[Federal Register: August 13, 2003 (Volume 68, Number 156)]
[Proposed Rules]
[Page 48327-48331]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13au03-19]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
19 CFR Part 103
RIN 1515-AD18
Confidentiality Protection for Vessel Cargo Manifest Information
AGENCY: Customs and Border Protection, Department of Homeland Security.
ACTION: Withdrawal of notice of proposed rulemaking.
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SUMMARY: This document withdraws a notice of proposed rulemaking (NPRM)
published in the Federal Register by the U.S. Customs Service (now a
bureau within the new Department of Homeland Security and renamed the
Bureau of Customs and Border Protection (CBP)) on January 9, 2003,
regarding the confidential treatment of certain vessel manifest
information. The NPRM proposed to provide that, in addition to the
importer or consignee, parties that electronically transmit vessel
cargo manifest information directly to CBP 24 or more hours before
cargo is laden aboard the vessel at the foreign port may request
confidentiality with respect to importer or consignee identification
information. Current regulations allow only the importer or consignee,
or an authorized employee, attorney, or official of the importer or
consignee, to make such requests. After careful consideration, CBP has
decided to withdraw the proposal because of the
[[Page 48328]]
clear lack of consensus on the part of the trade community regarding
the value of the proposed amendment and the administrative burden the
proposal, if adopted, would create for CBP and U.S. importers.
EFFECTIVE DATE: The effective date of this withdrawal is August 13,
2003.
FOR FURTHER INFORMATION CONTACT: Joanne Roman Stump, Chief, Disclosure
Law Branch, OR&R, (202) 572-8717, and Glen Vereb, Chief, Entry
Procedures & Carriers Branch, Office of Regulations and Rulings (OR&R),
at (202) 572-8724.
SUPPLEMENTARY INFORMATION:
Background
On January 9, 2003, the U.S. Customs Service (now a bureau within
the new Department of Homeland Security and renamed the Bureau of
Customs and Border Protection (CBP)) published a notice of proposed
rulemaking (the NPRM) in the Federal Register (68 FR 1173) proposing to
amend Sec. 103.31 of the Customs Regulations (19 CFR 103.31)
pertaining to public disclosure of vessel manifest information and the
confidential treatment of some of that information for importers and
consignees. Under Sec. 103.31(d)(1), an importer or consignee, or an
authorized employee, attorney, or official of the importer or
consignee, can file a request for confidentiality (referred to as a
certification in the regulation) relative to the name and address of
the importer or consignee and the name and address of its shippers. The
proposed regulation would allow, in certain circumstances, certain
carriers handling the importer's or consignee's shipments, if properly
authorized, to also file a confidentiality request on behalf of the
importer or consignee.
This document withdraws the NPRM.
Prior Relevant Rulemaking and the NPRM
On October 31, 2002, CBP published a final rule document in the
Federal Register (67 FR 66318) that amended the Customs Regulations
pertaining to the inward foreign manifest to provide that CBP must
receive from the carrier the vessel's Cargo Declaration (Customs Form
(CF) 1302), one document among a few that comprise the manifest, or a
CBP-approved electronic equivalent of the cargo declaration, at least
24 hours before the cargo is laden aboard the vessel at the foreign
port, and to require that Vessel Automated Manifest System (AMS)
participants provide the cargo declaration electronically.
The regulation also provides that a properly licensed or registered
non-vessel operating common carrier (NVOCC) that is in possession of an
International Carrier Bond containing the provisions of Sec. 113.64 of
the regulations (19 CFR 113.64) may electronically transmit required
manifest information directly to CBP through the AMS 24 or more hours
before cargo it delivers to the vessel carrier is laden aboard the
vessel at the foreign port. If the NVOCC chooses not to transmit the
required manifest information to CBP, as described above, the
regulation requires the NVOCC to instead fully disclose and present the
required information to the vessel carrier to allow the vessel carrier
to present the information to CBP via the AMS system (see 19 CFR
4.7(b)(3)). (The manifest information filing procedure of Sec. 4.7(b)
is sometimes referred to in this document as the ``24-hour rule.'')
