[Federal Register Volume 65, Number 172 (Tuesday, September 5, 2000)]
[Rules and Regulations]
[Pages 53565-53580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22346]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 10, 12, 18, 24, 111, 113, 114, 125, 134, 145, 162, 
171, and 172

[T.D. 00-57]
RIN 1515-AC01


Petitions for Relief: Seizures, Penalites, and Liquidated Damages

AGENCY: Customs Service, Treasury.

ACTION: Final rule.

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SUMMARY: This document revises the Customs Regulations relating to the 
filing of petitions in penalty, liquidated damages, and seizure cases. 
Parts 171 and 172 of the Customs Regulations are recrafted in this rule 
to include petition processing in seizure and unsecured penalty cases 
under part 171 and liquidated damages and secured penalty petition 
processing under part 172. The document revises the regulations to 
allow more flexibility and useful contact with Government officials in 
an effort to make the administration of penalty, liquidated damages and 
seizure cases more efficient. These regulations eliminate needless or 
redundant provisions.

EFFECTIVE DATE: October 5, 2000.

FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Penalties Branch, 
Office of Regulations and Rulings, 202-927-2344.

SUPPLEMENTARY INFORMATION:

Background

    Under the provisions of sections 618 and 623 of the Tariff Act of 
1930, as amended (19 U.S.C. 1618 and 1623), section 320 of title 46, 
United States Code App. (46 U.S.C. App. 320), and section 5321 of title 
31, United States Code (31 U.S.C. 5321), the Secretary of the Treasury 
is empowered to remit forfeitures, mitigate penalties, or cancel claims 
arising from violation of Customs bonds upon terms and conditions that 
he deems appropriate. Under sections 66 and 624 of the Tariff Act of 
1930, as amended (19 U.S.C. 66 and 1624), the Secretary is authorized 
to issue regulations necessary to carry out the provisions of the 
Tariff Act. Consistent with that authority, Parts 171 (relating to 
seizures and penalties) and 172 (relating to liquidated damages) of the 
Customs Regulations (19 CFR Parts 171 and 172) were promulgated to 
provide for the petitioning process in order to allow for the orderly 
remission of forfeitures, mitigation of penalties, and cancellation of 
claims for liquidated damages.
    In a Notice of Proposed Rulemaking published in the Federal 
Register (63 FR 5329) on February 2, 1998, Customs proposed to 
substantially revise Parts 171 and 172 of the Customs Regulations 
relating to the filing of petitions in penalty, liquidated damages, and 
seizure cases to make the proposed regulations briefer and to allow 
more flexibility and useful contact with government officials in an 
effort to administer cases in the most efficient way possible. The 
amendments to the regulations were also proposed to eliminate needless 
or redundant provisions.

Summary of Proposal

    Below is a summary of the Notice of Proposed Rulemaking:
    1. The scope of Parts 171 and 172 was proposed to be changed. Part 
171, as proposed, related to unsecured fines and penalties and all 
seizure and forfeiture cases. Inasmuch as the payment of certain 
penalties is

[[Page 53566]]

guaranteed by the conditions of the International Carrier Bond and, 
therefore, can involve demands against sureties, the provisions of Part 
172 were proposed to be amended to relate to all claims for liquidated 
damages and penalties secured by a bond. This proposed change would 
guarantee that all such claims against sureties would be handled in a 
consistent manner.
    2. The proposed regulations anticipated that electronic filing of 
petitions is an inevitability even though Customs does not currently 
have, on a nationwide basis, the capabilities to accept petitions 
electronically. Accordingly, the proposed regulations reflected the 
acceptance of electronic signatures and eliminated the requirement of 
duplicate copies if an electronic petition is filed.
    3. The proposed regulations required that petitions for relief be 
signed by the petitioner, his attorney-at-law or a Customs broker, but 
would allow others, in certain non-commercial violations (such as 
passenger/baggage-line violations), to file petitions on behalf of non-
English speaking claimants to property or other petitioners who have 
some disability that may impede the ability to file a petition. 
Instances have occurred where such petitions were rejected because they 
did not meet the signature requirements of the current regulations. A 
strict reading of the current regulations would bar Customs from 
considering those petitions. This position caused needless delay in 
administrative processing of cases. As proposed, the process would be 
opened in these situations and efficiency would be promoted by 
allowing, in non-commercial violations, a non-English speaking 
petitioner or petitioner who has a disability which may impede his 
ability to file a petition to enlist a family member or other 
representative to file a petition on his behalf.
    4. Under the current regulations Customs may limit the petitioning 
period to 7 days in cases involving violations of 19 U.S.C. 1592 when 
the running of the statute of limitations is imminent. As Customs finds 
no reason to limit the 7-day petitioning period option to just cases 
involving violations of 19 U.S.C. 1592, it was proposed to extend the 
7-day rule to all cases and clarify that it is 7 working days, rather 
than calendar days.
    5. The regulatory section entitled ``Additional evidence required 
with certain petitions'' was proposed to be eliminated as unnecessary. 
The proposed new Sec. 171.2 indicated that the claimant or petitioner 
must establish a petitionable interest in seized property. How that 
proof is presented is not a subject requiring control by regulation.
    6. The current regulations provide that there is a right to make an 
oral presentation to seek relief from a penalty incurred for a 
violation of 19 U.S.C. 1592 for which proceedings commenced after 
December 31, 1978, and that oral presentations seeking relief for other 
penalties incurred may be allowed at the discretion of Customs. It was 
proposed to simply remove the reference to cases commenced subsequent 
to December 31, 1978, as that provision has become obsolete with the 
passage of time.
    7. Title VI of the North American Free Trade Agreement 
Implementation Act (known commonly as the Customs Modernization Act) 
(Pub.L. 103-182, 107 Stat. 2057) amended the provisions of 19 U.S.C. 
1595a(c) to provide for the seizure and forfeiture of stolen property. 
This amendment rendered current Sec. 171.22(c) obsolete, as those 
provisions of the new statute are applicable to any stolen property, 
not only that stolen in Canada and brought into the United States. 
Accordingly, it was proposed to eliminate that provision.
    8. Mitigation guidelines for monetary penalties assessed pursuant 
to 19 U.S.C. 1592 are currently published as Appendix B to Part 171 of 
the Regulations. Since the guidelines are now published, the provisions 
of Sec. 171.23 of the regulations, making these guidelines available 
upon request, became obsolete and that section was proposed to be 
eliminated.
    9. The offices of Regional Commissioner and District Director were 
eliminated under Customs reorganization; therefore, all references to 
those offices and delegations of authority to those individuals to 
decide petitions and supplemental petitions for relief became obsolete. 
In Treasury Decision 95-78 (T.D. 95-78, 60 FR 48645, September 20, 
1995), Customs published an Interim Rule which amended the regulations 
and authorized Fines, Penalties, and Forfeitures Officers to decide 
petitions for relief, and certain designated Headquarters officials 
assigned to field locations to decide supplemental and second 
supplemental petitions for relief in certain cases (although the Notice 
of Proposed Rulemaking proposed the elimination of second supplemental 
petitions, as discussed later herein). T.D. 95-78 was later finalized 
by Treasury Decision 99-27 (T.D. 99-27, 64 FR 13673, March 22, 1999). 
Changes promulgated by the interim rule were reflected in the Notice of 
Proposed Rulemaking.
    10. Consistent with the Customs reorganization, it was proposed to 
remove specific delegations of mitigation authority from the body of 
regulatory text with the intention of affording the Secretary of the 
Treasury and the Commissioner of Customs the opportunity to delegate 
authority to decide petitions and supplemental petitions to the field 
through delegation orders, without the necessity of amending the 
regulations. It was contemplated that a separate document would be 
published in the Federal Register detailing the new delegations.
    11. The provisions of Part 111 were proposed to be amended to 
eliminate the requirement of Headquarters approval of broker penalty 
cases assessed in excess of $10,000.
    12. Novel or complex issues often arise concerning Customs policy 
with regard to Customs actions or potential actions relating to 
seizures and forfeitures, penalties (including penalty-based demands 
for duty), liquidated damages or penalty assessment or mitigation in 
cases that are otherwise within field jurisdiction because of the value 
of the property or the amount of the penalty or claim for liquidated 
damages. In those instances, Headquarters advice may need to be sought. 
Accordingly, it was proposed to include a section in both Parts 171 and 
172 to allow any Customs officer or an alleged violator to initiate a 
request for advice to be submitted to the Fines, Penalties, and 
Forfeitures Officer for forwarding to the Chief, Penalties Branch, 
Office of Regulations and Rulings. It was proposed that the Fines, 
Penalties, and Forfeitures Officer would retain the authority to refuse 
to forward any request that fails to raise a qualifying issue and to 
seek legal advice from the appropriate Associate or Assistant Chief 
Counsel in such cases.
    13. Under current policy, Customs officers may accept petitions 
filed untimely in response to claims for liquidated damages. Those 
petitions can be accepted at any time prior to commencement of any 
sanctioning action against a bond principal or the issuance of any 
notice to show cause against a surety. It was proposed to permit 
Customs to accept late petitions in penalty cases as well, but, as 
articulated in guidelines published for cancellation of bond charges 
(see T.D. 94-38, 59 FR 17830, April 12, 1994), lateness in filing a 
petition was to be factored when considering remission or mitigation of 
a claim and less generous relief, if otherwise merited, was to be 
afforded to the petitioner who files in an untimely manner.
    14. The courts have consistently held that a claim for liquidated 
damages is not a ``charge or exaction'' which is

[[Page 53567]]

