[Federal Register Volume 64, Number 64 (Monday, April 5, 1999)] [Rules and Regulations] [Pages 16345-16347] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 99-8333] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Customs Service 19 CFR Parts 10, 18, 113 and 178 [T.D. 99-33] RIN 1515-AB67 Warehouse Withdrawals; Aircraft Fuel Supplies; Pipeline Transportation of Merchandise in Bond AGENCY: Customs Service, Department of the Treasury. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This document adopts as a final rule, with some changes, the interim rule amending the Customs Regulations that was published in the Federal Register on February 22, 1996, as T.D. 96-18. The interim rule implemented certain statutory changes to the Customs laws contained in the Customs modernization portion of the North American Free Trade Agreement Implementation Act regarding recordkeeping for merchandise transported by pipeline and duty-free withdrawals from Customs bonded warehouses of aircraft turbine fuel. The interim rule also clarified the procedures applicable to aircraft turbine fuel withdrawn from a bonded warehouse for certain duty-free use and then commingled with other lots of fuel before being so used. EFFECTIVE DATE: April 5, 1999. FOR FURTHER INFORMATION CONTACT: Jerry C. Laderberg, Office of Regulations and Rulings, 202-927-2320. SUPPLEMENTARY INFORMATION: Background Title VI of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182 (December 8, 1993), popularly known as the Customs Modernization Act (Mod Act), significantly amended certain Customs laws. This document concerns sections 664 and 665 of the Mod Act. Section 664 added a new section 553a to the Tariff Act of 1930 (19 U.S.C. 1553a), to account for bonded merchandise transported by pipeline. Section 665 amended section 557(a) of the Tariff Act of 1930 (19 U.S.C. 1557(a)), to provide for the duty-free withdrawal of turbine fuel from a Customs bonded warehouse under a 30-day accounting period. Under section 553a, bonded merchandise transported by pipeline may be accounted for on a quantitative basis. For this purpose, the bill of lading or equivalent document of receipt, issued by the pipeline carrier to the shipper and accepted by the consignee, may be used to account for the quantity of merchandise so transported and to maintain the identity of that merchandise. This facilitates the commingling of bonded merchandise with non-bonded merchandise being transported by pipeline. Commingling previously was not permitted under Customs law, which required that the physical identity of the bonded merchandise be maintained. However, since most merchandise transported by pipeline is commingled and is susceptible to quantitative accounting, section 553a is intended both to enable the effective use of modern fuel transportation systems and to reduce the administrative costs and paperwork for the industry and the Government. Under amended section 1557(a), aircraft turbine fuel may be withdrawn from a Customs bonded warehouse for use as provided under section 309 of the Tariff Act of 1930 (19 U.S.C. 1309) without the payment of duty if an amount equal to the quantity of fuel withdrawn is shown to be used as provided for in section 1309 within 30 days of its withdrawal. Duties must be deposited on turbine fuel that was withdrawn in excess of the quantity [[Page 16346]] shown to have been used under section 1309 during the 30-day period following withdrawal of the fuel. Previously, Customs required daily accounting for such fuel, which resulted in great administrative expense and excessive paperwork for industry. The amended procedure allows for the commingling of different lots of fuel, whether bonded, imported, or domestic, in a modern hydrant system, with accounting for the bonded fuel in a manner which is cost-effective and which substantially reduces paperwork. Accordingly, by a document published in the Federal Register (61 FR 6772) on February 22, 1996, as T.D. 96-18, Customs issued interim regulations to implement the foregoing statutory enactments. The interim regulations added a new Sec. 18.31 to its regulations (19 CFR 18.31) to allow bonded merchandise being transported by pipeline to be accounted for on a quantitative basis, and a new Sec. 10.62b to permit accounting on a monthly basis for the duty-free withdrawal of aircraft turbine fuel from a bonded warehouse for use as provided in 19 U.S.C. 1309. In connection with new Secs. 10.62b and 18.31, the interim regulations also made conforming changes to existing Secs. 10.60(d), 10.62(a), 18.1(a)(1), and 113.62(b) of