Exporters not Liable for Harbor Maintenance Fee

Background

The Harbor Maintenance Fee was created by the Water Resources Development Act of 1986 (Pub. L. 99-662) (26 U.S.C. 4461 et seq.) (the Act), and is implemented by Sec. 24.24 of the Customs Regulations (19 CFR 24.24). The fee, pursuant to the Act and as implemented by the regulations, became effective on April 1, 1987, and has been assessed on port use associated with imports, exports, and movements of cargo and passengers between domestic ports. The fee is paid to the U.S. Customs Service. The fee has been imposed at the time of loading for exports and unloading for other shipments. Exporters, importers and domestic shippers have been obligated, pursuant to the statute and regulations, to pay 0.125 percent of the value of the commercial cargo shipped through identified ports. The fee, once collected by Customs, is deposited in the Harbor Maintenance Trust Fund, from which Congress may appropriate amounts to pay for harbor maintenance and development projects and related expenses.

On March 31, 1998, the Supreme Court in United States v. United States Shoe Corp., 118 S. Ct. 1290, No. 97-372 (March 31, 1998), declared that the Harbor Maintenance Fee is unconstitutional as applied to exports. The Court found that the Harbor Maintenance Fee was a tax imposed on an ad valorem basis and as such, the fee was not a fair approximation of the services, facilities or benefits furnished to the exporter. Therefore, the Court ruled the Harbor Maintenance Fee does not qualify as a permissible user fee for exporters and is in violation of the Export Clause of the Constitution. By a notice published in the Federal Register (63 FR 24209) on May 1, 1998, Customs announced that as of April 25, 1998, it will no longer be collecting the Harbor Maintenance Fee for cargo loaded on board a vessel for export. This document amends Sec. 24.24 of the Customs Regulations (19 CFR 24.24) to make the regulation consistent with the Supreme Court decision; the document amends the regulation by removing the requirement that an exporter of cargo is liable for the payment of the Harbor Maintenance Fee when cargo is loaded for export at a port subject to the Harbor Maintenance Fee.

Inapplicability of Notice and Delayed Effective Date

Because the amendment to the Customs Regulations contained in this document removing exporters from having to pay the Harbor Maintenance Fee is being made in response to a Supreme Court decision, pursuant to section 553(a)(1) of the Administrative Procedure Act (5 U.S.C. 553(a)(1)), no notice of proposed rulemaking or public procedure is necessary. For the same reason, a delayed effective date is not required pursuant to 5 U.S.C. 553(d)(3).

Regulatory Flexibility Act

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply. Accordingly, this final rule is not subject to the regulatory analysis or other requirements of 5 U.S.C. 603 and 604.

Executive Order 12866

This amendment does not meet the criteria of a ``significant regulatory action'' as described in E.O. 12866.

Drafting Information

The principal author of this document was Keith B. Rudich, Esq., Regulations Branch, Office of Regulations and Rulings, U.S. Customs Service. However, personnel from other offices participated in its development.

List of Subjects in 19 CFR Part 24

Accounting, Canada, Claims, Customs duties and inspections, Fees, Financial and accounting procedures, Foreign trade statistics, Harbors, Imports, Reporting and recordkeeping requirements, Taxes, Trade Agreements, U.S.-Canada Free-Trade Agreement, User fees, Wages.

Amendment to the Regulations

Accordingly, Sec. 24.24 of the Customs Regulations (19 CFR 24.24) is amended as follows:

PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURES

1. The general authority for part 24, Customs Regulations (19 CFR Part 24) and the specific relevant authority citation for Sec. 24.24 Customs Regulations (19 CFR 24.24), continue to read as follows:

Authority: 5 U.S.C. 301, 19 U.S.C. 58a-58c, 66, 1202 (General Note 20, Harmonized Tariff Schedule of the United States (HTSUS)), 1450, 1624; 31 U.S.C. 9701. * * * * * Section 24.24 also issued under 19 U.S.C. 4461, 4462; * * * * *

Sec. 24.24 [Amended]

2. Section 24.24 is amended by removing paragraph (d)(3)(ii) and redesignating paragraph (d)(3)(iii) as (d)(3)(ii); by removing paragraph (e)(2) and redesignating paragraphs (e)(3), (4) and (5) as paragraphs (e)(2), (3), and (4) respectively; by removing the word ``exporter,'' in paragraph (g); by removing the word ``exporter,'' in paragraph (h)(1); and by removing the words '', exporting'' and ``the SED,'' in paragraph (i). William F. Riley, Acting Commissioner of Customs.

Approved: July 8, 1998.

John P. Simpson, Deputy Assistant Secretary of the Treasury. [FR Doc. 98-20456 Filed 7-30-98; 8:45 am] BILLING CODE 4820-02-P