 
accreditation. Approval may extend to the performance of the functions 
of gauging and measuring merchandise. Customs approval extends only to 
the performance of such functions as are vested in, or delegated to, 
Customs. The imported products for which gauging approval may be 
obtained remains the same as those currently listed in the regulations. 
But Customs may expand the list of commodity groups for approval.

C. Proposed Amendments Concerning Reimbursable Fees for Accreditation/
Approval and Periodic Reaccreditation/Reapproval

    At the time of promulgating the Customs Modernization provisions of 
the Act, Congress agreed that in order for Customs to expand the 
Customs laboratory/gauger program the cost of the program should be 
recaptured through the imposition of reasonable fees. A Customs task 
force was formed to study the kind of fee structure that would be 
necessary for Customs to recoup the costs associated with the 
application process, travel costs, conducting ongoing background 
investigations, and maintaining the program. The fee structure adopted 
would have to cover the costs associated with implementing the expanded 
program.
    The regulatory amendments proposed provide for the imposition of 
reasonable, i.e., reimbursable, charges associated with the work 
required by Customs to accredit/approve and periodically reaccredit/
reapprove commercial laboratories/gaugers. These charges necessarily 
will be variable, dependent on specific travel costs and the scope of 
particular accreditation/approval applications, and are designed merely 
to reimburse Customs for the actual costs of establishing and 
regulating the laboratory/gauger program. Accordingly, the fee 
structure is based on recovering those expenses which are variable, 
directly associated with specific travel and the conduct of background 
investigations, and those expenses which are fixed, based on 
administrative estimates generally applicable to recovering the 
technical and clerical support costs associated with the program.

Variable Costs

    The variable portion of the accreditation-reaccreditation/approval-
reapproval fee schedules will be based on the actual costs incurred for 
travel and associated with the scope of the background investigation. 
These charges are estimated to be approximately $ 1,000 per visit and $ 
1,700 per background investigation. Whenever possible, Customs will 
endeavor to bundle these variable costs so that where travel or 
investigations costs apply to more than one laboratory or gauger, the 
costs will be fairly apportioned between applicants.
    In the event of a dispute concerning the amount of assessment for 
travel costs and per diem charges relating to a scheduled inspection 
visit, the laboratory/gauger concerned may file an appeal within 30 
days of the assessment with the Director. The appeal letter must 
specify which charges are disputed and give reasons for the dispute, 
accompanied by supporting documentation where appropriate.

Fixed Costs

    The fixed portion of the accreditation-reaccreditation/ approval-
reapproval fee schedules is based on administrative guidelines which 
estimate program

[[Page 31388]]

administrative support costs that do not consider salary or related 
costs. The primary accreditation/approval fee is meant to defray the 
following costs:
    (1) Preparation and distribution of methods manuals (for 
laboratories only) and policies;
    (2) Development and distribution of application packages;
    (3) Set up and storage of company and/or branch files;
    (4a) For laboratories, check samples and blind sample programs 
(costs of collection, documentation, and mailing of samples; costs of 
obtaining and storing samples; and costs of excess sample disposal);
    (4b) For gaugers, development and application of proficiency 
testing; and
    (5) Office supplies used to administer the program, i.e., copier 
costs, envelopes, etc.
    Customs is authorized to charge 15% of program costs for 
administrative overhead. See, 19 CFR 24.21. Based on the above 
referenced administrative estimates of program-support costs, Customs 
has determined that the following initial fee schedules for 
accrediting/reaccrediting laboratories and approving/reapproving 
gaugers are reasonable:


For Laboratories:                                                       
  General Accreditation Fee....................................    $ 750
  Additional Commodities Fee...................................      200
  Laboratory Reaccreditation Fee...............................      375
  Commodity Reaccreditation Fee................................      150
For Gaugers:                                                            
  General Approval Fee.........................................      400
  Reapproval Fee...............................................      200
                                                                        

    Laboratories/gaugers will be required to submit to the Director, 
fifty percent of the applicable accreditation/ general approval fee 
amount with their initial application for accreditation/approval, to 
cover preliminary processing costs. This pre-payment is nonrefundable. 
Before a laboratory/gauger will be designated by Customs as an 
accredited/approved facility or can have its existing accreditation/
approval extended to cover additional commodity testing it must have 
paid the applicable variable charges assessed and the balance of the 
fixed fee associated with the action within 30 days of notification to 
Customs, and have its laboratory/gauger bond on file. Then the 
applicant will receive accreditation/approval documentation and a 
notice of accreditation/approval or extension of existing 
accreditation/approval will be published in the Federal Register and 
Customs Bulletin.
    Three years from the date of the initial accreditation/ approval, 
Customs, Account Services Division, will bill the licensee for 
reaccreditation/reapproval. There will be a 30-day billing period. If 
payment is not received by Customs within the 30 day billing period, 
revocation procedures will be initiated against all accreditations/ 
approvals granted the licensee.
    Following the first year of operation, these initial fee schedules 
may be revised to capture expenses not reimbursed to Customs. If the 
fee schedules are revised, they will be published in the Federal 
Register and the Customs Bulletin.

Already Accredited/Approved Laboratories/Gaugers

    Laboratories accredited and gaugers approved under Customs 
regulations prior to December 8, 1993, will not be required to apply 
for initial accreditation/approval. Until the time for reaccreditation/
reapproval, however, those commercial laboratories/gaugers already 
accredited/approved must, however, conduct their business in a manner 
consistent with the administrative portions of the amended regulations, 
and will be required to pay applicable reaccreditation/ reapproval fees 
in the third year following the date these proposed regulations become 
final.
    Customs-accredited laboratories may make their accreditation known 
to potential customers, but must accurately represent the tests for the 
commodity group(s) for which accreditation has been obtained. Such 
laboratories will be limited to the use of terms that appear in the 
Notice of Accreditation they receive at the time they are accredited. 
Parallel provisions will apply to Customs-approved gaugers.
    The regulations currently implementing the examination of 
merchandise provisions of 19 U.S.C. 1499 are found in part 151 of the 
Customs Regulations (19 CFR part 151); Sec. 151.13 currently pertains 
to both commercial laboratories and gaugers. Other Customs regulatory 
provisions referencing part 151 are found in part 113 (19 CFR part 
113). In this document Customs proposes to amend parts 113 and 151 of 
the Customs Regulations, as discussed below, to implement the Customs 
Modernization provisions pertaining to laboratory accreditations/gauger 
approvals (19 U.S.C. 1499(b)), as discussed above.
    In sum, it is proposed to revise two references in Sec. 113.67 of 
the Customs Regulations (19 CFR 113.67) to carry the proper cross 
references for the commercial laboratory or gauger provisions that are 
redesignated as proposed in this document. In part 151, it is proposed 
to provide for commercial laboratories and gaugers in separate 
sections, so that each program can be more easily administered. 
Accordingly, Sec. 151.12, currently reserved, will be amended to set 
forth the accreditation requirements and procedures applicable to 
commercial laboratories, and Sec. 151.13 will be amended to set forth 
the approval requirements and procedures applicable to commercial 
gaugers. Section 151.14 will be revised to remove reference to the 
product characteristic table currently contained in Sec. 151.13(a)(2), 
as these analysis methods will be contained in Commodity Group 
Brochures.

Discussion of Proposed Changes to Regulations

    It is proposed to utilize Sec. 151.12--currently reserved--to set 
forth the provisions concerning the accreditation of commercial 
laboratories. Section 151.12 will contain 11 paragraphs ((a) through 
(k)) in a new question and answer format designed to facilitate an 
understanding of how the new laboratory-accreditation program will 
operate.

