Accreditation of Commercial Testing Laboratories; Approval of Commercial Gaugers

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 113, 151, and 178

[T.D. 99-67]

RIN 1515-AB60

Accreditation of Commercial Testing Laboratories; Approval of

Commercial Gaugers

AGENCY: Customs Service, Treasury.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations relating to the

commercial testing and gauging of imported merchandise, pursuant to

Customs modernization provisions of the North American Free Trade

Agreement Implementation Act. The regulations revise the general

procedures for the accreditation/reaccreditation of commercial

laboratories, the approval/reapproval of commercial gaugers, and the

suspension and revocation of such accreditations/approvals. Further,

the regulations provide that Customs will charge such laboratories/

gaugers to accredit/approve and periodically reaccredit/reapprove their

commercial services pursuant to a reimbursable fee schedule, and make

provision for the imposition of monetary penalties for failure to

adhere to any of the provisions applicable to the examination,

sampling, and testing, or gauging of imported merchandise.

EFFECTIVE DATE: October 7, 1999.

FOR FURTHER INFORMATION CONTACT: Ira Reese, Laboratories and Scientific

Services, (202) 927-1060; or Marcelino Borges, Laboratories and

Scientific Services, (202) 927-1137.

SUPPLEMENTARY INFORMATION:

Background

On December 8, 1993, the United States enacted the North American

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

Stat. 2057. Title VI of the Act contains provisions pertaining to

Customs Modernization (107 Stat. 2170); section 613 of Subtitle A to

Title VI amends section 499 of the Tariff Act of 1930 (19 U.S.C. 1499),

which provides Customs with the authority to conduct examinations and

detain imported merchandise.

The Commercial Laboratory/Gauger Testing Provisions of Section 613

The provisions of section 613, among other things, codified Customs

regulations and administrative guidelines concerning the use of

commercial laboratories and gaugers by adding a new paragraph (b) to

section 499 (19 U.S.C. 1499(b)). Regarding the accreditation/approval

aspects of commercial laboratories/gaugers, the provisions of new

paragraph (b) authorize Customs to:

(1) set procedures for the accreditation of commercial laboratories

in the United States, which may be used to perform tests relating to

the admissibility, quantity, composition, or characteristics of

imported merchandise, and the approval of commercial gaugers in the

United States, which may be used to perform tests to establish the

quantities of imported merchandise;

(2) impose reasonable charges for such accreditations/approvals and

periodic reaccreditations/reapprovals; and

(3) establish the conditions regarding the suspension and

revocation of such accreditations and approvals, which may include the

imposition of monetary

[[Page 48529]]

penalties not to exceed $100,000, in addition to penalties for any loss

of revenue, in appropriate cases.

Regarding the testing/gauging aspects of commercial laboratories/

gaugers, new paragraph (b) further provides that:

(1) in the absence of Customs testing, Customs will accept analysis

and quantity results from Customs-accredited laboratories and Customs-

approved gaugers; however, this circumstance does not limit or

otherwise preclude Customs or any other Federal agency from

independently testing, analyzing, or quantifying any sample or

merchandise;

(2) testing procedures and methodologies will be made available

upon request to any person, except when they are proprietary to the

holder of a copyright or patent or developed by Customs for enforcement

purposes; information resulting from any Customs testing will be made

available to the importer of record and any agents thereof, except when

the information meets the above specified exclusions from disclosure;

and

(3) laboratories/gaugers may seek judicial review of any final

Customs decision that adversely affects their accreditation/approval,

i.e., denial, suspension, or revocation, or that imposes a monetary

penalty, by commencing an action within 60 days of such decision in the

Court of International Trade.

New paragraph (b) (set forth as a note to 19 U.S.C. 1499) also

provides that commercial laboratories/gaugers that had already been

accredited/approved by Customs may continue the accredited/approved

activities without having to seek accreditation/approval under the new

statute but that such facilities are subject to the new statutory and

regulatory requirements for reaccreditation/reapproval.

On June 9, 1998, Customs published a Notice of Proposed Rulemaking

(NPRM) in the Federal Register (63 FR 31385) that proposed to amend the

Customs Regulations relating to the commercial testing and gauging of

imported merchandise, pursuant to Customs modernization provisions of

the North American Free Trade Agreement Implementation Act (19 U.S.C.

1499(b)), and solicited comments in these matters. The comment period

closed August 10, 1998; seven comments were received. The comments and

Customs responses are set forth below.

Analysis of Comments

Expansion of Program

Comment: Three commenters recommended against the expansion of the

current program.

Customs Response: Prior to enactment of the Act, Customs

regulations and administrative guidelines concerning the use of

commercial laboratories and gaugers only allowed for the accreditation

of commercial laboratories and the approval of commercial gaugers to

perform selected tests on certain imported merchandise. The provisions

of the Act authorizing the establishment of regulations pertaining to

testing laboratories (19 U.S.C. 1499(b)) provide that accredited

private laboratories may be used to perform tests ``that would

otherwise be performed by Customs laboratories.'' Clearly, by this

language Congress intended that the Customs laboratory accreditation

program be extended to include the testing of many more products.

Accordingly, no change to the scope of the regulatory amendments

will be made based on these comments.

Lack of Third-Party Accreditation/Approval Entities

Comment: Two commenters, both independent accreditation bodies

acknowledging Congress' intention in the Act to expand the existing

commercial laboratory accreditation program, suggested that Customs

could benefit from making use of existing accreditation programs and

urged Customs to reconsider expansion of its program to rely on such

programs. The commenters suggested that Customs shift from an

``administration'' role to an ``oversight'' role.

Customs Response: Customs is not against third-party accreditation.

However, Customs believes it is best positioned to do the accrediting

of laboratories in the expanded program. Although Customs may consider

third-party accreditation in the future, we note that our current

decision not to use a third-body accreditation organization is

predicated on several factors including the following:

A. As a public organization, Customs can keep the program costs to

a minimum while meeting all of our technical and law enforcement needs;

B. Customs has 20+ years experience in successfully running these

types of programs; and

C. Customs interests and determinations go beyond those of other

accrediting bodies, to include:

1. The financial independence of the laboratory/gauger;

2. Background investigations of the applicant;

3. Ability to do the extremely broad range of testing required by

Customs; and

4. Ability to assist gaugers and laboratories using the Informed

Compliance process.

To transfer these interests and concerns to a third body would

require time and coordination with a third body organization that could

be better used by Customs in the actual accreditation/approval process.

Accordingly, no change to the regulatory amendments will be made

based on these comments.

Methodology

Comment: One commenter expressed concern about Customs specifying

which testing methods a laboratory can use and recommends industry

input prior to the establishment of such testing requirements.

Customs Response: Although Customs has already approved certain

testing methods and designated them for use in Commodity Group

Brochures and the U.S. Customs Laboratory Methods Manual, if a

laboratory seeking accreditation/reaccreditation believes that other

testing methods are more appropriate than those testing methods

designated by Customs, then, under the provisions of Sec. 151.12(e),

the laboratory can submit to the Executive Director with its

application the testing method(s) it believes is more appropriate. Such

alternative methods will be considered and approved on a case-by-case

basis. (Note that this same latitude in designating approved

measurement procedures is afforded gaugers in Sec. 151.13(c).)

Since, as proposed, the regulations provide that commercial

laboratories may seek approval of testing methods that they believe are

appropriate, no change to the regulatory amendments will be made based

on this comment. However, because the proposed laboratory regulations

(the gauger regulations are not affected, see discussion below) did not

reference the U.S. Customs Laboratory Methods Manual as a source

containing testing methods approved by Customs, proposed Sec. 151.12(a)

is revised to include this reference as a source of appropriate testing

methods and to note its availability on the Internet at Customs' Web

Site, discussed below.

Burden of Five (5)-Day Notification in General; Notification of

Equipment, etc. Changes in Particular

Comment: One commenter felt that the five (5)-day notification

requirement

[[Page 48530]]

pertaining to changes in legal name, address, etc., was burdensome,

especially for such items as staffing, equipment, and instruments, and

suggested that Customs institute a semi-annual notification

requirement.

Customs Response: Customs agrees that there is no need to require

the reporting of ``managerial or professional or executive staff'' and

``facilities, instruments, or equipment, etc.'' and is removing that

requirement by revising the provisions of proposed Sec. 151.12(c)(6)

(and the parallel provision for gaugers at Sec. 151.13(b)(6)). However,

Customs will retain the five (5)-day notification requirement

pertaining to changes in legal name, address, etc., as these items are

substantive changes that affect the accreditation/approval of the

facility and Customs must be able to maintain accurate records.

Proficiency Training

Comment: One commenter, while supporting the need for proficiency

testing, questioned the need for Customs to develop its own program.

This commenter opined that industrial programs, such as the American

Society for Testing and Materials (ASTM) Laboratory Cross Check

Program, are already available, of proven effect and efficiency, and

should be allowed to suffice.

Customs Response: Customs agrees with this observation and has

revised the provisions of proposed Sec. 151.12(f)(3)(ii) and (iii) (and

the applicable provision for gaugers at Sec. 151.13(d)(3)(i)) to modify

the requirement that proficiency testing through check samples ``will''

be required to read ``may'' be required. This change will permit

accredited/approved laboratories/gaugers to participate in proficiency

test programs developed by recognized industrial organizations. A

facility's level of proficiency, as determined by such programs, can

then be considered by Customs when Customs evaluates the facility for

purposes of reaccreditation/reapproval. However, this change will not

preclude Customs from developing its own check program if Customs

determines that such a program is necessary.

Excessive Fee Structure; Organizations With Multiple Locations

Comment: Three commenters expressed concern about the fees

associated with the accreditation process for laboratories. Two of

these commenters stated that variable costs appeared to be high,

especially for background investigations, and one of these commenters

inquired how large commercial laboratory organizations with multiple

locations would be handled.

Customs Response: Regarding the fee structure, the provisions of

the Act were promulgated at the request of industry with the

understanding that Customs would be given the authority to recover non-

personnel costs. The costs contained in these regulations are

consistent with that authority and are Customs best estimates of

expenses. These program costs will be reevaluated periodically to see

if the assumptions upon which they are based are correct.

Customs has reviewed the fee structure of third-party accreditation

bodies, as well as those of other federal and state agencies that have

the authority to charge fees, and found that the fees proposed are

significantly lower than third-party accreditations and lower than most

public-sector run programs. Customs identified certain indeterminate

costs as variable costs in an effort to keep these costs as low as

possible to the laboratory/gauger.

Regarding organizations with multiple locations, each site within

an organization can separately apply for accreditation/approval or all

sites within an organization can be designated in a single application.

