EXAMINATION OF BOOKS AND WITNESSES.

SEC. 615. EXAMINATION OF BOOKS AND WITNESSES. Section 509 (19 U.S.C. 1509) is amended as follows: (1) Subsection (a) is amended— (A) by striking out “and taxes” wherever it appears and inserting “, fees and taxes”; (B) by amending paragraph (1) to read as follows: “(1) examine, or cause to be examined, upon reasonable notice, any record (which for purposes of this section, includes, but is not limited to, any statement, declaration, document, or electronically generated or machine readable data) described in the notice with reasonable specificity, which may be relevant to such investigation or inquiry, except that— “(A) if such record is required by law or regulation for the entry of the merchandise (whether or not the Customs Service required its presentation at the time of entry) it shall be provided to the Customs Service within a reasonable time after demand for its production is made, taking into consideration the number, type, and age of the item demanded; and “(B) if a person of whom demand is made under subparagraph (A) fails to comply with the demand, the person may be subject to penalty under subsection (g);”; (C) by amending that part of paragraph (2) that precedes subparagraph (D) to read as follows: “(2) summon, upon reasonable notice— “(A) the person who— “(i) imported, or knowingly caused to be imported, merchandise into the customs territory of the United States, “(ii) exported merchandise, or knowingly caused merchandise to be exported, to Canada, “(iii) transported or stored merchandise that was or is carried or held under customs bond, or knowingly caused such transportation or storage, or “(iv) filed a declaration, entry, or drawback claim with the Customs Service; “(B) any officer, employee, or agent of any person described in subparagraph (A); 107 STAT. 2176 “(C) any person having possession, custody or care of records relating to the importation or other activity described in subparagraph (A); or”; and (D) by striking out the comma at the end of subparagraph (D) and inserting a semicolon. (2) Subsections (b) and (c) are redesignated as subsections (c) and (d), respectively. (3) The following new subsection is inserted after subsection (a): “(b) Regulatory Audit Procedures.— “(1) In conducting a regulatory audit under this section (which does not include a quantity verification for a customs bonded warehouse or general purpose foreign trade zone), the Customs Service auditor shall provide the person being audited, in advance of the audit, with a reasonable estimate of the time to be required for the audit. If in the course of an audit it becomes apparent that additional time will be required, the Customs Service auditor shall immediately provide a further estimate of such additional time. “(2) Before commencing an audit, the Customs Service auditor shall inform the party to be audited of his right to an entry conference at which time the purpose will be explained and an estimated termination date set. Upon completion of on-site audit activities, the Customs Service auditor shall schedule a closing conference to explain the preliminary results of the audit. “(3) Except as provided in paragraph (5), if the estimated or actual termination date for an audit passes without the Customs Service auditor providing a closing conference to explain the results of the audit, the person being audited may petition in writing for such a conference to the appropriate regional commissioner, who, upon receipt of such a request, shall provide for such a conference to be held within 15 days after the date of receipt. “(4) Except as provided in paragraph (5), the Customs Service auditor shall complete the formal written audit report within 90 days following the closing conference unless the appropriate regional commissioner provides written notice to the person being audited of the reason for any delay and the anticipated completion date. After application of any exemption contained in section 552 of title 5, United States Code, a copy of the formal written audit report shall be sent to the person audited no later than 30 days following completion of the report. “(5) Paragraphs (3) and (4) shall not apply after the Customs Service commences a formal investigation with respect to the issue involved.”. (4) Subsection (d) (as redesignated by paragraph (2)) is amended— (A) by striking out “statements, declarations, or documents” in paragraph (1)(A) and inserting “those”; (B) by inserting “, unless such customhouse broker is the importer of record on an entry” after “broker” in paragraph (1)(C)(i); (C) by striking out “import” in each of paragraphs (2)(B) and (4)(B); 107 STAT. 2177 (D) by inserting “described in section 508” after “transactions” in each of paragraphs (2)(B) and (4)(B); and (E) by inserting “, fees,” after “duties” in paragraph (4)(A). (5) The following new subsections are added at the end thereof: “(e) List of Records and Information.— The Customs Service shall identify and publish a list of the records or entry information that is required to be maintained and produced under subsection (a)(1)(A). “(f) Recordkeeping Compliance Program.— “(1) In General.— After consultation with the importing community, the Customs Service shall by regulation establish a recordkeeping compliance program which the parties listed in section 508(a) may participate in after being certified by the Customs Service under paragraph (2). Participation in the recordkeeping compliance program by recordkeepers is voluntary. “(2) Certification.