[Federal Register Volume 67, Number 196 (Wednesday, October 9, 2002)]
[Proposed Rules]
[Pages 62920-62926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25655]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 24 and 101

RIN 1515-AC77


Reimbursable Customs Services: Increase in Hourly Percentage Rate 
of Charge

AGENCY: Customs Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations to 
increase the hourly percentage rate of charge for reimbursable Customs 
services. In a previous document published in the Federal Register on 
February 1, 2001, Customs had proposed increasing the rate of charge to 
158 percent of the hourly rate of regular pay of the employee 
performing the service because the present rate of charge of 137 
percent does not reimburse Customs for the actual costs of providing 
such services. Based on the comments received to the previous Notice 
and following a complete review of the costs of providing reimbursable 
Customs services, Customs is now proposing a new methodology for 
determining the rate of charge for reimbursable Customs services and to 
revise the rate of charge to 154 percent of the hourly rate of regular 
pay of the employee performing the service. The proposed increase in 
the hourly percentage rate of charge is based on the actual expenses 
incurred by Customs in fiscal year 2000 associated with providing 
reimbursable Customs services during regular hours of duty and includes 
an increased percentage rate of charge for administrative overhead 
costs associated with providing such reimbursable services. This 
document proposes that the new hourly percentage rate of charge will be 
reviewed biennially using the actual costs and expenses associated with 
providing requested reimbursable Customs services from the preceding 
fiscal year.
    Further, this document proposes to increase the percentage rate of 
charge for administrative overhead costs associated with providing 
overtime

[[Page 62921]]

services. It also updates the list of national holidays in 19 CFR 
101.6.

DATES: Comments must be received on or before December 9, 2002.

ADDRESSES: Written comments may be addressed to, and inspected at, U.S. 
Customs Service, Office of Regulations and Rulings--Regulations Branch, 
1300 Pennsylvania Avenue, NW., Washington, DC 20229. Written comments 
may be inspected at U.S. Customs Service, 799 9th Street, NW., 
Washington, DC. during regular business hours. Arrangements to inspect 
submitted comments should be made in advance by calling Mr. Joseph 
Clark at (202) 572-8768.

FOR FURTHER INFORMATION CONTACT: Dennis Lomax, Revenue Branch, National 
Finance Center, Indianapolis, IN 46278; telephone (317) 298-1200, ext. 
1404.

SUPPLEMENTARY INFORMATION:

Background

    Under certain circumstances, Customs provides inspectional and 
supervisory services to parties-in-interest who request such Customs 
services during regular hours of duty or on an overtime basis. When 
these Customs services are provided, however, the party-in-interest is 
required to reimburse the Government for the Customs employee's 
compensation and other chargeable expenses. Customs authority to charge 
these expenses is contained at 31 U.S.C. 9701, which provides, in part, 
that each government service provided to identifiable persons is to be 
as self-sustaining as possible and that the fees and charges 
established by the agency are to be based on the costs to the 
Government in providing the service.
    The amount of compensation and expenses chargeable to parties-in-
interest for reimbursable Customs services performed during regular 
hours of duty is presently based on a computational formula that yields 
an hourly percentage rate of charge that is provided for in the 
introductory text of Sec.  24.17(d) of the Customs Regulations (19 CFR 
24.17(d)), plus a reimbursable charge for Medicare compensation that is 
provided for at Sec.  24.17(f), and a reimbursable charge for 
administrative overhead costs that is provided for at Sec.  24.21. The 
rate of charge for reimbursable Customs services performed on an 
overtime or outside the basic 40-hour workweek basis is provided for at 
other sections in part 24 of the Customs Regulations (see 19 CFR 24.16 
and 24.17(d)(1)).
    The charge currently provided for the reimbursable services of a 
Customs employee performed on a regular workday during a basic 40-hour 
workweek, pursuant to Sec.  24.17(d), is computed at a rate that is 
equal to 137 percent of the hourly rate of regular pay of the 
particular employee (plus additional charges for any night pay 
differential). This charge is based on a five-factor formula that 
computes an hourly percentage rate of charge that is intended to 
recover the estimated costs of various employee benefits such as leave, 
holidays, retirement, and life and health insurance and is only used to 
determine the costs of providing reimbursable Customs services during a 
basic 40-hour workweek.
    In addition to the base 137 percent rate of charge for reimbursable 
Customs services performed during a basic 40-hour workweek, Sec.  24.21 
provides that 15 percent of the compensation and/or expenses of the 
Customs employee performing the reimbursable service is chargeable to 
parties-in-interest for administrative overhead costs. This 15 percent 
rate of charge for administrative overhead costs has been in effect for 
nearly 20 years.
    In addition to the base 137 percent rate of charge set forth in 
Sec.  24.17(d) and the 15 percent rate of charge set forth in Sec.  
24.21, Sec.  24.17(f) further provides that parties-in-interest are 
also required to reimburse Customs for its share of Medicare costs for 
the employee. Section 24.17(f) currently provides that 1.35 percent of 
the reimbursable compensation expenses incurred will be the payment for 
Medicare costs. However, the regulations are incorrect because, 
pursuant to 26 U.S.C. 3111(b), Medicare compensation costs are to be 
recovered at a rate of charge that is equal to 1.45 percent of the 
reimbursable compensation expenses incurred.
    On February 1, 2001, Customs published a Notice of Proposed 
Rulemaking (Notice) in the Federal Register (66 FR 8554) that proposed 
to increase the hourly percentage rate of charge for reimbursable 
Customs services. The proposed increase was based on a recommendation 
by Treasury's Office of Inspector General (OIG) following an audit of 
Customs charges to the courier hubs for reimbursable Customs services 
that found that the current 137 percent rate of charge computed was 
inadequate to cover Customs actual costs. The OIG noted that the 
formula used to determine the computational charge of 137 percent set 
forth in Sec.  24.17(d) contained two outdated cost factors. First, the 
formula took account of 9 legal public holidays, but the number of 
public holidays is now 10 with the addition in 1983 of the Birthday of 
Martin Luther King, Jr. Second, the formula provided that the working 
hour equivalent of the Government's contributions for an employee's 
benefits was computed at 11\1/2\ percent of the annual rate of pay of 
an employee, but that should have risen to 28.55 percent since it was 
last computed. Accordingly, the OIG recommended that the rate of charge 
for reimbursable Customs services performed during regular hours of 
duty should be increased from 137 percent to 158 percent of the hourly 
rate of regular pay of the employee performing the service. The initial 
Notice only discussed the increase in the hourly rate of charge 
percentage for reimbursable Customs services within the context of 
Sec.  24.17; there was no discussion regarding the additional 
percentage rate of charge for administrative overhead costs provided 
for at Sec.  24.21(a).
    Comments were solicited on this proposed rulemaking from interested 
parties with a response date of April 2, 2001. Five comments were 
timely received: three were from trade associations and two were from 
express consignment operators. All of the comments expressed general 
concern about the added increase in costs if the proposed increase in 
the hourly percentage rate of charge is adopted. Based on these 
comments, a review of the estimated costs of providing reimbursable 
Customs services during a basic 40-hour workweek was undertaken.
    The comments and the results of Customs review of the computational 
formula and the additional charges for administrative overhead and 
Medicare costs associated with providing reimbursable Customs services 
during a basic 40-hour workweek are addressed below.

Discussion of Comments

Annual & Sick Leave

    Comment: Three of the commenters objected to some of the number 
values attached to factors in the computational formula used to 
determine the rate of charge for reimbursable Customs services. Two of 
these commenters objected to the OIG using the maximum time frame for 
annual leave (26 days, which is the 208 hour figure in the present 
formula), which is based on the most senior Customs officers, and for 
sick leave (13 days, which is the 104 hour figure in the formula) as 
factors in the computational formula used to determine the rate of 
charge. These commenters felt that the number values attached to these 
factors had the effect of overstating costs because not all

[[Page 62922]]

