[Federal Register Volume 73, Number 228 (Tuesday, November 25, 2008)]
[Rules and Regulations]
[Pages 71730-71785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-27048]
[[Page 71729]]
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Part II
Department of Homeland Security
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U.S. Customs and Border Protection
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19 CFR Parts 4, 12, 18, et al.
Importer Security Filing and Additional Carrier Requirements; Final
Rule
Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 /
Rules and Regulations
[[Page 71730]]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
19 CFR Parts 4, 12, 18, 101, 103, 113, 122, 123, 141, 143, 149,
178, and 192
[Docket Number USCBP-2007-0077; CBP Dec. 08-46]
RIN 1651-AA70
Importer Security Filing and Additional Carrier Requirements
AGENCY: Customs and Border Protection, Department of Homeland Security.
ACTION: Interim final rule, solicitation of comments.
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SUMMARY: To help prevent terrorist weapons from being transported to
the United States, vessel carriers bringing cargo to the United States
are required to transmit certain information to Customs and Border
Protection (CBP) about the cargo they are transporting prior to lading
that cargo at foreign ports of entry. This interim final rule requires
both importers and carriers to submit additional information pertaining
to cargo to CBP before the cargo is brought into the United States by
vessel. This information must be submitted to CBP by way of a CBP-
approved electronic data interchange system. The required information
is reasonably necessary to improve CBP's ability to identify high-risk
shipments so as to prevent smuggling and ensure cargo safety and
security. These regulations specifically fulfill the requirements of
section 203 of the Security and Accountability for Every (SAFE) Port
Act of 2006 and section 343(a) of the Trade Act of 2002, as amended by
the Maritime Transportation Security Act of 2002.
DATES: Effective Date: This rule is effective on January 26, 2009.
Compliance Dates: The compliance dates for these regulations are
set forth in Sec. 4.7c(d), 4.7d(f), and 149.2(g).
Comment Date: As provided in the ``Public Participation'' section
of this document, comments are requested on certain aspects of the
rule. Comments must be received on or before June 1, 2009.
ADDRESSES: You may submit comments, identified by docket number, by one
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments via docket number
USCBP-2007-0077.
Mail: Border Security Regulations Branch, Office of
International Trade, U.S. Customs and Border Protection, 799 9th
Street, NW., Washington, DC 20001.
Instructions: All submissions received must include the agency name
and document number for this rulemaking. All comments received will be
posted without change to http://www.regulations.gov, including any
personal information provided. For detailed instructions on submitting
comments and additional information on the rulemaking process, see the
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION
section of this document.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov. Submitted comments
may also be inspected on regular business days between the hours of 9
a.m. and 4:30 p.m. at the Office of International Trade, Customs and
Border Protection, 799 9th Street, NW., 5th Floor, Washington, DC.
Arrangements to inspect submitted comments should be made in advance by
calling Mr. Joseph Clark at (202) 325-0118.
FOR FURTHER INFORMATION CONTACT: Richard Di Nucci, Office of Field
Operations, (202) 344-2513.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Public Participation
II. Background
III. Carrier and Importer Requirements
A. Existing Requirements
B. New Carrier Requirements Under This Interim Final Rule
1. Vessel Stow Plans
2. Container Status Messages
C. New Importer Requirements Under This Interim Final Rule
D. Structured Review and Flexible Enforcement Period
E. Summary of Changes From NPRM
IV. Discussion of Comments Regarding This Rulemaking Generally
V. Discussion of Comments Regarding Proposed Carrier Requirements
Relating to Vessel Cargo Destined to the United States
A. Overview; Vessel Stow Plan
B. Public Comments; Vessel Stow Plan
C. Overview; Container Status Messages
D. Public Comments; Container Status Messages
E. Public Comments; Carrier Requirements Generally
VI. Discussion of Comments Regarding Proposed Importer Requirements
for Vessel Cargo Destined to the United States
A. Overview; Proposed Importer Requirements
1. Shipments Other Than FROB, IE Shipments, and T&E Shipments
2. FROB, IE Shipments, and T&E Shipments
B. Public Comments; Responsible Party
C. Public Comments; Agents
D. Public Comments; Customs Business
E. Public Comments; Bills of Lading
F. Public Comments; Required Elements
G. Public Comments; Technical Issues
H. Public Comments; Update and Withdrawal of Importer Security
Filing
I. Public Comments; In-Bond Shipments
J. Public Comments; Importer Security Filing, Entry, and
Application for FTZ Admission
K. Public Comments; Requests for Special Treatment
L. Public Comments; Importer Security Filing, Other Comments
VII. Discussion of Comments Regarding Proposed Amendments to Bond
Requirements and Enforcement
A. Overview; Bond Conditions and Enforcement Related to the
Proposed Importer Security Filing, Vessel Stow Plan, and Container
Status Message Requirements
B. Public Comments; Bond Conditions and Enforcement Related to
the Proposed Importer Security Filing, Vessel Stow Plan, and
Container Status Message Requirements
C. Overview; Bond Conditions Related to the Trade Act
Regulations
D. Public Comments; Bond Conditions Related to the Trade Act
Regulations
VIII. Discussion of Comments Regarding the Cost, Benefit, and
Feasibility Study
IX. Adoption of Proposal
X. Regulatory Analyses
A. Executive Order 12866
B. Regulatory Flexibility Act
C. Unfunded Mandates Reform Act
D. Paperwork Reduction Act
XI. Signing Authority
XII. Coordination of Interim Final Rule With Congress
XIII. Regulatory Amendments
Abbreviations and Terms Used in This Document
AAEI--American Association of Exporters and Importers
AAPA--American Association of Port Authorities
ABI--Automated Broker Interface
ACE--Automated Commercial Environment
AES--Automated Export System
AMS--Automated Manifest System
ANSI--American National Standards Institute
ATDI--Advance Trade Data Initiative
ATS--Automated Targeting System
BAPLIE--Bayplan/stowage plan occupied and empty locations message
CAMIR--Customs Automated Manifest Interface Requirements
CATAIR--Customs and Trade Automated Interface Requirements
CBP--Customs and Border Protection
CFR--Code of Federal Regulations
COAC--Departmental Advisory Committee on Commercial Operations of
Customs and Border Protection and Related Homeland Security
Functions
CSI--Container Security Initiative
CSM--Container status message
C-TPAT--Customs-Trade Partnership Against Terrorism
DDP--Delivered duty paid
[[Page 71731]]
DHS--U.S. Department of Homeland Security
DNL--Do not load
DUNS--Data Universal Numbering System
EIN--Employer identification number
FAQ--Frequently asked questions
FDA--U.S. Food and Drug Administration
FIRMS--Facilities Information and Resources Management System
FROB--Foreign cargo remaining on board
FTZ--Foreign trade zone
FR--Federal Register
GLN--Global Location Number
HTSUS--Harmonized Tariff Schedule of the United States
ICPA--International Compliance Professionals Association
IE--Immediate exportation
IIT--Instrument of international trade
IMO--International Maritime Organization
IRS--Internal Revenue Service
IT--Immediate transportation
ISF--Importer Security Filing
JIG--Joint Industry Group
LCL--Less than Container Load
MID--Manufacturer identification
MTSA--Maritime Transportation Security Act of 2002
NAM--National Association of Manufacturers
NCBFAA--National Customs Brokers and Forwarders Association of
America
NII--Non-Intrusive Inspection
NPRM--Notice of Proposed Rule Making
NVOCC--Non-vessel operating common carrier
OCS--Outer Continental Shelf
OPA--Outward Processing Arrangement
OMB--Office of Management and Budget
PDF--Portable Document Format
PGA--Participating Government Agency
Pub. L.--Public Law
RILA--Retail Industry Leaders Association
RFA--Regulatory Flexibility Act of 1980
SAFE Port Act--Security and Accountability for Every Port Act of
2006
SBREFA--Small Business Regulatory Enforcement Fairness Act of 1996
sFTP--Secure File Transfer Protocol
SSN--Social Security Number
T&E--Transportation and exportation
TIB--Temporary Importation Bond
TSC--Technology Support Center
TSN--Trade Support Network
UMRA--Unfunded Mandates Reform Act of 1995
UN EDIFACT--United Nations rules for Electronic Data Interchange For
Administration, Commerce and Transport
U.S.C.--United States Code
VIN--Vehicle Identification Number
VOCC--Vessel Operating Common Carrier
WHTI--Western Hemisphere Travel Initiative
WSC--World Shipping Council
I. Public Participation
Interested persons are invited to submit written comments on only
the six data elements for which CBP is providing some type of
flexibility (container stuffing location, consolidator (stuffer),
manufacturer (or supplier), ship to party, country of origin, and
commodity HTSUS number) and the requirements related to those elements
discussed in section 149.2(b) and (f). CBP also invites comments on the
revised Regulatory Assessment and Final Regulatory Flexibility
Analysis, including compliance costs for various industry segments, the
impact of the flexibilities provided in this rule, and the barriers to
submitting Importer Security Filing data 24 hours prior to lading. We
urge commenters to reference a specific portion of the rule, explain
the reason for any recommended change, and include data, information,
or authorities that support such recommended change.
