[Federal Register: March 21, 2003 (Volume 68, Number 55)]
[Rules and Regulations]
[Page 13835-13839]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr03-7]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 12
[T.D. 03-13]
RIN 1515-AD15
Entry of Certain Steel Products
AGENCY: Customs Service, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document adopts as a final rule, with some changes, a
proposed amendment to the Customs Regulations to set forth special
requirements for the entry of certain steel products. The steel
products in question are primarily those designated by the President in
Proclamation 7529 for increased duty or tariff-rate quota treatment
under the safeguard provisions of section 203 of the Trade Act of 1974.
The amendment requires the inclusion of an import license number on the
entry summary or foreign-trade zone admission documentation filed with
Customs for any steel product for which the U.S. Department of Commerce
requires an import license under its steel licensing and import
monitoring program.
EFFECTIVE DATE: Final rule effective: March 21, 2003.
FOR FURTHER INFORMATION CONTACT: Lisa Santana, Office of Field
Operations (202-927-4342).
SUPPLEMENTARY INFORMATION:
Background
On March 5, 2002, President Bush signed Proclamation 7529 ``To
Facilitate Positive Adjustment to Competition From Imports of Certain
Steel Products,'' which was published in the Federal Register (67 FR
10553) on March 7, 2002. The Proclamation was issued under section 203
of the Trade Act of 1974, as amended (19 U.S.C. 2253), and was in
response to determinations by the U.S. International Trade Commission
(ITC) under section 202 of the Trade Act of 1974, as
[[Page 13836]]
amended (19 U.S.C. 2252), that certain steel products were being
imported into the United States in such increased quantities as to be a
substantial cause of serious injury, or threat of serious injury, to
the domestic industries producing like or directly competitive
articles. The action taken by the President in the Proclamation
consisted of the implementation of certain ``safeguard measures,''
specifically, the imposition of a tariff-rate quota on imports of
specified steel slabs and an increase in duties on other specified
steel products. The Proclamation included an Annex setting forth
appropriate modifications to the Harmonized Tariff Schedule of the
United States (HTSUS) to effectuate the President's action. The
modifications to the HTSUS, which involved Subchapter III of Chapter 99
and included the addition of a new U.S. Note 11 and the addition of
numerous new subheadings to cover the affected steel products, were
made effective with respect to goods entered, or withdrawn from
warehouse for consumption, on or after March 20, 2002.
On March 5, 2002, the President issued a Memorandum to the
Secretary of the Treasury, the Secretary of Commerce, and the United
States Trade Representative entitled ``Action Under Section 203 of the
Trade Act of 1974 Concerning Certain Steel Products,'' which also was
published in the Federal Register (67 FR 10593) on March 7, 2002. The
Memorandum included an instruction to the Secretary of the Treasury and
the Secretary of Commerce to establish a system of import licensing to
facilitate the monitoring of imports of certain steel products. In
addition, the Memorandum instructed the Secretary of Commerce, within
120 days of the effective date of the safeguard measures established by
Proclamation 7529, to publish regulations in the Federal Register
establishing the system of import licensing.
On July 18, 2002, the International Trade Administration of the
Department of Commerce published in the Federal Register (67 FR 47338)
a proposed rule to establish a steel licensing and surge monitoring
system as instructed by the President in the March 5, 2002, Memorandum.
Under the Commerce proposal, all importers of steel products covered by
the President's section 203 action, including those products subject to
country exemptions or product exclusions, would be required to obtain a
steel import license and to provide the license information (that is,
the license number) to Customs except in the case of merchandise which
is eligible for informal entry under Sec. 143.21 of the Customs
Regulations (19 CFR 143.21). Commerce proposed to institute a
registration system for steel importers, and steel import licenses
would be issued to registered importers, customs brokers or their
agents through an automatic steel import licensing system. Once
registered, an importer or broker would submit the required license
application information electronically to Commerce, and the system
would then automatically issue a steel import license number for
inclusion on the entry summary documentation filed with Customs.