The final rule document (in the preamble discussion) also noted the
NVOCC community's concern that certain information and data that a
NVOCC would supply under the procedures of the ``24-hour rule'' would
be subject to release for publication under 19 U.S.C. 1431 (section
1431) and Sec. 103.31 of the Customs Regulations. The NVOCC group
contended that such release would reveal confidential business
information that could result in harm to the NVOCC community.
To respond to this concern, CBP indicated that it would publish
another NPRM for the purpose of seeking further input from the trade
regarding the value of amending Sec. 103.31 to allow NVOCCs and vessel
operating common carriers (ocean carriers) filing manifest information
in accordance with the ``24-hour rule'' to request confidentiality
under the regulation on behalf of importers and consignees. At the same
time, the agency began considering whether section 1431 might
accommodate expanding the parties who can file a confidentiality
request on behalf of an importer or consignee. The result was
publication of the January 9, 2003, NPRM and its request for public
comment.
The Statute and the Regulation
At the heart of the NPRM were the provisions of section 1431
regarding public disclosure and confidential treatment of vessel
manifest information. Under section 1431(c)(1), certain vessel manifest
information must be made available for public disclosure, including,
among other things, the name and address of each importer and
consignee, the name and address of the importer's or consignee's
shipper, the general character of the cargo, the name of the vessel or
carrier, and the country of origin of the shipment. Under section
1431(c)(1)(A), the importer or consignee may request that its name and
address and the name and address of its shipper be kept confidential by
filing a biennial certification in accordance with regulations adopted
by CBP. Under Sec. 103.31(a) of the Customs Regulations (19 CFR
103.31(a)), vessel manifest information must be made available, under
rules set forth in the regulation, to accredited representatives of the
press, including newspapers, commercial magazines, trade journals, and
similar publications. As stated previously, under Sec. 103.31(d), an
importer or consignee, or an authorized employee, attorney or official
of the importer or consignee, may request confidentiality relative to
the importer's or consignee's name and address, and the name and
address of its shippers, by filing a request with CBP every two years.
The statute and regulation thus require that certain manifest
information be made available to the public and, at the same time, that
importers and consignees be permitted to keep their identity
confidential, along with that of their shippers, should they so choose.
In passing section 1431, Congress struck a balance between freedom of
information (the requirement to release/disclose manifest information)
and fair competition (the right to request confidentiality of certain
information by importers and consignees) (hereinafter referred to as
the ``freedom of information--confidentiality balance''). Many in the
trade community and related businesses benefit from the availability of
manifest information, and some importers and consignees utilize the
confidentiality provision to protect their competitive posture.
Regarding this balance, it is noted that Congress stated that ``greater
disclosure of manifest information will facilitate better public
analysis of import trends, and allow port authorities and
transportation companies, among others, more easily to identify
potential customers and changes in their industries.'' (S. Rep. No.
308, 98th Cong., 1st Sess. 30 (1983), reprinted in 1984 U.S.C.C.A.N.
4910, 4939.) Congress further stated that section 1431 ``retains
sufficient protection for business-confidential data of importing
firms, while encouraging greater competition among those in the import-
servicing trades.'' Id.
Discussion of Comments
A total of 60 comments were submitted in response to the NPRM. A
substantial majority of the comments were opposed to amending Sec.
103.31 as
[[Page 48329]]
the NPRM proposed, and most of the minority in favor of the proposal
indicated that it did not go far enough and recommended ways to improve
it.
Comments in Favor of the Proposed Amendment
Eight of the 60 commenters favored adoption of the amendment
proposed in the NPRM. These commenters include organizations
representing customs brokers, freight forwarders, NVOCCs, importers,
exporters, and/or retailers, and one organization representing
producers and marketers of distilled spirits. All of these commenters
favored adoption of the proposal, claiming that it would protect from
disclosure what they consider commercially sensitive business
confidential information submitted in accordance with the ``24-hour
rule.'' These commenters contended that release of this information
will harm their competitive posture, expose their and their customers'
shipments to a greater risk of theft, and pose a terrorist security
threat to the nation. They pointed out that their information was not
subject to disclosure prior to promulgation of the ``24-hour rule'' and
contended that the ``24-hour rule's'' implementation, which they do not
oppose, should not impose this negative impact on their businesses.