II. Background
Section 203 of the Security and Accountability for Every Port Act
of 2006 (Pub. L. 109-347, 120 Stat. 1884 (SAFE Port Act)) provides that
the Secretary of Homeland Security (Secretary), acting through the
Commissioner of CBP, shall promulgate regulations to ``require the
electronic transmission to the Department [of Homeland Security] of
additional data elements for improved high-risk targeting, including
appropriate security elements of entry data, as determined by the
Secretary, to be provided as advanced information with respect to cargo
destined for importation into the United States prior to loading of
such cargo on vessels at foreign seaports.'' Pursuant to this Act, and
section 343(a) of the Trade Act of 2002 (19 U.S.C. 2071 note), CBP
published a Notice of Proposed Rule Making (NPRM) in the Federal
Register (73 FR 90) on January 2, 2008, proposing to require importers
and carriers to submit additional information pertaining to cargo
before the cargo is brought into the United States by vessel.
CBP has provided an overview of existing advance cargo information
requirements and entry requirements below. For a detailed discussion of
the advance cargo information requirements prior to this interim final
rule, the statutory and regulatory histories, and the statutory factors
governing development of these regulations, please see the NPRM
published at 73 FR 90.
The proposed rule was known to the trade as both the ``Importer
Security Filing proposal'' and the ``10 + 2 proposal.'' The name ``10 +
2'' is shorthand for the number of advance data elements CBP was
proposing to collect. Carriers would be generally required to submit
two additional data elements--a vessel stow plan and container status
messages regarding certain events relating to containers loaded on
vessels destined to the United States--to the elements they are already
required to electronically transmit in advance (the ``2'' of ``10+2'');
and importers,\1\ as defined in the proposed regulations, would be
required to submit 10 data elements--an Importer Security Filing
containing 10 data elements (the ``10'' of ``10+2'').
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\1\ For purposes of the proposed regulations, importer means the
party causing goods to arrive within the limits of a port in the
United States. For foreign cargo remaining on board (FROB), the
importer was proposed to be construed as the carrier. For immediate
exportation (IE) and transportation and exportation (T&E) in-bond
shipments, and goods to be delivered to a foreign trade zone (FTZ),
the importer was proposed to be construed as the party filing the
IE, T&E, or FTZ documentation with CBP.
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CBP extended the initial 60-day comment period by 15 days, from
March 3, 2008 to March 18, 2008. See 73 FR 6061 (Feb. 1, 2008).
Approximately 200 commenters responded in a timely manner to the NPRM.
As certain comments pertained to the proposed carrier requirements and
others pertained to the proposed importer requirements, this interim
final rule addresses separately the issues presented in the comments
regarding the proposed carrier requirements and the proposed importer
requirements.
III. Carrier and Importer Requirements
A. Existing Requirements
Carriers are currently required to submit advance cargo information
for vessels, including a vessel's Cargo Declaration, to CBP no later
than 24 hours before the cargo is laden aboard a vessel at a foreign
port. See 19 CFR 4.7 and 4.7a. This is generally referred to as the
``24 Hour Rule.'' This information must be submitted to CBP via the
Vessel Automated Manifest System (AMS). Carriers are currently not
required to submit vessel stow plans or container status messages to
CBP. In addition, importers of record are generally required to file
entry information, including CBP Form 3461, with CBP within fifteen
calendar days of the date of arrival of a shipment at a United States
port of entry and entry summary information, including CBP Form 7501,
within 10 working days of the entry of the merchandise. Entry and entry
summary information is submitted to CBP via the Automated Broker
Interface (ABI) or via paper forms. Importers are not currently
required to submit advance cargo information to CBP.
B. New Carrier Requirements Under This Interim Final Rule
1. Vessel Stow Plan
In addition to the existing carrier requirements pursuant to the 24
Hour Rule, this interim final rule requires
[[Page 71732]]
carriers to submit a vessel stow plan for vessels destined to the
United States. Carriers must transmit the stow plan for vessels
transporting containers so that CBP receives the stow plan no later
than 48 hours after the carrier's departure from the last foreign port.
For voyages less than 48 hours in duration, CBP must receive the stow
plan prior to the vessel's arrival at the first port in the United
States. Bulk and break bulk carriers are exempt from this requirement
for vessels exclusively carrying bulk and break bulk cargo. Carriers
must submit the vessel stow plan via the CBP-approved electronic data
interchange system, which currently includes AMS, secure file transfer
protocol (sFTP), or e-mail. If CBP approves of different or additional
electronic data interchange systems, CBP will publish a notice in the
Federal Register.
The vessel stow plan must include standard information relating to
the vessel and each container laden on the vessel, including the
following standard information:
With regard to the vessel,
(1) Vessel name (including international maritime organization
(IMO) number);
(2) Vessel operator; and
(3) Voyage number.
With regard to each container,
(1) Container operator;
(2) Equipment number;
(3) Equipment size and type;
(4) Stow position;
(5) Hazmat code (if applicable);
(6) Port of lading; and
(7) Port of discharge.
2. Container Status Messages
In addition to the existing carrier requirements pursuant to the 24
Hour Rule, this interim final rule also requires carriers to submit
container status messages (CSMs) \2\ to CBP daily for certain events
relating to all containers laden with cargo destined to arrive within
the limits of a port in the United States by vessel. CSMs created under
either the American National Standards Institute (ANSI) X.12 standard
or the United Nations rules for Electronic Data Interchange For
Administration, Commerce and Transport (UN EDIFACT) standard are
acceptable.
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\2\ CSMs are used to report terminal container movements (e.g.,
loading and discharging the vessel) and to report the change in
status of containers (e.g., empty or full).
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Carriers must submit a CSM when any of the required events occurs
if the carrier creates or collects a CSM in its equipment tracking
system reporting that event. Carriers are not required to create or
collect any CSM data other than those which the carrier already creates
or collects on its own and maintains in its electronic equipment
tracking system. Carriers must submit CSMs no later than 24 hours after
the message is entered into the carrier's equipment tracking system.
The events for which CSMs are required are:
(1) When the booking relating to a container which is destined to
arrive within the limits of a port in the United States by vessel is
confirmed;
(2) When a container destined to arrive within the limits of a port
in the United States by vessel undergoes a terminal gate inspection;
(3) When a container, which is destined to arrive within the limits
of a port in the United States by vessel, arrives or departs a facility
(These events take place when a container enters or exits a port,
container yard, or other facility. Generally, these CSMs are referred
to as ``gate-in'' and ``gate-out'' messages.);
(4) When a container, which is destined to arrive within the limits
of a port in the United States by vessel, is loaded on or unloaded from
a conveyance (This includes vessel, feeder vessel, barge, rail and
truck movements. Generally, these CSMs are referred to as ``loaded on''
and ``unloaded from'' messages.);
(5) When a vessel transporting a container, which is destined to
arrive within the limits of a port in the United States by vessel,
departs from or arrives at a port (These events are commonly referred
to as ``vessel departure'' and ``vessel arrival'' notices.);
(6) When a container which is destined to arrive within the limits
of a port in the United States by vessel undergoes an intra-terminal
movement;
(7) When a container which is destined to arrive within the limits
of a port in the United States by vessel is ordered stuffed or
stripped;
(8) When a container which is destined to arrive within the limits
of a port in the United States by vessel is confirmed stuffed or
stripped; and
(9) When a container which is destined to arrive within the limits
of a port in the United States by vessel is shopped for heavy
repair.\3\
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\3\ A container is shopped for heavy repair when it is delivered
to a facility for the purpose of being repaired.
