Rule2022-16233
Vessel Repair Duties for Vessels Entering U.S. Ports
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 29, 2022
Effective
July 29, 2022
Issuing agencies
Homeland Security DepartmentU.S. Customs and Border Protection
Abstract
This rule amends U.S. Customs and Border Protection (CBP) regulations to streamline the vessel repair entry process by extending the timeframe from 90 days to 150 days for vessel owners, masters, or authorized agents ("vessel operators") to provide completed vessel repair entries and to apply for relief from assessment of those vessel repair duties. Because CBP is extending the timeframe from 90 days to 150 days, CBP is also eliminating provisions that allow for requests for an additional 30-day extension to submit all of the relevant evidence as those extensions are no longer necessary.
Full Text
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<title>Federal Register, Volume 87 Issue 145 (Friday, July 29, 2022)</title>
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[Federal Register Volume 87, Number 145 (Friday, July 29, 2022)]
[Rules and Regulations]
[Pages 45642-45649]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-16233]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
19 CFR Part 4
[CBP Dec. 22-14]
RIN 1651-AB41
Vessel Repair Duties for Vessels Entering U.S. Ports
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security (DHS).
ACTION: Final rule.
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SUMMARY: This rule amends U.S. Customs and Border Protection (CBP)
regulations to streamline the vessel repair entry process by extending
the timeframe from 90 days to 150 days for vessel owners, masters, or
authorized agents (``vessel operators'') to provide completed vessel
repair entries and to apply for relief from assessment of those vessel
repair duties. Because CBP is extending the timeframe from 90 days to
150 days, CBP is also eliminating provisions that allow for requests
for an additional 30-day extension to submit all of the relevant
evidence as those extensions are no longer necessary.
[[Page 45643]]
DATES: This final rule is effective July 29, 2022.
FOR FURTHER INFORMATION CONTACT: W. Richmond Beevers, Chief, Cargo
Security, Carriers, and Restricted Merchandise Branch, Regulations and
Rulings, U.S. Customs and Border Protection, at 202-325-0084 or
<a href="/cdn-cgi/l/email-protection#7d0a14111804530f531f18180b180f0e3d1e1f0d5319150e531a120b"><span class="__cf_email__" data-cfemail="2a5d43464f53045804484f4f5c4f58596a49485a044e4259044d455c">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
Under section 466 of the Tariff Act of 1930, as amended (19 U.S.C.
1466), purchases for repairs or repairs made to certain vessels while
outside the United States are subject to declaration, entry, and
payment of ad valorem duty upon vessel arrival in any port of the
United States. Duties owed for vessel repairs made in a foreign country
apply to all vessels documented under U.S. law that engage in foreign
or coasting trade, as well as those intended to be employed in such
trade. 19 U.S.C. 1466(a). The statute also specifies the situations in
which vessel operators may be relieved from paying such duties.\1\
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\1\ Vessel operators may be relieved from paying duties for
foreign repairs to vessels when: materials purchased and repairs
made to vessels outside the United States were a result of damage
caused by inclement weather or other casualties; purchased materials
were made in the United States and installed by U.S. residents or
the vessel's crew; or purchased materials were used for dunnage
cargo, packing, erection of temporary bulkheads, or in preparation
for the carrying of liquid cargo. 19 U.S.C. 1466(d).
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Section 4.14 of title 19 of the Code of Federal Regulations (19 CFR
4.14) implements 19 U.S.C. 1466. Section 4.14(a)(1) requires vessel
operators to declare, enter, and be subject to payment of duty for
vessel repair purchases or repairs made to vessels while outside of the
United States upon vessel arrival to the United States or Puerto Rico.
The duties owed on these repairs and purchases are based on the actual
foreign cost of the vessel repair or expenditure. 19 CFR 4.14(a)(1).
Certain foreign vessel repair expenditures are not subject to
declaration, entry, or duty at all. See 19 CFR 4.14(a)(2)(i)-(iii).
Some expenditures may not require duty payments but must still follow
declaration and entry procedures. See 19 CFR 4.14(a)(3), (h)(1)-(4).
Upon arrival, vessel operators must declare and enter all foreign
repairs or related expenses to U.S. Customs and Border Protection (CBP)
on CBP Form 226, or an electronic equivalent, to be processed by CBP's
Vessel Repair Unit (VRU) in New Orleans, Louisiana (``vessel repair
entry''). See 19 CFR 4.14(d), (e), (g). The vessel repair entry must
include all foreign voyage expenditures for equipment, parts of
equipment, repair parts, materials, and labor. 19 CFR 4.14(e). The
regulations currently require a vessel operator to submit a completed
vessel repair entry within 90 days of vessel arrival into the United
States. 19 CFR 4.14(f). A completed vessel repair entry must contain
evidence of the cost of each foreign repair or related expense. Id. The
vessel operator can request additional time from the VRU to file a
completed vessel repair entry. Id. The VRU may grant, and in practice
almost always does grant, a 30-day extension period for vessel
operators to submit the completed entry.\2\ If additional time is
needed, the Cargo Security, Carriers, and Restricted Merchandise Branch
(CCR) at CBP Headquarters may grant, and in practice almost always does
grant, a second extension.\3\ Normally, in this instance, the CCR will
grant an additional 30-day extension after the first extension.
