[Federal Register: January 31, 2007 (Volume 72, Number 20)]
[Rules and Regulations]
[Page 4423-4430]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31ja07-6]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 113, 141, and 151
[CBP Dec. 07-02]
RIN 1505-AB57
Conditional Release Period and CBP Bond Obligations for Food,
Drugs, Devices, and Cosmetics
AGENCIES: Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document amends the Customs and Border Protection (CBP)
regulations to clarify the responsibilities of importers of food,
drugs, devices, and cosmetics under the basic CBP importation bond and
to provide a reasonable period of time to allow the Food and Drug
Administration (FDA) to perform its enforcement functions with respect
to these covered articles. The amendments include a provision for a
specific conditional release period of 30 days for any food, drug,
device, or cosmetic which has been released under bond and for which
admissibility is to be determined under the provisions of
[[Page 4424]]
the Federal Food, Drug, and Cosmetic Act (the Act). The amendments also
clarify the amount of liquidated damages that may be assessed when
there is a breach of the terms and conditions of the bond and authorize
any representative of FDA to obtain a sample of any imported article
subject to section 801 of the Act, as amended.
DATES: Effective Date: The amendments set forth in this document are
effective on May 1, 2007.
FOR FURTHER INFORMATION CONTACT: Wende Schuster, Office of
International Trade, (202-572-8761).
SUPPLEMENTARY INFORMATION:
Background
Federal Food, Drug, and Cosmetic Act
Section 801 of the Federal Food, Drug, and Cosmetic Act, as amended
(21 U.S.C. 381 referred to herein as section 381), and the regulations
promulgated under that statute, provide the basic legal framework
governing the importation of food, drugs, devices, and cosmetics into
the United States. Under 21 U.S.C. 381(a), the Secretary of the
Treasury shall deliver to the Secretary of Health and Human Services,
upon request, samples of food, drugs, devices, and cosmetics which are
being imported or offered for import. The Secretary of Health and Human
Services is authorized under section 381(a) to refuse admission of,
among other things, any article that appears from the examination or
otherwise to be adulterated or misbranded or to have been manufactured,
processed, or packed under insanitary conditions. In addition, the
Secretary of the Treasury is required by section 381(a) to cause the
destruction of any article refused admission unless the article is
exported, under regulations prescribed by the Secretary of the
Treasury, within 90 days of the date of notice of the refusal or within
such additional time as may be permitted pursuant to those regulations.
Under 21 U.S.C. 381(b), pending decision (by FDA) as to the
admission of an article being imported or offered for import, the
Secretary of the Treasury may authorize delivery of that article to the
owner or consignee upon the execution by him of a good and sufficient
bond providing for the payment of liquidated damages in the event of
default, as may be required pursuant to regulation. In addition,
section 381(b) allows the owner or consignee in certain circumstances
to take action to bring an imported article into compliance for
admission purposes under such bonding requirements as the Secretary of
the Treasury may prescribe by regulation.
Authority Delegation
On November 25, 2002, the President signed into law the Homeland
Security Act of 2002, Public Law 107-296, 116 Stat. 2135 (referred to
in this document as ``the HS Act''), which involved, among other
things, the creation of a new cabinet-level department, the Department
of Homeland Security (DHS), and the transfer or reorganization of a
number of executive branch agencies and offices within existing
cabinet-level departments. This legislation and subsequent
reorganization plans affected the organization and operation of the
Customs Service.
Section 402 of the HS Act provides that the Secretary of Homeland
Security shall be responsible for administering the customs laws of the
United States. With regard to the Customs Service, section 403(1) of
the HS Act transferred the functions, personnel, assets, and
liabilities of the Customs Service, including the functions of the
Secretary of the Treasury relating to the Customs Service, to the
Secretary of Homeland Security. However, notwithstanding the transfer
of the Customs Service to DHS, section 412 of the HS Act provides that
the legal authority vested in the Secretary of the Treasury over
customs revenue functions is to be retained by the Secretary of the
Treasury. Section 412 also authorizes the Secretary of the Treasury to
delegate any of the retained legal authorities over the customs revenue
functions to the Secretary of Homeland Security.