Customs services provided are performed by Customs employees eligible 
for maximum leave time, which requires 15 years of Government service, 
and that there was a strong probability that most Customs officers do 
not use all of their eligible sick leave in a year. These commenters 
argue that because the number of annual leave and sick days used in the 
reimbursable computational formula are inappropriate, the calculations 
are too high and the number values for these factors must be reduced to 
fairly reflect Custom's costs.
    A third commenter stated that if the numbers utilized for annual 
and sick leave were 50 percent of those being proposed, the 
computational formula would more accurately reflect the actual figures 
for work and non-work time, and thus provide a more accurate invoice 
for reimbursable charges. Noting that express carriers are responsible 
for reimbursement of Customs fees at double the normal rate of charge, 
it was stated that when benefits and administrative fees are added and 
then doubled the actual cost to an express operator for each $1.00 of 
salary cost is $3.04 under the current provisions and would be 
increased to $3.46 under the proposed rule. This commenter states that 
this 13.8 percent increase is significant and creates a real economic 
burden; however, if the numbers utilized for annual and sick leave were 
reduced by 50 percent the impact on express operators would be reduced 
from a 13.8 percent increase to only 5.3 percent, a far more realistic 
and acceptable increase.
    These commenters urged Customs not to adopt the proposed rule; to 
completely review the Notice regarding the issues raised; and expressed 
a strong preference for eliminating entirely the current system under 
which reimbursable charges are assessed, preferring a system that is 
transparent and simple. Specifically, these commenters advocated a 
system funded on a transaction-based fee, i.e., a fixed fee per 
informal shipment.
    Customs response: Customs agrees that the present computational 
formula factors--and resulting hourly percentage rate of charge--do not 
represent the actual costs to Customs of providing requested 
inspectional and supervisory services and that a better system, one 
that is more transparent and simple for reimbursing the Government, 
should be adopted. To that end, Customs reexamined how reimbursable 
service charges were calculated and conducted a cost analysis. As a 
result of the cost analysis, Customs found that it slightly 
undercharges for the actual costs and expenses of providing requested 
reimbursable Customs services. Accordingly, Customs is proposing, in 
this document, a new hourly percentage rate of charge for reimbursable 
Customs services that is based on actual expenses.
    Customs now addresses the comment regarding express carriers being 
responsible for reimbursement of Customs fees at double the normal 
hourly rate of charge and that if the numbers utilized for annual and 
sick leave were reduced by 50 percent of those being proposed the 
computational formula would more accurately reflect the actual figures 
for work and non-work time, providing a more accurate invoice for 
reimbursable charges. Customs does not agree with this comment. First, 
Customs does not charge for non-work time (see discussion below under 
Lunch Hours). Second, ``the reimbursement of Customs fees at double the 
normal rate'' issue is misleading because the fees billed are 
statutory. See 19 U.S.C. 58c(b)(9)(A), which provides for the 
aggregation of merchandise processing fees in an amount equal to 
reimbursable services. When merchandise is informally entered or 
released at a centralized hub facility, an express consignment carrier 
facility, or a small airport or other facility, the Merchandise 
Processing Fees (MPF) are billed in an amount equal to the reimbursable 
fee amount. Thus, each Customs assignment at these locations generates 
two billings, each for identical amounts. One of the billings is to 
reimburse Customs for providing Customs services (see 31 U.S.C. 9701 
and 19 CFR 24.17, which provides for the reimbursable charge fee); the 
second billing is for MPFs (see 19 U.S.C. 58c(b)(9)(A)(ii) and 19 CFR 
24.23(b)(2)(ii), which provide for the MPF when processing merchandise 
that is informally entered or released.) The generation of a second 
billing for MPFs that is equal to the amount of the billing for Customs 
services is in lieu of the per entry or release fee of $2.00, $6.00, or 
$9.00, provided for at 19 U.S.C. 58c(a)(10) and 19 CFR 24.23(b)(2)(i). 
This method of billing for the MPF releases the inspectors at the 
express consignment facilities from the responsibility of having to 
prepare collection documents for each informal entry which would 
dramatically slow the process of clearing merchandise and put the 
express consignment operators in jeopardy of not meeting their delivery 
deadlines. Accordingly, the billing for the MPF at a cost equal to the 
billing for Customs services is beneficial to express consignment 
operators.
    Further, any increase in the hourly rate of charge percentage must 
represent reimbursement to the Government for actual expenses. 
Accordingly, Customs cannot adopt an artificial number, i.e., 50 
percent of the number of annual and sick leave hours used to calculate 
the reimbursable fee, that bears no relationship to those expenses.
    It is also noted that the impact of the proposed increase in the 
hourly rate of charge percentage contained in this document (discussed 
below) is less than 1 percent of what is currently billed.
    Regarding the comment proposing a system funded on a transaction-
based fee, i.e., a fixed fee per informal shipment, Customs points out 
it is bound by current law which is premised on a reimbursable payment 
scheme. In order to adopt a transaction fee approach, Congressional 
action is required. Customs does not have authority, on its own, to 
adopt a transaction fee system.
    Customs agrees that the current system is not transparent and 
simple. While there is a computational formula set forth in the 
introductory paragraph of Sec.  24.17(d) for determining reimbursable 
charges for Customs services, the actual billing practice to collect 
the fees for Customs services provided entails billing for costs and 
expenses that are not included in the formula, but are found in various 
sections of the Customs Regulations: Sec. Sec.  24.16, 24.17 (other 
than the introductory paragraph of paragraph (d)), and 24.21. To remedy 
this situation, Customs is proposing in this document a new formula 
basis that would consolidate various regulatory provisions for clarity 
and be more accurate in providing reimbursement to Customs for the 
actual costs and expenses associated with providing requested Customs 
services.