Therefore, in practice, vessel operators have a total of 150 days to
submit a completed vessel repair entry supported by evidence showing
the cost of each foreign repair or expense.
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\2\ Based on communication with the Cargo Security, Carriers,
and Restricted Merchandise Branch on April 13, 2022. A subject
matter expert stated that the VRU nearly always approves the 30-day
extension requests subject to timeliness of such request. In 2021-
2022, VRU approved 100% of all requests for extensions.
\3\ Based on communication with the Cargo Security, Carriers,
and Restricted Merchandise Branch on April 13, 2022. A subject
matter expert stated that vessel operators are sophisticated users
understanding what is required and as a result, CCR nearly always
approves a second extension request subject to the timeliness of the
request. In 2021-2022, CCR approved 100% of all second requests for
extensions.
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Before the vessel may depart from a U.S. port, the vessel operator
must also submit the estimated cost of duties, or evidence of a bond,
for all potential repairs or expenses declared in the vessel repair
entry. 19 CFR 4.14(c). The current regulations set forth the
circumstances in which the vessel operator may be relieved from
assessment of these duties. Such relief is available when: (i) the
expenditure is not considered to be a repair or purchase within the
terms of 19 U.S.C. 1466 or as determined under judicial or
administrative interpretation; (ii) foreign repairs or expenditures
were the result of damage caused by inclement weather or other
casualties; (iii) materials used for repair were made in the United
States and installed by U.S. residents or the vessel's crew; (iv)
materials were used for the purpose of providing dunnage for the
packing of cargo, erection of temporary bulkheads, or in preparation
for the carrying of liquid cargo; (v) for vessels that continuously
remained outside the United States for two years, expenditures were
made after the first six months of their absence; (vi) expenditures
were made for Lighter Abroad Ship (LASH) operations; (vii) spare repair
parts or materials were certified for use on a cargo vessel, if duty
was previously paid under the appropriate U.S. commodity
classification; and (viii) spare repair parts were necessarily
installed prior to first entry into the United States, if duty was paid
under the appropriate U.S. commodity classification. 19 U.S.C. 1466(a),
(d), (e), (h); 19 CFR 4.14(h)(1)-(3).
Under the current regulations, the operator must apply for relief
from these duties within 90 days of the vessel's arrival into the
United States. 19 CFR 4.14(i). Similar to the timeline for submitting a
completed vessel repair entry, the VRU may grant, and in practice
almost always does grant, a 30-day filing extension, and the CCR may
grant an additional filing extension for vessel operators to apply for
relief from assessment of such duties.\4\ The CCR almost always grants
an additional 30-day extension, which results in an additional 60 days
for vessel operators to file for relief from duty payment after the
initial 90-day timeline expires. Therefore, in practice, current
procedures almost always allow vessel operators a total of 150 days to
file for relief from assessment of vessel repair duties.
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\4\ See 19 CFR 4.14(f) for extension procedures.
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Although both the VRU and CCR rarely deny filing extensions for
vessel operators seeking to submit completed vessel repair entries or
to apply for relief from assessment of vessel repair duties, the two
offices are still faced with the administrative burden of processing
extension requests. For instance, on average, the CCR processes 42
vessel repair extension requests annually. The VRU processes annually
over three times this number of extension requests.\5\ The hours
expended on extension requests create an unnecessary burden on both CBP
and vessel operators filing such requests with no benefit to CBP,
vessel operators or the public by maintaining the extensions.\6\
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\5\ The VRU processes on average 152 extension requests
annually. See Part IV, Table 1. Time Burden to Complete Extension
Requests.
\6\ Based on communication with the Cargo Security, Carriers,
and Restricted Merchandise Branch on April 13, 2022, subject matter
experts stated that the only reason VRU or CCR had ever denied a
request for an extension was an untimely request which occurred one
time with VRU over the last several years. Vessel operators are
sophisticated users who understand what is required to obtain an
extension.
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[[Page 45644]]
II. Discussion of Regulatory Changes
CBP is streamlining the vessel repair entry process under 19 CFR
4.14 by amending the timeframe to submit complete vessel repair entries
with supporting evidence for the costs of each repair and to apply for
relief from assessment of vessel repair duties. This rule will also
eliminate the need for filing extension requests. In particular,
paragraphs (f) and (i) are amended to eliminate provisions allowing for
extensions and to change the timeline for document submission from 90
to 150 days. These amendments allow the same timeframe as the current
practice, which provides for a 90-day deadline and the potential to
file two extensions, for a total of 150 days. Accordingly, the
amendments will simplify the process and alleviate unnecessary burdens
placed on CBP to process extension requests and on vessel operators to
file such requests. The amendments are described below.
A. Evidence for Cost of Repair
Paragraph (f) requires vessel operators to submit to CBP completed
vessel repair entries with supporting evidence of the final cost of
each foreign repair or expenditure within 90 days of the vessel's
arrival. 19 CFR 4.14(f). The vessel operator is permitted to submit
initial or interim cost estimates if sufficient evidence to show final
costs or expenditures is not yet available, but must submit a completed
entry within 90 days of the vessel's arrival. 19 CFR 4.14(f). If
additional time is needed to submit completed vessel repair entries,
vessel operators are required to submit to the VRU a written request
explaining their need for filing extensions before the 90-day timeline
expires. 19 CFR 4.14(f). Paragraph (f) allows the VRU to grant a 30-day
extension and the CCR to grant a second extension. 19 CFR 4.14(f).