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CBP is aware that it might be cost beneficial for some carriers to
transmit all CSMs, rather than filter out CSMs relating to containers
destined to the United States or relating only to the required events.
Therefore, carriers may transmit their ``global'' CSM messages,
including CSMs relating to containers that do not contain cargo
destined for importation into the United States and CSMs relating to
events other than the required events. By transmitting CSMs in addition
to those required by this interim final rule, a carrier authorizes CBP
to access and use those data.
For each CSM submitted to CBP by the carrier, the following
information must be included:
(1) Event code being reported, as defined in the ANSI X.12 or UN
EDIFACT standards;
(2) Container number;
(3) Date and time of the event being reported;
(4) Status of the container (empty or full);
(5) Location where the event took place; and
(6) Vessel identification associated with the message if the
container is associated with a specific vessel.
Carriers are exempt from the CSM requirement for bulk and break
bulk cargo. Carriers must submit CSMs via the CBP-approved electronic
data interchange system. The current electronic data interchange system
for CSMs approved by CBP is sFTP. If CBP approves of a different or
additional electronic data interchange system, CBP will publish a
notice in the Federal Register.
The following chart illustrates the existing carrier data
requirements pursuant to the 24 Hour Rule and the new carrier data
requirements required pursuant to this interim final rule.
Existing Carrier Requirements Versus New Carrier Requirements
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Existing requirements New requirements
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Requirement...................... Advance Cargo Information (i.e., Trade Stow Plan Container Status Messages
Act Requirements or 24 Hour Rule)
[[Page 71733]]
Timing........................... 24 hours prior to lading 48 hours after departure; prior to 24 hours after the message is entered
arrival for voyages less than 48 hrs into the carrier's equipment
tracking system
Submission Method................ vessel AMS vessel AMS, sFTP, or email sFTP
Elements......................... --Bill of Lading Number With regard to the vessel, --Event code being reported, as
--Foreign Port before vessel departs --Vessel name (including international defined in the ANSI X.12 or UN
for U.S. maritime organization (IMO) number); EDIFACT standards;
--Carrier SCAC [Standard Carrier Alpha --Vessel operator; and --Container number;
Code] --Voyage number --Date and time of the event being
--Carrier Assigned Voyage Number With regard to each container, reported;
--Date of Arrival at First U.S. Port --Container operator; --Status of the container (empty or
--Quantity --Equipment number; full);
--Unit of measure of Quantity --Equipment size and type; --Location where the event took
--First Foreign Place of Receipt --Stow position; place; and
--Commodity Description (or six-digit --Hazmat code (if applicable); --Vessel identification associated
HTSUS Number) --Port of lading; and with the message if the container is
--Commodity Weight --Port of discharge. associated with a specific vessel.
--Shipper Name and Address
--Consignee Name and Address or ID
Number
--Vessel Name
--Vessel Country
--Vessel Number
--Foreign Port of Lading
--Hazmat Code
--Container numbers
--Seal Numbers
--Date of Departure from Foreign Port
--Time of Departure from Foreign Port
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C. New Importer Requirements Under This Interim Final Rule
This interim final rule requires Importer Security Filing (ISF)
Importers, as defined in these regulations, or their agents, to
transmit an Importer Security Filing to CBP, for cargo other than
foreign cargo remaining on board (FROB), no later than 24 hours before
cargo is laden aboard a vessel destined to the United States. See the
``Structured Review and Flexible Enforcement Period'' section of this
document for flexibilities related to timing for certain Importer
Security Filing elements. Because FROB is frequently laden based on a
last-minute decision by the carrier, the Importer Security Filing for
FROB is required any time prior to lading. An Importer Security Filing
is required for each shipment, at the lowest bill of lading level
(i.e., at the house bill of lading level, if applicable). The party
required to submit the Importer Security Filing is the party causing
the goods to enter the limits of a port in the United States. This
party is the carrier for FROB and the party filing for the immediate
exportation (IE), transportation and exportation (T&E), or foreign
trade zone (FTZ) documentation for those types of shipments. The ISF
Importer, as a business decision, may designate an authorized agent to
file the Importer Security Filing on the ISF Importer's behalf. A party
can act as an authorized agent for purposes of filing the Importer
Security Filing if that party obtains access to ABI or AMS.
ISF Importers, or their agents, must transmit the Importer Security
Filing via a CBP-approved electronic data interchange system. The
current approved electronic data interchange systems for the Importer
Security Filing is ABI and vessel AMS. If CBP approves a different or
additional electronic data interchange system in the future, CBP will
publish a notice in the Federal Register.
The party who filed the Importer Security Filing must update the
Importer Security Filing if, after the filing and before the goods
arrive within the limits of a port in the United States, there are
changes to the information filed or more accurate information becomes
available.
ISF Importers, or their agents, must submit 10 elements to CBP for
shipments consisting of goods intended to be entered into the United
States and goods intended to be delivered to an FTZ. ISF Importers, or
their agents, must submit five elements to CBP for shipments consisting
entirely of FROB and shipments consisting entirely of goods intended to
be ``transported'' as IE or T&E in-bond shipments.
For shipments other than those consisting entirely of FROB and
goods intended to be ``transported'' in-bond as an IE or T&E, the
Importer Security Filing must consist of 10 elements, unless an element
is specifically exempted. The manufacturer (or supplier), country of
origin, and commodity Harmonized Tariff Schedule of the United States
(HTSUS) number must be linked to one another at the line item level.
The 10 elements are as follows: (1) Seller; (2) Buyer; (3) Importer of
record number/Foreign trade zone applicant identification number; (4)
Consignee number(s); (5) Manufacturer (or supplier); (6) Ship to party;
(7) Country of origin; (8) Commodity HTSUS number; (9) Container
stuffing location; and (10) Consolidator (stuffer).
For shipments consisting entirely of FROB and shipments consisting
entirely of goods intended to be ``transported'' in-bond as an IE or
T&E, the Importer Security Filing must consist of five elements, unless
an element is specifically exempted. The five elements are as follows:
(1) Booking party; (2) Foreign port of unlading; (3) Place of delivery;
(4) Ship to party; and (5) Commodity HTSUS number.
Four of the Importer Security Filing elements are identical to
elements submitted for entry (CBP Form 3461) and entry summary (CBP
Form 7501) purposes. These elements are the importer of record number,
consignee number, country of origin, and
[[Page 71734]]
commodity HTSUS number when provided at the 10-digit level. An importer
may submit these elements once to be used for both Importer Security
Filing and entry/entry summary purposes. If an importer chooses to have
these elements used for entry/entry summary purposes, the Importer
Security Filing and entry/entry summary must be self-filed by the
importer or filed by a licensed customs broker in a single transmission
to CBP no later than 24 hours prior to lading. In addition, the HTSUS
number must be provided at the 10-digit level.
Two of the Importer Security Filing elements are identical to
elements submitted for application to admit goods to an FTZ (CBP Form
214). These elements are the country of origin and commodity HTSUS
number when provided at the 10-digit level. The filer may submit the
Importer Security Filing and CBP Form 214 in the same electronic
transmission to CBP and may submit the country of origin and commodity
HTSUS number once to be used for both Importer Security Filing and FTZ
admission purposes. If the party submitting the Importer Security
Filing chooses to have this element used for FTZ admission purposes,
the HTSUS number must be provided at the 10-digit level.
