[Federal Register Volume 67, Number 40 (Thursday, February 28, 2002)]
[Rules and Regulations]
[Pages 9188-9191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-4746]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 162, 171 and 178

[T.D. 02-08]
RIN 1515-AC69


Civil Asset Forfeiture

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule, with some changes, the 
interim rule amending the Customs Regulations that was published in the 
Federal Register on December 14, 2000, as T.D. 00-88. The interim rule 
implemented the provisions of the Civil Asset Forfeiture Reform Act of 
2000 (CAFRA), insofar as these provisions were applicable to laws 
enforced by Customs. The CAFRA created general rules governing civil 
forfeiture proceedings. However, CAFRA specifically exempted from 
certain of its requirements forfeitures that were made under a number 
of statutes, among these being: the Tariff Act of 1930 or any other 
provision of law codified in title 19, United States Code; the Internal 
Revenue Code of 1986; the Federal Food, Drug, and Cosmetic Act; the 
International Emergency Economic Powers Act; and the Trading with the 
Enemy Act. In addition, this final rule adopts certain minor conforming 
changes to the Customs Regulations that were made in the interim rule 
in order to reflect a recodification of existing statutory law.

EFFECTIVE DATE: February 28, 2002.

FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Penalties Branch, (202-
927-2344).

SUPPLEMENTARY INFORMATION:

Background

    Section 2 of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), 
Public Law (Pub. L.) 106-185, 114 Stat. 202, enacted on April 25, 2000, 
and codified at title 18, United States Code, section 983 (18 U.S.C. 
983), created general rules for civil forfeiture proceedings. This 
section of the CAFRA, however, specifically exempts from certain of its 
requirements forfeitures undertaken pursuant to the following statutes: 
the Tariff Act of 1930 or any other provision of law codified in title 
19, United States Code; the Internal Revenue Code of 1986; the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.); the Trading with 
the Enemy Act (50 U.S.C. App. 1 et seq.); and section 1 of title VI of 
the Act of June 15, 1917 (40 Stat. 233; 22 U.S.C. 401). In addition, 
Public Law 107-56, enacted October 26, 2001, the title of which is the 
Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 
2001, exempted from the requirements of CAFRA the International 
Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1701 et seq.).
    Under section 2 of the CAFRA, specified duties and obligations

[[Page 9189]]

concerning civil forfeiture proceedings are placed upon Government 
officials who were to be designated by the seizing agencies.
    By a document published in the Federal Register (65 FR 78090) on 
December 14, 2000, as T.D. 00-88, Customs announced an interim rule to 
clarify and implement the law in this regard. It was determined that 
interim regulations were appropriate because no additional requirements 
were imposed upon the public. Rather, the interim regulations conferred 
certain additional rights on property owners or interested parties, and 
provided clear guidance to Customs officials in the processing of 
property seized for forfeiture under the CAFRA.
    The interim rule identified the particular Customs official who 
will grant extensions of time for sending notices of seizure, as 
authorized by 18 U.S.C. 983(a)(1)(B), and it identified those Customs 
officials who will rule on requests for immediate release of seized 
property, as authorized by 18 U.S.C. 983(f)(2). The interim regulations 
also provided guidance to Customs officials in the processing of 
property seized for forfeiture under the CAFRA.
    In addressing these matters, the interim rule added a new subpart H 
to part 162 of the Customs Regulations (19 CFR part 162, subpart H).
    Furthermore, the interim regulations made clear that acceptance of 
an administrative forfeiture remission does not make the Government 
liable for fees, costs or interest pursuant to 28 U.S.C. 2465. In this 
respect, a new Sec. 171.24 was added to the Customs Regulations (19 CFR 
171.24) to provide that, in the case of any seizure for forfeiture that 
is remitted or mitigated under 19 U.S.C. 1618 or 31 U.S.C. 5321, the 
person who accepts such a remission or mitigation decision will not be 
considered to have substantially prevailed in a civil forfeiture 
proceeding for purposes of being able to collect any fees, costs or 
interest from the Government.
    With the exception of the provision in new Sec. 171.24, seizures 
exempted from the requirements of section 2 of the CAFRA will be 
processed in accordance with existing regulations.
    Lastly, Pub. L. 103-272, 108 Stat. 745, dated July 5, 1994, 
reenacted and recodified the provisions of title 49, United States 
Code. To this end, the interim rule removed the reference to 49 U.S.C. 
App. appearing in part 171, subpart F, of the Customs Regulations (19 
CFR part 171, subpart F), and added in its place a reference to 49 
U.S.C. 80303, in accordance with the recodification of the statutory 
provision specifically made by section 1(e) of Pub. L. 103-272.
    Before adopting the interim regulations as a final rule, Customs 
solicited comments from the public. Three commenters responded to the 
interim rule. A description of the issues that were raised by the 
commenters together with Customs response to these issues is set forth 
below.

