[Federal Register Volume 65, Number 240 (Wednesday, December 13, 2000)]
[Rules and Regulations]
[Pages 77813-77816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31699]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 12, 113, 163 and 178

[T.D. 00-87]
RIN 1515-AC43


Amended Bond Procedures for Articles Subject to an Exclusion 
Order Issued by the U.S. International Trade Commission

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule, with some changes, 
proposed amendments to the Customs Regulations regarding bond 
procedures for the entry of articles subject to an exclusion order 
issued by the U.S. International Trade Commission (``Commission''). 
Merchandise that is subject to a Commission exclusion order may be 
entitled to entry under a special bond

[[Page 77814]]

prescribed by the Secretary of the Treasury in an amount determined by 
the Commission to be sufficient to protect the complainant from any 
injury. If the Commission later determines that the respondent has 
violated the provisions of section 337, the bond may be forfeited to 
the complainant. This document adds the text of this special 
importation and entry bond to the Customs Regulations, and makes 
conforming changes to other regulatory provisions that are impacted by 
the addition of the new bond text.

EFFECTIVE DATE: January 12, 2001.

FOR FURTHER INFORMATION CONTACT: Glen Vereb, Entry Procedures and 
Carriers Branch, (202) 927-1327.

SUPPLEMENTARY INFORMATION:

Background

    Under section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 
1337), the U.S. International Trade Commission (``Commission'') has the 
authority to conduct investigations into certain alleged unfair 
practices in import trade. Most complaints filed under this provision 
involve allegations of patent infringement, trademark infringement, or 
misappropriation of trade secrets. The Commission may determine that 
section 337 has been violated or, during the course of an 
investigation, that there is reason to believe that section 337 has 
been violated.
    If the Commission finds a violation, or reason to believe there is 
a violation, of section 337, it may direct the Secretary of the 
Treasury to exclude the subject articles from entry into the U.S. 
During the period the Commission's exclusion order remains in effect, 
and prior to the date that the Commission's determination of a 
violation of section 337 becomes final, articles otherwise excluded may 
be entered under a single entry bond prescribed by the Secretary of the 
Treasury.
    Certain statutory changes to section 337 of the Tariff Act of 1930 
were enacted pursuant to the Uruguay Round Agreements Act (URAA), 
Public Law 103-465, 108 Stat. 4809 (December 8, 1994). Paragraphs 
(e)(1) and (j)(3) of section 337, as respectively amended by sections 
321(a)(3) and (6) of the URAA, provide that articles subject to a 
Commission exclusion order may be entered under bond prescribed by the 
Secretary of the Treasury in an amount determined by the Commission to 
be sufficient to protect the complainant from any injury and that if 
the Commission later determines that the respondent has violated the 
provisions of section 337, the bond may be forfeited to the 
complainant.
    On February 8, 2000, Customs published a document in the Federal 
Register (65 FR 6062) that proposed to amend the Customs Regulations to 
implement the statutory changes to section 337 effected by section 321 
of the URAA.
    In that document, it was proposed to create a new single entry bond 
that must be filed for articles subject to a Commission exclusion 
order. It was proposed that the amount of the single entry bond would 
be determined by the Commission to be sufficient to protect the 
complainant from any injury. It was proposed that if the Commission 
later determines that the respondent has violated the provisions of 
section 337, the bond may be forfeited to the 3 complainant. The 
procedures for importing merchandise subject to the bonding 
requirements of section 337 were proposed to be set forth in 
Sec. 12.39, Customs Regulations. The new bond conditions were proposed 
to be set forth in part 113, Customs Regulations.
    Further, it was proposed to remove any reference to Commission 
exclusion orders from Sec. 113.62, as this section pertains to basic 
importation and entry bonds. The newly proposed bond to indemnify the 
complainant under section 337 is applicable where merchandise is 
subject to a Commission exclusion order and is set forth in appendix B 
to part 113. Customs wishes to emphasize that the proposed special 
importation and entry bond is in addition to, not in lieu of, the basic 
importation and entry bond (Sec. 113.62) and any other Customs 
requirements for the importation of merchandise subject to a Commission 
exclusion order.
    It was also noted in the proposal that the ``(a)(1)(A)'' list of 
documents required for entry, set forth in the appendix to part 163 of 
the Customs Regulations, would be amended if the proposal were adopted. 
The (a)(1)(A) list would be amended to reflect the fact that the new 
bond would be required as an entry document for entry of merchandise 
covered by a Commission exclusion order.
    In addition, it was noted in the proposal that part 178, which 
lists the information collections contained in the regulations and the 
control numbers assigned by OMB, would be amended accordingly if the 
proposal were adopted.
    Comments were solicited on the proposal.

