[Federal Register Volume 64, Number 64 (Monday, April 5, 1999)]
[Rules and Regulations]
[Pages 16345-16347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8333]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 10, 18, 113 and 178

[T.D. 99-33]
RIN 1515-AB67


Warehouse Withdrawals; Aircraft Fuel Supplies; Pipeline 
Transportation of Merchandise in Bond

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule, with some changes, the 
interim rule amending the Customs Regulations that was published in the 
Federal Register on February 22, 1996, as T.D. 96-18. The interim rule 
implemented certain statutory changes to the Customs laws contained in 
the Customs modernization portion of the North American Free Trade 
Agreement Implementation Act regarding recordkeeping for merchandise 
transported by pipeline and duty-free withdrawals from Customs bonded 
warehouses of aircraft turbine fuel. The interim rule also clarified 
the procedures applicable to aircraft turbine fuel withdrawn from a 
bonded warehouse for certain duty-free use and then commingled with 
other lots of fuel before being so used.

EFFECTIVE DATE: April 5, 1999.

FOR FURTHER INFORMATION CONTACT: Jerry C. Laderberg, Office of 
Regulations and Rulings, 202-927-2320.

SUPPLEMENTARY INFORMATION:

Background

    Title VI of the North American Free Trade Agreement Implementation 
Act, Pub. L. 103-182 (December 8, 1993), popularly known as the Customs 
Modernization Act (Mod Act), significantly amended certain Customs 
laws. This document concerns sections 664 and 665 of the Mod Act. 
Section 664 added a new section 553a to the Tariff Act of 1930 (19 
U.S.C. 1553a), to account for bonded merchandise transported by 
pipeline. Section 665 amended section 557(a) of the Tariff Act of 1930 
(19 U.S.C. 1557(a)), to provide for the duty-free withdrawal of turbine 
fuel from a Customs bonded warehouse under a 30-day accounting period.
    Under section 553a, bonded merchandise transported by pipeline may 
be accounted for on a quantitative basis. For this purpose, the bill of 
lading or equivalent document of receipt, issued by the pipeline 
carrier to the shipper and accepted by the consignee, may be used to 
account for the quantity of merchandise so transported and to maintain 
the identity of that merchandise. This facilitates the commingling of 
bonded merchandise with non-bonded merchandise being transported by 
pipeline. Commingling previously was not permitted under Customs law, 
which required that the physical identity of the bonded merchandise be 
maintained. However, since most merchandise transported by pipeline is 
commingled and is susceptible to quantitative accounting, section 553a 
is intended both to enable the effective use of modern fuel 
transportation systems and to reduce the administrative costs and 
paperwork for the industry and the Government.
    Under amended section 1557(a), aircraft turbine fuel may be 
withdrawn from a Customs bonded warehouse for use as provided under 
section 309 of the Tariff Act of 1930 (19 U.S.C. 1309) without the 
payment of duty if an amount equal to the quantity of fuel withdrawn is 
shown to be used as provided for in section 1309 within 30 days of its 
withdrawal. Duties must be deposited on turbine fuel that was withdrawn 
in excess of the quantity

[[Page 16346]]

shown to have been used under section 1309 during the 30-day period 
following withdrawal of the fuel. Previously, Customs required daily 
accounting for such fuel, which resulted in great administrative 
expense and excessive paperwork for industry. The amended procedure 
allows for the commingling of different lots of fuel, whether bonded, 
imported, or domestic, in a modern hydrant system, with accounting for 
the bonded fuel in a manner which is cost-effective and which 
substantially reduces paperwork.
    Accordingly, by a document published in the Federal Register (61 FR 
6772) on February 22, 1996, as T.D. 96-18, Customs issued interim 
regulations to implement the foregoing statutory enactments.
    The interim regulations added a new Sec. 18.31 to its regulations 
(19 CFR 18.31) to allow bonded merchandise being transported by 
pipeline to be accounted for on a quantitative basis, and a new 
Sec. 10.62b to permit accounting on a monthly basis for the duty-free 
withdrawal of aircraft turbine fuel from a bonded warehouse for use as 
provided in 19 U.S.C. 1309. In connection with new Secs. 10.62b and 
18.31, the interim regulations also made conforming changes to existing 
Secs. 10.60(d), 10.62(a), 18.1(a)(1), and 113.62(b) of the Customs 
Regulations (19 CFR 10.60(d), 10.62(a), 18.1(a)(1), and 113.62(b)).