The following chart illustrates the existing importer data
requirements for entry and entry summary purposes and the new importer
data requirements pursuant to this interim final rule.
Existing Importer Requirements Versus New Importer Requirements
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Existing Requirements New Requirements
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Requirement.............. Entry and Entry Summary \4\ Importer Security Filing
Timing................... Entry within 15 calendar days of date of 24 hours prior to lading for 8 of the
arrival; Entry summary within 10 working elements; as early as possible, in no
days of entry event later than 24 hours prior to
arrival, for 2 of the elements
Submission Method........ ABI or paper ABI or vessel AMS
Elements................. --Bill of Lading Number Shipments Other Than FROB, IE Shipments
--Importer of Record Number * and T&E Shipments:
--Seller
--Foreign Port before vessel departs for --Buyer
U.S.
--Carrier SCAC --Importer of record number/FTZ applicant
identification number *
--Carrier Assigned Voyage Number --Consignee number(s) *
--Date of Arrival at First U.S. Port --Manufacturer (or supplier)
--Quantity --Ship to party
--Unit of measure of Quantity --Country of origin *
--First Foreign Place of Receipt --Commodity HTSUS number *
--Commodity Description --Container stuffing location
--Commodity HTSUS Number * --Consolidator (stuffer)
--Commodity Weight
--Shipper Name and Address
--Consignee Name and Address and Number * FROB, IE Shipments and T&E Shipments:
--Country of Origin * --Booking party
--Vessel Name --Foreign port of unlading
--Vessel Country --Place of delivery
--Vessel Number --Ship to party
--Foreign Port of Lading --Commodity HTSUS number
--Hazmat Code
--Container numbers
--Seal Numbers
--Date of Departure from Foreign Port
--Time of Departure from Foreign Port
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* These elements are provided for Importer Security Filing and entry/entry summary or FTZ admission purposes.
D. Structured Review and Flexible Enforcement Period
In order to provide the trade sufficient time to adjust to the new
requirements and in consideration of the business process changes that
may be necessary to achieve full compliance, CBP will show restraint in
enforcing the rule, taking into account difficulties that importers may
face in complying with the rule, so long as importers are making
satisfactory progress toward compliance and are making a good faith
effort to comply with the rule to the extent of their current ability.
This policy will last for twelve months after the effective date and
will apply to all aspects of the filing rule.
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\4\ Importers are not currently required to submit any
information to CBP prior to foreign lading for targeting purposes.
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In addition, this rule provides flexibility with respect to certain
elements of the Importer Security Filings. This flexibility falls into
two categories:
Two elements of the Importer Security Filings will be
subject to flexibility as to timing. These elements are the Container
stuffing location and Consolidator (stuffer). The ISF Importer must
submit these elements as early as possible, and in any event no later
than 24 hours prior to arrival in a U.S. port (or upon lading at the
foreign port if that is later than 24 hours prior to arrival in a U.S.
port).
Four elements will be subject to flexibility as to
interpretation. These elements are the Manufacturer (or supplier), Ship
to party, Country of origin, and Commodity HTSUS number. There is no
special timing flexibility for these elements; they must be filed 24
hours prior to lading. However, CBP has added flexibility by allowing
ISF Importers, in their initial filing, to provide a range of
acceptable responses based on facts available to the importer at the
time, in lieu of a single specific response (which may become known to
the importer only at a later time). ISF Importers will be required to
update
[[Page 71735]]
their filings with respect to these elements as soon as more precise or
more accurate information is available, in no event later than 24 hours
prior to arrival at a U.S. port (or upon lading at the foreign port if
that is later than 24 hours prior to arrival in a U.S. port). For
example, 24 hours prior to lading:
The ISF Importer could identify the manufacturer as being
one of three typically used manufacturers, with more precision to be
provided in subsequent ISF updates.
The ISF Importer could submit the identity of the
importer, consignee, or the facility where the goods will be unladen in
the event that the ship to party is unavailable (e.g., ``to order''
shipments).
If the ISF Importer is, in good faith, unable to determine
whether the country where the final stage of production of an article
took place is the country of origin, the ISF Importer may provide the
country where the final stage of production of the article took place
in lieu of the country of origin, and update the ISF submission as soon
as more accurate data are available.
The purpose of these flexibilities is to allow CBP to conduct a
structured review of the elements, including an evaluation of any
specific compliance difficulties that the trade may be encountering
with respect to these elements. CBP may gather information by
conducting reviews of particular importers to determine whether
submission of all 10 data elements 24 hours prior to lading was in fact
feasible and, if not, what barriers the importer encountered. The
structured review will cover a range of enterprises, from small to
large, and will include both integrated and nonintegrated supply
chains.
The structured review will further be enhanced by comments filed in
response to this publication. Although the rule is now final, CBP
invites comments on the 6 data elements for which CBP is providing some
type of flexibility (Container stuffing location, Consolidator
(stuffer), Manufacturer (or supplier), Ship to party, Country of
origin, and Commodity HTSUS number). These comments are due by June 1,
2009.
The structured review will also be enhanced by feedback provided in
CBP's formal outreach program, described below. The information
gathering phase of the structured review will end on June 1, 2009. All
comments must be submitted to CBP by that date. We note, again, that
CBP is not reopening the proposed rule in this action for comment;
rather CBP is seeking comment on the requirements discussed in section
149.2(b) and (f) of this rule and the revised Regulatory Impact
Assessment.
On the basis of information obtained during the structured review
and public comments, DHS will undertake an analysis of the elements
subject to flexibilities discussed in this section. The analysis will
examine compliance costs for various industry segments, the impact of
the flexibilities, the barriers to submitting these data 24 hours prior
to lading, and the benefits of collecting these data. Based on that
analysis, DHS, in coordination with other parts of the Executive
Branch, will determine whether to eliminate, modify, or leave unchanged
these requirements.
CBP is committed to fully supporting the trade community in its
efforts to successfully implement the requirements of this rule. During
the first months of implementation--(1) CBP will conduct an extended
round of structured outreach activities to engage with the trade on all
aspects of the rule with a series of regional seminars and trade round
table discussions at all of CBP's major seaports of entry and other
ports as needed or requested by the trade. (2) CBP will identify trade
community operators who have established processes (or who have
successfully re-engineered processes) to deliver the data timely to CBP
to provide their colleagues in the community with business advice on
how to comply with the regulatory requirements. (3) CBP's seminars will
focus on all topics related to this rule, technical, operational, and
process components, such as documentation adjustments (e.g., modifying
the terms of letters of credit to require receipt of data to effect
final payment) and developing automated solutions to track supply chain
partners and commodity orders (e.g. creating vendor/supplier
databases).
A proposed schedule for these outreach activities is as follows:
------------------------------------------------------------------------
Regions Proposed dates
------------------------------------------------------------------------
North East Coast:
Ports of Newark/New York 30 days after publication.
and Boston.
South East Coast:
Ports of Baltimore, 45 days after publication.
Philadelphia, and Norfolk.
Ports of Charleston, 60 days after publication.
Savannah, and Jacksonville.
Ports of Miami, Port 75 days after publication.
Everglades, and San Juan.
Gulf Coast:
Ports of Houston and New 90 days after publication.
Orleans.
Northwest Pacific Coast:
Ports of Seattle/Tacoma 105 days after publication.
and Portland.
Ports of Oakland/San 120 days after publication.
Francisco.
Pacific Coast:
Ports of Los Angeles/Long 135 days after publication.
Beach.
------------------------------------------------------------------------
Additional sessions will be scheduled based on trade community
needs and feedback. All material discussed and presented at the
seminars will be published on the CBP Web site along with Frequently
Asked Questions (FAQs) and a general ``How to Guide.'' CBP will
consider an entity's progress in the implementation of the rule during
the delayed enforcement period as a mitigating factor in any
enforcement action following the delayed enforcement period.
E. Summary of Changes From NPRM
As referenced below, CBP is making several significant changes from
the proposed rule. These changes consist of the following:
(1) A compliance date of one year from the effective date of this
final rule is established (in new Sec. Sec. 4.7c(d), 4.7d(f), and
149.2(g)).
