[Federal Register Volume 87, Number 145 (Friday, July 29, 2022)]
[Rules and Regulations]
[Pages 45642-45649]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16233]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

19 CFR Part 4

[CBP Dec. 22-14]
RIN 1651-AB41


Vessel Repair Duties for Vessels Entering U.S. Ports

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security (DHS).

ACTION: Final rule.

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

SUMMARY: This rule amends U.S. Customs and Border Protection (CBP) 
regulations to streamline the vessel repair entry process by extending 
the timeframe from 90 days to 150 days for vessel owners, masters, or 
authorized agents (``vessel operators'') to provide completed vessel 
repair entries and to apply for relief from assessment of those vessel 
repair duties. Because CBP is extending the timeframe from 90 days to 
150 days, CBP is also eliminating provisions that allow for requests 
for an additional 30-day extension to submit all of the relevant 
evidence as those extensions are no longer necessary.

[[Page 45643]]


DATES: This final rule is effective July 29, 2022.

FOR FURTHER INFORMATION CONTACT: W. Richmond Beevers, Chief, Cargo 
Security, Carriers, and Restricted Merchandise Branch, Regulations and 
Rulings, U.S. Customs and Border Protection, at 202-325-0084 or 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Under section 466 of the Tariff Act of 1930, as amended (19 U.S.C. 
1466), purchases for repairs or repairs made to certain vessels while 
outside the United States are subject to declaration, entry, and 
payment of ad valorem duty upon vessel arrival in any port of the 
United States. Duties owed for vessel repairs made in a foreign country 
apply to all vessels documented under U.S. law that engage in foreign 
or coasting trade, as well as those intended to be employed in such 
trade. 19 U.S.C. 1466(a). The statute also specifies the situations in 
which vessel operators may be relieved from paying such duties.\1\
---------------------------------------------------------------------------

    \1\ Vessel operators may be relieved from paying duties for 
foreign repairs to vessels when: materials purchased and repairs 
made to vessels outside the United States were a result of damage 
caused by inclement weather or other casualties; purchased materials 
were made in the United States and installed by U.S. residents or 
the vessel's crew; or purchased materials were used for dunnage 
cargo, packing, erection of temporary bulkheads, or in preparation 
for the carrying of liquid cargo. 19 U.S.C. 1466(d).
---------------------------------------------------------------------------

    Section 4.14 of title 19 of the Code of Federal Regulations (19 CFR 
4.14) implements 19 U.S.C. 1466. Section 4.14(a)(1) requires vessel 
operators to declare, enter, and be subject to payment of duty for 
vessel repair purchases or repairs made to vessels while outside of the 
United States upon vessel arrival to the United States or Puerto Rico. 
The duties owed on these repairs and purchases are based on the actual 
foreign cost of the vessel repair or expenditure. 19 CFR 4.14(a)(1). 
Certain foreign vessel repair expenditures are not subject to 
declaration, entry, or duty at all. See 19 CFR 4.14(a)(2)(i)-(iii). 
Some expenditures may not require duty payments but must still follow 
declaration and entry procedures. See 19 CFR 4.14(a)(3), (h)(1)-(4).
    Upon arrival, vessel operators must declare and enter all foreign 
repairs or related expenses to U.S. Customs and Border Protection (CBP) 
on CBP Form 226, or an electronic equivalent, to be processed by CBP's 
Vessel Repair Unit (VRU) in New Orleans, Louisiana (``vessel repair 
entry''). See 19 CFR 4.14(d), (e), (g). The vessel repair entry must 
include all foreign voyage expenditures for equipment, parts of 
equipment, repair parts, materials, and labor. 19 CFR 4.14(e). The 
regulations currently require a vessel operator to submit a completed 
vessel repair entry within 90 days of vessel arrival into the United 
States. 19 CFR 4.14(f). A completed vessel repair entry must contain 
evidence of the cost of each foreign repair or related expense. Id. The 
vessel operator can request additional time from the VRU to file a 
completed vessel repair entry. Id. The VRU may grant, and in practice 
almost always does grant, a 30-day extension period for vessel 
operators to submit the completed entry.\2\ If additional time is 
needed, the Cargo Security, Carriers, and Restricted Merchandise Branch 
(CCR) at CBP Headquarters may grant, and in practice almost always does 
grant, a second extension.\3\ Normally, in this instance, the CCR will 
grant an additional 30-day extension after the first extension. 
Therefore, in practice, vessel operators have a total of 150 days to 
submit a completed vessel repair entry supported by evidence showing 
the cost of each foreign repair or expense.
---------------------------------------------------------------------------

    \2\ Based on communication with the Cargo Security, Carriers, 
and Restricted Merchandise Branch on April 13, 2022. A subject 
matter expert stated that the VRU nearly always approves the 30-day 
extension requests subject to timeliness of such request. In 2021-
2022, VRU approved 100% of all requests for extensions.
    \3\ Based on communication with the Cargo Security, Carriers, 
and Restricted Merchandise Branch on April 13, 2022. A subject 
matter expert stated that vessel operators are sophisticated users 
understanding what is required and as a result, CCR nearly always 
approves a second extension request subject to the timeliness of the 
request. In 2021-2022, CCR approved 100% of all second requests for 
extensions.
---------------------------------------------------------------------------