By Treasury Order 100-16, dated May 15, 2003, the Secretary of the
Treasury, by virtue of authority vested in him/her by 31 U.S.C. 321(b)
and section 412 of the Homeland Security Act of 2002, delegated to the
Secretary of Homeland Security authority for customs revenue functions
with certain exceptions, including that contained in paragraph
(1)(a)(i) of the Order by which the Secretary of the Treasury retains
the sole authority to approve regulations concerning import quotas or
trade bans, user fees, marking, labeling, copyright and trademark
enforcement, and the completion of entry or substance of entry summary
including duty assessment and collection, classification, valuation,
application of the U.S. Harmonized Tariff Schedules, eligibility or
requirements for preferential trade programs, and establishment of
related recordkeeping requirements. As this final rule concerns
activities involving both the completion of entry and the substance of
the entry summary focusing on bond obligations and consequences that
might arise as a result of post-entry and post-summary determinations
of admissibility of merchandise, its subject matter is excepted from
the delegation of authority to the Secretary of Homeland Security.
Thus, the responsibility for this regulation rests with the Secretary
of the Treasury.
Applicable Regulations
Based upon the above Federal Food, Drug, and Cosmetic Act statutory
provisions, imported foods, drugs, devices, and cosmetics are
conditionally released under bond while determinations as to
admissibility are made; see 19 CFR 12.3. Under current 19 CFR
141.113(c), CBP may demand the return to CBP custody of most types of
merchandise that fail to comply with the laws or regulations governing
their admission into the United States (also referred to as the
redelivery procedure).
The condition of the basic importation and entry bond contained in
19 CFR 113.62(d) sets forth the obligation of the importer of record to
timely redeliver released merchandise to CBP on demand and provides
that a demand for redelivery will be made no later than 30 days after
the date of release of the merchandise or 30 days after the end of the
conditional release period, whichever is later. Under current
procedures, when imported merchandise is refused admission by the Food
and Drug Administration (FDA), CBP issues a notice of redelivery in
order to establish a claim for liquidated damages if the importer of
record fails to export, destroy, or redeliver the refused merchandise
in the time period prescribed in that notice of redelivery.
CBP has taken the position in C.S.D. 86-21 that the term ``end of
the conditional release period'' in 19 CFR 113.62(d) has reference to a
set time limitation that is either established by regulation (see, for
example, 19 CFR 141.113(b) which prescribes a 180-day conditional
release period for purposes of determining the correct country of
origin of imported textiles and textile products) or by express
notification to the importer of record. The end of the conditional
release period does not refer to the liquidation of the entry covering
the imported merchandise.
Proposed Regulatory Changes
On June 7, 2002, a Notice of Proposed Rulemaking was published in
the Federal Register (67 FR 39322; the NPRM) that proposed to amend the
regulations to provide for a specific conditional release period for
[[Page 4425]]
merchandise for which the FDA is authorized to determine admissibility.
The changes proposed were intended to clarify importers'
responsibilities under the bond, provide a defined period of time to
allow the FDA to perform its enforcement functions, and provide
finality to the process.
The NPRM proposed to make the following specific changes to what
were then referred to as the Customs regulations (now the CBP
regulations):
1. To redesignate some paragraphs in 19 CFR 141.113 due to the
addition of a new paragraph (c), which provided for a specific
conditional release period of 180 days for any food, drug, device, or
cosmetic. The FDA would have this time period to make its determination
of admissibility. Similar to the case of textiles and textile products
mentioned above, the proposed amendment specified a 180-day conditional
release period but also provided for a shorter period if FDA made a
determination of inadmissibility before the expiration of that 180-day
period. It is noted that under the proposed regulatory text, a demand
for redelivery under 19 CFR 113.62(d) could be made up to 210 days
(that is, 180 days plus 30 days) after the date of release of the
merchandise. (The standard CBP bond condition states that redelivery
may be demanded within 30 days after release or 30 days after the end
of any applicable conditional release period, whichever is later.) The
proposed regulation also made clear that the failure to redeliver
merchandise would result in the assessment of liquidated damages equal
to three times the value of the merchandise or equal to the domestic
value of the merchandise in those instances where the port director has
required a bond equal to the domestic value as permitted by current 19
CFR 12.3.
2. To amend 19 CFR 151.11 to authorize a representative of the FDA
to obtain samples of food, drugs, devices, and cosmetic products
covered by the Federal Food, Drug, and Cosmetic Act.
Comments
One hundred and forty (140) comments were received from importers,
brokers, sureties, freight forwarders, express consignment operators,
and trade associations. All commenters were opposed to the length of
time of the proposed conditional release period. An analysis of those
comments follows.