The choice will be with the applicant; however, all applicable variable

(for technical inspections) and fixed (for administration) costs

associated with processing the application submitted will be assessed

for each site designated for accreditation/approval. As stated in the

Background portion of the NPRM concerning ``variable costs,'' Customs

will endeavor to bundle these costs, which include background

investigations, so that where these costs apply to more than one site,

the costs will be fairly apportioned between applicants.

Accordingly, no change to the fee structure in the regulations will

be made based on these comments.

Fee Structure Unfair to Small Entities

Comment: Three commenters objected to the fairness of the proposed

fee structure as it will impact on very small laboratories and gaugers.

These commenters argue that such gauger/laboratory facilities currently

in the program should be exempt from any reapproval/reaccreditation

fees because they will not see any benefit from the expansion. Further,

these commenters argue that in order for an existing facility to

``expand'' its services, it will have to acquire expertise and

equipment, both of which are expensive. These commenters conclude by

stating that if Customs wants to recapture the expenses of an expanded

program it should do so by charging those facilities that will benefit,

and not those already in the program.

Customs Response: Customs is concerned about being fair to all

parties in interest. However, paragraph (b) of section 613 of the Act

mandates that while those laboratories/gaugers that were accredited/

approved prior to December 8, 1993, need not reapply for initial

accreditation/approval, such facilities will be subject to

reaccreditation/reapproval under the applicable statute and

implementing regulations. Accordingly, these grandfathered laboratory

and gauger facilities are required to pay the fees that are associated

with reaccreditation/reapproval.

Customs believes that the expansion of this program provides an

opportunity for any laboratory to participate in the laboratory program

on a level playing field. Any company will have the opportunity to look

at their position and make a decision as to the degree to which it will

participate in the laboratory program. Accordingly, Customs has

structured the cost system to be commensurate with the level of

laboratory participation in the program. The costs are being fairly

leveled against all parties and will be reviewed annually to ensure

that all costs are reasonable to the success of the program.

Accordingly, no change to the fee structure in the regulations will

be made based on these comments.

Sample Retention Policy

Comment: One commenter stated that the one year sample retention

period was too restrictive, and pointed out that special consideration

should be made where the sample is perishable or hazardous. This

commenter noted that typical storage retention periods in the

inspection industry are from 45-90 days.

Customs Response: Regarding the one-year sample-retention period

for non-perishable samples and remnants, Customs agrees that in the

main this requirement may work a hardship on laboratories. Accordingly,

Customs is lessening the retention period for non-perishable items to

four months, unless the samples are the subject of litigation.

Recently, Customs has authorized its own laboratories to shorten their

sample-retention period from one year to four months, and believes that

this same retention period could be allowed for commercial laboratories

performing Customs testing services.

Regarding the subject of perishable samples, both in the Background

[[Page 48531]]

portion and the proposed Amendments to the Regulations portion of the

NPRM (at Sec. 151.12(j)(1)) it was stated that perishable samples and

sample remnants could be disposed of more expeditiously, if done in

accordance with acceptable laboratory procedures. With regard to

hazardous materials, such samples are not considered comparable to

perishable samples, and laboratories accredited to test such materials

should know how to safely handle and store or dispose of these

materials.

Accordingly, to make more clear that there is both a perishable

goods and a non-perishable goods retention period, the provisions of

proposed Sec. 151.12(j)(1) are revised to separate the early disposal

of perishable samples provision from the non-perishable samples

provision. Further, the retention period for non-perishable goods is

lessened from one year to four months, unless the merchandise sampled

is the subject of litigation, in which case the laboratory will retain

that sample merchandise until instructed by Customs that it can dispose

of it.

Status of an Analysis Report Where Customs also Analyzes the Sample

Comment: One commenter questioned why an importer would use a

commercial laboratory if Customs could also analyze shipments and

simply ignore an accredited laboratory's report.

Customs Response: The Act provides that the establishment of a

program for the accrediting/approving of commercial facilities to

perform any of the functions currently performed by Customs facilities

does not limit in any way or preclude Customs from independently

testing or analyzing any sample or merchandise and basing

administrative action upon Customs findings. For this reason, no change

will be made to the regulations on this subject. However, Customs would

like to make all concerned aware that Customs does not simply ignore

the report of an accredited lab or an approved gauger in any situation.

Where there is a contradiction between reports, Customs will review the

situation in detail and if the report from the accredited lab or an

approved gauger is found to be more accurate or controlling in the

situation at hand, the Executive Director or his designee will

authorize the use of the accredited lab or approved gauger report in

lieu of Customs report.

Disclosure of Testing Procedures and Methods

Comment: One commenter stated that Customs should make the

following two points clear concerning the disclosure/availability of

testing procedures and methods:

(1) that the amount of laboratory analysis methods that cannot be

released because of copyright/patent or law enforcement reasons is a

very tiny fraction of Customs methods, and that all other methods,

including methods to ascertain compliance with other agency

requirements, etc., are available to the public at no charge; and

(2) that copies of U.S. Customs lab reports and worksheets are not

subject to the Freedom of Information Act (FOIA), and that such lab

reports are available free of charge and the associated worksheets are

available for a flat fee of $ 10.

Customs Response: Regarding the commenter's first contention

concerning the disclosure/availability of laboratory analysis methods,

Customs generally agrees. Customs reiterates, however, that there are

some laboratory analysis methods that are confidential because of

enforcement concerns or because the methods are patented or

copyrighted. Regarding the public availability of laboratory analysis

methods at no charge, the commenter is correct. As indicated in the

NPRM and previously in this document, a listing of the methods in the

U.S. Customs Laboratory Methods Manual is available at the Customs Web

Site on the Internet (www.customs.gov) and a description of those

methods, i.e., those prepared by public sources such as Customs

Laboratory personnel, will also be available at the Customs Web Site.

But Customs points out that other methods that have been developed by

private commercial organizations are not available from Customs. These

other methods should be obtained directly from these commercial

organizations.

Regarding the commenter's second contention concerning the free

availability of U.S. Customs lab reports without resort to FOIA and the

availability of associated worksheets for a flat fee without resort to

the FOIA, Customs does release, free of charge, to the importer of

record and their agents, including the customs broker, laboratory

reports that do not include proprietary information or are not related

to an investigation. While a FOIA request is not necessary, Customs

still requires a written request from the importer of record or agent.

When the requested Customs laboratory report is released, it does not

include the report's associated worksheets or other supporting data.

Customs laboratory worksheets, including associated spectra,

chromatograms, etc., if not containing proprietary or investigation-

related information are also released by Customs upon written request

by the importer of record and their agents, including the customs

broker. However, Customs does assess a charge for this information

based on the FOIA guidelines for the costs associated with searching

and photocopying the requested materials. This material will not be

released prior to the payment of all applicable fees.

No regulatory changes will be made based on these comments.

Subcontracting to another Customs-Accredited/Approved Site

Comment: Two commenters could not see the reason why one Customs-

approved laboratory should not be able to subcontract to another

Customs-approved laboratory. In this regard, one of these commenters

inquired as what constituted subcontracting between companies owned or

managed by the same parent organization (an issue visited briefly above

under organizations with multiple locations).

Customs Response: Reconsidering this issue and reviewing the

position contained in ASTM E548: Standard Guide for General Criteria

Used for Evaluating Laboratory Competence (and Guide 25 of the

International Organization for Standardization entitled General

Requirements for the Competence of Calibration and Test Laboratories, a

parallel publication; see discussion below), Customs agrees that

subcontracting between Customs accredited/approved facilities should be

allowed. Accordingly, the provisions of Sec. 151.12(j)(5) (and the

applicable gauger provisions at Sec. 151.13(h)(4)) are revised to allow

for subcontracting between Customs-accredited/approved facilities.

Limiting Gaugers Activities to Petroleum Products

Comment: One commenter inquired if the provisions of Sec. 151.13(a)

which state that commercial gaugers deal mainly with petroleum was

meant to limit commercial gauger activities to just petroleum products.

Customs Response: No, this is not the case. Because gauging

activities in general do include the measurement of animal and

vegetable oils, as well as petroleum and petroleum products and bulk

chemicals, proposed Sec. 151.13(a) is revised to include these

endeavors as well. Customs would like to clarify that through the

application process, a gauger can list any area of gauging where a

commercial activity may be feasible. Further, already approved gaugers

can request expanded gauging opportunities at no additional cost to

their reapproval.

[[Page 48532]]

Gauging Procedures

Comment: One commenter inquired when the Customs Commodity Group

brochure dealing with gauging and measurement procedures would be

published, so that he could review it.

Customs Response: The proposed regulatory text of Sec. 151.13(c)

providing for this was an error, as the definition of Commodity Group

Brochure (provided at Sec. 151.12(a)) clearly limits these booklets to

laboratory testing procedures; Customs does not intend to prepare such

a brochure for gauging activities. Accordingly, the regulatory text of

proposed Sec. 151.13(c) is revised to provide that approved gaugers

must comply with appropriate procedures published by such organizations

as the ASTM and the American Petroleum Institute (API), and other

procedures approved in writing by the Executive Director.

Gauger Equipment Requirements in Closed-System Measurements

Comment: One commenter expressed industry concern about the

equipment requirements contained at proposed Sec. 151.13(d)(3)(ii)(A),

which require that gaugers have all of the equipment and instruments

needed to conduct approved services, as it relates to closed system

measurement equipment. The commenter states that, unlike other aspects

of the industry, there is no standardization of this equipment, even

among different models made by the same manufacturer. The concern stems

from the fact that many closed petroleum systems have unique piping and

fittings that preclude a gauger from having all of the needed

connectors to hook up a measurement system. The commenter feels that

Customs should specify either minimum required equipment or fittings.

Customs Response: It is noted that the proposed regulations in this

area are not different from the existing regulations under which the

industry is currently operating, and no radical change is anticipated.

Enumeration of minimum required equipment or fittings is not necessary

because Customs allows this industry to establish its own requirements

(this is another reason why there is no Commodity Group Brochure for

gauging). Further, it should be noted that Customs works very

positively with this industry, on a case-by-case basis, to permit the

use of refinery or facility connectors when they are unique and

unavailable to the general gauger industry. But where the situation

becomes a routine responsibility of a gauger, Customs expects the

gauger to own and calibrate all of the connectors and equipment that

are added to a system in order to make the appropriate measurements.

Accordingly, no change to the regulations will be made based on

this comment.

Notice of Proposed Assessment of Penalties

Comment: One commenter expressed concern that there was no notice

or due process protection before the imposition of penalties, and

argued that specific guidelines should be established so that

variations in interpretation of these regulatory provisions at

different ports could be avoided.