    Before the vessel may depart from a U.S. port, the vessel operator 
must also submit the estimated cost of duties, or evidence of a bond, 
for all potential repairs or expenses declared in the vessel repair 
entry. 19 CFR 4.14(c). The current regulations set forth the 
circumstances in which the vessel operator may be relieved from 
assessment of these duties. Such relief is available when: (i) the 
expenditure is not considered to be a repair or purchase within the 
terms of 19 U.S.C. 1466 or as determined under judicial or 
administrative interpretation; (ii) foreign repairs or expenditures 
were the result of damage caused by inclement weather or other 
casualties; (iii) materials used for repair were made in the United 
States and installed by U.S. residents or the vessel's crew; (iv) 
materials were used for the purpose of providing dunnage for the 
packing of cargo, erection of temporary bulkheads, or in preparation 
for the carrying of liquid cargo; (v) for vessels that continuously 
remained outside the United States for two years, expenditures were 
made after the first six months of their absence; (vi) expenditures 
were made for Lighter Abroad Ship (LASH) operations; (vii) spare repair 
parts or materials were certified for use on a cargo vessel, if duty 
was previously paid under the appropriate U.S. commodity 
classification; and (viii) spare repair parts were necessarily 
installed prior to first entry into the United States, if duty was paid 
under the appropriate U.S. commodity classification. 19 U.S.C. 1466(a), 
(d), (e), (h); 19 CFR 4.14(h)(1)-(3).
    Under the current regulations, the operator must apply for relief 
from these duties within 90 days of the vessel's arrival into the 
United States. 19 CFR 4.14(i). Similar to the timeline for submitting a 
completed vessel repair entry, the VRU may grant, and in practice 
almost always does grant, a 30-day filing extension, and the CCR may 
grant an additional filing extension for vessel operators to apply for 
relief from assessment of such duties.\4\ The CCR almost always grants 
an additional 30-day extension, which results in an additional 60 days 
for vessel operators to file for relief from duty payment after the 
initial 90-day timeline expires. Therefore, in practice, current 
procedures almost always allow vessel operators a total of 150 days to 
file for relief from assessment of vessel repair duties.
---------------------------------------------------------------------------

    \4\ See 19 CFR 4.14(f) for extension procedures.
---------------------------------------------------------------------------

    Although both the VRU and CCR rarely deny filing extensions for 
vessel operators seeking to submit completed vessel repair entries or 
to apply for relief from assessment of vessel repair duties, the two 
offices are still faced with the administrative burden of processing 
extension requests. For instance, on average, the CCR processes 42 
vessel repair extension requests annually. The VRU processes annually 
over three times this number of extension requests.\5\ The hours 
expended on extension requests create an unnecessary burden on both CBP 
and vessel operators filing such requests with no benefit to CBP, 
vessel operators or the public by maintaining the extensions.\6\
---------------------------------------------------------------------------

    \5\ The VRU processes on average 152 extension requests 
annually. See Part IV, Table 1. Time Burden to Complete Extension 
Requests.
    \6\ Based on communication with the Cargo Security, Carriers, 
and Restricted Merchandise Branch on April 13, 2022, subject matter 
experts stated that the only reason VRU or CCR had ever denied a 
request for an extension was an untimely request which occurred one 
time with VRU over the last several years. Vessel operators are 
sophisticated users who understand what is required to obtain an 
extension.

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

[[Page 45644]]

II. Discussion of Regulatory Changes

    CBP is streamlining the vessel repair entry process under 19 CFR 
4.14 by amending the timeframe to submit complete vessel repair entries 
with supporting evidence for the costs of each repair and to apply for 
relief from assessment of vessel repair duties. This rule will also 
eliminate the need for filing extension requests. In particular, 
paragraphs (f) and (i) are amended to eliminate provisions allowing for 
extensions and to change the timeline for document submission from 90 
to 150 days. These amendments allow the same timeframe as the current 
practice, which provides for a 90-day deadline and the potential to 
file two extensions, for a total of 150 days. Accordingly, the 
amendments will simplify the process and alleviate unnecessary burdens 
placed on CBP to process extension requests and on vessel operators to 
file such requests. The amendments are described below.

A. Evidence for Cost of Repair

    Paragraph (f) requires vessel operators to submit to CBP completed 
vessel repair entries with supporting evidence of the final cost of 
each foreign repair or expenditure within 90 days of the vessel's 
arrival. 19 CFR 4.14(f). The vessel operator is permitted to submit 
initial or interim cost estimates if sufficient evidence to show final 
costs or expenditures is not yet available, but must submit a completed 
entry within 90 days of the vessel's arrival. 19 CFR 4.14(f). If 
additional time is needed to submit completed vessel repair entries, 
vessel operators are required to submit to the VRU a written request 
explaining their need for filing extensions before the 90-day timeline 
expires. 19 CFR 4.14(f). Paragraph (f) allows the VRU to grant a 30-day 
extension and the CCR to grant a second extension. 19 CFR 4.14(f). 
Current practice allows vessel operators a total of 150 days to submit 
vessel repair entries because both the VRU and CCR rarely deny 
extension requests. In practice, the CCR will grant a second 30-day 
extension. Therefore, the filing extensions provide vessel operators 
with an additional 60 days to file completed vessel repair entries. The 
amendment to paragraph (f) thus removes the provision regarding 
extensions and provides 150 days from vessel arrival for operators to 
submit a completed vessel repair entry, as opposed to the existing 90-
day deadline and the possibility of filing for two extensions.

