[Federal Register Volume 64, Number 172 (Tuesday, September 7, 1999)]
[Rules and Regulations]
[Pages 48528-48543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23033]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 113, 151, and 178

[T.D. 99-67]
RIN 1515-AB60


Accreditation of Commercial Testing Laboratories; Approval of 
Commercial Gaugers

AGENCY: Customs Service, Treasury.

ACTION: Final rule.

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SUMMARY: This document amends 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 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 regulations provide that Customs will charge such laboratories/
gaugers to accredit/approve and periodically reaccredit/reapprove their 
commercial services pursuant to a reimbursable fee schedule, 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, or gauging of imported merchandise.

EFFECTIVE DATE: October 7, 1999.

FOR FURTHER INFORMATION CONTACT: Ira Reese, Laboratories and Scientific 
Services, (202) 927-1060; or Marcelino Borges, Laboratories and 
Scientific Services, (202) 927-1137.

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, codified 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

[[Page 48529]]

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 will 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 imposes a monetary 
penalty, by commencing an action within 60 days of such decision in the 
Court of International Trade.
    New paragraph (b) (set forth as a note to 19 U.S.C. 1499) also 
provides that commercial laboratories/gaugers that had already been 
accredited/approved by Customs may continue the accredited/approved 
activities without having to seek accreditation/approval under the new 
statute but that such facilities are subject to the new statutory and 
regulatory requirements for reaccreditation/reapproval.
    On June 9, 1998, Customs published a Notice of Proposed Rulemaking 
(NPRM) in the Federal Register (63 FR 31385) that proposed 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 (19 U.S.C. 
1499(b)), and solicited comments in these matters. The comment period 
closed August 10, 1998; seven comments were received. The comments and 
Customs responses are set forth below.

Analysis of Comments

Expansion of Program

    Comment: Three commenters recommended against the expansion of the 
current program.
    Customs Response: Prior to enactment of the Act, Customs 
regulations and administrative guidelines concerning the use of 
commercial laboratories and gaugers only allowed for the accreditation 
of commercial laboratories and the approval of commercial gaugers to 
perform selected tests on certain imported merchandise. The provisions 
of the Act authorizing the establishment of regulations pertaining to 
testing laboratories (19 U.S.C. 1499(b)) provide that accredited 
private laboratories may be used to perform tests ``that would 
otherwise be performed by Customs laboratories.'' Clearly, by this 
language Congress intended that the Customs laboratory accreditation 
program be extended to include the testing of many more products.
    Accordingly, no change to the scope of the regulatory amendments 
will be made based on these comments.

Lack of Third-Party Accreditation/Approval Entities

    Comment: Two commenters, both independent accreditation bodies 
acknowledging Congress' intention in the Act to expand the existing 
commercial laboratory accreditation program, suggested that Customs 
could benefit from making use of existing accreditation programs and 
urged Customs to reconsider expansion of its program to rely on such 
programs. The commenters suggested that Customs shift from an 
``administration'' role to an ``oversight'' role.
    Customs Response: Customs is not against third-party accreditation. 
However, Customs believes it is best positioned to do the accrediting 
of laboratories in the expanded program. Although Customs may consider 
third-party accreditation in the future, we note that our current 
decision not to use a third-body accreditation organization is 
predicated on several factors including the following:
    A. As a public organization, Customs can keep the program costs to 
a minimum while meeting all of our technical and law enforcement needs;
    B. Customs has 20+ years experience in successfully running these 
types of programs; and
    C. Customs interests and determinations go beyond those of other 
accrediting bodies, to include:
    1. The financial independence of the laboratory/gauger;
    2. Background investigations of the applicant;
    3. Ability to do the extremely broad range of testing required by 
Customs; and
    4. Ability to assist gaugers and laboratories using the Informed 
Compliance process.
    To transfer these interests and concerns to a third body would 
require time and coordination with a third body organization that could 
be better used by Customs in the actual accreditation/approval process.
    Accordingly, no change to the regulatory amendments will be made 
based on these comments.

Methodology

    Comment: One commenter expressed concern about Customs specifying 
which testing methods a laboratory can use and recommends industry 
input prior to the establishment of such testing requirements.
    Customs Response: Although Customs has already approved certain 
testing methods and designated them for use in Commodity Group 
Brochures and the U.S. Customs Laboratory Methods Manual, if a 
laboratory seeking accreditation/reaccreditation believes that other 
testing methods are more appropriate than those testing methods 
designated by Customs, then, under the provisions of Sec. 151.12(e), 
the laboratory can submit to the Executive Director with its 
application the testing method(s) it believes is more appropriate. Such 
alternative methods will be considered and approved on a case-by-case 
basis. (Note that this same latitude in designating approved 
measurement procedures is afforded gaugers in Sec. 151.13(c).)
    Since, as proposed, the regulations provide that commercial 
laboratories may seek approval of testing methods that they believe are 
appropriate, no change to the regulatory amendments will be made based 
on this comment. However, because the proposed laboratory regulations 
(the gauger regulations are not affected, see discussion below) did not 
reference the U.S. Customs Laboratory Methods Manual as a source 
containing testing methods approved by Customs, proposed Sec. 151.12(a) 
is revised to include this reference as a source of appropriate testing 
methods and to note its availability on the Internet at Customs' Web 
Site, discussed below.

Burden of Five (5)-Day Notification in General; Notification of 
Equipment, etc. Changes in Particular

    Comment: One commenter felt that the five (5)-day notification 
requirement

[[Page 48530]]

pertaining to changes in legal name, address, etc., was burdensome, 
especially for such items as staffing, equipment, and instruments, and 
suggested that Customs institute a semi-annual notification 
requirement.
    Customs Response: Customs agrees that there is no need to require 
the reporting of ``managerial or professional or executive staff'' and 
``facilities, instruments, or equipment, etc.'' and is removing that 
requirement by revising the provisions of proposed Sec. 151.12(c)(6) 
(and the parallel provision for gaugers at Sec. 151.13(b)(6)). However, 
Customs will retain the five (5)-day notification requirement 
pertaining to changes in legal name, address, etc., as these items are 
substantive changes that affect the accreditation/approval of the 
facility and Customs must be able to maintain accurate records.

Proficiency Training

    Comment: One commenter, while supporting the need for proficiency 
testing, questioned the need for Customs to develop its own program. 
This commenter opined that industrial programs, such as the American 
Society for Testing and Materials (ASTM) Laboratory Cross Check 
Program, are already available, of proven effect and efficiency, and 
should be allowed to suffice.
    Customs Response: Customs agrees with this observation and has 
revised the provisions of proposed Sec. 151.12(f)(3)(ii) and (iii) (and 
the applicable provision for gaugers at Sec. 151.13(d)(3)(i)) to modify 
the requirement that proficiency testing through check samples ``will'' 
be required to read ``may'' be required. This change will permit 
accredited/approved laboratories/gaugers to participate in proficiency 
test programs developed by recognized industrial organizations. A 
facility's level of proficiency, as determined by such programs, can 
then be considered by Customs when Customs evaluates the facility for 
purposes of reaccreditation/reapproval. However, this change will not 
preclude Customs from developing its own check program if Customs 
determines that such a program is necessary.

