Prohibited/Restricted Merchandise; Enforcement of Foreign Assets Control Regulations

DEPARTMENT OF THE TREASURY

19 CFR Parts 12, 145, and 161

[T.D. 96-42]

RIN 1515-AB91

Prohibited/Restricted Merchandise; Enforcement of Foreign Assets

Control Regulations

AGENCY: Customs Service, Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations to more clearly

provide that Customs enforces the laws and regulations of the Office of

Foreign Assets Control (OFAC) of the Department of the Treasury

regarding economic sanctions applicable to those countries that have

been designated by the President as constituting a threat to the

national security, foreign policy, or economy of the United States.

Currently, the Customs Regulations refer to OFAC regulations only in

the context of merchandise arriving by mail. This document clarifies

that Customs enforces the laws and regulations administered by OFAC

regardless of how subject merchandise, services, and technology arrive

in or depart from the U.S.

EFFECTIVE DATE: May 17, 1996.

FOR FURTHER INFORMATION CONTACT: Louis Alfano, Office of Field

Operations, Commercial Enforcement Branch, (202) 927-0005.

SUPPLEMENTARY INFORMATION:

Background

As part of Customs continuing effort to ensure that its regulations

are informative and up-to-date, Customs has determined that its

regulations do not clearly set forth the fact that Customs enforces the

laws and regulations administered by the Office of Foreign Assets

Control (OFAC) of the Department of the Treasury (31 CFR Chapter V).

These laws include the Trading With the Enemy Act (50 U.S.C. App. 1-

44), the National Emergencies Act (50 U.S.C. 1641 et seq.), the

International Emergency Economic Powers Act (50 U.S.C. 1701-1706), and

the International Security and Development Cooperation Act (22 U.S.C.

2349aa8-9); the regulations are found at Chapter V of Title 31 of the

Code of Federal Regulations (Money and Finance) (31 CFR Chapter V).

These laws and regulations impose prohibitions or restrictions on

importations, exportations, and other transactions involving funds,

merchandise, services, and technology with and of those countries that

have been designated by the President, pursuant to applicable statutory

provisions. Currently, the Customs Regulations refer to OFAC

regulations only in part 145 of the Customs Regulations (19 CFR Part

145), the provisions of which apply only to merchandise arriving by

mail. This document clarifies that Customs enforces the laws and

regulations administered by OFAC regardless of how the subject

merchandise, services, and technology arrive in or depart from the U.S.

by amending three sections in as many parts to provide further notice

to the public of Customs enforcement obligations concerning the

application of economic sanctions to designated countries.

In reviewing Sec. 145.56 of the Customs Regulations (19 CFR

145.56), which concerns the applicability of OFAC controls on

merchandise arriving by mail, Customs has determined that the listing

of countries subject to controls administered by OFAC is not up-to-

date. (The list of countries in the section has not been updated since

the section was promulgated in 1973 and is outdated and inconsistent

with OFAC regulations: two of the four countries currently listed are

no longer subject to OFAC's controls (North Vietnam (now Vietnam) and

Rhodesia (now Zimbabwe)) and other countries that have since been

designated by the President as subject to sanctions have not been added

to the list). Each time the President sanctions and lifts sanctions on

designated countries, OFAC amends its regulations accordingly.

Repeating the list of sanctioned countries in the Customs Regulations

merely duplicates the efforts of OFAC and, if not done timely, could

result in future inconsistencies between OFAC and Customs Regulations.

Accordingly, Customs has determined that to avoid the possibility of

future inconsistencies between OFAC and Customs Regulations in the

listing of sanctioned countries, Customs will no longer set forth such

a list in its regulations, but will simply refer readers to the OFAC

regulations. Thus, in amending Sec. 145.56, this document retains the

procedural provisions, but removes the listing of countries subject to

economic sanctions.

This document also clarifies the extent of Customs responsibility

in enforcing OFAC controls by adding sections regarding OFAC controls

in both Part 12, which concerns regulations of various Federal agencies

which Customs enforces and special classes of merchandise, and in Part

161, which concerns general enforcement provisions. A new Sec. 12.150

is added to Part 12, which cross-references OFAC regulations at 31 CFR

Chapter V, explains how OFAC regulations work, and provides an address

for further information from OFAC. Also, a specific authority citation

is added to account for Customs import (19 U.S.C. 1595a(c)) and export

(22 U.S.C 401) seizure authority and to account for the terms and

conditions for release (19 U.S.C. 1618). Section 161.2 is amended to

list OFAC as an agency whose laws are enforced by Customs. Also, the

parenthetical legal authority citations at the end of Sec. 161.2 are

amended to account for changes in the law since 1972, when the

citations were first provided, and are placed under the general

authority citation at the beginning of Part 161.