B. Application for Relief From Assessment of Vessel Repair Duties

    Paragraph (i) requires vessel operators to apply for relief from 
assessment of vessel repair duties within 90 days of vessel arrival for 
the opportunity to qualify for relief from assessment of these duties. 
19 CFR 4.14(i). An Application for Relief must clearly state the legal 
basis for granting relief for one of the reasons specified in paragraph 
(h). Although the Application for Relief is not required to be 
submitted in any particular format, it must certify that all repair 
operations performed aboard the vessel during the one-year period prior 
to the current submission have been declared and entered and must be 
supported by certain evidence outlined in paragraph (i)(1)(i)-(vi) and 
(i)(2).\7\ 19 CFR 4.14(i)(1). Paragraph (i) allows the VRU to grant a 
30-day extension and the CCR to grant a second extension for vessel 
operators to file for relief from assessment of vessel repair duties. 
Similar to the procedure for vessel repair entries in paragraph (f), 
the CCR normally grants a second 30-day extension. Therefore, current 
practice allows vessel owners 150 days to file an Application for 
Relief from assessment of vessel repair duties, because, as a practical 
matter, the VRU and CCR usually grant all extension requests. The 
amendments therefore remove the extension provisions and expand the 
original 90-day timeline to 150 days from vessel arrival for owners to 
apply for relief from assessment of vessel repair duties.
---------------------------------------------------------------------------

    \7\ Each Application for Relief must include copies of: (i) 
itemized bills, receipts, and invoices for items shown in 19 CFR 
4.14(e); (ii) photocopies of relevant parts of vessel logs, as well 
as of any classification society reports which detail damage and 
remedies; (iii) a certification by the senior officer with personal 
knowledge of all relevant circumstances relating to casualty damage; 
(iv) a certification by the senior officer with personal knowledge 
of all relevant circumstances relating to foreign repair 
expenditures; (v) a certification by the master that casualty-
related expenditures were necessary to ensure the safety and 
seaworthiness of the vessel in reaching its U.S. port of 
destination; and (vi) any permits or other documents filed with or 
issued by any U.S. Government agency other than CBP regarding the 
operation of the vessel that are relevant to the request for relief. 
19 CFR 4.14(i).
---------------------------------------------------------------------------

IV. Statutory and Regulatory Analysis

A. Inapplicability of Prior Notice and Delayed Effective Date

    According to section 553 of the Administrative Procedure Act (APA) 
(5 U.S.C. 553), rulemaking generally requires prior notice and comment 
and a 30-day delayed effective date, subject to specified exceptions. 
Pursuant to 5 U.S.C. 553(b)(3)(A), the prior notice and comment and 
delayed effective date requirements do not apply when agencies 
promulgate rules concerning agency organization, procedure, or 
practice. In addition, section 553(d) of the APA requires that a final 
rule have a 30-day delayed effective date. The APA, however, provides 
exceptions from the prior notice and public comment requirement and the 
delayed effective date requirements, when an agency for good cause 
finds that such procedures are impracticable, unnecessary, or contrary 
to the public interest.
    This rule does not require prior notice and comment because it 
relates to agency organization, procedure, or practice. Specifically, 
the final rule merely updates the regulations to simplify CBP's 
procedures and does not substantially change any parties' right to file 
evidence for the cost of vessel repair or to apply for relief from 
assessment of vessel repair duties. Moreover, the new amendment seeks 
to codify what is done in practice.
    Current practice almost always provides vessel operators with 150 
days to file the supporting evidence for repairs and to apply for 
relief from assessment of duties, which the new amendment will still 
allow. Current regulations allow 90 days from vessel arrival to file 
these documents. Upon the request of a vessel operator, the VRU and CCR 
usually grant two 30-day filing extensions, for a total of an 
additional 60 days. The final rule will eliminate the extension request 
procedure and allow for a total of 150 days without extensions, rather 
than an initial 90 days with two 30-day extensions, to file these 
documents. As a result, this rule merely streamlines the vessel repair 
entry process by eliminating the need for vessel owners to file 
extension requests and by providing the same timeframe for these 
documents to be filed.
    Additionally, CBP finds that prior notice and comment are 
unnecessary and that good cause exists to issue this rule effective 
upon publication. Prior notice and comment are unnecessary because the 
rule does not substantively alter the underlying rights or interests of 
vessel operators and streamlines the process for both vessel operators 
and CBP.

B. Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 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

[[Page 45645]]

