[Federal Register Volume 82, Number 10 (Tuesday, January 17, 2017)]
[Proposed Rules]
[Pages 4800-4803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00653]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Part 133

[USCBP-2016-0076]
RIN 1515-AE21


Donations of Technology and Support Services To Enforce 
Intellectual Property Rights

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security; Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes amendments to the U.S. Customs and 
Border Protection (CBP) regulations pertaining to the enforcement of 
intellectual property rights. Specifically, CBP is proposing amendments 
to implement a section of the Trade Facilitation and Trade Enforcement 
Act of 2015 which requires CBP to prescribe regulatory procedures for 
the donation of technologies, training, or other support services for 
the purpose of assisting CBP in intellectual property enforcement. The 
proposed regulations would enhance CBP's intellectual property rights 
enforcement capabilities.

DATES: Comments must be received on or before March 3, 2017.

ADDRESSES: You may submit comments, identified by docket number, by one 
of the following methods:
     Federal eRulemaking Portal at http://www.regulations.gov. 
Follow the instructions for submitting comments via Docket No. USCBP-
2016-0076.
     Mail: Trade and Commercial Regulations Branch, Regulations 
and Rulings, Office of Trade, U.S. Customs and Border Protection, 90 K 
Street NE., 10th Floor, Washington, DC 20229-1177.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to http://www.regulations.gov, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov. Submitted comments 
may be inspected during regular business days between the hours of 9 
a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch, 
Regulations and Rulings, Office of Trade, Customs and Border 
Protection, 90 K Street NE., 10th Floor, Washington, DC 20229-1177. 
Arrangements to inspect submitted comments should be made in advance by 
calling Mr. Joseph Clark at (202) 325-0118.

FOR FURTHER INFORMATION CONTACT: Garrett D. Wright, Chief, Donations 
Acceptance Program, Office of Field Operations, U.S. Customs and Border 
Protection, telephone (202) 344-2344.

SUPPLEMENTARY INFORMATION:

Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of the 
proposed rule. U.S. Customs and Border Protection (CBP) also invites 
comments that relate to the economic, environmental, or federalism 
effects that might result from this proposed rulemaking. Comments that 
will provide the most assistance to CBP will reference a specific 
portion of the proposed rulemaking, explain the reason for any 
recommended change, and include data, information, or authority that 
supports such recommended change. See ADDRESSES above for information 
on how to submit comments.

Background

    The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), 
Public Law 114-125, 130 Stat. 122 (19 U.S.C. 4301 note), enacted 
February 24, 2016, includes an assortment of trade facilitation and 
trade enforcement provisions, including several that focus on improving 
CBP's intellectual property rights (IPR) enforcement at the border. 
Section 308(d) of the TFTEA requires the Commissioner of CBP to 
prescribe regulations that will enable CBP to receive donations of 
technologies, training, and other support services for the purpose of 
assisting CBP in detecting and identifying imports that infringe 
intellectual property rights.
    In House Report 114-114, the House Ways and Means Committee stated 
that CBP should take steps to ensure that personnel dedicated to 
enforcement of IPR are effectively trained to detect and identify 
infringing imports. The Committee noted that much of the expertise in 
this area lies within the private sector, and that companies are most 
knowledgeable about their products and can provide valuable training to 
CBP on detection. H.R. 114-114 at 76.

Discussion of Proposed Amendments

New Subpart H to Part 133--Donations of Intellectual Property Rights 
Technology and Support Services

Sec.  133.61
    This document proposes to implement section 308(d) of the TFTEA by 
promulgating a new subpart H to part 133 of title 19 of the Code of 
Federal Regulations, entitled ``[D]onations of Intellectual Property 
Rights Technology and Support Services,'' which would provide for the 
receipt and acceptance by CBP of donations of hardware, software, 
equipment, and similar technologies, as well as training and support 
services, for the purpose of assisting CBP in enforcing IPR. It is also 
proposed to add and reserve subpart G to part 133.