Proposed New Section 151.12

    Paragraph (a) will contain the definitions of three terms or 
phrases that will be used throughout the remaining paragraphs of 
Sec. 151.12.
    Paragraph (b) will pose the question ``What is a ``Customs-
accredited laboratory''?'' and describes the eligibility requirements 
for commercial laboratories. The paragraph explains that those 
laboratories that can demonstrate the capability to perform approved 
methods of analysis used to determine the admissibility, quantity, 
composition, or characteristics for certain tariff commodity groups can 
be accredited by Customs to perform such tests for Customs purposes.
    Paragraph (c) will pose the question ``What are the obligations of 
a Customs-accredited laboratory?'' and delineates the six requirements 
commercial laboratories must agree to before they can be accredited by 
Customs.
    Paragraph (d) will pose the question ``What are the commodity 
groups for which accreditation may be sought?'' and contains the list 
of commodity groups for which accreditation is available without 
special permission from the Director. The list of commodity groups, 
although similar to the provisions currently at Sec. 151.13(a)(2), is 
expanded from two HTSUS chapters to include more than 40 HTSUS chapters 
to reflect the scope of imported merchandise for which Customs is 
responsible for testing.
    Paragraph (e) will pose the question ``What are the approved 
methods of

[[Page 31389]]

analysis?'' and provides that the approved methods of testing will be 
published in Customs Commodity Group Brochures. The brochures will 
specify the particular testing procedures required, unless written 
permission from the Director is given to use an alternate method. 
Procedures required by the Director may reference applicable general 
industry standards, published by such organizations as the American 
Society for Testing and Materials (ASTM) and the American Petroleum 
Institute (API).
    Paragraph (f) will pose the question ``How would a commercial 
laboratory become a Customs-accredited laboratory?'' and explains the 
essential requirements that prospective commercial laboratories must 
respond to when applying for accreditation: (1) What the application 
should contain, (2) where an application should be sent, and (3) how 
the application will be reviewed. Further, this paragraph will describe 
the criteria by which Customs will appraise each applicant's overall 
physical plant and management system to ascertain the laboratory's 
ability to manage and control the acquisition of technical data 
associated with the accreditation sought and describe Customs 
determination of an applicant's competence.
    Paragraph (g) will pose the question ``How will an applicant be 
notified concerning accreditation?'' and describes the procedures 
Customs will follow when notifying applicants concerning the 
disposition of their applicationor request for extension of 
accreditation. The paragraph also describes the grounds for 
nonselection, based on application, background investigation, or 
capability matters, and the appeal procedures applicants must follow to 
appeal adverse determinations concerning their application or request 
for extension of accreditation.
    Paragraph (h) will pose the question ``What are the accreditation/
reaccreditation fee requirements?'' and provides that any fixed fee 
changes will be published in the Customs Bulletin and the Federal 
Register; the fees for the first year are as discussed above.
    Paragraph (i) will pose the question ``Can existing Customs-
accredited laboratories continue to operate?'' and provides that while 
such laboratories, accredited prior to December 8, 1993, will retain 
that accreditation, they must, however, conduct their business in a 
manner consistent with the administrative portions of the new 
regulations. This paragraph also provides that these existing 
facilities will have their status reevaluated in the third year 
following the effective date of this regulation. At the time of 
reaccreditation, these laboratories must meet the requirements of the 
regulations and pay the applicable fees; a failure to meet these 
requirements will result in revocation or suspension of the 
accreditation.
    Paragraph (j) will pose the question ``How will Customs-accredited 
laboratories operate?'' and describes (1) the testing of samples, (2) 
the acceptance of reports by Customs, (3) recordkeeping requirements, 
(4) limited representation of Customs accreditation, and (5) a 
prohibition against accredited laboratories subcontracting Customs-
related analyses work. The testing of samples procedures provide that 
importers may have samples of their merchandise tested by Customs-
accredited laboratories, and that the commercial laboratory designated 
to test the sample is required to test only one part of the sample that 
will be split into two parts under Customs supervision, reserving the 
second part for a period of one year. Further, these provisions provide 
that Customs and any other Federal agency reserve the right to 
independently challenge the results of such reports.
    Lastly, paragraph (k) will pose the question ``How can a laboratory 
have its accreditation suspended or revoked or be required to pay a 
monetary penalty?'' and explains (1) how the laboratory's accreditation 
may be revoked or suspended or how the laboratory may be assessed a 
monetary penalty in lieu of, or in addition to, suspension or 
revocation of accreditation, (2) what are the grounds for suspension, 
revocation, or assessment of a monetary penalty, (3) the notice 
requirements Customs will follow, (4) the appeal rights of the 
laboratory, (5) publication requirements, and (6) penalty provisions. 
Regarding the appeal of a revocation, suspension, or penalty decision, 
these provisions parallel the appeal provisions regarding nonselection. 
Regarding the monetary penalty provisions, these can be in addition to 
or in lieu of an order regarding suspension or revocation of 
accreditation. No penalty may exceed $100,000.

Proposed Amended Section Sec. 151.13

    It is further proposed to amend the provisions of Sec. 151.13, 
which currently contains provisions pertaining to both commercial 
gaugers and laboratories, to make its provisions exclusive to 
commercial gaugers. Section 151.13 will contain 9 paragraphs ((a) 
through (i)) in a similar question and answer format designed to 
facilitate how the new gauger-approval program will operate.
    Paragraph (a) will pose the question ``What is a `Customs-approved 
gauger'?'' and describes the eligibility requirements for commercial 
gaugers. The paragraph explains that those gaugers that can demonstrate 
the capability to perform the approved gauging and measurement 
procedures for certain tariff commodity groups listed in the section 
can be approved by Customs to perform such procedures for Customs 
purposes.
    Paragraph (b) will pose the question ``What are the obligations of 
a Customs-approved gauger?'' and delineates the six requirements 
commercial gaugers must agree to before they can be approved by 
Customs.
    Paragraph (c) will pose the question ``What are the approved 
gauging and measurement procedures?'' and provides that the approved 
gauging and measurement procedures will be published in Customs 
Commodity Group Brochures. The brochures will specify the particular 
measurements and procedures required, unless written permission from 
the Director is given to use an alternate method. Procedures required 
by the Director may reference applicable general industry standards, 
published by such organizations as the American Society for Testing and 
Materials (ASTM) and the American Petroleum Institute (API).
    Paragraph (d) will pose the question ``How would a commercial 
gauger become a Customs-approved gauger?'' and explains the essential 
requirements that prospective commercial gaugers must meet when 
applying for approval. These provisions substantially mirror the 
requirements discussed above for proposed Sec. 151.12(f).
    Paragraph (e) will pose the question of ``How will an applicant be 
notified concerning approval?'' and describes the procedures Customs 
will follow when notifying applicants concerning the disposition of 
their application or request for extension of approval. The paragraph 
also describes the grounds for nonselection, based on application, 
background investigation, or capability matters, and the appeal 
procedures applicants must follow if their application or request is 
disapproved. These provisions substantially mirror the requirements 
discussed above for proposed Sec. 151.12(g).
    Paragraph (f) will pose the question ``What are the approval/
reapproval fee requirements?'' and provides that any fixed fee changes 
will be published in the Customs Bulletin and the Federal Register. 
These provisions substantially mirror the requirements discussed above 
for proposed Sec. 151.12(h).

[[Page 31390]]

    Paragraph (g) will pose the question ``Can existing Customs-
approved gaugers continue to operate?'' and provides that while such 
gaugers, approved prior to December 8, 1993, will retain that approval, 
they must, however, conduct their business in a manner consistent with 
the administrative portions of the new regulations. Other provisions in 
this paragraph applicable to gaugers substantially mirror the 
requirements discussed above for laboratories at proposed 
Sec. 151.12(i).
    Paragraph (h) will pose the question ``How will Customs-approved 
gaugers operate?'' and describes (1) the acceptance of reports by 
Customs, (2) recordkeeping requirements, (3) limited representation of 
Customs approval requirements, and (4) a prohibition against approved 
gaugers subcontracting Customs-related work. These provisions 
substantially mirror the requirements discussed above for proposed 
Sec. 151.12(j).
    Paragraph (i) will pose the question ``How can a gauger have its 
approval suspended or revoked or be required to pay a monetary 
penalty?'' and explains (1) how the gauger's approval may be revoked or 
suspended or how the gauger may be assessed a monetary penalty in lieu 
of, or in addition to, suspension or revocation of approval, (2) what 
are the grounds for suspension, revocation, or assessment of a monetary 
penalty, (3) the notice requirements Customs will follow, (4) the 
appeal rights of the gauger, (5) publication requirements, and (6) 
penalty provisions. These provisions substantially mirror the 
requirements discussed above for proposed Sec. 151.12(k).