Discussion of Comment

    One comment was received by Customs in response to the solicitation 
of comments.
    Comment: The commenter recommended four changes to the text of the 
proposed bond, as follows:
    (1) Bond Obligee: That additional text be included in the bond to 
better identify the actual complainant. This is suggested to be 
achieved by including a blank space for the complainant's name to be 
typed on the bond and by including a blank space in which to type the 
specific Commission case or investigation number;
    (2) Description of the Merchandise: That the bond text require the 
entry date and entry number for the merchandise so that there is 
certainty as to which merchandise is secured by which bond;
    (3) Prompt Notice to the Principal from the Port Director Regarding 
the Commission Exclusion Determination: That a condition of the bond be 
that the port director's notice to redeliver to the importer be 
promptly issued after the Commission investigation; and
    (4) Agreement to Pay Face Value of the Bond Upon Default of the 
Principal's Obligation to Export/Destroy the Merchandise: That the 
seventh paragraph of the proposed bond text be clarified to indicate 
that the principal and the surety, ``jointly and severally,'' agree to 
pay an amount equal to the face value of the bond in the event of 
default.
    Customs Response: With respect to these four recommendations, 
Customs agrees with the adoption of all but the third (i.e., ``Prompt 
Notice to the Principal from the Port Director regarding the Commission 
Exclusion Determination''). Unlike the previous Commission bond that 
indemnified the Government, the new Commission bond indemnifies the 
complainant. Consequently, the new bond should impose as few 
preconditions as possible on the Government. Since a Commission order 
is either served on the principal, or made by general announcement in 
the Federal Register, there is no need to add, as a condition of the 
bond, the requirement that a port director issue a notice to redeliver, 
let alone impose a requirement that such a notice be issued 
``promptly'' within a specified time period.

Conclusion

    After review of the comment and further consideration, Customs has 
decided that the proposed amendments, with the changes to the text of 
the proposed special importation and entry bond discussed above, should 
be adopted as a final rule.

The Regulatory Flexibility Act and Executive Order 12866

    Because these amendments conform the Customs Regulations to reflect 
the

[[Page 77815]]

terms of an existing statute regarding bond procedures for articles 
subject to an exclusion order issued by the Commission, pursuant to the 
provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., it 
is certified that these amendments will not have a significant impact 
on a substantial number of small entities. Further, these amendments do 
not meet the criteria for a ``significant regulatory action'' as 
specified in Executive Order 12866.

Paperwork Reduction Act

    The collection of information contained in this final rule has been 
reviewed and approved by the Office of Management and Budget (OMB) in 
accordance with the requirements of the Paperwork Reduction Act of 1995 
(44 U.S.C. 3507) under control number 1515-0222. An agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless the collection of information displays 
a valid control number assigned by OMB.
    The collection of information in this final rule is in appendix B 
to part 113. Although other parts of the Customs Regulations are being 
amended, all information required by these amendments is contained or 
identified in appendix B to part 113. The information requested is 
necessary to enable Customs to permit the entry of merchandise the 
subject of a Commission exclusion order under a bond to indemnify a 
complainant under section 337 of the Tariff Act of 1930, as amended. 
The likely respondents are individuals or commercial organizations that 
seek to import merchandise that is the subject of a section 337 
exclusion order into the U.S.
    The estimated average annual burden associated with the collection 
of information in this final rule is 30 minutes per respondent or 
recordkeeper. Comments concerning the accuracy of this burden estimate 
and suggestions for reducing this burden should be sent to the U.S. 
Customs Service, Information Services Group, Office of Finance, 1300 
Pennsylvania Avenue, N.W. Washington, D.C. 20229, and to OMB, 
Attention: Desk Officer for the Department of the Treasury, Office of 
Information and Regulatory Affairs, Washington, D.C. 20503. A copy 
should also be sent to the Regulations Branch at the address set forth 
above.

