Enforcement of ITC Exclusion Orders

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR PART 12

RIN 1515-AB44

Enforcement of ITC Exclusion Orders

AGENCY: Customs Service, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes an amendment of the Customs Regulations

regarding unfair competition to reflect Customs authority to enforce

seizure and forfeiture orders issued by the United States International

Trade Commission (ITC). These orders would be issued for articles which

had previously been denied entry pursuant to an ITC exclusion order.

Such seizure and forfeiture orders may be issued only when the owner,

importer or consignee of such articles has previously attempted to

import articles subject to an exclusion order into the U.S.; the

articles have previously been denied entry; and the owner, importer or

consignee has been notified in writing of the previous denial of entry.

The proposed amendment sets forth the procedures Customs will follow

when seizures are made for violations of the ITC exclusion orders. It

also describes the appeal rights and procedures available to parties

who have an interest in the seized property.

DATES: Comments must be received on or before July 18, 1994.

ADDRESSES: Comments (preferably in triplicate) may be submitted to 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: Vicki Allums, Intellectual Property

Rights Branch (202) 482-6960.

SUPPLEMENTARY INFORMATION:

Background

Under Sec. 337 of the Tariff Act of 1930 (19 U.S.C. 1337), the

International Trade Commission applies U.S. statutory law and the

common law of unfair competition to the importation of products into

the United States and their subsequent sale in the United States.

Section 337 declares unlawful unfair methods of competition and unfair

acts in the importation and sale of products in the United States, the

threat or effect of which is to destroy or substantially injure a

domestic industry, prevent establishment of such an industry, or

restrain or monopolize trade and commerce in the United States. Section

337 also declares as unlawful per se infringement of a valid and

enforceable U.S. patent, copyright, registered trademark, or mask work;

no resulting injury need be found. To obtain relief under section 337,

the affected U.S. industry must file a complaint with the United States

International Trade Commission (ITC). A formal hearing before an

administrative law judge will then be conducted in order to determine

whether a violation under section 337 exists. The administrative law

judge then issues an initial determination. The initial determination

is subject to discretionary review by the ITC, which may affirm,

reverse, modify, set aside, or remand the initial determination to the

administrative law judge for further proceedings. If it is determined

that a violation exists, the ITC may order that any articles found to

be in violation of the Act be excluded from entry into the U.S.

Section 1342(a)(5)(B) of the Omnibus Trade and Competitiveness Act

of 1988 amended section 337 of the Tariff Act by inserting a new

subsection (i). That subsection authorizes the ITC to issue an order

providing that any article determined to be imported in violation of

the provisions of the law relating to unfair methods of competition and

unfair acts in the importation of articles into the United States

should be seized and forfeited when certain conditions stated in the

law have been met. Any such order issued is to be enforced by the

Secretary of the Treasury.

For such an order to be valid, the law provides that the following

conditions must be met:

(a) The owner, importer, or consignee of the article must have

previously attempted to import the article into the United States;

(b) The article must have been denied entry into the United States

by reason of an order issued under 19 U.S.C. 1337 (d); and

(c) Upon such previous denial of entry, the Secretary of the

Treasury must have provided the owner, importer, or consignee of the

article with written notice of--

(i) Such order, and

(ii) That seizure and forfeiture would result from any further

attempt to import the article into the United States.

Section 12.39, Customs Regulations (19 CFR 12.39) currently

describes the role of the ITC in determining whether an importer has

engaged in unfair methods of competition or practices, and the actions

the ITC can order in response to the finding of such practices. Among

those actions are exclusion from entry and entry under bond of articles

imported in violation of fair trade provisions, both of which are cited

in Sec. 12.39(b). The authority of the ITC to exclude articles from

entry into the United States under section 337 is described in

Sec. 12.39(b)(1). Section 12.39(b)(2) permits excluded articles to be

entered under a single entry bond pending the finalization of the ITC

determination. Finally, Sec. 12.39(b)(3) requires, among other things,

that district directors notify each importer or consignee of articles

entered under bond pursuant to Sec. 12.39(b)(2) when the determination

becomes final, and indicate that the entry of articles is refused.

This document proposes to amend Sec. 12.39(b), Customs Regulations

(19 CFR 12.39(b)) to reflect both the authority of the ITC to issue

seizure and forfeiture orders against articles and like articles for

which exclusion orders have been issued under certain conditions and

the authority of the Secretary of the Treasury to enforce those orders.

The proposed amendment also sets forth the procedures that Customs,

on behalf of the Secretary of the Treasury, will follow when enforcing

the order. The proposed procedures provide that when the three

statutory conditions are met that allow the ITC to issue a seizure and

forfeiture order, and the ITC notifies the Secretary of the Treasury of

the issuance of such order, the Assistant Commissioner, Commercial

Operations, will notify all ports of entry of the order and identify

both the article subject to the order and the owners, importers or

consignees who are subject to the order.

