[Federal Register Volume 66, Number 155 (Friday, August 10, 2001)]
[Proposed Rules]
[Pages 42163-42167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20081]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 66, No. 155 / Friday, August 10, 2001 / 
Proposed Rules  

[[Page 42163]]



DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 12, 113, 151, and 162

RIN 1515-AC87


Dog and Cat Protection Act

AGENCY: Customs Service, Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This document proposes to amend the Customs Regulations to 
implement certain provisions of the Dog and Cat Protection Act of 2000. 
The Dog and Cat Protection Act of 2000 prohibits the importation of any 
products containing dog or cat fur, and provides for civil and criminal 
penalties for violations of the Act. This document proposes to set 
forth in the regulations the prohibitions on dog and cat fur 
importations and the penalties for violations. The document also 
proposes to implement the provision of the Act pertaining to Customs 
certification of domestic and foreign commercial laboratories to test 
products to determine if the products intended to be imported into the 
United States contain dog or cat fur. The proposed regulations 
implement Federal law prohibiting these imports in order to discourage 
inhumane practices abroad concerning the treatment of dogs and cats.

DATES: Comments must be received on or before October 9, 2001.

ADDRESSES: Written comments may be addressed to, and inspected at, U.S. 
Customs Service, Office of Regulations and Rulings--Regulations Branch, 
1300 Pennsylvania Avenue--3rd Floor, NW., Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT: On laboratory procedures--Renee 
Stevens, Laboratories & Scientific Services, Office of Information and 
Technology, (202) 927-0941;
    On trade enforcement matters--Luan T. Cotter, Trade Programs--
Commercial Enforcement, Office of Field Operations, (202) 927-1249; and
    On penalty and forfeiture policy and procedural matters--Jeremy 
Baskin, Penalties Branch, Office of Regulations and Rulings, (202) 927-
2344.

SUPPLEMENTARY INFORMATION:

Background

I. The Dog and Cat Protection Act of 2000, in General

    Congress found that products made with dog and cat fur are being 
imported into and sold in the United States and that these products are 
often deceptively labeled to prevent consumers, as well as retailers 
and importers, from ascertaining the true content of the fur contained 
in the products they purchase in the U.S. Congress also found that 
available evidence suggests that producers of dog and cat fur products 
house, transport, and slaughter these dogs and cats for their fur in 
inhumane ways. Based on these findings, Congress promulgated the Dog 
and Cat Protection Act of 2000 (the ``Act''), as chapter 3 of Subtitle 
B of Title I of the Tariff Suspension and Trade Act of 2000. This Act 
was signed into law on November 9, 2000 (Pub. L. 106-476, 114 Stat. 
2101, codified at 19 U.S.C. 1308).
    The provisions of the Act amend Title III of the Tariff Act of 1930 
by adding a new section 308, entitled ``Prohibition on importation of 
dog and cat fur products.'' In general, the provisions of the new 
section 308 prohibit the importation, exportation, introduction into 
interstate commerce, manufacture for introduction into interstate 
commerce, offer for sale, sale, transportation, or distribution in the 
U.S. of any products made with dog or cat fur. This section also 
provides for civil and criminal penalties for violations of the Act, 
including the forfeiture of prohibited products and the potential 
debarment of individuals from engaging in commerce involving fur 
products. Further, section 308 also authorizes the Secretary of the 
Treasury to offer rewards for information concerning violations, and 
provides any persons accused of certain violations with an affirmative 
defense if they can demonstrate that they exercised reasonable care in 
determining the nature of the products alleged to have been imported or 
exported in violation of the Act. Lastly, this section directs Customs 
to develop a program of certifying U.S. and foreign laboratories for 
making reliable assessments of whether products are made with dog or 
cat fur.
    This document proposes to amend the Customs Regulations (19 CFR 
chapter I) to set forth the prohibited conduct defined in the Act. The 
document also proposes to set forth the penalty, forfeiture, and reward 
provisions, and the provision regarding the affirmative defense of 
reasonable care for persons accused of violating provisions of the Act. 
In addition the document proposes to implement the provision regarding 
the accreditation of domestic and foreign laboratories for testing 
products to determine if the products contain dog or cat fur.

