2017-20920. Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates

AGENCY:

Bureau of the Census, Commerce.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The U.S. Census Bureau (Bureau of the Census) proposes to amend its regulations in order to clarify that the data collected from the Kimberley Process Certificates (KPCs) are collected in compliance with the Clean Diamond Trade Act and not under the Census Bureau's laws and regulations. In addition, this rule clarifies the submission requirements and permissible uses of the KPCs.

DATES:

Written comments must be received on or before November 28, 2017.

ADDRESSES:

Please direct all written comments on this proposed rule to the Chief, International Trade Management Division, U.S. Census Bureau, Room 5K158, Washington, DC 20233-6010. You may also submit comments, identified by RIN number 0607-AA54 or by the e-Rulemaking Docket ID USBC-2017-0003, to the Federal e-Rulemaking Portal: http://www.regulations.gov. All comments received are part of the public record. No comments will be posted to http://www.regulations.gov for public viewing until after the comment period has closed. Comments will generally be posted without change. All Personally Identifiable Information (for example, name and address) voluntarily submitted by the commenter may be publicly accessible. Do not submit Confidential Business Information or otherwise sensitive or protected information. The Census Bureau will accept anonymous comments (enter N/A in the required fields, if you wish to remain anonymous). You may submit attachments to electronic comments in Microsoft Word, Excel, WordPerfect, or Adobe PDF file formats only.

FOR FURTHER INFORMATION CONTACT:

Dale C. Kelly, Chief, International Trade Management Division, U.S. Census Bureau, Room 5K158, Washington, DC 20233-6010, by phone [phone], by fax [phone], or by email [[e-mail]].

SUPPLEMENTARY INFORMATION:

Background

The Census Bureau is amending the Foreign Trade Regulations (FTR) (15 CFR, part 30) to clarify that the Kimberley Process Certificates (KPCs) are not collected under Title 13 of the United States Code. Instead, the KPCs are collected under the Clean Diamond Trade Act (CDTA) (Pub. L. 108-19, 19 U.S.C. 3901, et seq.) and Executive Order 13312, entitled “Implementing the Clean Diamond Trade Act” (68 FR 45151, July 29, 2003). The CDTA and Executive Order 13312 require that the importation into, and exportation from, the United States of any rough diamonds be controlled through the Kimberley Process Certification Scheme (KPCS). The KPCS calls on Participants (i.e. governments participating in the KPCS), including the United States, to ensure that any shipment of rough diamonds exported to, or imported from, a Participant be accompanied by a valid KPC, and maintain and publish statistics on the importation and exportation of rough diamonds. The CDTA further provides that the United States should produce statistics on imports and exports of rough diamonds and to make these statistics available for analysis by interested parties, including other governments participating in the KPCS.

Consistent with the CDTA, Executive Order 13312, and the KPCS, the Office of Foreign Assets Control's Rough Diamonds Control Regulations (Title 31 CFR, part 592) require that a shipment of rough diamonds imported into, or exported from, the United States be accompanied by an original KPC, and the Census Bureau's FTR requires that KPCs for all import and export shipments be provided to the Census Bureau. The data collected from the KPCs are separate and distinct from the statistical data collected under Title 13 of the United States Code, and are not governed by the confidentiality provisions of that title.

Finally, the U.S. Department of Homeland Security and the U.S. Department of State concur with the revisions to the FTR as required by 13 U.S.C. 303, and Public Law 107-228, division B, title XIV, section 1404.

Program Requirements

Consistent with the CDTA and Executive Order 13312, the Census Bureau is revising the FTR in CFR Title 15, part 30, in sections 30.1, 30.4, 30.7, 30.50, 30.60, and 30.70, as follows:

• Revise § 30.1(c) to add the definition “Kimberley Process Certificate” as a technical amendment.
• Revise § 30.1(c) to add the definition “Voided Kimberley Process Certificate” to clarify the term.
• Revise § 30.4 to add paragraph (e) to clarify the filing procedures for voided KPCs and to address that the collection of KPCs are not pursuant to Title 13, of the United States Code .
• Revise § 30.7(c) to clarify that KPCs must be provided to the Census Bureau immediately after export of the shipment from the United States.
• Revise § 30.50(c) to clarify that KPCs must be provided to the Census Bureau immediately after entry of the shipment in the United States.
• Revise § 30.60 to add a note clarifying that KPCs are not considered Electronic Export Information and are not confidential under Title 13 of the United States Code.
• Revise § 30.70 to clarify how violations of the CDTA will be enforced.

Rulemaking Requirements

Regulatory Flexibility Act

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) that this proposed rule will not have a significant impact on a substantial number of small entities. Currently, a KPC must be submitted for all imports or exports of rough diamonds. This rulemaking requires that KPCs be provided to the Census Bureau immediately after either entry in or export from the United States. It replaces the previous requirement to provide the KPC to the Census Bureau in advance.

This action requires that U.S. Principal Parties in Interest (USPPIs) or authorized agents in the United States file export information to the Automated Export System (AES) for all shipments where an Electronic Export Information (EEI) record is required under the FTR. The SBA's table of size standards indicates that businesses that are the USPPI or authorized agent and file export information are considered small businesses if they employ less than 500 people. Based on Exhibit 7a of the 2015 Profile of U.S. Exporting Companies, the Census Bureau estimates that there are 295,000 USPPIs that are considered small business entities under the SBA definition. And more than 90 percent of these USPPIs use an authorized agent to file export information. An estimate of the number of authorized agents is not known and is unable to be determined.