Discussion of Comments

    Comment: One commenter declares that currently, at international 
airports, there are signs warning passengers to declare the currency 
they are carrying if it exceeds $10,000. The commenter recommends that 
information be added to this warning that if currency is seized for 
nonreporting, the person whose money is seized has a right to file a 
claim and to be represented by an attorney, even if the person cannot 
afford an attorney. The claimant indicates that section 983(b) of title 
18 specifies the right to legal representation.
    Customs Response: The informational content of warnings posted at 
airports notifying passengers of the obligation to file monetary 
instrument reports falls outside the scope of this regulation.
    Comment: One commenter states that clarification is required of the 
meaning of 18 U.S.C. 981(d) of the CAFRA. In particular, the commenter 
notes that administrative proceedings for violation of the Customs laws 
are inconsistent with section 981.
    Customs Response: Customs disagrees. Administrative proceedings for 
processing seizures made for violation of the Customs laws are governed 
by the statutory provisions of 19 U.S.C. 1602 through 1619. Further, 
the provisions of 19 U.S.C. 1600 state that these procedures will apply 
to seizures of any property effected by Customs officers under any law 
enforced or administered by the Customs Service unless such law 
specifies different procedures. Because section 981 specifically 
authorizes the application of the Customs laws to these seizures, we 
find no inconsistencies.
    Comment: One commenter asks why the interim regulations refer to 
``calendar days'' when the statute only refers to ``days.''
    Customs Response: Customs used the term ``calendar days'' in the 
interim rule for purposes of clarity.
    Comment: One commenter observes that Sec. 162.92(a) in the interim 
rule states that Customs will send a written notice of seizure ``as 
soon as practicable'' yet an existing regulatory provision (19 CFR 
162.21(a)) states that a receipt for seized property shall be given at 
the time of seizure to the person from whom the property was seized. 
The commenter suggests that these provisions are clearly in conflict. 
The commenter avers that immediate notification of seizure must occur, 
because extending the time for issuance of a receipt creates a 
situation where none of the parties directly involved with the 
shipment, i.e., shipper, consignee or carrier, would know the 
disposition for an extended period of time. It is asserted that seizure 
of a shipment with no notice from Customs for 60 days or more does not 
allow the importer to conduct his normal business and will cause the 
carrier to expend needless time and effort in searching for the seized 
articles.
    Customs Response: There is no conflict presented between 
Secs. 162.21 and 162.92. Further, Customs believes that adequate 
safeguards regarding notices of seizure already exist.
    The commenter incorrectly equates providing a receipt for seized 
property, which is merely an indication that the Government has taken 
possession of the property, with issuance of a formal notice of 
seizure, which explains the rights, both administrative and judicial, 
that a claimant to that property has with regard to challenging the 
forfeiture. The issuance of a notice of seizure is already governed by 
the provisions of Sec. 162.31 of the Customs Regulations (19 CFR 
162.31). Those requirements of notice have not changed. In fact, the 
regulation with which the commenter takes issue, Sec. 162.92, 
specifically references the requirements of Sec. 162.31 governing 
information to be included in a notice of seizure. By contrast, the 
provisions of Sec. 162.21 only speak to the responsibilities and 
authority of the Customs officer actually making a seizure. Section 
162.21 does not deal with the notification of seizure and explanation 
of the forfeiture processes as do the notices of seizure.
    Comment: One commenter notes that, as a carrier, delay in 
notification of seizures under Sec. 162.92(a) can result in claims 
being made against the carrier for ``lost'' merchandise which has, in 
fact, been seized by Customs.
    The commenter suggests numerous possible procedures that Customs 
could implement by regulation to assist carriers when claims are filed 
due to seizure. Specifically, these procedures include: (1) The 
provision by Customs of a list of all shipments seized from a carrier's 
custody not more than 60 days following seizure, without exception so 
as to allow the carrier to process claims; (2) the review by Customs, 
every 30 days, of a list of all claims submitted to the carrier for 
loss in order to allow the carrier to determine which shipments

