Announcement of General Program Test: Quota Preprocessing

DEPARTMENT OF THE TREASURY

Customs Service

Announcement of General Program Test: Quota Preprocessing

AGENCY: Customs Service, Treasury.

ACTION: General notice.

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SUMMARY: This notice announces Customs plan to conduct a test to

evaluate the effectiveness of a new operational procedure regarding the

electronic processing of quota-class apparel merchandise. The tests

will be conducted at ports located at New York/Newark and Los Angeles.

The new procedure will allow certain quota entries to be processed

prior to carrier arrival, thus reducing the quota processing time. This

notice informs the public of the new procedure and

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eligibility requirements to participate in the test. Public comments

concerning any aspect of the test are solicited.

EFFECTIVE DATES: Written comments regarding this notice must be

received on or before August 24, 1998. This test will commence no

earlier than August 24, 1998 and run for approximately a six month time

period, with evaluations of the test occurring periodically.

ADDRESSES: Applications to participate in the prototype will be

accepted prior to and throughout the prototype. Written comments

regarding this notice or any aspect of this test should be addressed to

Lori Bowers, U.S. Customs Service, QWG Team Leader, 1000 Second Ave.,

Suite 2100, Seattle, WA 98104-1020 or may be sent via e-mail to

[email protected]. Applications should be sent to

the prototype coordinator at any of the four following port(s) where

the applicant wishes to submit quota entries for preprocessing:

(1) Julian Velasquez, Port of Los Angeles, 300 S. Ferry St.,

Terminal Island, CA 90731;

(2) Tony Piscitelli, Los Angeles International Airport, 11099 S. La

Cienaga Blvd., Los Angeles, CA 90045;

(3) Barry Goldberg, JFK Airport, JFK Building 77, Jamacia, NY

11430; and

(4) John Lava, Ports of New York/Newark, 6 World Trade Center, New

York, NY10048.

FOR FURTHER INFORMATION CONTACT: Lori Bowers, (206) 553-0452, or Bob

Abels, (202) 927-0001.

SUPPLEMENTARY INFORMATION:

I. Description of Proposed Test

The Concept of Quota Preprocessing

Many apparel importers have identified a need to reduce the

processing time for quota entries. These importers state that the total

processing time, as measured from carrier arrival to Customs release,

for quota merchandise is longer than for non-quota merchandise.

Normally, entry summary documentation for both quota and non-quota

merchandise may be preliminarily reviewed by Customs before the arrival

of the carrier. For quota-class merchandise, however, the importing

carrier must have actually arrived within the port limits and either

the estimated duties must have been deposited or a valid scheduled

statement date must have been received by Customs via the Automated

Broker Interface (ABI) before it is deemed that there has been

presentation of the entry summary. Because quota priority and status

are determined at the time of presentation, the preliminary review does

not reduce the processing time for quota entries. This results in

increased costs and delays in receipt of quota-class merchandise. To

address this issue a multi-discipline work group, including members

from the trade, was formed in partnership with the National Treasury

Employees Union (NTEU). Using process improvement methodology, the

Quota Processing Work Group (QWG) developed Quota Preprocessing--a new

operational procedure regarding the processing of quota-class

merchandise--as a solution to the problem.

Quota preprocessing will allow certain quota entries (discussed

below) to be filed, reviewed for admissibility, and processed through

Customs prior to arrival of the carrier, similar to the methods in

which non-quota entries are presently processed. It is believed that

such a change in procedures could reduce the processing time for quota

entries.

The Quota Preprocessing test is designed to evaluate the

effectiveness of this new operating procedure, so that any benefits of

processing quota entries prior to carrier arrival can be verified. By

prototyping the concept first, Customs can measure the benefits,

receive input from the trade, and determine if any future changes are

necessary before incorporating Quota Preprocessing into its standard

procedures. Should the measurements support the anticipated benefits,

action will be initiated to amend certain Customs regulations (see

below) so that Quota Preprocessing can be incorporated into the design

of Customs future computer system, ACE (Automated Commercial

Environment).

The ports of New York/Newark (4701, 4601, 1001) and Los Angeles

(2704, 2720) are the test locations for Quota Preprocessing. By

prototyping the process first at these ports, Customs can assess

whether or not Quota Preprocessing can achieve its stated objectives

prior to expanding the process nationally.

Prototype Objectives

The goals of the prototype are:

(1) To reduce the processing time of quota entries;

(2) To process quota entries submitted as part of the preprocessing

program in the same amount of time as non-quota entries;

(3) To increase the quantity of quota entries released within one

calendar day of the arrival of the carrier; and

(4) To equalize the submission of quota entries over the five-day

work week.

Description of the Prototype

Participants in the prototype may submit quota entries that meet

the eligibility requirements specified below to Customs up to five days

prior to vessel arrival or after wheels are up on air shipments. Quota

entries to be preprocessed must be submitted to Customs during official

business hours (see, Sec. 101.6, Customs Regulations), and will be

reviewed for admissibility and processed prior to the carrier's

arrival.

Pursuant to Customs Modernization provisions in the North American

Free Trade Agreement Implementation Act (the Act), Pub.L. 103-182, 107

Stat. 2057, 2170 (December 8, 1993), Customs amended its regulations,

in part, to enable the Commissioner of Customs to conduct limited test

programs/procedures designed to evaluate the effectiveness of new

technology or operations procedures, which have as their goal the more

efficient and effective processing of passengers, carriers, and

merchandise. Section 101.9(a) of the Customs Regulations (19 CFR

101.9(a)) allows for such general testing. See, TD 95-21. This test

concerns the processing of merchandise and is established pursuant to

that regulatory provision. Public comments concerning any aspect of the

prototype are solicited and Customs will review any comments timely

received before implementing this test.