Comment
The vast majority of commenters stated that, as importers of food
and health and beauty aid products, having a conditional release period
of 180 days would effectively put them out of business. The costs
involved in warehousing the goods would make their businesses
unmanageable. Additionally, the long waiting period could cause
products to fall out of specification, lose effectiveness, or become
obsolete or unusable. These comments assume that any FDA-regulated
merchandise must be held intact for 180 days after entry. Other
commenters who stated that the 180-day period is too long recognize
that the intent of the regulation was not to require that all this
merchandise be held during the pendency of the conditional release
period, but rather that it only apply to merchandise for which an
admissibility decision by FDA is not made. Many of these commenters
specifically recommended that the conditional release period end upon
issuance of a notice from FDA providing that the goods may proceed (a
may proceed notice) or issuance of a notice of refusal if those acts
occur before the end of the 180-day conditional release period. Various
other commenters noted that under FDA's own Regulatory Procedures
Manual, articles which have been released by FDA are no longer
considered to be in import status by that agency.
Response
After review of all the comments, CBP concurs that the 180-day
conditional release period is too long. Thus, the regulatory text of
this final rule is amended to provide that the conditional release
period ends upon the soonest occurring of the following events:
issuance by the FDA that the merchandise may proceed, issuance of a
notice of refusal of admission, or expiration of the 30-day period
after release of the goods.
It was not the intention of the proposed regulation to require that
all goods regulated by the FDA be warehoused for 6 months while the
conditional release period runs its course. When FDA issues a notice
that the merchandise may proceed (which is the case on the vast
majority of entries that come under FDA scrutiny), that act will serve
to end the conditional release period. Accordingly, we concur with the
commenter who recommended amendment of the proposed rule to indicate
that the conditional release period ends upon issuance of the notice by
FDA that the merchandise may proceed. In addition, the issuance of a
notice of refusal of admission would end the conditional release
period.
There may be some situations where FDA will need additional time to
determine admissibility. Accordingly, the final rule also includes
regulatory language that would permit FDA to extend the general 30-day
conditional release period through express notification to the importer
identifying the necessary testing requiring this extension.
Comment
Many commenters opposed the 180-day conditional release period for
the reason that it extends the current conditional release period of 30
days.
Response
Under the conditions of the basic importation bond, in order to
establish a valid claim for liquidated damages for failure to redeliver
merchandise into CBP custody, CBP must issue a notice of redelivery
within 30 days of CBP release of merchandise or within 30 days after
the end of the conditional release period, whichever is later. As
stated in the notice of proposed rulemaking, there currently exists no
conditional release period created by regulation for merchandise the
admissibility of which is determined by the FDA. Therefore, neither the
proposed rulemaking nor this final rule extends the conditional release
period from 30 to 180 days because no express conditional release
period for FDA contexts has ever been created by regulation. The
commenters were apparently confusing the conditional release period
with the 30-day period, after the conditional release period, during
which CBP may still demand redelivery.
Comment
One commenter suggested that the proposed sampling procedures would
result in the compromising of its packaging between manufacturing sites
and customers' facilities. The commenter proposed a process whereby it
and other manufacturers could provide dedicated samples of present and
proposed imported products, and CBP could maintain a data bank of
importers and known imported products covered by these regulations.
Response
The commenter's suggestion is outside the scope of the regulation
because it proposes an examination procedure that is not done on a
shipment-by-shipment basis. Under the provisions of 21 U.S.C. 381, CBP
delivers to the Secretary of Health and Human Services such samples of
food, drugs, devices, and cosmetics that are being imported or offered
for import into the United States. Through these regulations, this
sampling authority is
[[Page 4426]]
delegated to the FDA in recognition of the practicalities of
merchandise inspection. This will clarify that FDA inspectors may,
under section 381(a), pull samples of imports of food, drugs, devices,
and cosmetics.
Comment
One commenter asked whether CBP contemplates changing line release
(otherwise known as Border Release Advanced Screening and Selectivity
(BRASS)) procedures to accommodate the exchange of information
necessary for providing notices of sampling.
Response
Contemplated changes to line release (otherwise known as BRASS
release) systems are operational in nature and are, thus, outside the
scope of this rulemaking.