Current practice allows vessel operators a total of 150 days to submit
vessel repair entries because both the VRU and CCR rarely deny
extension requests. In practice, the CCR will grant a second 30-day
extension. Therefore, the filing extensions provide vessel operators
with an additional 60 days to file completed vessel repair entries. The
amendment to paragraph (f) thus removes the provision regarding
extensions and provides 150 days from vessel arrival for operators to
submit a completed vessel repair entry, as opposed to the existing 90-
day deadline and the possibility of filing for two extensions.
B. Application for Relief From Assessment of Vessel Repair Duties
Paragraph (i) requires vessel operators to apply for relief from
assessment of vessel repair duties within 90 days of vessel arrival for
the opportunity to qualify for relief from assessment of these duties.
19 CFR 4.14(i). An Application for Relief must clearly state the legal
basis for granting relief for one of the reasons specified in paragraph
(h). Although the Application for Relief is not required to be
submitted in any particular format, it must certify that all repair
operations performed aboard the vessel during the one-year period prior
to the current submission have been declared and entered and must be
supported by certain evidence outlined in paragraph (i)(1)(i)-(vi) and
(i)(2).\7\ 19 CFR 4.14(i)(1). Paragraph (i) allows the VRU to grant a
30-day extension and the CCR to grant a second extension for vessel
operators to file for relief from assessment of vessel repair duties.
Similar to the procedure for vessel repair entries in paragraph (f),
the CCR normally grants a second 30-day extension. Therefore, current
practice allows vessel owners 150 days to file an Application for
Relief from assessment of vessel repair duties, because, as a practical
matter, the VRU and CCR usually grant all extension requests. The
amendments therefore remove the extension provisions and expand the
original 90-day timeline to 150 days from vessel arrival for owners to
apply for relief from assessment of vessel repair duties.
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\7\ Each Application for Relief must include copies of: (i)
itemized bills, receipts, and invoices for items shown in 19 CFR
4.14(e); (ii) photocopies of relevant parts of vessel logs, as well
as of any classification society reports which detail damage and
remedies; (iii) a certification by the senior officer with personal
knowledge of all relevant circumstances relating to casualty damage;
(iv) a certification by the senior officer with personal knowledge
of all relevant circumstances relating to foreign repair
expenditures; (v) a certification by the master that casualty-
related expenditures were necessary to ensure the safety and
seaworthiness of the vessel in reaching its U.S. port of
destination; and (vi) any permits or other documents filed with or
issued by any U.S. Government agency other than CBP regarding the
operation of the vessel that are relevant to the request for relief.
19 CFR 4.14(i).
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IV. Statutory and Regulatory Analysis
A. Inapplicability of Prior Notice and Delayed Effective Date
According to section 553 of the Administrative Procedure Act (APA)
(5 U.S.C. 553), rulemaking generally requires prior notice and comment
and a 30-day delayed effective date, subject to specified exceptions.
Pursuant to 5 U.S.C. 553(b)(3)(A), the prior notice and comment and
delayed effective date requirements do not apply when agencies
promulgate rules concerning agency organization, procedure, or
practice. In addition, section 553(d) of the APA requires that a final
rule have a 30-day delayed effective date. The APA, however, provides
exceptions from the prior notice and public comment requirement and the
delayed effective date requirements, when an agency for good cause
finds that such procedures are impracticable, unnecessary, or contrary
to the public interest.
This rule does not require prior notice and comment because it
relates to agency organization, procedure, or practice. Specifically,
the final rule merely updates the regulations to simplify CBP's
procedures and does not substantially change any parties' right to file
evidence for the cost of vessel repair or to apply for relief from
assessment of vessel repair duties. Moreover, the new amendment seeks
to codify what is done in practice.
Current practice almost always provides vessel operators with 150
days to file the supporting evidence for repairs and to apply for
relief from assessment of duties, which the new amendment will still
allow. Current regulations allow 90 days from vessel arrival to file
these documents. Upon the request of a vessel operator, the VRU and CCR
usually grant two 30-day filing extensions, for a total of an
additional 60 days. The final rule will eliminate the extension request
procedure and allow for a total of 150 days without extensions, rather
than an initial 90 days with two 30-day extensions, to file these
documents. As a result, this rule merely streamlines the vessel repair
entry process by eliminating the need for vessel owners to file
extension requests and by providing the same timeframe for these
documents to be filed.
Additionally, CBP finds that prior notice and comment are
unnecessary and that good cause exists to issue this rule effective
upon publication. Prior notice and comment are unnecessary because the
rule does not substantively alter the underlying rights or interests of
vessel operators and streamlines the process for both vessel operators
and CBP.
B. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety
[[Page 45645]]
effects, distributive impacts, and equity). Executive Order 13563
emphasizes the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This amendment is not a ``significant regulatory action,'' under
section 3(f) of Executive Order 12866. Accordingly, OMB has not
reviewed this regulation. In summary, CBP expects there to be a
combined total savings of approximately $55,209 annually to the Federal
Government and vessel owners as a result of this rule. Following is
analysis of this estimated cost savings.
Purchases for repairs or repairs made to certain vessels while
outside the United States are subject to entry and payment of duty.
This amendment to 19 CFR 4.14 extends the timeframe for U.S. vessel
operators to provide a completed vessel repair entry to CBP and to
apply for relief from the assessment of duty usually required for
vessel repairs occurring in a foreign country to reflect current CBP
practice. Currently, vessel operators have 90 days to submit a
completed vessel repair entry with supporting evidence for each repair.
In certain circumstances, vessel operators can apply for relief from
assessment of these duty amounts, if they provide the appropriate
documentation. Vessel operators are likewise given 90 days from vessel
arrival into the United States to apply for relief.
In both scenarios, current regulations, 19 CFR 4.14(f), (i), allow
vessel operators to request extensions to complete vessel repair
entries and apply for relief from duty assessment. Vessel operators can
request two separate extensions, allowing them, in practice, a total of
150 days to provide all the necessary information to complete their
vessel repair entries or Applications for Relief. This amendment to 19
CFR 4.14 changes the deadline from 90 to 150 days and eliminates the
requirement that vessel operators request extensions. This amendment
would obviate the need for vessel operators to make extension requests
and would eliminate all costs associated with these requests. CBP
estimates that this amendment would provide an overall savings to the
U.S. economy by taking away the time burden associated with the
extension requests for both vessel repair entries and relief from duty
payments on vessel repairs made abroad.
Under the current regulations located at 19 CFR 4.14, when certain
vessels undergo repairs outside of the United States, the value of the
foreign repairs may be subject to duties when these vessels re-enter
the United States or Puerto Rico.\8\ Upon re-entry to a U.S. or Puerto
Rico port, vessel operators are required to submit a vessel repair
declaration and entry documentation, including an estimated duty
payment (or produce evidence of a bond), before the vessel can be
released from that U.S. port of entry. Specifically, the values of
foreign parts and foreign repairs made to certain vessels at foreign
shipyards are subject to duty upon re-entry to a U.S. or Puerto Rico
port. The duty amount is based on the actual foreign costs to the
vessel operator for purchases of articles used in repairs and labor
costs for repairs made outside the United States by foreign shipyards
and foreign labor. According to existing regulations, for articles
previously imported into the United States and then exported for use in
foreign vessel repairs, vessel owners are required to pay duties. The
duties owed are based on the foreign purchase price of the articles
when initially imported into the United States.
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\8\ According to 19 CFR 4.14(a), duties owed for vessel repairs
occurring outside the United States apply to all vessels documented
under U.S. law that engage in foreign or coasting trade, as well as
those intended to engage in those trades, under CBP interpretations.
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Vessel operators submitting vessel repair entries must provide
supporting documentation validating the costs of all foreign parts and
repairs. If vessel operators do not have all of the required
information at the time of entry, they can file an incomplete vessel
repair entry as long as they can provide complete evidence to the VRU
within 90 days of vessel arrival. Vessel operators must provide the
final foreign cost of articles used and any repairs within this 90-day
deadline to complete a vessel repair entry. However, vessel operators
may be granted an extension to complete a vessel repair entry if they
are unable to before the deadline. Upon the vessel operator's
submission of a written request justifying the need for additional
time, the VRU may grant a 30-day extension. As discussed above, in
practice, the VRU nearly always approves requests made by vessel
operators for a 30-day extension.\9\ A second extension may also be
granted beyond the initial 30-day extension. This second request must
be approved by the CCR.\10\ If both requests for extensions are
granted, vessel operators, in practice, are given a total of 150 days
to provide complete evidence of costs for vessel repair entries. If all
cost evidence is not provided by the specified deadlines, the VRU can
refer the matter to U.S. Immigration and Customs Enforcement to acquire
the information needed to complete the vessel repair entry.
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\9\ Based on communication with the Cargo Security, Carriers,
and Restricted Merchandise Branch on April 13, 2022. A subject
matter expert stated that the VRU nearly always approves the 30-day
extension requests, only 1 request had been denied in the past
several years and denial was based on a late submission well after
the deadline.
\10\ CBP notes that these second extension requests for vessel
repair entries are rarely denied. Data received from the Cargo
Security, Carriers, and Restricted Merchandise Branch on October 28,
2020. A subject matter expert stated that the CCR nearly always
approves a second extension request.