[[Page 9190]]

have been seized by Customs; (3) the empowerment of the carrier to 
require any party filing a claim against the carrier to obtain from 
Customs written confirmation that the shipment was not seized in order 
to perfect that claim; and (4) the empowerment of the carrier to 
require the party filing a claim to assign ownership of the shipment to 
the carrier should it be found to have been seized and then released by 
Customs.
    Customs Response: Customs disagrees that any changes as proposed by 
the commenter are needed under the circumstances. The provisions of 
Sec. 162.31 already require Customs to provide written notice of any 
liability to forfeiture to each party that the facts of record indicate 
has an interest in the claim or seized property. To this effect, as 
stated above, Sec. 162.92(a) in the interim rule specifically 
references the requirements of Sec. 162.31 governing information to be 
included in a notice of seizure.
    It is not the responsibility of Customs to match each notice of 
seizure provided to a carrier with any claims of loss that have been 
filed against the carrier. Nor is it the province of the Customs 
Regulations to include provisions regarding business practices of a 
carrier or to empower that carrier to require information from its 
clients under the authority of federal regulation. The requirements of 
CAFRA require notification to known parties-in-interest as provided in 
the interim regulations and as adopted in these final regulations.
    Comment: One commenter states, in connection with Sec. 162.92(d), 
that only the Assistant Commissioner, Office of Investigations, may 
extend the period for sending notices, not his designee. It is claimed 
that 18 U.S.C. 983 makes no provision for designees.
    Customs Response: The provisions of 18 U.S.C. 983(a)(1)(B) require 
the decision as to any extension to be made by a supervisory official 
in the Headquarters office of the seizing agency. Section 162.92(d) in 
the interim rule complies with this statutory requirement. There is no 
statutory prohibition on allowing a designee of a supervisory official 
from making this decision.
    Comment: One commenter notes, with respect to Sec. 162.93, that if 
notice of seizure is not provided timely under CAFRA, and the seized 
property must be returned to the person from whom the property was 
seized, the interim regulations provide no audit or check to assure 
that return of the property occurs. It is averred that no party other 
than Customs will know that the seizure occurred because no notice has 
been issued. Accordingly, the commenter suggests that articles should 
be returned to the owner within 60 days, the same time period as 
originally required to issue the notice.
    Customs Response: Customs disagrees. The provisions of Sec. 162.93 
in the interim rule require Customs to return property to any person 
from whom property is seized if the notice of seizure is not sent 
within the time period prescribed in Sec. 162.92. Also, the provisions 
of Sec. 162.21 of the Customs Regulations (19 CFR 162.21) require 
Customs to provide a receipt for seized property to the party from whom 
the property has been seized. Contrary to the commenter's assertion, 
the party from whom the property is seized will know of the seizure 
based upon regulatory requirements that predate the CAFRA regulations 
which are the subject of this document.
    Comment: One commenter states, in relation to filing a claim for 
seized property under Sec. 162.94, that 18 U.S.C. 983(a)(2)(D) requires 
Customs to make claim forms generally available upon request. The 
commenter also indicates that the provisions of section 983(a)(2)(E) 
should make clear that a claim can be filed without the posting of a 
