[Federal Register Volume 78, Number 129 (Friday, July 5, 2013)]
[Rules and Regulations]
[Pages 40388-40391]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16223]



[[Page 40388]]

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

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Part 12

[Docket No. USCBP-2012-0004; CBP Dec. 13-12]
RIN 1515-AD82


Inadmissibility of Consumer Products and Industrial Equipment 
Noncompliant With Applicable Energy Conservation or Labeling Standards

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

ACTION: Final rule.

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

SUMMARY: This document adopts as a final rule, with changes, proposed 
amendments to the U.S. Customs and Border Protection (CBP) regulations 
that provide that CBP will refuse admission into the customs territory 
of the United States to consumer products and industrial equipment 
found to be noncompliant with energy conservation and labeling 
standards pursuant to the Energy Policy and Conservation Act of 1975 
(EPCA) and its implementing regulations. The final rule further 
provides that, upon written or electronic notice from the Department of 
Energy (DOE) or the Federal Trade Commission (FTC), CBP may 
conditionally release under bond to the importer such noncompliant 
products or equipment for purposes of reconditioning, re-labeling, or 
other action so as to bring the subject product or equipment into 
compliance. This regulation implements the mandate of the EPCA, as 
amended.

DATES: Effective August 5, 2013.

FOR FURTHER INFORMATION CONTACT: Virginia H. McPherson, Trade 
Processes, Trade Policy and Programs, Office of International Trade, 
(202) 863-6563; William R. Scopa, Partner Government Agencies, Office 
of International Trade, (202) 863-6544.

SUPPLEMENTARY INFORMATION: 

Background

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA), Public Law 94-163 (42 U.S.C. 6291-6309), as amended, 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles, a program covering most major household appliances. 
Similarly, Title III, Part C of the EPCA, (42 U.S.C. 6311-6317) as 
amended, added by Public Law 95-619, Title IV, section 441(a), 
established the Energy Conservation Program for Certain Industrial 
Equipment, a program covering industrial equipment.
    Section 6302(a) of title 42 of the United States Code (42 U.S.C. 
6302(a)), and its implementing regulations, prescribe the specific 
energy conservation and labeling standards applicable to manufacturers 
and, in some instances, private labelers, distributors, and retailers. 
Sections 6301 and 6316 of title 42 of the United States Code (42 U.S.C. 
6301 and 6316) require the Secretary of the Treasury to issue 
regulations refusing admission into the customs territory of the United 
States to covered products or covered equipment offered for importation 
in violation of 42 U.S.C. 6302. The statute also provides the Secretary 
with the discretion to authorize the importation of covered products or 
covered industrial equipment under terms and conditions (including the 
furnishing of a bond) that ensure that the merchandise will not violate 
42 U.S.C. 6302.
    On March 26, 2012, U.S. Customs and Border Protection (CBP) 
published in the Federal Register (77 FR 17364) a proposal to amend 
part 12 of title 19 of the Code of Federal Regulations (19 CFR Part 12) 
by adding a new Sec.  12.50, which provides that CBP will refuse 
admission into the customs territory of the United States to imports of 
products or equipment covered by the EPCA and its implementing 
regulations, for which CBP has received a written determination of 
noncompliance with 42 U.S.C. 6302 from the Department of Energy (DOE) 
or the Federal Trade Commission (FTC), as applicable.
    This proposed regulation's goal was to implement the mandate of the 
EPCA to refuse admission into the United States of certain consumer 
products and industrial equipment that do not meet applicable labeling 
or energy conservation requirements.
    Proposed Sec.  12.50 was drafted to be consistent with Sec.  
429.5(b) of title 10 of the Code of Federal Regulations (10 CFR 
429.5(b)), which is a DOE regulation that further notifies the 
importing public that any covered product or equipment offered for 
importation that does not meet the applicable energy conservation 
standards set forth in 42 U.S.C. 6291-6317 will be refused admission 
into the customs territory of the United States under CBP issued 
regulations.
    CBP solicited comments on the proposed rulemaking.

