Advance Notice of Proposed Customs Regulations Amendments Concerning the Country of Origin Marking Requirements for Frozen Produce Packages

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 134

RIN 1515-AB61

Advance Notice of Proposed Customs Regulations Amendments

Concerning the Country of Origin Marking Requirements for Frozen

Produce Packages

AGENCY: Customs Service, Department of Treasury.

ACTION: Advance notice of proposed rulemaking; solicitation of

comments.

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SUMMARY: This document provides advance notice of a proposal to amend

the Customs Regulations to: Prescribe rules regarding a conspicuous

place for the marking of country of origin on packages of frozen

produce; and establish rules concerning the appropriate type size and

style to be employed in marking frozen produce packages. The purpose of

this document is to help determine whether a rulemaking is needed to

ensure a uniform standard for conspicuous and legible country of origin

marking for packages of frozen produce, and, if needed, the contents of

that rulemaking.

DATES: Comments must be received on or before March 20, 1995.

ADDRESSES: Written comments (preferably in triplicate) may be addressed

to the Regulations Branch, Office of Regulations and Rulings, U.S.

Customs Service, Franklin Court, 1301 Constitution Ave., N.W.,

Washington, D.C. 20229. Comments submitted may be inspected at the

Regulations Branch, Office of Regulations and Rulings, U.S. Customs

Service, Franklin Court, 1099 14th Street, N.W., Suite 4000,

Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Wende Schuster, Special Classification

and Marking Branch, Office of Regulations and Rulings (202-482-6980).

SUPPLEMENTARY INFORMATION:

Background

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304),

provides that, unless excepted, every article of foreign origin (or its

container) imported into the U.S. shall be marked in a conspicuous

place as legibly, indelibly, and permanently as the nature of the

article (or its container) will permit, in such a manner as to indicate

to the ultimate purchaser in the U.S. the English name of the country

of origin of the article. Failure to mark an article in accordance with

the requirements of 19 U.S.C. 1304 shall result in the levy of a duty

of ten percent ad valorem. Part 134, Customs Regulations (19 CFR Part

134), implements the country of origin marking requirements and

exceptions of 19 U.S.C. 1304.

Customs Ruling and Court Action

On May 9, 1988, Norcal Crosetti Foods, Inc. and other California

packers of domestically-grown produce requested a ruling from Customs

concerning what constituted conspicuous country of origin marking for

packages of frozen produce, i.e., whether the marking should be located

on the front or some other panel of the package and in what type size

and style it should appear. Specifically, Customs was asked to

determine whether packaged frozen produce was considered conspicuously

marked if the marking did not appear on the front panel of the package

in prominent lettering. Sample packages which were not marked on their

front panels were submitted with the ruling request. On November 21,

1988, Customs issued a ruling (Headquarters Ruling Letter (HRL)

731830), stating that the country of origin markings on all of the

samples submitted were in compliance with the country of origin marking

requirements, as the packages were marked by names and words which

appeared on the back panel of the packaging in close proximity to

nutritional and other information.

The packers appealed Customs determination in HRL 731830 to the

Court of International Trade (CIT). Norcal/Crosetti Foods, Inc. v. U.S.

Customs Service, 15 CIT 60, 758 F.Supp. 729 (1991) (Norcal I). In

Norcal I, the court ruled that frozen produce is not marked in a

conspicuous place unless it is marked on the front panel of the

package. The court remanded the matter to Customs with directions to

issue a new ruling. Pursuant to the court's order in Norcal I, Customs

issued Treasury Decision (T.D.) 91-48 (56 FR 24115, May 28, 1991),

which required the country of origin marking for frozen produce to be

placed on the front panel of the package.

Arguing that the CIT did not have jurisdiction to decide the case,

the government appealed the CIT's decision to the Court of Appeals for

the Federal

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Circuit. Norcal/Crosetti Foods, Inc. v. U.S., 963 F.2d 356 (Fed.Cir.