Despite their support for the proposed amendment, most of these
commenters indicated their dissatisfaction with the particulars of the
proposal and recommended several ways to improve it, variously
including:
(1) dropping the documentation requirement (power of attorney and/
or letter of authorization) applicable to the additional parties that
could request confidentiality under the proposed regulation, on the
grounds it is time consuming and onerous for importers/consignees to
produce it and for the additional parties (NVOCCs and ocean carriers)
to manage and submit it (many commenters, both for and against, were
unsure whether the proposed regulation, which requires that the
importer/consignee designate the NVOCC or ocean carrier as its
attorney-in-fact, requires a power of attorney);
(2) allowing the additional parties filing confidentiality requests
under the proposed regulation to retain the required documentation in
their records rather than submit it with the confidentiality request;
(3) adding a general exclusion from the disclosure requirement for
any information relative to FROB (Freight Remaining on Board)
merchandise;
(4) allowing all NVOCCs to request confidentiality, whether or not
they are licensed or registered with the Federal Maritime Commission or
they have the capacity to file information electronically;
(5) providing that a general grant of confidentiality apply to all
information submitted by NVOCCs and ocean carriers under the ``24-hour
rule,'' not just importer/consignee identification information; and
(6) improving the process by reducing the incidence of erroneous
disclosures and eliminating the biennial filing requirement.
Comments in Opposition to the Proposed Amendment
Fifty-two of the 60 commenters opposed adoption of the amendment
proposed in the NPRM. These commenters include: U.S. manufacturers,
producers, and importers; a publisher of trade information; a United
States Attorney, Department of Justice; ocean carriers and shipping
companies; market researchers and consultants; trade associations; port
authorities; local and regional economic and business development
organizations; offshore suppliers; and a U.S. Congressman. From their
comments, several significant reasons for opposition to the proposed
amendment emerged. Because of the number of individual comments
opposing the proposal, they are consolidated and presented below
according to subject.
The Proposed Amendment Goes Beyond the Terms of the Statute and Is
Contrary to Congressional Policy
Many of the commenters opposing the proposed amendment contended
that: (1) The proposed expansion of the parties authorized to request
confidentiality under the regulation strains the language of the
statute and the intent of Congress and (2) this expansion would wrongly
upset the ``freedom of information--confidentiality balance'' provided
for under section 1431.
These commenters stated that allowing additional parties to request
confidentiality under the regulation would lead to the filing of more
requests and a corresponding reduction of available information. Also,
according to these commenters, most or perhaps all of these additional
requests would be authorized by importers or consignees who otherwise
would not make the request of their own volition; instead, the NVOCCs
and ocean carriers allowed to request confidentiality under the
proposed regulation would seek authorization, for their own reasons,
from their importer and consignee clients to file the confidentiality
requests. Thus, these commenters stated, access to information would be
blocked, to the detriment of those who rely on that information, while
the purpose of section 1431--excluding from disclosure the identities
of importers and consignees for their protection--would not be served.
The Proposed Amendment Is Not Necessary
Many commenters contended that there is no need to amend the
regulation. This contention has two parts. The first asserts that there
is no need to amend the regulation because the ``disclosure-
confidentiality process'' that is now in place under the statute and
the regulation works well for both the trade community that utilizes
the information and the importers and consignees who may request
confidentiality if they so desire. These commenters repeatedly stated
that the current law strikes the right balance between freedom of
information and confidentiality. In this regard, these commenters
pointed out that the NPRM did not identify a single problem,
difficulty, or impediment facing importers or consignees under the
current system that might warrant a fix to further the intent of the
law.
The second part of the contention questioned the NVOCC community's
claim to need protection from harm that would result from disclosure of
the manifest information for which it now seeks to request
confidentiality. These commenters pointed out that, for many years,
under the current system, ocean carriers have not suffered harm
requiring remedy despite the fact that they have not had the right to
request confidentiality on behalf of their importer or consignee
clients. They thus questioned the contention that a level of harm
requiring remedy would result upon the release of that same manifest
information submitted by NVOCCs authorized to file confidentiality
requests under the proposed amendment.