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In the current regulations, there are limited circumstances under
which vessel operators can be granted relief from paying the duties on
foreign articles and foreign repairs.\11\ In these cases, vessel
operators may apply for relief from assessment of the duties. However,
Applications for Relief from assessment of vessel repair duties require
a significant amount of documentation to support such claims for
relief.\12\ These applications must provide information regarding all
vessel repair operations performed aboard that vessel within the 12-
month period prior to the most current vessel repair entry. As with
filing incomplete vessel repair entries, vessel operators likewise have
90 days from vessel arrival at a U.S. port to file these Applications
for Relief. Vessel operators can similarly request an extension to the
initial 90-day deadline to apply for relief, assuming vessel operators
can justify the need for a 30-day extension. These extension requests
are comparable to the extension requests for completing vessel repair
entries which include: waiting on
[[Page 45646]]
receipts, invoices, documents, certifications, surveyor reports, and
third party organization reports. The VRU determines whether to grant
extensions for submitting Applications for Relief, and in practice, the
VRU rarely declines such requests.\13\ In addition, vessel operators
can request a second extension, which the CCR may grant.\14\ If the
vessel operator does not file an Application for Relief or does not
provide an appropriate justification for relief, the vessel operator is
responsible for the full duty amount as determined by the vessel repair
entry.
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\11\ According to 19 CFR 4.14(h) and (i), there are a few
circumstances where vessels can qualify for duty relief. These
include but are not limited to: matters involving vessels normally
subject to 19 U.S.C. 1466(a), (d), (e), or (h). These situations
include vessels that continuously remain outside the United States
for two years or longer; expenditures on LASH barges; relief on
certain spare repair parts or materials; and relief on certain spare
parts necessarily installed on a vessel prior to their first entry
into the United States.
\12\ According to 19 CFR 4.14(i), each Application for Relief
should include the following documentation: itemized bills,
receipts, and invoices for items shown in 19 CFR 4.14(e); the cost
of items for which a request for relief is made must be segregated
from the cost of the other items listed in the vessel repair entry;
photocopies of relevant parts of vessel logs, as well as of any
classification society reports which detail damage and remedies; a
certification by the senior officer with personal knowledge of all
relevant circumstances relating to casualty damage (time, place,
cause, and nature of damage); a certification by the senior officer
with personal knowledge of all relevant circumstances relating to
foreign repair expenditures (time, place, and nature of purchases
and work performed); a certification by the master that casualty-
related expenditures were necessary to ensure the safety and
seaworthiness of the vessel in reaching its U.S. port of destination
and any permits or other documents filed with or issued by any U.S.
Government agency other than CBP regarding the operation of the
vessel that are relevant to the request for relief.
\13\ Based on communication with the Cargo Security, Carriers,
and Restricted Merchandise Branch on April 13, 2022; subject matter
expert stated that the VRU essentially always approves the 30-day
extension requests. During the past several years, only 1 request
has been denied and the denial was solely due to the extension
request being submitted well after the deadline.
\14\ CBP notes that these second extension requests for
Applications for Relief are rarely denied. Data received from the
Cargo Security, Carriers, and Restricted Merchandise Branch on April
13, 2022; subject matter expert stated that the CCR nearly always
approves a second extension request.
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This amendment changes the deadline for vessel operators to provide
complete information for vessel repair entries and to submit
Applications for Relief. The amendment extends the time period from 90
days to 150 days and eliminates the need for extension requests. CBP
believes that extending the initial deadline will provide vessel
operators additional time to provide the appropriate and accurate
information. In addition, by changing the deadline to 150 days, the
amendment would eliminate the necessity for vessel operators to request
deadline extensions to complete vessel repair entries and Applications
for Relief. CBP expects that the amendment will generate savings to
both vessel operators and the Federal Government by eliminating the
costs associated with completing and reviewing extension requests
beyond the initial 90-day deadline in the existing regulations. CBP
does not expect this amendment to impose any costs to vessel operators
or the Federal Government.
Table 1--Time Burden To Complete Extension Requests
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Time burden Annual time
Expected per request to burden to Time burden Annual time
annual vessel vessel per request to burden to CBP
extension operators operators CBP (hours) (hours)
requests (hours) (hours)
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VRU Extension Requests.......... 152 1 152 0.5 76
CCR Extension Requests.......... 42 1 42 0.56 24
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Vessel operators and CBP will benefit from this amendment because
the extension request process is time-consuming for both the government
and private parties. CBP estimates that the VRU reviews approximately
152 extension requests annually, while the CCR reviews on average 42
extension requests each year.\15\ CBP estimates the average time burden
placed on vessel operators or representatives to complete a single
extension request (both the initial and subsequent requests) is
approximately one hour each.\16\ Meanwhile, CBP estimates that the time
burden placed on CBP to review and approve the extension requests is
approximately 30 minutes (0.5 hours) to review each VRU extension
request and approximately 34 minutes (0.56 hours) to review each CCR
extension request.\17\
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\15\ Data provided by the Cargo Security, Carriers, and
Restricted Merchandise Branch on November 9, 2020. Data obtained
included the average number of extension requests reviewed by the
VRU and CCR from FY 2018-FY 2020. CBP calculated the average annual
expected extension requests by looking at the annual requests
reviewed in FY 2018, FY 2019 and FY 2020. The extension request
numbers include both extension requests for completing vessel repair
entries and applications for duty assessment relief.
\16\ Data received from the Vessel Repair Unit on November 10,
2020. Subject matter expert's best estimate on time burden placed on
vessel operators to file extension requests is approximately one
hour.
\17\ Data obtained from the Cargo Security, Carriers, and
Restricted Merchandise Branch on October 28, 2020, providing an
estimated time burden on CBP to review each VRU and each CCR
extension request.