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 amendment is not a ``significant regulatory action,'' under 
section 3(f) of Executive Order 12866. Accordingly, OMB has not 
reviewed this regulation. In summary, CBP expects there to be a 
combined total savings of approximately $55,209 annually to the Federal 
Government and vessel owners as a result of this rule. Following is 
analysis of this estimated cost savings.
    Purchases for repairs or repairs made to certain vessels while 
outside the United States are subject to entry and payment of duty. 
This amendment to 19 CFR 4.14 extends the timeframe for U.S. vessel 
operators to provide a completed vessel repair entry to CBP and to 
apply for relief from the assessment of duty usually required for 
vessel repairs occurring in a foreign country to reflect current CBP 
practice. Currently, vessel operators have 90 days to submit a 
completed vessel repair entry with supporting evidence for each repair. 
In certain circumstances, vessel operators can apply for relief from 
assessment of these duty amounts, if they provide the appropriate 
documentation. Vessel operators are likewise given 90 days from vessel 
arrival into the United States to apply for relief.
    In both scenarios, current regulations, 19 CFR 4.14(f), (i), allow 
vessel operators to request extensions to complete vessel repair 
entries and apply for relief from duty assessment. Vessel operators can 
request two separate extensions, allowing them, in practice, a total of 
150 days to provide all the necessary information to complete their 
vessel repair entries or Applications for Relief. This amendment to 19 
CFR 4.14 changes the deadline from 90 to 150 days and eliminates the 
requirement that vessel operators request extensions. This amendment 
would obviate the need for vessel operators to make extension requests 
and would eliminate all costs associated with these requests. CBP 
estimates that this amendment would provide an overall savings to the 
U.S. economy by taking away the time burden associated with the 
extension requests for both vessel repair entries and relief from duty 
payments on vessel repairs made abroad.
    Under the current regulations located at 19 CFR 4.14, when certain 
vessels undergo repairs outside of the United States, the value of the 
foreign repairs may be subject to duties when these vessels re-enter 
the United States or Puerto Rico.\8\ Upon re-entry to a U.S. or Puerto 
Rico port, vessel operators are required to submit a vessel repair 
declaration and entry documentation, including an estimated duty 
payment (or produce evidence of a bond), before the vessel can be 
released from that U.S. port of entry. Specifically, the values of 
foreign parts and foreign repairs made to certain vessels at foreign 
shipyards are subject to duty upon re-entry to a U.S. or Puerto Rico 
port. The duty amount is based on the actual foreign costs to the 
vessel operator for purchases of articles used in repairs and labor 
costs for repairs made outside the United States by foreign shipyards 
and foreign labor. According to existing regulations, for articles 
previously imported into the United States and then exported for use in 
foreign vessel repairs, vessel owners are required to pay duties. The 
duties owed are based on the foreign purchase price of the articles 
when initially imported into the United States.
---------------------------------------------------------------------------

    \8\ According to 19 CFR 4.14(a), duties owed for vessel repairs 
occurring outside the United States apply to all vessels documented 
under U.S. law that engage in foreign or coasting trade, as well as 
those intended to engage in those trades, under CBP interpretations.
---------------------------------------------------------------------------

    Vessel operators submitting vessel repair entries must provide 
supporting documentation validating the costs of all foreign parts and 
repairs. If vessel operators do not have all of the required 
information at the time of entry, they can file an incomplete vessel 
repair entry as long as they can provide complete evidence to the VRU 
within 90 days of vessel arrival. Vessel operators must provide the 
final foreign cost of articles used and any repairs within this 90-day 
deadline to complete a vessel repair entry. However, vessel operators 
may be granted an extension to complete a vessel repair entry if they 
are unable to before the deadline. Upon the vessel operator's 
submission of a written request justifying the need for additional 
time, the VRU may grant a 30-day extension. As discussed above, in 
practice, the VRU nearly always approves requests made by vessel 
operators for a 30-day extension.\9\ A second extension may also be 
granted beyond the initial 30-day extension. This second request must 
be approved by the CCR.\10\ If both requests for extensions are 
granted, vessel operators, in practice, are given a total of 150 days 
to provide complete evidence of costs for vessel repair entries. If all 
cost evidence is not provided by the specified deadlines, the VRU can 
refer the matter to U.S. Immigration and Customs Enforcement to acquire 
the information needed to complete the vessel repair entry.
---------------------------------------------------------------------------

    \9\ Based on communication with the Cargo Security, Carriers, 
and Restricted Merchandise Branch on April 13, 2022. A subject 
matter expert stated that the VRU nearly always approves the 30-day 
extension requests, only 1 request had been denied in the past 
several years and denial was based on a late submission well after 
the deadline.
    \10\ CBP notes that these second extension requests for vessel 
repair entries are rarely denied. Data received from the Cargo 
Security, Carriers, and Restricted Merchandise Branch on October 28, 
2020. A subject matter expert stated that the CCR nearly always 
approves a second extension request.
---------------------------------------------------------------------------

    In the current regulations, there are limited circumstances under 
which vessel operators can be granted relief from paying the duties on 
foreign articles and foreign repairs.\11\ In these cases, vessel 
operators may apply for relief from assessment of the duties. However, 
Applications for Relief from assessment of vessel repair duties require 
a significant amount of documentation to support such claims for 
relief.\12\ These applications must provide information regarding all 
vessel repair operations performed aboard that vessel within the 12-
month period prior to the most current vessel repair entry. As with 
filing incomplete vessel repair entries, vessel operators likewise have 
90 days from vessel arrival at a U.S. port to file these Applications 
for Relief. Vessel operators can similarly request an extension to the 
initial 90-day deadline to apply for relief, assuming vessel operators 
can justify the need for a 30-day extension. These extension requests 
are comparable to the extension requests for completing vessel repair 
entries which include: waiting on

[[Page 45646]]

receipts, invoices, documents, certifications, surveyor reports, and 
third party organization reports. The VRU determines whether to grant 
extensions for submitting Applications for Relief, and in practice, the 
VRU rarely declines such requests.\13\ In addition, vessel operators 
can request a second extension, which the CCR may grant.\14\ If the 
vessel operator does not file an Application for Relief or does not 
provide an appropriate justification for relief, the vessel operator is 
responsible for the full duty amount as determined by the vessel repair 
entry.
---------------------------------------------------------------------------