II. Specific Provisions of the Dog and Cat Protection Act of 2000

A. Prohibited Conduct

    For Customs purposes, the Act prohibits any person from importing 
into, or exporting from, the U.S. any dog or cat fur product. The Act 
provides an exception for the importation, exportation, or 
transportation, for noncommercial purposes, of deceased personal pets, 
that includes such pets preserved through taxidermy. The terms ``cat 
fur,'' ``dog fur,'' ``dog or cat fur product,'' and ``person'' are 
specifically defined in the Act.
    Prohibited and restricted merchandise are generally provided for in 
part 12 of the Customs Regulations. It is proposed to add a new 
subheading for dog and cat fur and to add a new Sec. 12.64 to provide 
for the Act's provisions pertaining to the prohibited conduct. The 
definitions for the terms ``cat fur,'' ``dog fur,'' ``dog or cat fur 
product,'' and ``person'' will be provided for at paragraph (a) of the 
new Sec. 12.64. The nature of the prohibited conduct will be provided 
for at paragraph (b) of the new Sec. 12.64. Paragraph (c) will provide 
that any products containing dog or cat fur imported or exported 
contrary to the provisions of Sec. 12.64 are subject to seizure and 
forfeiture.

B. Penalty and Reward Provisions

    The Act provides that any person who violates any provision of new 
section 308, in addition to any other civil or criminal penalty that 
may be imposed under title 18 of the United States Code or any other 
provision of law, may be assessed a civil penalty of not more than 
$10,000 for each separate knowing and intentional violation, $5,000 for 
each

[[Page 42164]]

separate grossly negligent violation, or $3,000 for each separate 
negligent violation. Further, the violator may be prohibited from 
importing, exporting, or selling any fur product in the United States 
if it is found that the person engaged in a pattern or practice of 
actions that has resulted in a final administrative determination with 
respect to the assessment of civil penalties for knowing and 
intentional or grossly negligent violations of section 308. In 
determining the amount of civil penalties assessed for violation of 
section 308, the degree of culpability, any history of prior 
violations, ability to pay, the seriousness of the violation, and any 
other matters as fairness may require will be taken into account. No 
penalty will be assessed under the Act against a person unless the 
person is given written notice and an opportunity for a hearing. 
Lastly, a reward of not less than $500 will be paid to any person who 
furnishes information that establishes or leads to a civil penalty 
assessment, debarment, or forfeiture of property for any violation of 
the Act.
    These penalty and reward provisions are proposed to be provided for 
at paragraphs (b)-(d) of new Sec. 162.81. Paragraph (a) of new 
Sec. 162.81 will reference the prohibited conduct provided for at new 
Sec. 12.64.

C. The Affirmative Defense of Reasonable Care

    Any person charged with a penalty under the provisions of the Act 
has a defense to that proceeding if he establishes that he exercised 
reasonable care in determining the nature of the products alleged to 
have resulted in such violation, and in ensuring that the products were 
accompanied by documentation, packaging, and labeling that were 
accurate as to the nature of the products. One of the procedures 
prescribed by the Act as an indicia of reasonable care is use of a 
Customs-accredited laboratory's determination that dog or cat fur is 
not contained in an item. While the use of a Customs-accredited 
laboratory is not required to avoid liability, it may prove dispositive 
in determining whether the person exercised reasonable care.
    This affirmative defense provision is proposed to be provided for 
in paragraph (e) of new Sec. 162.81.