Comment
One commenter suggested that the rule must be rescinded in order to
comply with Executive Order (E.O.) 12866. The commenter stated that
given the huge volume of imports involved, the storage costs alone
would almost certainly exceed the $100 million threshold or would, at
the very least, adversely affect in a material way the economy, a
sector of the economy, productivity, competition, or jobs.
Response
The commenter did not provide detail or justification for these
comments, but CBP does not believe that storage costs of this magnitude
would be incurred as a result of the rule now being promulgated. As
noted above, CBP does believe that the 180-day conditional release
period originally proposed is too long and realizes that this time
period could negatively affect importers. To that end, CBP has modified
the conditional release period from 180 days to 30 days in the final
rule to reduce potential negative impacts to imports and corresponding
storage costs.
Comment
Various commenters state that CBP has failed to comply with the
Regulatory Flexibility Act, disagreeing with the statement in the
proposed rulemaking that the proposed amendments, if adopted, will not
have a significant impact on a substantial number of small entities.
The commenters claim that, contrary to the assertion in the notice of
proposed rulemaking, assessment of liquidated damages of three times
the value of imported merchandise could have a devastating impact upon
the many thousands of small companies engaged in the importation of
FDA-regulated products. It is also stated that the proposed rulemaking
represents a radical departure from current CBP policy with regard to
redelivery of FDA-regulated products.
Response
CBP does not agree because the rule is not a radical departure from
current CBP policy. Additionally, in response to the comments to the
proposed rule, the final rule reduces the conditional release period
time from 180 days to 30 days, and potential costs that could be
incurred should now be substantially less. The rule should not affect
small entities that are compliant with redelivery requirements, and the
rule does not impose further entry requirements or additional paperwork
burden.
Comment
Various commenters suggested that CBP rescind or place a stay on
consideration of the proposed rulemaking until the implications of
recently passed legislation governing port security can be considered
in relation to FDA's inspection protocol and CBP's release procedures.
The commenters indicated that the new law requires that importers
provide CBP and FDA with advance notice of their intent to import food
products--a procedure that should enhance FDA's ability to promptly
identify shipments that pose a safety concern. Those commenters also
stated that the proposed rule should be rescinded in order to allow CBP
and FDA to examine and discuss standardization of FDA notifications to
importers and to take into account the commercial needs of the
importing community.
Response
CBP disagrees. We are unaware of legislation governing port
security that impinges upon or supplants FDA's authority to refuse
merchandise pursuant to the provisions of 21 U.S.C. 381(a). That
provision allows for the release of merchandise under bond while the
determination as to admissibility is made. This rulemaking simply
provides for the creation of a conditional release period for FDA
contexts that is more clearly defined than the practice that currently
exists. Furthermore, the Bioterrorism Act creates a new section 21
U.S.C. 381(m), which specifically indicates that FDA-regulated food and
food products for which prior notice of arrival is not received shall
not be released under a bond authorized by section 381(b). As set out
in implementing regulations issued by FDA and CBP (see 68 FR 58974),
decisions regarding compliance with new prior notice requirements are
different from, and may precede, determinations of admissibility under
other sections of the Federal Food, Drug, and Cosmetic Act or other
laws. (See 21 CFR 1.283(g).) While CBP believes that the Bioterrorism
Act will affect the importation of FDA-regulated products, it does not
serve to overrule regulations concerning longstanding FDA and CBP
authorities. Effect must be given to all of the substantive provisions
of 21 U.S.C. 381, not part of them. Further, since the FDA-regulated
food or food products for which prior notice of arrival is not received
will not be released under a bond authorized by section 381(b), any
issues arising concerning a conditional release period for merchandise
released under bond are moot.
Comment
One commenter suggested that the time period to comment on the
proposed rule be extended because of the complex underlying issues
involved.
Response
CBP disagrees that the comment period needed to be extended. CBP
received 140 comments to the proposed rule, and a wide variety of
issues were presented in these comments. The primary concern, which was
raised by all commenters to the proposed rule, was the length of the
conditional release period. In response to this concern CBP has reduced
the conditional release period from 180 to 30 days.
Comment
Many commenters conceded that it may be appropriate to clearly
define a conditional release period, but they also suggested that 30
days would be a reasonable conditional release period for these
products. Those same commenters also stated that CBP must further
clarify and limit the scope of the proposed rule. Clarification is
needed that clearly exempts from the conditional release period
shipments that have been issued a may proceed notice. The commenters
also suggested that FDA should notify importers when an entry is deemed
conditional. As proposed, the commenters claimed that the rule
represents a radical departure from current practices when the release
of imported product is only rendered conditional through FDA's timely
notification of its intent to examine or sample the product.