Customs Response: Regarding the due process rights of accredited

laboratories/approved gaugers where penalties may be assessed, Customs

agrees that advance notice (30 calendar days) of impending penalties

should be clearly provided for in the regulations. Accordingly, the

provisions of proposed Secs. 151.12(k) (1) and (2) and 151.13(i) (1)

and (2) are revised to clarify when notices of proposed penalties are

issued and when final notices of penalties are issued.

Regarding the uniformity of the program, the fact that all

decisions or orders imposing monetary penalties will be made by the

Executive Director, Laboratories and Scientific Services, should ensure

that the program will be administered in a uniform manner throughout

the country. Further, Customs believes the appeal procedure provided

for in the regulations enables affected laboratories/gaugers to

challenge any decision of the Executive Director the facility believes

to be unfair. The expanded program is designed to provide optimum

uniformity with checks and balances at all decision points in order to

protect the interests of the laboratory/gauger.

Penalties, Loss of Revenue, and Liquidated Damages

Comment: One commenter argued that Customs-accredited laboratories

should not be subject to penalties, the recovery of ``lost'' revenue,

and liquidated damages under the lab's bond, as the bond is a

performance bond, not a revenue bond.

Customs Response: This comment concerns the provisions of

Sec. 151.12(k)(1)(iii), entitled ``Assessment of monetary penalties.''

Customs believes that, perhaps, it did not clearly communicate that

there is a distinction between the basis for monetary penalties and the

basis for liquidated damages. There is a statutory basis for liability

for monetary penalties and any loss of revenue in cases of intentional

falsification of data in collusion with the importer (19 U.S.C.

1499(b)(1)(B)(i)) and there is a contractual basis for liability under

the provisions of the Customs bond for liquidated damages. Customs is

revising the third sentences of proposed Sec. 151.12(k)(1)(iii) for

laboratories and Sec. 151.13(i)(1)(iii) for gaugers to distinguish

between penalties/loss of revenue and liquidated damages.

The Terms ``Current Approval'' and ``Future Regulation''

Comment: One commenter requested clarification of the difference

between ``current approval'' and ``future regulation'' regarding

reimbursable fees for accreditation/approval and periodic

reaccreditation/reapproval.

Customs Response: The thrust of this comment is not clear; however,

Customs will attempt to respond, based on the assumption that the

comment pertains to already accredited/approved laboratories/gaugers.

Both in the Background portion and the proposed Amendments to the

Regulations portion of the Notice of Proposed Rulemaking at

Sec. 151.12(j)(1) it was stated that laboratories accredited and

gaugers approved under Customs regulations prior to December 8, 1993

(the effective date of the Act) will not be required to pay applicable

reaccreditation/reapproval fees until after the third year following

the date these regulations become final. Thus, the new fees provided

for in these regulations are not applicable to grandfathered

laboratories/gaugers until their next scheduled inspection, based on

their existing triennial inspection date.

To make this point as clear as possible, the provisions of proposed

Sec. 151.12(i) (and the parallel provision for gaugers at

Sec. 151.13(g)) are revised to state that accredited/approved

facilities will have their status reevaluated on their next triennial

inspection date which is no earlier than three years after the

effective date of this regulation.

Small Business Administration

Comment: One commenter stated that there are many small businesses

that will be impacted by the regulations and inquired if the Small

Business Administration was notified of the proposed regulations.

Customs Response: Because Customs expects the number of accredited

laboratories and approved gaugers to be small, Customs has certified

that, if adopted, these regulations will not have a significant adverse

economic impact on a substantial number of small entities. A statement

to this effect was published in the NPRM. Customs has

[[Page 48533]]

not received any information during the comment period that would

indicate any significant economic impact.

Movement of Goods in International Commerce

Comment: One commenter stated that the proposal failed to address

that international business is done these days by the importers

receiving ``confirmation'' and/or ``production'' samples of products

before the shipments of the product are sent so that the importer is

assured that what is being made and shipped is what was ordered per

specifications. The apparent thrust of the comment goes to whether

Customs labs will examine these ``confirmation'' or ``production''

samples rather than samples taken from part of the merchandise actually

being imported.

Customs Response: As was stated in the Background portion of the

NPRM, importers that choose to have merchandise tested by commercial

facilities accredited/approved by Customs, must certify that the sample

tested was taken from the merchandise in the entry, i.e., from the

importer's actual importations. Customs cannot allow for the testing of

``confirmation'' or ``production'' samples that are not in fact samples

taken from part of the merchandise actually being imported. The Act

clearly provides that the tests/measurements to be allowed by

accredited/approved commercial facilities are those that will establish

the admissibility, quantity, composition, or characteristics of

imported merchandise, not merchandise that someday may be imported.

Accordingly, no change to the regulations will be made based on

this comment.

Statement of Fee Schedule and a Clarification

The fee schedule set forth in the proposal is being adopted. The

initial fixed fee schedules for accrediting/reaccrediting laboratories

and approving/ reapproving gaugers are:

For Laboratories

General Accreditation Fee: $750

Additional Commodities Fee: $200

Laboratory Reaccreditation Fee: $375

Commodity Reaccreditation Fee: $150

For Gaugers

General Approval Fee: $400

Reapproval Fee: $200

The initial variable fee schedules for accrediting/reaccrediting

laboratories and approving/reapproving gaugers are approximately $1,000

for travel per visit and $1,700 per background investigation.

Also, Customs wishes to note that laboratories/gaugers may be

accredited/approved in Puerto Rico, as the United States is defined to

include Puerto Rico, see, 19 CFR 101.1, ``Customs territory of the

United States.''

Other Changes to the Regulations

In addition to the changes to the proposed regulatory text

identified and discussed above in connection with the public comments,

Customs has made numerous editorial, nonsubstantive changes to the

proposed text (in most cases involving wording, parallel construction,

punctuation, or structure) in order to enhance the clarity,

readability, and application of the regulatory texts. An example of an

editorial change involves the grounds for nonselection/suspension,

revocation, or assessment of a monetary penalty in

Secs. 151.12(g)(2)(ii) and 151.13(e)(2)(ii), and

Secs. 151.12(k)(1)(ii)(B) and 151.13(i)(1)(ii)(B). Because of the

common elements in these four provisions, the language in all these

provisions is aligned for purposes of consistency. Several other

changes are being made as well; they are summarized below.

Section 151.12(d)

Proposed Sec. 151.12(d)(2) listed sixteen (16) commodity groups for

which accreditation could be sought without special permission from the

Executive Director. However, for ease of reference it has been decided

to merge the commodity group of Wood and Articles of Wood with the

commodity group of botanical identification. Accordingly, the final

text of this section is revised to list only fifteen (15) commodity

groups.

Section 151.12(f)

Proposed Sec. 151.12(f)(3) provided that Customs evaluation of an

applicant's professional abilities will be in accordance with the

general criteria contained in the ASTM E548: Standard Guide for General

Criteria Used for Evaluating Laboratory Competence. Because many

Laboratories follow the ISO/IEC Guide 25--General Requirements for the

Competence of Calibration and Testing Laboratories, the final text of

Sec. 151.12(f) is revised to include this publication as well.

Sections 151.12(j) and 151.13(h)

Proposed Sec. 151.12(j)(3)(F) (and the parallel provision

applicable to gaugers at proposed Sec. 151.13(h)(2)(v)(F)) provided

that reports must include the signature of the person accepting

technical responsibility for the report. Because signatures are

frequently illegible, Customs has decided to require the typed name of

the person signing the report. Accordingly, these two provisions are

revised to add the additional requirement of the typed name of the

person signing the report.

Sections 151.13(c)

The proposed heading for Sec. 151.13(c) denominated both gauging

and measurement as procedures, which might cause some applicants to

believe that there are two separate procedures. Accordingly, the

reference to gauging is removed from the heading for this section.

Conclusion

After careful consideration of all the comments received and

further review of the matter, Customs has decided to adopt the

amendments to part 151 of the Customs Regulations as a final rule with

the modifications and changes discussed above and as set forth below.

To reflect the paperwork requirements contained at Secs. 151.12(f)

and 151.13(d), part 178 of the Customs Regulations is revised to

account for the separate application data required for laboratory

accreditation and gauger approval.

The Regulatory Flexibility Act, and Executive Order 12866

Because the number of accredited laboratories and approved gaugers

is expected to be small, pursuant to the provisions of the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.), it is certified that the

amendments will not have a significant adverse economic impact on a

substantial number of small entities. Accordingly, the amendments are

not subject to the regulatory analysis or other requirements of 5

U.S.C. 603 and 604. This amendment does not meet the criteria for a

``significant regulatory action'' as specified in Executive Order

12866.

Paperwork Reduction Act

The collection of information contained in these final regulations

has been reviewed and approved by the Office of Management and Budget

(OMB) in accordance with the requirements of the Paperwork Reduction

Act of 1995 (44 U.S.C. 3507) under control number 1515-0155. An agency

may not conduct or sponsor, and a person is not required to respond to,

a collection of information unless the collection of information

displays a valid control number assigned by OMB.

The collections of information in this final rule are in

Secs. 151.12(e) and 151.13(c). The information is required so that

Customs can make a determination as to which applicants

[[Page 48534]]

are competent to receive or maintain accreditation/approval credentials

to test/measure imported merchandise. The information will be used to

process those applications submitted for Customs accreditation/

approval. The likely respondents are individuals and commercial

organizations who either analyze merchandise or measure, gauge, or

sample merchandise.

The estimated average burden associated with the collection of

information in this final rule is five hours per respondent or

recordkeeper. Comments concerning the accuracy of this burden estimate

and suggestions for reducing this burden should be directed to the U.S.

Customs Service, Information Services Group, Office of Finance, 1300

Pennsylvania Ave., N.W., Washington, D.C. 20229; and to OMB, Attention:

Desk Officer for the Department of the Treasury, Office of Information

and Regulatory Affairs, Washington, D.C. 20503.

Drafting Information

The principal author of this document was Gregory R. Vilders,

Attorney, Regulations Branch, Office of Regulations and Rulings.

However, personnel from other offices participated in its development.

List of Subjects

19 CFR Part 113

Bonds, Customs duties and inspection, Exports, Freight, Imports,

Reporting and recordkeeping requirements.

19 CFR Part 151

Administrative practice and procedure, Courts, Customs duties and

inspection, Examination, Fees assessment, Gaugers, Imports,

Laboratories, Licensing, Penalties, Reporting and recordkeeping

requirements, Sampling and testing.

19 CFR Part 178

Administrative practice and procedure, Collections of information,

Exports, Imports, Paperwork requirements, Reporting and recordkeeping

requirements.