(2) CBP has added flexibility for four Importer Security Filing
elements (Manufacturer (or supplier), Ship to party, Country of origin,
and Commodity HTSUS number). Specifically, CBP is allowing importers,
in their initial filing, to provide a range of acceptable responses
based on facts available to the importer at the time, in
[[Page 71736]]
lieu of a single specific response (which may become known to the
importer only at a later time). Importers will be required to update
their filings with respect to these elements as soon as more precise or
more accurate information is available, in no event less than 24 hours
prior to arrival at a U.S. port (or upon lading at the foreign port if
that is later than 24 hours prior to arrival in a U.S. port).
(3) CBP has added flexibility for two Importer Security Filing
elements (Container stuffing location and Consolidator (stuffer)) by
requiring submission as early as possible, and in any event no later
than 24 hours prior to arrival in a U.S. port (or upon lading at the
foreign port if that is later than 24 hours prior to arrival in a U.S.
port).
(4) The requirement that break bulk cargo be included on vessel
stow plans is removed from Sec. 4.7c.
(5) The liquidated damages amount for violations of the Importer
Security Filing requirements are changed from the value of the
merchandise, as proposed, to $5,000 for each violation in proposed
Sec. Sec. 113.62(j), 113.64(e), and 113.73(c) and new Sec. 113.63(g)
and Appendix D to part 113.
CBP is also making the following additional changes from the
proposed rule:
(1) Proposed Sec. 4.7(c)(5) required carriers to provide the
``Hazmat-UN code.'' This section is changed to allow the carrier to
provide any Hazmat code, if applicable.
(2) Proposed Sec. 4.7d(a) is changed to clarify that CSMs are
required for empty containers.
(3) The label for the party required to submit the Importer
Security Filing is changed from the ``importer'' to the ``ISF
Importer'' in part 149 and proposed Sec. 149.1(a) is changed to
clarify that the ISF Importer is construed as the owner, purchaser,
consignee, or agent such as a licensed customs broker.
(4) Proposed Sec. 149.3(a)(5) is changed to clarify that the
supplier must be the ``party supplying'' the finished goods in the
country from which the goods are leaving and that this party does not
necessarily need to be in the country from which the goods are leaving.
(5) The definition for the ``Booking party'' element in proposed
Sec. 149.3(b)(1) is changed to require the identity of the ``party who
initiates the reservation of the cargo space for the shipment.''
(6) Proposed Sec. 149.3(a)(1), (2), (5), (6), (9), and (10) and
(b)(1) and (b)(4) are changed to allow the ISF Importer to provide
widely recognized commercially accepted identification numbers.
(7) The section heading for proposed Sec. 149.5 is changed to
clarify that the eligibility and bond requirements therein apply to an
ISF Importer who submits an Importer Security Filing on his own behalf
as well as agents submitting an Importer Security Filing on behalf of
another party.
(8) An importer security filing bond is added in a new Appendix D
of part 113 and provisions for the Importer Security Filing are added
to Sec. 113.63 in a new paragraph (g).
(9) The new importer security filing bond and basic custodial bond
are added to the list of bonds in proposed Sec. 149.5(b) that may be
posted for Importer Security Filing purposes.
(10) Proposed Sec. 149.5(b) is changed to require the ISF Importer
to possess one of the required bonds or to have an agent post the
agent's bond when submitting an Importer Security Filing on behalf of
the ISF Importer.
(11) Proposed Sec. 149.5(c) is changed to clarify that powers of
attorney must be in English and that powers of attorney and letters of
revocation must be retained for five years from revocation.
(12) Proposed new 113.64(c) provides that liquidated damages for
violations of advance cargo information requirements are capped at
$100,000 for vessel carriers. Proposed redesignated paragraph (d) of
Sec. 113.64 is changed to include a $100,000 cap on all other
conveyance arrivals as well.
(13) Sections 4.7c, 4.7d, and 149.2 are added to the list of
approved information collections in Sec. 178.2.
IV. Discussion of Comments Regarding This Rulemaking Generally
Comment
CBP should postpone implementation until the regulations can be
implemented through the Automated Commercial Environment (ACE), a
vigorous outreach to the public sector and other agencies of the
government is undertaken and CBP is able to further study the costs,
benefits, and alternatives. CBP should then issue a new Strawman \5\ or
initially publish the rule as an interim final rule providing details
of the bonding, liquidated damages, penalty, collection proposal, and
data requirements, so that companies can develop or adapt their
information technology systems and software to properly transmit the
filing. When CBP does proceed, the rule should include a delayed
effective date of 90 days to 14 months to provide ample time for the
trade to prepare their systems and processes. Following the delayed
effective date, CBP should phase-in enforcement over a 12-month period
during which CBP should accept less than the full complement of data
elements, accept data at some point less than 24 hours prior to lading,
phase in individual elements, phase in trade participants, and/or not
impose any punitive measures.
---------------------------------------------------------------------------
\5\ Prior to publishing the NPRM, CBP posted a ``strawman''
proposal on the CBP website along with a request for comments from
the trade.
---------------------------------------------------------------------------
CBP Response
Section 203 of the SAFE Port Act of 2006 provides that the
Secretary of Homeland Security shall promulgate regulations requiring
additional data elements for improved high-risk targeting. CBP has
engaged the trade through the rulemaking process and through
consultation as required by section 203 of the SAFE Port Act
(incorporating the requirements of section 343(a) of the Trade Act of
2002). CBP has met with groups representing the trade while developing
the proposal, including: The Departmental Advisory Committee on
Commercial Operations of Customs and Border Protection and Related
Homeland Security Functions (COAC), the American Association of
Exporters and Importers (AAEI), the American Association of Port
Authorities (AAPA), the Joint Industry Group (JIG), the National
Association of Manufacturers (NAM), the National Customs Brokers and
Forwarders Association of America (NCBFAA), the International
Compliance Professionals Association (ICPA), the Retail Industry
Leaders Association (RILA), the Trade Support Network (TSN), the U.S.
Chamber of Commerce, and the World Shipping Council (WSC). Prior to
publishing the NPRM, CBP also posted a ``strawman'' proposal on the CBP
Web site along with a request for comments from the trade. CBP has also
considered the costs, benefits, and alternatives and has prepared a
cost, benefit, and feasibility analysis. An updated cost, benefit, and
feasibility analysis has been prepared for this interim final rule and
is available in the public docket and on Regulations.gov.
After careful consideration, DHS has determined that issuance of
this interim final rule is necessary at this time to fulfill the SAFE
Port Act's statutory mandate and increase the security of cargo
entering the United States by vessel by improving CBP's risk assessment
capabilities. The information collected pursuant to this interim final
rule will greatly enhance CBP's enforcement decision making process.
The sooner that CBP can obtain these data, the sooner CBP can use these
data to perform better risk analysis and identification of high-risk
shipments.
[[Page 71737]]
CBP understands that the trade may need time to adjust business
practices to comply with this interim final rule and that large and
complex parties may respond to these requirements differently than
small and less sophisticated importers. Therefore, in order to provide
the trade sufficient time to adjust to the new requirements and in
consideration of the business process changes that may be necessary to
achieve full compliance, CBP will show restraint in enforcing the rule,
taking into account difficulties that importers may face in complying
with the rule, so long as importers are making satisfactory progress
toward compliance and are making a good faith effort to comply with the
rule to the extent of their current ability. This policy will last for
twelve months after the effective date and will apply to all aspects of
the filing rule.
During this period, CBP will also work with the trade to assist
them in achieving compliance and will continue to update the trade on
issues associated with the regulations in the form of FAQs, postings on
the CBP Web site, other outreach to the trade, and consultation with
foreign countries. This rule also provides flexibilities with respect
to certain elements of Importer Security Filings. CBP has also
committed to a structured review of the elements, including an
evaluation of any specific compliance difficulties that the trade may
be encountering with respect to these elements. See the ``Structured
Review and Flexible Enforcement Period'' section of this document for
further discussion regarding the delayed compliance period,
flexibilities, and CBP's structured review.
