[Federal Register Volume 63, Number 142 (Friday, July 24, 1998)]
[Notices]
[Pages 39929-39931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19773]


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DEPARTMENT OF THE TREASURY

Customs Service


Announcement of General Program Test: Quota Preprocessing

AGENCY: Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: This notice announces Customs plan to conduct a test to 
evaluate the effectiveness of a new operational procedure regarding the 
electronic processing of quota-class apparel merchandise. The tests 
will be conducted at ports located at New York/Newark and Los Angeles. 
The new procedure will allow certain quota entries to be processed 
prior to carrier arrival, thus reducing the quota processing time. This 
notice informs the public of the new procedure and

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eligibility requirements to participate in the test. Public comments 
concerning any aspect of the test are solicited.

EFFECTIVE DATES: Written comments regarding this notice must be 
received on or before August 24, 1998. This test will commence no 
earlier than August 24, 1998 and run for approximately a six month time 
period, with evaluations of the test occurring periodically.

ADDRESSES: Applications to participate in the prototype will be 
accepted prior to and throughout the prototype. Written comments 
regarding this notice or any aspect of this test should be addressed to 
Lori Bowers, U.S. Customs Service, QWG Team Leader, 1000 Second Ave., 
Suite 2100, Seattle, WA 98104-1020 or may be sent via e-mail to 
[email protected]. Applications should be sent to 
the prototype coordinator at any of the four following port(s) where 
the applicant wishes to submit quota entries for preprocessing:
    (1) Julian Velasquez, Port of Los Angeles, 300 S. Ferry St., 
Terminal Island, CA 90731;
    (2) Tony Piscitelli, Los Angeles International Airport, 11099 S. La 
Cienaga Blvd., Los Angeles, CA 90045;
    (3) Barry Goldberg, JFK Airport, JFK Building 77, Jamacia, NY 
11430; and
    (4) John Lava, Ports of New York/Newark, 6 World Trade Center, New 
York, NY10048.

FOR FURTHER INFORMATION CONTACT: Lori Bowers, (206) 553-0452, or Bob 
Abels, (202) 927-0001.

SUPPLEMENTARY INFORMATION:

I. Description of Proposed Test

The Concept of Quota Preprocessing

    Many apparel importers have identified a need to reduce the 
processing time for quota entries. These importers state that the total 
processing time, as measured from carrier arrival to Customs release, 
for quota merchandise is longer than for non-quota merchandise. 
Normally, entry summary documentation for both quota and non-quota 
merchandise may be preliminarily reviewed by Customs before the arrival 
of the carrier. For quota-class merchandise, however, the importing 
carrier must have actually arrived within the port limits and either 
the estimated duties must have been deposited or a valid scheduled 
statement date must have been received by Customs via the Automated 
Broker Interface (ABI) before it is deemed that there has been 
presentation of the entry summary. Because quota priority and status 
are determined at the time of presentation, the preliminary review does 
not reduce the processing time for quota entries. This results in 
increased costs and delays in receipt of quota-class merchandise. To 
address this issue a multi-discipline work group, including members 
from the trade, was formed in partnership with the National Treasury 
Employees Union (NTEU). Using process improvement methodology, the 
Quota Processing Work Group (QWG) developed Quota Preprocessing--a new 
operational procedure regarding the processing of quota-class 
merchandise--as a solution to the problem.
    Quota preprocessing will allow certain quota entries (discussed 
below) to be filed, reviewed for admissibility, and processed through 
Customs prior to arrival of the carrier, similar to the methods in 
which non-quota entries are presently processed. It is believed that 
such a change in procedures could reduce the processing time for quota 
entries.
    The Quota Preprocessing test is designed to evaluate the 
effectiveness of this new operating procedure, so that any benefits of 
processing quota entries prior to carrier arrival can be verified. By 
prototyping the concept first, Customs can measure the benefits, 
receive input from the trade, and determine if any future changes are 
necessary before incorporating Quota Preprocessing into its standard 
procedures. Should the measurements support the anticipated benefits, 
action will be initiated to amend certain Customs regulations (see 
below) so that Quota Preprocessing can be incorporated into the design 
of Customs future computer system, ACE (Automated Commercial 
Environment).
    The ports of New York/Newark (4701, 4601, 1001) and Los Angeles 
(2704, 2720) are the test locations for Quota Preprocessing. By 
prototyping the process first at these ports, Customs can assess 
whether or not Quota Preprocessing can achieve its stated objectives 
prior to expanding the process nationally.