Amendments to the Regulations

For the reasons stated above, parts 113, 151, and 178 of the

Customs Regulations (19 CFR parts 113, 151, and 178) are amended as set

forth below:

PART 113--CUSTOMS BONDS

1. The general authority citation for part 113 continues to read as

follows:

Authority: 19 U.S.C. 66, 1623, 1624.

* * * * *

Sec. 113.67 [Amended]

2. Section 113.67 is amended as follows:

a. Paragraph (a)(1)(ii) is amended by removing the words ``terms of

the Commercial Gauger Agreement [see Sec. 151.13(b)(9)] and by the'';

and by removing the citations ``Secs. 151.13 and 151.14'' and adding,

in their place, the citation ``Sec. 151.13(b)''.

b. Paragraph (b)(1)(ii) is amended by removing the words ``terms of

the Commercial Laboratory Agreement [see Sec. 151.13(b)(9)] and by

the''; and by removing the citation ``Sec. 151.13'' and adding, in its

place, the citation ``Sec. 151.12(c)''.

PART 151--EXAMINATION, SAMPLING, AND TESTING OF MERCHANDISE

1. The general authority citation for part 151 continues to read as

follows:

Authority: 19 U.S.C. 66, 1202 (General Notes 20 and 21,

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

Subpart A also issued under 19 U.S.C. 1499.

* * * * *

2. In subpart A, Sec. 151.12 is added to read as follows:

Sec. 151.12 Accreditation of commercial laboratories.

This section sets forth the requirements for commercial

laboratories to obtain accreditation by Customs for the testing of

certain commodities, and explains the operation of such accredited

laboratories. This section also provides for the imposition of

accreditation and reaccreditation fees, sets forth grounds for the

suspension and revocation of accreditation, and provides for the

imposition of a monetary penalty for an accredited commercial

laboratory that fails to adhere to the provisions of this section.

(a) Definitions. For purposes of this section, the following words

and phrases have the meanings indicated:

Analysis record. An ``analysis record'' is a compilation of all

documents which have been generated during the course of analysis of a

particular sample which, under normal circumstances, may include, both

in paper and electronic-form, such documents as work sheets, notes,

associated spectra (both spectra of the actual product and any standard

spectra used for comparison), photographs and microphotographs, and the

laboratory report.

Assistant Commissioner. In Secs. 151.12 and 151.13, references to

the ``Assistant Commissioner'' mean the Assistant Commissioner, Office

of Field Operations, located in Washington, D.C.

Check samples. ``Check samples'' are samples which have been

distributed by Customs to accredited laboratories to test their

proficiency in a certain area of accreditation.

Commodity Group Brochure. A ``Commodity Group Brochure'' is a

booklet which contains a listing of laboratory methods which commercial

laboratories are required to have the capability to perform to qualify

for Customs-accreditation in a particular commodity group. The

brochures and the U.S. Customs Laboratory Methods Manual will specify

the particular laboratory testing methods required for particular

commodity groups, unless written permission from the Executive Director

is given to use an alternate method. Procedures required by the

Executive Director may reference applicable general industry testing

standards, published by such organizations as the American Society for

Testing and Materials (ASTM) and the American Petroleum Institute

(API). Commodity Group Brochures and a listing of the methods found in

the U.S. Customs Laboratory Methods Manual are available from the U.S.

Customs Service, Attention: Executive Director, Laboratories and

Scientific Services, Washington, D.C. 20229 and can also be found on

the Customs Internet Web Site: www.customs.gov.

Executive Director. In Secs. 151.12 and 151.13, references to the

``Executive Director'' mean the Executive Director, Laboratories and

Scientific Services, located in Washington, D.C.

(b) What is a ``Customs-accredited laboratory''? ``Commercial

laboratories'' are individuals and commercial organizations that

analyze merchandise, i.e., determine its composition and/or

characteristics, through laboratory analysis. A ``Customs-accredited

laboratory'' is a commercial laboratory, within the United States, that

has demonstrated, to the satisfaction of the Executive Director,

pursuant to this section, the capability to perform analysis of certain

commodities to determine elements relating to the admissibility,

quantity, composition, or characteristics of imported merchandise.

Customs accreditation extends only to the performance of such functions

as are vested in, or delegated to, Customs.

(c) What are the obligations of a Customs-accredited laboratory? A

commercial laboratory accredited by Customs agrees to the following

conditions and requirements:

(1) To comply with the requirements of part 151, Customs

Regulations (19 CFR part 151), and to conduct professional services in

conformance

[[Page 48535]]

with approved standards and procedures, including procedures which may

be required by the Commissioner of Customs or the Executive Director;

(2) To have no interest in or other connection with any business or

other activity which might affect the unbiased performance of duties as

a Customs-accredited laboratory. It is understood that this does not

prohibit acceptance of the usual fees for professional services;

(3) To maintain the ability, i.e., the instrumentation, equipment,

qualified staff, facilities, etc., to perform the services for which

the laboratory is accredited, and allow the Executive Director to

evaluate that ability on a periodic basis by such means as on-site

inspections, demonstrations of analysis procedures, reviews of

submitted records, and proficiency testing through check samples;

(4) To retain those laboratory records beyond the five-year record-

retention period and samples (see paragraph (j)(1) of this section)

specified by Customs as necessary to address matters concerned in

pending litigation, and, if laboratory operations or accreditation

cease, to contact Customs immediately regarding the disposition of

records/samples retained;

(5) To promptly investigate any circumstance which might affect the

accuracy of work performed as an accredited laboratory, to correct the

situation immediately, and to notify both the port director and the

Executive Director of such matters, their consequences, and any

corrective action taken or that needs to be taken; and

(6) To immediately notify both the port director and the Executive

Director of any attempt to impede, influence, or coerce laboratory

personnel in the performance of their duties, or of any decision to

terminate laboratory operations or accredited status. Further, within 5

days of any changes involving legal name, address, ownership, parent-

subsidiary relationships, bond, other offices or sites, or approved

signatories to notify the Executive Director by certified mail.

(d) What are the commodity groups for which accreditation may be

sought? (1) Commercial laboratories may apply for accreditation to

perform tests for any of the commodity groups listed in paragraph

(d)(2) of this section. Applicable test procedures are listed in

Commodity Group Brochures and the U.S. Customs Laboratory Methods

Manual. Application may be made for accreditation in more than one

commodity group. At the discretion of the Executive Director

accreditation may be granted for subgroups of tests within a commodity

group or for commodity groups not specifically enumerated. Once

accredited, a Customs-accredited laboratory may apply at any time to

expand its accreditation, to add new testing sites, or increase the

number of commodity groups or subgroups accredited.

(2) The commodity groups for which accreditation may be sought

without special permission from the Executive Director are:

(i) Dairy and Chocolate Products entered under Chapters 4, 18, and

21 of the Harmonized Tariff Schedule of the United States (HTSUS);

(ii) Food and Food Products entered under Chapters 7-12, 15, 16,

and 19-21, HTSUS;

(iii) Botanical Identification--materials and products entered

under Chapters 14 and 44-46, HTSUS;

(iv) Sugar, Sugar Syrups, and Confectionery products entered under

Chapter 17, HTSUS;

(v) Spirituous Beverages entered under Chapter 22, HTSUS;

(vi) Building Stone, Ceramics, Glassware, and Other Mineral

Substances entered under Chapters 25 and 68-70, HTSUS;

(vii) Inorganic Materials, including Inorganic Compounds and Ores,

entered under Chapters 26, 28, 31, and 36-38, HTSUS;

(viii) Petroleum and Petroleum Products entered under Chapters 27

and 29, HTSUS;

(ix) Organic Materials, including Intermediates and

Pharmaceuticals, entered under Chapters 29, 30, 34, 35, and 38, HTSUS;

(x) Rubber, Plastics, Polymers, Pigments and Paints entered under

Chapters 32, 39, and 40, HTSUS;

(xi) Essential Oils and Perfumes entered under Chapter 33, HTSUS;

(xii) Leather and Articles of Leather entered under Chapters 41 and

42, HTSUS;

(xiii) Paper and Paper Products entered under Chapters 47-49,

HTSUS;

(xiv) Textiles and Related Products, including footwear and hats,

entered under Chapters 50-67, HTSUS; and,

(xv) Metals and Alloys entered under Chapters 72-83, HTSUS.

(e) What are the approved methods of analysis? Customs-accredited

laboratories must follow the general or specific testing methods set

forth in Commodity Group Brochures and the U.S. Customs Laboratory

Methods Manual in the testing of designated commodities, unless the

Executive Director gives written permission to use an alternate method.

Alternative methods will be considered and approved on a case-by-case

basis.

(f) How would a commercial laboratory become a Customs-accredited

laboratory? (1) What should an application contain? An application for

Customs accreditation must contain the following information:

(i) The applicant's legal name and the address of its principal

place of business and any other facility out of which it will work;

(ii) Detailed statements of ownership and any partnerships, parent-

subsidiary relationships, or affiliations with any other domestic or

foreign organizations, including, but not limited to, importers, other

commercial laboratories, producers, refiners, Customs brokers, or

carriers;

(iii) A statement of financial condition;

(iv) If a corporation, a copy of the articles of incorporation and

the names of all officers and directors;

(v) The names, titles, and qualifications of each person who will

be authorized to sign or approve analysis reports on behalf of the

commercial laboratory;

(vi) A complete description of the applicant's facilities,

instruments, and equipment;

(vii) An express agreement that if notified by Customs of pending

accreditation to execute a bond in accordance with part 113, Customs

Regulations (19 CFR part 113), and submit it to the Customs port

nearest to the applicant's main office. (The limits of liability on the

bond will be established by the Customs port in consultation with the

Executive Director. In order to retain Customs accreditation, the

laboratory must maintain an adequate bond, as determined by the port

director);

(viii) A listing of each commodity group for which accreditation is

being sought and, if methods are being submitted for approval which are

not specifically provided for in a Commodity Group Brochure and the

U.S. Customs Laboratory Methods Manual, a listing of such methods;

(ix) A listing by commodity group of each method according to its

Customs Laboratory Method Number for which the laboratory is seeking

accreditation;

(x) An express agreement to be bound by the obligations contained

in paragraph (c) of this section; and,

(xi) A nonrefundable pre-payment equal to 50 percent of the fixed

accreditation fee, as published in the Federal Register and Customs

Bulletin, to cover preliminary processing costs. Further, the applicant

agrees to pay Customs within 30 days of notification of preliminary

accreditation the associated charges assessed for accreditation, i.e.,

those charges for actual travel and background

[[Page 48536]]

investigation costs, and the balance of the fixed accreditation fee.