[[Page 4801]]

    New subpart H, as set forth in proposed new Sec.  133.61, 
prescribes the methods by which donations of IPR technology and support 
services may be made. Specifically, proposed 19 CFR 133.61(a) sets 
forth the scope of this section and identifies the relevant authority. 
Proposed 19 CFR 133.61(b) prescribes the conditions applicable to a 
donation offer and provides that CBP will notify the donor, in writing, 
if additional information is requested or if CBP has determined that it 
will not accept the donation. In this regard, it is noted that CBP will 
take into consideration all aspects of the proposed donation offer, 
including whether such offer would pose a real or potential conflict 
between the interests of the donor and the interests of the government. 
Proposed 19 CFR 133.61(c) provides that if CBP elects to accept a 
donation offer, CBP will enter into a signed, written agreement with an 
authorized representative of the donating entity that commemorates all 
applicable terms and conditions, and that an agreement to accept 
training and other support services must provide that the services or 
training are offered without the expectation of payment and that the 
service provider expressly waives any future claims against the 
government.
Authority To Accept Donations
    As noted above, pursuant to section 308(d) of the TFTEA, CBP is 
required to prescribe regulatory procedures for donations of hardware, 
software, equipment, and similar technologies, as well as training and 
support services, for the purpose of assisting CBP in enforcing IPR.
    Acceptance of such donations must also be consistent with either 
section 482 of the Homeland Security Act of 2002, as amended by section 
2 of the Cross-Border Trade Enhancement Act of 2016 (Pub. L. 114-279), 
or section 507 of the Department of Homeland Security Appropriations 
Act of 2004 (Pub. L. 108-90).
    Section 482 of the Homeland Security Act replaced section 559 of 
Title V of Division F of the Consolidated Appropriations Act, 2014 
(Pub. L. 113-76) and permits CBP, in consultation with the General 
Services Administration (GSA), to ``enter into an agreement with any 
entity to accept a donation of personal property, money, or nonpersonal 
services'' to be used for certain CBP activities at most ports of entry 
where CBP performs inspection services. Generally speaking, donations 
may be used for certain activities of CBP's Office of Field Operations, 
including expenses related to ``(A) furniture, equipment, or 
technology, including the installation or deployment of such items; and 
(B) the operation and maintenance of such furniture, fixtures, 
equipment or technology.'' Section 482(a)(3). To implement section 482, 
CBP will build upon its experience in implementing section 559 of Title 
V of Division F of the Consolidated Appropriations Act, 2014, where CBP 
and the GSA issued the Section 559 Donation Acceptance Authority 
Proposal Evaluation Procedures & Criteria Framework in October, 
2014.\1\ Pursuant to Section 482(c)(3), CBP in consultation with GSA 
will establish criteria for evaluating donation proposals under Section 
482 and make such criteria publicly available.
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    \1\ https://www.cbp.gov/document/guidance/section-559-donation-acceptance-authority-proposal-evaluation-procedures-and. Section 483 
of the Homeland Security Act, as amended by the Cross-Border Trade 
Enhancement Act, also exempts from section 482 existing agreements 
entered into pursuant to section 559, as well as proposals already 
accepted for consideration by CBP.
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    Donations that may not be accepted under section 482 may be 
considered under section 507 of the DHS Appropriations Act of 2004. 
Section 507 of the DHS Appropriations Act of 2004 made the DHS Gifts 
and Donations account (formerly the Federal Emergency Management Agency 
``Bequests and Gifts'' account) ``available to the Department of 
Homeland Security . . . for the Secretary of Homeland Security to 
accept, hold, administer and utilize gifts and bequests, including 
property, to facilitate the work of the Department of Homeland 
Security.'' Title V, Public Law 108-90, 117 Stat. 1153-1154. DHS policy 
on the acceptance of gifts pursuant to section 507 is contained in DHS 
Directive 112-02 and DHS Instruction 112-02-001. The Secretary of DHS 
delegated the authority to accept and utilize gifts to the heads of 
certain DHS components, including the Commissioner of CBP, in DHS 
Delegation 0006.