D. Customs Accreditation of Fur Testing Laboratories

    Section 151.12 of the Customs Regulations (19 CFR 151.12) concerns 
the accreditation of commercial laboratories. Paragraph (b) of 
Sec. 151.12 explains, in general, what a Customs-accredited laboratory 
is and provides that accreditation is restricted to facilities within 
the United States that analyze certain commodities to determine 
elements relating to the admissibility, quantity, composition, or 
characteristics of imported merchandise. Because the Act requires 
Customs to provide for a process by which accreditation will be 
extended to foreign testing laboratories that can demonstrate to 
Customs reliable assessments of whether products intended for sale or 
consumption in the United States are made with dog or cat fur, it is 
proposed to amend this paragraph by adding another sentence to explain 
Customs limited accreditation of foreign laboratories to analyze 
products to determine if they contain dog or cat fur.
    Regarding the process by which testing laboratories, whether 
domestic or foreign, can qualify for certification by Customs, the 
application and accreditation procedures currently provided for at 
Sec. 151.12 and the fee schedule explained in T.D. 99-67 will apply. 
Paragraph (d) of Sec. 151.12 currently provides that accreditation may 
be sought by a commercial laboratory in any commodity group listed in 
paragraph (d)(2) of the section, and explains that applicable test 
procedures are listed in Commodity Group Brochures. To provide for 
Customs accreditation of commercial laboratories for purposes of the 
Act, Customs proposes to amend paragraph (d)(2) to add a new 
subparagraph (xvi) that will provide for the accreditation of 
laboratories in the testing of products containing fur, regardless of 
the classification of the products under the tariff schedule (HTSUS), 
to determine if the products contain any dog or cat fur. Customs will 
provide for the dog and cat fur testing procedures in a new Commodity 
Group Brochure. This proposed amendment will also reference the 
provisions of proposed Secs. 12.64 and 151.12(b) discussed above.
    With the accreditation of foreign laboratory facilities by Customs, 
further amendments are required regarding bonding, the payment of 
accreditation/ reaccreditation fees, and laboratory operations because 
the present regulatory scheme only concerns laboratory facilities 
located and operations occurring in the United States.
    Regarding bonding, paragraph (f)(1)(vii) of Sec. 151.12 concerns 
the agreement of laboratories to execute a bond when notified of 
pending accreditation and references the provisions of part 113 of the 
Customs Regulations. The bond conditions for commercial laboratories 
are at Sec. 113.67(b), which provides, in part, that if the principal 
defaults, the obligors must pay liquidated damages and that if the 
merchandise is restricted merchandise the liquidated damages are equal 
to three times the value of the merchandise.
    Because the risk of malfeasance or nonperformance presented by 
foreign laboratories accredited by Customs is great, given the distance 
and lack of enforcement opportunities, and because prohibited, not 
merely restricted, merchandise is at issue, the following amendments 
are proposed. First, it is proposed to amend Sec. 151.12(f)(1)(vii) to 
provide that when laboratories located outside of the United States are 
notified of pending accreditation/reaccreditation, a bond in the amount 
of a minimum of $ 1 million will be required to be executed in 
accordance with the provisions of part 113 of the Customs Regulations. 
Also, to secure the payment of any liquidated damages which may be 
assessed against the laboratory, it is proposed to further amend 
Sec. 151.12(f)(1)(vii) to provide that the foreign laboratory have a 
designated resident corporate surety in the United States. It is also 
proposed to amend the provisions of Sec. 113.67(b)(2)(i) to provide 
that if the principal defaults in the case of a bond taken by a foreign 
laboratory accredited to test products to determine if the products 
contain dog or cat fur, the obligors agree to pay liquidated damages 
equal to nine times the value of the merchandise.
    Paragraphs (f)(1)(xi) and (h)(1)(i) of Sec. 151.12 concern the fee 
requirements for accreditation/reaccreditation of commercial 
laboratories. With the accreditation of foreign laboratories, foreign 
exchange rate fluctuations-- respecting assessed costs--and the payment 
of variable fee assessments for international travel, per diem and 
background expenses prior to Customs review of an application for 
accreditation become issues. Accordingly, it is proposed to amend the 
second sentences of these provisions to limit their scope to domestic 
laboratories and to add new third sentences to provide that foreign 
laboratories applying for accreditation/reaccreditation must submit the 
whole of variable charges assessed for international travel, per diem 
and background expenses in U.S. currency before Customs will undertake 
to review their application for accreditation.
    A change is also needed to paragraph (j) of Sec. 151.12, which 
concerns how Customs-accredited laboratories should operate. Paragraph 
(j)(1) explains the procedure to be followed regarding the testing of 
sample merchandise. The