(2) Where should an application be sent? A commercial laboratory

seeking accreditation or an extension of an existing accreditation must

send a letter of application to the U.S. Customs Service, Attention:

Executive Director, Laboratories & Scientific Services, 1300

Pennsylvania Ave., NW, Washington, D.C. 20229.

(3) How will an application be reviewed?

(i) Physical plant and management system. The facility of the

applicant will be inspected to ensure that it is properly equipped to

perform the necessary tests and that staff personnel are capable of

performing required tests. Customs evaluation of an applicant's

professional abilities will be in accordance with the general criteria

contained in either the American Society for Testing and Materials

(ASTM) E548 (Standard Guide for General Criteria Used for Evaluating

Laboratory Competence) or the ISO/IEC Guide 25 (General Requirements

for the Competence of Calibration and Testing Laboratories). This

review will ascertain the laboratory's ability to manage and control

the acquisition of technical data. The review will be performed at the

time of initial application and upon reaccreditation at three-year

intervals.

(ii) Ability to perform tests on specified commodity groups. For

each commodity group applied for, the applicant will undergo a separate

review of testing capabilities. The specific accreditation will be

based on the laboratory's ability to perform the tests required for

that commodity group. This will include the qualifications of the

technical personnel in this field and the instrument availability

required by the test methods. Maintenance of accreditation will be

ongoing and may require the submission of test results on periodic

check samples. The criteria for acceptance will be based on the

laboratory's ability to produce a work product that assists in the

proper classification and entry of imported merchandise.

(iii) Determination of competence. The Executive Director will

determine the applicant's overall competence, independence, and

character by conducting on-site inspections, which may include

demonstrations by the applicant of analysis procedures and a review of

analysis records submitted, and background investigations. The

Executive Director may also conduct proficiency testing through check

samples.

(iv) Evaluation of technical and operational requirements. Customs

will determine whether the following technical and operational

requirements are met:

(A) Equipment. The laboratory must be equipped with all of the

instruments and equipment needed to conduct the tests for which it is

accredited. The laboratory must ensure that all instruments and

equipment are properly calibrated, checked, and maintained.

(B) Facilities. The laboratory must have, at a minimum, adequate

space, lighting, and environmental controls to ensure compliance with

the conditions prescribed for appropriate test procedures.

(C) Personnel. The laboratory must be staffed with persons having

the necessary education, training, knowledge, and experience for their

assigned functions (e.g., maintaining equipment, calibrating

instruments, performing laboratory analyses, evaluating analytical

results, and signing analysis reports on behalf of the laboratory). In

general, each technical staff member should hold, at a minimum, a

bachelor's degree in science or have two years related experience in an

analytical laboratory.

(g) How will an applicant be notified concerning accreditation?

(1) Notice of approval or nonselection. When Customs evaluation of

a laboratory's credentials is completed, the Executive Director will

notify the laboratory in writing of its preliminary approval or

nonselection. (Final approval determinations will not be made until the

applicant has satisfied all bond requirements and made payment on all

assessed charges and the balance of the applicable accreditation fee).

Notices of nonselection will state the specific grounds for the

determination. All final notices of accreditation, reaccreditation, or

extension of existing Customs accreditation will be published in the

Federal Register and Customs Bulletin.

(2) Grounds for nonselection. The Executive Director may deny a

laboratory's application for any of the following reasons:

(i) The application contains false or misleading information

concerning a material fact;

(ii) The laboratory, a principal of the laboratory, or a person the

Executive Director determines is exercising substantial ownership or

control over the laboratory operation is indicted for, convicted of, or

has committed acts which would:

(A) Under United States federal or state law, constitute a felony

or misdemeanor involving misstatements, fraud, or a theft-related

offense; or

(B) Reflect adversely on the business integrity of the applicant;

(iii) A determination is made that the laboratory-applicant does

not possess the technical capability, have adequate facilities, or

management to perform the approved methods of analysis for Customs

purposes;

(iv) A determination is made that the laboratory has submitted

false reports or statements concerning the sampling of merchandise, or

that the applicant was subject to sanctions by state, local, or

professional administrative bodies for such conduct;

(v) Nonpayment of assessed charges and the balance of the fixed

accreditation fee; or

(vi) Failure to execute a bond in accordance with part 113 of this

chapter.

(3) Adverse accreditation decisions; appeal procedures.

(i) Preliminary notice. A laboratory which is not selected for

accreditation will be sent a preliminary notice of action which states

the specific grounds for nonselection and advises that the laboratory

may file a response with the Executive Director within 30 calendar days

of receipt of the preliminary notice addressing the grounds for

nonselection.

(ii) Final notice. If the laboratory does not respond to the

preliminary notice, a final notice of nonselection will be issued by

the Executive Director after 30 calendar days of receipt of the

preliminary notice which states the specific grounds for the

nonselection and advises that the laboratory may administratively

appeal the final notice of nonselection to the Assistant Commissioner

within 30 calendar days of receipt of the final notice. If the

laboratory files a timely response, then the Executive Director, within

30 calendar days of receipt of the response, will issue a final

determination regarding the laboratory's accreditation. If this final

determination is adverse to the laboratory, then the final notice of

nonselection will state the specific grounds for nonselection and

advise the laboratory that it may administratively appeal the final

notice of nonselection to the Assistant Commissioner within 30 calendar

days of receipt of the final notice.

(iii) Appeal decision. The Assistant Commissioner will issue a

decision on the appeal within 30 calendar days of receipt of the

appeal. If the appeal decision is adverse to the laboratory, then the

laboratory may choose to pursue one of the following two options:

(A) Submit a new application for accreditation to the Executive

Director after waiting 90 days from the date of the Executive

Director's last decision; or

(B) File an action with the Court of International Trade, pursuant

to chapter

[[Page 48537]]

169 of title 28, United States Code, within 60 days after the issuance

of the Executive Director's final decision.

(h) What are the accreditation/reaccreditation fee requirements?

(1) In general. A fixed fee, representing Customs administrative

overhead expense, will be assessed for each application for

accreditation or reaccreditation. In addition, associated assessments,

representing the actual costs associated with travel and per diem of

Customs employees related to verification of application criteria and

background investigations will be charged. The combination of the fixed

fee and associated assessments represent reimbursement to Customs for

costs related to accreditation and reaccreditation. The fixed fee will

be published in the Customs Bulletin and the Federal Register. Based on

a review of the actual costs associated with the program, the fixed fee

may be adjusted periodically; any changes will be published in the

Customs Bulletin and the Federal Register.

(i) Accreditation fees. A nonrefundable pre-payment equal to 50

percent of the fixed accreditation fee to cover preliminary processing

costs must accompany each application for accreditation. Before a

laboratory will be accredited, it must remit to Customs, at the address

specified in the billing, within the 30 day billing period, the

associated charges assessed for the accreditation and the balance of

the fixed accreditation fee.

(ii) Reaccreditation fees. Before a laboratory will be

reaccredited, it must submit to Customs, at the billing address

specified, within the 30 day billing period the fixed reaccreditation

fee.

(2) Disputes. In the event a laboratory disputes the charges

assessed for travel and per diem costs associated with scheduled

inspection visits, it may file an appeal within 30 calendar days of the

date of the assessment with the Executive Director. The appeal letter

must specify which charges are in dispute and provide such supporting

documentation as may be available for each allegation. The Executive

Director will make findings of fact concerning the merits of an appeal

and communicate the agency decision to the laboratory in writing within

30 calendar days of the date of the appeal.

(i) Can existing Customs-accredited laboratories continue to

operate? Commercial laboratories accredited by the Executive Director

prior to December 8, 1993, will retain that accreditation under these

regulations provided they conduct their business in a manner consistent

with the administrative portions of this section. This paragraph does

not pertain to any laboratory which has had its accreditation suspended

or revoked. Laboratories which have had their accreditations continued

under this section will have their status reevaluated on their next

triennial inspection date which is no earlier than three years after

the effective date of this regulation. At the time of reaccreditation,

these laboratories must meet the requirements of this section and remit

to Customs, at the address specified in the billing, within the 30 day

billing period, the fixed reaccreditation fee. Failure to meet these

requirements will result in revocation or suspension of the

accreditation.

(j) How will Customs-accredited laboratories operate?

(1) Samples for testing. Upon request by the importer of record of

merchandise, the port director will release a representative sample of

the merchandise for testing by a Customs-accredited laboratory at the

expense of the importer. Under Customs supervision, the sample will be

split into two essentially equal parts and given to the Customs-

accredited laboratory. One portion of the sample may be used by the

Customs-accredited laboratory for its testing. The other portion must

be retained by the laboratory, under appropriate storage conditions,

for Customs use, as necessary, unless Customs requires other specific

procedures. Upon request, the sample portion reserved for Customs

purposes must be surrendered to Customs.

(i) Retention of non-perishable samples. Non-perishable samples

reserved for Customs and sample remnants from any testing must be

retained by the accredited laboratory for a period of four months from

the date of the laboratory's final analysis report, unless other

instructions are issued in writing by Customs. At the end of this

retention time period, the accredited laboratory may dispose of the

retained samples and sample remnants in a manner consistent with

federal, state, and local statutes.

(ii) Retention of perishable samples. Perishable samples reserved

for Customs and sample remnants from any testing can be disposed of

more expeditiously than provided for at paragraph (j)(1)(i) of this

section, if done in accordance with acceptable laboratory procedures,

unless other instructions are issued in writing by Customs.

(2) Reports. (i) Contents of reports. Testing data must be obtained

using methods approved by the Executive Director. The testing results

from a Customs-accredited laboratory that are submitted by an importer

of record with respect to merchandise in an entry, in the absence of

testing conducted by Customs laboratories, will be accepted by Customs,

provided that the importer of record certifies that the sample tested

was taken from the merchandise in the entry and the report establishes

elements relating to the admissibility, quantity, composition, or

characteristics of the merchandise entered, as required by law.

(ii) Status of commercial reports where Customs also tests

merchandise. Nothing in these regulations will preclude Customs from

sampling and testing merchandise from a shipment which has been sampled

and tested by a Customs-accredited laboratory at the request of an

importer. In cases where a shipment has been analyzed by both Customs

and a Customs-accredited laboratory, all Customs actions will be based

upon the analysis provided by the Customs laboratory, unless the

Executive Director advises otherwise. If Customs tests merchandise, it

will release the results of its test to the importer of record or its

agent upon request unless the testing information is proprietary to the

holder of a copyright or patent, or developed by Customs for

enforcement purposes.