Although the Presidential Memorandum of March 5, 2002, vested
primary responsibility for the steel product import licensing and
monitoring procedures in the Secretary of Commerce, the Secretary of
the Treasury, through the U.S. Customs Service, is primarily
responsible for the promulgation and administration of regulations
regarding the importation and entry of merchandise in the United
States. Accordingly, on August 9, 2002, Customs published in the
Federal Register (67 FR 51800) a notice of proposed rulemaking to amend
the Customs Regulations to provide an appropriate regulatory basis for
the collection of the steel import license number on the entry summary
documentation in accordance with the proposed regulatory standards
promulgated by the Department of Commerce. The proposed amendment
involved the addition of a new Sec. 12.145 (19 CFR 12.145) to require
the inclusion of a steel import license number on the entry summary in
any case in which a steel import license number is required to be
obtained under regulations promulgated by the Department of Commerce.
The August 9, 2002, notice included in the preamble a discussion of
the potential consequences under the importer's bond for a failure to
provide the required steel import license number to Customs on a timely
basis and included a statement that, after new Sec. 12.145 has been
adopted as a final rule, Customs would publish appropriate guidelines
which could outline circumstances in which liquidated damage claims in
these cases may be reduced to $50 for a late filing of the required
information or to $100 in the case of a complete failure to file the
information. The August 9, 2002, notice also invited the public to
submit written comments on the proposed regulatory amendment for
consideration by Customs prior to taking final action of the proposal.
On December 31, 2002, the International Trade Administration of the
Department of Commerce published in the Federal Register (67 FR 79845)
a final rule document to add new regulations implementing the Steel
Import Licensing and Surge Monitoring program. Those regulations, set
forth at 19 CFR part 360, consist of eight sections (Sec. Sec.
360.101-360.108) and reflect, with some changes, the proposals outlined
in the proposed rule published by the Department of Commerce on July
31, 2002. Those changes reflected in the final regulatory texts adopted
by Commerce that have a substantive impact on the text of Sec. 12.145
as proposed by Customs are identified in the discussion of comments on
the Customs proposal set forth below.
Discussion of Comments
Three commenters responded to the solicitation of comments in the
August 9, 2002, notice of proposed rulemaking. Those comments are
summarized and responded to below.
Comment: One commenter asserted that foreign-trade zone (FTZ)
activities are part of the U.S. economic territory (even though they
are legally defined as outside the customs territory of the United
States) and that FTZ-stored steel constitutes part of U.S. steel
inventories. This commenter therefore argued that FTZ activities must
be included in the steel import licensing system and, further, that
this FTZ license requirement should be imposed once, that is, at the
time of admission of the steel into the FTZ.
Customs response: Customs notes that the issue raised by this
commenter concerns the scope of the steel import licensing program
which is a matter for which the Department of Commerce, rather than
Customs, is responsible; therefore, Customs has no authority to impose
the standard suggested by this commenter. However, Customs also notes
in this regard that whereas under the July 18, 2002, Department of
Commerce proposals a license would have been required for steel
products twice, that is, as they entered and as they left an FTZ, the
Commerce regulations adopted in the December 31, 2002, final rule
document have addressed the concern raised by this commenter. Section
360.101(c) of those regulations specifically provides that all
shipments of covered steel products into FTZs will require an import
license prior to the filing of FTZ admission documents, that the
license number(s) must be reported on the application for FTZ admission
and/or status designation (Customs Form 214) at the
[[Page 13837]]
time of filing, and that a further steel license will not be required
for shipments from FTZs into the commerce of the United States.