Discussion of Comments

    One commenter responded to the request for comments on the interim 
regulations contained in T.D. 96-18. This commenter agreed with the 
substance of the interim regulations, but made a number of suggestions 
in an effort to clarify the meaning of the regulations or to further 
simplify their administration. The suggestions made by the commenter, 
together with the responses by Customs, are set forth below.
    Comment: The reference in Sec. 10.62(a) to Customs Form (CF) 7506 
should be changed to Customs Form 7501 because Customs has since 
adopted the use of CF 7501 in place of CF 7506.
    Customs Response: Customs agrees. Section 10.62(a) is changed 
accordingly.
    Comment: The last sentence in Sec. 10.62b(b) should be changed to 
require that the withdrawal of turbine fuel be made using CF 7512 
unless the blanket withdrawal procedure is used.
    Customs Response: Customs disagrees. Under Sec. 144.37, Customs 
Regulations (19 CFR 144.37), either a CF 7512 or a CF 7501 may be used 
to document the withdrawal.
    Comment: The commenter stated that the use of the phrase, ``the 
fuel withdrawn which is not entered and upon which duties have not been 
paid'', in Sec. 10.62b(c)(1) and its subordinate paragraphs, is 
superfluous and should be deleted from these provisions. The commenter 
asserts that, as used in paragraph (c)(1)(ii)(C) of Sec. 10.62b, the 
phrase appears misplaced because this paragraph deals with fuel being 
loaded onto an aircraft, as opposed to being withdrawn without entry or 
payment of duty from a bonded warehouse.
    Customs Response: Customs disagrees that the phrase should be 
entirely deleted from Sec. 10.62b(c). It serves to remind Customs and 
the party withdrawing the fuel that the fuel must be entered if not 
timely laden under 19 U.S.C. 1309. Customs agrees, however, that the 
phrase is inappropriate as used in Sec. 10.62b(c)(1)(ii)(C). Section 
10.62b(c)(1)(ii)(C) is revised consistent with the request made by the 
commenter.
    Comment: The commenter believes that it would be helpful to both 
Customs and importers to indicate in Sec. 10.62b(c)(1) that the 
referenced documents should be submitted to Customs at the port where 
the bonded entry was filed.
    Customs Response: Customs agrees and the provision is modified.
    Comment: The commenter states, with reference to Sec. 10.62b(g)(5), 
that blanket withdrawals of fuel from a bonded warehouse eliminate the 
need to file a CF 7512. The commenter advocates that the provision be 
revised to provide that a withdrawal document meeting the requirements 
of Sec. 10.62b can be submitted instead of CF 7512. The commenter also 
suggests that the withdrawal document, which is issued by the warehouse 
proprietor under Sec. 10.62b(g)(5), could also be issued by a pipeline 
operator, barge or vessel operator, or other party acceptable to 
Customs.
    In addition, the commenter wants to delete the requirement in 
Sec. 10.62b(g)(5)(ii) that the withdrawal document identify the 
specific tank from which the bonded fuel is withdrawn. The commenter is 
of the opinion that because fuel may be withdrawn from several tanks in 
frequent batches at multi-tank terminals, the precise tank or tanks 
from which a particular batch of fuel is withdrawn cannot readily be 
known. Moreover, the commenter declares that precise tank 
identification is not currently maintained for commercial or Customs 
purposes.
    Customs Response: Customs disagrees with the suggested changes. As 
already mentioned, under Sec. 144.37, Customs Regulations (19 CFR 
144.37), a CF 7512, or a CF 7501, may be used to document withdrawals 
for export.
    Because the warehouse proprietor is the party obligated under bond 
for the proper withdrawal of fuel supplies from the warehouse, the 
proprietor is the appropriate party to issue the withdrawal document. 
Customs believes that permitting another party, such as a pipeline, 
vessel, or barge operator, to issue a withdrawal document would impose 
an administrative burden on the agency as well as on the trade.
    Furthermore, Customs believes that the withdrawal document must 
include the specific tank from which fuel is withdrawn in order to 
enable the agency to audit the withdrawal of the fuel accurately and 
effectively.

Conclusion

    For these reasons, and after careful consideration of the comments 
and further review of the matter, Customs concludes that the interim 
rule published in the Federal Register (61 FR 6772) on February 22, 
1996, as T.D. 96-18, should be adopted as a final rule with the changes 
explained above.