Drafting Information

    The principal author of this document was Suzanne Kingsbury, Office 
of Regulations and Rulings, U.S. Customs Service. However, personnel 
from other offices participated in its development.

List of Subjects

19 CFR Part 12

    Bonds, Customs duties and inspection, Entry of merchandise, 
Imports, Restricted merchandise, Unfair competition.

19 CFR Part 113

    Bonds, Customs duties and inspection, Imports.

19 CFR Part 163

    Administrative practice and procedure, Customs duties and 
inspection, Imports, Reporting and recordkeeping requirements.

19 CFR Part 178

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

Amendments to the Regulations

    For the reasons stated in the preamble, parts 12, 113, 163 and 178 
of the Customs Regulations (19 CFR parts 12, 113, 163 and 178) are 
amended as follows:

PART 12--SPECIAL CLASSES OF MERCHANDISE

    1. The general authority citation for part 12 and the specific 
authority citation for Sec. 12.39 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.
* * * * *
    Section 12.39 is also issued under 19 U.S.C. 1337, 1623.
* * * * *
    2. Section 12.39(b)(2) is revised to read as follows:


Sec. 12.39  Imported articles involving unfair methods of competition 
or practices.

* * * * *
    (b) * * *
    (2) During the period the Commission's exclusion order remains in 
effect, excluded articles may be entered under a single entry bond in 
an amount determined by the International Trade Commission to be 
sufficient to protect the complainant from any injury. On or after the 
date that the Commission's determination of a violation of section 337 
becomes final, as set forth in paragraph (a) of this section, articles 
covered by the determination will be refused entry. If a violation of 
section 337 is found, the bond may be forfeited to the complainant 
under terms and conditions prescribed by the Commission. To enter 
merchandise that is the subject of a Commission exclusion order, 
importers must: 9
    (i) File with the port director prior to entry a bond in the amount 
determined by the Commission that contains the conditions identified in 
the special importation and entry bond set forth in appendix B to part 
113 of this chapter; and
    (ii) Comply with the terms set forth in 19 CFR 210.50(d) in the 
event of a forfeiture of this bond.
* * * * *

PART 113--CUSTOMS BONDS

    1. The general authority citation for part 113 continues to read as 
follows, and a new authority citation is added for Sec. 113.74:
    Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *
    Sec. 113.74 also issued under 19 U.S.C. 1337.


Sec. 113.62  [Amended]

    2. In Sec. 113.62:
    a. The introductory paragraph is amended by removing that portion 
of the text which reads ``, except that a bond taken in the case of 
merchandise subject to an exclusion order of the International Trade 
Commission under 19 U.S.C. 1337 shall be a single entry bond''; and
    b. Paragraph (l)(1) is amended by removing the words ``except that 
in the case of merchandise subject to an exclusion order of the 
International Trade Commission under 19 U.S.C. 1337 which has been 
released before such order becomes final, the obligors agree to pay 
liquidated damages in the amount specified in the order for failure to 
redeliver such merchandise'';
    3. A new Sec. 113.74 is added to read as follows:


Sec. 113.74  Bond conditions to indemnify a complainant under section 
337 of Tariff Act of 1930, as amended.