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Benefits From Eliminating VRU Extension Requests
Extension requests for vessel repair entries and applications for
duty assessment relief are typically filed on behalf of the vessel
operators by legal representatives or vessel agents. Unfortunately, CBP
does not have exact data on the proportion of how many extension
requests are completed by legal representatives on behalf of the vessel
operators and how many are filed by vessel agents. Therefore, CBP
assumes that half of all extension requests are filed by legal
representatives and half are filed by vessel agents.
Table 2--Expected Annual Savings From Eliminating VRU 30-Day Extension Requests
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Estimated time Estimated time
burden to burden to vessel Cost to Cost to vessel Estimated
vessel legal vessel legal time burden Cost to Total
operators representatives agents representatives to CBP CBP savings
(hours) (hours) (hours)
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VRU Extension Requests......................... 76 76 $4,265 $32,669 76 $5,796 $42,730
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On average, CBP estimates that vessel operators file approximately
152 extension requests every year that are reviewed by the VRU. CBP
assumes that half of these 152 requests (76) are filed by a vessel
operator's legal representative and half (76) are filed by vessel
agents. The expected savings to vessel operators from eliminating these
extension requests is based on the estimated burden hours for half of
the VRU extension requests (76 hours, 1 hour per request), multiplied
by the average loaded hourly wage rate for vessel legal representatives
($429.86). CBP determined that this is the best estimate for private
lawyers hired outside of a company, because the data
[[Page 45647]]
was obtained from an American Intellectual Property Law Association
(AIPLA) study on the average hourly billing rate for lawyers. AIPLA's
study surveyed intellectual property (IP) lawyers and was used in the
2017 Report of the Economic Survey. The study found the median hourly
billing rate for these lawyers was $400 in 2016 dollars, which is the
most recent data available, and $429.86 after adjustment to 2020
dollars.\18\ To estimate the cost of filing VRU extension requests
imposed on vessel agents, CBP used the estimated burden hours for half
of VRU extension requests (76 hours, 1 hour per request), multiplied by
the average loaded hourly wage rate for vessel operators ($56.12).\19\
CBP estimated that the savings each year from eliminating these
extension requests to vessel agents ($4,265) and legal representatives
($32,669) would be approximately $36,934.
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\18\ American Intellectual Property Law Association. 2017 Report
of the Economic Survey. ``Billable Hours, Billing Rate, Dollars
Billed (Q29, Q30, Q27).'' June 2017. CBP calculated the 2020
adjusted dollar amount using the percent increase in the Annual
Average GDP Price Deflator (2015 = 100) between 2016 and 2020. The
annual average GDP Price Deflator value in 2016 = 101.0481, the
annual average GDP Price Deflator value in 2020 = 108.5904, the
percent increase was estimated to be around 7.4641% (108.5904/
101.0481 = 1.07.4641 or 7.4641%). This percent increase was applied
to the 2016 estimated hourly billing rate of $400 for external
attorneys to estimate the 2020 hourly billing rate of $429.86 for
external attorneys.
\19\ CBP calculated this loaded wage rate by first multiplying
the Bureau of Labor Statistics' (BLS) 2020 median hourly wage rate
for Captains, Mates, and Pilots of Water Vessels ($37.08) by the
ratio of BLS' average 2020 total compensation to wages and salaries
for Transportation and Material Moving occupations (1.5134), the
assumed occupational group for captains, mates, and pilots of water
vessels, to account for non-salary employee benefits. These figures
are in 2020 U.S. dollars and CBP assumes an annual growth rate of 0
percent; the 2020 U.S. dollar values are equal to the 2021 U.S.
dollar values.
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In addition to the cost to vessel operators, the Federal Government
incurs costs from reviewing VRU extension requests every year. The
expected annual cost to the Federal Government associated with the
review of VRU extension requests is based on the number of responses
that must be reviewed (152) multiplied by the time burden to review and
process each response (0.5 hours) = 76 hours. This is then multiplied
by the average hourly loaded rate for other CBP employees ($76.26) =
$5,796.\20\ CBP thus estimates that the savings to the Federal
Government from eliminating VRU requests would be approximately $5,796
on an annual basis. Considering the combined savings to vessel
operators and the Federal Government as a result of eliminating VRU
extension requests, CBP estimates that this rule's annual savings is
approximately $42,730.
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\20\ Data obtained from the Cargo Security, Carriers, and
Restricted Merchandise Branch on October 28, 2020. The Cargo
Security, Carriers, and Restricted Merchandise Branch calculated the
time burden to GS-12 litigation specialists at 30 minutes to review
each VRU extension requests. CBP used its estimates for Other CBP
Employees at the GS-12 Step 3 level, as the best proxy for average
hourly loaded wage rate. CBP based this wage on the FY 2021 salary
and benefits of the national average of other CBP positions, which
is equal to a GS-12, Step 3. Source: Email correspondence with CBP's
Office of Finance on September 7, 2021.
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Benefits From Eliminating CCR Extension Requests
As discussed above, CBP expects that, on average, the CCR reviews
about 42 requests for 30-day extensions every year. These amendments
will have the effect of eliminating extension requests and their
associated costs, constituting a net savings to all associated parties.