The Proposed Amendment Harms Those Entities That Utilize Publicly
Available Trade Information
Many commenters in opposition cited the broad extent of the harm
that the proposed amendment would inflict on those many elements of the
trade and related communities that utilize the disclosed manifest
information for a wide variety of reasons. A long list of users of and
uses for the information emerged from the comments. Some of the users
are: Trade associations and other advocates for U.S. manufacturers/
producers, importers, and exporters;
[[Page 48330]]
port authorities; advocates for local, state, and regional economic and
business development; carriers and others involved in shipping and
shipping related businesses; a publisher of trade information; a market
researcher and consultant; and law enforcement entities. Some of the
uses are to: identify overseas markets; locate overseas suppliers;
attract and develop customers; promote increased international trade
and resulting economic growth; plan port expansion and development;
compete with other ports for business; compile trade information to
advise/assist business and trade clients; and enforce laws concerning
counterfeit trademarks and unlawful foreign competition.
These commenters asserted that allowing additional parties to
request confidentiality for importers and consignees, and the
corresponding reduction of available information caused by this
expansion, would result in serious harm to their competitive advantage
and damage or ruin their businesses. These commenters asserted that CBP
should not limit its evaluation of the matter to the harm that the
NVOCC community alleges it would suffer, but should also consider the
negative impact the change would have on other elements of the trade
community.
Operational Burdens
A few commenters objected to the proposal on grounds that it would
impose additional operational burdens on all parties and would result
in a more bureaucratic and less efficient system. First, the NVOCC or
ocean carrier would have to contact its importer and consignee clients
to solicit the authorizations, requiring a considerable effort and a
major document management task. The importers and consignees would have
to prepare a power of attorney (or other document for attorney-in-fact
designation) and a letter of authorization for a NVOCC or ocean carrier
seeking to file a confidentiality request on their behalf, something
they do not have to do under the current regulation. A few commenters
asked if a set of such documents would have to be prepared for each
NVOCC or carrier seeking authorization and if confidentiality would
then be applied on a shipment-by-shipment basis or on a NVOCC/carrier-
by-NVOCC/carrier basis.
Second, the NVOCC or ocean carrier would then have to submit the
request along with the authorization letter to CBP, a more onerous task
than merely submitting a request in the manner the current procedure
provides. Several asked whether a power of attorney would have to be
submitted with the request and authorization letter. Others asked about
recordkeeping requirements.
Third, these commenters indicated that the burden on CBP also would
increase significantly in verifying and tracking authorizations and
requests, suggesting creation of a more bureaucratic system with a more
complicated document management component. Some asked how multiple
requests (from different NVOCCs or carriers) for the same importer or
consignee would be handled. Even if only one request per importer or
consignee were required, which is not clear under the proposed
regulation, CBP would have to determine if a request had already been
filed on behalf of an importer/consignee each time it received a
request for an importer/consignee. Also, if requests were not
accompanied by the required document(s), CBP would have to request the
document(s) or send the certification back to the filer, holding
acceptance and processing of the certification in abeyance. If
questions were raised about the legitimacy or details of the
authorization letter or the power of attorney (or other document), if
required and submitted, CBP would have to make inquiries.
The Proposed Amendment Poses a Security Risk
Another reason for opposition to the proposed amendment mentioned
by a few commenters was the matter of security. Some contended that
curtailing the quantity of available information would harm local,
state, and federal security and law enforcement interests. Some stated
that the fact that the information is not disclosed until after a
shipment has arrived and been processed/released does not mean that the
information would lack value. Meaningful investigative information
could be gleaned after the fact, revealing patterns or past conduct
that could be helpful in law enforcement or anti-terrorism security
initiatives. One commenter's letter included a letter from a U.S.
Attorney whose access to trade information assisted his office in
obtaining convictions for a smuggling related crime.