Discussion of Comments

    Eight commenters responded to the solicitation of public comment. A 
description of the comments received, together with CBP's analyses, is 
set forth below.
    Comment:
    One commenter recommends that U.S. government agencies provide 
training to importers on purchasing goods and industrial equipment that 
meet relevant applicable energy conservation and labeling admissibility 
standards.
    CBP Response:
    CBP agrees that importers should be aware of the EPCA requirements 
applicable to their respective products and equipment and exercise 
reasonable care in the importation thereof. While it is not within 
CBP's purview to provide such training, we note that there is extensive 
information on EPCA requirements at the Department of Energy Web site 
http://www1.eere.energy.gov/buildings/appliance_standards. DOE has 
provided training regarding DOE's appliance standards regulatory 
program to groups of manufacturers through manufacturing trade 
associations and will provide training upon request. Trade groups may 
request EPCA compliance training by contacting DOE at 
energyefficiencyenforcement@hq.doe.gov.
    Comment:
    Two commenters are of the view that the 30-day conditional release 
period is not long enough for an importer to bring non-compliant 
merchandise into compliance with 42 U.S.C. 6302 and its implementing 
regulations.
    CBP Response:
    Non-compliant covered products and equipment that DOE or FTC deems 
to be in violation of 42 U.S.C. 6302 will be refused admission, unless 
DOE or FTC recommends release to the importer's premises to bring such 
products and equipment into compliance in which case CBP may 
conditionally release such products for such purpose. 77 FR 17365. In 
addition, as noted in Sec.  12.50(d), conditionally released covered 
imports are subject to the jurisdiction of DOE and/or FTC. Paragraph 
(d)(2) of this section provides that the conditional release period may 
be extended if CBP receives, within the initial 30-day conditional 
release period or any subsequent authorized extension thereof, a 
written or electronic recommendation from DOE or FTC stating the reason 
for a further extension and the anticipated length of the extension.
    Comment:
    One commenter expresses concern that administering the proposed 
rule

[[Page 40389]]