(3) Recordkeeping requirements. Customs-accredited laboratories

must maintain records of the type normally kept in the ordinary course

of business in accordance with the provisions of this chapter and any

other applicable provision of law, and make them available during

normal business hours for Customs inspection. In addition, these

laboratories must maintain all records necessary to permit the

evaluation and verification of all Customs-related work, including, as

appropriate, those described below. All records must be maintained for

five years, unless the laboratory is notified in writing by Customs

that a longer retention time is necessary for particular records.

Electronic data storage and transmission may be approved by Customs.

(i) Sample records. Records for each sample tested for Customs

purposes must be readily accessible and contain the following

information:

(A) A unique identifying number;

(B) The date when the sample was received or taken;

(C) The identity of the commodity (e.g. crude oil);

(D) The name of the client;

(E) The source of the sample (e.g., name of vessel, flight number

of airline,

[[Page 48538]]

name of individual taking the sample); and

(F) If available, the Customs entry date, entry number, and port of

entry and the names of the importer, exporter, manufacturer, and

country-of-origin.

(ii) Major equipment records. Records for each major piece of

equipment or instrument (including analytical balances) used in

Customs-related work must identify the name and type of instrument, the

manufacturer's name, the instrument's model and any serial numbers, and

the occurrence of all servicing performed on the equipment or

instrument, to include recalibration and any repair work, identifying

who performed the service and when.

(iii) Records of analytical procedures. The Customs-accredited

laboratory must maintain complete and up-to-date copies of all approved

analytical procedures, calibration methods, etc., and must document the

procedures each staff member is authorized to perform. These procedures

must be readily available to appropriate staff.

(iv) Laboratory analysis records. The Customs-accredited laboratory

must identify each analysis by sample record number (see paragraph

(j)(3)(i) of this section) and must maintain all information or data

(such as sample weights, temperatures, references to filed spectra,

etc.) associated with each Customs-related laboratory analysis. Each

analysis record must be dated and initialed or signed by the staff

member(s) who did the work.

(v) Laboratory analysis reports. Each laboratory analysis report

submitted to Customs must include:

(A) The name and address of the Customs-accredited laboratory;

(B) A description and identification of the sample, including its

unique identifying number;

(C) The designations of each analysis procedure used;

(D) The analysis report itself (i.e., the pertinent characteristics

of the sample);

(E) The date of the report; and

(F) The typed name and signature of the person accepting technical

responsibility for the analysis report (i.e., an approved signatory).

(4) Representation of Customs-accredited status. Commercial

laboratories accredited by Customs must limit statements or wording

regarding their accreditation to an accurate description of the tests

for the commodity group(s) for which accreditation has been obtained.

Use of terms other than those appearing in the notice of accreditation

(see paragraph (g) of this section) is prohibited.

(5) Subcontracting prohibited. Customs-accredited laboratories must

not subcontract Customs-related analysis work to non Customs-accredited

laboratories or non Customs-approved gaugers, but may subcontract to

other facilities that are Customs-accredited/approved and in good

standing.

(k) How can a laboratory have its accreditation suspended or

revoked or be required to pay a monetary penalty?

(1) Grounds for suspension, revocation, or assessment of a monetary

penalty. (i) In general. The Executive Director may immediately suspend

or revoke a laboratory's accreditation only in cases where the

laboratory's actions are intentional violations of any Customs law or

when required by public health or safety. In other situations where the

Executive Director has cause, the Executive Director will propose the

suspension or revocation of a laboratory's accreditation or propose a

monetary penalty and provide the laboratory with the opportunity to

respond to the notice of proposed action.

(ii) Specific grounds. A laboratory's accreditation may be

suspended or revoked, or a monetary penalty may be assessed because:

(A) The selection was obtained through fraud or the misstatement of

a material fact by the laboratory;

(B) The laboratory, a principal of the laboratory, or a person the

port director determines is exercising substantial ownership or control

over the laboratory operation is indicted for, convicted of, or has

committed acts which would: under United States federal or state law,

constitute a felony or misdemeanor involving misstatements, fraud, or a

theft-related offense; or reflect adversely on the business integrity

of the applicant. In the absence of an indictment, conviction, or other

legal process, the port director must have probable cause to believe

the proscribed acts occurred;

(C) Staff laboratory personnel refuse or otherwise fail to follow

any proper order of a Customs officer or any Customs order, rule, or

regulation;

(D) The laboratory fails to operate in accordance with the

obligations of paragraph (c) of this section;

(E) A determination is made that the laboratory is no longer

technically or operationally proficient at performing the approved

methods of analysis for Customs purposes;

(F) The laboratory fails to remit to Customs, at the billing

address specified, within the 30 day billing period the associated

charges assessed for the accreditation and the balance of the fixed

accreditation fee;

(G) The laboratory fails to maintain its bond;

(H) The laboratory fails to remit to Customs, at the billing

address specified, within the 30 day billing period, the fixed

reaccreditation fee; or

(I) The laboratory fails to remit any monetary penalty assessed

under this section.

(iii) Assessment of monetary penalties. The assessment of a

monetary penalty under this section, may be in lieu of, or in addition

to, a suspension or revocation of accreditation under this section. The

monetary penalty may not exceed $100,000 per violation and will be

assessed and administered pursuant to published guidelines. Any

monetary penalty under this section can be in addition to the recovery

of:

(A) Any loss of revenue, in cases where the laboratory

intentionally falsified the analysis report in collusion with the

importer, pursuant to 19 U.S.C. 1499(b)(1)(B)(i); or

(B) Liquidated damages assessed under the laboratory's Customs

bond.

(2) Notice. When a decision to suspend or revoke accreditation,

and/or assess a monetary penalty is made, the Executive Director will

immediately notify the laboratory in writing of the decision,

indicating whether the action is effective immediately or is proposed.

(i) Immediate suspension or revocation. Where the suspension or

revocation of accreditation is immediate, the Executive Director will

issue a notice of determination which will state the specific grounds

for the immediate suspension or revocation and advise the laboratory

that, in accordance with paragraph (k)(3) of this section, it may

administratively appeal the determination to the Assistant Commissioner

within 30 calendar days of the notice of determination. The laboratory

may not perform any Customs-accredited functions during the appeal

period.

(ii) Proposed suspension, revocation, or assessment of monetary

penalty.

(A) Preliminary notice. Where the suspension or revocation of

accreditation, and/or the assessment of a monetary penalty is proposed,

the Executive Director will issue a preliminary notice of action which

will state the specific grounds for the proposed action and advise the

laboratory that it has 30 calendar days to respond. The laboratory may

respond by accepting responsibility, explaining extenuating

circumstances, and/or providing rebuttal evidence. The laboratory also

may ask for a meeting with the Executive Director or his designee to

discuss the proposed action. The laboratory may continue to perform

[[Page 48539]]

functions requiring Customs-accreditation during this 30-day period. If

the laboratory does not respond to the preliminary notice, a notice of

adverse determination, in accordance with paragraph (k)(2)(ii)(B) of

this section, will be issued by the Executive Director after 30

calendar days of receipt of the preliminary notice. If the laboratory

files a timely response, then the Executive Director, within 30

calendar days of receipt of the response, will issue a notice of

determination. If this determination is adverse to the laboratory, a

notice of adverse determination, in accordance with paragraph

(k)(2)(ii)(B) of this section, will be issued by the Executive Director

after 30 calendar days of receipt of the response.

(B) Notice of adverse determination. A notice of adverse

determination will state the action being taken, specific grounds for

the determination, and advise the laboratory that it may

administratively appeal the adverse determination to the Assistant

Commissioner, in accordance with paragraph (k)(3) of this section. The

laboratory may not continue to perform any Customs-accredited functions

upon receiving a notice of adverse determination that its accreditation

has been suspended or revoked.

(3) Appeal. A Customs-accredited laboratory receiving an adverse

determination from the Executive Director that its accreditation has

been suspended or revoked, and/or that it has been assessed a monetary

penalty may file an administrative appeal to the Assistant Commissioner

within 30 calendar days of the notice of determination. If the

laboratory does not file an administrative appeal, the determination

made by the Executive Director in paragraph (k)(2) of this section will

become a final agency decision which will be communicated to the

laboratory by a notice of final action issued 30 days after the notice

of determination. If the laboratory does file a timely appeal, then the

Assistant Commissioner, within 30 calendar days of receipt of the

appeal, will make a final agency decision regarding the laboratory's

suspension or revocation of accreditation, and/or assessment of a

monetary penalty. If the final agency decision is adverse to the

laboratory, the decision will be communicated to the laboratory by a

notice of final action. Any adverse final agency decision will be

communicated to the public by a publication in the Federal Register and

Customs Bulletin, giving the effective date, duration, and scope of the

decision. Any notice of adverse final action communicated to a

laboratory will state the action taken, the specific grounds for the

action, and advise the laboratory that it may choose to :

(i) If suspended or revoked, submit a new application to the

Executive Director after waiting 90 days from the date of the Executive

Director's notice of final action; or

(ii) File an action with the Court of International Trade, pursuant

to chapter 169 of title 28, United States Code, within 60 days after

the issuance of the Executive Director's notice of final action.

3. Section 151.13 is revised to read as follows:

Sec. 151.13 Approval of commercial gaugers.

This section sets forth the requirements for commercial gaugers to

obtain approval by Customs for the measuring of certain merchandise,

and explains the operation of such approved gaugers. This section also

provides for the imposition of approval and reapproval fees, sets forth

grounds for the suspension or revocation of approval, and provides for

the imposition of a monetary penalty for an approved commercial gauger

that fails to adhere to the provisions of this section.

(a) What is a ``Customs-approved gauger''? ``Commercial gaugers''

are individuals and commercial organizations that measure, gauge, or

sample merchandise (usually merchandise in bulk form) and who deal

mainly with animal and vegetable oils, petroleum, petroleum products,

and bulk chemicals. A ``Customs-approved gauger'' is a commercial

concern, within the United States, that has demonstrated, to the

satisfaction of the Executive Director (defined at Sec. 151.12(a)),

pursuant to this section, the capability to perform certain gauging and

measurement procedures for certain commodities. Customs approval

extends only to the performance of such functions as are vested in, or

delegated to, Customs.