Business Practices Adjustment
Several commenters in opposition complained that altering the
disclosure/ confidentiality process under the regulation would require
further adjustments by those involved in the import and import
servicing trades. For example, one commenter stated that changing the
content of information disclosed would result in an unfavorable change
to its business practices and a negative impact on its bottom line.
CBP's Determination
After reviewing the comments, and upon further consideration of the
matter, CBP has determined to withdraw the proposal. It is apparent
that most of those who favored the idea behind the proposed regulation
nevertheless believe that the regulation, as drafted, does not go
nearly far enough; however, the plain language of the statute will not
allow CBP to go nearly as far as they would prefer. Those who objected
to the proposed regulation believe that it went much too far and that
the status quo was preferable for many reasons. Thus, because such a
substantial majority of the commenters did not favor the actual
proposed regulation and the comments revealed such a strong split
within the trade community, CBP has decided not to engage in any
rulemaking activity in this area for these reasons and the reasons
explained below.
CBP agrees with those commenters who stated that adoption of the
proposed amendment would result in an increase in the number of
confidentiality requests made under the regulation. CBP acknowledges
that most of that increase would likely result from the solicitation of
importer and consignee authorizations by NVOCCs and carriers allowed to
make the request under the proposed regulation. In a recent month since
publication of the NPRM, although certainly premature, one quarter of
the confidentiality requests CBP received were made by NVOCCs on behalf
of their importer/consignee clients. If the proposed amendment were
adopted, the increase in the volume of confidentiality requests would,
to a corresponding extent, result in less available information for
those segments of the trade community that utilize and rely on that
information. This, in turn, raises a legitimate question as to whether
the proposal would have a deleterious impact on the ``freedom of
information--confidentiality balance'' that the statute provides.
Regarding the terms of the statute, because most of the additional
requests would be made on behalf of importers and consignees who might
not otherwise make the request of their own volition, CBP has had to
consider whether the proposed amendment would serve the interests of
parties not intended to be beneficiaries of the law,
[[Page 48331]]
i.e., NVOCCs and ocean carriers handling the importer's/consignee's
shipments. CBP agrees that the statute is designed to protect the
identities of importers and consignees (and their shippers if desired)
for reasons that are related to their own competitive well being, not
for reasons related to the competitive well being of the NVOCCs and
ocean carriers filing manifest information in accordance with the ``24-
hour rule.''
Thus, upon review of the comments and further review of the matter,
CBP recognizes that allowing these other parties to file
confidentiality requests for their importer and consignee clients will
not further the intent of the law's confidentiality provision to
protect the interests of the importers/consignees, but will instead
serve the interests of these other parties at the expense of users of
manifest information whose interest this law is also intended to serve.
Importers and consignees already enjoy the benefits of this law through
the current regulation, which allows confidentiality requests to be
made by their authorized employees, attorneys, or officials.
Moreover, CBP is further persuaded by several of the other comments
opposing the proposed amendment and submits that the weight of these
other comments, taken together, provides additional support for a
decision to abandon the NPRM. Primary among these other reasons against
adoption of the proposal are that the proposal, if adopted, would cause
some degree of harm to certain elements of the trade community without
producing a beneficial impact on the law's beneficiaries or achieving a
result mandated by law; the proposal would create an unacceptable
operational burden on CBP; and it would create additional operational
burdens on all involved parties, including the importers and consignees
who may request confidentiality under the current regulation without
preparing a power of attorney or authorization letter. Also, the
proposed amendment raised a number of significant questions, as made
clear by the comments for and against, and as discovered by CBP during
its further review of the matter, indicating that amending the process
as proposed is more complicated and problematic than initially
contemplated. This recommends to an additional extent abandonment of
the project.
In summary, it is clear that there is no consensus among members of
the trade community on the value of adopting the proposed regulation
and that the greater weight of the comments is persuasively against
adoption. Also, the proposed regulation, if adopted, would have
presented a considerable challenge to administrative efficiency for
both CBP and importers and consignees.
Dated: August 7, 2003.
Robert C. Bonner,
Commissioner, Customs and Border Protection.
[FR Doc. 03-20567 Filed 8-12-03; 8:45 am]
BILLING CODE 4820-02-P