[[Page 42165]]

paragraph requires Customs supervision when merchandise samples are 
split for testing by accredited laboratories. Since the dog and cat 
fur-testing operations of foreign laboratories will be outside of the 
United States, Customs cannot supervise the procedure regarding the 
splitting of samples. Accordingly, this regulatory provision must be 
amended. It is proposed to amend paragraph (j) by adding a sentence 
that provides that the requirements regarding samples only apply to 
domestic laboratory operations and not to foreign laboratory operations 
accredited for purposes of the Dog and Cat Protection Act of 2000. 
Another sentence will be added to require that if a foreign laboratory 
accredited by Customs to test for dog and cat fur certifies that the 
product does not contain dog or cat fur, the certification submitted by 
an importer must be accompanied by the reports of the laboratory's 
testing result.

III. Miscellaneous and Organizational Change

    On September 21, 2000, the Commissioner of Customs announced 
certain organizational changes at Customs. One of these changes 
involved reassigning oversight of the Laboratories & Scientific 
Services from the Assistant Commissioner, Office of Field Operations, 
to the Assistant Commissioner, Office of Information and Technology 
(OIT). This action was taken so that Laboratories & Scientific Services 
could take better advantage of the technical expertise and services 
offered by OIT. Because the regulations providing for commercial 
laboratories expressly reference the Office of Field Operations at 
Sec. 151.12(a), it is proposed to amend this provision to reference the 
Office of Information and Technology.

Comments

    Before adopting these proposed regulations as a final rule, 
consideration will be given to any written comments timely submitted to 
Customs, including comments on the clarity of this proposed rule and 
how it may be made easier to understand. Comments submitted will be 
available for public inspection in accordance with the Freedom of 
Information Act (5 U.S.C. 552), Sec. 1.4 of the Treasury Department 
Regulations (31 CFR 1.4), and Sec. 103.11(b) of the Customs Regulations 
(19 CFR 103.11(b)), on regular business days between the hours of 9 
a.m. and 4:30 p.m. at the Regulations Branch, Office of Regulations and 
Rulings, U.S. Customs Service, 1300 Pennsylvania Avenue--3rd Floor, NW, 
Washington, D.C.

The Regulatory Flexibility Act And Executive Order 12866

    Pursuant to provisions of the Regulatory Flexibility Act (5 U.S.C. 
601 et seq.), it is certified that, if adopted, the proposed amendments 
will not have a significant economic impact on a substantial number of 
small entities. The proposed amendments merely set forth statutory 
prohibitions on the importation of products containing dog and cat fur 
and provide for a laboratory certification process that Customs has 
been directed to implement. Accordingly, the proposed amendments are 
not subject to the regulatory analysis or other requirements of 5 
U.S.C. 603 and 604. This amendment does not meet the criteria for a 
``significant regulatory action'' as specified in Executive Order 
12866.

Paperwork Reduction Act

    The collection of information in the current regulations has 
already been approved by the Office of Management and Budget (OMB) in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) 
and assigned OMB control number 1515-0155 (Application and other 
documents pertaining to accreditation of commercial laboratories). This 
notice of proposed rulemaking does not involve any material change to 
the existing approved information collection.
    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.
    Part 178 of the Customs Regulations (19 CFR part 178), which lists 
the information collections contained in the regulations and control 
numbers assigned by OMB, would be amended accordingly if this proposal 
is adopted.

List of Subjects

19 CFR Part 12

    Animals, Customs duties and inspection, Entry of merchandise, 
Exports, Furs, Imports, Labeling, Marking, Prohibited merchandise, 
Reporting and recordkeeping requirements, Restricted merchandise, 
Seizure and forfeiture.

19 CFR Part 113

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

19 CFR Part 151

    Customs duties and inspection, Examination, Exports, Imports, 
Laboratories, Licensing, Penalties, Reporting and recordkeeping 
requirements, Sampling and testing.