[[Page 4427]]
Response
CBP agrees that the rule should make clear that a conditional
release period ends when FDA provides a may proceed notice. The final
rule has been amended accordingly. CBP also agrees that a conditional
release period shorter than 180 days is appropriate and has amended the
rule to provide for a conditional release period of 30 days after the
release of the merchandise unless FDA issues a may proceed notice or a
notice of refusal which would immediately end the conditional period as
provided for in the final rule. However, shipments that have been
issued a may proceed notice are still subject to demands for redelivery
for 30 days from the issuance of the may proceed notice. The regulation
confirms that all FDA-regulated products under the Federal Food, Drug,
and Cosmetic Act are conditionally released pending FDA's determination
of admissibility. In the vast majority of cases the conditional release
period will end when the may proceed notice is provided before the end
of the time provided in the regulation.
Comment
Various commenters contended that CBP seeks to modify its
regulations in order to reverse the result of the court decision in
United States v. So's USA Company, Inc., 23 CIT 605 (1999). These
commenters stated that the So's court indicated that an importer must
have affirmative notice that goods are released conditionally in order
to extend the redelivery period beyond the 30 days from the date of
release. Another stated that under the proposed regulation, FDA would
no longer be required to advise an importer why its product is on hold,
or even that it is on hold, within the first 30 days of entry.
Response
CBP disagrees. The final rule is entirely consistent with the So's
opinion and it does not conflict with that opinion in any respect.
Further, this regulation does not affect any notice that FDA provides
to an importer under its authorities.
Comment
One commenter stated that the proposal is arbitrary because the
Government has not explained the need for a 180-day period to render a
decision on admissibility. The statement in the proposed rule that the
180-day period is a reasonable period of time to allow the FDA to
perform its enforcement functions is not supported by any explanation.
Response
Again, CBP agrees that the 180-day period is too long a time period
to have this merchandise conditionally released by regulation.
Accordingly, the conditional release period has been reduced to 30 days
in the final regulation. The 30-day release period can be shortened by
the earlier issuance of a may proceed notice or a notice of refusal of
admission. It also can be extended by an express notification from FDA
to the importer.
Comment
One commenter suggested that FDA import inspectors issue a notice
of review with regard to any shipment for which a may proceed notice is
not provided. The commenter stated that the conditional release period
could be established from the issuance date of the notice of review.
That same commenter stated that for perishable products, the
conditional release period should not exceed 5 days. For non-perishable
products, the conditional release period should not exceed 30 days.
Response
Issuance of a new FDA form of notice that a shipment is under
review is beyond the scope of this regulation. CBP disagrees that a
conditional release period should be for as little as 5 days. The
taking of samples and testing of merchandise could exceed that 5-day
time period.
Comment
Some commenters stated that the 180-day conditional release period
is not consistent with the Customs-Trade Partnership Against Terrorism
(C-TPAT) in that homeland security efforts are focused on increased
review of imports at the time of admission. The proposed 180-day period
would provide no potential homeland security benefits since the
materials would already be conditionally released to importers.
Response
CBP acknowledges that the proposed 180-day conditional release
period is too long and has revised the regulation accordingly. Review
of cargo for terrorism concerns preferably is performed earlier than
the time of admission of merchandise. In fact, review for terrorism
concerns is performed in the information transmission or presentation
process, which is in advance of arrival. For example, the FDA's prior
notice regulations (21 CFR 1.276 et seq.) require notice of food being
imported or offered for import into the United States in advance of the
foods' arrival, and CBP's advance electronic cargo information
regulations (set forth in 68 FR 68140) require information concerning
cargo before the cargo is brought into the United States by any mode of
transportation, so that CBP can pre-screen all cargo based on advance
data transmission. CBP's enforcement of these requirements is
consistent with C-TPAT. The conditional release period is meant to
address the longstanding application of the provisions of the Federal
Food, Drug, and Cosmetic Act, which allow for the release of
merchandise under good and sufficient bond pending an admissibility
determination and therefore is in addition to the prior notice and
advance cargo information requirements that implement border security
measures.
Comment
Many commenters stated that a 180 day conditional release period is
contrary to public policy in that merchandise which causes a public
health or safety issue should be identified and refused by FDA as
quickly as possible. A 180-day period raises an unreasonable risk.
