[Federal Register Volume 68, Number 55 (Friday, March 21, 2003)]
[Rules and Regulations]
[Pages 13835-13839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6757]


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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