19 August 1997
Source: http://www.access.gpo.gov/su_docs/aces/aces140.html

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[Federal Register: August 19, 1997 (Volume 62, Number 160)]
[Proposed Rules]
[Page 44102-44103]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19au97-13]

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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 118

RIN 1515-AC07


Centralized Examination Stations

AGENCY: Customs Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations
regarding the establishment and scope of operation of Centralized
Examination Stations (CESs). To reflect Customs interest in maximizing
compliance with export control laws and regulations without unduly
impeding the movement of outbound merchandise, it is proposed to expand
the definition of a CES to allow merchandise intended to be exported as
well as imported merchandise to be handled by a CES. Further, Customs
is proposing to allow for the inspection of outbound cargo at CESs at
ports other than the shipment's designated port of exit. To make the
CES application procedure more amenable to local conditions, Customs is
proposing more flexibility regarding the time frame for an applicant to
conform a facility to meet Customs security or other physical or
equipment requirements. Lastly, Customs is proposing to amend one of
the criteria on the application to operate a CES because Customs
believes it is too subjective. These changes are proposed in order to
keep the CES program responsive to both Customs and the trade
community's demands for the facilitated examinations of trade
merchandise.

DATES: Comments must be received on or before October 20, 1997.

ADDRESSES: Comments (preferably in triplicate) must be submitted to the
U.S. Customs Service, ATTN: Regulations Branch, Franklin Court, 1301
Constitution Avenue, NW., Washington, DC 20229, and may be inspected at
the Regulations Branch, 1099 14th Street, NW., Suite 4000, Washington,
DC.

FOR FURTHER INFORMATION CONTACT:

    For Policy Inquiries: Steven T. Soggin, Office of Field Operations,
Trade Compliance, (202) 927-0765;
    For Legal Inquiries: Jerry Laderberg, Office of Regulations and
Rulings, Entry Procedures and Carriers Branch, (202) 482-7052.

SUPPLEMENTARY INFORMATION:

Background

    In T.D. 93-6 (58 FR 5596) Customs amended the Customs Regulations
(19 CFR Chapter 1) to create a new Part 118 that set forth the
regulatory framework for the establishment, operation, and termination
of Centralized Examination Stations (CESs). A CES is a privately-
operated facility, not in the charge of a Customs officer, at which
imported merchandise is made available to Customs officers for physical
examination.
    Currently, CESs are authorized to provide inspectional facilities
for Customs officers to examine only imported merchandise. However,
because merchandise intended to be exported often is required to be
examined, Customs would like CESs to be authorized to provide
inspectional facilities for this merchandise as well. Customs has
statutory authority to inspect merchandise intended to be exported
pursuant to 22 U.S.C. 401, concerning the exportation of munitions and
other articles, and 31 U.S.C. 5317, concerning the search and
forfeiture of monetary instruments. Further, Customs broad authority to
conduct warrantless examinations of outbound merchandise has long been
recognized by the courts. See e.g., United States v. Udofot, 711 F.2d
831, 839 (8th Cir. 1983), cert. denied, 464 U.S. 896 (1983); United
States v. Ajlouny, 629 F.2d 830, 834 (2d Cir. 1980), cert. denied, 449
U.S. 111 (1981); United States v. Stanley, et al., 545 F.2d 661, 665-67
(9th Cir. 1976), cert. denied, 436 U.S. 917 (1978); cf., California
Bankers Ass'n v. Shultz, 416 U.S. 21, 63 (1974). Accordingly, to
reflect the authority to inspect merchandise intended to be exported,
the authority citation for Part 118 is revised. Also, Customs proposes
to amend the first sentence of Sec. 118.1 by removing the word
``imported'' to allow CESs to provide inspectional facilities for
merchandise regardless of whether it is inbound or outbound.
    Customs ability to inspect at inland ports shipments scheduled for
export from another port is authorized at the functional equivalent of
the border. See, United States v. Udofot, 711 F.2d 831 (8th Cir. 1983),
cert. denied, 464 U.S. 896 (1983); United States v. Hernandez-Salazar,
813 F.2d 1126 (11th Cir. 1987). To conduct such inspections at
locations other than the port of export, the exportation must be
imminent and the goods committed to export. Accordingly, should a
carrier, freight forwarder, or shipper wish to have its shipment
inspected at a CES at a port other than the designated port of export,
sufficient evidence that exportation is imminent and that the goods are
committed to export must be made available to Customs. Alternatively,
evidence of the shipper's consent to Customs inspection at an inland
port may be presented. To advise the exporting community of Customs
requirements for inspecting merchandise declared for export at a port
other than the port of exit, Customs proposes to further amend
Sec. 118.1 by adding a new sentence at the end that provides that
either proof of the shipper's consent to the inspection must be
furnished or transportation documents must accompany outbound shipments
to evidence that the exportation of the goods is imminent and that the
goods are committed to export.
    Pursuant to the provisions of 19 CFR 118.4(g), the CES operator is
required to maintain a custodial bond. The terms and conditions of the
custodial bond obligate the bond principal to accept only merchandise
authorized under Customs Regulations (see 19 CFR 113.63(a)(2)), and
keep safe any merchandise placed in its custody (see 19 CFR
113.63(b)(2)). A proposed amendment to Sec. 118.4(g) makes it clear
that the CES operator is authorized to accept and must keep safe all
merchandise that is delivered for examination. Accordingly, the
custodial bond will guarantee the receipt and safekeeping of
merchandise delivered for an import or export examination.
    Regarding the application procedure to operate a CES, paragraph (b)
of Sec. 118.11 currently provides that where a significant capital
expenditure would be required in order for an existing facility to meet
security or other physical or equipment requirements necessary for the
CES operation, an applicant may