bond. Thus, the commenter implies that this language should be included 
in Sec. 162.94.
    Customs Response: Customs agrees. Section 162.94(c) in the interim 
rule is revised in this final rule to include a provision that Customs 
will make claim forms generally available upon request. Also, 
Sec. 162.94 in the interim rule is amended in this final rule by adding 
a new paragraph (e) to make clear that a claim may be filed without the 
posting of a bond. Section 162.94(e) in the interim rule is 
redesignated as Sec. 162.94(f) in this final rule.
    Comment: One commenter states that Customs field offices need 
guidance on what is meant by the phrase ``legitimate business'' as it 
appears in Sec. 162.95(b)(1) in the interim rule, which states that 
immediate release of seized property for hardship purposes will not 
apply if the seized property is currency or monetary instruments or 
electronic funds unless such property comprises the assets of a 
legitimate business. To this end, the commenter states that if a person 
from whom currency or negotiable instruments have been seized can 
demonstrate that the money had just been withdrawn from a bank account 
or can provide sales slips for merchandise sold, that seized property 
should be returned on site.
    Customs Response: Customs disagrees that Sec. 162.95(b)(1) in the 
interim rule needs any change as suggested by the commenter.
    The commenter asks that Customs in effect expand the statute to 
include situations that are not contained in the statute. The statute 
allows for the immediate return of seized property to a claimant if 
continuing possession of the seized property by Customs, pending the 
final disposition of the forfeiture proceedings, would cause 
substantial hardship and that likely hardship outweighs the risk that 
the property will be lost, concealed or transferred if it is returned 
to the claimant during the pendency of the proceeding. See 18 U.S.C. 
983(f)(1).
    However, the statute excepts from immediate release, as provided 
above, currency, or other monetary instruments, or electronic funds 
unless that currency, other monetary instruments or electronic funds 
constitute the assets of a legitimate business which has been seized. 
If the claimant to property can show that the seized currency or 
monetary instruments are the assets of a legitimate business that has 
been seized, he would still need to show under the statute that he has 
a possessory interest in the property, that he has sufficient ties to 
the community, and that continuing possession by Customs would cause 
substantial hardship.
    Against this backdrop, the providing of ``slips showing sale of 
merchandise'' hardly rises to the level of proof needed in order for 
the Government to allow the immediate release of the seized property, 
as described by the commenter.
    Nevertheless, in one sense Sec. 162.95(b)(1) in the interim rule 
does not accurately reflect the statute. It states that immediate 
release of seized property for hardship purposes will not apply if the 
seized property is currency or monetary instruments or electronic funds 
unless such property comprises the assets of a legitimate business. In 
fact, the statute at 18 U.S.C. 983(f)(8) states that the provision 
governing the release of seized property will not apply if the seized 
property is contraband, currency, or other monetary instrument, or 
electronic funds unless such currency or other monetary instrument or 
electronic funds constitutes the assets of a legitimate business which 
has been seized. Accordingly, Sec. 162.95(b)(1) in the interim rule is 
amended in this final rule to more accurately reflect the statute in 
this respect.