In order to reflect the standard regarding FTZ transactions set
forth in the Commerce regulation referred to above, Customs in this
final rule document has redrafted proposed Sec. 12.145 to accommodate
a reference to inclusion of the appropriate license number on Customs
Form 214 at the time of filing with Customs. Thus, under the revised
text, the import license number must be provided to Customs in two
basic circumstances: (1) on Customs Form 7501 (or an electronic
equivalent) in the case of entered merchandise; and (2) on Customs Form
214 in the case of merchandise admitted into an FTZ. In addition, the
opening exception clause regarding informal entry that was included in
the proposed text has not been retained in the revised Sec. 12.145
text because it is covered in the license issuance standards
promulgated by Commerce and thus does not have to be repeated here.
Comment: A commenter stated that in administrative message 02-0910
dated July 19, 2002, Customs presented a proposed methodology for
enforcing compliance with the proposed licensing system subject to the
August 9, 2002, Customs notice of proposed rulemaking. Under this
methodology, foreign steel subject to licensing may enter a Customs
bonded warehouse or be covered by a temporary importation bond (TIB)
without a license; the license would be optional for both the warehouse
and TIB entries. Stating that this optional treatment is inconsistent
with the purpose of the licensing system, this commenter argued that
all foreign steel subject to the licensing requirements should be
treated identically, regardless of whether the steel is placed in a
bonded facility, covered by a TIB, or admitted into an FTZ, and that
this identical treatment should require the steel to be licensed and
counted when it is admitted into an FTZ, entered into a bonded
warehouse, or entered on a TIB.
Customs response: As regards the administrative message referred to
by this commenter, Customs notes that it was intended only to advise
the trade on the system requirements for filing the steel license
information (number) when entry filing is effected electronically in
the Automated Commercial System (ACS) through the automated broker
interface (ABI). The administrative message was issued in recognition
of the considerable lead time that is necessary in order to reprogram
ABI user software and reflected the best information available at that
time from the Department of Commerce regarding the steel import
licensing program requirements, that is, the proposals published by
Commerce on July 18, 2002.
As indicated in the preceding comment discussion regarding FTZs,
the primary responsibility for the steel import licensing program rests
with the Department of Commerce and, accordingly, Customs has no
authority to impose standards that are at variance with the program
requirements properly established by Commerce. Customs further notes
that, in the final regulations published by Commerce on December 31,
2002, Sec. 360.101(e) provides that import licenses are not required
in the case of TIB entries, transportation and exportation (T&E)
entries, and entries into a bonded warehouse, and that a license is
required at the time of entry summary in the case of a covered steel
product that is withdrawn from a bonded warehouse. In view of this
regulatory standard, Customs cannot adopt the ``identical'' treatment
principle suggested by this commenter, and the text of Sec. 12.145 set
forth in this final rule document has been modified to refer
specifically to merchandise ``entered, or withdrawn from warehouse for
consumption, in the customs territory of the United States'' in order
to exclude from coverage TIB, T&E, and warehouse entry transactions.
Comment: A commenter referred to a statement that ``[a]ll imports
of steel products * * * will be required to obtain a steel import
license and provide the license number to U.S. Customs on the entry
summary.'' This commenter raised the issue regarding the point at which
a material is considered to be ``imported'' and suggested that, in the
case of warehouse entries, that point should be when the material is
withdrawn from the warehouse and a consumption entry is filed and not
when the material is off-loaded under a warehouse entry and maintained
in the bonded warehouse.
Customs response: The statement referred to by this commenter
appeared in the proposed rule document published by the Department of
Commerce on July 18, 2002, rather than in the notice of proposed
rulemaking published by Customs on August 9, 2002. The statement was
not set forth in that document as proposed regulatory text and
therefore appears to have been directed to the general thrust of the
steel import licensing program. Customs further notes that under the
program as developed by Commerce, the mere fact of importation is not
controlling as regards the licensing and license number reporting
requirements. Rather, as already indicated in this comment discussion,
the Department of Commerce proposals and final regulatory texts, as
well as the text of Sec. 12.145 as proposed and as set forth in this
final rule document, make it clear that those requirements do not arise
at the time of entry into a bonded warehouse but rather only upon
withdrawal from the warehouse when Customs Form 7501 will be filed.