Other Regulatory Amendments Proposed

    Section 151.14 will be revised to remove a reference to the table 
of product characteristics found at Sec. 151.13(a)(2) because product 
characteristics will no longer be set forth in the regulations, but 
will be contained in specific Commodity Group Brochures.
    In Sec. 113.67, two references to current Sec. 151.13 will be 
revised to correspond to the changes proposed to Secs. 151.13 and 
151.14.

Comments

    Before adopting these proposed regulations as a final rule, 
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 
of the Treasury Department Regulations (31 CFR 1.4), and Sec. 103.11(b) 
of the 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, Suite 3000, 
1300 Pennsylvania Avenue, NW., Washington, DC.

The Regulatory Flexibility Act, and Executive Order 12866

    Because the number of accredited laboratories and approved gaugers 
is expected to be small, and such accreditation and approval will 
confer a benefit on the importing public, pursuant to the provisions of 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it is certified 
that, if adopted, the proposed amendments will not have a significant 
adverse economic impact on a substantial number of small entities. 
Accordingly, they are not subject to the regulatory analysis or other 
requirements of 5 U.S.C. 603 and 604. This document does not meet the 
criteria for a ``significant regulatory action'' as specified in E.O. 
12866.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
(OMB) for review in accordance with the Paperwork Reduction Act of 1995 
(44 U.S.C. 3507). Comments on the collection of information should be 
sent to OMB, Attention: Desk Officer for the Department of the 
Treasury, Office of Information and Regulatory Affairs, Washington, DC 
20503. A copy should also be sent to the Regulations Branch at the 
address set forth previously. Comments should be submitted within the 
time frame that comments are due regarding the substance of the 
proposal.
    Comments are invited on:
    (a) Whether the collection of information is necessary for the 
proper performance of the functions of the agency, including whether 
the information shall have practical utility;
    (b) The accuracy of the agency's estimate of the information 
collection burden;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the information collection burden on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start up costs and costs of operations, 
maintenance, and purchase of services to provide information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    The collections of information in these proposed regulations are in 
Secs. 151.12(e) and 151.13(c). The information requested is necessary 
so that Customs can determine whether those laboratories/gaugers 
seeking accreditation/approval to test/measure imported merchandise are 
competent to receive or maintain such credentials. The likely 
respondents are individuals and commercial organizations who either 
analyze merchandise or measure, gauge, or sample merchandise.
    Estimated total annual reporting and/or recordkeeping burden: 50 
hours.
    Estimated average annual burden per respondent/ recordkeeper: 5 
hours.
    Estimated number of respondents and/or recordkeepers: 10.
    Estimated annual frequency of responses: 1.
    Part 178 of the Customs Regulations (19 CFR part 178), which lists 
the information collections contained in the regulations and control 
numbers assigned by OMB, would be amended accordingly if this proposal 
is adopted.

Drafting Information

    The principal author of this document was Gregory R. Vilders, 
Attorney, Regulations Branch, Office of Regulations and Rulings. 
However, personnel from other offices participated in its development.

List of Subjects

19 CFR Part 113

    Bonds, Customs duties and inspection, Exports, Freight, Imports, 
Reporting and recordkeeping requirements.

19 CFR Part 151

    Customs duties and inspection, Examination, Fees assessment, 
Gaugers, Imports, Laboratories, Licensing, Penalties, Reporting and 
recordkeeping requirements, Sampling and testing.

Amendments to the Regulations

    For the reasons stated above, it is proposed to amend parts 113 and 
151 of the Customs Regulations (19 CFR parts 113 and 151) as set forth 
below:

PART 113--CUSTOMS BONDS

    1. The general authority citation for part 113 continues to read as 
follows:

    Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *

[[Page 31391]]

Sec. 113.67   [Amended]

    2. In Sec. 113.67, paragraph (a)(1)(ii) is amended by removing the 
words ``terms of the Commercial Gauger Agreement [see 
Sec. 151.13(b)(9)] and by the''; and by removing the citations 
``Secs. 151.13 and 151.14'' and adding, in their place, the citation 
``Sec. 151.13(b)''.


Sec. 113.67   [Amended]

    3. In Sec. 113.67, paragraph (b)(1)(ii) is amended by removing the 
words ``terms of the Commercial Laboratory Agreement [see 
Sec. 151.13(b)(9)] and by the''; and by removing the citation 
``Sec. 151.13'' and adding, in its place, the citation 
``Sec. 151.12(c)''.

PART 151--EXAMINATION, SAMPLING, AND TESTING OF MERCHANDISE

    1. The general authority citation for part 151 continues to read as 
follows:

    Authority: 19 U.S.C. 66, 1202 (General Notes 20 and 21, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624. 
Subpart A also issued under 19 U.S.C. 1499.
* * * * *
    2. In subpart A, Sec. 151.12 is added to read as follows:


Sec. 151.12  Accreditation of commercial laboratories.

    This section sets forth the requirements for commercial 
laboratories to obtain accreditation by Customs for the testing of 
certain commodities, and explains the operation of such accredited 
laboratories. This section also provides for the imposition of 
accreditation and reaccreditation fees, sets forth grounds for the 
suspension and revocation of accreditation, and provides for the 
imposition of a monetary penalty for an accredited commercial 
laboratory that fails to adhere to the provisions of this section.
    (a) Definitions. For purposes of this section, the following words 
and phrases have the meanings indicated:
    Analysis record. An ``analysis record'' is a compilation of all 
documents which have been generated during the course of analysis of a 
particular sample which, under normal circumstances, culminates in the 
issuance of a laboratory report. An analysis record may include, both 
in paper and electronic-form, such documents as work sheets, notes, 
associated spectra (both spectra of the actual product and any standard 
spectra used for comparison), photographs and microphotographs, and the 
laboratory report.
    Check samples. ``Check samples'' are samples which have been 
distributed by Customs to accredited laboratories to test their 
proficiency in a certain area of accreditation.
    Commodity Group Brochure. A ``Commodity Group Brochure'' is a 
booklet which contains a listing of the laboratory methods and 
application procedures which commercial laboratories are required to 
have the capability to perform to qualify for Customs-accreditation in 
a particular commodity group. The brochures will specify the particular 
laboratory testing procedures required for particular commodity groups, 
unless written permission from the Director is given to use an 
alternate method. Procedures required by the Director may reference 
applicable general industry testing standards, published by such 
organizations as the American Society for Testing and Materials (ASTM) 
and the American Petroleum Institute (API). Commodity Group Brochures 
are available from the U.S. Customs Service, Attention: Director, 
Laboratories & Scientific Services, Washington, D.C. 20229.
    Director. In Secs. 151.12 and 151.13, references to the 
``Director'' mean the Director, Laboratories & Scientific Services, 
located in Washington, DC.
    (b) What is a ``Customs-accredited laboratory''? ``Commercial 
laboratories'' are individuals and commercial organizations that 
analyze merchandise, i.e., determine its composition and/or 
characteristics, through laboratory analysis. A ``Customs-accredited 
laboratory'' is a commercial laboratory, within the United States, that 
has demonstrated, to the satisfaction of the Director, pursuant to this 
section, the capability to perform analysis of certain commodities to 
determine elements relating to the admissibility, quantity, 
composition, or characteristics of imported merchandise. Customs 
accreditation extends only to the performance of such functions as are 
vested in, or delegated to, Customs.
    (c) What are the obligations of a Customs-accredited laboratory? A 
commercial laboratory accredited by Customs agrees to the following 
conditions and requirements:
    (1) To comply with the requirements of part 151, Customs 
Regulations (19 CFR part 151), and to conduct professional services in 
conformance with approved standards and procedures, including 
procedures which may be required by the Commissioner of Customs or the 
Director;
    (2) To have no interest in or other connection with any business or 
other activity which might affect the unbiased performance of duties as 
a Customs-accredited laboratory. It is understood that this does not 
prohibit acceptance of the usual fees for professional services;
    (3) To maintain the ability, i.e., the instrumentation, equipment, 
qualified staff, facilities, etc., to perform the services for which 
the laboratory is accredited, and allow the Director to evaluate that 
ability on a periodic basis by such means as on-site inspections, 
demonstrations of analysis procedures, reviews of submitted records, 
and proficiency testing through check samples;
    (4) To retain those laboratory records beyond the five-year record-
retention period specified by Customs as necessary to address matters 
concerned in pending litigation, and, should laboratory operations or 
accreditation cease, to contact Customs immediately regarding the 
disposition of records retained;
    (5) To promptly investigate any circumstance which might affect the 
accuracy of work performed as an accredited laboratory, to correct the 
situation immediately, and to notify both the port director and the 
Director of such matters, their consequences, and any corrective action 
taken or that needs to be taken; and
    (6) To immediately notify both the port director and the Director 
of any attempt to impede, influence, or coerce laboratory personnel in 
the performance of their duties, or of any decision to terminate 
laboratory operations or accredited status. Further, within 5 days of 
any changes involving legal name, address, ownership, parent-subsidiary 
relationships, bond, other offices or sites, managerial or professional 
or executive staff, approved signatories, facilities, instruments, or 
equipment, etc., to notify the Director by certified mail.
    (d) What are the commodity groups for which accreditation may be 
sought? (1) Commercial laboratories may apply for accreditation to 
perform tests for any of the commodity groups listed in paragraph 
(d)(2) of this section. Applicable test procedures are listed in 
Commodity Group Brochures. Application may be made for accreditation in 
more than one commodity group. At the discretion of the Director 
accreditation may be granted for subgroups of tests within a commodity 
group or for commodity groups not specifically enumerated. Once 
accredited, a Customs-accredited laboratory may apply at any time to 
expand its accreditation, to add new testing sites, or increase the 
number of commodity groups or subgroups accredited.
    (2) The commodity groups for which accreditation may be sought 
without