Additional Changes

    As previously noted, Public Law 107-56, enacted on October 26, 
2001, and known as the Uniting and Strengthening

[[Page 9191]]

America by Providing Appropriate Tools Required to Intercept and 
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, exempted from the 
requirements of CAFRA the International Emergency Economic Powers Act 
(IEEPA) (50 U.S.C. 1701 et seq.). Section 162.91 in this final rule 
document is revised to reflect this statutory change.
    Also, section 3 of Public Law 106-561, enacted on December 21, 
2000, and known as The Paul Coverdell National Forensic Sciences 
Improvement Act of 2000, amended 18 U.S.C. 983(a)(2)(C)(ii) by 
eliminating the requirement that a party filing a CAFRA claim provide 
customary documentary evidence of an interest in the property, if such 
evidence is available; and by eliminating the requirement that the 
party state that the claim is not frivolous. Thus, Sec. 162.94(d)(2) in 
the interim rule, which contained both of these requirements, is 
amended to reflect the change.

Conclusion

    After careful consideration of the comments received and further 
review of the matter, Customs has concluded that the interim rule 
amending parts 162, 171 and 178, Customs Regulations (19 CFR parts 162, 
171 and 178) that was published in the Federal Register (65 FR 78090) 
on December 14, 2000, as T.D. 00-88, should be adopted as a final rule 
with the modifications discussed above.

Regulatory Flexibility Act, Executive Order 12866 and 
Inapplicability of Delayed Effective Date

    This final rule document does not impose any additional 
requirements upon the public. Rather, the regulations are intended both 
to confer certain additional rights on property owners or interested 
parties, and to provide clear guidance to Customs officials in the 
processing of property seized for forfeiture under the CAFRA. 
Accordingly, it has been determined, pursuant to 5 U.S.C. 553(d)(3), 
that a delayed effective date is not required. Because no notice of 
proposed rulemaking was required, the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) do not apply. This final rule 
does not result in a ``significant regulatory action'' as specified in 
E.O. 12866.

Paperwork Reduction Act

    The collection of information involved in this final rule document 
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 1515-0052 (Petition for remission or 
mitigation of forfeitures and penalties incurred). This collection 
encompasses a claim for seized property in a non-judicial civil 
forfeiture proceeding. This rule does not present any material change 
to the existing approved information collection. An agency may not 
conduct, 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.
    To this end, part 178, Customs Regulations (19 CFR part 178), 
containing the list of approved information collections, was previously 
revised by the interim rule to make appropriate reference to OMB 
Control Number 1515-0052.

List of Subjects

19 CFR Part 162

    Administrative practice and procedure, Customs duties and 
inspection, Drug traffic control, Imports, 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 178

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

Amendments to the Regulations

    Accordingly, the interim rule amending parts 162, 171 and 178, 
Customs Regulations (19 CFR parts 162, 171 and 178), which was 
published at 65 FR 78090 on December 14, 2000, is adopted as a final 
rule with the following changes to part 162:

PART 162--INSPECTION, SEARCH, AND SEIZURE

    1. The general authority and relevant specific authority citations 
for part 162 continue to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1592, 1593a, 1624.

* * * * *
    Sections 162.91 through 162.96 also issued under 18 U.S.C. 983.


    2. Section 162.91 is revised to read as follows:


Sec. 162.91  Exemptions.

    The provisions of this subpart will apply to all seizures of 
property for civil forfeiture made by Customs officers except for those 
seizures of property to be forfeited under the following statutes: The 
Tariff Act of 1930 or any other provision of law codified in title19, 
United States Code; the Internal Revenue Code of 1986 (26 U.S.C. 1 et 
seq.); the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et 
seq.); the Trading with the Enemy Act (50 U.S.C. App. 1 et seq.); the 
International Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1701 et 
seq.); and section 1 of title VI of the Act of June 15, 1917 (40 Stat. 
233; 22 U.S.C. 401).

    3. Section 162.94 is amended by adding a sentence at the end of 
paragraph (c) and by revising paragraph (d)(2) to read as set forth 
below; by redesignating existing paragraph (e) as paragraph (f); and by 
adding a new paragraph (e) to read as set forth below:


Sec. 162.94  Filing of a claim for seized property.

* * * * *
    (c) Form of claim. * * * Claim forms will be made generally 
available upon request.
    (d) Content of claim. * * *
    (2) State the claimant's interest in the property; and
* * * * *
    (e) No bond required. Any person may make a claim under this 
section without posting a bond.
* * * * *

    4. Section 162.95 is amended by revising paragraph (b)(1) to read 
as follows:


Sec. 162.95  Release of seized property.

* * * * *
    (b) Exceptions. * * *
    (1) Is contraband, currency or other monetary instrument, or 
electronic funds, unless, in the case of currency, other monetary 
instrument or electronic funds, such property comprises the assets of a 
legitimate business which has been seized;
* * * * *

Robert C. Bonner,
Commissioner of Customs.
    Approved: February 25, 2002.
Timothy E. Skud,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 02-4746 Filed 2-27-02; 8:45 am]
BILLING CODE 4820-02-P