Excessive Fee Structure; Organizations With Multiple Locations

    Comment: Three commenters expressed concern about the fees 
associated with the accreditation process for laboratories. Two of 
these commenters stated that variable costs appeared to be high, 
especially for background investigations, and one of these commenters 
inquired how large commercial laboratory organizations with multiple 
locations would be handled.
    Customs Response: Regarding the fee structure, the provisions of 
the Act were promulgated at the request of industry with the 
understanding that Customs would be given the authority to recover non-
personnel costs. The costs contained in these regulations are 
consistent with that authority and are Customs best estimates of 
expenses. These program costs will be reevaluated periodically to see 
if the assumptions upon which they are based are correct.
    Customs has reviewed the fee structure of third-party accreditation 
bodies, as well as those of other federal and state agencies that have 
the authority to charge fees, and found that the fees proposed are 
significantly lower than third-party accreditations and lower than most 
public-sector run programs. Customs identified certain indeterminate 
costs as variable costs in an effort to keep these costs as low as 
possible to the laboratory/gauger.
    Regarding organizations with multiple locations, each site within 
an organization can separately apply for accreditation/approval or all 
sites within an organization can be designated in a single application. 
The choice will be with the applicant; however, all applicable variable 
(for technical inspections) and fixed (for administration) costs 
associated with processing the application submitted will be assessed 
for each site designated for accreditation/approval. As stated in the 
Background portion of the NPRM concerning ``variable costs,'' Customs 
will endeavor to bundle these costs, which include background 
investigations, so that where these costs apply to more than one site, 
the costs will be fairly apportioned between applicants.
    Accordingly, no change to the fee structure in the regulations will 
be made based on these comments.

Fee Structure Unfair to Small Entities

    Comment: Three commenters objected to the fairness of the proposed 
fee structure as it will impact on very small laboratories and gaugers. 
These commenters argue that such gauger/laboratory facilities currently 
in the program should be exempt from any reapproval/reaccreditation 
fees because they will not see any benefit from the expansion. Further, 
these commenters argue that in order for an existing facility to 
``expand'' its services, it will have to acquire expertise and 
equipment, both of which are expensive. These commenters conclude by 
stating that if Customs wants to recapture the expenses of an expanded 
program it should do so by charging those facilities that will benefit, 
and not those already in the program.
    Customs Response: Customs is concerned about being fair to all 
parties in interest. However, paragraph (b) of section 613 of the Act 
mandates that while those laboratories/gaugers that were accredited/
approved prior to December 8, 1993, need not reapply for initial 
accreditation/approval, such facilities will be subject to 
reaccreditation/reapproval under the applicable statute and 
implementing regulations. Accordingly, these grandfathered laboratory 
and gauger facilities are required to pay the fees that are associated 
with reaccreditation/reapproval.
    Customs believes that the expansion of this program provides an 
opportunity for any laboratory to participate in the laboratory program 
on a level playing field. Any company will have the opportunity to look 
at their position and make a decision as to the degree to which it will 
participate in the laboratory program. Accordingly, Customs has 
structured the cost system to be commensurate with the level of 
laboratory participation in the program. The costs are being fairly 
leveled against all parties and will be reviewed annually to ensure 
that all costs are reasonable to the success of the program.
    Accordingly, no change to the fee structure in the regulations will 
be made based on these comments.

Sample Retention Policy

    Comment: One commenter stated that the one year sample retention 
period was too restrictive, and pointed out that special consideration 
should be made where the sample is perishable or hazardous. This 
commenter noted that typical storage retention periods in the 
inspection industry are from 45-90 days.
    Customs Response: Regarding the one-year sample-retention period 
for non-perishable samples and remnants, Customs agrees that in the 
main this requirement may work a hardship on laboratories. Accordingly, 
Customs is lessening the retention period for non-perishable items to 
four months, unless the samples are the subject of litigation. 
Recently, Customs has authorized its own laboratories to shorten their 
sample-retention period from one year to four months, and believes that 
this same retention period could be allowed for commercial laboratories 
performing Customs testing services.
    Regarding the subject of perishable samples, both in the Background

[[Page 48531]]

portion and the proposed Amendments to the Regulations portion of the 
NPRM (at Sec. 151.12(j)(1)) it was stated that perishable samples and 
sample remnants could be disposed of more expeditiously, if done in 
accordance with acceptable laboratory procedures. With regard to 
hazardous materials, such samples are not considered comparable to 
perishable samples, and laboratories accredited to test such materials 
should know how to safely handle and store or dispose of these 
materials.
    Accordingly, to make more clear that there is both a perishable 
goods and a non-perishable goods retention period, the provisions of 
proposed Sec. 151.12(j)(1) are revised to separate the early disposal 
of perishable samples provision from the non-perishable samples 
provision. Further, the retention period for non-perishable goods is 
lessened from one year to four months, unless the merchandise sampled 
is the subject of litigation, in which case the laboratory will retain 
that sample merchandise until instructed by Customs that it can dispose 
of it.

Status of an Analysis Report Where Customs also Analyzes the Sample

    Comment: One commenter questioned why an importer would use a 
commercial laboratory if Customs could also analyze shipments and 
simply ignore an accredited laboratory's report.
    Customs Response: The Act provides that the establishment of a 
program for the accrediting/approving of commercial facilities to 
perform any of the functions currently performed by Customs facilities 
does not limit in any way or preclude Customs from independently 
testing or analyzing any sample or merchandise and basing 
administrative action upon Customs findings. For this reason, no change 
will be made to the regulations on this subject. However, Customs would 
like to make all concerned aware that Customs does not simply ignore 
the report of an accredited lab or an approved gauger in any situation. 
Where there is a contradiction between reports, Customs will review the 
situation in detail and if the report from the accredited lab or an 
approved gauger is found to be more accurate or controlling in the 
situation at hand, the Executive Director or his designee will 
authorize the use of the accredited lab or approved gauger report in 
lieu of Customs report.

Disclosure of Testing Procedures and Methods

    Comment: One commenter stated that Customs should make the 
following two points clear concerning the disclosure/availability of 
testing procedures and methods:
    (1) that the amount of laboratory analysis methods that cannot be 
released because of copyright/patent or law enforcement reasons is a 
very tiny fraction of Customs methods, and that all other methods, 
including methods to ascertain compliance with other agency 
requirements, etc., are available to the public at no charge; and
    (2) that copies of U.S. Customs lab reports and worksheets are not 
subject to the Freedom of Information Act (FOIA), and that such lab 
reports are available free of charge and the associated worksheets are 
available for a flat fee of $ 10.
    Customs Response: Regarding the commenter's first contention 
concerning the disclosure/availability of laboratory analysis methods, 
Customs generally agrees. Customs reiterates, however, that there are 
some laboratory analysis methods that are confidential because of 
enforcement concerns or because the methods are patented or 
copyrighted. Regarding the public availability of laboratory analysis 
methods at no charge, the commenter is correct. As indicated in the 
NPRM and previously in this document, a listing of the methods in the 
U.S. Customs Laboratory Methods Manual is available at the Customs Web 
Site on the Internet (www.customs.gov) and a description of those 
methods, i.e., those prepared by public sources such as Customs 
Laboratory personnel, will also be available at the Customs Web Site. 
But Customs points out that other methods that have been developed by 
private commercial organizations are not available from Customs. These 
other methods should be obtained directly from these commercial 
organizations.
    Regarding the commenter's second contention concerning the free 
availability of U.S. Customs lab reports without resort to FOIA and the 
availability of associated worksheets for a flat fee without resort to 
the FOIA, Customs does release, free of charge, to the importer of 
record and their agents, including the customs broker, laboratory 
reports that do not include proprietary information or are not related 
to an investigation. While a FOIA request is not necessary, Customs 
still requires a written request from the importer of record or agent. 
When the requested Customs laboratory report is released, it does not 
include the report's associated worksheets or other supporting data.
    Customs laboratory worksheets, including associated spectra, 
chromatograms, etc., if not containing proprietary or investigation-
related information are also released by Customs upon written request 
by the importer of record and their agents, including the customs 
broker. However, Customs does assess a charge for this information 
based on the FOIA guidelines for the costs associated with searching 
and photocopying the requested materials. This material will not be 
released prior to the payment of all applicable fees.
    No regulatory changes will be made based on these comments.