Lunch Hours

    Comment: Two commenters objected that the OIG Report provided that 
couriers could be invoiced for employee's time spent at lunch. These 
commenters stated that no such allowance should be allowed and that 
reimbursable charges should be assessed only for actual time worked.
    Customs response: Regarding billings for the actual hours worked by 
Customs personnel, the OIG Report stated that Customs only billed 7 
hours a day when inspectors worked a full 8 hours. This means that 
Customs did not bill couriers for employee's time spent at lunch.

Benefits Ratio

    Comment: Two commenters stated that the OIG Report provided no

[[Page 62923]]

substantiation for the ratio of benefit costs to employee's salary. One 
of these commenters alleged that because the initial Federal Register 
Notice did not explain the OIG's audit report's conclusion--that the 
benefit ratio is 28.55 percent instead of 11.5 percent--that it 
violates the Administrative Procedure Act and Customs should withdraw 
the Notice.
    Customs response: Customs disagrees that the initial Notice 
violated the Administrative Procedure Act (APA). In promulgating a 
rulemaking document for publication in the Federal Register one of the 
requirements is that the Notice of Proposed Rulemaking shall include 
either the terms or substance of the proposed rule or a description of 
the subjects and issues involved. See 5 U.S.C. 553(b)(3). Customs 
believes the initial Notice clearly stated that the proposal was to 
increase the rate of charge for reimbursable Customs services in 
accordance with the OIG Report and that this met the APA standard of a 
description of the subjects and issues involved. Nonetheless, Customs 
believes that this comment is moot as Customs is proceeding in this 
document with another proposal.

Revenue Raising

    Comment: One commenter stated that the OIG Report suggests that the 
underlying purpose of the proposed 15 percent increase in the 
computational charge is not to reimburse Customs for costs of services, 
but rather, to raise revenue, which is an unlawful purpose.
    Customs response: Customs disagrees with this interpretation of the 
OIG's Report statement. The OIG Report statement in question was 
presented as a net result, that is, that if Customs increased its 
hourly rate of charge percentage from 137 percent to 158 percent, this 
would result in a revenue enhancement to Customs in that it would 
enable Customs to collect all the revenue due for providing 
reimbursable Customs services.

Computation of Charges

    Comment: One commenter stated that the proposed increase in the 
rate of charge was unreasonable and arbitrary, and would have a 
significant financial impact on all airports, not just user-fee 
airports. This commenter proposed that a more reasonable increase of 
149 percent, one that is in line with similar services provided 
airports, be adopted.
    Customs response: Customs has already discussed how the proposed 
increase in the hourly rate of charge percentage merely represents 
reimbursement to the Government based on actual expenses. Since the 
proposed increase in the hourly rate of charge percentage bore a direct 
relationship to actual expenses, as audited by the OIG, the proposal 
was neither unreasonable nor arbitrary. However, as indicated later in 
this document, Customs is now proposing a different rate of charge 
based on actual expenses during the fiscal year of 2000.