Regulatory Flexibility Act and Executive Order 12866

    As discussed in the interim rule, since the amendments are not 
subject to the notice and public procedure requirements of the 
Administrative Procedure Act (5 U.S.C. 553), they are not subject to 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Nor do the 
amendments constitute a ``significant regulatory action'' under E.O. 
12866.

Paperwork Reduction Act

    The collection of information contained in this final regulation 
has been reviewed and approved by the Office of Management and Budget 
(OMB) in accordance with the requirements of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3507(d)) under control number 1515-0209. Part 
178, Customs Regulations (19 CFR part 178) is amended to make provision 
for this information collection. An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a valid control number assigned by OMB.
    The collection of information in this final rule is in Sec. 10.62b. 
This information is required and will be used to verify that turbine 
fuel withdrawn from a Customs bonded warehouse is used on aircraft 
qualifying for duty-free withdrawal of fuel supplies, in accordance 
with statutory law. The likely respondents are businesses.

[[Page 16347]]

    The estimated average annual burden associated with the collection 
of information in this final rule is 12 hours per respondent/
recordkeeper.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be directed to the Office 
of Management and Budget, 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, Office 
of Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania 
Avenue, NW., 3rd Floor, Washington, DC 20229.

List of Subjects

19 CFR Part 10

    Customs duties and inspection, Exports, Imports, Reporting and 
recordkeeping requirements, Shipments.

19 CFR Part 18

    Bonded transportation, Common carriers, Customs duties and 
inspection, Exports, Imports.

19 CFR Part 113

    Common carriers, Customs duties and inspection, Exports, Freight, 
Laboratories, Reporting and recordkeeping requirements, Surety bonds.

19 CFR Part 178

    Administrative practice and procedure, Exports, Imports, Reporting 
and recordkeeping requirements.

Amendments to the Regulations

    Accordingly, the interim rule amending parts 10, 18 and 113, 
Customs Regulations (19 CFR parts 10, 18 and 113), which was published 
at 61 FR 6772 on February 22, 1996, is adopted as a final rule with the 
changes set forth below. In addition, part 178 is amended to add a new 
listing to Customs approved information collection requirements.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    1. The general authority citation for part 10, and the relevant 
specific authority citations, continue to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 
1498, 1508, 1623, 1624, 3314.
* * * * *
    Sections 10.61, 10.62, 10.63, 10.64, 10.64a also issued under 19 
U.S.C. 1309;
* * * * *
    Section 10.62b also issued under 19 U.S.C. 1557;
* * * * *


Sec. 10.62  [Amended]

    2. In Sec. 10.62(a), the first sentence is amended by removing the 
reference to ``Customs Form 7506'' and by adding, in its place, 
``Customs Form 7501''.
    3. Section 10.62b is amended by revising paragraphs (c)(1) and 
(c)(1)(ii)(C) to read as follows:


Sec. 10.62b  Aircraft turbine fuel.

* * * * *
    (c) Establishment of use of fuel by qualifying aircraft. * * *
    (1) The person withdrawing aircraft turbine fuel under paragraph 
(b) of this section must establish that an aircraft qualifying for the 
privileges provided for in section 309, Tariff Act of 1930, as amended, 
used fuel in an amount equal to or exceeding the quantity of the fuel 
withdrawn that is not entered and upon which duties are not paid by 
submitting to Customs, at the port where the bonded warehouse entry was 
filed, within the time provided in paragraph (d) of this section, 
either--
* * * * *
    (ii) * * *
    (C) All of the aircraft into which fuel is loaded hereunder were 
used in a trade provided for in section 309; and
* * * * *

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

    1. The authority citation for part 178 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

    2. Section 178.2 is amended by adding a new listing to the table in 
appropriate numerical order to read as follows:


Sec. 178.2  Listing of OMB control numbers.

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        19 CFR section              Description         OMB Control No.
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*                  *                  *                  *
                  *                  *                  *
Sec.  10.62b.................  Certificate of                  1515-0209
                                compliance for
                                turbine fuel
                                withdrawals.
 
*                  *                  *                  *
                  *                  *                  *
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    Approved: March 8, 1999.
Raymond W. Kelly,
Commissioner of Customs.

John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 99-8333 Filed 4-2-99; 8:45 am]
BILLING CODE 4820-02-P