[[Page 44103]]

request in the application, and the port director may allow, up to an
additional 30 calendar days after tentative selection to conform the
facility to such requirements. Because compliance with the 30-calendar-
day time-frame requirement for significant capital expenditures is
subject to building permits and other requirements of a local nature,
which may not be forthcoming within the time period specified, this
requirement imposes a burdensome condition in the application
procedure, which may operate to dissuade many potential applicants from
applying to become CES operators. Accordingly, Customs proposes to
remove this requirement and instead allow the time frames for making
capital improvements to a facility to be addressed locally.
    Further, paragraph (g) of this same section currently provides that
an applicant must present any information showing the applicant's
experience in international cargo operations and knowledge of Customs
procedures and regulations, ``or a commitment to acquire that
knowledge.'' Because a demonstrable knowledge of such operations,
procedures, and regulations is essential prior to selection as a CES
operator, the alternative ``commitment to acquire that knowledge''
language in the regulation is too subjective a standard by which to
measure an applicant's credentials to operate a CES. Accordingly,
Customs proposes to remove this language.

Comments

    Before adopting this proposal as a final rule, consideration will
be given to any written comments timely submitted to Customs. Comments
submitted will be available for public inspection in accordance with
the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4 of the Treasury
Department Regulations (31 CFR 1.4), and Sec. 103.11(b) of the Customs
Regulations (19 CFR 103.11(b)), on regular business days between the
hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch, U.S.
Customs Service, 1099 14th Street, NW., Suite 4000, Washington, DC.

Regulatory Flexibility Act

    Pursuant to provisions of the Regulatory Flexibility Act (5 U.S.C.
601 et seq.), it is certified that, if adopted, the proposed amendments
will not have a significant economic impact on a substantial number of
small entities, because the amendments would operate to confer new
benefits on potential CES operations, by allowing them to perform more
services. Accordingly, the proposed amendments are not subject to the
regulatory analysis or other requirements of 5 U.S.C. 603 and 604.

Executive Order 12866

    This document does not meet the criteria for a ``significant
regulatory action'' as defined in E.O. 12866.

List of Subjects in 19 CFR Part 118

    Administrative practice and procedure, Customs duties and
inspection, Examination stations, Exports, Imports, Licensing,
Reporting and recordkeeping requirements.

Proposed Amendment

    For the reasons stated above, it is proposed to amend part 118,
Customs Regulations (19 CFR part 118), as set forth below:

PART 118--CENTRALIZED EXAMINATION STATIONS

    1. The authority citation for part 118 is revised to read as
follows:

    Authority: 19 U.S.C. 66, 1499, 1623, 1624; 22 U.S.C. 401; 31
U.S.C. 5317.

    2. In Sec. 118.1, the first sentence is amended by removing the
word ``imported'', and a new sentence is added at the end to read as
follows:

Sec. 118.1  Definition.

    * * * To present outbound cargo for inspection at a CES at a port
other than the shipment's designated port of exit, either proof of the
shipper's consent to the inspection must be furnished or a complete set
of transportation documents must accompany the shipment to evidence
that exportation of the goods is imminent and that the goods are
committed to export, thereby, making them subject to Customs
examination.
    3. In Sec. 118.4, paragraph (g) is amended by adding a new second
sentence to read as follows:

Sec. 118.4  Responsibilities of a CES operator.

* * * * *
    (g) * * * The CES operator will accept and keep safe all
merchandise delivered to the CES for examination. * * *
* * * * *
    4. In Sec. 118.11, the second sentence in paragraph (b) is amended
by removing the words ``, and the port director may allow, up to an
additional 30 calendar days after tentative selection to conform the
facility to such requirements, but in such a case the agreement
referred to in Sec. 118.3 of this part shall not be executed until
those requirements are met'' and adding, in their place, the words
``time to conform the facility to such requirements. The agreement
referred to in Sec. 118.3 of this part shall not be executed, in any
event, until the facility is conformed to meet the requirements''; and
paragraph (g) is amended by removing the words ``, or a commitment to
acquire that knowledge''.

    Approved: June 3, 1997.
Samuel H. Banks,
Acting Commissioner of Customs.
[FR Doc. 97-21843 Filed 8-18-97; 8:45 am]
BILLING CODE 4820-02-P