    \11\ According to 19 CFR 4.14(h) and (i), there are a few 
circumstances where vessels can qualify for duty relief. These 
include but are not limited to: matters involving vessels normally 
subject to 19 U.S.C. 1466(a), (d), (e), or (h). These situations 
include vessels that continuously remain outside the United States 
for two years or longer; expenditures on LASH barges; relief on 
certain spare repair parts or materials; and relief on certain spare 
parts necessarily installed on a vessel prior to their first entry 
into the United States.
    \12\ According to 19 CFR 4.14(i), each Application for Relief 
should include the following documentation: itemized bills, 
receipts, and invoices for items shown in 19 CFR 4.14(e); the cost 
of items for which a request for relief is made must be segregated 
from the cost of the other items listed in the vessel repair entry; 
photocopies of relevant parts of vessel logs, as well as of any 
classification society reports which detail damage and remedies; a 
certification by the senior officer with personal knowledge of all 
relevant circumstances relating to casualty damage (time, place, 
cause, and nature of damage); a certification by the senior officer 
with personal knowledge of all relevant circumstances relating to 
foreign repair expenditures (time, place, and nature of purchases 
and work performed); a certification by the master that casualty-
related expenditures were necessary to ensure the safety and 
seaworthiness of the vessel in reaching its U.S. port of destination 
and any permits or other documents filed with or issued by any U.S. 
Government agency other than CBP regarding the operation of the 
vessel that are relevant to the request for relief.
    \13\ Based on communication with the Cargo Security, Carriers, 
and Restricted Merchandise Branch on April 13, 2022; subject matter 
expert stated that the VRU essentially always approves the 30-day 
extension requests. During the past several years, only 1 request 
has been denied and the denial was solely due to the extension 
request being submitted well after the deadline.
    \14\ CBP notes that these second extension requests for 
Applications for Relief are rarely denied. Data received from the 
Cargo Security, Carriers, and Restricted Merchandise Branch on April 
13, 2022; subject matter expert stated that the CCR nearly always 
approves a second extension request.
---------------------------------------------------------------------------

    This amendment changes the deadline for vessel operators to provide 
complete information for vessel repair entries and to submit 
Applications for Relief. The amendment extends the time period from 90 
days to 150 days and eliminates the need for extension requests. CBP 
believes that extending the initial deadline will provide vessel 
operators additional time to provide the appropriate and accurate 
information. In addition, by changing the deadline to 150 days, the 
amendment would eliminate the necessity for vessel operators to request 
deadline extensions to complete vessel repair entries and Applications 
for Relief. CBP expects that the amendment will generate savings to 
both vessel operators and the Federal Government by eliminating the 
costs associated with completing and reviewing extension requests 
beyond the initial 90-day deadline in the existing regulations. CBP 
does not expect this amendment to impose any costs to vessel operators 
or the Federal Government.

                               Table 1--Time Burden To Complete Extension Requests
----------------------------------------------------------------------------------------------------------------
                                                    Time burden     Annual time
                                     Expected     per request to     burden to      Time burden     Annual time
                                      annual          vessel          vessel      per request to   burden to CBP
                                     extension       operators       operators      CBP (hours)       (hours)
                                     requests         (hours)         (hours)
----------------------------------------------------------------------------------------------------------------
VRU Extension Requests..........             152               1             152             0.5              76
CCR Extension Requests..........              42               1              42            0.56              24
----------------------------------------------------------------------------------------------------------------

    Vessel operators and CBP will benefit from this amendment because 
the extension request process is time-consuming for both the government 
and private parties. CBP estimates that the VRU reviews approximately 
152 extension requests annually, while the CCR reviews on average 42 
extension requests each year.\15\ CBP estimates the average time burden 
placed on vessel operators or representatives to complete a single 
extension request (both the initial and subsequent requests) is 
approximately one hour each.\16\ Meanwhile, CBP estimates that the time 
burden placed on CBP to review and approve the extension requests is 
approximately 30 minutes (0.5 hours) to review each VRU extension 
request and approximately 34 minutes (0.56 hours) to review each CCR 
extension request.\17\
---------------------------------------------------------------------------

    \15\ Data provided by the Cargo Security, Carriers, and 
Restricted Merchandise Branch on November 9, 2020. Data obtained 
included the average number of extension requests reviewed by the 
VRU and CCR from FY 2018-FY 2020. CBP calculated the average annual 
expected extension requests by looking at the annual requests 
reviewed in FY 2018, FY 2019 and FY 2020. The extension request 
numbers include both extension requests for completing vessel repair 
entries and applications for duty assessment relief.
    \16\ Data received from the Vessel Repair Unit on November 10, 
2020. Subject matter expert's best estimate on time burden placed on 
vessel operators to file extension requests is approximately one 
hour.
    \17\ Data obtained from the Cargo Security, Carriers, and 
Restricted Merchandise Branch on October 28, 2020, providing an 
estimated time burden on CBP to review each VRU and each CCR 
extension request.
---------------------------------------------------------------------------

Benefits From Eliminating VRU Extension Requests
    Extension requests for vessel repair entries and applications for 
duty assessment relief are typically filed on behalf of the vessel 
operators by legal representatives or vessel agents. Unfortunately, CBP 
does not have exact data on the proportion of how many extension 
requests are completed by legal representatives on behalf of the vessel 
operators and how many are filed by vessel agents. Therefore, CBP 
assumes that half of all extension requests are filed by legal 
representatives and half are filed by vessel agents.