(b) What are the obligations of a Customs-approved gauger? A

commercial gauger approved by Customs agrees to the following

conditions and requirements:

(1) To comply with the requirements of part 151, Customs

Regulations (19 CFR part 151), and to conduct professional services in

conformance with approved standards and procedures, including

procedures which may be required by the Commissioner of Customs or the

Executive Director;

(2) To have no interest in or other connection with any business or

other activity which might affect the unbiased performance of duties as

a Customs-approved gauger. It is understood that this does not prohibit

acceptance of the usual fees for professional services;

(3) To maintain the ability, i.e., the instrumentation, equipment,

qualified staff, facilities, etc., to perform the services for which

the gauger is approved, and allow the Executive Director to evaluate

that ability on a periodic basis by such means as on-site inspections,

demonstrations of gauging procedures, and reviews of submitted records;

(4) To retain those gauger records beyond the five-year record-

retention period specified by Customs as necessary to address matters

concerned in pending litigation, and, if gauger operations or approval

cease, to contact Customs immediately regarding the disposition of

records retained;

(5) To promptly investigate any circumstance which might affect the

accuracy of work performed as an approved gauger, to correct the

situation immediately, and to notify both the port director and the

Executive Director of such matters, their consequences, and any

corrective action taken or that needs to be taken; and

(6) To immediately notify both the port director and the Executive

Director of any attempt to impede, influence, or coerce gauger

personnel in the performance of their duties, or of any decision to

terminate gauger operations or approval status. Further, within 5 days

of any changes involving legal name, address, ownership, parent-

subsidiary relationships, bond, other offices or sites, or approved

signatories to notify the Executive Director by certified mail.

(c) What are the approved measurement procedures? Customs-approved

gaugers must comply with appropriate procedures published by such

professional organizations as the American Society for Testing and

Materials (ASTM) and the American Petroleum Institute (API), unless the

Executive Director gives written permission to use an alternate method.

Alternative methods will be considered and approved on a case-by-case

basis.

(d) How would a commercial gauger become a Customs-approved gauger?

(1) What should an application contain? An application for Customs

approval must contain the following information:

(i) The applicant's legal name and the address of its principal

place of business and any other facility out of which it will work;

(ii) Detailed statements of ownership and any partnerships, parent-

subsidiary relationships, or affiliations with any other domestic or

foreign organizations, including, but not limited to, importers,

[[Page 48540]]

producers, refiners, Customs brokers, or carriers;

(iii) A statement of financial condition;

(iv) If a corporation, a copy of the articles of incorporation and

the names of all officers and directors;

(v) The names, titles, and qualifications of each person who will

be authorized to sign or approve gauging reports on behalf of the

commercial gauger;

(vi) A complete description of the applicant's facilities,

instruments, and equipment;

(vii) An express agreement that if notified by Customs of pending

approval to execute a bond in accordance with part 113, Customs

Regulations (19 CFR part 113), and submit it to the Customs port

nearest to the applicant's main office. (The limits of liability on the

bond will be established by the Customs port in consultation with the

Executive Director. In order to retain Customs approval, the gauger

must maintain an adequate bond, as determined by the port director);

(viii) An express agreement to be bound by the obligations

contained in paragraph (b) of this section; and,

(ix) A nonrefundable pre-payment equal to 50 percent of the fixed

approval fee, as published in the Federal Register and Customs

Bulletin, to cover preliminary processing costs. Further, the applicant

agrees to pay Customs within 30 days of notification of preliminary

approval the associated charges assessed for approval, i.e., those

charges for actual travel and background investigation costs, and the

balance of the fixed approval fee.

(2) Where should an application be sent? A commercial gauger

seeking approval or an extension of an existing approval must send a

letter of application to the U.S. Customs Service, Attention: Executive

Director, Laboratories & Scientific Services, 1300 Pennsylvania Ave.,

NW, Washington, D.C. 20229.

(3) How will an application be reviewed?

(i) Determination of competence. The Executive Director will

determine the applicant's overall competence, independence, and

character by conducting on-site inspections, which may include

demonstrations by the applicant of gauging procedures and a review of

records submitted, and background investigations. The Executive

Director may also conduct proficiency testing through check samples.

(ii) Evaluation of technical and operational requirements. Customs

will determine whether the following technical and operational

requirements are met:

(A) Equipment. The facility must be equipped with all of the

instruments and equipment needed to conduct approved services. The

gauger must ensure that all instruments and equipment are properly

calibrated, checked, and maintained.

(B) Facilities. The facility must have, at a minimum, adequate

space, lighting, and environmental controls to ensure compliance with

the conditions prescribed for appropriate measurements.

(C) Personnel. The facility must be staffed with persons having the

necessary education, training, knowledge, and experience for their

assigned functions (e.g., maintaining equipment, calibrating

instruments, performing gauging services, evaluating gauging results,

and signing gauging reports on behalf of the commercial gauger). In

general, each technical staff member should have, at a minimum, six

months training and experience in gauging.

(e) How will an applicant be notified concerning approval?

(1) Notice of approval or nonselection. When Customs evaluation of

a gauger's credentials is completed, the Executive Director will notify

the gauger in writing of its preliminary approval or nonselection.

(Final approval determinations will not be made until the applicant has

satisfied all bond requirements and made payment on all assessed

charges and the balance of the applicable accreditation fee). Notices

of nonselection will state the specific grounds for the determination.

All final notices of approval, reapproval, or extension of existing

Customs approval will be published in the Federal Register and Customs

Bulletin.

(2) Grounds for nonselection. The Executive Director may deny a

gauger's application for any of the following reasons:

(i) The application contains false or misleading information

concerning a material fact;

(ii) The gauger, a principal of the gauging facility, or a person

the Executive Director determines is exercising substantial ownership

or control over the gauger operation is indicted for, convicted of, or

has committed acts which would:

(A) Under United States federal or state law, constitute a felony

or misdemeanor involving misstatements, fraud, or a theft-related

offense; or

(B) Reflect adversely on the business integrity of the applicant;

(iii) A determination is made that the gauger-applicant does not

possess the technical capability, have adequate facilities, or

management to perform the approved methods of measurement for Customs

purposes;

(iv) A determination is made that the gauger has submitted false

reports or statements concerning the measurement of merchandise, or

that the applicant was subject to sanctions by state, local, or

professional administrative bodies for such conduct;

(v) Nonpayment of assessed charges and the balance of the fixed

approval fee; or

(vi) Failure to execute a bond in accordance with part 113 of this

chapter.

(3) Adverse approval decisions; appeal procedures.--(i) Preliminary

notice. A gauger which is not selected for approval will be sent a

preliminary notice of action which states the specific grounds for

nonselection and advises that the gauger may file a response with the

Executive Director within 30 calendar days of receipt of the

preliminary notice addressing the grounds for nonselection.

(ii) Final notice. If the gauger does not respond to the

preliminary notice, a final notice of nonselection will be issued by

the Executive Director after 30 calendar days of receipt of the

preliminary notice which states the specific grounds for the

nonselection and advises that the gauger may administratively appeal

the final notice of nonselection to the Assistant Commissioner within

30 calendar days of receipt of the final notice. If the gauger files a

timely response, then the Executive Director, within 30 calendar days

of receipt of the response, will issue a final determination regarding

the gauger's approval. If this final determination is adverse to the

gauger, then the final notice of nonselection will state the specific

grounds for nonselection and advise the gauger that it may

administratively appeal the final notice of nonselection to the

Assistant Commissioner within 30 calendar days of receipt of the final

notice.

(iii) Appeal decision. The Assistant Commissioner will issue a

decision on the appeal within 30 calendar days of receipt of the

appeal. If the appeal decision is adverse to the gauger, then the

gauger may choose to pursue one of the following two options:

(A) Submit a new application for approval to the Executive Director

after waiting 90 days from the date of the Executive Director's last

decision; or

(B) File an action with the Court of International Trade, pursuant

to chapter 169 of title 28, United States Code,

[[Page 48541]]

within 60 days after the issuance of the Executive Director's final

decision.

(f) What are the approval/reapproval fee requirements?

(1) In general. A fixed fee, representing Customs administrative

overhead expense, will be assessed for each application for approval or

reapproval. In addition, associated assessments, representing the

actual costs associated with travel and per diem of Customs employees

related to verification of application criteria and background

investigations will be charged. The combination of the fixed fee and

associated assessments represent reimbursement to Customs for costs

related to approval and reapproval. The fixed fee will be published in

the Customs Bulletin and the Federal Register. Based on a review of the

actual costs associated with the program, the fixed fee may be adjusted

periodically; any changes will be published in the Customs Bulletin and

the Federal Register.

(i) Approval fees. A nonrefundable pre-payment equal to 50 percent

of the fixed approval fee to cover preliminary processing costs must

accompany each application for approval. Before a gauger will be

approved, it must submit to Customs, at the address specified in the

billing, within the 30 day billing period the associated charges

assessed for the approval and the balance of the fixed approval fee.

(ii) Reapproval fees. Before a gauger will be reapproved, it must

submit to Customs, at the billing address specified, within the 30 day

billing period, the fixed reapproval fee.

(2) Disputes. In the event a gauger disputes the charges assessed

for travel and per diem costs associated with scheduled inspection

visits, it may file an appeal within 30 calendar days of the date of

the assessment with the Executive Director. The appeal letter must

specify which charges are in dispute and provide such supporting

documentation as may be available for each allegation. The Executive

Director will make findings of fact concerning the merits of an appeal

and communicate the agency decision to the gauger in writing within 30

calendar days of the date of the appeal.

(g) Can existing Customs-approved gaugers continue to operate?

Commercial gaugers approved by the Executive Director prior to December

8, 1993, will retain approval under these regulations provided that

they conduct their business in a manner consistent with the

administrative portions of this section. This paragraph does not

pertain to any gauger which has had its approval suspended or revoked.

Gaugers which have had their approvals continued under this section

will have their status reevaluated on their next triennial inspection

date which is no earlier than three years after the effective date of

this regulation. At the time of reapproval, these gaugers must meet the

requirements of this section and remit to Customs, at the address

specified in the billing, within the 30 day billing period the fixed

reapproval fee. Failure to meet these requirements will result in

revocation or suspension of the approval.

(h) How will Customs-approved gaugers operate?

(1) Reports. (i) Contents of reports. The measurement results from

a Customs-approved gauger that are submitted by an importer of record

with respect to merchandise in an entry, in the absence of measurements

conducted by Customs, will be accepted by Customs, provided that the

importer of record certifies that the measurement was of the

merchandise in the entry. All reports must measure net landed quantity,

except in the case of crude petroleum of Heading 2709, Harmonized

Tariff Schedule of the United States (HTSUS), which may be measured by

gross quantity. Reports must use the appropriate HTSUS units of

quantity, e.g., liters, barrels, or kilograms.

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

HTSUS Product Unit of quantity

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

Headings 1501-1515.......... Animal and vegetable Kilogram.

oils.

Subheadings 2707.10-2707.30 Benzene, toluene and Liter.

and 2902.20-2902.44. xylene.

Heading 2709................ Crude Petroleum..... Barrel.