Prototype Objectives

    The goals of the prototype are:
    (1) To reduce the processing time of quota entries;
    (2) To process quota entries submitted as part of the preprocessing 
program in the same amount of time as non-quota entries;
    (3) To increase the quantity of quota entries released within one 
calendar day of the arrival of the carrier; and
    (4) To equalize the submission of quota entries over the five-day 
work week.

Description of the Prototype

    Participants in the prototype may submit quota entries that meet 
the eligibility requirements specified below to Customs up to five days 
prior to vessel arrival or after wheels are up on air shipments. Quota 
entries to be preprocessed must be submitted to Customs during official 
business hours (see, Sec. 101.6, Customs Regulations), and will be 
reviewed for admissibility and processed prior to the carrier's 
arrival.
    Pursuant to Customs Modernization provisions in the North American 
Free Trade Agreement Implementation Act (the Act), Pub.L. 103-182, 107 
Stat. 2057, 2170 (December 8, 1993), Customs amended its regulations, 
in part, to enable the Commissioner of Customs to conduct limited test 
programs/procedures designed to evaluate the effectiveness of new 
technology or operations procedures, which have as their goal the more 
efficient and effective processing of passengers, carriers, and 
merchandise. Section 101.9(a) of the Customs Regulations (19 CFR 
101.9(a)) allows for such general testing. See, TD 95-21. This test 
concerns the processing of merchandise and is established pursuant to 
that regulatory provision. Public comments concerning any aspect of the 
prototype are solicited and Customs will review any comments timely 
received before implementing this test.
    The test of Quota Preprocessing is scheduled to run for six months 
with the starting date targeted for approximately 30 days from the 
publication of this notice in the Federal Register. Once the test is 
underway, Customs will begin evaluating the test procedure, employing 
criteria designed to measure the effectiveness of the prototype.

II. Importer/Entry Eligibility Criteria

    Only importers who currently import apparel through the ports of 
Los Angeles (2704/2740) and/or New York/Newark (1001/4601/4701) may 
participate in the prototype. Participants will not be permitted to 
alter their importing patterns in order to take advantage of Quota 
Preprocessing. During the prototype Customs will monitor import volumes 
for significant increases through the prototype ports.
    Customs will only accept consumption entries of apparel merchandise 
subject to quota (type 02 and 07) for preprocessing which meet the 
following criteria:
    (1) The entry must be filed using the ABI;
    (2) Payment must be made electronically through the Automated 
Clearinghouse (ACH);

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    (3) Arriving carriers must use the Automated Manifest System (AMS);
    (4) The quota category must be less than 85% full;
    (5) The entry must contain at least one line classifiable in 
Chapter 61 or 62 of the Harmonized Tariff Schedule of the United States 
(HTSUS); and
    (6) The entry must be submitted at the port of Los Angeles (2704/
2720) or New York/Newark (1001/4601/4701).
    If an importer submits a quota entry for Quota Preprocessing and it 
does not meet all of the above criteria the entry summary will be 
rejected back to the filer and may not be resubmitted to Customs until 
after the carrier has arrived. Upon arrival of the carrier, merchandise 
covered by a preprocessed entry will be released unless Customs decides 
to perform an examination. If an examination of the merchandise is 
necessary, the examination will occur during the port's regular 
inspectional hours.