properly the subject of a protest filed pursuant to the authority of 19 
U.S.C. 1514. See United States versus Toshoku America, Inc., 879 F.2d 
815 (Fed. Cir. 1989); Halperin Shipping Co., Inc. v. United States, 14 
CIT 438, 742 F. Supp. 1163 (1990). In light of these decisions, it was 
proposed to amend the regulations to indicate that claims for 
liquidated damages and decisions on petitions are not properly the 
subject of a protest filed pursuant to 19 U.S.C. 1514.
    15. In Trayco, Inc. v. United States, 994 F.2d 832 (Fed. Cir. 
1993), the Court permitted a company that had petitioned for relief, 
received a decision on the petition and, although unhappy with the 
mitigation offered, paid that mitigated amount ``under protest,'' to 
file suit to recover the amount paid. The Court noted that as `` * * * 
nothing in the statute or regulations gives notice that a party may 
relinquish its rights to judicial review by paying a mitigated penalty 
and filing a second supplemental petition, we decline to hold that 
Trayco is estopped where it accompanied its payment with a statement 
expressly reserving its rights to judicial review.'' Id. at 839. 
Customs proposed to amend the regulations to eliminate this regulatory 
gap and provide that any payment made in compliance with a mitigation 
decision will act as an accord and satisfaction where the paying party 
has elected to resolve the case through the administrative process and 
has waived the right to sue for a refund. It was proposed that this 
express statement be included in all mitigation decisions offered to 
petitioners in order to provide full disclosure as to their 
administrative or judicial rights. According to the proposal, Customs 
will not accept payments ``under protest.''
    16. It was proposed to eliminate second supplemental petitions. As 
proposed, payment of a mitigated amount would never be necessary to 
receive original or appellate administrative review. If a petitioner 
believes the underlying penalty was incorrectly assessed or the claim 
improperly mitigated, he would not be required to pay and then later 
sue for a refund of monies paid.
    17. The proposed regulations included a provision allowing the 
deciding Customs official to reserve the right to require a waiver of 
the statute of limitations executed by the claimants to the property or 
charged party or parties as a condition precedent before accepting a 
supplemental petition in any case if less than one year remains before 
the statute of limitations may be asserted as a defense to all or part 
of that case. Upon receipt of such a waiver, any reduced time period 
for acceptance of a petition would not be necessary.
    18. Under current Sec. 111.95, Customs Regulations, a final 
determination of $1,000 or less in response to a petition for relief in 
a case involving assessment of a penalty for violation of the 
provisions of 19 U.S.C. 1641 could not be the subject of a supplemental 
petition. As there is no basis to single out this particular violation 
as not being worthy of a supplemental petition for relief, and as 
Customs believes all parties should have the same administrative 
rights, it was proposed to remove this restriction on the filing of 
supplemental petitions in broker penalty cases.
    19. Sections 10.39(e) and (f) of the regulations, relating to the 
filing of petitions in cases involving breaches of the terms and 
conditions of temporary importation bonds (TIBs), provide for different 
standards of review if there has been a default with respect to all of 
the articles entered under bond or if there has been a default with 
respect to part, but not all, of the articles entered under bond. 
Because this bifurcation is unnecessary, it was proposed to combine the 
provisions of Secs. 10.39(e) and (f) to provide a single standard for 
review of TIB petitions without regard to whether all or part of the 
merchandise entered under the TIB are in breach.
    20. Current Sec. 162.48, Customs Regulations, relating to the 
disposition of perishable and low-value property, permits Customs, by 
the authority granted in section 612 of the Tariff Act of 1930, as 
amended (19 U.S.C. 1612), to destroy summarily low-value seized 
property (less than $1,000) when the costs of storing and maintaining 
such property are disproportionate to its value. Customs would then 
reimburse any successful petitioning claimant from the Treasury 
Forfeiture Fund. The provisions of section 667 of the Customs 
Modernization Act removed this $1,000 cap and permitted the summary 
destruction of any seized property, without regard to value, if the 
costs of maintaining such property were disproportionate to its value. 
Section 162.48 was proposed to be amended, consistent with this 
legislative change.
    21. Finally, the provisions of Part 162 were proposed to be amended 
to specifically authorize Fines, Penalties, and Forfeitures Officers to 
accept waivers of the statute of limitations with regard to actual or 
potential violations arising within their respective ports. It was 
proposed that the Office of Regulations and Rulings would retain 
authority to accept waivers in established actual cases over which it 
has jurisdiction and a petition for relief has been filed.
    Proposed conforming amendments to Parts 10, 12, 18, 24, 111, 113, 
114, 125, 134, 145, and 162 were also set forth in the Notice of 
Proposed Rulemaking.

Discussion of Comments

    The February 2, 1998, Notice of Proposed Rulemaking made provision 
for the submission of public comments on the proposed regulatory 
changes for consideration before adoption of those changes as a final 
rule. The prescribed comment period closed on April 3, 1998. A total of 
18 responses to the solicitation of comments was received by Customs. 
The comments submitted are summarized and responded to below.

Comment

    Five commenters are opposed to the combination of Secs. 10.39(e) 
and 10.39(f). The commenters state that current Sec. 10.39(e) provides 
for relief from liquidated damages involving breach of the terms and 
conditions of the TIB when partial exportation or destruction of such 
merchandise occurs. The commenters are of the view that the proposed 
recrafted regulation would unfairly penalize importers on entire 
shipments when only a small portion may not have been exported or 
destroyed in the prescribed manner. Section 10.39(f) currently 
indicates that the amount to be tendered is determined by the value of 
the goods involved in the breach of the bond. The commenters assert 
that the proposed new regulation would not do this and it is unclear as 
to the level of liability for the importer when a partial exportation 
or destruction occurs.

Customs Response

    The commenters' fears are misplaced. First, the proposed amendment 
in no way would change the provisions of Sec. 10.39(d)(1), which 
governs assessment of liquidated damages for failure to export or 
destroy TIB merchandise in the time period prescribed by regulation. 
Claims will still be assessed at two times or 110 percent of the 
estimated duties applicable to the entry, depending on the HTSUS 
provision under which entry is made. The proposed regulatory text would 
eliminate unnecessary differences in the authority of the Fines, 
Penalties, and Forfeitures Officer to act on a petition for relief with 
regard to those cases where all of the merchandise covered under the 
TIB was not exported or destroyed as opposed to those cases where 
partial exportation or destruction

[[Page 53568]]

occurred. The provisions of Sec. 10.39(e)(1) through (e)(4), relating 
to the standards to be considered when canceling the claim upon payment 
of a lesser amount, are not being changed. Those standards will be 
applied to partial breaches as well as breaches involving all 
merchandise covered by a TIB entry. In accordance with this response, 
Customs is proceeding with combining Sec. 10.39(e) and Sec. 10.39(f) in 
the final regulatory text.

Comment

    Numerous commenters express the view that oral presentations should 
be granted as a matter of right in all cases.

Customs Response

    Customs does not agree that oral presentations should be granted as 
a matter of right in all cases, but does concede that reference to 19 
U.S.C. 1593a(b)(2) regarding petitioning of penalties assessed for 
false drawback claims was inadvertently excluded from this proposed 
regulation. The provisions of 19 U.S.C. 1592(b)(2) and 19 U.S.C. 
1593a(b)(2) specifically state that a person charged with a penalty 
thereunder shall have reasonable opportunity under 19 U.S.C. 1618 to 
make representations, both oral and written, seeking remission or 
mitigation of the monetary penalty. For the most part, other statutes 
enforced by Customs do not provide for such an opportunity. It would be 
administratively burdensome to require Customs to hear oral 
presentations in all violations for which cases are developed. 
Accordingly, the regulations provide Customs with discretion to allow 
oral conferences in other cases. However, the final regulatory text is 
amended to include reference to 19 U.S.C. 1593a(b)(2).

Comment

    One commenter indicates that the regulations should be amended in a 
manner to require Customs to act on petitions within 120 days. The 
commenter states that when a petition is received, not much else has to 
be done by Customs and there is no basis for continued delays.

Customs Response

    Customs does not agree. When a petition is received, an 
investigation often must be undertaken in order to determine the 
veracity of statements made in that petition. This can be a time 
consuming process, particularly if information from foreign sources 
must be obtained. Additionally, there are instances when a claimant to 
seized property or a charged party asks that Customs delay a decision 
on a petition for relief. If Customs is required to adhere to a rigid 
decision schedule, it could work to the disadvantage of such a party. 
While Customs makes every effort to decide petitions for relief as 
expeditiously as possible, Customs sees no reason to amend the 
regulations to place a strict time frame on the processing of 
petitions.

Comment

    A comment was received from the Food and Drug Administration (FDA), 
indicating its concern that the provisions of proposed Secs. 172.11 and 
172.12 would authorize Fines, Penalties, and Forfeitures Officers to 
decide petitions for relief in cases involving the failure to redeliver 
FDA-regulated merchandise which has been refused admission. There is a 
concern that the Customs officers will not have the technical expertise 
to make such a determination.

Customs Response

    Customs appreciates FDA's concern, but notes that the provisions of 
21 CFR 1.97(b), which require FDA and Customs to be in agreement with 
regard to the terms and conditions of cancellation of any bond charge 
arising from the failure to comply with FDA admissibility requirements, 
have not been overridden by these regulations. Fines, Penalties, and 
Forfeitures Officers will still be required to forward all petitions 
for relief in FDA cases to FDA and will follow the recommendation of 
FDA with regard to the disposition of those cases consistent with the 
regulations.

Comment

    Numerous commenters object to proposed Sec. 171.2(e), which allows 
Customs to reduce the time for filing a petition for relief to no less 
than seven working days when fewer than 180 days remain from the date 
of penalty notice or seizure before the statute of limitations may be 
available as a defense. One commenter asks that the new regulations 
commit Customs to making every effort to issue notices of penalty and 
seizure within sufficient time so as to allow importers 30 days to file 
petitions for relief. Another commenter claims that this provision 
would interfere with a surety's right to investigate and raise 
appropriate defenses, if any, before deciding to extend the statute of 
limitations. The same commenter states that the surety should receive 
notice at the same time the claim is made against the principal on the 
bond. If at least 90 days remained before expiration of the statute of 
limitations, the surety should receive the full 60 days to investigate 
the claim and file a petition. In the alternative, the commenter 
suggests that Customs accept limited waivers of the statute of 
limitations to enlarge the time remaining to the full 180-day period. 
Finally, another commenter states that Customs is now proposing to 
extend the 7-day petitioning period to other types of cases when the 
running of the statute of limitations is ``imminent.'' The commenter 
suggests that Customs define the term ``imminent.''

Customs Response

    Customs does not agree that this provision is onerous and should be 
changed. It is noted that this provision is not a newly promulgated 
exception from the usual 30 or 60-day time periods for the filing of 
petitions for relief. This provision is basically unchanged from the 
current regulations. Under current 19 CFR 171.12(e), Customs may 
shorten the petitioning period to 7 days if less than 180 days remains 
before the statute of limitations is to run. Because the current 
regulation does not distinguish between calendar or working days so as 
to determine the appropriate length of that 7-day period, Customs has 
clarified the length of this shortened petitioning period by expressly 
indicating that 7 working days is the minimum time period for providing 
a petition for relief.
    Also, it should be noted that sureties have received and will 
continue to receive courtesy copies of notices to principals of claims 
for liquidated damages which are issued against any bond the sureties 
have written. The proposed regulations, by combining liquidated damages 
case processing with processing of penalties secured by bonds, insure 
that sureties will also receive courtesy copies of penalty notices 
issued against their bond principals when the sureties have written the 
underlying International Carrier's Bond. If anything, notification to 
sureties of potential liabilities has expanded.
    There is no regulatory proscription against execution of waivers of 
the statute of limitations which would enlarge the time to 180 days 
from the date of issuance of the claim for liquidated damages in order 
to allow for the full 60-day petitioning period.
    While Customs certainly aspires to avoid having to curtail the time 
a petitioner has to file a petition for relief and Customs attempts to 
issue notices of penalty, seizure or claims for liquidated damages more 
than 180 days prior to the running of the statute of limitations, 
Customs concedes that on occasion

[[Page 53569]]

these notices do not meet that time frame. While Customs continues to 
strive to issue notices so as to provide the claimant with full 
regulatory petitioning times, such notice issuance is not always 
possible. Customs is of the view that continuation of the current 
regulatory scheme provides a reasonable method to allow for maximum 
administrative petitioning rights.
    Further, the proposed regulatory text in Sec. 171.2(e) includes 
language indicating that if a penalty is assessed or a seizure is made 
and less than 180 days remain from the date of the penalty notice or 
seizure before the statute of limitations is available as a defense, 
the Fines, Penalties, and Forfeitures Officer may specify in the notice 
a reasonable period of time, but not less than 7 working days, for the 
filing of a petition for relief. For the sake of clarity, Customs is 
removing the phrase ``from the date of penalty notice or seizure'' and 
is rephrasing the final regulatory text to indicate that the Fines, 
Penalties, and Forfeitures Officer may specify in the seizure or 
penalty notice a reasonable period of time for the filing of a petition 
for relief.
    Finally, the regulatory text does not include any reference to the 
running of the statute of limitations being ``imminent.'' Rather, a 
time certain of 180 days prior to the availability of the statute as an 
affirmative defense is referenced. Customs sees no reason to define the 
term ``imminent'' because it does not appear in the proposed 
regulation.