Heading 2710 (various Fuel oils, motor Barrel.

subheadings). oils, kerosene,

naphtha,

lubricating oils.

Chapter 29 (various Organic compounds in Kilogram, liter,

subheadings). bulk and liquid etc.

form.

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

(ii) Status of commercial reports where Customs also gauges

merchandise. Nothing in these regulations will preclude Customs from

gauging a shipment which has been gauged by a Customs-approved gauger

at the request of an importer. In cases where a shipment has been

gauged by both Customs and a Customs-approved gauger, all Customs

actions will be based upon the gauging reports issued by Customs,

unless the Executive Director advises other actions. If Customs gauges

merchandise, it will release the report of its measurements to the

importer of record or its agent upon request unless the gauging

information is proprietary to the holder of a copyright or patent, or

developed by Customs for enforcement purposes.

(2) Recordkeeping requirements. Customs-approved gaugers must

maintain records of the type normally kept in the ordinary course of

business in accordance with the provisions of this chapter and any

other applicable provisions of law, and make them available during

normal business hours for Customs inspection. In addition, these

gaugers must maintain all records necessary to permit the evaluation

and verification of all Customs-related work, including, as

appropriate, those described below. All records must be maintained for

five years, unless the gauger is notified in writing by Customs that a

longer retention time is necessary for particular records. Electronic

data storage and transmission may be approved by Customs.

(i) Transaction records. Records for each Customs-related

transaction must be readily accessible and have the following:

(A) A unique identifying number;

(B) The date and location where the transaction occurred;

(C) The identity of the product (e.g. crude oil);

(D) The name of the client;

(E) The source of the product (e.g., name of vessel, flight number

of airline); and

(F) If available, the Customs entry date, entry number, and port of

entry and the names of the importer, exporter, manufacturer, and

country-of-origin.

(ii) Major equipment records. Records for each major piece of

equipment used in Customs-related work must identify the name and type

of instrument, the manufacturer's name, the instrument's model and any

serial numbers, and the occurrence of all servicing performed on the

equipment or instrument, to include recalibration and any repair work,

[[Page 48542]]

identifying who performed the service and when.

(iii) Records of gauging procedures. The Customs-approved gauger

must maintain complete and up-to-date copies of all approved gauging

procedures, calibration methods, etc., and must document the procedures

that each staff member is authorized to perform. These procedures must

be readily available to appropriate staff.

(iv) Gauging records. The Customs-approved gauger must identify

each transaction by transaction record number (see paragraph (h)(2)(i)

of this section) and must maintain all information or data (such as

temperatures, etc.) associated with each Customs-related gauging

transaction. Each gauging record (i.e., the complete file of all data

for each separate transaction) must be dated and initialed or signed by

the staff member(s) who did the work.

(v) Gauging reports. Each gauging report submitted to Customs must

include:

(A) The name and address of the Customs-approved gauger;

(B) A description and identification of the transaction, including

its unique identifying number;

(C) The designations of each gauging procedure used;

(D) The gauging report itself (i.e., the quantity of the

merchandise);

(E) The date of the report; and

(F) The typed name and signature of the person accepting technical

responsibility for the gauging report (i.e., an approved signatory).

(3) Representation of Customs-approved status. Commercial gaugers

approved by Customs must limit statements or wording regarding their

approval to an accurate description of the commodities for which

approval has been obtained. Use of terms other than those appearing in

the notice of approval (see paragraph (e) of this section) is

prohibited.

(4) Subcontracting prohibited. Customs-approved gaugers must not

subcontract Customs-related work to non Customs-approved gaugers or non

Customs-accredited laboratories, but may subcontract to other

facilities that are Customs-approved/accredited and in good standing.

(i) How can a gauger have its approval suspended or revoked or be

required to pay a monetary penalty?

(1) Grounds for suspension, revocation, or assessment of a monetary

penalty. (i) In general. The Executive Director may immediately suspend

or revoke a gauger's approval only in cases where the gauger's actions

are intentional violations of any Customs law or when required by

public health or safety. In other situations where the Executive

Director has cause, the Executive Director will propose the suspension

or revocation of a gauger's approval or propose a monetary penalty and

provide the gauger with the opportunity to respond to the notice of

proposed action.

(ii) Specific grounds. A gauger's approval may be suspended or

revoked, or a monetary penalty may be assessed because:

(A) The selection was obtained through fraud or the misstatement of

a material fact by the gauger;

(B) The gauger, a principal of the gauging facility, or a person

the port director determines is exercising substantial ownership or

control over the gauger operation is indicted for, convicted of, or has

committed acts which would: under United States federal or state law,

constitute a felony or misdemeanor involving misstatements, fraud, or a

theft-related offense; or reflect adversely on the business integrity

of the applicant. In the absence of an indictment, conviction, or other

legal process, the port director must have probable cause to believe

the proscribed acts occurred;

(C) Staff gauger personnel refuse or otherwise fail to follow any

proper order of a Customs officer or any Customs order, rule, or

regulation;

(D) The gauger fails to operate in accordance with the obligations

of paragraph (b) of this section;

(E) A determination is made that the gauger is no longer

technically or operationally proficient at performing the approved

methods of measurement for Customs purposes;

(F) The gauger fails to remit to Customs, at the billing address

specified, within the 30 day billing period the associated charges

assessed for the approval and the balance of the fixed approval fee;

(G) The gauger fails to maintain its bond;

(H) The gauger fails to remit to Customs, at the billing address

specified, within the 30 day billing period the fixed reapproval fee;

or

(I) The gauger fails to remit any monetary penalty assessed under

this section.

(iii) Assessment of monetary penalties. The assessment of a

monetary penalty under this section, may be in lieu of, or in addition

to, a suspension or revocation of approval under this section. The

monetary penalty may not exceed $100,000 per violation and will be

assessed and administered pursuant to published guidelines. Any

monetary penalty under this section can be in addition to the recovery

of:

(A) Any loss of revenue, in cases where the gauger intentionally

falsified the gauging report in collusion with the importer, pursuant

to 19 U.S.C. 1499(b)(1)(B)(i); or

(B) Liquidated damages assessed under the gauger's Customs bond.

(2) Notice. When a decision to suspend or revoke approval, and/or

assess a monetary penalty is made, the Executive Director will

immediately notify the gauger in writing of the decision, indicating

whether the action is effective immediately or is proposed.

(i) Immediate suspension or revocation. Where the suspension or

revocation of approval is immediate, the Executive Director will issue

a notice of determination which will state the specific grounds for the

immediate suspension or revocation and advise the gauger that, in

accordance with paragraph (i)(3) of this section, it may

administratively appeal the determination to the Assistant Commissioner

with 30 calendar days of the notice of determination. The gauger may

not perform any Customs-approved functions during the appeal period.

(ii) Proposed suspension, revocation, or assessment of monetary

penalty.--(A) Preliminary notice. Where the suspension or revocation of

approval, and/or the assessment of a monetary penalty is proposed, the

Executive Director will issue a preliminary notice of action which will

state the specific grounds for the proposed action and advise the

gauger that it has 30 calendar days to respond. The gauger may respond

by accepting responsibility, explaining extenuating circumstances, and/

or providing rebuttal evidence. The gauger also may ask for a meeting

with the Executive Director or his designee to discuss the proposed

action. The gauger may continue to perform functions requiring Customs-

approval during this 30-day period. If the gauger does not respond to

the preliminary notice, a notice of adverse determination, in

accordance with paragraph (i)(2)(ii)(B) of this section, will be issued

by the Executive Director after 30 calendar days of receipt of the

preliminary notice. If the gauger files a timely response, then the

Executive Director, within 30 calendar days of receipt of the response,

will issue a notice of determination. If this determination is adverse

to the gauger, a notice of adverse determination, in accordance with

paragraph (i)(2)(ii)(B) of this section, will be issued by the

Executive Director after 30 calendar days of receipt of the response.

[[Page 48543]]

(B) Notice of adverse determination. A notice of adverse

determination will state the action being taken, specific grounds for

the determination, and advise the gauger that it may administratively

appeal the adverse determination to the Assistant Commissioner, in

accordance with paragraph (i)(3) of this section. The gauger may not

continue to perform any Customs-approved functions upon receiving a

notice of adverse determination that its approval has been suspended or

revoked.

(3) Appeal. A Customs-approved gauger receiving an adverse

determination from the Executive Director that its approval has been

suspended or revoked, and/or that it has been assessed a monetary

penalty may file an administrative appeal to the Assistant Commissioner

within 30 calendar days of the notice of determination. If the gauger

does not file an administrative appeal, the determination made by the

Executive Director in paragraph (i)(2) of this section will become a

final agency decision which will be communicated to the gauger by a

notice of final action issued 30 days after the notice of

determination. If the gauger does file a timely appeal, then the

Assistant Commissioner, within 30 calendar days of receipt of the

appeal, will make a final agency decision regarding the gauger's

suspension or revocation of approval, and/or assessment of a monetary

penalty. If the final agency decision is adverse to the gauger, the

decision will be communicated to the gauger by a notice of final

action. Any adverse final agency decision will be communicated to the

public by a publication in the Federal Register and Customs Bulletin,

giving the effective date, duration, and scope of the decision. Any

notice of adverse final action communicated to a gauger will state the

action taken, the specific grounds for the action, and advise the

gauger that it may choose to:

(i) If suspended or revoked, submit a new application to the

Executive Director after waiting 90 days from the date of the Executive

Director's notice of final action; or

(ii) File an action with the Court of International Trade, pursuant

to chapter 169 of title 28, United States Code, within 60 days after

issuance of the Executive Director's notice of final action.

Sec. 151.14 [Amended]

4. In Sec. 151.14, the first sentence is amended by removing the

words `` `sediment and water' characteristic as set out in

Sec. 151.13(a)(2)'' and adding, in its place, the words ``analysis

method for crude petroleum contained in ASTM D96 or other approved

analysis method''.

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

1. The authority citation for part 178 continues to read as

follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

2. Section 178.2 is amended by removing the entry for

Sec. 151.13(i), and adding, in its place, separate listings for

Secs. 151.12(f) and 151.13(d) to read as follows:

Sec. 178.2 Listing of OMB control numbers.

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

OMB control

19 CFR section Description no.

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

* * * *

* * *

Sec. 151.12(f)............ Application and other 1515-0155

documents pertaining to

accreditation of

commercial laboratories..

Sec. 151.13(d)............ Application and other 1515-0155

documents pertaining to

approval of commercial

gaugers.

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

Raymond W. Kelly,

Commissioner of Customs.

Approved: July 30, 1999

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 99-23033 Filed 9-3-99; 8:45 am]

BILLING CODE 4820-02-P