— A recordkeeper may be certified as a participant in the recordkeeping compliance program after meeting the general recordkeeping requirements established under the program or after negotiating an alternative program suited to the needs of the recordkeeper and the Customs Service. Certification requirements shall take into account the size and nature of the importing business and the volume of imports. In order to be certified, the recordkeeper must be able to demonstrate that it— “(A) understands the legal requirements for record-keeping, including the nature of the records required to be maintained and produced and the time periods involved; “(B) has in place procedures to explain the record-keeping requirements to those employees who are involved in the preparation, maintenance, and production of required records; “(C) has in place procedures regarding the preparation and maintenance of required records, and the production of such records to the Customs Service; “(D) has designated a dependable individual or individuals to be responsible for recordkeeping compliance under the program and whose duties include maintaining familiarity with the recordkeeping requirements of the Customs Service; “(E) has a record maintenance procedure approved by the Customs Service for original records, or, if approved by the Customs Service, for alternative records or record-keeping formats other than the original records; and “(F) has procedures for notifying the Customs Service of occurrences of variances to, and violations of, the requirements of the recordkeeping compliance program or the negotiated alternative programs, and for taking corrective action when notified by the Customs Service of violations or problems regarding such program. “(g) Penalties.— “(1) Definition.— For purposes of this subsection, the term ‘information’ means any record, statement, declaration, document, or electronically stored or transmitted information or data referred to in subsection (a)(1)(A). 107 STAT. 2178 “(2) Effects of failure to comply with demand.— Except as provided in paragraph (4), if a person fails to comply with a lawful demand for information under subsection (a)(1)(A) the following provisions apply: “(A) If the failure to comply is a result of the willful failure of the person to maintain, store, or retrieve the demanded information, such person shall be subject to a penalty, for each release of merchandise, not to exceed $100,000, or an amount equal to 75 percent of the appraised value of the merchandise, whichever amount is less. “(B) If the failure to comply is a result of the negligence of the person in maintaining, storing, or retrieving the demanded information, such person shall be subject to a penalty, for each release of merchandise, not to exceed $10,000, or an amount equal to 40 percent of the appraised value of the merchandise, whichever amount is less. “(C) In addition to any penalty imposed under subparagraph (A) or (B) regarding demanded information, if such information related to the eligibility of merchandise for a column 1 special rate of duty under title I, the entry of such merchandise— “(i) if unliquidated, shall be liquidated at the applicable column 1 general rate of duty; or “(ii) if liquidated within the 2-year period preceding the date of the demand, shall be reliquidated, notwithstanding the time limitation in section 514 or 520, at the applicable column 1 general rate of duty; except that any liquidation or reliquidation under clause (i) or (ii) shall be at the applicable column 2 rate of duty if the Customs Service demonstrates that the merchandise should be dutiable at such rate. “(3) Avoidance of penalty.— No penalty may be assessed under this subsection if the person can show— “(A) that the loss of the demanded information was the result of an act of God or other natural casualty or disaster beyond the fault of such person or an agent of the person; “(B) on the basis of other evidence satisfactory to the Customs Service, that the demand was substantially complied with; or “(C) the information demanded was presented to and retained by the Customs Service at the time of entry or submitted in response to an earlier demand. “(4) Penalties not exclusive.— Any penalty imposed under this subsection shall be in addition to any other penalty provided by law except for— “(A) a penalty imposed under section 592 for a material omission of the demanded information, or “(B) disciplinary action taken under section 641. “(5) Remission or mitigation.— A penalty imposed under this section may be remitted or mitigated under section 618. “(6) Customs summons.— Nothing in this subsection shall limit or preclude the Customs Service from issuing, or seeking the enforcement of, a customs summons. “(7) Alternatives to penalties.— “(A) In general.— When a recordkeeper who— 107 STAT. 2179 “(i) has been certified as a participant in the recordkeeping compliance program under subsection (f); and “(ii) is generally in compliance with the appropriate procedures and requirements of the program; does not produce a demanded record or information for a specific release or provide the information by acceptable alternative means, the Customs Service, in the absence of willfulness or repeated violations, shall issue a written notice of the violation to the recordkeeper in lieu of a monetary penalty. Repeated violations by the recordkeeper may result in the issuance of penalties and removal of certification under the program until corrective action, satisfactory to the Customs Service, is taken. “(B) Contents of notice.— A notice of violation issued under subparagraph (A) shall— “(i) state that the recordkeeper has violated the recordkeeping requirements; “(ii) indicate the record or information which was demanded; and “(iii) warn the recordkeeper that future failures to produce demanded records or information may result in the imposition of monetary penalties. “(C) Response to notice.— Within a reasonable time after receiving written notice under subparagraph (A), the recordkeeper shall notify the Customs Service of the steps it has taken to prevent a recurrence of the violation. “(D) Regulations.— The Secretary shall promulgate regulations to implement this paragraph. Such regulations may specify the time periods for compliance with a demand for information and provide guidelines which define repeated violations for purposes of this paragraph. Any penalty issued for a recordkeeping violation shall take into account the degree of compliance compared to the total number of importations, the nature of the demanded records and the recordkeeper’s cooperation.”.