Comment: A commenter recommended that the Customs entry number not
be a requirement at the time of applying for a license unless it is
available at the time of filing. This commenter referred to two
situations in which it would not be possible to provide the proper
entry number when applying for the license. One situation involves
Customs bonded warehouses, where the entry number assigned at the time
of arrival in the United States is not the same as the entry number
that applies when duty is eventually paid. The other situation involves
split shipment situations where a portion of the cargo covered by one
invoice or bill of lading is discharged and moved overland separately
from the rest of the cargo, with the result that multiple entries will
be filed for the merchandise covered by the one invoice or bill of
lading.
Customs response: Customs first notes that the observations made by
this commenter relate to the license issuance process which is
controlled by the Department of Commerce regulations and not by the
regulations promulgated by Customs. Moreover, Customs notes that, in
the final regulations published by Commerce on December 31, 2002, Sec.
360.103(b) provides that license filers are not required to report a
Customs entry number to obtain an import license but are encouraged to
do so if the entry number is known at the time of filing for the
license. Accordingly, the concern expressed by this commenter has been
addressed in the Commerce final regulations.
Comment: A commenter referred to a statement that ``[t]he
applicable license number(s) must cover the total quantity of steel
entered and should match the information provided on the Customs entry
summary.'' This commenter argued that it would be difficult to meet
this requirement in some cases involving warehouse entries. For
example, where goods are withdrawn for export to Canada, the inclusion
of those quantities on an application for a license at the time of
``entry'' into the port would have an impact on the validity of the
data collected. This
[[Page 13838]]
commenter also noted the possibility that a warehouse entry could be
open for an extended period of time, requiring the government to
monitor the open license for months or even years.
Customs response: The statement referred to by this commenter
appeared in the proposed rule document published by the Department of
Commerce on July 18, 2002, rather than in the notice of proposed
rulemaking published by Customs on August 9, 2002, and this statement
was not set forth in that document as proposed regulatory text. A
similar statement does appear as regulatory text in the final rule
document published by Commerce on December 31, 2002: The last sentence
of Sec. 360.101(a)(2) reads ``[t]he applicable license(s) must cover
the total quantity of steel entered and should cover the same
information provided on the Customs entry summary.'' This sentence
appears in the context of a discussion of when a single license may
cover multiple products and when separate licenses for steel entered
under a single entry are required, and it immediately follows the
statement that ``[a]s a result, a single Customs entry may require more
than one steel import license.'' The regulatory text in question thus
relates to the scope of the licensing procedure and therefore falls
directly under the authority of Commerce rather than that of Customs.
Customs would also suggest that the potential problem outlined by
the commenter regarding goods withdrawn from warehouse for shipment to
Canada could be avoided by controlling the point at which application
for the license is made. In other words, even though under 19 CFR
181.53 goods withdrawn from a U.S. duty-deferral program (such as a
Customs bonded warehouse) for exportation to Canada must be treated as
entered or withdrawn for consumption, and thus a Customs Form 7501 must
be filed as a consequence of that exportation, the potential problem
outlined by this commenter could be avoided simply if the importer did
not apply for the license when the steel is entered in the warehouse
but rather only when it, or any part of it, is withdrawn for shipment
to Canada. This approach would also address the ``open license'' issue
raised by this commenter.
Comment: One commenter raised an issue regarding the impact of the
proposal on quota monitoring. The commenter specifically asked whether
the licenses will play a role in tracking the quota for products
excluded from the safeguard action that include a quota mechanism. This
commenter suggested that the answer to this question would greatly
impact both the timing for filing the license application and what
information might need to be included on the application.
Customs response: Customs is simply responsible for collecting the
license number and any related quota or other data required at the time
of entry and for providing that data to the Department of Commerce.
Responsibility for all other tracking aspects of the data collected
lies with the Commerce and therefore is outside the regulatory
authority exercised by Customs.