[[Page 31392]]

special permission from the Director are:
    (i) Dairy and Chocolate Products entered under Chapters 4, 18, and 
21 of the Harmonized Tariff Schedule of the United States (HTSUS);
    (ii) Food and Food Products entered under Chapters 7-12, 15, 16, 
and 19-21, HTSUS;
    (iii) Botanical Identification--materials and products entered 
under Chapter 14 and Section IX, HTSUS;
    (iv) Sugar, Sugar Syrups, and Confectionery products entered under 
Chapter 17, HTSUS;
    (v) Spirituous Beverages entered under Chapter 22, HTSUS;
    (vi) Inorganic Materials, including Inorganic Compounds and Ores, 
entered under Chapters 26, 28, 31, and 36-38, HTSUS;
    (vii) Petroleum and Petroleum Products entered under Chapters 27 
and 29, HTSUS;
    (viii) Organic Materials, including Intermediates and 
Pharmaceuticals, entered under Chapters 29, 30, 34, 35, and 38, HTSUS;
    (ix) Building Stone, Ceramics, Glassware, and Other Mineral 
Substances entered under Chapter 25 and Section XIII, HTSUS;
    (x) Rubber, Plastics, Polymers, Pigments and Paints entered under 
Chapter 32 and Section VII, HTSUS;
    (xi) Essential Oils and Perfumes entered under Chapter 33, HTSUS;
    (xii) Leather and Articles of Leather entered under Chapters 41 and 
42, HTSUS;
    (xiii) Wood and Articles of Wood entered under Chapters 44 and 46, 
HTSUS;
    (xiv) Paper and Paper Products entered under Section X, HTSUS;
    (xv) Textiles and Related Products, including footwear and hats, 
entered under Sections XI and XII, HTSUS; and,
    (xvi) Metals and Alloys entered under Section XV, HTSUS.
    (e) What are the approved methods of analysis? Customs-accredited 
laboratories shall follow the general or specific testing methods set 
forth in Commodity Group Brochures in the testing of designated 
commodities, unless the Director gives written permission to use an 
alternate method. Alternative methods will be considered and approved 
on a case-by-case basis.
    (f) How would a commercial laboratory become a Customs-accredited 
laboratory?--(1) What should an application contain? An application for 
Customs-accreditation shall contain the following information:
    (i) The applicant's legal name and the addresses of its principal 
place of business and any other facility out of which it will work;
    (ii) Detailed statements of ownership and any partnerships, parent-
subsidiary relationships, or affiliations with any other domestic or 
foreign organizations, including, but not limited to, importers, other 
commercial laboratories, producers, refiners, Customs brokers, and 
carriers;
    (iii) A statement of financial condition;
    (iv) If a corporation, a copy of the articles of incorporation and 
the names of all officers and directors;
    (v) The names, titles, and qualifications of each person who will 
be authorized to sign or approve analysis reports on behalf of the 
commercial laboratory;
    (vi) A complete description of the applicant's facilities, 
instruments, and equipment;
    (vii) Express agreement that if notified by Customs of pending 
accreditation to execute a bond in accordance with part 113, Customs 
Regulations (19 CFR part 113), and submit it to the Customs port 
nearest to the applicant's main office. (The limits of liability on the 
bond will be established by the Customs port in consultation with the 
Director. In order to retain Customs accreditation, the laboratory must 
maintain an adequate bond, as determined by the port director);
    (viii) A listing of each commodity group for which accreditation is 
being sought and, if procedures are being submitted for approval which 
are not specifically provided for in a Commodity Group Brochure, a 
listing of such procedures;
    (ix) A statement for each commodity group for which accreditation 
is being sought, providing:
    (A) That all tests on all commodities in a named group can be 
performed, or
    (B) That all tests on the commodities in a group except those 
indicated can be performed; or,
    (C) That the listed procedures which are not specifically provided 
for in the Commodity Group Brochure are being submitted for approval 
for use;
    (x) Express agreement to be bound by the obligations contained in 
paragraph (c) of this section; and,
    (xi) A nonrefundable pre-payment equal to 50 percent of the fixed 
accreditation fee, as published in the Federal Register and Customs 
Bulletin, to cover preliminary processing costs. Further, the applicant 
agrees to pay Customs within 30 days of notification the associated 
charges assessed for accreditation, i.e., those charges for actual 
travel and background investigation costs, and the balance of the fixed 
accreditation fee.
    (2) Where should an application be sent? A commercial laboratory 
seeking accreditation or an extension of an existing accreditation 
shall send a letter of application to the U.S. Customs Service, 
Attention: Director, Laboratories & Scientific Services, Washington, 
D.C. 20229.
    (3) How will an application be reviewed?
    (i) Physical plant and management system. The facility of the 
applicant will be inspected to ensure that it is properly equipped to 
perform the necessary tests and that staff personnel are capable of 
performing required tests. Customs evaluation of an applicant's 
professional abilities will be in accordance with the general criteria 
contained in the American Society for Testing and Materials (ASTM) 
E548: Standard Guide for General Criteria Used for Evaluating 
Laboratory Competence. This review will ascertain the laboratory's 
ability to manage and control the acquisition of technical data. The 
review will be performed at the time of initial application and upon 
reaccreditation at three-year intervals.
    (ii) Ability to perform tests on specified commodity groups. For 
each commodity group applied for, the applicant will undergo a separate 
review and testing. The specific accreditation will be based on the 
laboratory's ability to perform the tests required for that commodity 
group. This will include the qualifications of the technical personnel 
in this field and the instrument availability required by the test 
methods. Maintenance of accreditation will be on-going and will require 
the submission of test results on periodic check samples. The criteria 
for acceptance will be based on the laboratory's ability to produce a 
work product that assists in the proper classification and entry of 
imported merchandise.
    (iii) Determination of competence. The Director shall determine the 
applicant's overall competence, independence, and character by 
conducting on-site inspections, which will include demonstrations by 
the applicant of analysis procedures; reviewing analysis records 
submitted; conducting proficiency testing through check samples; and 
conducting background investigations.
    (iv) Evaluation of technical and operational requirements. Customs 
shall determine whether the following technical and operational 
requirements are met:
    (A) Equipment. The laboratory shall be equipped with all of the 
instruments and equipment needed to conduct the tests for which it is 
accredited. The