would be overly burdensome on CBP and detract from the agency's other 
responsibilities under its mission.
    CBP's Response:
    As part of CBP's mission, CBP assists other government agencies in 
enforcing their regulatory requirements on imports and exports. CBP's 
administrative obligations under the rule will not cause an undue 
burden on CBP's resources or importers, in part because CBP will have 
access to substantive advice provided by DOE or FTC.
    Comment:
    One commenter is of the view that the proposed rule fails to comply 
with the statutory requirement to ensure that non-compliant covered 
products and equipment are refused admission into the customs territory 
of the United States, noting that section 331 of the EPCA requires 
implementation of an affirmative program to ensure at the time that a 
covered product or equipment is proposed for importation that the goods 
meet the applicable efficiency standards and labeling requirements. 
Specifically, the commenter views the proposed rule as arbitrary and 
capricious because it evades CBP's nondiscretionary statutory 
responsibility to refuse admission to noncompliant products or 
equipment by relying on DOE and FTC's discretionary authority to 
identify products and equipment as noncompliant. The commenter notes 
that even if those agencies had the resources to identify noncompliant 
products and equipment, the statute does not require them to do so. The 
commenter maintains that the proposed rule also fails to impose 
measures appropriate to ensure that such products and equipment will 
come into compliance or be exported or abandoned to the United States.
    CBP Response:
    CBP disagrees with the commenter's argument that the proposal did 
not meet its obligation under the statute. The proposed rule does set 
forth a regulatory scheme whereby CBP will refuse admission to covered 
products and equipment that do not comply with the EPCA.
    Nevertheless, in an effort to clarify the procedures by which a 
refusal of admission may take place, this document adds language in the 
final rule to 19 CFR 12.50(b) that states that CBP may make a finding 
on its own that a covered product or equipment is noncompliant without 
having received a prior written noncompliance notice from DOE or FTC. 
In these situations, CBP will confer with DOE or FTC, as applicable, as 
to disposition of the product or equipment.
    Comment:
    One commenter states that CBP cannot reasonably rely exclusively on 
DOE or FTC to identify and notify CBP of noncompliant products and 
equipment. The commenter further states that under 42 U.S.C. 6305, a 
citizen may establish that products are noncompliant by bringing a 
citizen's suit and yet, pursuant to the proposed rule, CBP would not 
refuse admission to such products and equipment under these 
circumstances.
    CBP Response:
    As noted above, CBP is adding language in Sec.  12.50(b) to include 
a statement indicating that CBP will refuse admission to a covered 
product or equipment found to be noncompliant with the EPCA even if DOE 
or FTC has not issued a determination of noncompliance for the good. 
Therefore, the agency's reliance on DOE and FTC is not exclusive.
    Comment:
    One commenter maintains that the proposed rule's requirement that 
DOE and FTC not only name the regulated party that is in violation but 
also describe the product or equipment in sufficient detail to enable 
CBP to identify noncompliant covered articles has not been adequately 
explained and could pose an irrational bar to enforcement.
    CBP Response:
    CBP does not agree that this requirement will preclude meaningful 
enforcement. CBP notes, for example, that DOE's current notices of 
noncompliance already typically provide far more information than 
simply the name of the regulated party that is in violation. DOE has 
access to CBP entry information, which includes parties involved in the 
importation of products regulated by DOE, and which DOE can compare to 
information in its DOE Compliance and Certification Management System.
    Comment:
    One commenter suggests that CBP must require importers to provide 
proof of compliance or other information sufficient to enable the use 
of existing DOE and FTC resources to identify noncompliant products and 
facilitate their return to CBP. CBP should create a system that is 
linked with the DOE Compliance and Certification Management System 
database and require that importers identify their proposed import as 
in compliance with applicable standards and labeling requirements and 
certified as such in the database.
    CBP Response:
    CBP acknowledges that linked automated systems would facilitate 
enforcement of the statute. In this regard, it is noted that CBP is 
actively participating in the development of automated systems in which 
participating government agencies, including DOE, can share data in 
order to facilitate cargo processing and enhance supply chain security.
    Comment:
    One commenter expressed approval of the proposed rulemaking, noting 
that it puts everyone on a level playing field.
    CBP Response:
    CBP agrees.
    Comment:
    One commenter suggests that CBP amend the proposed rule to include 
an exception for products and equipment intended for export only or 
transshipment.
    CBP Response:
    As noted above, the provisions of 42 U.S.C. 6301 empower the 
Secretary of the Treasury to authorize the importation of such covered 
products and equipment upon such terms and conditions (including the 
furnishing of a bond) as may appear to him appropriate to ensure that 
such covered products and equipment will not violate section 6302 of 
this title. CBP agrees that imported products and equipment not entered 
for consumption should be excluded from the definition of ``covered 
import.'' For example, products and equipment may be entered into 
customs bonded warehouses and withdrawn for exportation (see 19 U.S.C. 
1557), admitted into Foreign Trade Zones and then transferred for 
exportation in zone-restricted status (see 19 U.S.C. 81c), or entered 
for transportation and exportation under bond (see 19 U.S.C. 1553). 
Therefore, CBP is including language in the final rule in Sec.  
12.50(a) to clarify that ``covered imports'' means those products and 
equipment for which an entry for consumption has been filed, including 
those products and equipment withdrawn from warehouse for consumption 
or foreign merchandise entered for consumption from a foreign trade 
zone.

Conclusion

    After analysis of the comments and further review of the matter, 
CBP has determined to adopt as final, with the changes noted above in 
Sec. Sec.  12.50(a) and (b) (19 CFR 12.50(a) and (b)), the proposed 
rule published in the Federal Register (77 FR 17364) on March 26, 2012. 
This final rule also includes non-substantive editorial changes which 
consist of: A merging of proposed paragraphs (b) and (c) to clarify the 
fact that CBP's ``action'' is a ``refusal of admission''; a newly 
redesignated