Response
CBP has revised the regulation to provide for a 30-day conditional
release period in order to address this concern.
Comment
Many commenters indicated that if the redelivery period was shorter
than the 180-days prescribed, companies would hold merchandise pending
such a period and there would be more chance for a successful recall
for safety concerns, since there is less chance that the goods would
have been used or consumed.
Response
CBP agrees and has revised the final rule to provide for a 30-day
conditional release period in order to address this concern.
Comment
One commenter suggested that CBP should strive to allow
unconditional release of FDA-regulated merchandise with the filing of
the CF-3461 (CBP entry document) as long as the entry summary and
carrier manifest data are consistent with information contained within
the FDA approved product listings.
Response
CBP disagrees because this would have CBP making decisions as to
admissibility under the Federal Food, Drug, and Cosmetic Act when this
[[Page 4428]]
decision-making authority clearly resides with the Secretary of Health
and Human Services.
Comment
Many commenters stated that the proposed amendment to 19 CFR 151.10
of the CBP regulations regarding the collection of samples is not
necessary. The commenters noted that the provisions of section 702(a)
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 372) already
allow for the taking of samples by representatives of FDA.
Response
Under the provisions of 21 U.S.C. 381(a), CBP delivers samples of
food, drugs, devices, and cosmetics that are being imported or offered
for import into the United States, to the Secretary of Health and Human
Services upon his request. The proposed amendment simply clarifies that
such delivery authority is delegated to representatives of FDA and is
not intended to intrude on any other authority that the Secretary of
Health and Human Services may already have.
Comment
A group of commenters suggested the adoption of regulatory language
that would preclude the issuance of fines or penalties against an
importer who distributes articles after having received an FDA may
proceed notice.
Response
CBP disagrees with this proposed language. CBP cannot by regulatory
amendment exempt an importer from incurring fines or penalties that may
otherwise be imposed for violation of a statute.
Comment
Various commenters stated that imposition of a 180-day conditional
release period is violative of U.S. international obligations under the
GATT 1994, and one commenter indicated that the proposed rule is
violative of the Agreement on the Application of Sanitary and
Phytosanitary Measures. While conceding that some additional controls
at the border are acceptable, these commenters asserted that extending
CBP control over imports for a seven-month period after importation
would not stand scrutiny. Additionally, it was noted that sanitary and
phytosanitary procedures must be undertaken and completed without undue
delay (commenter's emphasis) and in no less favorable a manner for
imported products than for like domestic products. Imposition of a
conditional release period of 180 days is claimed to be violative of
this ``undue delay'' proscription.
Response
Again, CBP has reduced the conditional release period from 180 to
30 days in the final rule.
Comment
Some commenters indicated that continuation of a conditional
release period after FDA admits goods into commerce is inconsistent
with the provisions of the Federal Food, Drug, and Cosmetic Act. The
commenters stated that conditional delivery of the merchandise to the
owner is made pending a decision as to admission generally, and not
solely a decision to deny admission. It is argued that conditional
release also ends upon admission of the article and, as such, CBP's
proposal to extend the conditional release period to 180 days without
concern as to whether the merchandise has been admitted defeats the
statutory intent of the Act. In contrast, another commenter stated that
once a positive determination as to admissibility is made, the importer
should not have to be subjected to the possibility of a redelivery
demand for sampling or testing of the product. The latter commenter
further contended that even after receiving a may proceed notice, an
importer is left in the dark as to the status of goods that are
apparently admitted into the commerce.
Response
CBP agrees that issuance of a notice from FDA that the merchandise
may proceed would usually make it unnecessary to issue a redelivery
notice in order to establish liability under the bond. For purposes of
clarity, CBP is amending the language in the final rule to indicate
that one of three acts occurring first in time--issuance of a notice of
refusal, issuance of a may proceed notice or passage of 30 days from
the date of conditional release--will end the conditional release
period. However, it should be understood that issuance of a may proceed
notice does not mean that CBP is precluded from issuing a subsequent
demand to redeliver within 30 days from the end of that conditional
release period.
Comment
Two commenters suggested that sureties be given the earliest
possible notice (preferably in electronic form) that goods they have
secured are subject to detention, refusal, and/or redelivery in order
that immediate action can be taken with regard to pending and future
importations. Also, mitigation guidelines should be adopted that
provide extraordinary mitigation to sureties for efforts to locate,
redeliver, and/or rehabilitate goods which are subject to liquidated
damages for failure to redeliver into CBP custody.