CBP calculated these costs by combining the costs to vessel operators
and the Federal Government for filing and reviewing these subsequent
extension requests, for completing vessel repair entries, and for
applying for relief from duty payments. CBP assumes that the time
burden on vessel operators to file the subsequent extension requests
(which are reviewed by the CCR) is one hour per extension request. Like
extension requests to the VRU, CBP expects that the costs incurred by
these extension requests to the CCR represent potential savings from
the amendment. CBP expects that half of the 42 extension requests to
the CCR (21) are completed by legal representatives on behalf of vessel
operators and half (21) are completed by vessel agents.
Table 3--Expected Annual Savings From Eliminating CCR 30-Day Extension Requests
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated time Estimated time
burden to burden to vessel Cost to Cost to vessel Estimated
vessel legal vessel legal time burden Cost to Total
operators representatives agents representatives to CBP CBP savings
(hours) (hours) (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CCR Extension Requests......................... 21 21 $1,169 $8,955 24 $2,354 $12,479
--------------------------------------------------------------------------------------------------------------------------------------------------------
CBP calculated the savings from removing the subsequent requests
for 30-day extensions based on the estimated burden hours for half of
the CCR extension requests (21 hours, 1 hour per request), multiplied
by the average loaded hourly wage rate for vessel legal representatives
equaling $429.86).\21\ For the second half of the CCR extension
requests, which CBP assumes are filed by vessel agents, CBP used the
estimated burden hours for half of the CCR extension requests (21
hours, 1 hour per request), multiplied by the average loaded hourly
wage rate for vessel operators equaling $56.12.\22\ CBP calculated that
the estimated annual savings to vessel operators by eliminating the CCR
extension requests will be approximately $10,125.
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\21\ CBP determined this is the best estimate for private
lawyers hired outside of a company and was obtained from an American
Intellectual Property Law Association (AIPLA) study on the average
hourly billing rate for lawyers. AIPLA's study surveyed intellectual
property (IP) lawyers that were used in the 2017 Report of the
Economic Survey. The median hourly billing rate for these lawyers
was $400 in 2016 dollars, which is the most recent data available,
and $424.75 after adjustment to 2019 dollars. American Intellectual
Property Law Association. 2017 Report of the Economic Survey.
``Billable Hours, Billing Rate, Dollars Billed (Q29, Q30, Q27).''
June 2017. CBP calculated the 2020 adjusted dollar amount using the
percent increase in the Annual Average GDP Price Deflator (2015 =
100) between 2016 and 2020. The annual average GDP Price Deflator
value in 2016 = 101.0481, the annual average GDP Price Deflator
value in 2020 = 108.5904, the percent increase was estimated to be
around 7.4641% (108.5904/101.0481 = 1.074641 or 7.4641%). This
percent increase was applied to the 2016 estimated hourly billing
rate of $400 for external attorneys to estimate the 2020 hourly
billing rate of $429.86 for external attorneys.
\22\ CBP calculated this loaded wage rate by first multiplying
the Bureau of Labor Statistics' (BLS) 2020 median hourly wage rate
for Captains, Mates, and Pilots of Water Vessels ($37.08) by the
ratio of BLS' average 2020 total compensation to wages and salaries
for Transportation and Material Moving occupations (1.5134), the
assumed occupational group for captains, mates, and pilots of water
vessels, to account for non-salary employee benefits. These figures
are in 2020 U.S. dollars and CBP assumes an annual growth rate of 0
percent; the 2020 U.S. dollar values are equal to the 2021 U.S.
dollar values.
---------------------------------------------------------------------------
By eliminating the need for subsequent extension requests, the
amendments will provide savings to the Federal Government, as the CCR
staff would no longer need to review extension requests. The estimated
annual savings from this portion of the
[[Page 45648]]
amendment to the Federal Government is based on the number of responses
that must be reviewed (42) multiplied by the time burden to review and
process each response (0.5625 hours) = 24 hours multiplied by the
average hourly loaded wage rate for a CBP attorney-advisor ($98.10) =
$2,354.<SUP>23 24</SUP> The total savings from eliminating CCR
extension requests was estimated by combining savings to both vessel
operators ($10,125) and CBP ($2,354), which is approximately $12,479
each year.
---------------------------------------------------------------------------
\23\ Data obtained from the Cargo Security, Carriers, and
Restricted Merchandise Branch on October 28, 2020, providing an
estimated time burden to the CCR to review the secondary extension
requests. Of the 80 requests reviewed in FY 2020, the estimated time
burden was about 45 hours for attorney-advisors, equivalent to about
0.5625 hours per request to review. A lack of detailed data for FY
2019 and FY 2018 prevented CBP from obtaining exact time burdens to
complete the requests made during those years. Therefore, CBP used
the FY 2020 average time burden per request and applied that average
to the total number of requests reviewed in FY 2019 and FY 2018 to
estimate the annual expected time burden associated with secondary
extension requests.
\24\ CBP based this wage on the FY 2021 salary and benefits of
the national average of CBP Attorney positions. Source: Email
correspondence with CBP's Office of Finance on March 18, 2022.