[[Page 40390]]

paragraph (c) which sets forth the manner by which DOE or FTC will 
notify CBP about noncompliant products and equipment; inclusion of a 
reference to the relevant statutory authority in the definition of 
``noncompliant covered import'' in 19 CFR 12.50(a); and a removal of 
the reference to ``paragraph (b)'' in 19 CFR 12.50(d)(1)(i) to clarify 
that CBP's refusal of admission as used in this context pertains to 
conditional release. Lastly, this document amends proposed 19 CFR 
12.50(d)(2) to reflect that an importer may request an extension of the 
conditional release period from DOE or FTC if made within the initial 
30-day conditional release period or any subsequent authorized 
extension thereof. CBP may permit an extension of the conditional 
release period if it receives a written or electronic recommendation to 
that effect from DOE or FTC. If the noncompliant covered import is not 
timely brought into compliance, and DOE or FTC has not recommended an 
extension of the conditional release period, CBP will issue a refusal 
of admission notice to the importer and demand the redelivery of the 
specified covered product to CBP custody.

Executive Order 12866

    Executive Orders 13563 and 12866 direct agencies to assess 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 rule has not been designated a ``significant regulatory action.''

The Regulatory Flexibility Act

    This section examines the impact of the rule on small entities as 
required by the Regulatory Flexibility Act (5 U.S.C. 601 et. seq.), as 
amended by the Small Business Regulatory Enforcement and Fairness Act 
of 1996. 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 rule establishes a procedure whereby CBP will refuse admission 
into the customs territory of the United States to consumer products 
and industrial equipment deemed noncompliant with the EPCA and its 
implementing regulations. Upon written or electronic notice by DOE or 
FTC, CBP may conditionally release under bond to the importer such 
noncompliant products or equipment for purposes of reconditioning, re-
labeling, or other action so that they may be brought into compliance 
with applicable energy conservation and labeling standards.
    DOE has identified only a small number of businesses importing 
noncompliant articles, of which fewer than five were small entities. 
When notified of their noncompliance, each of these businesses ceased 
importation of these articles. Given the small number of small entities 
identified by DOE as having been noncompliant and that the law 
prohibiting the importation of these noncompliant articles within the 
United States was enacted in 1975, CBP does not anticipate a 
significant number of small entities attempting to import articles 
which violate 42 U.S.C 6302 and its implementing regulations. If a 
small entity does import an article in violation of 42 U.S.C 6302 and 
its implementing regulations, the small entity can request DOE or FTC 
to allow CBP to grant the imported article a conditional release. CBP 
believes the cost associated with this conditional release to be 
negligible because this request is virtually costless to the small 
entity and the importer is already required to maintain a CBP basic 
importation and entry bond.
    No comments were submitted regarding this assessment. Accordingly, 
based on the above analysis, CBP certifies that this rule will not have 
a significant impact on a substantial number of small entities.

Paperwork Reduction Act

    As there is no collection of information proposed in this document, 
the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) 
are inapplicable.

Signing Authority

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

List of Subjects in 19 CFR Part 12

    Customs duties and inspection, Electronic products, Entry of 
merchandise, Imports, Prohibited merchandise, Reporting and 
recordkeeping requirements, Restricted merchandise.

Amendments to the CBP Regulations

    For the reasons stated above, part 12 of title 19 of the Code of 
Federal Regulations (19 CFR Part 12) is amended as set forth below.

PART 12--SPECIAL CLASSES OF MERCHANDISE

0
1. The general authority citation for part 12 continues to read as 
follows and the specific authority citation is revised to read as 
follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624;
* * * * *
Section 12.50 also issued under 42 U.S.C. 6301;
* * * * *

0
2. A center heading and Sec.  12.50 are added to read as follows:

Consumer Products and Industrial Equipment Subject to Energy 
Conservation or Labeling Standards


Sec.  12.50  Consumer products and industrial equipment subject to 
energy conservation or labeling standards.