Comment

    Many commenters disagree with the proposal to eliminate second 
supplemental petitions. They consistently claim that second 
supplemental petitions serve an important function and provide a 
necessary level of review. One commenter notes that the second 
supplemental petition is particularly useful in vessel repair cases 
established for violation of 19 U.S.C. 1466, particularly when a 
protest decision on the vessel entry liquidation reduces the loss of 
revenue to be collected on that entry. As currently configured in 19 
CFR 171.33(c)(2)(ii), the regulation allows for the filing of a second 
supplemental petition within 30 days following an administrative or 
judicial decision with respect to entries involved in the penalty case 
which reduces the loss of duties upon which the mitigated penalty 
amount was based. The second supplemental petition affords the 
petitioner the ability to obtain the proper mitigated penalty amount. 
In vessel repair cases, the duty involved can often be substantial. 
That same commenter goes on to argue that elimination of the second 
supplemental petition would substantially reduce the petitioner's 
ability to receive full mitigation. The only avenue for further relief 
would be litigation, the least desirable alternative.

Customs Response

    Customs agrees that an avenue for relief should be available to the 
party who must rely on an administrative or judicial decision which 
would reduce the amount of administrative penalties; however, the 
second supplemental petition, which requires full payment from that 
party prior to Customs acceptance of that second supplemental petition, 
places a substantial burden on that party when those same large sums 
are at issue.
    Accordingly, in acknowledgment of the need to provide an 
administrative alternative to the party who would be affected by an 
administrative or judicial decision, Customs has decided to amend the 
provisions of proposed Secs. 171.61 and 172.41 (relating to the filing 
of supplemental petitions) to allow for the filing of a supplemental 
petition within 60 days from an administrative or judicial decision 
with respect to entries involved in the penalty case which reduces the 
loss of duties upon which the mitigated penalty amount was based. This 
amendment would save petitioning rights for the party who awaits 
another administrative decision that would influence the outcome of its 
penalty case.
    Notwithstanding the above, Customs remains of the view that the 
second supplemental petition should be eliminated. Currently, the 
petitioner is afforded up to two years after a decision on a 
supplemental petition for relief to file a second supplemental 
petition. That is simply too long a time to keep administrative matters 
open. Additionally, the Trayco court viewed with disfavor the 
regulatory requirement of payment in compliance with the decision on 
the supplemental petition for relief in order to obtain the third level 
of administrative review. Rather than prolong the process, Customs is 
of the view that two administrative opportunities provide sufficient 
levels of review for the charged party or claimant to seized property.

Comment

    Numerous comments were received with regard to Customs' proposal to 
allow any Customs officer or alleged violator to initiate a request for 
Headquarters advice with a Fines, Penalties, and Forfeitures Officer 
for forwarding to the Chief, Penalties Branch, Office of Regulations 
and Rulings. This advice request, as proposed, must relate to any novel 
or complex issue arising concerning Customs policy regarding Customs 
actions or potential actions relating to seizures and forfeitures, 
penalties (including penalty-based demands for duty), liquidated 
damages or case assessment or mitigation in cases that are otherwise 
within field jurisdiction because of the value of the property or the 
amount of the penalty or claim for liquidated damages. The Fines, 
Penalties, and Forfeitures Officer would retain authority to refuse to 
forward any request that fails to raise a qualifying issue and to seek 
advice from the appropriate Associate or Assistant Chief Counsel in 
such cases.
    Reaction to this proposed regulation ranged from strongly negative 
(with one commenter stating ``the field office is typically the source 
of the problem which the petitioner would like Headquarters to review, 
and therefore is far too interested and biased a party to determine 
whether that review is warranted''; and referring to this as ``asking 
the fox to guard the chicken coop'') to positively disposed, but 
cautious. The latter group seeks the establishment of criteria for the 
referral to Headquarters, seeing those criteria as being key to the 
effectiveness of the change. Several commenters suggest that the 
regulations provide for a right of appeal from the decision of the 
Fines, Penalties, and Forfeitures Officer to refuse referral.

Customs Response

    Customs is of the view that sufficient safeguards and guarantees 
have been written into the regulation to allay the fears that deserving 
claimants will be barred from being heard. Concomitantly, the 
regulation is drawn narrowly enough to prevent frivolous claims that 
Headquarters review is required. The Fines, Penalties, and Forfeitures 
Officer is and must be afforded discretion to refuse to forward a 
request that fails to raise a qualifying issue, but he or she is also 
encouraged to seek legal advice from Associate or Assistant Chief 
Counsel as to whether a request does raise such a qualifying issue. The 
regulation was not designed to permit Headquarters review of all 
petitions, nor is it necessary to provide for appeal rights of a 
decision to disallow Headquarters review of novel and complex issues. 
That would impose yet another administrative layer to decide whether a 
claim should be heard at a

[[Page 53570]]

Headquarters level. That would clearly not promote administrative 
efficiency.
    Customs is also of the view that establishment in regulation of 
criteria to be followed for the granting of Headquarters review would 
be difficult. It is impossible to predict what issues might arise from 
Customs policies. Unlike Applications for Further Review in the protest 
process, mitigation decisions are acts of administrative discretion and 
do not have precedential value. Facts underlying the issuance of claims 
or the making of seizures can be very different yet involve the same 
statutory violation. Decisions are made within published guideline 
ranges. To allow further review of any act of administrative discretion 
would involve Headquarters review of every decision. This is not the 
intent of this regulatory change.

Comment

    Numerous commenters express objection to the proposal to eliminate 
Customs Headquarters authorization of broker penalties when such 
penalties are proposed for issuance in amounts in excess of $10,000.

Customs Response

    When the Tariff and Trade Act of 1984 (Pub.L. 98-573) amended 19 
U.S.C. 1641 to provide for civil monetary penalties against brokers, 
Customs agreed with the brokerage community that the novelty of these 
penalties was such that Headquarters review of all proposed 19 U.S.C. 
1641 penalties was necessary so as to provide guidance to the field and 
to identify those situations for which a penalty response was 
appropriate. In Treasury Decision 86-161 (T.D. 86-161, 51 FR 30345, 
August 26, 1986; corrected 51 FR 31760, September 5, 1986), Customs 
first published broker penalty assessment and mitigation guidelines by 
adding Appendix C to Part 171 to provide further guidance for field 
offices. A revision to Appendix C was published in Treasury Decision 
90-20 (T.D. 90-20, 55 FR 10056, March 19, 1990.) After approximately 
five years of experience in assessing these penalties, Customs 
published Treasury Decision 91-77 (T.D. 91-77, 56 FR 46115, September 
10, 1991), in which field offices were empowered to issue broker 
penalties without Headquarters review when the amount to be assessed 
did not exceed $10,000. At that point, it was believed that the agency 
had sufficient experience with these penalties that Headquarters review 
was only necessary when the most serious assessments were contemplated.
    Customs is now of the view that Headquarters review of broker 
penalty cases is unnecessary. Headquarters does not by regulation 
review the issuance of any other type of penalty. There is no 
compelling reason to continue to approve broker penalties of any size. 
The Penalties Branch, Office of Regulations and Rulings, will review 
and decide supplemental petitions for relief in broker penalty cases 
when the amount assessed exceeds $10,000, so Headquarters review will 
still be afforded in the more serious cases.

Comment

    Some commenters indicate that it is unnecessary for Customs, by 
regulation, to require proof of representation. One commenter suggests 
that standards of local bar associations provide adequate protections.

Customs Response

    As Customs brokers may also represent parties that have been 
charged with penalties or claims for liquidated damages or seek return 
of seized property, standards of local bar associations do not provide 
adequate protection. The local bar association would not have 
jurisdiction to discipline a Customs broker. Because Customs concedes 
that not every petition for relief need be accompanied by a statement 
of representation, the proposed regulation left this requirement to the 
discretion of the Fines, Penalties, and Forfeitures Officer. 
Accordingly, no change is made to the proposed regulations based on 
these comments.

Comment

    One commenter is extremely concerned about unauthorized filing of 
petitions and believes that petitions should be signed only by an 
attorney or a Customs broker. The commenter suggests that proposed 
Sec. 171.1(b), which would allow a corporation's petition to be signed 
by ``an officer or responsible supervisory official or a representative 
of the corporation,'' would allow anyone claiming to be a 
representative to sign a petition. In the view of the commenter, 
virtually every significant commercial penalty claim involves a 
corporation and the proposed regulatory text would eliminate any and 
all restrictions with regard to individuals signing on behalf of 
corporations.

Customs Response

    Customs disagrees with the commenter that signing of petitions by 
corporations should be limited to attorneys or Customs brokers because 
a principal can always act on its own behalf. Customs believes that 
when a corporation is the petitioner, it clearly can have a petition 
signed by an officer. Customs also believes that a large corporation 
may not want to require that a petition be signed by an officer in all 
cases and may want the flexibility to allow a responsible individual in 
a supervisory position or other responsible employee (such as a claims 
examiner) to be able to act on its behalf. Customs does agree, however, 
with the commenter that the proposed language may be too broad in 
seeming to allow any individual claiming to be a ``representative'' of 
the corporation to sign a petition for the corporation. Because the 
language as proposed may be read too broadly, Customs is modifying the 
proposed ``representative of the corporation'' language in the final 
rule to provide that a ``responsible employee representative'' as well 
as an officer or responsible individual in a supervisory position may 
sign a petition for a corporation.

Comment

    Proposed Sec. 172.43 states that Customs may require a waiver of 
the statute of limitations as a condition precedent prior to 
consideration of a supplemental petition for relief if the statute will 
be available as a defense to all or part of a case within one year from 
the date of decision on an original petition for relief. One commenter 
suggests that this proposed language only relieves Customs from its 
duty to issue demands timely. It is averred that unless Customs is held 
accountable for issuing timely decisions on the original petition, 
there is no impetus for Customs to decide claims promptly.

Customs Response

    Customs does not agree with this analysis. The statute of 
limitations may loom as a defense for many reasons, not just because 
Customs did not issue a demand timely. Customs seeks the statute of 
limitations waiver to encourage the orderly processing of the case so 
as to avoid litigation. It is not now, nor has it ever been, Customs 
policy to delay without good cause issuance of any claim. The claimant 
can always refuse to provide the statute of limitations waiver and the 
matter can be referred for commencement of a judicial action.

Comment

    One commenter suggests that proposed Sec. 172.22(b), relating to 
the payment of mitigation amounts acting as an accord and satisfaction, 
could compromise the rights of a surety in that it would force the 
surety to settle a

[[Page 53571]]

claim because, being threatened with sanction, the surety would have to 
choose between obtaining a preliminary injunction or protesting the 
payment.

Customs Response

    Customs does not agree with the commenter. A surety is provided 
with courtesy copies of original demands on bond principals. When the 
bond principal either fails to respond or exhausts its administrative 
rights and does not comply with decisions on any petitions for relief, 
a demand on surety is issued and the surety is afforded all petitioning 
rights. Once the surety is provided with a mitigation decision, if the 
surety refuses to pay and has raised a justiciable issue, Customs will 
commence a collection action and the surety may have its day in court. 
Customs is not of the view that application of the principles of accord 
and satisfaction to any single payment in compliance with a mitigation 
decision is an event that will force the surety either to comply or go 
to court to avoid sanction. Accordingly, Customs believes that the 
regulation should be adopted as proposed.

Comment

    Another commenter strongly opposes the provisions of proposed 
Sec. 171.23. The commenter states that the government will exercise 
greater care when it knows that its decision may be reviewed by the 
courts. The commenter believes that the court will only review the 
question of whether a violation occurred, not the mitigation. The 
commenter indicates that the government should welcome rather than 
oppose the court's view of whether a violation occurred.