[[Page 31393]]

laboratory shall ensure that all instruments and equipment are properly 
calibrated, checked, and maintained.
    (B) Facilities. The laboratory shall have, at a minimum, adequate 
space, lighting, and environmental controls to ensure compliance with 
the conditions prescribed for appropriate test procedures.
    (C) Personnel. The laboratory shall be staffed with persons having 
the necessary education, training, knowledge, and experience for their 
assigned functions (e.g., maintaining equipment, calibrating 
instruments, performing laboratory analyses, evaluating analytical 
results, and signing analysis reports on behalf of the laboratory). In 
general, each technical staff member should hold, at a minimum, a 
bachelor's degree in science or have two years related experience in an 
analytical laboratory.
    (g) How will an applicant be notified concerning accreditation?--
(1) Notice of approval or nonselection. When Customs evaluation of a 
laboratory's credentials is completed, the Director shall notify the 
laboratory in writing of its preliminary approval or nonselection. 
(Final approval determinations will not be made until the applicant has 
satisfied all bond requirements and made payment on all assessed 
charges and the balance of the applicable accreditations fee). Notices 
of nonselection will state the reasons for the determination. All 
notices of accreditation, reaccreditation, or extension of existing 
accreditations will be published in the Federal Register and Customs 
Bulletin.
    (2) Grounds for nonselection. The Director may deny a laboratory's 
application for any of the following reasons:
    (i) The application contains false or misleading information 
concerning a material fact;
    (ii) The laboratory, a principal of the laboratory, or a person the 
Director determines is exercising substantial ownership or control over 
such laboratory or officer, has been indicted for, convicted of, or 
committed acts which, under United States federal or state law, would 
constitute any felony or misdemeanor involving misstatements, fraud, 
theft-related offenses or any other violation which would reflect 
adversely on the business integrity of the applicant;
    (iii) A determination is made that the laboratory-applicant does 
not possess the capability or have adequate facilities and management 
to perform the approved methods of analysis for Customs purposes;
    (iv) A determination is made that the laboratory has submitted 
false reports or statements concerning the sampling of merchandise, or 
that the applicant was subject to sanctions by state, local, or 
professional administrative bodies for such conduct;
    (v) Nonpayment of assessed charges and the balance of the fixed 
accreditation fee; or
    (vi) Failure to execute a bond in accordance with part 113 of this 
chapter.
    (3) Appeal of adverse determinations. Laboratories receiving an 
adverse accreditation determination and wishing to appeal the 
determination must file an appeal within 30 days to the Director. 
Within 30 days of receipt of the appeal, the Director shall make a 
final determination regarding the appeal and notify the laboratory in 
writing. If the Director reaffirms the nonselection, again citing 
specific reasons, then the applicant may choose to either:
    (i) Submit a new application to the Director after waiting 90 days 
from the date of the Director's last decision; or
    (ii) File an action with the Court of International Trade, pursuant 
to chapter 169 of title 28, United States Code, within 60 days after 
the issuance of the Director's final decision.
    (h) What are the accreditation/reaccreditation fee requirements?
    (1) In general. A fixed fee, representing Customs administrative 
overhead expense, will be assessed for each application for 
accreditation or reaccreditation. In addition, associated assessments, 
representing the actual costs associated with travel and per diem of 
Customs employees related to verification of application criteria and 
background investigations will be charged. The combination of the fixed 
fee and associated assessments represent reimbursement to Customs for 
costs related to accreditation and reaccreditation. The fixed fee will 
be published in the Customs Bulletin and the Federal Register. Based on 
a review of the actual costs associated with the program, the fixed fee 
may be adjusted periodically; any changes will be published in the 
Customs Bulletin and the Federal Register.
    (i) Accreditation fees. A nonrefundable pre-payment equal to 50 
percent of the fixed accreditation fee to cover preliminary processing 
costs must accompany each application for accreditation. Before a 
laboratory will be accredited, it must remit to Customs, Account 
Services Division, within the 30 day billing period the associated 
charges assessed for the accreditation and the balance of the fixed 
accreditation fee.
    (ii) Reaccreditation fees. Before a laboratory will be 
reaccredited, it must submit to Customs, Account Services Division, 
within the 30 day billing period the fixed reaccreditation fee.
    (2) Disputes. In the event a laboratory disputes the charges 
assessed for travel and per diem costs associated with scheduled 
inspection visits, it may file an appeal within 30 days of the date of 
the assessment with the Director. The appeal letter must specify which 
charges are in dispute and provide such supporting documentation as may 
be available for each allegation. The Director shall make findings of 
fact concerning the merits of an appeal and communicate the agency 
decision to the laboratory in writing within 30 days of the date of the 
appeal.
    (i) Can existing Customs-accredited laboratories continue to 
operate? Commercial laboratories accredited by the Director prior to 
December 8, 1993, will retain that accreditation under these 
regulations provided they conduct their business in a manner consistent 
with the administrative portions of this section. This paragraph does 
not pertain to any laboratory which has had its accreditation suspended 
or revoked. Laboratories which have had their accreditations continued 
under this section will have their status reevaluated in the third year 
following the effective date of this regulation. At the time of 
reaccreditation, these laboratories must meet the requirements of this 
section and remit to Customs, Account Services Division, within the 30 
day billing period the fixed reaccreditation fee. Failure to meet these 
requirements will result in revocation or suspension of the 
accreditation.
    (j) How will Customs-accredited laboratories operate?
    (1)(i) Samples for testing. Upon request by the importer of record 
of merchandise, the port director will release a representative sample 
of the merchandise for testing by a Customs-accredited laboratory at 
the expense of the importer. Under Customs supervision, the sample 
shall be split into two essentially equal parts and given to the 
Customs-accredited laboratory. One portion of the sample may be used by 
the Customs-accredited laboratory for its testing. The other portion 
shall be retained by the laboratory, under appropriate storage 
conditions, for Customs use, as necessary, unless Customs requires 
other specific procedures. Upon request, the sample portion reserved 
for Customs purposes shall be surrendered to Customs. Samples reserved 
for Customs and sample remnants from any testing shall be retained by 
the accredited

[[Page 31394]]