Comment
Prior to finalizing the regulations, CBP should undertake a pilot
test using the required timeframes for data submission and employing
the actual targeting, validation, and electronic processes that are
intended to be employed upon implementation
Comment Response
As part of CBP's pre-existing Advance Trade Data Initiative (ATDI),
CBP worked with a wide variety of volunteers from the world trade
community to test the trade's ability to provide data, including some
elements of the Importer Security Filing, to CBP. ATDI has proven that
the industry has access to the required data and can get the data to
CBP. CBP also has proven the ability to incorporate the ATDI data into
the Automated Targeting System (ATS). Regarding timing requirements,
some ATDI participants are hitting the 24 hours prior to lading
deadline today. However, CBP understands that some business practices
may need to change in order for the ISF Importer to obtain the required
information 24 hours prior to lading. Therefore, in order to provide
the trade sufficient time to comply with these requirements, CBP has
taken several steps, including adoption of a 12-month delayed
compliance date. This rule also provides flexibilities with respect to
certain elements of Importer Security Filings. In addition, CBP has
committed to a structured review of the elements, including an
evaluation of any specific compliance difficulties that the trade may
be encountering with respect to these elements. See the ``Structured
Review and Flexible Enforcement Period'' section of this document for
further discussion regarding the delayed compliance period,
flexibilities, and CBP's structured review.
Comment
CBP should extend the comment period for the NPRM.
CBP Response
CBP published a document in the Federal Register (73 FR 6061) on
February 1, 2008, extending the comment period an additional 15 days
until March 18, 2008.
Comment
When the technical information has been developed, CBP should
publish proposed data specifications in the Customs and Trade Automated
Interface Requirements (CATAIR) and Customs Automated Manifest
Interface Requirements (CAMIR) without requiring that a confidentiality
agreement be signed and should re-issue the NPRM with a 90-day comment
period.
CBP Response
CBP disagrees that re-issuing the NPRM is necessary. CBP has
amended the CATAIR, CAMIR, and American National Standards Institute
(ANSI) X.12 transaction messages, providing the technical requirements
necessary to comply with these regulations. CBP has posted these
documents to the CBP Web site. While this interim final rule becomes
effective 60 days from the date of publication in the Federal
Register--thus codifying the specific requirements--CBP is extending
the compliance date to one year from the effective date and is
providing flexibilities with respect to certain elements of Importer
Security Filings. See the ``Structured Review and Flexible Enforcement
Period'' section of this document for further discussion regarding the
delayed compliance period and flexibilities. CBP believes that,
especially with the flexibilities that CBP is providing, this is
sufficient time for the trade to prepare for and comply with the new
requirements.
Comment
The proposed regulation runs afoul of section 343(a)(3)(I) of the
Trade Act of 2002 which requires that, where practicable, the
regulations shall avoid redundant requirements because the requirement
for line item information for each shipment will result in redundant
Importer Security Filing submissions and CBP has announced that it
intends to target upon receipt of the Importer Security Filing as well
as upon entry.
CBP Response
CBP is aware that four of the Importer Security Filing elements,
while collected at a different time, are identical to elements
submitted for entry (CBP Form 3461) and entry summary (CBP Form 7501)
purposes and two of the Importer Security Filing elements, while
collected at a different time, are identical to elements submitted for
application to admit goods to an FTZ (CBP Form 214). In an effort to
minimize the redundancy of data transmitted to CBP, after further
consideration and in response to public comments, CBP is allowing an
importer to submit these elements once via the same electronic
transmission to be used for both Importer Security Filing and entry/
entry summary or FTZ admission purposes. With regard to redundancy of
multiple Importer Security Filings, CBP understands that for some
Importer Security Filing filings the 10 data elements will not change
for multiple bills of lading. Therefore, CBP will accept one Importer
Security Filing for multiple bills of lading in the same shipment.
Comment
This rule has become superfluous with the statutory requirement for
the foreign port image scanning of all containerized maritime cargoes
prior to their being placed on vessels for shipment to the United
States. In addition, there has been no demonstration that the Importer
Security Filing will contribute to the effectiveness of the ATS.
CBP Response
CBP disagrees. Advance cargo information provides transparency into
the transaction, including the parties
[[Page 71738]]
and goods involved, which is part of the overall risk analysis. The
information required by this rule will allow CBP to conduct data
analysis to more effectively identify high-risk containers for
increased scrutiny, and screen out shipments for increased scrutiny.
Additional scrutiny could include additional non-intrusive inspection
(NII) and physical examination. The value of NII, including radiation
detection capabilities, is increased when the targeter has a frame of
reference which is provided by accompanying transaction data such as
the data required pursuant to these regulations.
Comment
CBP should scan 100% of cargo in lieu of requiring an Importer
Security Filing, vessel stow plans and container status messages
(CSMs).
CBP Response
CBP disagrees. The physical cargo is only one piece of the puzzle.
Information, such as the information collected as a result of this
rulemaking will allow CBP to put the image produced by a scan into
context. The scan and Importer Security Filing together will provide
additional transparency and validate the shipment and parties involved.
Comment
It is unclear how the proposed requirements will enhance the
security of the United States. This rule could result in increased
transit time, which could actually increase security risks.
CBP Response
Pursuant to section 203 of the SAFE Port Act (6 U.S.C. 943), the
Secretary of Homeland Security, acting through the Commissioner of CBP,
must promulgate regulations to require the electronic transmission of
additional data elements for improved high-risk targeting, including
appropriate security elements of entry data for cargo destined to the
United States by vessel prior to loading of such cargo on vessels at
foreign seaports. The Importer Security Filing elements, vessel stow
plans, and CSMs will enhance CBP's targeting and risk analysis
capabilities by increasing the transparency of key supply chain
participants, cargo, and events. CBP does not agree that increased
transit time (dwell time at a foreign port terminal), if incurred due
to this rulemaking, will result in an increased security risk. The risk
reduction provided by the collection of additional information that
will result from these regulations is significantly greater than any
risk increase resulting from any increased dwell times. Furthermore,
CBP is addressing global port security through other initiatives.
Comment
The Importer Security Filing should be expanded to prevent
dangerous merchandise, including narcotics and other illegal
consignments, from being shipped to the United States.
CBP Response
This rule is one part of CBP's layered approach to cargo security.
CBP has implemented a comprehensive strategy designed to enhance
national security while protecting the economic vitality of the United
States. The Container Security Initiative (CSI), the 24 Hour Rule, and
the Customs-Trade Partnership Against Terrorism (C-TPAT) are
cornerstone approaches implemented to further this goal. Additionally,
CBP has developed cargo risk assessment capabilities in its Automated
Targeting System (ATS) to screen all maritime containers before they
are loaded aboard vessels in foreign ports. Each of these initiatives
is dependent upon data supplied by trade entities, including carriers,
non-vessel operating common carriers (NVOCCs), brokers, importers or
their agents. Internal and external government reviews have concluded
that the more complete advance shipment data required pursuant to this
interim final rule will produce even more effective and more vigorous
cargo risk assessments. Accordingly, CBP will use these data to ensure
cargo safety and security and to prevent smuggling.
Comment
Limiting the proposed requirements to the vessel environment will
encourage circumvention by transshipment through Canada and Mexico.
Does CBP plan to apply these requirements to other modes in the future?
Significant adjustment will be necessary if these rules are applied to
other modes.
CBP Response
CBP disagrees that this rule encourages circumvention, as the
United States has a strong working relationship with both Canadian and
Mexican border enforcement agencies. CBP will monitor any unexplained
increases in land border traffic and will take appropriate security
measures if warranted. This interim final rule is focused on vessel
cargo pursuant to the requirements under the SAFE Port Act 2006 and the
Trade Act of 2002. As such, this rule is an incremental step toward
meeting the goal of securing shipments to the United States. CBP will
continue to evaluate the effectiveness of this rule. However, at this
time, CBP is not considering expanding the advance data requirements
for other modes.