Customs Response

    Customs does not intend to deny a charged party its day in court. 
After Customs determines that a violation has occurred and assesses and 
mitigates a penalty, effects a seizure and remits a forfeiture, or 
assesses a claim for liquidated damages and cancels the claim upon 
payment of a lesser amount, all in accordance with the administrative 
procedure, there will be no coercion to pay. If a party wishes to have 
its day in court it can inform Customs that it will not pay and can 
wait for judicial action to be commenced.
    However, Customs believes that once a party agrees to pay an 
administratively determined mitigation, remission or cancellation 
amount, the party should not be permitted also to pursue the matter in 
the courts. This has always been Customs view--a party can choose 
between administrative proceedings and judicial proceedings. This view 
was not, however, reflected in the regulations. Section 171.23 was 
proposed in reaction to the court's statement in Trayco, supra., that 
``nothing in the statute or regulations gives notice that a party may 
relinquish its rights to judicial review by paying a mitigated 
penalty.'' The proposed regulation, once adopted, will serve to give 
the notice that the court stated was missing, in that payment of a 
penalty will act as an accord and satisfaction and bar judicial review.
    It is noted that if a party chooses to pay the mitigated penalty, 
forfeiture remission amount or bond claim cancellation amount, one 
still has the right to pursue the administrative proceeding by filing a 
supplemental petition for relief.

Comment

    One commenter representing sureties objects to proposed 
Sec. 172.13(c), which states that no action shall be taken on any 
petition from a principal or surety if received after issuance of a 
notice to show cause is issued to a surety.

Customs Response

    Customs will soon be issuing procedures with regard to the 
nonacceptance of bonds from delinquent sureties. Those procedures 
include the issuance of notices to show cause. They are being 
formulated with considerable consultation with the surety community. At 
the time a notice to show cause is issued to a surety, the surety will 
have already received at least six notifications of the existence of 
the claim. Customs does not agree that failure to accept a petition at 
that late a juncture in the administrative proceedings will place a 
chilling effect on meaningful exchanges.

Comment

    One commenter suggests that in proposed Sec. 171.1(c)(4), Customs 
should not require proof of a petitionable interest in seized property 
from an importer of record. The commenter suggests that this provision 
be amended to allow any party who may act as importer of record to file 
a petition for remission of a forfeiture without additional proof of a 
petitionable interest in the property.

Customs Response

    Customs does not agree. While Customs concedes that in the 
overwhelming number of cases, the importer of record will have a 
petitionable interest in any seized merchandise, there are situations 
where a Customs broker filing an entry as a nominal importer of record 
will have no petitionable interest in the merchandise being entered. As 
such, it would not be appropriate to include regulatory text that would 
automatically confer upon an importer of record a petitionable interest 
in seized property.

Comment

    One commenter suggests that the provisions of proposed Sec. 171.21 
should require a written decision with regard to a petition submitted 
in response to an alleged violation of 19 U.S.C. 1595a.

Customs Response

    Sections 19 U.S.C. 1592, 1593a and 1641 all specifically provide 
that a written statement which sets forth the final determination and 
the findings of fact and conclusions of law on which such determination 
is based must be issued. Customs is of the view that the agency should 
not identify through rulemaking other violations for which written 
decisions will or will not be given as a matter of right. However, 
Customs endeavors to issue written decisions in response to all 
petitions, regardless of the underlying violation.
    Customs notes that the proposed rule inadvertently omitted a 
reference to 19 U.S.C. 1593a in this section. The regulatory text has 
been amended to so include that statute in this provision.

Comment

    One commenter disagrees with the certification by Customs pursuant 
to the Regulatory Flexibility Act that the provisions of the proposed 
regulatory amendments, if adopted, will not have a substantial impact 
on a number of small entities. The commenter states that there is no 
credible support for the statement that small business entities are 
rarely repeat violators of Customs laws and, therefore, will seldom 
need to avail themselves of these regulatory provisions and file 
petitions for relief on a regular basis. The commenter provides 
anecdotal evidence that it had a bond principal that was a small entity 
that had seven delinquent liquidated damages claims. The commenter goes 
on to state that common sense suggests that small companies are 
frequent violators of the customs laws and are substantially and 
directly affected by the proposed regulations.

Customs Response

    Customs does not deny that some small businesses will be affected 
by these regulations. The statement included in the Notice of Proposed 
Rulemaking did not state that small companies would never be impacted, 
but that there would not be a significant impact on a substantial 
number of small

[[Page 53572]]

entities. Prompted by the commenter's concern, Customs, to verify its 
certification statement, reviewed all claims for liquidated damages 
(the most common sort of violation that would be incurred by a small 
entity) in a large port for Fiscal Year 1998. Some 830 violators were 
identified. Those 830 violators incurred 1,690 claims for liquidated 
damages, an average of two per entity. Only 34 entities incurred more 
than 5 claims for liquidated damages and of those 34 entities more than 
two-thirds were large transportation companies and retailers, clearly 
not small businesses. Of those 830 identified violators, (which is an 
unknown percentage of all businesses that deal with Customs in some 
form or fashion, many of whom incur no liabilities whatsoever and don't 
appear in any list of violators), only 11 could be identified as small 
businesses--slightly over one percent. In light of this sampling, 
Customs remains of the view that these amendments will not have a 
significant impact on a substantial number of small entities.

Comment

    One commenter indicates that it would be opposed to the provisions 
of proposed Sec. 172.33 (which permits Customs, as a condition to 
accepting an offer in compromise, to require that the offeror enter 
into any collateral agreement or post security which is deemed 
necessary for the protection of the interest of the United States), if 
such a provision is intended to extend the period in which the surety 
would be liable, either by request for extension of the statute of 
limitations or other means.

Customs Response

    The commenter should be assured that Customs does not intend, 
through promulgation of this section, to extend the statute of 
limitations or to otherwise compromise any rights that a party may have 
to raise any defenses with regard to any claim brought against it.

Comment

    One commenting surety representative indicates that Customs had 
recently adopted a policy whereby any mitigation offered to a bond 
principal (and not acted on by it) would be described in the first 
demand on surety, and made available to the surety as a basis for 
settlement. The commenter urges that the revised regulation provide 
that this information be included in the first demand on surety and 
that the surety be offered a reasonable opportunity to accept the 
mitigation offered. In that same vein, other commenters suggest that 
the proposed regulatory text of Secs. 171.62(a) and 172.42(a) be 
amended to add the following language: ``In no event can the reviewing 
official grant less relief than contained in the decision on the 
original petition for relief.'' It is averred that this protects 
petitioners from the risk of having to pay a higher penalty merely by 
exercising the due process right of an administrative review of the 
original decision.

Customs Response

    Customs does not agree with either of these comments. As to the 
comment of the surety, Customs offers mitigation as a matter of 
administrative discretion. While in the vast majority of cases the 
mitigation offered to the bond principal will be offered to the 
principal's surety, Customs does not want its mitigation policies to be 
dictated by regulation.
    The same logic applies to Customs rejection of the proposed 
language limiting mitigation authority when considering a supplemental 
petition for relief. Facts may arise that were not available when 
considering the original petition for relief that would call for less 
generous mitigation when considering a supplemental petition for 
relief. As a matter of policy, Customs does not grant less generous 
mitigation upon review of a supplemental petition for relief than was 
afforded on the original petition without an articulable reason for 
doing so. The filing of a supplemental petition for relief questioning 
the decision on the original petition is never, in and of itself, an 
adequate reason to grant less generous relief than was afforded on the 
original petition. A petitioner should never be penalized for the mere 
act of filing a supplemental petition for relief. In order to safeguard 
against abuses of this type, Customs affords review of supplemental 
petitions for relief by officials other than those deciding the 
original petition. Customs cannot agree to the proposed regulatory 
language barring the granting of less generous mitigation in all 
situations inasmuch as such language would interfere with the exercise 
of administrative discretion.

Comment

    Finally, numerous commenters object to Customs elimination of 
specifically enumerated delegations of authority within the language of 
the regulations. One commenter states that the Notice of Proposed 
Rulemaking stated that additional authority is to be delegated to the 
Customs ports to render decisions on petitions and supplemental 
petitions. The commenter suggests that such further delegation will 
only magnify a problem of lack of uniformity between ports.

Customs Response

    Customs notes that the Notice of Proposed Rulemaking proposed to 
remove specific delegations of mitigation authority from the body of 
the regulatory text with the intention of affording the Secretary of 
the Treasury and the Commissioner of Customs the opportunity to 
delegate authority to decide petitions and supplemental petitions 
through delegation orders without the necessity of amending the 
regulations. The Notice also stated that a separate document would be 
published in the Federal Register detailing new delegations. It is 
unclear how any further delegations of authority will only magnify a 
problem of lack of uniformity between ports, as the commenter suggests. 
All ports function under the same delegations. Rather than causing a 
lack of uniformity, those delegations promote uniformity. Accordingly, 
Customs disagrees with the comments and will publish this proposed 
regulatory text without change.

Conclusion and Other Changes

    After analysis of the comments and further review of the matter, 
Customs has determined to adopt the amendments proposed in the Notice 
of Proposed Rulemaking published in the Federal Register (63 FR 5329) 
on February 2, 1998, with the changes mentioned in the comment 
discussion and with the following additional changes that are necessary 
to bring consistency to the regulations or to remove unnecessary 
language:
    1. Customs has removed Sec. 113.46 from the regulatory text. As 
Customs is not setting forth guidelines relating to cancellation of 
bond charges resulting from failure to produce documents in the 
regulations and is not directing the reader to the location of these 
guidelines, this language is unnecessary.
    2. Customs has reviewed the last sentence of proposed Sec. 171.3(a) 
and has determined that said sentence is unnecessary. Proposed 
Sec. 171.3(a) discusses the arrangement of oral presentations in cases 
involving alleged violations of 19 U.S.C. 1592. In the current 
regulation, it was necessary to define when a proceeding was commenced 
because of the change in the underlying statute promulgated in 1978. 
Therefore, through the passage of time the sentence has become obsolete 
and has been eliminated.
    3. The provisions of proposed Sec. 171.64 contain an error. The 
language of the regulation indicates that the deciding official 
reserves the right to require a waiver as a condition