Application of Charges

    Comment: Three of the commenters argued that the reimbursable 
charges imposed by Customs on the air express industry are not 
similarly imposed on the U.S. Postal Service (USPS), which gives USPS 
an unfair competitive advantage. These commenters recommended that 
Customs rectify this imbalance before attempting to increase the rate 
of charge for reimbursable Customs services.
    Customs response: It is acknowledged that the billing schemes 
applicable to the USPS and the air express industry are statutorily 
different: one being grounded in the Consolidated Omnibus Budget 
Reconciliation Act of 1985, the other being grounded in the Omnibus 
Budget Reconciliation Act of 1987. But since the initial Notice 
concerned an increase in the rate of charge for reimbursable Customs 
services and not the application of this rate of charge, this comment 
falls outside the scope of this rulemaking and will not be addressed in 
this document.

Impact of Increase and Need for Delayed Effective Date for Final Rule

    Comment: One commenter urged Customs to delay the effective date of 
any new reimbursable rate six months from the date of publication. The 
commenter stated that delaying the effective date would provide a 
reasonable amount of time for businesses whose budgets are already 
established based on the existing rate of charge for reimbursable 
Customs services to adjust to the proposed increased rate of charge.
    Customs response: Customs cannot agree to this accommodation for 
several reasons. First, the proposed increase in the rate of charge is 
minimal. The present total charge for reimbursable Customs services is 
153.45 percent and the proposed increase, as discussed below, will only 
raise the total charge to 154 percent. Customs does not believe that 
such a small increase would cause serious disruption to interested 
parties' budgets. Second, in consolidating the various regulatory 
provisions that comprise the total charge for reimbursable Customs 
services, Customs is making its regulations as transparent and simple 
as possible--a goal that should be accomplished as soon as possible. 
Third, the purpose for the change in the rate of charge for 
reimbursable Customs services is to provide full reimbursement to 
Customs for these services. For these reasons, allowing for a delayed 
effective date of six months would contradict the purpose of the 
reimbursable charges statute (31 U.S.C. 9701). Accordingly, in the 
final rule document Customs expects to provide for the normal 30 days 
delayed effective date provided for by the APA.

Further Consideration by Customs

    Based upon the comments received to the initial Notice published on 
February 1, 2001, and upon further consideration of the factors 
employed in the computational formula to represent reimbursement to 
Customs for the costs and expenses associated with providing requested 
Customs services, Customs has decided to no longer use the five-factor 
computational formula that is presently used to determine the hourly 
percentage rate of charge for reimbursable Customs services. The 
computational formula currently provided at Sec.  24.17(d) contains 
outdated cost factors and other factors that do not capture the actual 
costs to Customs of providing inspectional and supervisory services. 
Customs now believes that a straight comparison of actual costs based 
on data every other year--beginning with fiscal year 2000--yields an 
hourly percentage rate of charge that provides Customs with a firm 
basis for determining the fees it needs to charge for reimbursable 
Customs services. Further, Customs believes that consolidating the 
various regulatory provisions that comprise all the costs and expense 
factors used to charge parties-in-interest for requested Customs 
services will provide the trade community with the clarity it needs to 
understand how Customs arrives at the percentage rate charged.

New Proposed Rate of Charge

    This document sets forth a new proposed methodology for determining 
the rate of charge for reimbursable Customs services performed on a 
regular workday during a basic 40-hour workweek, and, based on that 
methodology, proposes that the rate of charge be increased to a single 
rate of 154 percent of the hourly rate of regular pay of the employee 
performing the service. This new proposed hourly percentage rate of 
charge employs an updated computational formula that is based on the 
ratio of actual benefits to salary for personnel in the Office of Field 
Operations who performed