Comment
CBP should conduct outreach with the trade, including presentation
of a white paper, PowerPoint presentation, and FAQs, prior to
implementation and during the implementation phase, including a regular
and recurring collaborative process with COAC and the TSN. CBP should
also produce a ``best practices'' document, including detailed process
flows, for industry and CBP officers to ensure that all trade
participants understand how to comply with the new requirements.
Importers will need to implement new processes regardless of whether
enforcement is phased in.
CBP Response
CBP agrees that business practices and processes will need to be
adjusted and that is reflected in our delayed compliance period and
outreach efforts. See the ``Structured Review and Flexible Enforcement
Period'' section of this document for further discussion regarding the
delayed compliance period. CBP has amended the CATAIR, CAMIR, and X.12
transaction messages, providing the technical requirements necessary
for submitting Importer Security Filings. These documents have been
posted to the ``Automated Systems'' section of the CBP Web site. CBP
will continue to conduct outreach with the trade, in fulfillment of its
regulatory and statutory obligations, both during the delayed
compliance period and thereafter, via FAQs, postings on the CBP Web
site, and other outreach.
Comment
CBP should provide a Help Desk to assist in the resolution of
problems associated with the Importer Security Filing requirements.
CBP Response
CBP will utilize existing resources to resolve problems associated
with the Importer Security Filing requirements. In order to get access
to the Automated Broker Interface (ABI) or the Vessel Automated
Manifest System (vessel AMS), members of the trade should contact a CBP
Client Representative or the CBP Technology Support Center (TSC),
formerly known as the CBP Help Desk, for resolution of technical
problems associated with Importer Security Filings. In addition, CBP
has
[[Page 71739]]
established a dedicated email account for Importer Security Filing-
related issues. Members of the public are directed to the CBP Web site
at http://www.cbp.gov for the latest information regarding these
contacts. CBP will also continue to update the trade in the form of
FAQs, postings on the CBP Web site, and other outreach to the trade.
Comment
The information that CBP has requested is the same information that
thousands of shippers, importers and manufacturers have at their
fingertips every day. It has long been understood that importing into
the United States is a privilege, not a right. Thus, it is completely
proper for CBP to require those who would take advantage of our
nation's prosperity to help to protect that prosperity. Importers will
have an added incentive to investigate and identify the identity of
their suppliers due to the penalties associated with improper Importer
Security Filings. CBP should also be commended for its open,
consultative approach in developing this initiative and these
regulations.
CBP Response
CBP appreciates the support and cooperation offered by the trade.
V. Discussion of Comments Regarding Proposed Carrier Requirements
Relating to Vessel Cargo Destined to the United States
A. Overview; Vessel Stow Plan
CBP proposed to require carriers to submit a vessel stow plan for
vessels destined to the United States. Under the proposed regulations,
carriers were required to transmit the stow plan for vessels
transporting containers and/or break bulk cargo so that CBP received it
no later than 48 hours after the carrier's departure from the last
foreign port. For voyages less than 48 hours in duration, CBP was to
receive the stow plan prior to the vessel's arrival at the first port
in the United States. Bulk carriers were to be exempt from this
requirement for vessels exclusively carrying bulk cargo. The proposal
required carriers to submit the vessel stow plan via the CBP-approved
electronic data interchange system. The current approved electronic
data interchange system for the vessel stow plan is vessel AMS. The
proposal stated that if CBP approves of different or additional
electronic data interchange systems, CBP would publish a notice in the
Federal Register.
Under the proposed regulations, the vessel stow plan was required
to include standard information relating to the vessel and each
container and unit of break bulk cargo laden on the vessel. The vessel
stow plan was to include the following standard information:
With regard to the vessel,
(1) Vessel name (including international maritime organization
(IMO) number);
(2) Vessel operator; and
(3) Voyage number.
With regard to each container or unit of break bulk cargo,
(1) Container operator, if containerized;
(2) Equipment number, if containerized;
(3) Equipment size and type, if containerized;
(4) Stow position;
(5) Hazmat-UN code;
(6) Port of lading; and
(7) Port of discharge.
B. Public Comments; Vessel Stow Plan
Comments Regarding Responsibilities
The vessel operating carrier, rather than the non-vessel operating
common carrier (NVOCC), should be responsible for filing the stow plan.
The NVOCC may not have the vessel stow plan because they do not operate
the vessel and have no knowledge of the physical location of cargo as
loaded on the vessel. Stow plans are not created to meet regulatory
requirements, and therefore a vessel operating carrier should not be
responsible for inaccuracies or incompleteness. In addition, carriers
should not be responsible for errors in information carriers are unable
to verify.
CBP Response
CBP agrees that the vessel operating carrier (i.e., vessel
operator) is responsible for filing the stow plan. While, prior to this
interim final rule, stow plans were not created to meet regulatory
requirements, CBP is requiring, through this rulemaking, that vessel
carriers submit accurate and timely stow plans for containerized cargo.
CBP will use stow plan data to compare the containers listed on the
stow plan with containers listed on the vessel's manifest in an effort
to identify potentially unmanifested containers. CBP may take
enforcement action against a carrier that fails to comply with the
requirement to submit stow plans in a timely or accurate manner. CBP
enforcement actions may include, but are not limited to, claims for
liquidated damages pursuant to 19 CFR 113.64(f). However, CBP has set a
compliance date of one year from the effective date of this interim
final rule. During that one-year delayed compliance period, CBP will
work with the trade to assist them in achieving compliance. CBP will
also work with the trade on ongoing issues and will keep updating and
posting new FAQs to the CBP Web site, while conducting additional
outreach to the trade and various foreign government entities. See the
``Structured Review and Flexible Enforcement Period'' section of this
document for further discussion regarding the delayed compliance period
and CBP's planned outreach efforts.
Comments Regarding Procedures
Commenters questioned whether a stow plan is required for every
U.S. arrival from a foreign port. Some also stated that CBP should
provide the vessel stow plan filer an electronic acknowledgment,
containing time and date of receipt and unique identification number,
as evidence that the vessel stow plan was successfully received. Others
questioned which formats can be used for submission of vessel stow
plans and whether CBP will accept vessel stow plans in Adobe Portable
Document Format (.pdf). Some also stated that CBP should also accept
the U.S. hazardous material (hazmat) codes or Hazmat class in addition
to the proposed Hazmat-UN code and that CBP should not use the stow
plan for securing detailed and complete hazmat information. Where
reference is made to the equipment number, commenters questioned
whether CBP wanted carriers to report the unique Vehicle Identification
Number (VIN) for vehicles or if a simple vehicle count is sufficient.
CBP Response
CBP must receive a stow plan after the vessel departs from the last
foreign port. CBP agrees that the vessel stow plan filer should receive
a status notification message acknowledging that the vessel stow plan
was accepted by CBP's system. As to formats, CBP will accept vessel
stow plans in the United Nations rules for Electronic Data Interchange
For Administration, Commerce and Transport (UN EDIFACT) Bayplan/stowage
plan occupied and empty locations message (BAPLIE) SMDG format, which
is the industry-wide standard for carriers who currently use electronic
stow plans. CBP will also work with carriers to accept the ANSI X.12
``324'' format on a case-by-case basis. Other formats, such as the
Adobe.pdf format, are not specifically designed for stow plans and,
therefore, would be difficult for CBP systems to interpret. Therefore,
CBP cannot justify the costs associated with supporting these
additional formats at this time. CBP will continue to consider
[[Page 71740]]
additional formats in the future. Regarding hazardous materials
reporting on vessel stow plans, the commenter did not provide
information regarding what was intended by reference to U.S. Hazmat
codes. The U.S. Department of Transportation Hazardous Materials Table
lists Hazmat-UN identification numbers and hazard classes. See 49 CFR
part 172.101. In order to minimize the cost to carriers, CBP will
accept any widely recognized commercially acceptable hazardous
materials identification numbers and classifications that the carrier
uses in the normal course of business, such as those listed on the U.S.
Department of Transportation Hazardous Materials Table. Regarding VINs,
a VIN is not required as part of a stow plan. Also, since stow plans
are not required for break bulk merchandise, they will not be required
for vehicles unless they are containerized.