[[Page 53573]]

precedent before accepting a petition for relief or supplemental 
petition for relief in any case where the statute of limitations will 
be available as a defense within one year from the date of the decision 
on the original petition for relief. Requirement of a waiver cannot be 
a condition precedent to the acceptance of an original petition for 
relief, provided the statute will be available as a defense within one 
year from the date of the decision on that petition. The regulation has 
been amended to eliminate the reference to petitions. The regulation is 
now consistent with the provisions of Sec. 172.43.
    4. In reviewing the provisions of proposed Sec. 162.81, Customs is 
of the view that the ministerial acts involving the processing of 
statute of limitations waivers are operational in nature and need not 
be the subject of regulation. Accordingly, that proposed section has 
been removed from the final document.
    5. In the regulatory text of proposed Secs. 171.13(a) and 
172.13(a), Customs indicated that late petitions could be accepted if 
the deciding official, in his or her discretion, believed the efficient 
administration of justice would be met. Upon further review of this 
proposed regulation, Customs has decided that codification of the 
acceptance of untimely petitions in penalty, seizure and liquidated 
damages cases could be construed by claimants to seized property and 
alleged violators as bestowing a right to file a late petition. While 
Customs concededly, as a matter of policy, has accepted late petitions 
in claims for liquidated damages cases and merely afforded less 
generous mitigation, Customs has decided that such a decision should 
remain a matter of policy and should not be included in regulation. 
Accordingly, in the final regulatory text, proposed Secs. 171.13(a) and 
172.13(a) have been removed. Paragraphs (b) and (c) of proposed 
Sec. 171.13 have been redesignated in the final text as paragraphs (a) 
and (b). Paragraphs (b) and (c) in proposed Sec. 172.13 have been 
redesignated in the final text as paragraphs (a) and (b).
    6. Customs has also removed proposed Sec. 171.32 from the final 
regulatory text and redesignated proposed Sec. 171.33 as Sec. 171.32. 
Customs Headquarters will retain all offer acceptance authority, still 
subject to the approval of the General Counsel of the Treasury or his 
delegee, in cases administered under Part 171. The proposed regulatory 
text regarding authority to accept offers in cases administered under 
Part 172 has not been changed in the final document.
    7. The proposed regulatory texts in Secs. 171.1 and 172.2 did not 
make it clear that Customs can require that petitions and any documents 
submitted in support of petitions be in English or have English 
translations provided. Accordingly, language has been added to both of 
the noted regulations to clarify this requirement.
    8. The proposed regulatory texts in Secs. 171.14 and 172.14 have 
been amended to reflect the fact that Headquarters advice regarding 
actual duty loss tenders determined by Customs pursuant to 
Sec. 162.74(c) of the Customs Regulations relating to prior disclosure 
and actual duty loss demands made under Sec. 162.79b of the Customs 
Regulations are outside the scope of those particular regulations. The 
last sentence of Sec. 162.79b will be retained. This section will 
continue to provide for Headquarters review of any determination of 
actual loss of duties in which a Sec. 1592(d) demand has been made and 
there is no penalty assessment, the assessed penalty is remitted in 
full or the penalty amount (or mitigated penalty) has been paid.
    9. The proposed regulatory text in Sec. 10.39(e) has been amended 
to indicate that the Fines, Penalties, and Forfeitures Officer may 
cancel Temporary Importation Bond liquidated damages liability upon 
payment of a lesser amount in accordance with delegated authority. The 
proposed version of this section did not include this limiting language 
and apparently gave unintended full claim cancellation authority to 
Fines, Penalties, and Forfeiture Officers in these situations.
    10. The proposed rule overlooked the provisions of Sec. 12.8 of the 
Customs Regulations regarding claims for liquidated damages for failure 
to comply with meat inspection requirements. Customs is amending 
Sec. 12.8 to conform with the provisions of Part 172.
    11. In the fourth sentence of Sec. 162.74(c) the word ``demanded'' 
is removed and replaced with the word ``determined''. In prior 
disclosure, Customs does not ``demand'' the actual loss of revenue. 
Rather, the disclosing party tenders the duty to perfect the prior 
disclosure.
    12. Consistent with the current practice of removing unnecessary 
footnotes, Part 18 of the Customs Regulations has been amended by 
removing footnote 9 which relates to Sec. 18.24(a).
    13. On Wednesday, March 15, 2000, Customs published Treasury 
Decision 00-17 (T.D. 00-17) in the Federal Register (65 FR 13880), 
amending the regulations relating to Customs brokers. In that document, 
the provisions of 19 CFR 111.92 and 111.93 explain the process 
involving issuance of monetary penalties for violations of the laws and 
regulations relating to Customs brokers. For purposes of clarity, this 
document has redesignated the existing text of Sec. 111.92 as paragraph 
(a) with minor changes and added a new paragraph (b) to distinguish 
between pre-penalty and penalty notices. Also, provisions of Appendix C 
to Part 171 of the Customs Regulations which announce guidelines for 
the imposition and mitigation of penalties for violation of 19 U.S.C. 
1641 have been amended to remove sections which are not consistent with 
regulatory changes promulgated in T.D. 00-17.
    It is also noted that Customs is publishing in this issue of the 
Federal Register a separate document that details delegations of 
authority to decide petitions and supplemental petitions submitted 
pursuant to Part 171 and Part 172 of the Customs Regulations.

Regulatory Flexibility Act

    Inasmuch as small business entities are infrequently repeat 
violators of Customs laws, and, therefore, will seldom need to avail 
themselves of the these regulatory provisions and file petitions for 
relief on a regular basis, it is certified, pursuant to the provisions 
of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), that these 
amendments will not have a significant economic impact on a substantial 
number of small entities. Accordingly, the amendments are not subject 
to the regulatory analysis requirements of 5 U.S.C. 603 and 604.

Eexcutive Order 12866

    This document does not meet the criteria for a ``significant 
regulatory action'' under E.O. 12866.

List of Subjects

19 CFR Part 10

    Alterations, Bonds, Customs duties and inspection, Exports, 
Imports, Preference programs, Repairs, Reporting and recordkeeping 
requirements, Trade agreements.

19 CFR Part 12

    Bonds, Customs duties and inspection, Labeling, Marking, Prohibited 
merchandise, Reporting and recordkeeping requirements, Restricted 
merchandise, Seizure and forfeiture, Trade agreements.

19 CFR Part 18

    Bonds, Customs duties and inspection, Penalties, Prohibited 
merchandise, Reporting and recordkeeping requirements.

[[Page 53574]]

19 CFR Part 24

    Accounting, Claims, Customs duties and inspection, Financial and 
accounting procedures, Harbors, Reporting and recordkeeping 
requirements, Trade agreements.

19 CFR Part 111

    Administrative practice and procedure, Bonds, Brokers, Customs 
duties and inspection, Imports, Licensing, Penalties, Reporting and 
recordkeeping requirements.

19 CFR Part 113

    Bonds, Customs duties and inspection, Exports, Foreign commerce and 
trade statistics, Freight, Imports, Reporting and recordkeeping 
requirements.

19 CFR Part 114

    Carnets, Customs duties and inspection.

19 CFR Part 125

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

19 CFR Part 134

    Country of origin, Customs duties and inspection, Imports, 
Labeling, Marking, Packaging and containers, Reporting and 
recordkeeping requirements.

19 CFR Part 145

    Customs duties and inspection, Imports, Mail, Postal service, 
Reporting and recordkeeping requirements.

19 CFR Part 162

    Administrative practice and procedure, Customs duties and 
inspection, Law enforcement, Penalties, Prohibited merchandise, 
Reporting and recordkeeping requirements, Seizures and forfeitures.

19 CFR Part 171

    Administrative practice and procedure, Customs duties and 
inspection, Law enforcement, Penalties, Seizures and forfeitures.

19 CFR Part 172

    Administrative practice and procedure, Customs duties and 
inspection, Penalties.

Amendments to the Regulations

    For the reasons stated above, parts 10, 12, 18, 24, 111, 113, 114, 
125, 134, 145, 162, 171, and 172, Customs Regulations (19 CFR parts 10, 
12, 18, 24, 111, 113, 114, 125, 134, 145, 162, 171, and 172), are 
amended as set forth below.

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

    1. The general authority citation for Part 10, Customs Regulations 
(19 CFR Part 10) continues to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508, 
1623, 1624, 3314.
* * * * *

    2. Section 10.39 is amended by removing paragraph (f) and 
redesignating current paragraph (g) and (h), respectively, as 
paragraphs (f) and (g) and by revising the introductory paragraph of 
Sec. 10.39(e) to read as follows:


Sec. 10.39  Cancellation of bond charges.

* * * * *
    (e) If there has been a default with respect to any or all of the 
articles covered by the bond and a written petition for relief is filed 
as provided in part 172 of this chapter, it will be reviewed by the 
Fines, Penalties, and Forfeitures Officer having jurisdiction in the 
port where the entry was filed. If the Fines, Penalties, and 
Forfeitures Officer is satisfied that the importation was properly 
entered under Chapter 98, subchapter XIII, and that there was no intent 
to defraud the revenue or delay the payment of duty, the Fines, 
Penalties, and Forfeitures Officer may cancel the liability for the 
payment of liquidated damages in any case in his or her delegated 
authority as follows:
* * * * *

PART 12--SPECIAL CLASSES OF MERCHANDISE

    1. The general authority citation and relevant specific authority 
citations for Part 12, Customs Regulations (19 CFR Part 12) continue to 
read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624.
* * * * *
    Sections 12.95 through 12.103 also issued under 15 U.S.C. 1241-
1245;
* * * * *

    2. Section 12.8(b) is amended by removing the number ``$100,000'' 
and by replacing it with the phrase ``the Fines, Penalties, and 
Forfeitures Officer's delegated authority''.


Sec. 12.102  [Amended]

    3. Section 12.102 is amended by removing the number ``60'' and 
adding in its place the number ``30'.

PART 18--TRANSPORTATION IN BOND AND MERCHANDISE IN TRANSIT

    1. The general authority citation for Part 18, Customs Regulations 
(19 CFR Part 18) is revised to read as follows and the specific 
authority for Sec. 18.8 is removed:

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States), 1551, 1552, 1553, 
1623, 1624.
* * * * *

    2. Section 18.8(d) is revised to read as follows:


Sec. 18.8  Liability for shortage, irregular delivery, or nondelivery; 
penalties.

* * * * *
    (d) In any case in which liquidated damages are imposed in 
accordance with this section and the Fines, Penalties, and Forfeitures 
Officer is satisfied by evidence submitted to him with a petition for 
relief filed in accordance with the provisions of Part 172 of this 
chapter that any violation of the terms and conditions of the bond 
occurred without any intent to evade any law or regulation, the Fines, 
Penalties, and Forfeitures Officer, in accordance with delegated 
authority, may cancel such claim upon the payment of any lesser amount 
or without the payment of any amount as may be deemed appropriate under 
the law and in view of the circumstances.
* * * * *


Sec. 18.24  [Amended]

    3. Section 18.24 is amended by removing footnote 9.

PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE

    1. The general authority citation for Part 24, Customs Regulations 
(19 CFR Part 24) continues to read as follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General 
Note 20, Harmonized Tariff Schedule of the United States), 1505, 
1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 9701;
* * * * *


Sec. 24.24  [Amended]

    2. The first sentence of Sec. 24.24(h)(3) is amended by removing 
the phrase ``published pursuant to the provisions of Sec. 172.22(d)(1) 
of this chapter''.

PART 111--CUSTOMS BROKERS

    1. The general authority citation for Part 111, Customs Regulations 
(19 CFR Part 111) continues to read as follows:


[[Page 53575]]


    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1624, 1641.
* * * * *

    2. Section 111.92 is revised to read as follows:


Sec. 111.92  Notice of monetary penalty.

    (a) Pre-penalty notice. If assessment of a monetary penalty under 
Sec. 111.91 is contemplated, Customs will issue a written notice which 
advises the broker or other person of the allegations or complaints 
against him and explains that the broker or other person has a right to 
respond to the allegations or complaints in writing within 30 days of 
the date of mailing of the notice. The Fines, Penalties, and 
Forfeitures Officer has discretion to provide additional time for good 
cause.
    (b) Penalty notice. If the broker or other person files a timely 
response to the written notice of the allegations or complaints, the 
Fines, Penalties, and Forfeiture Officer will review this response and 
will either cancel the case, issue a notice of penalty in an amount 
which is lower than that provided for in the written notice of 
allegations or complaints or issue a notice of penalty in the same 
amount as that provided in the written notice of allegations or 
complaints. If no response is received from the broker or other person, 
the Fines, Penalties, and Forfeitures Officer will issue a notice of 
penalty in the same amount as that provided in the written notice of 
allegations or complaints.


Sec. 111.93  [Amended]

    3. Section 111.93 is amended by removing the reference to 
``111.92'' and adding in its place, ``111.92(b)''.

PART 113--CUSTOMS BONDS

    1. The general authority citation and relevant specific authority 
citation for Part 113, Customs Regulations (19 CFR Part 113) continue 
to read as follows:

    Authority: 19 U.S.C. 66, 1623, 1624.
    Subpart E also issued under 19 U.S.C. 1484, 1551, 1565.