Inapplicability of Public Notice and Comment Requirements, Delayed

Effective Date Requirements, the Regulatory Flexibility Act, and

Executive Order 12866

Because this amendment merely provides further notice to the public

that Customs enforces the laws and regulations administered by the

Office of Foreign Assets Control of the Department of the Treasury,

pursuant to 5 U.S.C. 553(b)(B), good cause exists for dispensing with

notice and public procedure thereon as unnecessary. For the same

reasons, good cause exists for dispensing with a delayed effective date

under 5 U.S.C. 553(d)(1) and (d)(3). Since this document is not subject

to the notice and public procedure requirements of 5 U.S.C. 553, it is

not subject to provisions of the Regulatory Flexibility Act (5 U.S.C.

601 et seq.). This document does not meet the criteria for a

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

List of Subjects

19 CFR Part 12

Customs duties and inspection, Economic sanctions, Imports,

Licensing, Prohibited merchandise, Restricted merchandise, Reporting

and recordkeeping requirements, Sanctions, Seizure and forfeiture.

[[Page 24889]]

19 CFR Part 145

Customs duties and inspection, Imports, Mail, Postal service,

Prohibited merchandise, Restricted merchandise, Reporting and

recordkeeping requirements, Seizure and forfeiture.

19 CFR Part 161

Customs duties and inspection, Imports, Law enforcement.

Amendments to the Regulations

For the reasons stated above, parts 12, 145, and 161 of the Customs

Regulations (19 CFR parts 12, 145, and 161), are amended as set forth

below:

PART 12--SPECIAL CLASSES OF MERCHANDISE

1. The general authority citation for Part 12 continues and a

specific authority citation for new Sec. 12.150 is added 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 12.150 also issued under 19 U.S.C. 1595a and 1618; 22

U.S.C. 401.

2. Part 12 is amended by adding a centerheading and new Sec. 12.150

to read as follows:

Merchandise Subject to Economic Sanctions

Sec. 12.150 Merchandise prohibited by economic sanctions; detention;

seizure or other disposition; blocked property.

(a) Generally. Merchandise from certain countries designated by the

President as constituting a threat to the national security, foreign

policy, or economy of the United States shall be detained until the

question of its release, seizure, or other disposition has been

determined under law and regulations issued by the Treasury

Department's Office of Foreign Assets Control (OFAC) (31 CFR Chapter

V).

(b) Seizure. When an unlicensed importation of merchandise subject

to OFAC's regulations is determined to be prohibited, no entry for any

purpose shall be permitted and, unless the immediate reexportation or

other disposition of such merchandise under Customs supervision has

previously been authorized by OFAC, the merchandise shall be seized.

(c) Licenses. OFAC's regulations may authorize OFAC to issue

licenses on a case-by-case basis authorizing the importation of

otherwise prohibited merchandise under certain conditions. If such a

license is issued subsequent to the attempted entry and seizure of the

merchandise, importation shall be conditioned upon the importer:

(1) Agreeing in writing to hold the Government harmless, and

(2) Paying any storage and other Customs fees, costs, or expenses,

as well as any mitigated forfeiture amount or monetary penalty imposed

or assessed by Customs or OFAC, or both.

(d) Blocked property. Merchandise which constitutes property in

which the government or any national of certain designated countries

has an interest may be blocked (frozen) pursuant to OFAC's regulations

and may not be transferred, sold, or otherwise disposed of without an

OFAC license.

(e) Additional information. For further information concerning

importing merchandise prohibited under economic sanctions programs

currently in effect, the Office of Foreign Assets Control of the

Department of the Treasury should be contacted. The address of that

office is 1500 Pennsylvania Ave., N.W., Annex 2nd Floor, Washington,

D.C. 20220.

PART 145--MAIL IMPORTATIONS

1. The general authority citation for Part 145 is revised to read

as follows:

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

Tariff Schedule of the United States), 1624;

* * * * *

Sec. 145.56 [Amended]

2. Section 145.56 is amended by removing the words ``North Korea,

North Vietnam, Cuba, or Rhodesia'' and adding, in their place, the

words ``certain designated countries''; and by adding the parenthetical

words ``(See also 19 CFR 12.150)'' at the end of the section before the

period.

PART 161--GENERAL ENFORCEMENT PROVISIONS

1. The general authority citation for Part 161 is revised, and a

specific authority citation for section 161.2 is added, to read as

follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1600, 1619, 1624, 1646a;

Section 161.2 also issued under 12 U.S.C. 95a; 18 U.S.C. 545; 19

U.S.C. 1595(a); 22 U.S.C. 401, 1934, 2349aa8-9;

42 U.S.C. 1804, 1807; 50 U.S.C. 1641 et seq., 1701 et seq.;

50 U.S.C. App. 1-44, 2411.

* * * * *

2. Section 161.2 is amended by adding paragraph (a)(3) and removing

the parenthetical authority citations at the end of the section. The

revision reads as follows:

Sec. 161.2 Enforcement for other agencies.

(a) * * *

(1) * * *

(2) * * *

(3) Importations, exportations, and transactions involving

identified goods, services, and technology with any of those countries

designated as subject to economic sanctions under the laws and

regulations administered by the Office of Foreign Assets Control of the

Department of the Treasury.

* * * * *

Michael H. Lane,

Acting Commissioner of Customs.

Approved: April 8, 1996.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 96-12373 Filed 5-16-96; 8:45 am]

BILLING CODE 4820-02-P