[[Page 62924]]

reimbursable services during regular hours of duty (not costs for 
overtime or services delivered outside the basic workweek) in fiscal 
year 2000. The new proposal consolidates in one section of the 
regulations (Sec.  24.17(d)) the other fee and expense provisions 
associated with providing reimbursable Customs services during regular 
hours of duty.
    For the Office of Field Operations for fiscal year 2000, the ratio 
of benefits to salary was determined as follows:

------------------------------------------------------------------------
                                                                Millions
------------------------------------------------------------------------
Salaries:
  Full-time..................................................     $479.1
  Part-time..................................................        6.5
                                                              ----------
      Total Salaries.........................................      485.6
Benefits:
  Life and Health Insurance..................................       31.6
  Retirement Contributions...................................       55.5
  FICA.......................................................       18.1
  Medicare...................................................        3.6
  Uniforms...................................................        3.8
  Cost of Living.............................................        2.9
  All Others.................................................        3.6
                                                              ----------
      Total Benefits.........................................     119.1
------------------------------------------------------------------------
 Benefits Rate of Charge = 24 percent (119.1 M/485.6 M).

    Thus, the benefits rate of charge is calculated to be 24 percent. 
In determining this benefits ratio, Medicare costs are included. 
Medicare costs are not considered within the 137 percent rate of charge 
currently set forth in the regulations at Sec.  24.17(d); they are 
added on to the 137 percent pursuant to Sec.  24.17(f).
    Because the Medicare compensation cost is directly factored into 
the proposed percentage rate of charge, it is proposed to revise 
paragraph (f) of Sec.  24.17 to limit its application to provisions 
other than the provision providing for reimbursable Customs services 
during a regular workweek. Also, the reference to 1.35 percent is 
removed, as the rate was changed to 1.45 percent in 1986 by the Federal 
Insurance Contributions Act (FICA), which establishes this compensation 
charge.
    Currently, in addition to the charge of 137 percent and the 
Medicare charge, Customs charges for administrative overhead for 
services performed during the regular workweek. Administrative overhead 
is provided for at Sec.  24.21 of the Customs Regulations. In this 
document, Customs is proposing to consolidate the administrative 
overhead charge for work during a regular workweek into the hourly 
percentage rate of charge.

Administrative Overhead Charges for Regular Workweek Reimbursable 
Services

    Section 24.21(a) provides, in part, that an additional charge for 
administrative overhead costs must be collected from parties-in-
interest who are required to reimburse Customs for compensation and/or 
expenses of Customs officers performing reimbursable and overtime 
services for the benefit of such parties under either Sec.  24.16 or 
Sec.  24.17. This charge is currently represented by the flat rate of 
charge of 15 percent. The flat rate of charge was adopted in 1984 
because at that time Customs did not have a formal accounting system 
for determining the indirect costs of administrative overhead and chose 
to adopt the Treasury Department's recommendation that 15 percent of 
the identified costs of providing such services be used. See T.D. 84-
231.
    To determine whether the 15 percent administrative overhead charge 
truly represented reimbursement to the government, Customs took the 
actual indirect costs of administrative overhead expenses during 
regular hours of duty (not costs for overtime or services delivered 
outside the basic workweek) for the Office of Field Operations for 
fiscal year 2000 and found the following relationship:

------------------------------------------------------------------------
                                                                Millions
------------------------------------------------------------------------
Salaries:
  Full-time..................................................     $479.1
  Part-time..................................................        6.5
                                                              ----------
      Total Salary...........................................     $485.6
Administrative Support.......................................    $145.1
------------------------------------------------------------------------
 Administrative Overhead Rate of Charge = 30 percent (145.1 M/485.6 M).

    Thus, the charge for administrative overhead is determined to be 30 
percent of the compensation and/or expenses of the Customs officers 
performing the services. Combining the direct benefit and the indirect 
administrative overhead rates of charge gives a single rate of charge 
percentage that is calculated as follows:

------------------------------------------------------------------------
                                                                Millions
------------------------------------------------------------------------
Benefits Costs...............................................     $119.1
Administrative Overhead......................................      145.1
                                                              ----------
    Total Benefit and Administrative Overhead Costs..........     264.2
------------------------------------------------------------------------
 Combined Rates of Charge = 54 percent (264.2 M/485.6 M).