19 CFR Part 162

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

Proposed Amendments to the Regulations

    For the reasons stated above, it is proposed to amend parts 12, 
113, 151, and 162 of the Customs Regulations (19 CFR parts 12, 113, 
151, and 162) as set forth below:

PART 12--SPECIAL CLASSES OF MERCHANDISE

    1. The general authority citation for part 12 continues, and a new 
specific authority for new Sec. 12.64 is added, to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 22, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624;
* * * * *
    Section 12.64 also issued under 19 U.S.C. 1308;
* * * * *
    2. A new center heading consisting of Sec. 12.64 is added after 
Sec. 12.63 to read as follows:

Dog and Cat Fur


Sec. 12.64  Products containing dog and cat fur prohibited.

    (a) Definitions. For purposes of this section, the following terms 
have the meanings indicated:
    Cat fur. ``Cat fur'' means the pelt or skin of any animal of the 
species Felis catus.
    Dog fur. ``Dog fur'' means the pelt or skin of any animal of the 
species Canis familiaris.
    Dog or cat fur product. ``Dog or cat fur product'' means any item 
of merchandise which consists, or is composed in whole or in part, of 
any dog fur, cat fur, or both.
    Person. ``Person'' means any individual, partnership, corporation, 
association, organization, business trust, government entity, or other 
entity subject to the jurisdiction of the U.S.
    (b) Prohibited merchandise.--(1) Imported or exported. It is 
unlawful for any person to import into, or export

[[Page 42166]]

from, the U.S. any dog or cat fur product.
    (2) Exception. The provisions of paragraph (b)(1) of this section 
do not apply to the importation or exportation for noncommercial 
purposes, of deceased personal pets, including such pets preserved 
through taxidermy.
    (c) Forfeiture. Any dog or cat fur product imported or exported 
contrary to the provisions of this section is subject to seizure and 
forfeiture.

PART 113--CUSTOMS BONDS

    1. The general authority citation for part 113 continues to read as 
follows:

    Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *
    2. In Sec. 113.67(b)(2)(i), a new sentence is added to the end to 
read as follows:


Sec. 113.67  Commercial gauger and commercial laboratory bond 
conditions.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *. If the principal defaults in the case of a bond taken by 
a foreign laboratory accredited to test products to determine if the 
products contain dog or cat fur, the obligors agree to pay liquidated 
damages equal to nine times the value of the merchandise. (See, 
Sec. 151.12(f)(1)(vii) of this chapter.)
* * * * *

PART 151--EXAMINATION, SAMPLING, AND TESTING OF MERCHANDISE

    1. The general authority citation for part 151 continues, and a new 
specific authority citation for Sec. 151.12 is added, to read as 
follows:

    Authority: 19 U.S.C. 66, 1202 (General Notes 22 and 23, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624.

    Subpart A also issued under 19 U.S.C. 1499.
    Section 151.12 also issued under 19 U.S.C. 1308;
* * * * *
    2. In Sec. 151.12:
    a. Paragraph (a) is amended at the definition for ``Assistant 
Commissioner'' by removing the words ``Office of Field Operations'' and 
adding, in their place, the words ``Office of Information and 
Technology'';
    b. paragraph (b) is amended by revising the second sentence and by 
adding a new third and fourth sentence;
    c. paragraph (d)(2) is amended by adding a new paragraph 
(d)(2)(xvi);
    d. paragraph (f) is amended:
    (i) at paragraph (f)(1)(vii) by adding a new sentence at the end of 
the paragraph;
    (ii) at paragraph (f)(1)(xi) at the second sentence by removing the 
words ``the applicant agrees'' and adding, in their place, the words 
``domestic applicants agree''; and, by adding a new third sentence; and
    (iii) by adding a new paragraph (f)(1)(xii); and
    e. paragraph (h)(1)(i) is amended at the second sentence by 
removing the words ``Before a laboratory'' and adding, in their place, 
the words ``Before a domestic laboratory''; and by adding a new third 
sentence;
    f. paragraph (j)(1) is amended by revising the first sentence and 
adding a new sentence at the end of the paragraph.
    The additions and revisions to read as follows:


151.12  Accreditation of commercial laboratories.

* * * * *
    (b) * * *. A ``Customs-accredited laboratory'' is a commercial 
laboratory that has demonstrated, to the satisfaction of the Executive 
Director, pursuant to this section, the capability to perform analysis 
of certain commodities to determine elements relating to the 
admissibility, quantity, composition, or characteristics of imported 
merchandise. For accreditations other than accreditation to determine 
whether dog or cat fur is contained in articles, a commercial 
laboratory must be located in the United States. For accreditation to 
determine whether dog or cat fur is contained in any articles intended 
for sale or consumption in the United States, a commercial laboratory 
may be located in a foreign country or the United States. * * *
* * * * *
    (d) * * *
    (2) * * *
    (xvi) Products, regardless of the chapter of the tariff schedule 
(HTSUS) under which they are classified when entered, to determine if 
they contain any dog or cat fur (see Secs. 12.64, 151.12(b), and 162.81 
of this chapter).
* * * * *
    (f) * * *
    (1) * * *
    (vii) * * *. If the commercial laboratory is seeking accreditation 
for determination of whether a product contains dog or cat fur and is 
located outside of the United States, the express agreement must 
provide that the foreign laboratory will execute a bond in accordance 
with part 113, Customs Regulations, in an amount of a minimum of $1 
million, will submit the bond to Headquarters, and that the laboratory 
will have a resident corporate surety in the United States to secure 
the payment of any liquidated damages that may be assessed against the 
laboratory; the application in this instance must identify the name and 
address of the resident corporate surety.
* * * * *
    (xi) * * *. Foreign applicants applying for accreditation/
reaccreditation regarding the testing of products for dog and cat fur 
(see Secs. 12.64, 151.12(b), and 162.81 of this chapter) must submit 
all variable charges assessed for international travel, per diem and 
background expenses in U.S. currency before Customs will undertake to 
review their application for accreditation.
    (xii) If a commercial laboratory is seeking accreditation for 
determination of whether a product contains dog or cat fur and is 
located outside of the United States, the name and address of a 
resident agent in the United States who is authorized to accept service 
of process against the foreign laboratory.
* * * * *
    (h) * * *
    (1) * * *
    (i) * * *. Foreign laboratories applying for accreditation/
reaccreditation regarding the testing of products for dog and cat fur 
(see Secs. 12.64, 151.12(b), and 162.81 of this chapter) must submit 
all variable charges assessed for international travel, per diem and 
background expenses in U.S. currency before Customs will undertake to 
review their application for accreditation.
* * * * *
    (j) How will Customs-accredited laboratories operate.--(1) Samples 
for testing. For laboratories other than those foreign laboratories 
accredited to determine whether a product contains dog or cat fur, upon 
request by the importer of record of merchandise, the port director 
will release a representative sample of the merchandise for testing by 
a Customs-accredited laboratory at the expense of the importer. * * *. 
If a foreign laboratory accredited by Customs to test for dog and cat 
fur certifies that the product does not contain dog or cat fur, the 
certification submitted by an importer must be accompanied by the 
reports of the laboratory's testing result as set forth in paragraph 
(j)(2) of this section.
* * * * *

PART 162--INSPECTION, SEARCH, AND SEIZURE

    1. The general authority citation for part 162 continues, and a new 
specific

[[Page 42167]]

authority for Sec. 162.81 is added, to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1592, 1593a, 1624.
* * * * *
    Section 162.81 also issued under 19 U.S.C. 1308;
* * * * *
    2. In Sec. 162.70:
    a. paragraph (a)(1) is amended by removing the word ``and'' at the 
end of the paragraph and adding a semicolon;
    b. paragraph (a)(2) is amended by removing the period at the end 
and adding, in its place, a semicolon and the word ``and''; and
    c. a new paragraph (a)(3) is added, to read as follows:


Sec. 162.70  Applicability.

