May 2, 2012 / Law Alert

Customs and Border Protection (CBP) proposes a rule to refuse admission to imports not compliant with energy or labeling standards

On March 26, 2012, the Department of the Treasury (Treasury) and CBP jointly announced a proposed rule that will affect manufacturers and importers of consumer products and commercial equipment subject to Department of Energy (DOE) energy conservation standards: the Energy Conservation Program for Consumer Products Other than Automobiles, 42 U.S.C. §§ 6291-6309, and the Energy Conservation Program for Certain Industrial Equipment, 42 U.S.C. §§ 6211- 6217, (together, the “Energy Conservation Programs”). Everything from consumer appliances (washers, dryers, air conditioning units, smaller household electronics, etc.) to industrial and commercial grade appliances and manufacturing equipment is covered by these DOE Energy Conservation Program standards. Under the proposed rule, the CBP must deny admission of certain imports that do not comply with energy conservation or labeling standards when instructed to do so by the DOE or the Federal Trade Commission (FTC). The rule also provides for the conditional release of such refused goods so that they may be brought into compliance.

By making enforcement of energy conservation standards easier, the proposed rule signifies a shift in policy toward a renewed emphasis on enforcement of such standards and echoes the DOE’s recent attempts to bolster its own enforcement efforts “to ensure manufacturers meet the energy and water conservation standards, saving energy—and money—for American consumers and businesses.” Under existing DOE regulations, manufacturers, importers, and private labelers of noncompliant products are subject to civil penalties, and the National Energy Efficiency Enhancement Act of 2010 set out a 20 year DOE initiative to update and strengthen efforts to improve the efficiency of consumer and industrial goods. In the past two years, the DOE’s Offi ce of General Counsel has accordingly shifted its policy to proactive enforcement.

The announcement, published as a notice in the Federal Register (77 Fed. Reg. 17364) dated March, 26, 2012, states:

Specifically, CBP will refuse admission into the customs territory of the United States1 to consumer products and industrial equipment deemed noncompliant with the Energy Policy and Conservation Act of 1975 (EPCA) and its implementing regulations, and for which CBP has received written notice from the DOE or the FTC that identifi es merchandise as noncompliant with applicable EPCA requirements. In lieu of immediate refusal of admission, and upon written or electronic notice by DOE or FTC, CBP may conditionally release under bond to the importer such noncompliant products or equipment for purposes of reconditioning, re-labeling, or other action so as to bring the subject product or equipment into compliance with applicable energy conservation and labeling admissibility standards.

The notice further states that imports that are conditionally released must be brought into compliance within 30 days, unless an extension is granted, and failure to do so will result in a refusal of admission and demand for redelivery.

Under 15 U.S.C. § 2066, CBP is already authorized to refuse admission to consumer goods that fail to comply with product safety rules or have been deemed hazardous, as well as chemical substances that do not comply with the Toxic Substances Control Act administered by the Environmental Protection Agency. Under 42 U.S.C. §§ 6301 and 6316, the Secretary of the Treasury (the “Secretary”) is required to issue regulations refusing admission of products or equipment covered by the Energy Conservation Programs offered for importation into US customs territory in violation of 42 U.S.C. § 6302. The statute also authorizes the Secretary to use his or her discretion to allow the importation of covered products. In accordance with 41 U.S.C. § 6301, the proposed rule essentially transfers that authority from the Secretary to CBP, as authorized by the DOE or the FTC, by adding § 12.50 to 19 C.F.R. Part 12.

Comments on the proposed rule must be received by May 25, 2012.

1 Note: A foreign trade zone (FTZ) is not considered part of the customs territory of the United States, so such non-complying
imports could be imported into an FTZ to be brought into compliance. (Footnote not in original quotation).