    Taking these tabulations into consideration, Customs in this 
document is proposing to amend Sec.  24.17(d) to reflect that the 
charges for the services of a Customs employee on a regular workweek 
during a basic 40-hour workweek will be computed at 154 percent of the 
hourly rate of regular compensation for the particular Customs employee 
performing the services.
    Because the administrative overhead cost is directly factored into 
the proposed percentage rate of charge for work during a regular 
workweek, Customs is proposing to amend Sec.  24.21(a) to remove the 
references to reimbursable services and Sec.  24.17.

Administrative Overhead Charges for Overtime Reimbursable Services

    Customs also examined the relationship between administrative 
overhead expenses for overtime services and the compensation and/or 
expenses of the Customs officers performing overtime services. Customs 
took the actual indirect costs of administrative overhead expenses 
associated with providing Customs services on an overtime basis for the 
Office of Field Operations for fiscal year 2000 and found the following 
relationship:

------------------------------------------------------------------------
                                                                Millions
------------------------------------------------------------------------
Overtime Salaries............................................     $132.1
Administrative Support.......................................      39.5
------------------------------------------------------------------------
 Administrative Overhead Rate of Charge = 30 percent (39.5 M/132.1 M).

    This 30 percent rate more accurately reflects the Government's cost 
in providing administrative overhead services to parties-in-interest. 
Accordingly, it is proposed to amend Sec.  24.21(a) to reflect that the 
rate of charge for administrative overhead for Customs officers 
performing overtime services will be 30 percent of the compensation 
and/or expenses of the Customs officers performing the service. A 
conforming change is proposed to Sec.  24.17(e).
    With the proposed amendments to part 24 of the Customs Regulations, 
Customs believes that the calculation of the percentage charges for 
Customs services provided on either a reimbursable or overtime basis is 
more transparent and simple to compute.
    The proposed new percentage rates of charge set forth in this 
document more accurately reflects the Government's actual costs in 
providing these services to parties-in-interest and will be reviewed 
biennially using the actual costs and expenses associated with 
providing requested reimbursable Customs services from the preceding 
fiscal year.

[[Page 62925]]

Other Amendments

    In Sec.  101.6, it is proposed to amend paragraph (a) by updating 
the list of national holidays on which Customs offices are closed by 
adding the third Monday in January, and the heading of paragraph (b) by 
correcting a typographical error.

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.  1.5 of the Treasury Department 
Regulations (31 CFR 1.5), and Sec.  103.11(b) of the Customs 
Regulations (19 CFR 103.11(b)), on regular business days between the 
hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch, Office of 
Regulations and Rulings, U.S. Customs Service, 799 9th Street, NW., 
Washington, DC. Arrangements to inspect submitted comments should be 
made in advance by calling Mr. Joseph Clark at (202) 572-8768.

The Regulatory Flexibility Act and Executive Order 12866

    The proposed amendments are intended to conform the Customs 
regulations with statutory laws, which provide for ten legal public 
holidays and allow Customs to assess reimbursable charges to those 
parties-in-interest who require Customs services on either a 
reimbursable or overtime basis. Further, in the case of reimbursable 
charges for Customs services performed during regular hours of duty, 
because the proposed increases in the percentage rates of charge yield 
a combined increase that is so small (an increase of only .55 percent), 
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. Accordingly, the proposed amendments are not subject to 
the regulatory analysis or other requirements of 5 U.S.C. 603 and 604. 
Further, these proposed amendments do not meet the criteria for a 
``significant regulatory action'' as specified in E.O. 12866.

Drafting Information

    The principal author of this document was Gregory R. Vilders, 
Attorney, Regulations Branch, Office of Regulations and Rulings. 
However, personnel from other offices participated in its development.

List of Subjects

19 CFR Part 24

    Accounting, Customs duties and inspection, Fees, Financial and 
accounting procedures, Reimbursable charges, Reporting and 
recordkeeping requirements, Wages.

19 CFR Part 101

    Customs duties and inspection, Organization and functions 
(Government agencies), Reimbursable charges, Reporting and 
recordkeeping requirements, Wages.