1992) (Norcal II). In Norcal II, the court ruled on procedural grounds

to reverse the judgment of the CIT and remand the case with

instructions to dismiss the complaint for lack of jurisdiction. The

appellate court reasoned that since the packers' had not exhausted

their administrative remedies, their claims were not properly before

the CIT. The court further indicated that a proper course would have

been for the packers to initiate a proceeding before Customs under

section 516 of the Tariff Act of 1930, as amended (19 U.S.C. 1516).

The 516 Petition and Agency Action (1993)

A 516 petition (the Norcal petition) was initiated by letters dated

January 13 and January 29, 1993, and filed with Customs under 19 U.S.C.

1516 and Part 175, Customs Regulations (19 CFR Part 175). The

petitioners were Norcal Crosetti Foods, Inc. and Patterson Frozen

Foods, Inc., California packers of produce grown domestically. The

International Brotherhood of Teamsters, on behalf of its Local 912,

submitted a letter dated February 24, 1993, supporting the Norcal and

Patterson petition. The Norcal petition asked Customs to reconsider its

position in HRL 731830, and to adopt the findings of the CIT in Norcal

I.

The petitioners contended that imported frozen produce is not

marked in a conspicuous place in accordance with the requirements of 19

U.S.C. 1304. The petitioners argued that under a correct application of

19 U.S.C. 1304, the indication of country of origin must appear on the

front panel of a package to be considered as marked in a conspicuous

place. These domestic producers argued further that Customs standards

for the size and prominence of such country of origin markings were not

in conformity with 19 U.S.C. 1304.

Customs published a notice in the Federal Register on September 9,

1993 (58 FR 47413), advising the public of the petitioners' contentions

and soliciting public comments on the issues raised in the petition.

Also in this notice, Customs effectively suspended the effective date

of T.D. 91-48 by reinstating HRL 731830. Seventy-one comments were

submitted in response to the petitions.

In T.D. 94-5 (58 FR 68743, December 29, 1993), Customs issued a

final interpretive ruling based on the comments which were received in

response to the September 9 Federal Register notice. T.D. 94-5 stated

that back panel marking was insufficient and front panel country of

origin marking was prescribed in a specified type size and style

designed to match the net weight or net quantity of contents marking of

the product under the Food Labeling Regulations (21 CFR 101.105). In

T.D. 94-5, Customs modified T.D. 91-48 by requiring that conspicuous

marking within the meaning of T.D. 91-48, shall be limited to marking

which complies with the additional specifications for type size and

style set forth in T.D. 94-5. The effective date initially established

for the decision in T.D. 94-5 was May 8, 1994, in order to allow

importers time to modify their packaging. On March 29, 1994, however,

Customs issued two Federal Register documents: One (59 FR 14458)

suspending the compliance date of May 8, 1994, for parties adversely

affected by the country of origin marking requirements specified in

T.D. 94-5, and the other (59 FR 14579) giving notice of its intention

to adopt a new compliance date of January 1, 1995, and soliciting

comments on both the proposed compliance date and on the specifications

regarding type size and style.

In response to T.D. 94-5, however, an action was filed with the

Court of International Trade on behalf of American Frozen Food

Institute, Inc. and National Food Processors Association, which

challenged Customs decision. In American Frozen Food Institute, Inc.,

et al. v. The United States, Slip Op. 94-97 (June 9, 1994), the CIT

ruled that because Customs had chosen to promulgate front panel marking

in combination with other requirements needing APA [Administrative

Procedure Act, 5 U.S.C. 553] rulemaking procedures, the entirety of

T.D. 94-5 could not stand. The court stated that it expected Customs to

formulate a rational rule based on comments received in connection with

this matter before publishing any proposed rule.

The court further concluded that, because the full rulemaking

process had not yet been followed, it would not rule on whether T.D.

94-5 was acceptable substantively. Since the court declared T.D. 94-5,

in its entirety, null and void, there is no decision on the January

1993 petition filed by Norcal Crosetti Foods, Inc. and Patterson Frozen

Foods, Inc. The decision on the 516 petition will be held in abeyance.