Subcontracting to another Customs-Accredited/Approved Site

    Comment: Two commenters could not see the reason why one Customs-
approved laboratory should not be able to subcontract to another 
Customs-approved laboratory. In this regard, one of these commenters 
inquired as what constituted subcontracting between companies owned or 
managed by the same parent organization (an issue visited briefly above 
under organizations with multiple locations).
    Customs Response: Reconsidering this issue and reviewing the 
position contained in ASTM E548: Standard Guide for General Criteria 
Used for Evaluating Laboratory Competence (and Guide 25 of the 
International Organization for Standardization entitled General 
Requirements for the Competence of Calibration and Test Laboratories, a 
parallel publication; see discussion below), Customs agrees that 
subcontracting between Customs accredited/approved facilities should be 
allowed. Accordingly, the provisions of Sec. 151.12(j)(5) (and the 
applicable gauger provisions at Sec. 151.13(h)(4)) are revised to allow 
for subcontracting between Customs-accredited/approved facilities.

Limiting Gaugers Activities to Petroleum Products

    Comment: One commenter inquired if the provisions of Sec. 151.13(a) 
which state that commercial gaugers deal mainly with petroleum was 
meant to limit commercial gauger activities to just petroleum products.
    Customs Response: No, this is not the case. Because gauging 
activities in general do include the measurement of animal and 
vegetable oils, as well as petroleum and petroleum products and bulk 
chemicals, proposed Sec. 151.13(a) is revised to include these 
endeavors as well. Customs would like to clarify that through the 
application process, a gauger can list any area of gauging where a 
commercial activity may be feasible. Further, already approved gaugers 
can request expanded gauging opportunities at no additional cost to 
their reapproval.

[[Page 48532]]

Gauging Procedures

    Comment: One commenter inquired when the Customs Commodity Group 
brochure dealing with gauging and measurement procedures would be 
published, so that he could review it.
    Customs Response: The proposed regulatory text of Sec. 151.13(c) 
providing for this was an error, as the definition of Commodity Group 
Brochure (provided at Sec. 151.12(a)) clearly limits these booklets to 
laboratory testing procedures; Customs does not intend to prepare such 
a brochure for gauging activities. Accordingly, the regulatory text of 
proposed Sec. 151.13(c) is revised to provide that approved gaugers 
must comply with appropriate procedures published by such organizations 
as the ASTM and the American Petroleum Institute (API), and other 
procedures approved in writing by the Executive Director.

Gauger Equipment Requirements in Closed-System Measurements

    Comment: One commenter expressed industry concern about the 
equipment requirements contained at proposed Sec. 151.13(d)(3)(ii)(A), 
which require that gaugers have all of the equipment and instruments 
needed to conduct approved services, as it relates to closed system 
measurement equipment. The commenter states that, unlike other aspects 
of the industry, there is no standardization of this equipment, even 
among different models made by the same manufacturer. The concern stems 
from the fact that many closed petroleum systems have unique piping and 
fittings that preclude a gauger from having all of the needed 
connectors to hook up a measurement system. The commenter feels that 
Customs should specify either minimum required equipment or fittings.
    Customs Response: It is noted that the proposed regulations in this 
area are not different from the existing regulations under which the 
industry is currently operating, and no radical change is anticipated. 
Enumeration of minimum required equipment or fittings is not necessary 
because Customs allows this industry to establish its own requirements 
(this is another reason why there is no Commodity Group Brochure for 
gauging). Further, it should be noted that Customs works very 
positively with this industry, on a case-by-case basis, to permit the 
use of refinery or facility connectors when they are unique and 
unavailable to the general gauger industry. But where the situation 
becomes a routine responsibility of a gauger, Customs expects the 
gauger to own and calibrate all of the connectors and equipment that 
are added to a system in order to make the appropriate measurements.
    Accordingly, no change to the regulations will be made based on 
this comment.

Notice of Proposed Assessment of Penalties

    Comment: One commenter expressed concern that there was no notice 
or due process protection before the imposition of penalties, and 
argued that specific guidelines should be established so that 
variations in interpretation of these regulatory provisions at 
different ports could be avoided.
    Customs Response: Regarding the due process rights of accredited 
laboratories/approved gaugers where penalties may be assessed, Customs 
agrees that advance notice (30 calendar days) of impending penalties 
should be clearly provided for in the regulations. Accordingly, the 
provisions of proposed Secs. 151.12(k) (1) and (2) and 151.13(i) (1) 
and (2) are revised to clarify when notices of proposed penalties are 
issued and when final notices of penalties are issued.
    Regarding the uniformity of the program, the fact that all 
decisions or orders imposing monetary penalties will be made by the 
Executive Director, Laboratories and Scientific Services, should ensure 
that the program will be administered in a uniform manner throughout 
the country. Further, Customs believes the appeal procedure provided 
for in the regulations enables affected laboratories/gaugers to 
challenge any decision of the Executive Director the facility believes 
to be unfair. The expanded program is designed to provide optimum 
uniformity with checks and balances at all decision points in order to 
protect the interests of the laboratory/gauger.

Penalties, Loss of Revenue, and Liquidated Damages

    Comment: One commenter argued that Customs-accredited laboratories 
should not be subject to penalties, the recovery of ``lost'' revenue, 
and liquidated damages under the lab's bond, as the bond is a 
performance bond, not a revenue bond.
    Customs Response: This comment concerns the provisions of 
Sec. 151.12(k)(1)(iii), entitled ``Assessment of monetary penalties.'' 
Customs believes that, perhaps, it did not clearly communicate that 
there is a distinction between the basis for monetary penalties and the 
basis for liquidated damages. There is a statutory basis for liability 
for monetary penalties and any loss of revenue in cases of intentional 
falsification of data in collusion with the importer (19 U.S.C. 
1499(b)(1)(B)(i)) and there is a contractual basis for liability under 
the provisions of the Customs bond for liquidated damages. Customs is 
revising the third sentences of proposed Sec. 151.12(k)(1)(iii) for 
laboratories and Sec. 151.13(i)(1)(iii) for gaugers to distinguish 
between penalties/loss of revenue and liquidated damages.