the Customs Regulations (19 CFR 10.60(d), 10.62(a), 18.1(a)(1), and 113.62(b)). Discussion of Comments One commenter responded to the request for comments on the interim regulations contained in T.D. 96-18. This commenter agreed with the substance of the interim regulations, but made a number of suggestions in an effort to clarify the meaning of the regulations or to further simplify their administration. The suggestions made by the commenter, together with the responses by Customs, are set forth below. Comment: The reference in Sec. 10.62(a) to Customs Form (CF) 7506 should be changed to Customs Form 7501 because Customs has since adopted the use of CF 7501 in place of CF 7506. Customs Response: Customs agrees. Section 10.62(a) is changed accordingly. Comment: The last sentence in Sec. 10.62b(b) should be changed to require that the withdrawal of turbine fuel be made using CF 7512 unless the blanket withdrawal procedure is used. Customs Response: Customs disagrees. Under Sec. 144.37, Customs Regulations (19 CFR 144.37), either a CF 7512 or a CF 7501 may be used to document the withdrawal. Comment: The commenter stated that the use of the phrase, ``the fuel withdrawn which is not entered and upon which duties have not been paid'', in Sec. 10.62b(c)(1) and its subordinate paragraphs, is superfluous and should be deleted from these provisions. The commenter asserts that, as used in paragraph (c)(1)(ii)(C) of Sec. 10.62b, the phrase appears misplaced because this paragraph deals with fuel being loaded onto an aircraft, as opposed to being withdrawn without entry or payment of duty from a bonded warehouse. Customs Response: Customs disagrees that the phrase should be entirely deleted from Sec. 10.62b(c). It serves to remind Customs and the party withdrawing the fuel that the fuel must be entered if not timely laden under 19 U.S.C. 1309. Customs agrees, however, that the phrase is inappropriate as used in Sec. 10.62b(c)(1)(ii)(C). Section 10.62b(c)(1)(ii)(C) is revised consistent with the request made by the commenter. Comment: The commenter believes that it would be helpful to both Customs and importers to indicate in Sec. 10.62b(c)(1) that the referenced documents should be submitted to Customs at the port where the bonded entry was filed. Customs Response: Customs agrees and the provision is modified. Comment: The commenter states, with reference to Sec. 10.62b(g)(5), that blanket withdrawals of fuel from a bonded warehouse eliminate the need to file a CF 7512. The commenter advocates that the provision be revised to provide that a withdrawal document meeting the requirements of Sec. 10.62b can be submitted instead of CF 7512. The commenter also suggests that the withdrawal document, which is issued by the warehouse proprietor under Sec. 10.62b(g)(5), could also be issued by a pipeline operator, barge or vessel operator, or other party acceptable to Customs. In addition, the commenter wants to delete the requirement in Sec. 10.62b(g)(5)(ii) that the withdrawal document identify the specific tank from which the bonded fuel is withdrawn. The commenter is of the opinion that because fuel may be withdrawn from several tanks in frequent batches at multi-tank terminals, the precise tank or tanks from which a particular batch of fuel is withdrawn cannot readily be known. Moreover, the commenter declares that precise tank identification is not currently maintained for commercial or Customs purposes. Customs Response: Customs disagrees with the suggested changes. As already mentioned, under Sec. 144.37, Customs Regulations (19 CFR 144.37), a CF 7512, or a CF 7501, may be used to document withdrawals for export. Because the warehouse proprietor is the party obligated under bond for the proper withdrawal of fuel supplies from the warehouse, the proprietor is the appropriate party to issue the withdrawal document. Customs believes that permitting another party, such as a pipeline, vessel, or barge operator, to issue a withdrawal document would impose an administrative burden on the agency as well as on the trade. Furthermore, Customs believes that the withdrawal document must include the specific tank from which fuel is withdrawn in order to enable the agency to audit the withdrawal of the fuel accurately and effectively. Conclusion For these reasons, and after careful consideration of the comments and further review of the matter, Customs concludes that the interim rule published in the Federal Register (61 FR 6772) on February 22, 1996, as T.D. 96-18, should be adopted as a final rule with the changes explained above. Regulatory Flexibility Act and Executive Order 12866 As discussed in the interim rule, since the amendments are not subject to the notice and public procedure requirements of the Administrative Procedure Act (5 U.S.C. 553), they are not subject to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Nor do the amendments constitute a ``significant regulatory action'' under E.O. 12866. Paperwork Reduction Act The collection of information contained in this final regulation has been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1515-0209. Part 178, Customs Regulations (19 CFR part 178) is amended to make provision for this information collection. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB. The collection of information in this final rule is in Sec. 10.62b. This information is required and will be used to verify that turbine fuel withdrawn from a Customs bonded warehouse is used on aircraft qualifying for duty-free withdrawal of fuel supplies, in accordance with statutory law. The likely respondents are businesses. [[Page 16347]] The estimated average annual burden associated with the collection of information in this final rule is 12 hours per respondent/ recordkeeper. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503. A copy should also be sent to the Regulations Branch, Office of Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania Avenue, NW., 3rd Floor, Washington, DC 20229. List of Subjects 19 CFR Part 10 Customs duties and inspection, Exports, Imports, Reporting and recordkeeping requirements, Shipments. 19 CFR Part 18 Bonded transportation, Common carriers, Customs duties and inspection, Exports, Imports. 19 CFR Part 113 Common carriers, Customs duties and inspection, Exports, Freight, Laboratories, Reporting and recordkeeping requirements, Surety bonds. 19 CFR Part 178 Administrative practice and procedure, Exports, Imports, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, the interim rule amending parts 10, 18 and 113, Customs Regulations (19 CFR parts 10, 18 and 113), which was published at 61 FR 6772 on February 22, 1996, is adopted as a final rule with the changes set forth below. In addition, part 178 is amended to add a new listing to Customs approved information collection requirements. PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, ETC. 1. The general authority citation for part 10, and the relevant specific authority citations, continue to read as follows: Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 1498, 1508, 1623, 1624, 3314. * * * * * Sections 10.61, 10.62, 10.63, 10.64, 10.64a also issued under 19 U.S.C. 1309; * * * * * Section 10.62b also issued under 19 U.S.C. 1557; * * * * * Sec. 10.62 [Amended] 2. In Sec. 10.62(a), the first sentence is amended by removing the reference to ``Customs Form 7506'' and by adding, in its place, ``Customs Form 7501''. 3. Section 10.62b is amended by revising paragraphs (c)(1) and (c)(1)(ii)(C) to read as follows: Sec. 10.62b Aircraft turbine fuel. * * * * * (c) Establishment of use of fuel by qualifying aircraft. * * * (1) The person withdrawing aircraft turbine fuel under paragraph (b) of this section must establish that an aircraft qualifying for the privileges provided for in section 309, Tariff Act of 1930, as amended, used fuel in an amount equal to or exceeding the quantity of the fuel withdrawn that is not entered and upon which duties are not paid by submitting to Customs, at the port where the bonded warehouse entry was filed, within the time provided in paragraph (d) of this section, either-- * * * * * (ii) * * * (C) All of the aircraft into which fuel is loaded hereunder were used in a trade provided for in section 309; and * * * * * PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS 1. The authority citation for part 178 continues to read as follows: Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq. 2. Section 178.2 is amended by adding a new listing to the table in appropriate numerical order to read as follows: Sec. 178.2 Listing of OMB control numbers. ------------------------------------------------------------------------ 19 CFR section Description OMB Control No. ------------------------------------------------------------------------ * * * * * * * Sec. 10.62b................. Certificate of 1515-0209 compliance for turbine fuel withdrawals. * * * * * * * ------------------------------------------------------------------------ Approved: March 8, 1999. Raymond W. Kelly, Commissioner of Customs. John P. Simpson, Deputy Assistant Secretary of the Treasury. [FR Doc. 99-8333 Filed 4-2-99; 8:45 am] BILLING CODE 4820-02-P