Response
Mitigation guidelines for claims for liquidated damages are outside
the scope of this rulemaking. Issuance of notices of detention and
refusal are governed by FDA statute and regulation and any changes to
issuance of those documents are also outside the scope of this
regulation. Notices of redelivery may include private or confidential
business information that would not be releasable to a surety unless a
demand for payment was made against its bond.
Comment
One commenter proposed that the regulation require that all demands
for redelivery be made contemporaneously with the notice of refusal
issued by FDA. The commenter contended that this change would promote
cooperation between FDA and CBP and encourage compliance through the
more efficient issuance of required notices.
Response
CBP does not agree because, for operational reasons, it may not
always be possible for notices to be issued contemporaneously.
Conclusion
In accordance with the foregoing analysis of the comments and
further consideration of the matter, CBP has determined that the
amendments of the proposed rule should be adopted as final with the
sole major change being a reduction in the conditional release period
from 180 days to 30 days, as set forth in the regulatory text further
below. In addition, cross-references to the section of the regulations
involving conditional release periods are being added to the relevant
portion of the section on basic importer and entry bond conditions in
19 CFR 113.62.
Executive Order 12866 and the Regulatory Flexibility Act
This rule is not considered to be a significant regulatory action
under Executive Order 12866. Accordingly, a regulatory assessment is
not required.
It is certified, pursuant to the provisions of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), that the regulatory amendments
set forth in this final rule will not have a significant economic
impact on a substantial
[[Page 4429]]
number of small entities. The rule should not affect small entities
that are compliant with redelivery requirements, and the rule does not
impose further entry requirements or additional paperwork burdens.
A review of data for FY2004 indicates actual CBP liquidated damage
collections for FDA jurisdiction goods are comparatively rare and of
modest amounts. The total amount of liquidated damages collected in
FY2004 for these goods was approximately $4 million. The total revenue
(including those liquidated damages) collected for all imports was $27
billion. This amount reflects 6,000 liquidated damage cases, compared
to 28.1 million entries of all goods worth $1.41 trillion. Pertinent
cases and liquidated damage amounts are a tiny fraction (less than 1
percent) of overall revenue collected and import value. The value of
liquidated damages collected changes minimally from year to year based
on the number of importers, the number of bonds, and the number of
violations. CBP does not expect this amount to change as a result of
this rule.
Additionally, the conditional release period should help importers,
regardless of size, by clarifying that CBP must issue a redelivery
notice within 30 days if it wishes to collect liquidated damages. As
noted previously, there is currently no set date to issue a redelivery
notice. The rule will compel CBP to act more quickly to provide notice
to importers that violate the conditions of their bond. If CBP cannot
act within the 30 days, it then foregoes collecting any liquidated
damages.
List of Subjects
19 CFR Part 113
Customs bond conditions.
19 CFR Part 141
Bonds, Customs duties and inspection, Entry procedures, Imports,
Prohibited merchandise, Release of merchandise.
19 CFR Part 151
Customs duties and inspection, Examination, Sampling and testing,
Imports, Laboratories, Penalties, Reporting and recordkeeping
requirements.
Amendments to the Regulations
0
For the reasons stated above, parts 113, 141, and 151 of the CBP
regulations (19 CFR Parts 141 and 151) are amended as set forth below.
PART 113--CUSTOMS BOND CONDITIONS
0
1. The authority citation for part 113 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *
Sec. 113.62 [Amended]
0
2. Section 113.62(d) is amended by adding a sentence at the end to read
as follows: ``(See Sec. Sec. 141.113(b), 12.73(b)(2), and 12.80 of
this chapter.)''
PART 141--ENTRY OF MERCHANDISE
0
3. The authority citation for part 141 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1448, 1484, 1624.
* * * * *
Section 141.113 also issued under 19 U.S.C. 1499, 1623.