The Terms ``Current Approval'' and ``Future Regulation''

    Comment: One commenter requested clarification of the difference 
between ``current approval'' and ``future regulation'' regarding 
reimbursable fees for accreditation/approval and periodic 
reaccreditation/reapproval.
    Customs Response: The thrust of this comment is not clear; however, 
Customs will attempt to respond, based on the assumption that the 
comment pertains to already accredited/approved laboratories/gaugers. 
Both in the Background portion and the proposed Amendments to the 
Regulations portion of the Notice of Proposed Rulemaking at 
Sec. 151.12(j)(1) it was stated that laboratories accredited and 
gaugers approved under Customs regulations prior to December 8, 1993 
(the effective date of the Act) will not be required to pay applicable 
reaccreditation/reapproval fees until after the third year following 
the date these regulations become final. Thus, the new fees provided 
for in these regulations are not applicable to grandfathered 
laboratories/gaugers until their next scheduled inspection, based on 
their existing triennial inspection date.
    To make this point as clear as possible, the provisions of proposed 
Sec. 151.12(i) (and the parallel provision for gaugers at 
Sec. 151.13(g)) are revised to state that accredited/approved 
facilities will have their status reevaluated on their next triennial 
inspection date which is no earlier than three years after the 
effective date of this regulation.

Small Business Administration

    Comment: One commenter stated that there are many small businesses 
that will be impacted by the regulations and inquired if the Small 
Business Administration was notified of the proposed regulations.
    Customs Response: Because Customs expects the number of accredited 
laboratories and approved gaugers to be small, Customs has certified 
that, if adopted, these regulations will not have a significant adverse 
economic impact on a substantial number of small entities. A statement 
to this effect was published in the NPRM. Customs has

[[Page 48533]]

not received any information during the comment period that would 
indicate any significant economic impact.

Movement of Goods in International Commerce

    Comment: One commenter stated that the proposal failed to address 
that international business is done these days by the importers 
receiving ``confirmation'' and/or ``production'' samples of products 
before the shipments of the product are sent so that the importer is 
assured that what is being made and shipped is what was ordered per 
specifications. The apparent thrust of the comment goes to whether 
Customs labs will examine these ``confirmation'' or ``production'' 
samples rather than samples taken from part of the merchandise actually 
being imported.
    Customs Response: As was stated in the Background portion of the 
NPRM, importers that choose to have merchandise tested by commercial 
facilities accredited/approved by Customs, must certify that the sample 
tested was taken from the merchandise in the entry, i.e., from the 
importer's actual importations. Customs cannot allow for the testing of 
``confirmation'' or ``production'' samples that are not in fact samples 
taken from part of the merchandise actually being imported. The Act 
clearly provides that the tests/measurements to be allowed by 
accredited/approved commercial facilities are those that will establish 
the admissibility, quantity, composition, or characteristics of 
imported merchandise, not merchandise that someday may be imported.
    Accordingly, no change to the regulations will be made based on 
this comment.

Statement of Fee Schedule and a Clarification

    The fee schedule set forth in the proposal is being adopted. The 
initial fixed fee schedules for accrediting/reaccrediting laboratories 
and approving/ reapproving gaugers are:

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

    The initial variable fee schedules for accrediting/reaccrediting 
laboratories and approving/reapproving gaugers are approximately $1,000 
for travel per visit and $1,700 per background investigation.
    Also, Customs wishes to note that laboratories/gaugers may be 
accredited/approved in Puerto Rico, as the United States is defined to 
include Puerto Rico, see, 19 CFR 101.1, ``Customs territory of the 
United States.''

Other Changes to the Regulations

    In addition to the changes to the proposed regulatory text 
identified and discussed above in connection with the public comments, 
Customs has made numerous editorial, nonsubstantive changes to the 
proposed text (in most cases involving wording, parallel construction, 
punctuation, or structure) in order to enhance the clarity, 
readability, and application of the regulatory texts. An example of an 
editorial change involves the grounds for nonselection/suspension, 
revocation, or assessment of a monetary penalty in 
Secs. 151.12(g)(2)(ii) and 151.13(e)(2)(ii), and 
Secs. 151.12(k)(1)(ii)(B) and 151.13(i)(1)(ii)(B). Because of the 
common elements in these four provisions, the language in all these 
provisions is aligned for purposes of consistency. Several other 
changes are being made as well; they are summarized below.
Section 151.12(d)
    Proposed Sec. 151.12(d)(2) listed sixteen (16) commodity groups for 
which accreditation could be sought without special permission from the 
Executive Director. However, for ease of reference it has been decided 
to merge the commodity group of Wood and Articles of Wood with the 
commodity group of botanical identification. Accordingly, the final 
text of this section is revised to list only fifteen (15) commodity 
groups.
Section 151.12(f)
    Proposed Sec. 151.12(f)(3) provided that Customs evaluation of an 
applicant's professional abilities will be in accordance with the 
general criteria contained in the ASTM E548: Standard Guide for General 
Criteria Used for Evaluating Laboratory Competence. Because many 
Laboratories follow the ISO/IEC Guide 25--General Requirements for the 
Competence of Calibration and Testing Laboratories, the final text of 
Sec. 151.12(f) is revised to include this publication as well.
Sections 151.12(j) and 151.13(h)
    Proposed Sec. 151.12(j)(3)(F) (and the parallel provision 
applicable to gaugers at proposed Sec. 151.13(h)(2)(v)(F)) provided 
that reports must include the signature of the person accepting 
technical responsibility for the report. Because signatures are 
frequently illegible, Customs has decided to require the typed name of 
the person signing the report. Accordingly, these two provisions are 
revised to add the additional requirement of the typed name of the 
person signing the report.
Sections 151.13(c)
    The proposed heading for Sec. 151.13(c) denominated both gauging 
and measurement as procedures, which might cause some applicants to 
believe that there are two separate procedures. Accordingly, the 
reference to gauging is removed from the heading for this section.

Conclusion

    After careful consideration of all the comments received and 
further review of the matter, Customs has decided to adopt the 
amendments to part 151 of the Customs Regulations as a final rule with 
the modifications and changes discussed above and as set forth below.
    To reflect the paperwork requirements contained at Secs. 151.12(f) 
and 151.13(d), part 178 of the Customs Regulations is revised to 
account for the separate application data required for laboratory 
accreditation and gauger approval.

The Regulatory Flexibility Act, and Executive Order 12866

    Because the number of accredited laboratories and approved gaugers 
is expected to be small, pursuant to the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.), it is certified that the 
amendments will not have a significant adverse economic impact on a 
substantial number of small entities. Accordingly, the amendments are 
not subject to the regulatory analysis or other requirements of 5 
U.S.C. 603 and 604. This amendment does not meet the criteria for a 
``significant regulatory action'' as specified in Executive Order 
12866.