                                     Table 2--Expected Annual Savings From Eliminating VRU 30-Day Extension Requests
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Estimated time    Estimated time
                                                    burden  to     burden to vessel    Cost to     Cost to vessel     Estimated
                                                      vessel            legal          vessel          legal         time burden    Cost to      Total
                                                    operators      representatives     agents     representatives      to CBP         CBP       savings
                                                     (hours)           (hours)                                         (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VRU Extension Requests.........................              76                 76      $4,265            $32,669            76      $5,796     $42,730
--------------------------------------------------------------------------------------------------------------------------------------------------------

    On average, CBP estimates that vessel operators file approximately 
152 extension requests every year that are reviewed by the VRU. CBP 
assumes that half of these 152 requests (76) are filed by a vessel 
operator's legal representative and half (76) are filed by vessel 
agents. The expected savings to vessel operators from eliminating these 
extension requests is based on the estimated burden hours for half of 
the VRU extension requests (76 hours, 1 hour per request), multiplied 
by the average loaded hourly wage rate for vessel legal representatives 
($429.86). CBP determined that this is the best estimate for private 
lawyers hired outside of a company, because the data

[[Page 45647]]

was obtained from an American Intellectual Property Law Association 
(AIPLA) study on the average hourly billing rate for lawyers. AIPLA's 
study surveyed intellectual property (IP) lawyers and was used in the 
2017 Report of the Economic Survey. The study found the median hourly 
billing rate for these lawyers was $400 in 2016 dollars, which is the 
most recent data available, and $429.86 after adjustment to 2020 
dollars.\18\ To estimate the cost of filing VRU extension requests 
imposed on vessel agents, CBP used the estimated burden hours for half 
of VRU extension requests (76 hours, 1 hour per request), multiplied by 
the average loaded hourly wage rate for vessel operators ($56.12).\19\ 
CBP estimated that the savings each year from eliminating these 
extension requests to vessel agents ($4,265) and legal representatives 
($32,669) would be approximately $36,934.
---------------------------------------------------------------------------

    \18\ American Intellectual Property Law Association. 2017 Report 
of the Economic Survey. ``Billable Hours, Billing Rate, Dollars 
Billed (Q29, Q30, Q27).'' June 2017. CBP calculated the 2020 
adjusted dollar amount using the percent increase in the Annual 
Average GDP Price Deflator (2015 = 100) between 2016 and 2020. The 
annual average GDP Price Deflator value in 2016 = 101.0481, the 
annual average GDP Price Deflator value in 2020 = 108.5904, the 
percent increase was estimated to be around 7.4641% (108.5904/
101.0481 = 1.07.4641 or 7.4641%). This percent increase was applied 
to the 2016 estimated hourly billing rate of $400 for external 
attorneys to estimate the 2020 hourly billing rate of $429.86 for 
external attorneys.
    \19\ CBP calculated this loaded wage rate by first multiplying 
the Bureau of Labor Statistics' (BLS) 2020 median hourly wage rate 
for Captains, Mates, and Pilots of Water Vessels ($37.08) by the 
ratio of BLS' average 2020 total compensation to wages and salaries 
for Transportation and Material Moving occupations (1.5134), the 
assumed occupational group for captains, mates, and pilots of water 
vessels, to account for non-salary employee benefits. These figures 
are in 2020 U.S. dollars and CBP assumes an annual growth rate of 0 
percent; the 2020 U.S. dollar values are equal to the 2021 U.S. 
dollar values.
---------------------------------------------------------------------------

    In addition to the cost to vessel operators, the Federal Government 
incurs costs from reviewing VRU extension requests every year. The 
expected annual cost to the Federal Government associated with the 
review of VRU extension requests is based on the number of responses 
that must be reviewed (152) multiplied by the time burden to review and 
process each response (0.5 hours) = 76 hours. This is then multiplied 
by the average hourly loaded rate for other CBP employees ($76.26) = 
$5,796.\20\ CBP thus estimates that the savings to the Federal 
Government from eliminating VRU requests would be approximately $5,796 
on an annual basis. Considering the combined savings to vessel 
operators and the Federal Government as a result of eliminating VRU 
extension requests, CBP estimates that this rule's annual savings is 
approximately $42,730.
---------------------------------------------------------------------------

    \20\ Data obtained from the Cargo Security, Carriers, and 
Restricted Merchandise Branch on October 28, 2020. The Cargo 
Security, Carriers, and Restricted Merchandise Branch calculated the 
time burden to GS-12 litigation specialists at 30 minutes to review 
each VRU extension requests. CBP used its estimates for Other CBP 
Employees at the GS-12 Step 3 level, as the best proxy for average 
hourly loaded wage rate. CBP based this wage on the FY 2021 salary 
and benefits of the national average of other CBP positions, which 
is equal to a GS-12, Step 3. Source: Email correspondence with CBP's 
Office of Finance on September 7, 2021.
---------------------------------------------------------------------------

Benefits From Eliminating CCR Extension Requests
    As discussed above, CBP expects that, on average, the CCR reviews 
about 42 requests for 30-day extensions every year. These amendments 
will have the effect of eliminating extension requests and their 
associated costs, constituting a net savings to all associated parties. 
CBP calculated these costs by combining the costs to vessel operators 
and the Federal Government for filing and reviewing these subsequent 
extension requests, for completing vessel repair entries, and for 
applying for relief from duty payments. CBP assumes that the time 
burden on vessel operators to file the subsequent extension requests 
(which are reviewed by the CCR) is one hour per extension request. Like 
extension requests to the VRU, CBP expects that the costs incurred by 
these extension requests to the CCR represent potential savings from 
the amendment. CBP expects that half of the 42 extension requests to 
the CCR (21) are completed by legal representatives on behalf of vessel 
operators and half (21) are completed by vessel agents.