The test of Quota Preprocessing is scheduled to run for six months

with the starting date targeted for approximately 30 days from the

publication of this notice in the Federal Register. Once the test is

underway, Customs will begin evaluating the test procedure, employing

criteria designed to measure the effectiveness of the prototype.

II. Importer/Entry Eligibility Criteria

Only importers who currently import apparel through the ports of

Los Angeles (2704/2740) and/or New York/Newark (1001/4601/4701) may

participate in the prototype. Participants will not be permitted to

alter their importing patterns in order to take advantage of Quota

Preprocessing. During the prototype Customs will monitor import volumes

for significant increases through the prototype ports.

Customs will only accept consumption entries of apparel merchandise

subject to quota (type 02 and 07) for preprocessing which meet the

following criteria:

(1) The entry must be filed using the ABI;

(2) Payment must be made electronically through the Automated

Clearinghouse (ACH);

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(3) Arriving carriers must use the Automated Manifest System (AMS);

(4) The quota category must be less than 85% full;

(5) The entry must contain at least one line classifiable in

Chapter 61 or 62 of the Harmonized Tariff Schedule of the United States

(HTSUS); and

(6) The entry must be submitted at the port of Los Angeles (2704/

2720) or New York/Newark (1001/4601/4701).

If an importer submits a quota entry for Quota Preprocessing and it

does not meet all of the above criteria the entry summary will be

rejected back to the filer and may not be resubmitted to Customs until

after the carrier has arrived. Upon arrival of the carrier, merchandise

covered by a preprocessed entry will be released unless Customs decides

to perform an examination. If an examination of the merchandise is

necessary, the examination will occur during the port's regular

inspectional hours.

Regulatory Provisions Affected

During the six-month test period of this operational procedure, the

requirements regarding scheduling of ACH payment, quota status,

submission of quota documents, and time of entry, found in

Secs. 24.25(c)(3), 132.11, 132.11a, 141.63 and 141.68 of the Customs

Regulations, will be suspended at the affected ports.

Regarding the submission of an entry under this prototype, when the

documents are filed prior to arrival of the merchandise the term ``time

of entry'' shall be the time the merchandise arrives within the port

limits. For purposes of this prototype, the term ``time of

presentation'' shall be the time of delivery in proper form of the

entry/entry summary for consumption for which a valid scheduled

statement date for the estimated duties payable has been successfully

received by Customs via the ABI. A valid scheduled statement date must

be within 10 days of the estimated date of arrival of the merchandise.

III. Application

Importers that wish to participate in the Quota Preprocessing

prototype must submit a written application that includes the following

information:

1. The specific ports located at either New York/Newark or Los

Angeles at which they intend to enter quota merchandise;

2. The importer of record number(s), including suffix(es), and a

statement of the importer's/filer's electronic filing capabilities;

3. Names and addresses of any entry filers, including Customs

brokers, who will be electronically filing entries at each port on

behalf of the importer/participant; and

4. The total number of consumption quota entries (type 02 and 07)

filed at each of the prototype ports during the preceding 12-month

period and the estimated number of eligible entries expected to be

filed at each designated port during the Quota Preprocessing prototype.

If it is expected that a significantly higher number of eligible

entries will be filed during the prototype than were filed during the

preceding 12 months, an explanation for the increase is necessary.

Customs will notify applicants in writing of their selection or

nonselection in this prototype. If an applicant is denied

participation, he/she may appeal in writing to the port director at the

port which denied the application.

IV. Misconduct

A participant may be suspended from the Quota Preprocessing

prototype and disqualified from any future phases of this prototype if

involved in any of the following acts of misconduct:

1. Shifting the volume of imports clearing through the prototype

port(s);

2. Continually overestimating the date of arrival;

3. Continually submitting ineligible entries, i.e., the entry

summary is non-ABI, the carrier is non-AMS, payment is not via ACH,

and/or none of the merchandise is from HTSUS Chapter 61 or 62;

4. Submitting multiple requests for canceled entries;

5. Participating in any activity to circumvent quota or erroneously

gain quota status; or

6. Failing to abide by the terms and conditions of this notice or

applicable laws and regulations.

Participants subject to suspension will be notified in writing.

Such notice will apprise the participant of the facts or conduct

warranting suspension and the date on which the suspension will take

effect.

Any decision proposing suspension of a participant may be appealed

in writing to the local port director within 15 days of the decision

date. Should the participant appeal the notice of proposed suspension,

the participant should address the facts or conduct charges contained

in the notice and state how he/she does or will achieve compliance.

However, in the case of willfulness or where public health interests or

safety are concerned, the suspension may be effective immediately.

Further, Customs has the discretion to immediately suspend a prototype

participant based on the determination that an unacceptable compliance

risk exists. This suspension may be invoked at any time after

acceptance in the prototype. In addition to being suspended, a

participant may be subject to penalties, liquidated damages, and/or

other administrative sanctions for such action.

V. Test Evaluation Criteria

Although by no means exclusive, the following evaluation criteria

may be used by Customs to assess the merits of the test procedure:

1. Workload impact (workload shifts/volume, cycle times, etc.);

2. Policy and procedure accommodations;

3. System efficiency;

4. Operational efficiency; or

5. Other issues identified by public comment or by the

participants.

Also, Customs may survey participants to validate the benefits of

this prototype. Results of the test evaluations will be available at

the conclusion of the prototype and will be made available to the

public upon request.

Dated: July 20, 1998.

Audrey Adams,

Acting Assistant Commissioner, Office of Field Operations.

[FR Doc. 98-19773 Filed 7-23-98; 8:45 am]

BILLING CODE 4820-02-P