    (a) * * *
    (3) Violations of section 308, Tariff Act of 1930, as amended (19 
U.S.C. 1308), that occur after November 9, 2000.
* * * * *
    3. A new Sec. 162.81 is added, to read as follows:


Sec. 162.81  Penalties for importation or exportation of products 
containing dog or cat fur.

    (a) Products containing dog or cat fur. Any person importing into, 
or exporting from, the U.S. any dog or cat fur product in contravention 
of the provisions of Sec. 12.64 of this chapter is subject to civil 
penalties and the merchandise is subject to seizure and forfeiture.
    (b) Civil monetary penalties.--(1) Assessment under 19 U.S.C. 1308. 
Any person who imports or exports from the U.S. any dog or cat fur 
product in contravention of the provisions of Sec. 12.64 of this 
chapter may, in addition to any other civil or criminal penalty that 
may be imposed under title 18, United States Code, or any other 
provision of law, be subject to civil monetary penalties for violation 
of 19 U.S.C. 1308 of not more than $10,000 for each separate knowing 
and intentional violation of this section, or not more than $5,000 for 
each separate grossly negligent violation of this section, or not more 
than $3,000 for each separate negligent violation.
    (2) Assessment under 19 U.S.C. 1592 or 19 U.S.C. 1595a(b). Any 
person who imports into the U.S. any dog or cat fur product in 
contravention of the provisions of Sec. 12.64 of this chapter may be 
assessed, in addition to or in lieu of any other civil monetary penalty 
or penalties, civil monetary penalties under 19 U.S.C. 1592 or 19 
U.S.C. 1595a(b). These penalties will be administered under Part V, 
Tariff Act of 1930, as amended.
    (3) Notice. In accordance with 19 U.S.C. 1308(c)(1)(D), no penalty 
may be assessed or imposed under the provisions of paragraphs (b)(1) or 
(c) of this section against a person unless the person is given notice 
and opportunity for a hearing with respect to such violation, in 
accordance with section 554 of title 5, United States Code.
    (4) Factors in assessing penalties. In determining the amount of 
civil penalties assessed under paragraphs (b)(1) or (c) of this 
section, the Secretary of the Treasury will take into account the 
degree of culpability, any history of prior violations under this 
statute and regulations, ability to pay, the seriousness of the 
violation, and such other matters as fairness may require.
    (c) Debarment. In accordance with 19 U.S.C. 1308(c)(1)(B), the 
Secretary of the Treasury may prohibit a person from importing or 
exporting any fur product into or out of the United States if the 
Secretary finds that the person has engaged in a pattern or practice of 
actions that has resulted in a final administrative determination with 
respect to the assessment of civil monetary penalties for knowing and 
intentional or grossly negligent violations of Sec. 12.64 of this 
chapter.
    (d) Reward. The Secretary of the Treasury will pay a reward of not 
less than $500 to any person who furnishes information that establishes 
or leads to a civil penalty assessment, debarment, or forfeiture of 
property for any violation of 19 U.S.C. 1308 or any regulation issued 
thereunder.
    (e) Affirmative defense. Any person accused of a violation under 19 
U.S.C. 1308 has a defense in any proceeding brought under paragraphs 
(b)(1) or (c) of this section or 19 U.S.C. 1308 if that person 
establishes by a preponderance of the evidence that he exercised 
reasonable care in determining the nature of the products alleged to 
have resulted in the violation and in ensuring that the products were 
accompanied by documentation, packaging, and labeling that were 
accurate as to the nature of the products. If the person can show that 
the products imported were tested by a Customs-accredited laboratory 
(see, Sec. 151.12) to attempt to determine the nature of fur contained 
in an article, the use of a Customs-accredited laboratory may prove 
dispositive in determining whether that person exercised reasonable 
care for purposes of applying applicable penalty provisions.

    Approved: July 18, 2001.
Charles W. Winwood,
Acting Commissioner of Customs.
Timothy E. Skud,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 01-20081 Filed 8-9-01; 8:45 am]
BILLING CODE 4820-02-P