The Census Bureau anticipates that the clarification of requirements will not significantly affect the small businesses that file through the AES. The majority of agents require use of a computer to perform routine tasks, such as filing through the AES. These agents are unlikely to be significantly affected by these clarifications of requirements, as they already possess the necessary technology and equipment to submit the information through the AES. In addition, it is not necessary for small businesses to purchase software for this task because a free Internet-based system, AES Direct, is provided for the electronic submission of export information. The proposed new requirements will have minimal impact on response burden. For these reasons, this rule will not have a significant economic impact on a substantial number of small entities.

Executive Orders

This rule has been determined to be not significant for purposes of Executive Order 12866. This proposed rule is not an Executive Order 13771 regulatory action because this proposed rule is not significant under Executive Order 12866. This rulemaking does not contain policies with federalism implications as that term is defined under Executive Order 13132.

Paperwork Reduction Act

Notwithstanding any other provision of law, no person is required to respond to, nor shall a person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act (PRA), unless that collection of information displays a current, valid Office of Management and Budget (OMB) control number. This rule contains a collection-of-information subject to the requirements of the PRA (44 U.S.C. 3501 et seq.) and that has been approved under OMB control number 0607-0152.

List of Subjects in 15 CFR Part 30

• Economic statistics
• Exports
• Foreign trade
• Reporting and recordkeeping requirements

For the reasons set out in the preamble, the Census Bureau is proposing to amend Title 15, CFR part 30, as follows:

PART 30—FOREIGN TRADE REGULATIONS

1. The authority citation for 15 CFR part 30 continues to read as follows:

Authority: 5 U.S.C. 301; 13 U.S.C. 301-307; Reorganization plan No. 5 of 1990 (3 CFR 1949-1953 Comp., p. 1004); Department of Commerce Organization Order No. 35-2A, July 22, 1987, as amended, and No. 35-2B, December 20, 1996, as amended; Pub. L. 107-228, 116 Stat. 1350.

2. Amend § 30.1(c) by adding definitions for “Kimberley Process Certificate (KPC)” and “Voided Kimberley Process Certificate” to read as follows:

§ 30.1

Purpose and definitions.

* * * * *

(c) * * *

Kimberley Process Certificate (KPC). A forgery resistant document used to certify the origin of rough diamonds from sources which are free of conflict.

* * * * *

Voided Kimberley Process Certificate. A Kimberley Process Certificate intended to be used for the exportation of rough diamonds from the United States that has been cancelled for reasons such as loss or error.

* * * * *

3. Amend § 30.4 by adding paragraph (e) to read as follows:

§ 30.4

Electronic Export Information filing procedures, deadlines, and certification statements.

* * * * *

(e) Collection of KPCs and voided KPCs. Any voided KPC must be faxed by the voiding party to the Census Bureau on [phone], or provided by other methods as permitted by the Census Bureau immediately upon voiding. The collection of KPCs, including voided KPCs, is performed pursuant to the Clean Diamond Trade Act, Public Law 108-19, 19 U.S.C. Section 3901 et seq. (CDTA) and Executive Order 13312, and not Title 13, U.S.C.

4. Amend § 30.7 by revising paragraph (c) to read as follows:

§ 30.7

Annotating the bill of lading, air waybill, or other commercial loading documents with proof of filing citations, and exemption legends.

* * * * *

(c) Exports of rough diamonds classified under HS subheadings 7102.10, 7102.21, 7102.31 require the proof of filing citation, as stated in paragraph (b) of this section, to be indicated on the Kimberley Process Certificate (KPC). In addition, the KPC must be faxed to the Census Bureau on [phone], or provided by other methods as permitted by the Census Bureau, immediately after export of the shipment from the United States.

5. Amend § 30.50 by revising paragraph (c) to read as follows:

§ 30.50

General requirements for filing import entries.

* * * * *

(c) The Kimberley Process Certificate (KPC) for all imports of rough diamonds classified under HS subheadings 7102.10, 7102.21, 7102.31 must be faxed by the importer or customs broker to the Census Bureau on [phone], or provided by other methods as permitted by the Census Bureau, immediately after entry of the shipment in the United States.

6. Amend § 30.60 by adding a note to read as follows:

§ 30.60

Confidentiality of Electronic Export Information.

* * * * *

Note to § 30.60:

Kimberley Process Certificates (KPCs), including voided KPCs, provided to the Census Bureau pursuant to the Clean Diamond Trade Act, Executive Order 13312, and this Part are not considered EEI and are not confidential under Title 13.

7. Amend § 30.70 by revising the introductory text to read as follows:

§ 30.70

Violation of the Clean Diamond Trade Act.

Section 8(c) of the Clean Diamond Trade Act (CDTA) authorizes U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) to enforce the laws and regulations governing exports of rough diamonds. The Treasury Department's Office of Foreign Assets Control's (OFAC) also has enforcement authority pursuant to section 5(a) of the CDTA, Executive Order 13312, and Rough Diamonds Control Regulations (31 CFR 592). CBP, ICE, and the OFAC are authorized to enforce provisions of the CDTA that provide for the following civil and criminal penalties:

* * * * *

Dated: September 22, 2017.

Ron S. Jarmin,

Associate Director for Economic Programs, Performing the Non-Exclusive Functions and Duties of the Director, Bureau of the Census.