Sec. 113.46  [Removed]

    2. Section 113.46 is removed.


Sec. 113.52  [Amended]

    3. Section 113.52 is amended by removing the words ``and 
172.22(c)'' from the parenthetical phrase contained therein.


Sec. 113.54  [Amended]

    4. Section 113.54(a) is amended by removing ``172.31'' and adding 
in its place ``172.11(b)''.

PART 114--CARNETS

    1. The general authority citation for Part 114, Customs Regulations 
(19 CFR Part 114) continues to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1623, 1624.


Sec. 114.34  [Amended]

    2. Section 114.34(c) is amended by removing the final non-
parenthetical sentence and the final parenthetical sentence.

PART 125--CARTAGE AND LIGHTERAGE OF MERCHANDISE

    1. The general authority citation and relevant specific authority 
citation for Part 125, Customs Regulations (19 CFR Part 125) continue 
to read as follows:

    Authority:  19 U.S.C. 66, 1565, 1624.
* * * * *
    Sections 125.41 and 125.42 also issued under 19 U.S.C. 1623.

    2. Section 125.42 is revised to read as follows:


Sec. 125.42  Cancellation of liability.

    The Fines, Penalties, and Forfeitures Officer, in accordance with 
delegated authority, may cancel liquidated damages incurred under the 
bond of the foreign trade zone operator, containing the bond conditions 
set forth in Sec. 113.73 of this chapter, or under the bond of the 
cartman, lighterman, bonded carrier, bonded warehouse operator, 
container station operator or centralized examination station operator 
on Customs Form 301, containing the bond conditions set forth in 
Sec. 113.63 of this chapter, upon the payment of such lesser amount, or 
without the payment of any amount, as the Fines, Penalties, and 
Forfeitures Officer may deem appropriate under the circumstances. 
Application for cancellation of liquidated damages incurred shall be 
made in accordance with the provisions of part 172 of this chapter.

PART 134--COUNTRY OF ORIGIN MARKING

    1. The general authority citation for Part 134, Customs Regulations 
(19 CFR Part 134) continues to read as follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States), 1304, 1624.


Sec. 134.54  [Amended]

    2. Section 134.54 is amended by removing in paragraph (a) the 
phrase ``, plus any estimated duty thereon as determined at the time of 
entry''; and by removing the second sentence in paragraph (b).

PART 145--MAIL IMPORTATIONS

    1. The general authority citation and relevant specific authority 
citation for Part 145, Customs Regulations (19 CFR Part 145) continue 
to read as follows:

    Authority:  19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1624.

Section 145.4 also issued under 18 U.S.C. 545, 19 U.S.C. 1618;

* * * * *

    2. Section 145.4(b) is revised to read as follows:


Sec. 145.4  Dutiable merchandise without declaration or invoice, 
prohibited merchandise, and merchandise imported contrary to law.

* * * * *
    (b) Mitigation of forfeiture. Any claimant incurring a forfeiture 
of merchandise for violation of this section may file a petition for 
relief pursuant to part 171 of this chapter. Mitigation of that 
forfeiture may occur consistent with mitigation guidelines.
* * * * *

PART 162--INSPECTION, SEARCH, AND SEIZURE

    1. The general authority citation and relevant specific authority 
citation for Part 162, Customs Regulations (19 CFR Part 162) continue 
to read as follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1624.
* * * * *
    Section 162.48 also issued under 19 U.S.C. 1606, 1607, 1608, 
1612, 1613b, 1618;
* * * * *

    2. Section 162.48 is amended by revising the section heading and 
the heading of paragraph (b) to read as follows and by removing from 
the first sentence in paragraph (b) the phrase ``and such value is less 
than $1,000,'':


Sec. 162.48  Disposition of perishable and other seized property.

* * * * *
    (b) Disposition of other seized property.
* * * * *


Sec. 162.74  [Amended]

    3. The fourth sentence of Sec. 162.74(c) is amended by removing the 
word ``demanded'' and replacing it with the word ``determined''.

[[Page 53576]]

PART 171--FINES, PENALTIES, AND FORFEITURES

    1. The general authority citation for Part 171, Customs Regulations 
(19 CFR Part 171) is revised to read as follows:

    Authority:  19 U.S.C. 66, 1592, 1593a, 1618, 1624; 22 U.S.C. 
401; 31 U.S.C. 5321; 46 U.S.C. App. 320.
* * * * *

    2. Section 171.0 is revised to read as follows:


Sec. 171.0  Scope.

    This part contains provisions relating to petitions for relief from 
fines, forfeitures, and certain penalties incurred, and petitions for 
the restoration of proceeds from sale of seized and forfeited property. 
This part does not relate to petitions on claims for liquidated damages 
or penalties which are guaranteed by the conditions of the 
International Carrier Bond (see Sec. 113.64 of this Chapter).

    3. Subparts A through E of Part 171 are revised to read as follows:
Subpart A--Application for Relief
Sec.
171.1   Petition for relief.
171.2   Filing a petition.
171.3   Oral presentations seeking relief.
Subpart B--Action on Petitions
171.11   Petitions acted on by Fines, Penalties, and Forfeitures 
Officer.
171.12   Petitions acted on at Customs Headquarters.
171.13   Limitations on consideration of petitions.
171.14   Headquarters advice.
Subpart C--Disposition of Petitions
171.21   Written decisions.
171.22   Decisions effective for limited time.
171.23   Decisions not protestable.
Subpart D--Offers in Compromise
171.31   Form of offers.
171.32   Acceptance of offers in compromise.
Subpart E--Restoration of Proceeds of Sale
171.41  Application of provisions for petitions for relief.
171.42   Time limit for filing petition for restoration.
171.43   Evidence required.
171.44   Forfeited property authorized for official use.

Subpart A--Application for Relief


Sec. 171.1  Petition for relief.

    (a) To whom addressed. Petitions for the remission or mitigation of 
a fine, penalty, or forfeiture incurred under any law administered by 
Customs must be addressed to the Fines, Penalties, and Forfeitures 
Officer designated in the notice of claim.
    (b) Signature. For commercial violations, the petition for 
remission or mitigation must be signed by the petitioner, his attorney-
at-law or a Customs broker. If the petitioner is a corporation, the 
petition may be signed by an officer or responsible supervisory 
official of the corporation, or a responsible employee representative 
of the corporation. Electronic signatures are acceptable. In non-
commercial violations, a non-English speaking petitioner or petitioner 
who has a disability which may impede his ability to file a petition 
may enlist a family member or other representative to file a petition 
on his behalf. The deciding Customs officer may, in his or her 
discretion, require proof of representation before consideration of any 
petition.
    (c) Form. The petition for remission or mitigation need not be in 
any particular form. Customs can require that the petition and any 
documents submitted in support of the petition be in English or be 
accompanied by an English translation. The petition must set forth the 
following:
    (1) A description of the property involved (if a seizure);
    (2) The date and place of the violation or seizure;
    (3) The facts and circumstances relied upon by the petitioner to 
justify remission or mitigation; and
    (4) If a seizure case, proof of a petitionable interest in the 
seized property.
    (d) False statement in petition. A false statement contained in a 
petition may subject the petitioner to prosecution under the provisions 
of 18 U.S.C. 1001.


Sec. 171.2  Filing a petition.

    (a) Where filed. A petition for relief must be filed with the 
Fines, Penalties, and Forfeitures office whose address is given in the 
notice.
    (b) When filed--(1) Seizures. Petitions for relief from seizures 
must be filed within 30 days from the date of mailing of the notice of 
seizure.
    (2) Penalties. Petitions for relief from penalties must be filed 
within 60 days of the mailing of the notice of penalty incurred.
    (c) Extensions. The Fines, Penalties, and Forfeitures Officer is 
empowered to grant extensions of time to file petitions when the 
circumstances so warrant.
    (d) Number of copies. The petition must be filed in duplicate 
unless filed electronically.
    (e) Exception for certain cases. If a penalty is assessed or a 
seizure is made and less than 180 days remain before the statute of 
limitations may be asserted as a defense, the Fines, Penalties, and 
Forfeitures Officer may specify in the seizure or penalty notice a 
reasonable period of time, but not less than 7 working days, for the 
filing of a petition for relief. If a petition is not filed within the 
time specified, the matter will be transmitted promptly to the 
appropriate Office of the Chief Counsel for referral to the Department 
of Justice.


Sec. 171.3  Oral presentations seeking relief.

    (a) For violation of section 592 or section 593A. If the penalty 
incurred is for a violation of section 592, Tariff Act of 1930, as 
amended (19 U.S.C. 1592), or section 593A, Tariff Act of 1930, as added 
(19 U.S.C. 1593a), the person named in the notice, in addition to 
filing a petition, may make an oral presentation seeking relief in 
accordance with this paragraph.
    (b) Other oral presentations. Oral presentations other than those 
provided in paragraph (a) of this section may be allowed in the 
discretion of any official of the Customs Service or Department of the 
Treasury authorized to act on a petition or supplemental petition.

Subpart B--Action on Petitions


Sec. 171.11  Petitions acted on by Fines, Penalties, and Forfeitures 
Officer.

    (a) Remission or mitigation authority. Upon receipt of a petition 
for relief submitted pursuant to the provisions of section 618 of the 
Tariff Act of 1930, as amended (19 U.S.C. 1618), or section 5321(c) of 
title 31, United States Code (31 U.S.C. 5321(c)), or section 320 of 
title 46, United States Code App. (46 U.S.C. App. 320), the Fines, 
Penalties, and Forfeitures Officer is empowered to remit or mitigate on 
such terms and conditions as, under law and in view of the 
circumstances, he or she deems appropriate in accordance with 
appropriate delegations of authority.
    (b) When violation did not occur. Notwithstanding any other 
delegation of authority, the Fines, Penalties, and Forfeitures Officer 
is always empowered to cancel any claim when he or she definitely 
determines that the act or omission forming the basis of any claim of 
penalty or forfeiture did not occur.
    (c) When violation is result of vessel in distress. The Fines, 
Penalties, and Forfeitures Officer may remit without payment any 
penalty which arises for violation of the coastwise laws if he or she 
is satisfied that the violation occurred as a direct result of an 
arrival of the transporting vessel in distress.


Sec. 171.12  Petitions acted on at Customs Headquarters.

    Upon receipt of a petition for relief filed pursuant to the 
provisions of section 618 of the Tariff Act of 1930, as amended (19 
U.S.C. 1618), section

[[Page 53577]]

5321(c) of title 31, United States Code (31 U.S.C. 5321(c)), or section 
320 of title 46, United States Code App. (46 U.S.C. App. 320), 
involving fines, penalties, and forfeitures which are outside of his or 
her delegated authority, the Fines, Penalties, and Forfeitures Officer 
will refer that petition to the Chief, Penalties Branch, Office of 
Regulations and Rulings, Customs Headquarters, who is empowered to 
remit or mitigate on such terms and conditions as, under law and in 
view of the circumstances, he or she deems appropriate, unless there 
has been no delegation to act by the Secretary of the Treasury or his 
designee. In those cases where there has been no delegation to act by 
the Secretary, the Chief, Penalties Branch, will forward the matter to 
the Department with a recommendation.


Sec. 171.13  Limitations on consideration of petitions.

    (a) Cases referred for institution of legal proceedings. No action 
will be taken on any petition after the case has been referred to the 
Department of Justice for institution of legal proceedings. The 
petition will be forwarded to the Department of Justice.
    (b) Conveyance awarded for official use. No petition for remission 
of forfeiture of a seized conveyance which has been forfeited and 
retained for official use will be considered unless it is filed before 
final disposition of the property is made. This does not affect 
petitions for restoration of proceeds of sale filed pursuant to the 
provisions of section 613 of the Tariff Act of 1930, as amended (19 
U.S.C. 1613).