laboratory for a period of one year from the date of the laboratory's 
final analysis report, unless other instructions are issued in writing 
by Customs. At the end of the one-year retention time period the 
accredited laboratory may dispose of the retained samples and sample 
remnants in a manner consistent with federal, state, and local 
statutes; perishable samples and sample remnants may be disposed of 
more expeditiously, if done in accordance with acceptable laboratory 
procedures.
    (2) Contents of reports. The testing results from a Customs-
accredited laboratory that are submitted by an importer of record with 
respect to merchandise in an entry shall, in the absence of testing 
conducted by Customs laboratories, be accepted by Customs provided that 
the importer of record certifies that the sample tested was taken from 
the merchandise in the entry and the report establishes elements 
relating to the admissibility, quantity, composition, or 
characteristics of the merchandise entered, as required by law. The 
data must be obtained using methods approved by the Director. Nothing 
in these regulations shall preclude Customs from sampling and testing 
merchandise from a shipment which has been sampled and tested by a 
Customs-accredited laboratory at the request of an importer. In cases 
where a shipment has been analyzed by both Customs and a Customs-
accredited laboratory, all Customs actions will be based upon the 
analysis provided by the Customs laboratory, unless the Director 
advises otherwise. If a Customs laboratory performs a test of 
merchandise, it shall release the results of its test to the importer 
of record or its agent upon request unless it is proprietary to the 
holder of a copyright or patent, or developed by Customs for 
enforcement purposes.
    (3) Recordkeeping requirements. Customs-accredited laboratories 
shall maintain records of the type normally kept in the ordinary course 
of business in accordance with the provisions of this chapter and any 
other applicable provision of law, and make them available during 
normal business hours for Customs inspection. In addition, these 
laboratories shall maintain all records necessary to permit the 
evaluation and verification of all Customs-related work, including, as 
appropriate, those described below. All records shall be maintained for 
five years, unless the laboratory is notified in writing by Customs 
that a longer retention time is necessary for particular records. 
Electronic data storage and transmission may be approved by Customs.
    (i) Sample records. Records for each sample tested for Customs 
purposes must be readily accessible and contain the following 
information:
    (A) A unique identifying number;
    (B) The date when the sample was received or taken;
    (C) The identity of the commodity (e.g., crude oil);
    (D) The name of the client;
    (E) The source of the sample (e.g., name of vessel, flight number 
of airline, name of individual taking the sample); and,
    (F) If available, the Customs entry date, entry number, and port of 
entry and the names of the importer, exporter, manufacturer, and 
country-of-origin.
    (ii) Major equipment records. Records for each major piece of 
equipment or instrument (including analytical balances) used in 
Customs-related work must identify the name and type of instrument, the 
manufacturer's name, the instrument's model and any serial numbers, and 
the occurrence of all servicing performed on the equipment or 
instrument, to include recalibration and any repair work, identifying 
who performed the service and when.
    (iii) Records of analytical procedures. The Customs-accredited 
laboratory must maintain complete and up-to-date copies of all approved 
analytical procedures, calibration methods, etc., and must document the 
procedures each staff member is authorized to perform. These procedures 
must be readily available to appropriate staff.
    (iv) Laboratory analysis records. The Customs-accredited laboratory 
must identify each analysis by sample record number (see paragraph 
(j)(3)(i) of this section) and must maintain all information or data 
(such as sample weights, temperatures, references to filed spectra, 
etc.) associated with each Customs-related laboratory analysis. Each 
analysis record must be dated and initialed or signed by the staff 
member(s) who did the work.
    (v) Laboratory analysis reports. Each laboratory analysis report 
submitted to Customs must include:
    (A) The name and address of the Customs-accredited laboratory;
    (B) A description and identification of the sample, including its 
unique identifying number;
    (C) The designations of each analysis procedure used;
    (D) The analysis report itself (i.e., the pertinent characteristics 
of the sample);
    (E) The date of the report; and
    (F) The signature of the person accepting technical responsibility 
for the analysis report (i.e., an approved signatory).
    (4) Representation of Customs-accredited status. Commercial 
laboratories accredited by Customs shall limit statements or wording 
regarding their accreditation to an accurate description of the tests 
for the commodity group(s) for which accreditation has been obtained. 
Use of terms other than those appearing in the notice of approval (see 
paragraph (f) of this section) is prohibited.
    (5) Subcontracting prohibited. Customs-accredited laboratories 
shall not subcontract Customs-related analysis work.
    (k) How can a laboratory have its accreditation suspended or 
revoked or be required to pay a monetary penalty? 
    (1) Grounds for suspension, revocation, or monetary penalty. (i) 
General. A laboratory's accreditation may be revoked or suspended or a 
laboratory may be assessed a monetary penalty at any time by the 
Director.
    (ii) Grounds for suspension, revocation, or assessment of a 
monetary penalty. A laboratory's accreditation may be suspended or 
revoked, or a monetary penalty may be assessed because:
    (A) The selection was obtained through fraud or the misstatement of 
a material fact by the laboratory;
    (B) The laboratory, or other person the port director determines is 
exercising substantial ownership or control over the laboratory 
operation or corporate officer, is indicted for, convicted of, or has 
committed acts which would constitute any felony or misdemeanor under 
United States Federal or State law. In the absence of an indictment, 
conviction, or other legal process, a port director must have probable 
cause to believe the proscribed acts occurred;
    (C) Staff laboratory personnel refuse or otherwise fail to follow 
any proper order of a Customs officer or any Customs order, rule, or 
regulation relative to continued licensing as a Customs-accredited 
laboratory;
    (D) The laboratory fails to operate in accordance with the 
obligations of paragraph (c) of this section;
    (E) A determination is made that the laboratory is no longer 
technically or operationally proficient at performing the approved 
methods of analysis for Customs purposes;
    (F) The laboratory fails to remit to Customs, the Accounts Services 
Division, within the 30 day billing period the associated charges 
assessed for the accreditation and the balance of the fixed 
accreditation fee;
    (G) The laboratory fails to maintain its bond; or
    (H) The laboratory fails to remit to Customs, the Accounts Services 
Division, within the 30 day billing period the fixed reaccreditation 
fee.

[[Page 31395]]

    (iii) Assessment of monetary penalties. The assessment of a 
monetary penalty under this section, may be in lieu of, or in addition 
to, a suspension or revocation of accreditation under this section. The 
monetary penalty may not exceed $100,000 per violation and shall be 
assessed and mitigated pursuant to published guidelines. Any monetary 
penalty under this section can be in addition to the recovery of any 
loss of revenue or liquidated damages assessed under the laboratory's 
Customs bond.
    (2) Notice. When a decision to suspend, revoke, and/or to assess a 
monetary penalty is contemplated, Customs shall immediately notify the 
laboratory in writing of the proposed action. The notice of proposed 
action shall contain a description of the grounds for the proposed 
revocation, suspension, and/or assessment of a monetary penalty action, 
and advise the laboratory of the procedures for filing appeals.
    (3) Appeal procedures. A Customs-accredited laboratory receiving a 
notice of suspension or revocation of accreditation, and/or of 
assessment of a monetary penalty, and wishing to appeal the decision 
shall follow the appeal procedures set forth in paragraph (g)(3) of 
this section. An appeal to the Director may contain an acceptance of 
responsibility and may also provide extenuating circumstances and/or 
rebuttal evidence. Further, the appeal may ask for a meeting with the 
Director or his designee to discuss proposed actions. Should the 
laboratory fail to file an appeal within the required time period, the 
Director shall take actions to implement the proposed suspension or 
revocation and/or to collect the monetary penalty assessed in the 
notice.
    (4) Publication. All final notices of suspension or revocation of a 
laboratory's accreditation and/or assessment of a monetary penalty will 
be published in the Federal Register and Customs Bulletin, giving the 
effective date, duration, and scope of each action.
    3. Section 151.13 is revised to read as follows:


Sec. 151.13  Approval of commercial gaugers.

    This section sets forth the requirements for commercial gaugers to 
obtain approval by Customs for the measuring of certain merchandise, 
and explains the operation of such approved gaugers. This section also 
provides for the imposition of approval and reapproval fees, sets forth 
grounds for the suspension or revocation of approval, and provides for 
the imposition of a monetary penalty for an approved commercial gauger 
that fails to adhere to the provisions of this section.
    (a) What is a ``Customs-approved gauger''? ``Commercial gaugers'' 
are individuals and commercial organizations that measure, gauge, or 
sample merchandise (usually merchandise in bulk form) and who deal 
mainly with petroleum, petroleum products, and bulk chemicals. A 
``Customs-approved gauger'' is a commercial concern, within the United 
States, that has demonstrated, to the satisfaction of the Director 
(defined at Sec. 151.12(a)), pursuant to this section the capability to 
perform certain gauging and measurement procedures for certain 
commodities. Customs approval extends only to the performance of such 
functions as are vested in, or delegated to, Customs.
    (b) What are the obligations of a Customs-approved gauger? A 
commercial gauger approved by Customs agrees to the following 
conditions and requirements:
    (1) To comply with the requirements of part 151, Customs 
Regulations (19 CFR part 151), and to conduct professional services in 
conformance with approved standards and procedures, including 
procedures which may be required by the Commissioner of Customs or the 
Director;
    (2) To have no interest in or other connection with any business or 
other activity which might affect the unbiased performance of duties as 
a Customs-approved gauger. It is understood that this does not prohibit 
acceptance of the usual fees for professional services;
    (3) To maintain the ability, i.e., the instrumentation, equipment, 
qualified staff, facilities, etc., to perform the services for which 
the gauger is approved, and allow the Director to evaluate that ability 
on a periodic basis by such means as on-site inspections, 
demonstrations of gauging procedures, and reviews of submitted records;
    (4) To retain those gauger records beyond the five-year record-
retention period specified by Customs as necessary to address matters 
concerned in pending litigation, and, should laboratory operations or 
accreditation cease, to contact Customs immediately regarding the 
disposition of records retained;
    (5) To promptly investigate any circumstance which might affect the 
accuracy of work performed as an approved gauger, to correct the 
situation immediately, and to notify both the port director and the 
Director of such matters, their consequences, and any corrective action 
taken or that needs to be taken; and
    (6) To immediately notify both the port director and the Director 
of any attempt to impede, influence, or coerce gauger personnel in the 
performance of their duties, or of any decision to terminate laboratory 
operations or accredited status. Further, within 5 days of any changes 
involving legal name, address, ownership, parent-subsidiary 
relationships, bond, other offices or sites, managerial or professional 
or executive staff, approved signatories, facilities, instruments, or 
equipment, etc., to notify the Director by certified mail.
    (c) What are the approved gauging and measurement procedures? 
Customs-accredited gaugers shall follow the general or specific gauging 
and measurement procedures set forth in Commodity Group Brochures (see 
definition at Sec. 151.12(a)) in the testing of designated commodities, 
unless the Director gives written permission to use an alternate 
method. Alternative methods will be considered and approved on a case-
by-case basis.
    (d) How would a commercial gauger become a Customs-approved gauger? 
(1) What should an application contain? An application for approval 
shall contain the following information:
    (i) The applicant's legal name and the addresses of its principal 
place of business and any other facility out of which it will work;
    (ii) Detailed statements of ownership and any partnerships, parent-
subsidiary relationships, or affiliations with any other domestic or 
foreign organizations, including, but not limited to, importers; 
producers; refiners; Customs brokers; or carriers;
    (iii) A statement of financial condition;
    (iv) If a corporation, a copy of the articles of incorporation and 
the names of all officers and directors;
    (v) The names, titles, and qualifications of each person who will 
be authorized to sign or approve gauging reports on behalf of the 
commercial gauger;
    (vi) A complete description of the applicant's facilities, 
instruments, and equipment;
    (vii) Express agreement that if notified by Customs of pending 
accreditation to execute a bond in accordance with part 113, Customs 
Regulations (19 CFR part 113), and submit it to the Customs port 
nearest to the applicant's main office. (The limits of liability on the 
bond will be established by the Customs port in consultation with the 
Director. In order to retain Customs approval, the gauger must maintain 
an adequate bond, as determined by the port director);