Proposed Amendments to the Regulations

    For the reasons set forth above, it is proposed to amend parts 24 
and 101 of the Customs Regulations (19 CFR parts 24 and 101), as set 
forth below:

PART 24--Customs Financial and Accounting Procedure

    1. The general authority citation for part 24 continues to read, 
and the specific authority for Sec.  24.17 is revised to read, as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General 
Note 23, Harmonized Tariff Schedule of the United States), 1505, 
1624; 26 U.S.C. 4461; 4462; 31 U.S.C. 9701.

* * * * *
    Section 24.17 also issued under 5 U.S.C. 6103; 19 U.S.C. 267, 
1450, 1451, 1452, 1456, 1524, 1557, 1562; 46 U.S.C. 2110, 2111, 
2112;
* * * * *

    2. In Sec.  24.17:
    a. The introductory text of paragraph (d) is revised and the table 
following the introductory text is removed;
    b. Paragraph (e) is revised; and
    c. Paragraph (f) is revised.
    The revisions to paragraphs (d), (e), and (f) read as follows:


Sec.  24.17  Reimbursable services of Customs employees.

* * * * *
    (d) Computation charge for reimbursable services. The charge for 
the services of a Customs employee on a regular workday during a basic 
40-hour workweek is computed at a rate that is equal to 154 percent of 
the hourly rate of regular compensation for the particular Customs 
employee performing the services with an additional charge equal to any 
night pay differential actually payable under 5 U.S.C. 5545. The 154 
percent hourly rate of charge is based on the reimbursable service 
expenses incurred by the Office of Field Operations during fiscal year 
2000 and includes charges for administrative overhead and Medicare.
* * * * *
    (e) The reimbursable charge for Customs services performed on an 
overtime basis shall be computed in accordance with Sec. Sec.  24.16 
and 24.21(a).
    (f) Medicare compensation costs. In addition to other expenses and 
compensation chargeable to parties-in-interest set forth in this 
section, unless otherwise expressly provided for, such persons shall 
also be required to reimburse Customs for its share of applicable 
Medicare costs.
    3. In Sec.  24.21, the heading and paragraph (a) are revised to 
read as follows:


Sec.  24.21  Administrative overhead charges.

    (a) Overtime services. The charge for the administrative overhead 
costs associated with providing Customs services on an overtime basis 
for parties-in-interest under the provisions of Sec.  24.16 of this 
part shall be computed at a rate that is equal to 30 percent of the 
hourly rate of compensation for the particular Customs employee 
performing the service.
* * * * *

PART 101--GENERAL PROVISIONS

    1. The general authority citation for part 101 is revised to read 
as follows:

    Authority: 5 U.S.C. 301, 6103; 19 U.S.C. 2, 66, 1202 (General 
Note 23, Harmonized Tariff Schedule of the United States), 1623, 
1624, 1646a.
* * * * *
    2. In Sec.  101.6:
    a. Paragraph (a) is revised; and
    b. Paragraph (b) is amended by removing the word ``hgurs'' in the 
heading and adding, in its place, the word ``hours''.
    The revision reads as follows:


Sec.  101.6  Hours of business.

* * * * *
    (a) Saturdays, Sundays, and national holidays.--(1) National 
holidays. In addition to Saturdays, Sundays, and any other calendar day 
designated as a holiday by Federal statute or Executive Order, Customs 
offices will be closed on the following national holidays:
    (i) January 1;
    (ii) The third Monday in January;
    (iii) The third Monday in February;
    (iv) The last Monday in May;
    (v) July 4;
    (vi) The first Monday in September;
    (vii) The second Monday in October;
    (viii )November 11;
    (ix) The fourth Thursday in November; and
    (x) December 25.

[[Page 62926]]

    (2) Observance of national holidays. If a national holiday falls on 
a Saturday, then the Friday preceding that Saturday will be observed as 
the national holiday for work purposes. If a national holiday falls on 
a Sunday, then the Monday following that Sunday will be observed as the 
national holiday for work purposes.
* * * * *

    Approved: October 2, 2002.
Robert C. Bonner,
Commissioner of Customs.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 02-25655 Filed 10-8-02; 8:45 am]
BILLING CODE 4820-02-P