RES-2-12 RR:CR:DR 231173 TLS
Ms. Julie McCombs
Director of Global Policy
Air-Conditioning and Refrigeration Institute
4100 North Fairfax Drive Suite 200
Arlington, Virginia 22203
RE: Ruling request re entry of articles not in compliance with Department of Energy standards; 19 U.S.C. § 1557; 19 U.S.C. § 1555; 19 U.S.C. § 81c; 19 CFR Part 146; 19 CFR Part 144
Dear Ms. McCombs:
This is in response to your request for a ruling, which this office received via an email dated October 6, 2005. You ask under what circumstances, if any, may non-compliant air conditioners be imported into the United States. Our response follows.
Your organization, the Air-Conditioning and Refrigeration Institute, is a trade association representing manufacturers of central air conditioners and commercial refrigeration equipment. The Department of Energy (DOE) has recently amended its energy efficiency standards to require that all central air-conditioners and heat pumps (all equipment referenced herein will alternatively and collectively be referred to as “CAC”) manufactured on or after January 23, 2006, must be rated at least 13 Seasonal Energy Efficiency Ratio (SEER) in order to be allowed entry into the United States market. This amendment was published in the Federal Register on August 17, 2004. 69 Fed. Reg. 158 (August 17, 2004).
You state that some of your members would like to import into the United States CACs that are rated at less than 13 SEER for export through distribution centers.
May central air conditioners and other equipment covered by the Department of Energy SEER standards that are not in compliance with those standards be imported into the United States for export?
LAW AND ANALYSIS:
Under 42 U.S.C. § 6301, any covered product offered for importation in violation of DOE energy conservation standards “shall be refused admission into the customs territory of the United States under rules issued by the Secretary of the Treasury, except that the Secretary of the Treasury may, by such rules, authorize the importation of such covered product upon such terms and conditions... to ensure that such covered product... will be exported or abandoned to the United States.” See also 10 CFR 430.64(b). The “customs territory of the United States” is defined as limited to the States, the District of Columbia, and Puerto Rico. HTSUSA, General Note 2 (codified by reference at 19 U.S.C. § 1202).
The authority to determine whether a covered product is in violation of DOE energy conservation standards rests with the Department of Energy. As noted above, a covered product with a rating of less than 13 SEER can only be imported under conditions that ensure its export from the United States. The appropriate way of accomplishing this is by either placing the merchandise into a foreign trade zone for export only, or a customs bonded warehouse for export only.
Under 19 U.S.C. § 81c, foreign merchandise of every description, except that which is prohibited by law, may be brought into a foreign trade zone (FTZ) without being subject to the customs laws of the United States, including the requirement for entry and the payment of duties and other U.S. Customs and Border Protection (CBP) charges. See also 19 U.S.C. 146.31. Such merchandise brought into the FTZ may be exported. 19 U.S.C. § 81c(a). A CAC rated below 13 SEER would not be prohibited from importation for the purpose of exportation by admission of the CAC into an FTZ. Foreign trade zones are not part of the customs territory of the United States. See 19 CFR 146.1(b) (the definition of “constructive transfer” clearly distinguishes an FTZ from the customs territory).
Under 19 U.S.C. § 1557(a)(1), any merchandise subject to duty, with the exception of perishable articles and explosive substances other than firecrackers, may be entered into a bonded warehouse at the expense and risk of the owner purchaser, importer, or consignee. See also 19 CFR 144.1(a). As noted above, a CAC rated below 13 SEER would not be prohibited from importation for the purpose of exportation if it is entered into a bonded warehouse and then later exported. See 19 CFR 144.4 and 144.37. It should be noted that CBP has joint custody over all merchandise imported into a bonded warehouse and authority to supervise the operations of the warehouse, unless otherwise specified. See 19 U.S.C. § 1555(a). The procedures covering warehouse operations and requirements for operating a bonded warehouse are found in 19 U.S.C. §§ 1555 and 1557, and 19 CFR Parts 19 and 144. See also 19 CFR 113.62 (basic importation and entry bond requirements).
Foreign air conditioning units and other equipment subject to the standards set by the Department of Energy under 10 CFR 430.32 that are not in compliance with those standards, may be imported into the United States for the purpose of exportation, and placed in either a foreign trade zone or customs bonded warehouse pursuant to that purpose.
William G. Rosoff, Chief
Entry Process and Duty Refunds Branch