    (a) Definitions. For purposes of this section, the following terms 
have the meanings indicated:
    Covered import. The term ``covered import'' means a consumer 
product or industrial equipment that is classified by the Department of 
Energy as covered by an applicable energy conservation standard, or by 
the Federal Trade Commission as covered by an applicable energy 
labeling standard, pursuant to the Energy Policy and Conservation Act 
of 1975, as amended (42 U.S.C. 6291-6317), and for which an entry for 
consumption has been filed, including products and equipment withdrawn 
from warehouse for consumption or foreign merchandise entered for 
consumption from a foreign trade zone.
    DOE. The term ``DOE'' means the Department of Energy.
    Energy conservation standard. The term ``energy conservation 
standard'' means any standard meeting the definitions of that term in 
42 U.S.C. 6291(6) or 42 U.S.C. 6311(18).
    FTC. The term ``FTC'' means the Federal Trade Commission.
    Noncompliant covered import. The term ``noncompliant covered 
import'' means a covered import determined to be in violation of 42 
U.S.C. 6302 or 42 U.S.C. 6316 as not in compliance with applicable 
energy conservation or energy labeling standards.
    (b) CBP action; refusal of admission. CBP will refuse admission 
into the customs territory of the United States to

[[Page 40391]]

any covered import found to be noncompliant with applicable energy 
conservation or energy labeling standards. If DOE or FTC notifies CBP 
that a covered import does not comply with an applicable energy 
conservation or energy labeling standard, CBP will refuse admission to 
the covered import, or pursuant to paragraph (d) of this section, CBP 
may allow conditional release of the covered import so that it may be 
brought into compliance. CBP may make a finding that a covered import 
is noncompliant without having received a prior written noncompliance 
notice from DOE or FTC. In such a situation, CBP will confer with DOE 
or FTC, as applicable, as to disposition of the import.
    (c) DOE or FTC notice. Upon a determination that a covered import 
is not in compliance with applicable energy conservation or labeling 
standards, DOE or FTC, as applicable, will provide CBP with a written 
or electronic notice that identifies the importer and contains a 
description of the noncompliant covered import that is sufficient to 
enable CBP to identify the subject merchandise and refuse admission 
thereof into the customs territory of the United States.
    (d) Conditional release. In lieu of immediate refusal of admission 
into the customs territory of the United States, CBP, pursuant to a 
written or electronic recommendation from DOE or FTC, may permit the 
release of a noncompliant covered import to the importer of record for 
purposes of reconditioning, re-labeling, or other modification. The 
release from CBP custody of any such covered import will be deemed 
conditional and subject to the bond conditions set forth in Sec.  
113.62 of this chapter. Conditionally released covered imports are 
subject to the jurisdiction of DOE and/or FTC.
    (1) Duration. Unless extended in accordance with paragraph (d)(2) 
of this section, the conditional release period will terminate upon the 
earliest occurring of the following events:
    (i) The date CBP issues a notice of refusal of admission to the 
importer;
    (ii) The date DOE or FTC issues a notice to CBP stating that the 
covered import is in compliance and may proceed; or
    (iii) At the conclusion of the 30-day period following the date of 
release.
    (2) Extension. An importer may request an extension of the 
conditional release period from DOE or FTC if made within the initial 
30-day conditional release period or any subsequent authorized 
extension thereof. CBP may permit an extension of the conditional 
release period if recommended electronically or in writing, by DOE or 
FTC.
    (3) Issuance of redelivery notice and demand for redelivery. If DOE 
or FTC notifies CBP in writing or electronically that noncompliant 
covered imports have not timely been brought into compliance, CBP will 
issue a refusal of admission notice to the importer and, in addition, 
CBP will demand the redelivery of the specified covered import to CBP 
custody. The demand for redelivery may be made concurrently with the 
notice of refusal of admission.
    (4) Liquidated damages. A failure to comply with a demand for 
redelivery made under this paragraph (d) will result in the assessment 
of liquidated damages equal to three times the value of the covered 
product. Value as used in this provision means value as determined 
under 19 U.S.C. 1401a.

Thomas S. Winkowski,
Deputy Commissioner of CBP, Performing the Duties of the Commissioner 
of CBP.
    Approved: July 1, 2013.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2013-16223 Filed 7-3-13; 8:45 am]
BILLING CODE 9111-14-P