Sec. 171.14  Headquarters advice.

    The advice of the Director, International Trade Compliance 
Division, Office of Regulations and Rulings, Customs Headquarters, may 
be sought in any case (except as provided in this section), without 
regard to delegated authority to act on a petition or offer, when a 
novel or complex issue concerning a ruling, policy, or procedure is 
presented concerning a Customs action(s) or potential Customs action(s) 
relating to seizures and forfeitures, penalties, or mitigating or 
remitting any claim. This section does not apply to actual duty loss 
tenders determined by Customs pursuant to Sec. 162.74(c) of this 
Chapter relating to prior disclosure and to actual duty loss demands 
made under Sec. 162.79b of this Chapter. The request for advice may be 
initiated by the alleged violator or any Customs officer, but must be 
submitted to the Fines, Penalties, and Forfeitures Officer. The Fines, 
Penalties, and Forfeitures Officer retains the authority to refuse to 
forward any request that fails to raise a qualifying issue and to seek 
legal advice from the appropriate Associate or Assistant Chief Counsel 
in any case.

Subpart C--Disposition of Petitions


Sec. 171.21  Written decisions.

    If a petition for relief relates to a violation of sections 592, 
593A or 641, Tariff Act of 1930, as amended (19 U.S.C. 1592, 19 U.S.C. 
1593a, or 19 U.S.C. 1641), the petitioner will be provided with a 
written statement setting forth the decision on the matter and the 
findings of fact and conclusions of law upon which the decision is 
based.


Sec. 171.22  Decisions effective for limited time.

    A decision to mitigate a penalty or to remit a forfeiture upon 
condition that a stated amount is paid will be effective for not more 
than 60 days from the date of notice to the petitioner of such decision 
unless the decision itself prescribes a different effective period. If 
payment of the stated amount or arrangements for such payment are not 
made, or a supplemental petition is not filed in accordance with 
regulation, the full penalty or claim for forfeiture will be deemed 
applicable and will be enforced by promptly referring the matter, after 
required collection action, if appropriate, to the appropriate Office 
of the Chief Counsel for preparation for referral to the Department of 
Justice unless other action has been directed by the Commissioner of 
Customs.


Sec. 171.23  Decisions not protestable.

    (a) Mitigation decision not subject to protest. Any decision to 
remit a forfeiture or mitigate a penalty is not a protestable decision 
as defined under the provisions of 19 U.S.C. 1514. Any payment made in 
compliance with any decision to remit a forfeiture or mitigate a 
penalty is not a charge or exaction and therefore is not a protestable 
action as defined under the provisions of 19 U.S.C. 1514.
    (b) Payment of mitigated amount as accord and satisfaction. Payment 
of a mitigated amount in compliance with an administrative decision on 
a petition or supplemental petition for relief will be considered an 
election of administrative proceedings and full disposition of the 
case. Payment of a mitigated amount will act as an accord and 
satisfaction of the Government claim. Payment of a mitigated amount 
will never serve as a bar to filing a supplemental petition for relief.

Subpart D--Offers in Compromise


Sec. 171.31  Form of offers.

    Offers in compromise submitted pursuant to the provisions of 
section 617 of the Tariff Act of 1930, as amended (19 U.S.C. 1617) must 
expressly state that they are being submitted in accordance with the 
provisions of that section. The amount of the offer must be deposited 
with Customs in accordance with the provisions of Sec. 161.5 of this 
chapter.


Sec. 171.32  Acceptance of offers in compromise.

    An offer in compromise will be considered accepted only when the 
offeror is so notified in writing. As a condition to accepting an offer 
in compromise, the offeror may be required to enter into any collateral 
agreement or to post any security which is deemed necessary for the 
protection of the interest of the United States.

Subpart E--Restoration of Proceeds of Sale


Sec. 171.41  Application of provisions for petitions for relief.

    The general provisions of subpart A of this part on filing and 
content of petitions for relief apply to petitions for restoration of 
proceeds of sale except insofar as modified by this subpart.


Sec. 171.42  Time limit for filing petition for restoration.

    A petition for the restoration of proceeds of sale under section 
613, Tariff Act of 1930, as amended (19 U.S.C. 1613) must be filed 
within 3 months after the date of the sale.


Sec. 171.43  Evidence required.

    In addition to such other evidence as may be required under the 
provisions of subpart A of this part, the petition for restoration of 
proceeds of sale under section 613, Tariff Act of 1930, as amended (19 
U.S.C. 1613), must show the interest of the petitioner in the property. 
The petition must be supported by satisfactory proof that the 
petitioner did not know of the seizure prior to the declaration or 
decree of forfeiture and was in such circumstances as prevented him 
from knowing of it.


Sec. 171.44  Forfeited property authorized for official use.

    If forfeited property which is the subject of a claim under section 
613, Tariff Act of 1930, as amended (19 U.S.C. 1613) has been 
authorized for official use, retention or delivery will be regarded as 
the sale thereof for the purposes of section 613. The

[[Page 53578]]

appropriation available to the receiving agency for the purchase, hire, 
operation, maintenance and repair of property of the kind so received 
is available for the granting of relief to the claimant and for the 
satisfaction of liens for freight, charges and contributions in general 
average that may have been filed.

    4. Subpart G is added to part 171 to read as follows:

Subpart G--Supplemental Petitions for Relief

Sec.
171.61   Time and place of filing.
171.62   Supplemental petition decision authority.
171.63   Appeals to the Secretary of the Treasury in certain 1592 
cases.
171.64   Waiver of statute of limitations.
Subpart G--Supplemental Petitions for Relief


Sec. 171.61  Time and place of filing.

    If the petitioner is not satisfied with a decision of the deciding 
official on an original petition for relief, a supplemental petition 
may be filed with the Fines, Penalties, and Forfeitures Officer having 
jurisdiction in the port where the violation occurred. Such 
supplemental petition must be filed within 60 days from the date of 
notice to the petitioner of the decision from which further relief is 
requested or within 60 days following an administrative or judicial 
decision with respect to the entries involved in a penalty case which 
reduces the loss of duties upon which the mitigated penalty amount was 
based (whichever is later) unless another time to file such a 
supplemental petition is prescribed in the decision. The filing of a 
supplemental petition may be subject to the conditions prescribed in 
Sec. 171.64 of this part. A supplemental petition may be filed whether 
or not the mitigated penalty or forfeiture remission amount designated 
in the decision on the original petition is paid.


Sec. 171.62  Supplemental petition decision authority.

    (a) Decisions of Fines, Penalties, and Forfeitures Officers. 
Supplemental petitions filed on cases where the original decision was 
made by the Fines, Penalties, and Forfeitures Officer, will be 
initially reviewed by that official. The Fines, Penalties, and 
Forfeitures Officer may choose to grant more relief and issue a 
decision indicating that additional relief to the petitioner. If the 
petitioner is dissatisfied with the further relief granted or if the 
Fines, Penalties, and Forfeitures Officer decides to grant no further 
relief, the supplemental petition will be forwarded to a designated 
Headquarters official assigned to a field location for review and 
decision, except that supplemental petitions filed in cases involving 
violations of 19 U.S.C. 1641 where the amount of the penalty assessed 
exceeds $10,000 will be forwarded to the Chief, Penalties Branch, 
Office of Regulations and Rulings.
    (b) Decisions of Customs Headquarters. Supplemental petitions filed 
on cases where the original decision was made by the Chief, Penalties 
Branch, Office of Regulations and Rulings, Customs Headquarters, will 
be forwarded to the Director, International Trade Compliance Division, 
Customs Headquarters, for review and decision.
    (c) Decisions of Treasury Department. Supplemental petitions filed 
on cases where the original decision was made in the Treasury 
Department, will be referred to the Chief, Penalties Branch, Office of 
Regulations and Rulings, Customs Headquarters, who will forward the 
supplemental petitions to the Department with a recommendation.
    (d) Authority of Assistant Commissioner. Any authority given to any 
Headquarters official by this part may also be exercised by the 
Assistant Commissioner, Office of Regulations and Rulings, or his 
designee.


Sec. 171.63  Appeals to the Secretary of the Treasury in certain 1592 
cases.

    A petitioner filing a supplemental petition pursuant to this 
subpart from a decision of the Chief, Penalties Branch, Office of 
Regulations and Rulings, with respect to any liability assessed under 
19 U.S.C. 1592 may request that the petition be accepted as an appeal 
to the Secretary of the Treasury. The Secretary will accept for 
decision any such supplemental petition when in his discretion he 
determines that such petition raises a question of fact, law or policy 
of such importance as to require a decision by the Secretary. If the 
Secretary declines to accept an appeal for decision, the petitioner 
will be so informed. In such a case, a decision will be issued thereon 
by the Director, International Trade Compliance Division.


Sec. 171.64  Waiver of statute of limitations.

    The deciding Customs official always reserves the right to require 
a waiver of the statute of limitations executed by the claimants to the 
property or charged party or parties as a condition precedent before 
accepting a supplemental petition in any case in which less than one 
year remains before the statute will be available as a defense to all 
or part of that case.

Appendix C to Part 171

    5. Appendix C to Part 171 is amended by removing the NOTE following 
section I.D., removing section I.E., redesignating section I.F. as 
section I.E., removing section I.G. and redesignating section I.H. as 
section I.F.

PART 172--[REVISED]

    1. Part 172 is revised to read as follows:

PART 172--CLAIMS FOR LIQUIDATED DAMAGES; PENALTIES SECURED BY BONDS

Sec.
172.0   Scope.
Subpart A--Notice of Claim and Application for Relief
172.1   Notice of liquidated damages or penalty incurred and right 
to petition for relief.
172.2   Petition for relief.
172.3   Filing a petition.
172.4   Demand on surety.
Subpart B--Action on Petitions
172.11   Petitions acted on by Fines, Penalties, and Forfeitures 
Officer.
172.12   Petitions acted at Customs Headquarters.
172.13   Limitations on consideration of petitions.
172.14   Headquarters advice.
Subpart C--Disposition of Petitions
172.21   Decisions effective for limited time.
172.22   Decisions not protestable.
Subpart D--Offers in Compromise
172.31   Form of offers.
172.32   Authority to accept offers.
172.33   Acceptance of offers in compromise.
Subpart E--Supplemental Petitions for Relief
172.41   Time and place of filing.
172.42   Supplemental petition decision authority.
172.43   Waiver of statute of limitations.

    Authority: 19 U.S.C. 66, 1618, 1623, 1624; 46 U.S.C. App. 320.


Sec. 172.0  Scope.

    This part contains provisions relating to petitions for relief from 
claims for liquidated damages arising under any Customs bond and 
penalties incurred which are secured by the conditions of the 
International Carrier Bond (see Sec. 113.64 of this Chapter). This part 
does not relate to petitions on unsecured fines or penalties or 
seizures and forfeitures, nor does it relate to petitions for the 
restoration of proceeds of sale pursuant to 19 U.S.C. 1613.

[[Page 53579]]

Subpart A--Notice of Claim and Application for Relief


Sec. 172.1  Notice of liquidated damages or penalty incurred and right 
to petition for relief.

    (a) Notice of liquidated damages or penalty incurred. When there is 
a failure to meet the conditions of any bond posted with Customs or 
when a violation occurs which results in assessment of a penalty which 
is secured by a Customs bond, the principal will be notified in writing 
of any liability for liquidated damages or penalty incurred and a 
demand will be made for payment. The sureties on such bond will also be 
notified in writing of any such liability at the same time.
    (b) Notice of right to petition for relief. The notice will inform 
the principal that application may be made for relief from payment of 
liquidated damages or penalty.