                                     Table 3--Expected Annual Savings From Eliminating CCR 30-Day Extension Requests
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Estimated time    Estimated time
                                                    burden  to     burden to vessel    Cost to     Cost to vessel     Estimated
                                                      vessel            legal          vessel          legal         time burden    Cost to      Total
                                                    operators      representatives     agents     representatives      to CBP         CBP       savings
                                                     (hours)           (hours)                                         (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CCR Extension Requests.........................              21                 21      $1,169             $8,955            24      $2,354     $12,479
--------------------------------------------------------------------------------------------------------------------------------------------------------

    CBP calculated the savings from removing the subsequent requests 
for 30-day extensions based on the estimated burden hours for half of 
the CCR extension requests (21 hours, 1 hour per request), multiplied 
by the average loaded hourly wage rate for vessel legal representatives 
equaling $429.86).\21\ For the second half of the CCR extension 
requests, which CBP assumes are filed by vessel agents, CBP used the 
estimated burden hours for half of the CCR extension requests (21 
hours, 1 hour per request), multiplied by the average loaded hourly 
wage rate for vessel operators equaling $56.12.\22\ CBP calculated that 
the estimated annual savings to vessel operators by eliminating the CCR 
extension requests will be approximately $10,125.
---------------------------------------------------------------------------

    \21\ CBP determined this is the best estimate for private 
lawyers hired outside of a company and was obtained from an American 
Intellectual Property Law Association (AIPLA) study on the average 
hourly billing rate for lawyers. AIPLA's study surveyed intellectual 
property (IP) lawyers that were used in the 2017 Report of the 
Economic Survey. The median hourly billing rate for these lawyers 
was $400 in 2016 dollars, which is the most recent data available, 
and $424.75 after adjustment to 2019 dollars. American Intellectual 
Property Law Association. 2017 Report of the Economic Survey. 
``Billable Hours, Billing Rate, Dollars Billed (Q29, Q30, Q27).'' 
June 2017. CBP calculated the 2020 adjusted dollar amount using the 
percent increase in the Annual Average GDP Price Deflator (2015 = 
100) between 2016 and 2020. The annual average GDP Price Deflator 
value in 2016 = 101.0481, the annual average GDP Price Deflator 
value in 2020 = 108.5904, the percent increase was estimated to be 
around 7.4641% (108.5904/101.0481 = 1.074641 or 7.4641%). This 
percent increase was applied to the 2016 estimated hourly billing 
rate of $400 for external attorneys to estimate the 2020 hourly 
billing rate of $429.86 for external attorneys.
    \22\ CBP calculated this loaded wage rate by first multiplying 
the Bureau of Labor Statistics' (BLS) 2020 median hourly wage rate 
for Captains, Mates, and Pilots of Water Vessels ($37.08) by the 
ratio of BLS' average 2020 total compensation to wages and salaries 
for Transportation and Material Moving occupations (1.5134), the 
assumed occupational group for captains, mates, and pilots of water 
vessels, to account for non-salary employee benefits. These figures 
are in 2020 U.S. dollars and CBP assumes an annual growth rate of 0 
percent; the 2020 U.S. dollar values are equal to the 2021 U.S. 
dollar values.
---------------------------------------------------------------------------

    By eliminating the need for subsequent extension requests, the 
amendments will provide savings to the Federal Government, as the CCR 
staff would no longer need to review extension requests. The estimated 
annual savings from this portion of the

[[Page 45648]]

amendment to the Federal Government is based on the number of responses 
that must be reviewed (42) multiplied by the time burden to review and 
process each response (0.5625 hours) = 24 hours multiplied by the 
average hourly loaded wage rate for a CBP attorney-advisor ($98.10) = 
$2,354.23 24 The total savings from eliminating CCR 
extension requests was estimated by combining savings to both vessel 
operators ($10,125) and CBP ($2,354), which is approximately $12,479 
each year.
---------------------------------------------------------------------------

    \23\ Data obtained from the Cargo Security, Carriers, and 
Restricted Merchandise Branch on October 28, 2020, providing an 
estimated time burden to the CCR to review the secondary extension 
requests. Of the 80 requests reviewed in FY 2020, the estimated time 
burden was about 45 hours for attorney-advisors, equivalent to about 
0.5625 hours per request to review. A lack of detailed data for FY 
2019 and FY 2018 prevented CBP from obtaining exact time burdens to 
complete the requests made during those years. Therefore, CBP used 
the FY 2020 average time burden per request and applied that average 
to the total number of requests reviewed in FY 2019 and FY 2018 to 
estimate the annual expected time burden associated with secondary 
extension requests.
    \24\ CBP based this wage on the FY 2021 salary and benefits of 
the national average of CBP Attorney positions. Source: Email 
correspondence with CBP's Office of Finance on March 18, 2022.
---------------------------------------------------------------------------