These seizure orders would be issued by the ITC against specific

importers, or their agents and consignees, and would apply only to

articles which have been denied entry, and for which the importer has

been notified in writing.

The proposed amendment also contains procedures that are to be

followed by parties having a proprietary interest in articles which are

seized pursuant to ITC seizure orders and who wish to file a petition

for relief.

Comments

Before adopting the proposed amendment, 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, Treasury Regulations (31

CFR 1.4), and Sec. 103.11(b), Customs Regulations (19 CFR 103.11(b)),

on regular business days between the hours of 9 a.m. and 4:30 p.m. at

the Regulations Branch, 1099 14th Street NW., Suite 4000, Washington,

DC.

Regulatory Flexibility Act

For the reasons set forth in the preamble, pursuant to the

provisions of the Regulatory Flexibility Act (5 U.S.C. 601, et seq.),

it is certified that the amendment will not have a significant economic

impact on a substantial number of small entities. Accordingly, it is

not subject to the regulatory analysis or other requirements of 5

U.S.C. 603 and 604.

Executive Order 12866

This amendment does not meet the criteria for a ``significant

regulatory action'' as specified in E.O. 12866.

Drafting Information

The principal author of this document was Peter T. Lynch,

Regulations Branch, 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

Customs duties and inspection, Imports.

Proposed Amendment to the Regulations

Accordingly, it is proposed to amend part 12, Customs Regulations

(19 CFR part 12), as set forth below:

PART 12--SPECIAL CLASSES OF MERCHANDISE

1. The general and relevant specific authority citation for part 12

continues to read as follows:

Authority: 5 U.S.C. 301, 19 U.S.C. 66, 1202 (General Note 17,

Harmonized Tariff Schedule of the United States (HTSUS)), 1624;

* * * * *

Section 12.39 also issued under 19 U.S.C. 1337, 1623;

* * * * *

2. Section 12.39 is amended by revising the heading of paragraph

(b); by inserting a new paragraph (b)(4); by redesignating paragraphs

(c) and (d) as paragraphs (d) and (e); and by adding a new paragraph

(c) to read as follows:

Sec. 12.39 Imported articles involving unfair methods of competition

or practices.

* * * * *

(b) Exclusion from entry; entry under bond; notice of exclusion

order.

* * * * *

(4) In addition to the notice given to importers or consignees of

articles released under bond, district directors shall provide written

notice to all owners, importers or consignees of articles which are

denied entry into the United States pursuant to an exclusion order that

any future attempt to import such articles may result in the articles

being seized and forfeited. Copies of all such notices are to be

forwarded to the Commercial Compliance Branch, Office of Trade

Operations, at Customs Headquarters, and to the Office of The General

Counsel, USITC, 500 E Street SW., Washington DC 20436 by the district

directors.

(c) Seizure and Forfeiture Orders. (1) In addition to issuing an

exclusion order under paragraph (b)(1) of this section, the Commission

may issue an order providing that any article determined to be in

violation of section 337 be seized and forfeited to the United States.

Such order may be issued if:

(i) The owner, importer, or consignee of the article previously

attempted to import the article into the United States;

(ii) The article was previously denied entry into the United States

by reason of an exclusion order issued under paragraph (b)(1) of this

section; and

(iii) Upon such previous denial of entry, the district director of

the district in which the entry was attempted had notified the owner,

importer, or consignee of the article in writing of both the exclusion

order and that seizure and forfeiture would result from any further

attempt to import the article into the United States.

(2) Upon receipt of any seizure order issued by the Commission in

accordance with this paragraph, the Assistant Commissioner, Commercial

Operations shall immediately notify all ports of entry of the property

subject to the seizure order and identify the persons notified under

paragraph (b)(4) of this section.

(3) The district director in the district in which the article was

seized shall issue a notice of seizure to parties known to have a

proprietary interest in the seized property. All claimants to the

property shall have an opportunity to petition for relief under the

provisions of 19 CFR part 171. All petitions must be filed within 30

days of the date of issuance of the notice of seizure, and failure of a

claimant to petition will result in the commencement of administrative

forfeiture proceedings. All petitions will be decided by the

appropriate Customs officer, based upon the value of the articles under

seizure.

(4) If seized articles are found to be not includable in an order

for seizure and forfeiture, then the seizure and the forfeiture shall

be remitted in accordance with standard Customs procedures.

(5) Forfeited merchandise shall be disposed of in accordance with

the Customs laws.

* * * * *

Approved: May 6, 1994.

Samuel H. Banks,

Acting Commissioner of Customs.

Dennis M. O'Connell,

Acting Deputy Assistant Secretary of the Treasury.

[FR Doc. 94-12272 Filed 5-18-94; 8:45 am]

BILLING CODE 4820-02-P