Sec. 172.2  Petition for relief.

    (a) To whom addressed. Petitions for the cancellation of any claim 
for liquidated damages or remission or mitigation of a fine or penalty 
secured by a Customs bond incurred under any law or regulation 
administered by Customs must be addressed to the Fines, Penalties, and 
Forfeitures Officer designated in the notice of claim.
    (b) Signature. The petition for remission or mitigation must be 
signed by the petitioner, his attorney-at-law or a Customs broker. If 
the petitioner is a corporation, the petition may be signed by an 
officer or responsible supervisory official of the corporation, or 
responsible employee representative of the corporation. Electronic 
signatures are acceptable. The deciding Customs officer may, in his or 
her discretion and with articulable cause, require proof of 
representation before consideration of any petition.
    (c) Form. The petition for cancellation, remission or mitigation 
need not be in any particular form. Customs can require that the 
petition and any documents submitted in support of the petition be in 
English or be accompanied by an English translation. The petition must 
set forth the following:
    (1) The date and place of the violation; and
    (2) The facts and circumstances relied upon by the petitioner to 
justify cancellation, remission or mitigation.
    (d) False statement in petition. A false statement contained in a 
petition may subject the petitioner to prosecution under the provisions 
of 18 U.S.C. 1001.


Sec. 172.3  Filing a petition.

    (a) Where filed. A petition for relief must be filed by the bond 
principal with the Fines, Penalties, and Forfeitures office whose 
address is given in the notice.
    (b) When filed. Petitions for relief must be filed within 60 days 
from the date of mailing to the bond principal the notice of claim for 
liquidated damages or penalty secured by a bond.
    (c) Extensions. The Fines, Penalties, and Forfeitures Officer is 
empowered to grant extensions of time to file petitions when the 
circumstances so warrant.
    (d) Number of copies. The petition must be filed in duplicate 
unless filed electronically.
    (e) Exception for certain cases. If a penalty or claim for 
liquidated damages is assessed and fewer than 180 days remain from the 
date of penalty or liquidated damages notice before the statute of 
limitations may be asserted as a defense, the Fines, Penalties, and 
Forfeitures Officer may specify in the notice a reasonable period of 
time, but not less than 7 working days, for the filing of a petition 
for relief. If a petition is not filed within the time specified, the 
matter will be transmitted promptly to the appropriate Office of the 
Chief Counsel for referral to the Department of Justice.


172.4  Demand on surety.

    If the principal fails to file a petition for relief or fails to 
comply in the prescribed time with a decision to mitigate a penalty or 
cancel a claim for liquidated damages issued with regard to a petition 
for relief, Customs will make a demand for payment on surety. The 
surety will then have 60 days from the date of the demand to file a 
petition for relief.

Subpart B--Action on Petitions


Sec. 172.11  Petitions acted on by Fines, Penalties, and Forfeitures 
Officer.

    (a) Mitigation or cancellation authority. Upon receipt of a 
petition for relief submitted pursuant to the provisions of section 618 
or 623 of the Tariff Act of 1930, as amended (19 U.S.C. 1618 or 19 
U.S.C. 1623), or section 320 of title 46, United States Code App. (46 
U.S.C. App. 320), the Fines, Penalties, and Forfeitures Officer, 
notwithstanding any other law or regulation, is empowered to mitigate 
any penalty or cancel any claim for liquidated damages on such terms 
and conditions as, under law and in view of the circumstances, he or 
she shall deem appropriate in accordance with appropriate delegations 
of authority.
    (b) When violation did not occur. Notwithstanding any other 
delegation of authority, the Fines, Penalties, and Forfeitures Officer 
is always empowered to cancel any case without payment of a mitigated 
or cancellation amount when he or she definitely determines that the 
act or omission forming the basis of any claim of penalty or claim for 
liquidated damages did not occur.


Sec. 172.12  Petitions acted on at Customs Headquarters.

    Upon receipt of a petition for relief filed pursuant to the 
provisions of section 618 or 623 of the Tariff Act of 1930, as amended 
(19 U.S.C. 1618 or 19 U.S.C. 1623), or section 320 of title 46, United 
States Code App. (46 U.S.C. App. 320), involving fines, penalties, and 
claims for liquidated damages which are outside of his or her delegated 
authority the Fines, Penalties, and Forfeitures Officer will refer that 
petition to the Chief, Penalties Branch, Office of Regulations and 
Rulings, Customs Headquarters, who is empowered, notwithstanding any 
other law or regulation, to mitigate penalties or cancel bond claims on 
such terms and conditions as, under law and in view of the 
circumstances, he or she deems appropriate.


Sec. 172.13  Limitations on consideration of petitions.

    (a) Cases referred for institution of legal proceedings. No action 
will be taken on any petition if the civil liability has been referred 
to the Department of Justice for institution of legal proceedings. The 
petition will be forwarded to the Department of Justice.
    (b) Delinquent sureties. No action will be taken on any petition 
from a principal or surety if received after the issuance to surety of 
a notice to show cause pursuant to the provisions of Sec. 113.38(c)(3) 
of this chapter.


Sec. 172.14  Headquarters advice.

    The advice of the Director, International Trade Compliance 
Division, Office of Regulations and Rulings, Customs Headquarters, may 
be sought in any case (except as provided in this section), without 
regard to delegated authority to act on a petition or offer, when a 
novel or complex issue concerning a ruling, policy, or procedure is 
presented concerning a Customs action(s) or potential Customs action(s) 
relating to penalties secured by bonds (including penalty-based 
determinations of duty except as provided in this section), claims for 
liquidated damages or mitigating any claim. This section does not apply 
to actual duty loss tenders determined by Customs pursuant to 
Sec. 162.74(c) of this chapter relating to prior disclosure. The

[[Page 53580]]

request for advice may be initiated by the bond principal, surety or 
any Customs officer, but must be submitted to the Fines, Penalties, and 
Forfeitures Officer. The Fines, Penalties, and Forfeitures Officer 
retains the authority to refuse to forward any request that fails to 
raise a qualifying issue and to seek legal advice from the appropriate 
Associate or Assistant Chief Counsel in any case.

Subpart C--Disposition of Petitions


Sec. 172.21  Decisions effective for limited time.

    A decision to mitigate a penalty or to cancel a claim for 
liquidated damages upon condition that a stated amount is paid will be 
effective for not more than 60 days from the date of notice to the 
petitioner of such decision unless the decision itself prescribes a 
different effective period. If payment of the stated amount is not made 
or a petition or a supplemental petition is not filed in accordance 
with regulation, the full penalty or claim for liquidated damages will 
be deemed applicable and will be enforced by promptly transmitting the 
matter, after required collection action, if appropriate, to the 
appropriate office of the Chief Counsel for preparation for referral to 
the Department of Justice unless other action has been directed by the 
Commissioner of Customs. Any such case may also be the basis for a 
sanction action commenced in accordance with regulations in this 
chapter.


Sec. 172.22  Decisions not protestable.

    (a) Mitigation decision not subject to protest. Any decision to 
remit or mitigate a penalty or cancel a claim for liquidated damages 
upon payment of a lesser amount is not a protestable decision as 
defined under the provisions of 19 U.S.C. 1514. Any payment made in 
compliance with any decision to remit or mitigate a penalty or cancel a 
claim for liquidated damages upon payment of a lesser amount is not a 
charge or exaction and therefore is not a protestable action as defined 
under the provisions of 19 U.S.C. 1514.
    (b) Payment of mitigated or cancellation amount as accord and 
satisfaction. Payment of a mitigated or cancellation amount in 
compliance with an administrative decision on a petition or 
supplemental petition for relief will be considered an election of 
administrative proceedings and full disposition of the case. Payment of 
a mitigated or cancellation amount will act as an accord and 
satisfaction of the Government claim. Payment of a mitigated or 
cancellation amount will never serve as a bar to filing a supplemental 
petition for relief.

Subpart D--Offers in Compromise


Sec. 172.31  Form of offers.

    Offers in compromise submitted pursuant to the provisions of 
section 617 of the Tariff Act of 1930, as amended (19 U.S.C. 1617), 
must expressly state that they are being submitted in accordance with 
the provisions of that section. The amount of the offer must be 
deposited with Customs in accordance with the provisions of Sec. 161.5 
of this chapter.


Sec. 172.32  Authority to accept offers.

    The authority to accept offers in compromise, subject to the 
recommendation of the General Counsel of the Treasury or his delegee, 
resides with the official having authority to decide a petition for 
relief, except that authority to accept offers in compromise submitted 
with regard to penalties secured by a bond or claims for liquidated 
damages which are the subject of a letter to show cause issued to a 
surety in anticipation of possible action involving nonacceptance of 
bonds authorized under the provisions of part 113 of this chapter will 
reside with the designated Headquarters official who issued the show 
cause letter.


Sec. 172.33  Acceptance of offers in compromise.

    An offer in compromise will be considered accepted only when the 
offeror is so notified in writing. As a condition to accepting an offer 
in compromise, the offeror may be required to enter into any collateral 
agreement or to post any security which is deemed necessary for the 
protection of the interest of the United States.

Subpart E--Supplemental Petitions for Relief


Sec. 172.41  Time and place of filing.

    If the petitioner is not satisfied with a decision of the deciding 
official on an original petition for relief, a supplemental petition 
may be filed with the Fines, Penalties, and Forfeitures Officer having 
jurisdiction in the port where the violation occurred. The petitioner 
must file such a supplemental petition within 60 days from the date of 
notice to the petitioner of the decision from which further relief is 
requested or within 60 days following an administrative or judicial 
decision with respect to issues serving as the basis for the claim for 
liquidated damages (whichever is later) unless another time to file 
such a supplemental petition is prescribed in the decision. A 
supplemental petition may be filed whether or not the mitigated amount 
designated in the decision on the original petition is paid.


Sec. 172.42  Supplemental petition decision authority.

    (a) Decisions of Fines, Penalties, and Forfeitures Officers. 
Supplemental petitions filed on cases where the original decision was 
made by the Fines, Penalties, and Forfeitures Officer, will be 
initially reviewed by that official. The Fines, Penalties, and 
Forfeitures Officer may choose to grant more relief and issue a 
decision indicating additional relief to the petitioner. If the 
petitioner is dissatisfied with the further relief granted or if the 
Fines, Penalties, and Forfeitures Officer decides to grant no further 
relief, the supplemental petition will be forwarded to a designated 
Headquarters official assigned to a field location for review and 
decision.
    (b) Decisions of Customs Headquarters. Supplemental petitions filed 
on cases where the original decision was made by the Chief, Penalties 
Branch, Office of Regulations and Rulings, Customs Headquarters, will 
be forwarded to the Director, International Trade Compliance Division, 
for review and decision.
    (c) Authority of Assistant Commissioner. Any authority given to any 
Headquarters official by this part may also be exercised by the 
Assistant Commissioner, Office of Regulations and Rulings, or his 
designee.


Sec. 172.43  Waiver of statute of limitations.

    The deciding Customs official always reserves the right to require 
a waiver of the statute of limitations executed by the charged party or 
parties as a condition precedent before accepting a supplemental 
petition in any case in which less than one year remains before the 
statute will be available as a defense to all or part of that case.

Raymond W. Kelly,
Commissioner of Customs.
    Approved: July 25, 2000.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-22346 Filed 9-1-00; 8:45 am]
BILLING CODE 4820-02-P