    A bond to indemnify a complainant under section 337 of the Tariff 
Act of 1930, as amended, must contain the conditions listed in appendix 
B to this part. The bond must be a single entry bond and must be filed 
in accordance with the provisions set forth in 19 CFR 12.39(b)(2). For 
the forfeiture or return of this bond, the provisions of 19 CFR 
210.50(d) will apply.

    4. A new appendix B is added to part 113 to read as follows:

Appendix B to Part 113--Bond to Indemnify Complainant Under Section 
337, Tariff Act of 1930, as Amended

    This appendix contains the bond to indemnify a complainant under 
section

[[Page 77816]]

337 of the Tariff Act of 1930, as amended. The provisions contained in 
11 Secs. 12.39(b)(2) and 113.74 of the Customs Regulations (19 CFR 
Chapter I) and Sec. 210.50(d) of the U.S. International Trade 
Commission Regulations (19 CFR Chapter II) apply.

Bond to Indemnify Complainant Under Section 337, Tariff Act of 1930, As 
Amended

    ____________ as principal and ________ as surety, are held and 
bound to ____________, as the complainant in U.S. International 
Trade Commission case/investigation number ________, of unfair 
practices or methods of competition in import trade in violation of 
section 337, Tariff Act of 1930, as amended, in the sum of ________ 
dollars ($________), for payment of which we bind ourselves, our 
heirs, executors, administrators, successors, and assigns, jointly 
and severally, by these conditions.
    Pursuant to the provisions of section 337, Tariff Act of 1930, 
as amended, the principal and surety recognize that the Commission 
has, according to the conditions described in its order, excluded 
from, or authorized, entry into the United States of the following 
merchandise ________________ ________________________ under entry 
number ____________, dated ____________.
    The principal and surety recognize that the Commission has 
excluded that merchandise from entry until its investigation is 
completed, or until its decision that there is a violation of 
section 337 becomes final.
    The principal and surety recognize that certain merchandise 
excluded from entry by the Commission was, or may be, offered for 
entry into the United States while the Commission's prohibition is 
in effect.
    The principal and surety recognize that the principal desires to 
obtain a release of that merchandise pending a final determination 
of the merchandise's admissibility into the United States, as 
provided under section 337, and, for that purpose, the principal and 
surety execute this stipulation:
    If it is determined, as provided in section 337 of the Tariff 
Act of 1930, as amended, to exclude that merchandise from the United 
States, then, on notification from the port director of Customs, the 
principal is obligated to export or destroy under Customs 
supervision the merchandise released under this stipulation within 
30 days from the date of the port director's notification.
    The principal and surety, jointly and severally, agree that if 
the principal defaults on that obligation, the principal and surety 
shall pay to the complainant an amount equal to the face value of 
the bond as may be demanded by him/her under the applicable law and 
regulations.
    Witness our hands and seals this ________ day of ____________ 
(month), ________ (year).
________________ (seal)
Principal
________________ (seal)
Surety

PART 163--RECORDKEEPING

    1. The authority citation for part 163 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510, 
1624.

    2. In the appendix to part 163--Interim (a)(1)(A) List, under 
section ``IV.,'' the list of documents/records or information required 
for entry of special categories of merchandise is amended by adding the 
following new listing in the appropriate numerical order:
* * * * *

Part 113, Appendix B--Bond to Indemnify Complainant Under Section 
337, Tariff Act of 1930, as Amended

* * * * *

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

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

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

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


Sec. 178.2  Listing of OMB control numbers.

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              19 CFR section                          Description                      OMB control no.
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*                  *                  *                  *                  *                  *
                                                        *
Part 113--Appendix B.....................  Bond to Indemnify Complainant                              1515-0222
                                            Under Section 337, Tariff Act
                                            of 1930, as Amended.
*                  *                  *                  *                  *                  *
                                                        *
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Raymond W. Kelly,
Commissioner of Customs.
    Approved: December 7, 2000.
Timothy E. Skud,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-31699 Filed 12-12-00; 8:45 am]
BILLING CODE 4820-02-U