Paperwork Reduction Act

    The collection of information contained in these final regulations 
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) under control number 1515-0155. 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 assigned by OMB.
    The collections of information in this final rule are in 
Secs. 151.12(e) and 151.13(c). The information is required so that 
Customs can make a determination as to which applicants

[[Page 48534]]

are competent to receive or maintain accreditation/approval credentials 
to test/measure imported merchandise. The information will be used to 
process those applications submitted for Customs accreditation/
approval. The likely respondents are individuals and commercial 
organizations who either analyze merchandise or measure, gauge, or 
sample merchandise.
    The estimated average burden associated with the collection of 
information in this final rule is five hours per respondent or 
recordkeeper. Comments concerning the accuracy of this burden estimate 
and suggestions for reducing this burden should be directed to the U.S. 
Customs Service, Information Services Group, Office of Finance, 1300 
Pennsylvania Ave., N.W., Washington, D.C. 20229; and to OMB, Attention: 
Desk Officer for the Department of the Treasury, Office of Information 
and Regulatory Affairs, Washington, D.C. 20503.

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

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

19 CFR Part 178

    Administrative practice and procedure, Collections of information, 
Exports, Imports, Paperwork requirements, Reporting and recordkeeping 
requirements.

Amendments to the Regulations

    For the reasons stated above, parts 113, 151, and 178 of the 
Customs Regulations (19 CFR parts 113, 151, and 178) are amended 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.
* * * * *


Sec. 113.67  [Amended]

    2. Section 113.67 is amended as follows:
    a. 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)''.
    b. 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, 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.
    Assistant Commissioner. In Secs. 151.12 and 151.13, references to 
the ``Assistant Commissioner'' mean the Assistant Commissioner, Office 
of Field Operations, located in Washington, D.C.
    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 laboratory methods which commercial 
laboratories are required to have the capability to perform to qualify 
for Customs-accreditation in a particular commodity group. The 
brochures and the U.S. Customs Laboratory Methods Manual will specify 
the particular laboratory testing methods required for particular 
commodity groups, unless written permission from the Executive Director 
is given to use an alternate method. Procedures required by the 
Executive 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 and a listing of the methods found in 
the U.S. Customs Laboratory Methods Manual are available from the U.S. 
Customs Service, Attention: Executive Director, Laboratories and 
Scientific Services, Washington, D.C. 20229 and can also be found on 
the Customs Internet Web Site: www.customs.gov.
    Executive Director. In Secs. 151.12 and 151.13, references to the 
``Executive Director'' mean the Executive Director, Laboratories and 
Scientific Services, located in Washington, D.C.
    (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 Executive 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

[[Page 48535]]

with approved standards and procedures, including procedures which may 
be required by the Commissioner of Customs or the Executive 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 Executive 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 and samples (see paragraph (j)(1) of this section) 
specified by Customs as necessary to address matters concerned in 
pending litigation, and, if laboratory operations or accreditation 
cease, to contact Customs immediately regarding the disposition of 
records/samples 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 
Executive 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 Executive 
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, or approved 
signatories to notify the Executive 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 and the U.S. Customs Laboratory Methods 
Manual. Application may be made for accreditation in more than one 
commodity group. At the discretion of the Executive 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 special permission from the Executive 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 Chapters 14 and 44-46, HTSUS;
    (iv) Sugar, Sugar Syrups, and Confectionery products entered under 
Chapter 17, HTSUS;
    (v) Spirituous Beverages entered under Chapter 22, HTSUS;
    (vi) Building Stone, Ceramics, Glassware, and Other Mineral 
Substances entered under Chapters 25 and 68-70, HTSUS;
    (vii) Inorganic Materials, including Inorganic Compounds and Ores, 
entered under Chapters 26, 28, 31, and 36-38, HTSUS;
    (viii) Petroleum and Petroleum Products entered under Chapters 27 
and 29, HTSUS;
    (ix) Organic Materials, including Intermediates and 
Pharmaceuticals, entered under Chapters 29, 30, 34, 35, and 38, HTSUS;
    (x) Rubber, Plastics, Polymers, Pigments and Paints entered under 
Chapters 32, 39, and 40, 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) Paper and Paper Products entered under Chapters 47-49, 
HTSUS;
    (xiv) Textiles and Related Products, including footwear and hats, 
entered under Chapters 50-67, HTSUS; and,
    (xv) Metals and Alloys entered under Chapters 72-83, HTSUS.
    (e) What are the approved methods of analysis? Customs-accredited 
laboratories must follow the general or specific testing methods set 
forth in Commodity Group Brochures and the U.S. Customs Laboratory 
Methods Manual in the testing of designated commodities, unless the 
Executive 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 must contain the following information:
    (i) The applicant's legal name and the address 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, 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 analysis reports on behalf of the 
commercial laboratory;
    (vi) A complete description of the applicant's facilities, 
instruments, and equipment;
    (vii) An 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 
Executive 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 methods are being submitted for approval which are 
not specifically provided for in a Commodity Group Brochure and the 
U.S. Customs Laboratory Methods Manual, a listing of such methods;
    (ix) A listing by commodity group of each method according to its 
Customs Laboratory Method Number for which the laboratory is seeking 
accreditation;
    (x) An 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 of preliminary 
accreditation the associated charges assessed for accreditation, i.e., 
those charges for actual travel and background

[[Page 48536]]

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 must 
send a letter of application to the U.S. Customs Service, Attention: 
Executive Director, Laboratories & Scientific Services, 1300 
Pennsylvania Ave., NW, 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 either the American Society for Testing and Materials 
(ASTM) E548 (Standard Guide for General Criteria Used for Evaluating 
Laboratory Competence) or the ISO/IEC Guide 25 (General Requirements 
for the Competence of Calibration and Testing Laboratories). 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 of testing capabilities. 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 
ongoing and may 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 Executive Director will 
determine the applicant's overall competence, independence, and 
character by conducting on-site inspections, which may include 
demonstrations by the applicant of analysis procedures and a review of 
analysis records submitted, and background investigations. The 
Executive Director may also conduct proficiency testing through check 
samples.
    (iv) Evaluation of technical and operational requirements. Customs 
will determine whether the following technical and operational 
requirements are met:
    (A) Equipment. The laboratory must be equipped with all of the 
instruments and equipment needed to conduct the tests for which it is 
accredited. The laboratory must ensure that all instruments and 
equipment are properly calibrated, checked, and maintained.
    (B) Facilities. The laboratory must 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 must 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 Executive Director will 
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 accreditation fee). 
Notices of nonselection will state the specific grounds for the 
determination. All final notices of accreditation, reaccreditation, or 
extension of existing Customs accreditation will be published in the 
Federal Register and Customs Bulletin.
    (2) Grounds for nonselection. The Executive 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 
Executive Director determines is exercising substantial ownership or 
control over the laboratory operation is indicted for, convicted of, or 
has committed acts which would:
    (A) Under United States federal or state law, constitute a felony 
or misdemeanor involving misstatements, fraud, or a theft-related 
offense; or
    (B) Reflect adversely on the business integrity of the applicant;
    (iii) A determination is made that the laboratory-applicant does 
not possess the technical capability, have adequate facilities, or 
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) Adverse accreditation decisions; appeal procedures. 
    (i) Preliminary notice. A laboratory which is not selected for 
accreditation will be sent a preliminary notice of action which states 
the specific grounds for nonselection and advises that the laboratory 
may file a response with the Executive Director within 30 calendar days 
of receipt of the preliminary notice addressing the grounds for 
nonselection.
    (ii) Final notice. If the laboratory does not respond to the 
preliminary notice, a final notice of nonselection will be issued by 
the Executive Director after 30 calendar days of receipt of the 
preliminary notice which states the specific grounds for the 
nonselection and advises that the laboratory may administratively 
appeal the final notice of nonselection to the Assistant Commissioner 
within 30 calendar days of receipt of the final notice. If the 
laboratory files a timely response, then the Executive Director, within 
30 calendar days of receipt of the response, will issue a final 
determination regarding the laboratory's accreditation. If this final 
determination is adverse to the laboratory, then the final notice of 
nonselection will state the specific grounds for nonselection and 
advise the laboratory that it may administratively appeal the final 
notice of nonselection to the Assistant Commissioner within 30 calendar 
days of receipt of the final notice.
    (iii) Appeal decision. The Assistant Commissioner will issue a 
decision on the appeal within 30 calendar days of receipt of the 
appeal. If the appeal decision is adverse to the laboratory, then the 
laboratory may choose to pursue one of the following two options:
    (A) Submit a new application for accreditation to the Executive 
Director after waiting 90 days from the date of the Executive 
Director's last decision; or
    (B) File an action with the Court of International Trade, pursuant 
to chapter