Publication of this document is without prejudice to an ultimate

decision on the 516 petition.

Issues for Consideration in Determining Whether Customs Should

Issue a Notice of Proposed Rulemaking With Regard to Specific

Country of Origin Marking of Frozen Produce

The Customs Service is considering issuing a notice of proposed

rulemaking to amend the Customs Regulations to prescribe rules

regarding a conspicuous location for the country of origin marking on

packages of frozen produce and to require that such marking meet

certain type size and style specifications. Although relevant comments

were received in response to the Federal Register notices pertaining to

T.D. 94-5, there are several other issues on which we would like to

receive additional public comments before deciding whether to propose

rulemaking on this matter. In addition to general comments, interested

parties are invited to comment on the following specific issues:

(1) Is there a need for Customs to initiate a proposed rulemaking

regarding country of origin marking of frozen produce?

(2) Whether there are current abuses in the country of origin

marking of imported packages of frozen produce. If so, whether such

abuses require that Customs prescribe country of origin marking

requirements by rules applicable to all packages of frozen produce, or

whether the abuses should be handled on a case-by-case basis.

(3) For purposes of the marking statute and regulations, are there

sound reasons of public policy for treating frozen produce differently

from produce packaged in other ways (e.g., canned goods)?

(4) Whether the front panel of frozen produce is the only

``conspicuous place'' on the package for country of origin marking.

(5) Whether a specified location on another panel (e.g., the back

panel) where the country of origin marking is demarcated by, for

example, a box, a header, bold print, margins, a contrasting

background, or other graphic devices, would constitute a ``conspicuous

place'' for purposes of the marking statute.

(6) Whether Customs should prescribe, by regulation, certain type

size and style specifications for the country of origin marking of

frozen produce. If so, whether the regulations should specify one type

size for all packages of frozen produce, or different type sizes

depending upon the size of the package. If one type size is prescribed

for all packages of frozen produce, what type size should be

recommended and why?

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(7) Whether for purposes of country of origin marking, the term

``produce'' should be defined to include both fruits and vegetables.

(8) Where frozen produce packaging contains produce sourced from

multiple countries, should this have any bearing on the placement of

the country of origin marking?

(9) Whether the particular conditions of the frozen food section in

a store impact on the likelihood that a consumer will notice label

information regarding country of origin without this information being

given special prominence. If so, whether there is any empirical

evidence of such consumer behavior.

(10) Whether consumer behaviors and attitudes toward country of

origin marking of frozen produce can be documented with studies or

surveys. If so, how much time would be needed for a study or survey to

be conducted and for the data to be analyzed?

(11) If Customs goes forward with a notice of proposed rulemaking,

what should be a sufficient period of time for public comment?

(12) If Customs issues a notice of proposed rulemaking, should a

public hearing be held in connection with such proposed rulemaking?

(13) If Customs proposes and adopts new country of origin marking

regulations, what would be an appropriate time frame between the

publication of the final rule and the effective date of such

regulations?

(14) What other issues should be addressed in the proposed

rulemaking in order to afford a full opportunity for public comment?

Comments

In order to assist Customs in determining whether to proceed with a

notice of proposed rulemaking to prescribe rules regarding the country

of origin marking for packages of frozen produce, and the appropriate

type size and style specifications for such marking, this notice

invites written comments on the issues raised in this document as well

as any other issues in connection with this matter. Consideration will

be given to any comments that are 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), section 1.4, Treasury

Department Regulations (31 CFR 1.4), and section 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, Office of

Regulations and Rulings, U.S. Customs Service, 1099 14th Street, N.W.,

Suite 4000, Washington, D.C.

William F. Riley,

Acting Commissioner of Customs.

Approved: January 27, 1995.

Ronald K. Noble,

Under Secretary of the Treasury.

[FR Doc. 95-2546 Filed 2-1-95; 8:45 am]

BILLING CODE 4820-02-P