Regulatory Provisions Affected

    During the six-month test period of this operational procedure, the 
requirements regarding scheduling of ACH payment, quota status, 
submission of quota documents, and time of entry, found in 
Secs. 24.25(c)(3), 132.11, 132.11a, 141.63 and 141.68 of the Customs 
Regulations, will be suspended at the affected ports.
    Regarding the submission of an entry under this prototype, when the 
documents are filed prior to arrival of the merchandise the term ``time 
of entry'' shall be the time the merchandise arrives within the port 
limits. For purposes of this prototype, the term ``time of 
presentation'' shall be the time of delivery in proper form of the 
entry/entry summary for consumption for which a valid scheduled 
statement date for the estimated duties payable has been successfully 
received by Customs via the ABI. A valid scheduled statement date must 
be within 10 days of the estimated date of arrival of the merchandise.

III. Application

    Importers that wish to participate in the Quota Preprocessing 
prototype must submit a written application that includes the following 
information:
    1. The specific ports located at either New York/Newark or Los 
Angeles at which they intend to enter quota merchandise;
    2. The importer of record number(s), including suffix(es), and a 
statement of the importer's/filer's electronic filing capabilities;
    3. Names and addresses of any entry filers, including Customs 
brokers, who will be electronically filing entries at each port on 
behalf of the importer/participant; and
    4. The total number of consumption quota entries (type 02 and 07) 
filed at each of the prototype ports during the preceding 12-month 
period and the estimated number of eligible entries expected to be 
filed at each designated port during the Quota Preprocessing prototype. 
If it is expected that a significantly higher number of eligible 
entries will be filed during the prototype than were filed during the 
preceding 12 months, an explanation for the increase is necessary.
    Customs will notify applicants in writing of their selection or 
nonselection in this prototype. If an applicant is denied 
participation, he/she may appeal in writing to the port director at the 
port which denied the application.

IV. Misconduct

    A participant may be suspended from the Quota Preprocessing 
prototype and disqualified from any future phases of this prototype if 
involved in any of the following acts of misconduct:
    1. Shifting the volume of imports clearing through the prototype 
port(s);
    2. Continually overestimating the date of arrival;
    3. Continually submitting ineligible entries, i.e., the entry 
summary is non-ABI, the carrier is non-AMS, payment is not via ACH, 
and/or none of the merchandise is from HTSUS Chapter 61 or 62;
    4. Submitting multiple requests for canceled entries;
    5. Participating in any activity to circumvent quota or erroneously 
gain quota status; or
    6. Failing to abide by the terms and conditions of this notice or 
applicable laws and regulations.
    Participants subject to suspension will be notified in writing. 
Such notice will apprise the participant of the facts or conduct 
warranting suspension and the date on which the suspension will take 
effect.
    Any decision proposing suspension of a participant may be appealed 
in writing to the local port director within 15 days of the decision 
date. Should the participant appeal the notice of proposed suspension, 
the participant should address the facts or conduct charges contained 
in the notice and state how he/she does or will achieve compliance. 
However, in the case of willfulness or where public health interests or 
safety are concerned, the suspension may be effective immediately. 
Further, Customs has the discretion to immediately suspend a prototype 
participant based on the determination that an unacceptable compliance 
risk exists. This suspension may be invoked at any time after 
acceptance in the prototype. In addition to being suspended, a 
participant may be subject to penalties, liquidated damages, and/or 
other administrative sanctions for such action.

V. Test Evaluation Criteria

    Although by no means exclusive, the following evaluation criteria 
may be used by Customs to assess the merits of the test procedure:
    1. Workload impact (workload shifts/volume, cycle times, etc.);
    2. Policy and procedure accommodations;
    3. System efficiency;
    4. Operational efficiency; or
    5. Other issues identified by public comment or by the 
participants.
    Also, Customs may survey participants to validate the benefits of 
this prototype. Results of the test evaluations will be available at 
the conclusion of the prototype and will be made available to the 
public upon request.

    Dated: July 20, 1998.
Audrey Adams,
Acting Assistant Commissioner, Office of Field Operations.
[FR Doc. 98-19773 Filed 7-23-98; 8:45 am]
BILLING CODE 4820-02-P