[[Page 48537]]

169 of title 28, United States Code, within 60 days after the issuance 
of the Executive 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, at the address 
specified in the billing, 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, at the billing address 
specified, 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 calendar days of the 
date of the assessment with the Executive Director. The appeal letter 
must specify which charges are in dispute and provide such supporting 
documentation as may be available for each allegation. The Executive 
Director will make findings of fact concerning the merits of an appeal 
and communicate the agency decision to the laboratory in writing within 
30 calendar days of the date of the appeal.
    (i) Can existing Customs-accredited laboratories continue to 
operate? Commercial laboratories accredited by the Executive 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 on their next 
triennial inspection date which is no earlier than three years after 
the effective date of this regulation. At the time of reaccreditation, 
these laboratories must meet the requirements of this section and remit 
to Customs, at the address specified in the billing, 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) 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 will 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 must 
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 must be surrendered to Customs.
    (i) Retention of non-perishable samples. Non-perishable samples 
reserved for Customs and sample remnants from any testing must be 
retained by the accredited laboratory for a period of four months from 
the date of the laboratory's final analysis report, unless other 
instructions are issued in writing by Customs. At the end of this 
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.
    (ii) Retention of perishable samples. Perishable samples reserved 
for Customs and sample remnants from any testing can be disposed of 
more expeditiously than provided for at paragraph (j)(1)(i) of this 
section, if done in accordance with acceptable laboratory procedures, 
unless other instructions are issued in writing by Customs.
    (2) Reports. (i) Contents of reports. Testing data must be obtained 
using methods approved by the Executive Director. The testing results 
from a Customs-accredited laboratory that are submitted by an importer 
of record with respect to merchandise in an entry, in the absence of 
testing conducted by Customs laboratories, will 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.
    (ii) Status of commercial reports where Customs also tests 
merchandise. Nothing in these regulations will 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 
Executive Director advises otherwise. If Customs tests merchandise, it 
will release the results of its test to the importer of record or its 
agent upon request unless the testing information is proprietary to the 
holder of a copyright or patent, or developed by Customs for 
enforcement purposes.
    (3) Recordkeeping requirements. Customs-accredited laboratories 
must 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 must maintain all records necessary to permit the 
evaluation and verification of all Customs-related work, including, as 
appropriate, those described below. All records must 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,

[[Page 48538]]

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 typed name and 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 must 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 accreditation 
(see paragraph (g) of this section) is prohibited.
    (5) Subcontracting prohibited. Customs-accredited laboratories must 
not subcontract Customs-related analysis work to non Customs-accredited 
laboratories or non Customs-approved gaugers, but may subcontract to 
other facilities that are Customs-accredited/approved and in good 
standing.
    (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 assessment of a monetary 
penalty. (i) In general. The Executive Director may immediately suspend 
or revoke a laboratory's accreditation only in cases where the 
laboratory's actions are intentional violations of any Customs law or 
when required by public health or safety. In other situations where the 
Executive Director has cause, the Executive Director will propose the 
suspension or revocation of a laboratory's accreditation or propose a 
monetary penalty and provide the laboratory with the opportunity to 
respond to the notice of proposed action.
    (ii) Specific grounds. 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, a principal of the laboratory, or a person the 
port director determines is exercising substantial ownership or control 
over the laboratory operation is indicted for, convicted of, or has 
committed acts which would: under United States federal or state law, 
constitute a felony or misdemeanor involving misstatements, fraud, or a 
theft-related offense; or reflect adversely on the business integrity 
of the applicant. In the absence of an indictment, conviction, or other 
legal process, the 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;
    (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, at the billing 
address specified, 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;
    (H) The laboratory fails to remit to Customs, at the billing 
address specified, within the 30 day billing period, the fixed 
reaccreditation fee; or
    (I) The laboratory fails to remit any monetary penalty assessed 
under this section.
    (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 will be 
assessed and administered pursuant to published guidelines. Any 
monetary penalty under this section can be in addition to the recovery 
of:
    (A) Any loss of revenue, in cases where the laboratory 
intentionally falsified the analysis report in collusion with the 
importer, pursuant to 19 U.S.C. 1499(b)(1)(B)(i); or
    (B) Liquidated damages assessed under the laboratory's Customs 
bond.
    (2) Notice. When a decision to suspend or revoke accreditation, 
and/or assess a monetary penalty is made, the Executive Director will 
immediately notify the laboratory in writing of the decision, 
indicating whether the action is effective immediately or is proposed.
    (i) Immediate suspension or revocation. Where the suspension or 
revocation of accreditation is immediate, the Executive Director will 
issue a notice of determination which will state the specific grounds 
for the immediate suspension or revocation and advise the laboratory 
that, in accordance with paragraph (k)(3) of this section, it may 
administratively appeal the determination to the Assistant Commissioner 
within 30 calendar days of the notice of determination. The laboratory 
may not perform any Customs-accredited functions during the appeal 
period.
    (ii) Proposed suspension, revocation, or assessment of monetary 
penalty.
    (A) Preliminary notice. Where the suspension or revocation of 
accreditation, and/or the assessment of a monetary penalty is proposed, 
the Executive Director will issue a preliminary notice of action which 
will state the specific grounds for the proposed action and advise the 
laboratory that it has 30 calendar days to respond. The laboratory may 
respond by accepting responsibility, explaining extenuating 
circumstances, and/or providing rebuttal evidence. The laboratory also 
may ask for a meeting with the Executive Director or his designee to 
discuss the proposed action. The laboratory may continue to perform