0
4. Section 141.113 is amended as follows:
0
a. The heading of the section is revised to read as set forth below;
0
b. Paragraph (a) is amended by, after the heading, designating the
introductory text of paragraph (a) as paragraph (a)(1), redesignating
current paragraphs (1) through (5) as paragraphs (a)(1)(i) through (v),
and designating the remaining text, after redesignated paragraph
(a)(1)(v), as paragraph (a)(2);
0
c. In redesignated paragraph (a)(2), first sentence, the words
``Customs custody'' are removed and replaced with the words ``CBP
custody'';
0
d. In paragraph (b), the two references to ``Customs'' are replaced
with reference to ``CBP'' and the three references to ``Customs
custody'' are replaced with reference to ``CBP custody'';
0
e. Current paragraphs (c) through (h) are redesignated as paragraphs
(d) through (i);
0
f. New paragraph (c) is added;
0
g. In redesignated paragraph (d), the words ``in paragraph (a) or (b)
of this section'' are removed and replaced with the words ``in
paragraph (a), (b), or (c) of this section'', and the words ``Customs
custody'' are removed and replaced with the words ``CBP custody'';
0
h. In redesignated paragraphs (e) and (f), the words ``Customs
custody'' are removed and replaced with the words ``CBP custody'';
0
i. In redesignated paragraph (g), first sentence, the words ``Customs
custody'' are removed and replaced with the words ``CBP custody''; and
0
j. In redesignated paragraph (h) and in the first sentence of
redesignated paragraph (i), the words ``Customs custody'' are removed
and replaced with the words ``CBP custody''.
The revisions read as follows:
Sec. 141.113 Recall of merchandise released from Customs and Border
Protection custody.
* * * * *
(c) Food, drugs, devices, and cosmetics--(1) Conditional release
period. For purposes of determining the admissibility of any food,
drug, device, or cosmetic imported pursuant to section 801(a) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 381(a)), as amended,
the release from CBP custody of any such product will be deemed
conditional. Unless extended in accordance with paragraph (c)(2) of
this section, the conditional release period will terminate upon the
earliest occurring of the following events:
(i) The date that FDA issues a notice of refusal of admission;
(ii) The date that FDA issues a notice that the merchandise may
proceed; or
(iii) Upon the end of the 30-day period following the date of
release.
(2) Extension of conditional release period. The conditional
release period provided under this paragraph (c) may be extended. The
FDA must issue a written or electronic notice of sampling, detention,
or other FDA action to the bond principal (i.e., importer of record)
within 30 days of the release of the merchandise in order for the
extension of the conditional release period to be valid.
(3) Issuance of a redelivery notice. If FDA refuses admission of a
food, drug, device or cosmetic into the United States, or if any notice
of sampling or other request is not complied with, FDA will communicate
that fact to the CBP port director who will demand the redelivery of
the product to CBP custody. CBP will issue a notice of redelivery
within 30 days from the date the product was refused admission by the
FDA or from the date FDA determined the noncompliance with a notice of
sampling or other request. The demand for redelivery may be made
contemporaneously with the notice of refusal issued by the FDA.
Notwithstanding the provisions of paragraph (i) of this section, a
failure to comply with a demand for redelivery made under this
paragraph (c) will result in the assessment of liquidated damages equal
to three times the value of the merchandise involved unless the port
director has prescribed a bond equal to the domestic value of the
merchandise pursuant to Sec. 12.3(b) of this Chapter.
* * * * *
[[Page 4430]]
PART 151--EXAMINATION, SAMPLING, AND TESTING OF MERCHANDISE
0
5. The general authority citation for part 151 continues to read, and a
specific authority citation for Sec. 151.11 is added to read, as
follows:
Authority: 19 U.S.C. 66, 1202 (General Notes 3(i) and 3(j),
Harmonized Tariff Schedule of the United States (HTSUS)), 1624.
Section 151.11 also issued under 21 U.S.C. 381;
* * * * *
0
6. Section 151.11 is amended as follows:
0
a. In the first sentence, the words ``Customs custody'' are removed and
replaced with the words ``CBP custody'';
0
b. In the second sentence, the words ``Customs custody'' are replaced
with the words ``CBP custody''; and
0
c. After the second sentence, a third sentence is added, to read as
follows:
Sec. 151.11 Request for samples or additional examination packages
after release of merchandise.
* * * For purposes of determining admissibility, representatives of
the Food and Drug Administration may obtain samples of any food, drug,
device, or cosmetic, the importation of which is governed by section
801 of the Federal Food, Drug, and Cosmetic Act, as amended (21 U.S.C.
381).
Deborah J. Spero,
Acting Commissioner, Customs and Border Protection.
Approved: January 25, 2007.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 07-408 Filed 1-30-07; 8:45 am]
BILLING CODE 9111-14-P