[[Page 31396]]

    (viii) Express agreement to be bound by the obligations contained 
in paragraph (b) of this section; and,
    (ix) A nonrefundable pre-payment equal to 50 percent of the fixed 
approval fee, as published in the Federal Register and Customs 
Bulletin, to cover preliminary processing costs. Further, the applicant 
agrees to pay to Customs within 30 days of notification the associated 
charges assessed for approval, i.e., those charges for actual travel 
and background investigation costs, and the balance of the fixed 
approval fee.
    (2) Where should an application be sent? A commercial gauger 
seeking approval or an extension of an existing approval shall send a 
letter of application to the U.S. Customs Service, Attention: Director, 
Laboratories & Scientific Services, Washington, DC 20229.
    (3) How will an application be reviewed?
    (i) Determination of competence. The Director shall determine the 
applicant's overall competence, independence, and character by 
conducting on-site inspections, which will include demonstrations by 
the applicant of gauging procedures; reviewing records submitted; and 
conducting background investigations.
    (ii) Evaluation of technical and operational requirements. Customs 
shall determine whether the following technical and operational 
requirements are met:
    (A) Equipment. The facility shall be equipped with all of the 
instruments and equipment needed to conduct approved services. The 
gauger shall ensure that all instruments and equipment are properly 
calibrated, checked, and maintained.
    (B) Facilities. The facility shall have, at a minimum, adequate 
space, lighting, and environmental controls to ensure compliance with 
the conditions prescribed for appropriate measurements.
    (C) Personnel. The facility shall be staffed with persons having 
the necessary education, training, knowledge, and experience for their 
assigned functions (e.g., maintaining equipment, calibrating 
instruments, performing gauging services, evaluating gauging results, 
and signing gauging reports on behalf of the commercial gauger). In 
general, each technical staff member should have, at a minimum, six (6) 
months training and experience in gauging.
    (e) How will an applicant be notified concerning approval?
    (1) Notice of approval or nonselection. When Customs evaluation of 
a gauger's credentials is completed, the Director shall notify the 
gauger in writing of its approval or nonselection. (Final approval 
decisions will not be made until the applicant has satisfied all bond 
requirements and made payment on all assessed charges and the balance 
of the application fee.) Notices of nonselection will state the reasons 
for the decision. All notices of approval, reapproval, or extension of 
a gauger's existing Customs-approval will be published in the Federal 
Register and Customs Bulletin.
    (2) Grounds for nonselection. The Director may deny a gauger's 
application for any of the following reasons:
    (i) The application contains false or misleading information 
concerning a material fact;
    (ii) The gauger has been indicted for, convicted of, or committed 
acts which under United States federal or state law would constitute 
any felony or misdemeanor involving misstatements, fraud, theft-related 
offenses or any other violation which would reflect adversely on the 
business integrity of the applicant;
    (iii) A determination is made that the gauger-applicant does not 
possess the capability or have adequate facilities and management to 
perform the approved methods of measurement for Customs purposes;
    (iv) A determination is made that the gauger has submitted false 
reports or statements concerning the measurement of merchandise, or 
that the applicant was subject to sanctions by state, local, or 
professional administrative bodies for such conduct;
    (v) Nonpayment of assessed charges and the balance of the fixed 
approval fee; or
    (vi) Failure to execute a bond in accordance with part 113 of this 
chapter.
    (3) Appeal of adverse determinations. Gaugers receiving an adverse 
approval determination and wishing to appeal the determination must 
file an appeal within 30 days to the Director. Within 30 days of 
receipt of the appeal, the Director shall make a final determination 
regarding the appeal and notify the gauger in writing. If the Director 
reaffirms the nonselection, again citing specific reasons, then the 
applicant may choose to either:
    (i) Submit a new application to the Director after waiting 90 days 
from the date of the Director's last decision; or
    (ii) File an action with the Court of International Trade, pursuant 
to chapter 169 of title 28, United States Code, within 60 days after 
the issuance of the Director's final decision.
    (f) What are the approval/reapproval fee requirements? 
    (1) In general. A fixed fee, representing Customs administrative 
overhead expense, will be assessed for each application for approval or 
reapproval. In addition, associated assessments, representing the 
actual costs associated with travel and per diem of Customs employees 
related to verification of application criteria and background 
investigations will be charged. The combination of the fixed fee and 
associated assessments represent reimbursement to Customs for costs 
related to approval and reapproval. The fixed fee will be published in 
the Customs Bulletin and the Federal Register. Based on a review of the 
actual costs associated with the program, the fixed fee may be adjusted 
periodically; any changes will be published in the Customs Bulletin and 
the Federal Register.
    (i) Approval fees. A nonrefundable pre-payment equal to 50 percent 
of the fixed approval fee to cover preliminary processing costs must 
accompany each application for approval. Before a gauger will be 
approved, it must submit to Customs, Account Services Division, within 
the 30 day billing period the associated charges assessed for the 
approval and the balance of the fixed approval fee.
    (ii) Reapproval fees. Before a gauger will be reapproved, it must 
submit to Customs, Account Services Division, within the 30 day billing 
period the fixed reapproval fee.
    (2) Disputes. In the event a gauger disputes the charges assessed 
for travel and per diem costs associated with scheduled inspection 
visits, it may file an appeal within 30 days of the date of the 
assessment with the Director. The appeal letter must specify which 
charges are in dispute and provide such supporting documentation as may 
be available for each allegation. The Director shall make findings of 
fact concerning the merits of an appeal and communicate the agency 
decision to the gauger in writing within 30 days of the date of the 
appeal.
    (g) Can existing Customs-approved gaugers continue to operate? 
Commercial gaugers approved by the Director prior to December 8, 1993, 
will retain approval under these regulations provided that they conduct 
their business in a manner consistent with the administrative portions 
of this section. This paragraph does not pertain to any gauger which 
has had its approval suspended or revoked. Gaugers which have had their 
approvals continued under this section will have their status 
reevaluated in the third year

[[Page 31397]]

following the effective date of this regulation. At the time of 
reapproval, these gaugers must meet the requirements of this section 
and remit to Customs, Account Services Division, within the 30 day 
billing period the fixed reapproval fee. Failure to meet these 
requirements will result in revocation or suspension of the approval.
    (h) How will Customs-approved gaugers operate? 
    (1)(i) Contents of reports. The measurement results from a Customs-
approved gauger that are submitted by an importer of record with 
respect to merchandise in an entry shall, in the absence of measurement 
conducted by Customs laboratories, be accepted by Customs, provided 
that the importer of record certifies that the measurement was of the 
merchandise in the entry. All reports shall measure net landed 
quantity, except in the case of crude petroleum of Heading 2709, 
Harmonized Tariff Schedule of the United States (HTSUS), which may be 
measured by gross quantity. Reports shall be given in the appropriate 
HTSUS units of quantity, e.g., liters, barrels, or kilograms.

