Enforcement of ITC Exclusion Orders

DEPARTMENT OF THE TREASURY

19 CFR Part 12

[T.D. 95-87]

RIN 1515-AB44

Enforcement of ITC Exclusion Orders

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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

SUMMARY: This document amends 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 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.

EFFECTIVE DATE: November 27, 1995.

FOR FURTHER INFORMATION CONTACT: Vicki Allums, Intellectual Property

Rights Branch, U.S. Customs Service, (202) 482-6960.

[[Page 54940]]

SUPPLEMENTARY INFORMATION:

Background

Under section 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.

Customs Notice of Proposed Rulemaking

On May 19, 1994, Customs published a Notice of Proposed Rulemaking

in the Federal Register (59 FR 26151), which solicited comments on a

proposal to amend the Customs Regulations so that they would reflect

Customs authority to enforce seizure and forfeiture orders issued by

the International Trade Commission. No comments were received in

response to the NPRM.

However, in its internal review of the proposed rule, Customs

identified an inconsistency between the proposal and the statute's

legislative history. The legislative history indicates that Congress

intended to include ``like goods'' within the scope of section 337

seizure orders. The addition of this phrase to the final regulation

does not expand the final rule because Customs seizure and forfeiture

authority only extends to articles and like articles which fall within

the scope of the ITC order. The phrase merely serves to clarify the

extent of that authority.

Summary of Amendment

This document amends 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 amendment also sets forth the procedures that Customs, on

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

order. The 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, Customs 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 and like articles which have been denied entry by reason of an

exclusion order, and for which the importer has been notified in

writing.

The amendment also contains procedures that are to be followed by

parties having an interest in articles which are seized pursuant to ITC

seizure orders and who wish to file a petition for relief.

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.

Amendment to the Regulations

Accordingly, part 12, Customs Regulations (19 CFR part 12), is

amended as set forth below:

[[Page 54941]]

PART 12--SPECIAL CLASSES OF MERCHANDISE

1. The general and relevant specific authority citations for part

12 continue to read as follows:

Authority: 5 U.S.C. 301, 19 U.S.C. 66, 1202 (General Note 20,

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 adding 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, port 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 Enforcement, Trade Compliance Division, 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 Sec. 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 or like articles into the United

States;

(ii) The article or like articles were 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 port director of the

port 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 or like articles into the United States.

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

accordance with this paragraph, Customs 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 port director in the port in which the article was seized

shall issue a notice of seizure to parties known to have an interest in

the seized property. All interested parties 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.

* * * * *

George J. Weise,

Commissioner of Customs.

Approved: October 10, 1995.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 95-26718 Filed 10-26-95; 8:45 am]

BILLING CODE 4820-02-P