    CBP expects the amendment will result in savings to the U.S. 
economy on an annual basis. CBP calculated the total savings as the 
combination of savings accrued by both the Federal Government and 
vessel operators from extending the filing deadlines to 150 days. CBP 
calculated the total savings by adding the expected savings to vessel 
operators generated by eliminating VRU extension requests ($36,934) and 
CCR extension requests ($10,125). CBP also included in total savings of 
the amendment, the added savings to the Federal Government generated by 
eliminating VRU extension requests ($5,796) and CCR extension requests 
($2,354). CBP estimates that the overall savings to the U.S. economy 
from this amendment will be approximately $55,209 each year.
    Overall, CBP expects that the impact from amending the deadlines 
from 90 to 150 days for vessel operators to provide completed vessel 
repair entries and applications for duty assessment relief does not 
result in a ``significant'' economic impact in any given year. After 
considering the impacts of the amendment, CBP expects there to be a net 
savings of approximately $55,209 annually to the U.S. economy. At the 
same time, CBP does not expect any costs associated with this 
amendment.

C. 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 an agency to prepare and make available to the public a 
regulatory flexibility analysis that describes the effect of a proposed 
rule on small entities (i.e., small businesses, small organizations, 
and small governmental jurisdictions) when the agency is required to 
publish a general notice of proposed rulemaking for a rule. Since a 
general notice of proposed rulemaking is not necessary for this rule, 
CBP is not required to prepare a regulatory flexibility analysis for 
this rule.

D. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that CBP consider the impact of paperwork and other information 
collection burdens imposed on the public. As there is no collection of 
information in this document, the provisions of the Paperwork Reduction 
Act are inapplicable.

V. Signing Authority

    This document is being issued in accordance with 19 CFR 0.2(a), 
which provides that the authority of the Secretary of the Treasury with 
respect to CBP regulations that are not related to customs revenue 
functions was transferred to the Secretary of Homeland Security 
pursuant to Section 403(l) of the Homeland Security Act of 2002. 
Accordingly, this final rule to amend such regulations may be signed by 
the Secretary of Homeland Security (or his or her delegate).

List of Subjects in 19 CFR Part 4

    Exports, Freight, Harbors, Maritime carriers, Oil pollution, 
Reporting and recordkeeping requirements, Vessels.

Amendments to the Regulations

    For the reasons set forth in the preamble, CBP amends part 4 of 
title 19 of the Code of Federal Regulations (19 CFR part 4) as set 
forth below.

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

0
1. The general authority citation for part 4 and the specific authority 
citation for Sec.  4.14 continues to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1415, 1431, 1433, 1434, 
1624, 2071 note; 46 U.S.C. 501, 60105.
* * * * *
    Section 4.14 also issued under 19 U.S.C. 1466, 1498; 31 U.S.C. 
9701.
* * * * *

0
2. In Sec.  4.14, revise paragraphs (f) and (i)(1) to read as follows:


Sec.  4.14  Equipment purchases for, and repairs to, American vessels.

* * * * *
    (f) Time limit for submitting evidence of cost. A complete vessel 
repair entry must be supported by evidence showing the cost of each 
item entered. If the entry is incomplete when submitted, evidence to 
make it complete must be received by the VRU as identified in paragraph 
(g) of this section within 150 calendar days from the date of vessel 
arrival. That evidence must include the final cost of repairs. In the 
event that all final cost evidence is not furnished within 150 days, or 
is of doubtful authenticity, the VRU may refer the matter to U.S. 
Immigration and Customs Enforcement to begin procedures to obtain the 
needed evidence. That agency may also investigate the reason for a 
failure to file or for an untimely submission. Unexplained or 
unjustified delays in providing CBP with sufficient information to 
properly determine duty may result in penalty action as specified in 
paragraph (j) of this section.
* * * * *
    (i) * * *
    (1) Applications for Relief. Relief from the assessment of vessel 
repair duty will not be granted unless an Application for Relief is 
filed with CBP. Relief will not be granted based merely upon a claim 
for relief made at the time of entry under paragraph (e) of this 
section. If relief is sought, an Application is not required to be 
presented in any particular format, but it must clearly present the 
legal basis for granting relief, as specified in paragraph (h) of this 
section. An Application must also state that all repair operations 
performed aboard a vessel during the one-year period prior to the 
current submission have been declared and entered. A valid Application 
is required to be supported by complete evidence as detailed in 
paragraphs (i)(1)(i) through (vi) and (i)(2) of this section. Except as 
further provided in this paragraph, the deadline for receipt of an 
Application and supporting evidence is 150 calendar days from the date 
that the vessel first arrived in the United States following foreign 
operations. Applications must be addressed and submitted by the vessel 
operator to the VRU and will be decided in that unit. The VRU may seek 
the advice of the Cargo Security, Carriers & Restricted Merchandise 
Branch, Office of Trade, in CBP Headquarters with regard to any 
specific item or issue which has not been addressed by clear precedent. 
If no Application is filed or if a submission which does not meet the 
minimal standards of an Application for Relief is

[[Page 45649]]

received, the duty amount will be determined without regard to any 
potential claims for relief from duty assessment (see paragraph (h) of 
this section). Each Application for Relief must include copies of:
* * * * *

Alejandro N. Mayorkas,
Secretary of Homeland Security.
[FR Doc. 2022-16233 Filed 7-28-22; 8:45 am]
BILLING CODE 9111-14-P