----------------------------------------------------------------------------------------------------------------
                HTSUS                             Product                          Unit of quantity             
----------------------------------------------------------------------------------------------------------------
Headings 1501-1515...................  Animal and vegetable oils....  Kilogram.                                 
Subheadings 2707.10-2707.30 and        Benzene, toluene and xylene..  Liter.                                    
 2902.20-2902.44.                                                                                               
Heading 2709.........................  Crude Petroleum..............  Barrel.                                   
Heading 2710 (various subheadings)...  Fuel oils, motor oils,         Barrel                                    
                                        kerosene, naphtha,                                                      
                                        lubricating oils.                                                       
Chapter 29 (various subheadings).....  Organic compounds in bulk and  Kilogram, liter, etc.                     
                                        liquid form.                                                            
----------------------------------------------------------------------------------------------------------------

    (ii) Nothing in these regulations shall preclude Customs from 
gauging a shipment which has been gauged by a Customs-approved gauger 
at the request of an importer. In cases where a shipment has been 
gauged by both Customs and a Customs-approved gauger, all Customs 
actions will be based upon the gauging reports issued by Customs, 
unless the Director advises other actions. If Customs measures 
merchandise, it shall release the reports of its measurements to the 
importer of record or its agent upon request unless it is proprietary 
to the holder of a copyright or patent, or developed by Customs for 
enforcement purposes.
    (2) Recordkeeping requirements. Customs-approved gaugers shall 
maintain records of the type normally kept in the ordinary course of 
business in accordance with the provisions of this chapter and any 
other applicable provisions of law, and make them available during 
normal business hours for Customs inspection. In addition, these 
gaugers shall maintain all records necessary to permit the evaluation 
and verification of all Customs-related work, including, as 
appropriate, those described below. All records shall be maintained for 
five years, unless the gauger is notified in writing by Customs that a 
longer retention time is necessary for particular records. Electronic 
data storage and transmission may be approved by Customs.
    (i) Transaction records. Records for each Customs-related 
transaction must be readily accessible and have the following:
    (A) A unique identifying number;
    (B) The date and location where the transaction occurred;
    (C) The identity of the product (e.g. crude oil);
    (D) The name of the client;
    (E) The source of the product (e.g., name of vessel, flight number 
of airline); and
    (F) If available, the Customs entry date, entry number, and port of 
entry and the names of the importer, exporter, manufacturer, and 
country-of-origin.
    (ii) Major equipment records. Records for each major piece of 
equipment used in Customs-related work must identify the name and type 
of instrument, the manufacturer's name, the instrument's model and any 
serial numbers, and the occurrence of all servicing performed on the 
equipment or instrument, to include recalibration and any repair work, 
identifying who performed the service and when.
    (iii) Records of gauging procedures. The Customs-approved gauger 
must maintain complete and up-to-date copies of all approved gauging 
procedures, calibration methods, etc., and must document the procedures 
that each staff member is authorized to perform. These procedures must 
be readily available to appropriate staff.
    (iv) Gauging records. The Customs-approved gauger must identify 
each transaction by transaction record number (see paragraph (h)(2)(i) 
of this section) and must maintain all information or data (such as 
temperatures, etc.) associated with each Customs-related gauging 
transaction. Each gauging record (i.e., the complete file of all data 
for each separate transaction) must be dated and initialed or signed by 
the staff member(s) who did the work.
    (v) Gauging reports. Each gauging report submitted to Customs must 
include:
    (A) The name and address of the Customs-approved gauger;
    (B) A description and identification of the transaction, including 
its unique identifying number;
    (C) The designations of each gauging procedure used;
    (D) The gauging report itself (i.e., the quantity of the 
merchandise);
    (E) The date of the report; and,
    (F) The signature of the person accepting technical responsibility 
for the gauging report (i.e., an approved signatory).
    (3) Representation of Customs-approved status. Commercial gaugers 
approved by Customs shall limit statements or wording regarding their 
approval to an accurate description of the commodities for which 
approval has been obtained.
    (4) Subcontracting prohibited. Customs-approved gaugers shall not 
subcontract Customs-related work.
    (i) How can a gauger have its approval suspended or revoked or be 
required to pay a monetary penalty? 
    (1) Grounds for suspension, revocation, or assessment of a monetary 
penalty.--(i) General. A gauger's approval may be revoked or suspended 
or a gauger may be assessed a monetary penalty at any time by the 
Director.
    (ii) Grounds for suspension, revocation, or monetary penalty. A 
gauger's accreditation may be suspended or revoked, or a monetary 
penalty may be assessed because:
    (A) The selection was obtained through fraud or the misstatement of 
a material fact by the gauger;
    (B) The gauger, or other person the port director determines is 
exercising substantial ownership or control over the gauger operation 
or corporate officer, is indicted for, convicted of, or has committed 
acts which would constitute any felony or misdemeanor under United 
States Federal or State law. In the absence of an indictment, 
conviction, or other legal process, a port director must have probable 
cause to believe the proscribed acts occurred;

[[Page 31398]]

    (C) Staff gauger personnel refuse or otherwise fail to follow any 
proper order of a Customs officer or any Customs order, rule, or 
regulation relative to continued licensing as a Customs-accredited 
gauger;
    (D) The gauger fails to operate in accordance with the obligations 
of paragraph (b) of this section;
    (E) A determination is made that the gauger is no longer 
technically or operationally proficient at performing the approved 
methods of measurement for Customs purposes;
    (F) The gauger fails to remit to Customs, the Accounts Services 
Division, within the 30 day billing period the associated charges 
assessed for the approval and the balance of the fixed approval fee;
    (G) The gauger fails to maintain its bond; or
    (H) The gauger fails to remit to Customs, the Accounts Services 
Division, within the 30 day billing period the fixed reapproval fee.
    (iii) Assessment of monetary penalties. The assessment of a 
monetary penalty under this section, may be in lieu of, or in addition 
to, a suspension or revocation of accreditation under this section. The 
monetary penalty may not exceed $100,000 per violation and shall be 
assessed and mitigated pursuant to published guidelines. Any monetary 
penalty under this section can be in addition to the recovery of any 
loss of revenue or liquidated damages assessed under the gauger's 
Customs bond.
    (2) Notice. When a decision to suspend, revoke, and/or to assess a 
monetary penalty is contemplated, Customs shall immediately notify the 
gauger in writing of the proposed action. The notice of proposed action 
shall contain a description of the grounds for the proposed revocation, 
suspension, and/or assessment of a monetary penalty action, and advise 
the gauger of the procedures for filing appeals.
    (3) Appeal procedures. A Customs-approved gauger receiving a notice 
of suspension or revocation of approval, and/or of assessment of a 
monetary penalty, and wishing to appeal the decision, shall follow the 
appeal procedures set forth in paragraph (e)(3) of this section. An 
appeal to the Director may contain an acceptance of responsibility and 
may also provide extenuating circumstances and/or rebuttal evidence. 
Further, the appeal may ask for a meeting with the Director or his 
designee to discuss proposed actions. Should the gauger fail to file an 
appeal within the required time period, the Director shall take actions 
to implement the proposed suspension or revocation and/or to collect 
the monetary penalty assessed in the notice.
    (4) Publication. All final notices of suspension or revocation of a 
commercial gauger's approval, and/or assessment of a monetary penalty 
will be published in the Federal Register and Customs Bulletin, giving 
the effective date, duration, and scope of each action.
    4. In Sec. 151.14, the first sentence is amended by removing the 
words `` `sediment and water' characteristic as set out in 
Sec. 151.13(a)(2)'' and adding, in its place, the words ``analysis 
method for crude petroleum contained in ASTM D96 or other approved 
analysis method''.

    Approved: May 6, 1998.
Samuel H. Banks,
Acting Commissioner of Customs.

John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-15336 Filed 6-8-98; 8:45 am]
BILLING CODE 4820-02-P