[[Page 48539]]

functions requiring Customs-accreditation during this 30-day period. If 
the laboratory does not respond to the preliminary notice, a notice of 
adverse determination, in accordance with paragraph (k)(2)(ii)(B) of 
this section, will be issued by the Executive Director after 30 
calendar days of receipt of the preliminary notice. If the laboratory 
files a timely response, then the Executive Director, within 30 
calendar days of receipt of the response, will issue a notice of 
determination. If this determination is adverse to the laboratory, a 
notice of adverse determination, in accordance with paragraph 
(k)(2)(ii)(B) of this section, will be issued by the Executive Director 
after 30 calendar days of receipt of the response.
    (B) Notice of adverse determination. A notice of adverse 
determination will state the action being taken, specific grounds for 
the determination, and advise the laboratory that it may 
administratively appeal the adverse determination to the Assistant 
Commissioner, in accordance with paragraph (k)(3) of this section. The 
laboratory may not continue to perform any Customs-accredited functions 
upon receiving a notice of adverse determination that its accreditation 
has been suspended or revoked.
    (3) Appeal. A Customs-accredited laboratory receiving an adverse 
determination from the Executive Director that its accreditation has 
been suspended or revoked, and/or that it has been assessed a monetary 
penalty may file an administrative appeal to the Assistant Commissioner 
within 30 calendar days of the notice of determination. If the 
laboratory does not file an administrative appeal, the determination 
made by the Executive Director in paragraph (k)(2) of this section will 
become a final agency decision which will be communicated to the 
laboratory by a notice of final action issued 30 days after the notice 
of determination. If the laboratory does file a timely appeal, then the 
Assistant Commissioner, within 30 calendar days of receipt of the 
appeal, will make a final agency decision regarding the laboratory's 
suspension or revocation of accreditation, and/or assessment of a 
monetary penalty. If the final agency decision is adverse to the 
laboratory, the decision will be communicated to the laboratory by a 
notice of final action. Any adverse final agency decision will be 
communicated to the public by a publication in the Federal Register and 
Customs Bulletin, giving the effective date, duration, and scope of the 
decision. Any notice of adverse final action communicated to a 
laboratory will state the action taken, the specific grounds for the 
action, and advise the laboratory that it may choose to :
    (i) If suspended or revoked, submit a new application to the 
Executive Director after waiting 90 days from the date of the Executive 
Director's notice of final action; 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 Executive Director's notice of final 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 animal and vegetable oils, 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 Executive 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 
Executive 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 Executive 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, if gauger operations or approval 
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 
Executive 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 Executive 
Director of any attempt to impede, influence, or coerce gauger 
personnel in the performance of their duties, or of any decision to 
terminate gauger operations or approval status. Further, within 5 days 
of any changes involving legal name, address, ownership, parent-
subsidiary relationships, bond, other offices or sites, or approved 
signatories to notify the Executive Director by certified mail.
    (c) What are the approved measurement procedures? Customs-approved 
gaugers must comply with appropriate procedures published by such 
professional organizations as the American Society for Testing and 
Materials (ASTM) and the American Petroleum Institute (API), unless the 
Executive 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 Customs 
approval must contain the following information:
    (i) The applicant's legal name and the address 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,

[[Page 48540]]

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) An express agreement that if notified by Customs of pending 
approval 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 
Executive Director. In order to retain Customs approval, the gauger 
must maintain an adequate bond, as determined by the port director);
    (viii) An 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 Customs within 30 days of notification of preliminary 
approval 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 must send a 
letter of application to the U.S. Customs Service, Attention: Executive 
Director, Laboratories & Scientific Services, 1300 Pennsylvania Ave., 
NW, Washington, D.C. 20229.
    (3) How will an application be reviewed?
    (i) Determination of competence. The Executive Director will 
determine the applicant's overall competence, independence, and 
character by conducting on-site inspections, which may include 
demonstrations by the applicant of gauging procedures and a review of 
records submitted, and background investigations. The Executive 
Director may also conduct proficiency testing through check samples.
    (ii) Evaluation of technical and operational requirements. Customs 
will determine whether the following technical and operational 
requirements are met:
    (A) Equipment. The facility must be equipped with all of the 
instruments and equipment needed to conduct approved services. The 
gauger must ensure that all instruments and equipment are properly 
calibrated, checked, and maintained.
    (B) Facilities. The facility must have, at a minimum, adequate 
space, lighting, and environmental controls to ensure compliance with 
the conditions prescribed for appropriate measurements.
    (C) Personnel. The facility must 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 
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 Executive Director will notify 
the gauger 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 accreditation fee). Notices 
of nonselection will state the specific grounds for the determination. 
All final notices of approval, reapproval, or extension of existing 
Customs approval will be published in the Federal Register and Customs 
Bulletin.
    (2) Grounds for nonselection. The Executive 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, a principal of the gauging facility, or a person 
the Executive Director determines is exercising substantial ownership 
or control over the gauger operation is indicted for, convicted of, or 
has committed acts which would:
    (A) Under United States federal or state law, constitute a felony 
or misdemeanor involving misstatements, fraud, or a theft-related 
offense; or
    (B) Reflect adversely on the business integrity of the applicant;
    (iii) A determination is made that the gauger-applicant does not 
possess the technical capability, have adequate facilities, or 
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) Adverse approval decisions; appeal procedures.--(i) Preliminary 
notice. A gauger which is not selected for approval will be sent a 
preliminary notice of action which states the specific grounds for 
nonselection and advises that the gauger may file a response with the 
Executive Director within 30 calendar days of receipt of the 
preliminary notice addressing the grounds for nonselection.
    (ii) Final notice. If the gauger does not respond to the 
preliminary notice, a final notice of nonselection will be issued by 
the Executive Director after 30 calendar days of receipt of the 
preliminary notice which states the specific grounds for the 
nonselection and advises that the gauger may administratively appeal 
the final notice of nonselection to the Assistant Commissioner within 
30 calendar days of receipt of the final notice. If the gauger files a 
timely response, then the Executive Director, within 30 calendar days 
of receipt of the response, will issue a final determination regarding 
the gauger's approval. If this final determination is adverse to the 
gauger, then the final notice of nonselection will state the specific 
grounds for nonselection and advise the gauger that it may 
administratively appeal the final notice of nonselection to the 
Assistant Commissioner within 30 calendar days of receipt of the final 
notice.
    (iii) Appeal decision. The Assistant Commissioner will issue a 
decision on the appeal within 30 calendar days of receipt of the 
appeal. If the appeal decision is adverse to the gauger, then the 
gauger may choose to pursue one of the following two options:
    (A) Submit a new application for approval to the Executive Director 
after waiting 90 days from the date of the Executive Director's last 
decision; or
    (B) File an action with the Court of International Trade, pursuant 
to chapter 169 of title 28, United States Code,

[[Page 48541]]

within 60 days after the issuance of the Executive 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, at the address specified in the 
billing, 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, at the billing address specified, 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 calendar days of the date of 
the assessment with the Executive Director. The appeal letter must 
specify which charges are in dispute and provide such supporting 
documentation as may be available for each allegation. The Executive 
Director will make findings of fact concerning the merits of an appeal 
and communicate the agency decision to the gauger in writing within 30 
calendar days of the date of the appeal.
    (g) Can existing Customs-approved gaugers continue to operate? 
Commercial gaugers approved by the Executive 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 on their next triennial inspection 
date which is no earlier than three years after the effective date of 
this regulation. At the time of reapproval, these gaugers must meet the 
requirements of this section and remit to Customs, at the address 
specified in the billing, 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) Reports. (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, in the absence of measurements 
conducted by Customs, will be accepted by Customs, provided that the 
importer of record certifies that the measurement was of the 
merchandise in the entry. All reports must 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 must use the appropriate HTSUS units of 
quantity, e.g., liters, barrels, or kilograms.