Comment: A commenter stated that the sole enforcement authority
that Customs has regarding the proposed rule is the liquidated damages
provision under 19 CFR 113.62. This commenter further argued that since
Customs can mitigate liquidated damage claims, Customs must design its
mitigation guidelines with respect to steel import licenses to ensure
that importers will have a strong incentive to comply with the
regulatory requirements. The commenter also referred to the preamble
discussion in the August 9, 2002, notice of proposed rulemaking
regarding future mitigation guidelines that would include a reduction
of liquidated damage claims to $50 for a late filing of the required
information or $100 in the case of a complete failure to file the
information. Arguing that these amounts are negligible, the commenter
stated that Customs should adopt guidelines similar to those which
governed the entry of products from Canada under the 1996 Softwood
Lumber Agreement, that is, mitigation to between 25 and 50 percent of
the claim, but not less than $500 and not more than $3,000 per entry,
and no mitigation if the importer completely failed to provide the
required information.
Customs response: Customs does not agree that the mitigation
standards applied to cases involving softwood lumber from Canada are
appropriate in the present context. Subject to any changes that may be
reflected in any published mitigation guidelines regarding the steel
import license program, Customs remains of the opinion that the
mitigated amounts reflected in the August 9, 2002, notice of proposed
rulemaking are generally appropriate in this context.
Conclusion
Based on the final regulations adopted by the Department of
Commerce and the analysis of the comments received as set forth above,
Customs believes that proposed Sec. 12.145 should be adopted as a
final regulation with the changes to the text as discussed above.
Executive Order 12866
This document does not meet the criteria for a ``significant
regulatory action'' as specified in E.O. 12866.
Regulatory Flexibility Act
Pursuant to the provisions of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), it is certified that this amendment will not have
a significant economic impact on a substantial number of small
entities. Customs believes that the amendment, which involves the
addition of only one data element to each of two existing required
Customs forms, will have a negligible impact on importer operations.
Accordingly, the amendment is not subject to the regulatory analysis or
other requirements of 5 U.S.C. 603 and 604.
Paperwork Reduction Act
The collections of information in the current regulations have
already been approved by the Office of Management and Budget (OMB) in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507)
and assigned OMB control number 1515-0065 (Entry summary and
continuation sheet) and OMB control number 1515-0086 (Application for
foreign-trade zone admission and/or status designation). This rule does
not involve any material change to the existing approved information
collections.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number assigned by OMB.
Drafting Information
The principal author of this document was Francis W. Foote, Office
of Regulations and Rulings, U.S. Customs Service. However, personnel
from other offices participated in its development.
List of Subjects in 19 CFR Part 12
Bonds, Customs duties and inspection, Entry of merchandise,
Imports, Prohibited merchandise, Reporting and recordkeeping
requirements, Restricted merchandise.
Amendment to the Regulations
For the reasons stated in the preamble, Part 12 of the Customs
Regulations (19 CFR Part 12) is amended as set forth below.
PART 12--SPECIAL CLASSES OF MERCHANDISE
1. The authority citation for Part 12 continues to read in part as
follows:
[[Page 13839]]
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 23,
Harmonized Tariff Schedule of the United States (HTSUS)), 1624;
* * * * *
2. A new center heading and new Sec. 12.145 are added to read as
follows:
Steel Products
Sec. 12.145 Entry or admission of certain steel products.
In any case in which a steel import license number is required to
be obtained under regulations promulgated by the U.S. Department of
Commerce, that license number must be included:
(a) On the entry summary, Customs Form 7501, or on an electronic
equivalent, at the time of filing, in the case of merchandise entered,
or withdrawn from warehouse for consumption, in the customs territory
of the United States; or
(b) On Customs Form 214, at the time of filing under Part 146 of
this chapter, in the case of merchandise admitted into a foreign trade
zone.
Robert C. Bonner,
Commissioner of Customs.
Approved: February 25, 2003.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 03-6757 Filed 3-20-03; 8:45 am]
BILLING CODE 4820-02-P