DOE Energy Efficiency Filing Proposal Misunderstands Complex Import Process, Say Commenters

The Energy Department’s proposal to require the filing of additional data elements in ACE for products subject to energy efficiency standards is unnecessarily burdensome, and runs contrary to the federal government’s stated goal of simplifying the import process, said manufacturer and importer associations in comments submitted to the agency (here). The proposed rule results from a misunderstanding of the roles various parties play in the import process, seeking data from importers that is best and most easily – and already – submitted by manufacturers, they said.

The proposal creates a “new import barrier” in the form of an “unnecessary and duplicative reporting scheme,” said the National Association of Manufacturers (here). Under DOE’s Dec. 29 proposed rule (see 1512290020), filers would have to submit data elements, including an energy efficiency certification reference number when available, for every shipment at time of entry. Comments on the proposed rule were due March 14. Several trade groups, including the National Customs Brokers & Forwarders Association of America, have already weighed in asking DOE to withdraw the proposal.

Manufacturers, including importers, of products covered by energy efficiency standards are already required to submit certifications annually, noted several commenters. “Given that the proposal does not eliminate the annual certification that is already in place, transmitting certifications prior to importation is not only duplicative to the information already available to DOE from the manufacturer but an administrative and financial burden on the U.S. company that would be required to acquire and submit such information prior to importation for every shipment,” said NAM.

The proposal “maintains an uninformed and simplistic view of how information is maintained in international commerce and how this information is ultimately prepared for input into ACE,” said the Business Alliance for Customs Modernization (here). Certificate information is “not routinely maintained” by importers, it said. Many importers receive transmissions of data in systems that do not have capacity for the new data, and these systems “would all have to be reprogrammed at great time and expense.” DOE, anticipating a manual process would be required to match certification data to shipments, “does not appreciate” that industry has strived for years to automate the transmission of commercial information, it said.

In many cases the data is simply not available and would require dramatic changes, BACM said. Because energy efficiency certificate information remains with the manufacturer and does not follow a product through the supply chain, importers do not currently know when a product containing a covered component is shipped, particularly when it goes through a complex supply chain. Products put up for sale in retail sets that contain covered products, like power supplies, are imported under a single HTS number and have a single SKU and model number, so importers may not know certification data is required.

Requiring that importers submit certification numbers would “significantly” increase the time and expense involved in filing entries, said BACM. Importers of products not covered by energy efficiency standards would be affected as well because they would have to submit a disclaim data element if the product enters under certain HTS subheadings. “The fact is, every time a broker handles data there is a transaction cost associated with that transaction,” it said. “The net result of this proposed rule is that importers will see their entry filing costs rise dramatically.”

Express companies, which often act as importer of record, could not “reasonably attest to the accuracy of energy conservation information or the required certificate, but rather can only provide the certificate to CBP as an agent of the actual importer,” said the Express Association of America (here). The proposed rule “would potentially preclude brokers from acting as IOR for many products, as brokers could not certify whether or not the product was in compliance,” it said. “Brokers rely on the actual buyer of the goods to know and provide that information.”

The manufacturer is the best source of energy efficiency compliance data, said the Retail Industry Leaders Association (here). “Manufacturers have direct knowledge of factory operations, raw material sourcing, and testing data related to each product,” said RILA. The proposed rule “implies a transfer of certification obligation from manufacturers to importers,” it said. “As retailers, like many nonmanufacturing importers, we are at least one layer removed from the DOE certification process and do not have the necessary visibility into the manufacturing process and systems for certification.”

The proposal also raises broader concerns for the trade industry. The timing of the proposal during the ACE transition would run afoul of CBP’s ACE deployment schedule, and could “significantly delay partner government agencies and importers’ preparedness for the December 2016 deadline,” said RILA. It also establishes a new trade barrier that could put the U.S. at risk of violating its World Trade Organization obligations.

Though comments from importers were largely critical of the proposal, environmental groups and domestic manufacturers submitted comments in favor. Howard Industries said the proposed rule would level the playing field by stopping a surge in imports that have not been properly certified. “Allowing the importation and sale of such non-compliant brands … puts domestic manufacturers such as Howard at a competitive disadvantage and threatens U.S. jobs,” it said (here). “Creating an additional check at the border will decrease the likelihood that non-compliant covered products will be imported and increase the likelihood that non-compliant imports will be detected.”

The proposal’s importer certification approach “appears to be the least burdensome path to ensuring that the compliance status of the shipment can be verified in real time,” with importers only needing to provide only three numbers beyond the information already provided to CBP, said joint comments from the National Resources Defense Council, Earthjustice and other environmental groups (here). However, the proposal does not address the possibility that non-compliant importers will falsely claim that shipments do not contain any covered products when they import under HTS subheadings that include both subject and non-subject goods. To address this problem, DOE should work with CBP and the International Trade Commission to align the tariff schedule with DOE standards, such as by adding new statistical suffixes.