Executive Orders 13563 and 12866

    Executive Orders 13563 and 12866 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This proposed rule is not a ``significant regulatory 
action,'' under section 3(f) of Executive Order 12866. Accordingly, the 
Office of Management and Budget has not reviewed this regulation.
    This rule proposes amendments to the CBP regulations that would 
prescribe procedures for the voluntary donation of technology, 
training, and other support services for the purpose of assisting CBP 
in enforcing IPR, as required by section 308(d) of the Trade 
Facilitation and Trade Enforcement Act of 2015, Public Law 114-125, 130 
Stat. 122 (19 U.S.C. 4301 note). These donations would improve CBP's 
knowledge of intellectual property and improve its ability to detect 
infringing articles and prevent their importation.
    Because donations under this rule would be voluntary, CBP assumes 
that entities would only make donations if they believe it is in their 
best interest to do so. The cost of the donation itself, including any 
training provided, would vary greatly depending on the particulars of 
the donation. Due to a lack of data on the types of donations that 
entities would offer as a result of this rulemaking, CBP is unable to 
estimate the cost of these donations to the public. In addition to the 
cost of the donated product or training itself, donors would bear some 
paperwork related costs with this rule. Under this rule, if finalized, 
entities must submit an offer of a donation in writing to CBP and 
provide all pertinent details regarding the scope, purpose, expected 
benefits, intended use, estimated costs, and proposed conditions of the 
donation. Based on discussions with CBP's Office of Field Operations, 
CBP estimates that approximately 50 entities would make donations 
annually and that there would be one donation made per entity annually, 
for a total of 50 donations per year. CBP estimates that it would take 
an entity approximately 2 hours to write the offer of donation. In most 
cases, CBP believes that attorneys either employed or hired by the 
donor would write the offer of donation. Considering the median hourly 
wage of an attorney of $80.83,2 3 writing the

[[Page 4802]]