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

    (ii) Status of commercial reports where Customs also gauges 
merchandise. Nothing in these regulations will 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 Executive Director advises other actions. If Customs gauges 
merchandise, it will release the report of its measurements to the 
importer of record or its agent upon request unless the gauging 
information is proprietary to the holder of a copyright or patent, or 
developed by Customs for enforcement purposes.
    (2) Recordkeeping requirements. Customs-approved gaugers must 
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 must maintain all records necessary to permit the evaluation 
and verification of all Customs-related work, including, as 
appropriate, those described below. All records must 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,

[[Page 48542]]

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 typed name and 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 must limit statements or wording regarding their 
approval to an accurate description of the commodities for which 
approval has been obtained. Use of terms other than those appearing in 
the notice of approval (see paragraph (e) of this section) is 
prohibited.
    (4) Subcontracting prohibited. Customs-approved gaugers must not 
subcontract Customs-related work to non Customs-approved gaugers or non 
Customs-accredited laboratories, but may subcontract to other 
facilities that are Customs-approved/accredited and in good standing.
    (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) In general. The Executive Director may immediately suspend 
or revoke a gauger's approval only in cases where the gauger's actions 
are intentional violations of any Customs law or when required by 
public health or safety. In other situations where the Executive 
Director has cause, the Executive Director will propose the suspension 
or revocation of a gauger's approval or propose a monetary penalty and 
provide the gauger with the opportunity to respond to the notice of 
proposed action.
    (ii) Specific grounds. A gauger's approval 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, a principal of the gauging facility, or a person 
the port director determines is exercising substantial ownership or 
control over the gauger operation is indicted for, convicted of, or has 
committed acts which would: under United States federal or state law, 
constitute a felony or misdemeanor involving misstatements, fraud, or a 
theft-related offense; or reflect adversely on the business integrity 
of the applicant. In the absence of an indictment, conviction, or other 
legal process, the port director must have probable cause to believe 
the proscribed acts occurred;
    (C) Staff gauger personnel refuse or otherwise fail to follow any 
proper order of a Customs officer or any Customs order, rule, or 
regulation;
    (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, at the billing address 
specified, 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;
    (H) The gauger fails to remit to Customs, at the billing address 
specified, within the 30 day billing period the fixed reapproval fee; 
or
    (I) The gauger fails to remit any monetary penalty assessed under 
this section.
    (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 approval under this section. The 
monetary penalty may not exceed $100,000 per violation and will be 
assessed and administered pursuant to published guidelines. Any 
monetary penalty under this section can be in addition to the recovery 
of:
    (A) Any loss of revenue, in cases where the gauger intentionally 
falsified the gauging report in collusion with the importer, pursuant 
to 19 U.S.C. 1499(b)(1)(B)(i); or
    (B) Liquidated damages assessed under the gauger's Customs bond.
    (2) Notice. When a decision to suspend or revoke approval, and/or 
assess a monetary penalty is made, the Executive Director will 
immediately notify the gauger in writing of the decision, indicating 
whether the action is effective immediately or is proposed.
    (i) Immediate suspension or revocation. Where the suspension or 
revocation of approval is immediate, the Executive Director will issue 
a notice of determination which will state the specific grounds for the 
immediate suspension or revocation and advise the gauger that, in 
accordance with paragraph (i)(3) of this section, it may 
administratively appeal the determination to the Assistant Commissioner 
with 30 calendar days of the notice of determination. The gauger may 
not perform any Customs-approved functions during the appeal period.
    (ii) Proposed suspension, revocation, or assessment of monetary 
penalty.--(A) Preliminary notice. Where the suspension or revocation of 
approval, and/or the assessment of a monetary penalty is proposed, the 
Executive Director will issue a preliminary notice of action which will 
state the specific grounds for the proposed action and advise the 
gauger that it has 30 calendar days to respond. The gauger may respond 
by accepting responsibility, explaining extenuating circumstances, and/
or providing rebuttal evidence. The gauger also may ask for a meeting 
with the Executive Director or his designee to discuss the proposed 
action. The gauger may continue to perform functions requiring Customs-
approval during this 30-day period. If the gauger does not respond to 
the preliminary notice, a notice of adverse determination, in 
accordance with paragraph (i)(2)(ii)(B) of this section, will be issued 
by the Executive Director after 30 calendar days of receipt of the 
preliminary notice. If the gauger files a timely response, then the 
Executive Director, within 30 calendar days of receipt of the response, 
will issue a notice of determination. If this determination is adverse 
to the gauger, a notice of adverse determination, in accordance with 
paragraph (i)(2)(ii)(B) of this section, will be issued by the 
Executive Director after 30 calendar days of receipt of the response.

[[Page 48543]]

    (B) Notice of adverse determination. A notice of adverse 
determination will state the action being taken, specific grounds for 
the determination, and advise the gauger that it may administratively 
appeal the adverse determination to the Assistant Commissioner, in 
accordance with paragraph (i)(3) of this section. The gauger may not 
continue to perform any Customs-approved functions upon receiving a 
notice of adverse determination that its approval has been suspended or 
revoked.
    (3) Appeal. A Customs-approved gauger receiving an adverse 
determination from the Executive Director that its approval has been 
suspended or revoked, and/or that it has been assessed a monetary 
penalty may file an administrative appeal to the Assistant Commissioner 
within 30 calendar days of the notice of determination. If the gauger 
does not file an administrative appeal, the determination made by the 
Executive Director in paragraph (i)(2) of this section will become a 
final agency decision which will be communicated to the gauger by a 
notice of final action issued 30 days after the notice of 
determination. If the gauger does file a timely appeal, then the 
Assistant Commissioner, within 30 calendar days of receipt of the 
appeal, will make a final agency decision regarding the gauger's 
suspension or revocation of approval, and/or assessment of a monetary 
penalty. If the final agency decision is adverse to the gauger, the 
decision will be communicated to the gauger by a notice of final 
action. Any adverse final agency decision will be communicated to the 
public by a publication in the Federal Register and Customs Bulletin, 
giving the effective date, duration, and scope of the decision. Any 
notice of adverse final action communicated to a gauger will state the 
action taken, the specific grounds for the action, and advise the 
gauger that it may choose to:
    (i) If suspended or revoked, submit a new application to the 
Executive Director after waiting 90 days from the date of the Executive 
Director's notice of final action; 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 
issuance of the Executive Director's notice of final action.


Sec. 151.14  [Amended]

    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''.

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 removing the entry for 
Sec. 151.13(i), and adding, in its place, separate listings for 
Secs. 151.12(f) and 151.13(d) to read as follows:


Sec. 178.2  Listing of OMB control numbers.

------------------------------------------------------------------------
                                                            OMB control
       19 CFR section                Description                no.
------------------------------------------------------------------------
 
*                  *                  *                  *
                  *                  *                  *
Sec.  151.12(f)............  Application and other             1515-0155
                              documents pertaining to
                              accreditation of
                              commercial laboratories..
Sec.  151.13(d)............  Application and other             1515-0155
                              documents pertaining to
                              approval of commercial
                              gaugers.
------------------------------------------------------------------------

Raymond W. Kelly,
Commissioner of Customs.
    Approved: July 30, 1999
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 99-23033 Filed 9-3-99; 8:45 am]
BILLING CODE 4820-02-P