---------------------------------------------------------------------------
CBP expects the amendment will result in savings to the U.S.
economy on an annual basis. CBP calculated the total savings as the
combination of savings accrued by both the Federal Government and
vessel operators from extending the filing deadlines to 150 days. CBP
calculated the total savings by adding the expected savings to vessel
operators generated by eliminating VRU extension requests ($36,934) and
CCR extension requests ($10,125). CBP also included in total savings of
the amendment, the added savings to the Federal Government generated by
eliminating VRU extension requests ($5,796) and CCR extension requests
($2,354). CBP estimates that the overall savings to the U.S. economy
from this amendment will be approximately $55,209 each year.
Overall, CBP expects that the impact from amending the deadlines
from 90 to 150 days for vessel operators to provide completed vessel
repair entries and applications for duty assessment relief does not
result in a ``significant'' economic impact in any given year. After
considering the impacts of the amendment, CBP expects there to be a net
savings of approximately $55,209 annually to the U.S. economy. At the
same time, CBP does not expect any costs associated with this
amendment.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended
by the Small Business Regulatory Enforcement and Fairness Act of 1996,
requires an agency to prepare and make available to the public a
regulatory flexibility analysis that describes the effect of a proposed
rule on small entities (i.e., small businesses, small organizations,
and small governmental jurisdictions) when the agency is required to
publish a general notice of proposed rulemaking for a rule. Since a
general notice of proposed rulemaking is not necessary for this rule,
CBP is not required to prepare a regulatory flexibility analysis for
this rule.
D. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires
that CBP consider the impact of paperwork and other information
collection burdens imposed on the public. As there is no collection of
information in this document, the provisions of the Paperwork Reduction
Act are inapplicable.
V. Signing Authority
This document is being issued in accordance with 19 CFR 0.2(a),
which provides that the authority of the Secretary of the Treasury with
respect to CBP regulations that are not related to customs revenue
functions was transferred to the Secretary of Homeland Security
pursuant to Section 403(l) of the Homeland Security Act of 2002.
Accordingly, this final rule to amend such regulations may be signed by
the Secretary of Homeland Security (or his or her delegate).
List of Subjects in 19 CFR Part 4
Exports, Freight, Harbors, Maritime carriers, Oil pollution,
Reporting and recordkeeping requirements, Vessels.
Amendments to the Regulations
For the reasons set forth in the preamble, CBP amends part 4 of
title 19 of the Code of Federal Regulations (19 CFR part 4) as set
forth below.
PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES
0
1. The general authority citation for part 4 and the specific authority
citation for Sec. 4.14 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1415, 1431, 1433, 1434,
1624, 2071 note; 46 U.S.C. 501, 60105.
* * * * *
Section 4.14 also issued under 19 U.S.C. 1466, 1498; 31 U.S.C.
9701.
* * * * *
0
2. In Sec. 4.14, revise paragraphs (f) and (i)(1) to read as follows:
Sec. 4.14 Equipment purchases for, and repairs to, American vessels.
* * * * *
(f) Time limit for submitting evidence of cost. A complete vessel
repair entry must be supported by evidence showing the cost of each
item entered. If the entry is incomplete when submitted, evidence to
make it complete must be received by the VRU as identified in paragraph
(g) of this section within 150 calendar days from the date of vessel
arrival. That evidence must include the final cost of repairs. In the
event that all final cost evidence is not furnished within 150 days, or
is of doubtful authenticity, the VRU may refer the matter to U.S.
Immigration and Customs Enforcement to begin procedures to obtain the
needed evidence. That agency may also investigate the reason for a
failure to file or for an untimely submission. Unexplained or
unjustified delays in providing CBP with sufficient information to
properly determine duty may result in penalty action as specified in
paragraph (j) of this section.
* * * * *
(i) * * *
(1) Applications for Relief. Relief from the assessment of vessel
repair duty will not be granted unless an Application for Relief is
filed with CBP. Relief will not be granted based merely upon a claim
for relief made at the time of entry under paragraph (e) of this
section. If relief is sought, an Application is not required to be
presented in any particular format, but it must clearly present the
legal basis for granting relief, as specified in paragraph (h) of this
section. An Application must also state that all repair operations
performed aboard a vessel during the one-year period prior to the
current submission have been declared and entered. A valid Application
is required to be supported by complete evidence as detailed in
paragraphs (i)(1)(i) through (vi) and (i)(2) of this section. Except as
further provided in this paragraph, the deadline for receipt of an
Application and supporting evidence is 150 calendar days from the date
that the vessel first arrived in the United States following foreign
operations. Applications must be addressed and submitted by the vessel
operator to the VRU and will be decided in that unit. The VRU may seek
the advice of the Cargo Security, Carriers & Restricted Merchandise
Branch, Office of Trade, in CBP Headquarters with regard to any
specific item or issue which has not been addressed by clear precedent.
If no Application is filed or if a submission which does not meet the
minimal standards of an Application for Relief is
[[Page 45649]]
received, the duty amount will be determined without regard to any
potential claims for relief from duty assessment (see paragraph (h) of
this section). Each Application for Relief must include copies of:
* * * * *
Alejandro N. Mayorkas,
Secretary of Homeland Security.
[FR Doc. 2022-16233 Filed 7-28-22; 8:45 am]
BILLING CODE 9111-14-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.