offers of donation would result in a total annual time cost to donors 
of $8,083 ($80.83 * 2 hours * 50 written donation proposals). This 
would equate to a cost of $161.66 per entity. CBP again notes that this 
is a voluntary program, and entities would only provide donations if 
the benefits of doing so outweigh the costs.
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    \2\ Source of median wage rate: U.S. Bureau of Labor Statistics. 
Occupational Employment Statistics, ``May 2014 National Occupational 
Employment and Wage Estimates, United States--Median Hourly Wage by 
Occupation Code: 23-1011.'' Updated March 25, 2015. Available at 
http://www.bls.gov/oes/2014/may/oes231011.htm. Accessed June 15, 
2015. CBP adjusted this figure, which was in 2014 U.S. dollars, to 
2015 U.S. dollars by applying a 1.0 percent annual growth rate to 
the figure, as recommended by the U.S. Department of 
Transportation's value of travel time guidance. Source: U.S. 
Department of Transportation, Office of Transportation Policy. The 
Value of Travel Time Savings: Departmental Guidance for Conducting 
Economic Evaluations Revision 2 (2015 Update), ``Table 4 (Revision 
2-corrected): Recommended Hourly Values of Travel Time Savings.'' 
April 29, 2015. http://www.transportation.gov/sites/dot.gov/files/docs/Revised%20Departmental%20Guidance%20on%20Valuation%20of%20Travel%20Time%20in%20Economic%20Analysis.pdf. Accessed June 1, 2016.
    \3\ The total compensation to wages and salaries ratio is equal 
to the calculated average of the 2014 quarterly estimates (shown 
under Mar., June, Sep., Dec.) of the total compensation cost per 
hour worked for Professional and Related occupations (49.69) divided 
by the calculated average of the 2014 quarterly estimates (shown 
under Mar., June, Sep., Dec.) of wages and salaries cost per hour 
worked for the same occupation category (34.315). Source of total 
compensation to wages and salaries ratio data: U.S. Bureau of Labor 
Statistics. Employer Costs for Employee Compensation. Employer Costs 
for Employee Compensation Historical Listing March 2004-December 
2015, ``Table 3. Civilian workers, by occupational group: employer 
costs per hours worked for employee compensation and costs as a 
percentage of total compensation, 2004-2015 by Respondent Type: 
Professional and related occupations.'' June 10, 2015. Available at 
http://www.bls.gov/ncs/ect/sp/ececqrtn.pdf. Accessed June 15, 2015.
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    In addition to donor costs, this rule would introduce a time cost 
to CBP to process each offer of donation. As with donor costs, CBP's 
cost to receive and learn about the donated article would depend on the 
particulars of the donation. Also, accepting the donation is voluntary 
on CBP's part and the agency would only accept the donation if it is in 
CBP's best interest to do so. In addition to CBP's costs associated 
with receiving and learning about the donated article, there are 
quantifiable costs to CBP related to evaluating the donation and making 
a decision on whether to accept it under the conditions provided. CBP 
estimates, at a minimum, the agency's evaluation time to be 
approximately 10 hours for each of the 50 donations made to CBP 
annually. CBP predicts that in most cases, each written offer of 
donation would be evaluated by five CBP employees. Based on the average 
hourly wage for a general CBP employee of $55.91,\4\ evaluating the 50 
offers of donation each year would result in an annual time cost to CBP 
of $139,775.00 ($55.91 * 5 CBP employees * 10 hours * 50 written 
donation proposals). On average, each offer of donation would cost CBP 
$2,795.50 in evaluation time costs.
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    \4\ CBP bases this wage on the FY 2015 salary and benefits of 
the national average of general, non-CBP Officer/frontline CBP 
positions, which is equal to a GS-12, Step 5. Source: Email 
correspondence with CBP's Office of Administration on June 25, 2015.
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    In summary, this rule could result in a total quantifiable annual 
cost to the public of $8,083 and a total annual cost to CBP of 
$139,775.00. Additionally, the public would bear a cost equal to the 
value of the donation and CBP would bear a cost to accept the donation. 
As these costs would vary depending on the particulars of the donation, 
CBP is unable to quantify them in this analysis. Because donations are 
voluntary for both the donor and CBP, donations would presumably only 
occur if the benefits to each party outweigh the costs.
    Along with costs, the proposed rule would provide benefits to the 
donor and CBP. In particular, the proposed rule would enhance CBP's IPR 
enforcement capabilities by making donations of authentication devices, 
equipment, and training available to CBP personnel. This would help 
protect the entities making donations from the illegal importation of 
IPR-infringing products. The value of this benefit would vary depending 
on how much an entity believes IPR enforcement would improve because of 
its donation. As stated earlier, an entity would only make the donation 
if it believes the benefits of improved IPR enforcement outweigh the 
costs.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et. seq.), as amended 
by the Small Business Regulatory Enforcement and Fairness Act of 1996, 
requires agencies to assess the impact of regulations on small 
entities. A small entity may be a small business (defined as any 
independently owned and operated business not dominant in its field 
that qualifies as a small business per the Small Business Act); a small 
not-for-profit organization; or a small governmental jurisdiction 
(locality with fewer than 50,000 people).
    This proposed rule, if finalized, would allow entities to 
voluntarily donate technology, training, and other support services to 
improve CBP's ability to enforce IPR potentially related to their 
goods. As any entity with intellectual property could make these 
donations, this rule may affect a substantial number of small entities. 
However, this rule imposes no new obligations on entities, including 
those considered small. Any small entity that chooses to make these 
donations would presumably do so because it believes the benefits of 
donating exceed the costs. Therefore, this rule would not have a 
significant economic impact on small entities. Given these reasons, CBP 
certifies that this rule, if finalized, will not have a significant 
economic impact on a substantial number of small entities. CBP invites 
public comments on this determination.

Paperwork Reduction Act

    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.
    OMB approved collection 1651-0123 will be amended to reflect a new 
information collection proposed by this rule for written offers of 
donations to CBP of technology, training, and other support services in 
accordance with 19 CFR 133.61(b). CBP estimates that this rule would 
result in 50 responses each year and 100 burden hours to respondents 
annually. The new information collection would reflect the burden hours 
for each written offer of donation provided to CBP as follows:
    Estimated number of annual respondents: 50.
    Estimated number of annual responses: 50.
    Estimated time burden per response: 2 hours.
    Estimated total annual time burden: 100 hours.

Signing Authority

    This proposed regulation is being issued in accordance with 19 CFR 
0.1(a)(1) pertaining to the Secretary of the Treasury's authority (or 
that of his delegate) to approve regulations related to certain customs 
revenue functions.

List of Subjects

19 CFR Part 133

    Circumvention devices, Copying or simulating trademarks, 
Copyrights, Counterfeit goods, Customs duties and inspection, 
Detentions, Donations, Reporting and recordkeeping requirements, 
Restricted merchandise, Seizures and forfeitures, Technology, 
Trademarks, Trade names, Support services.

Proposed Amendments to Part 133 of the CBP Regulations

    For the reasons set forth in the preamble, CBP proposes to amend 19 
CFR part 133 as set forth below:

PART 133--TRADEMARKS, TRADE NAMES, AND COPYRIGHTS

0
1. The general authority citation for part 133 continues, and the 
specific authority for new subpart H is added, to read as follows:


[[Page 4803]]


    Authority: 15 U.S.C. 1124, 1125, 1127; 17 U.S.C. 101, 601, 602, 
603; 19 U.S.C. 66, 1202, 1499, 1526, 1624; 31 U.S.C. 9701.
* * * * *
    Section 133.61 also issued under Sec. 308(d), Pub. L. 114-125; 
Sec. 507, Pub. L. 108-90; Sec. 2, Pub. L. 114-279.

Subpart G--[Reserved].

0
2. Add and reserve subpart G.
0
3. Add subpart H, consisting of Sec.  133.61, to read as follows:

Subpart H--Donations of Intellectual Property Rights Technology and 
Support Services.


Sec.  133.61  Donations of intellectual property rights technology and 
support services.

    (a) Scope. The Commissioner of U.S. Customs and Border Protection 
(CBP) is authorized to accept donations of hardware, software, 
equipment, and similar technologies, as well as donated support 
services and training, from private sector entities, for the purpose of 
assisting CBP in enforcing intellectual property rights. Such 
acceptance must be consistent with the conditions set forth in this 
section and section 308(d) of the Trade Facilitation and Trade 
Enforcement Act of 2015, as well as either section 482 of the Homeland 
Security Act of 2002 or section 507 of the DHS Appropriations Act of 
2004.
    (b) Donation offer. A donation offer must be submitted to CBP 
either via email, to [email protected], or mailed to the 
attention of the Executive Assistant Commissioner, Office of Field 
Operations, or his/her designee. The donation offer must describe the 
proposed donation in sufficient detail to enable CBP to determine its 
compatibility with existing CBP technologies, networks, and facilities 
(e.g. operating system or similar requirements, power supply 
requirements, item size and weight, etc.). The donation offer must also 
include information pertaining to the donation's scope, purpose, 
expected benefits, intended use, costs, and attached conditions, as 
applicable, that is sufficient to enable CBP to evaluate the donation 
and make a determination as to whether to accept it. CBP will notify 
the donor, in writing, if additional information is requested or if CBP 
has determined that it will not accept the donation.
    (c) Agreement to accept donation. If CBP accepts a donation of 
hardware, software, equipment, technologies, or to accept training and 
other support services, for the purpose of enforcing intellectual 
property rights, CBP will enter into a signed, written agreement with 
an authorized representative of the donor. The agreement must contain 
all applicable terms and conditions of the donation. An agreement to 
accept training and other support services must provide that the 
services or training are offered without the expectation of payment, 
and that the service provider expressly waives any future claims 
against the government.

R. Gil Kerlikowske,
Commissioner.
    Approved: January 09, 2017.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2017-00653 Filed 1-13-17; 8:45 am]
 BILLING CODE 9111-14-P