Comments Regarding Scope of Requirements for Stow Plan
CBP should not require stow plans for vessels transporting fewer
than a threshold number of containers or for vessels traveling solely
within the U.S. Outer Continental Shelf (OCS). CBP should not require
stow plans for break bulk cargo (including roll-on/roll-off vessels)
because break bulk is obvious as to what it is and where it is in the
cargo hold and, therefore, of limited security value. CBP should also
not require stow plans for bulk ships carrying either containers or
break bulk cargoes on deck. Some questioned whether a carrier will need
to include cargo that is not bound for the United States on a stow
plan.
CBP Response
A stow plan must be filed for each vessel carrying containerized
cargo that is required to transmit an advance cargo declaration
pursuant to section 343(a) of the Trade Act of 2002. CBP will use stow
plan data to compare the containers listed on the stow plan with
containers listed on the vessel's manifest in an effort to identify
potentially unmanifested containers. Unmanifested containers are
considered to be of the highest risk to our nation's security since
there is little information available about the contents or intended
destination of these containers. Even a single unmanifested container
poses a possible threat to the security of the United States. For this
reason, CBP does not intend to establish an exemption from the stow
plan requirement based on the number of containers carried on a vessel
or for vessels traveling solely within the U.S. OCS. After further
consideration and in response to comments, CBP has determined to not
require break bulk cargo on stow plans. However, regardless of the type
of vessel (including break bulk and bulk vessels), a vessel stow plan
accounting for all containers onboard a vessel must be submitted to
CBP. Finally, carriers will be required to submit stow plans for all
containerized cargo that will enter the limits of a port in the United
States.
Comments Regarding the Timing for Submission of the Stow Plan
Commenters questioned the timing for stow plans for trips of very
short duration (e.g., Vancouver to Seattle). It was suggested that the
stow plan not be required earlier than the required United States Coast
Guard Notice of Arrival, which is 96 hours prior to arrival. It was
also suggested that CBP should amend the regulations, as proposed, to
require submission of the stow plan 48 hours after the vessel departs
from the last foreign port where goods are laden on the vessel rather
than the last foreign port. Others questioned when a vessel ``arrives''
for vessel stow plan timing purposes. Finally, commenters questioned
whether carriers need to amend stow plans. If so, carriers should only
be required to amend stow plans when they find that a container has
been stowed aboard that was not on the stow plan as submitted to CBP
and not when a container is on a stow plan but was not loaded aboard
the vessel.
CBP Response
Stow plans are required for vessels carrying containers destined to
the United States. For voyages less than 48 hours in duration
(including very short voyages), CBP must receive the stow plan prior to
the vessel's arrival at the first port in the United States. CBP
disagrees with the remaining comments. Under the interim final rule,
stow plans are required no later than 48 hours after the vessel departs
from the last foreign port so that CBP has an accurate representation
of the cargo laden on the vessel as it arrives in the United States.
Except for voyages less than 48 hours in duration, a vessel stow plan
must be submitted 48 hours after the vessel departs from the last
foreign port, whether goods are laden and/or unladen at that port, so
that the vessel stow plan will accurately depict the cargo onboard when
the vessel arrives within the limits of a port in the United States.
Vessel arrival for vessel stow plan purposes is the same as vessel
arrival for vessel entry purposes. Arrival of a vessel is defined in 19
CFR 4.0. See also 19 CFR 4.2 regarding reports of arrival of vessels.
Finally, inasmuch as CBP requires that an accurate and complete stow
plan be submitted, a carrier must submit a new accurate stow plan
immediately upon discovery of any inaccuracies. However, the carrier
will still be liable for enforcement actions resulting from the
inaccurate vessel stow plan.
C. Overview; Container Status Messages
Pursuant to section 343(a) of the Trade Act of 2002, CBP proposed
to require carriers to submit CSMs daily for certain events relating to
all containers laden with cargo destined to arrive within the limits of
a port in the United States by vessel.
Under the proposed regulations, CSMs created under either the ANSI
X.12 standard or the UN EDIFACT standard were to be acceptable.
Under the proposed regulations, carriers were required to submit a
CSM when any of the required events occurs if the carrier creates or
collects a CSM in its equipment tracking system reporting that event.
The proposed regulations would not require a carrier to create or
collect any CSM data other than that which the carrier already creates
or collects on its own and maintains in its electronic equipment
tracking system. CSMs were to be submitted no later than 24 hours after
the message is entered into the carrier's equipment tracking system.
The events for which CSMs would be required are:
(1) When the booking relating to a container which is destined to
arrive within the limits of a port in the United States by vessel is
confirmed;
(2) When a container which is destined to arrive within the limits
of a port in the United States by vessel undergoes a terminal gate
inspection;
(3) When a container, which is destined to arrive within the limits
of a port in the United States by vessel, arrives or departs a facility
(These events take place when a container enters or exits a port,
container yard, or other facility. Generally, these CSMs are referred
to as ``gate-in'' and ``gate-out'' messages.);
(4) When a container, which is destined to arrive within the limits
of a port in the United States by vessel, is loaded on or unloaded from
a conveyance (This includes vessel, feeder vessel, barge, rail and
truck movements. Generally, these CSMs are referred to as ``loaded on''
and ``unloaded from'' messages);
(5) When a vessel transporting a container, which is destined to
arrive within the limits of a port in the United States by vessel,
departs from or arrives
[[Page 71741]]
at a port (These events are commonly referred to as ``vessel
departure'' and ``vessel arrival'' notices);
(6) When a container which is destined to arrive within the limits
of a port in the United States by vessel undergoes an intra-terminal
movement;
(7) When a container which is destined to arrive within the limits
of a port in the United States by vessel is ordered stuffed or
stripped;
(8) When a container which is destined to arrive within the limits
of a port in the United States by vessel is confirmed stuffed or
stripped; and
(9) When a container which is destined to arrive within the limits
of a port in the United States by vessel is shopped for heavy repair.
CBP is aware that it might be cost beneficial for some carriers to
transmit all CSMs, rather than filter out CSMs relating to containers
destined to the United States or relating only to the required events.
Therefore, CBP proposed to allow carriers to transmit their ``global''
CSM messages, including CSMs relating to containers that do not contain
cargo destined for importation into the United States and CSMs relating
to events other than the required events. CBP stated in the proposal
that by transmitting CSMs in addition to those required by the proposed
regulations, a carrier would authorize CBP to access and use those
data.
For each CSM submitted, the following information was proposed to
be included:
(1) Event code being reported, as defined in the ANSI X.12 or UN
EDIFACT standards;
(2) Container number;
(3) Date and time of the event being reported;
(4) Status of the container (empty or full);
(5) Location where the event took place; and
(6) Vessel identification associated with the message.
Carriers would be exempt from the CSM requirement for bulk and
break bulk cargo. Under the proposed regulations, carriers would be
required to submit CSMs via the CBP-approved electronic data
interchange system. The current approved electronic data interchange
system for CSMs is vessel AMS. The proposal stated that if CBP approves
of a different or additional electronic data interchange system, CBP
will publish notice in the Federal Register.
D. Public Comments; Container Status Messages
Comments Regarding Responsibilities
Some commenters questioned whether the vessel operating carrier or
NVOCC, when applicable, is required to submit CSMs. Others asked
whether a carrier that has no electronic equipment tracking system
needs to report any CSMs and when a carrier may stop sending event
messages. Some noted that CBP should require all carriers, not just
those who currently create or collect CSMs, to submit CSMs.
CBP Response
Vessel operating carriers are required to submit CSMs. If a carrier
currently does not create or collect CSMs in an equipment tracking
system, the carrier is not required to submit CSMs to CBP. If a carrier
does create or collect CSMs, the carrier's obligation to transmit CSMs
ends upon discharge of the cargo in the United States. However, a
carrier may transmit other CSMs in addition to those required by these
regulations. By transmitting additional CSMs, the carrier authorizes
CBP to access and use those data. In order to minimize the cost to
carriers whose volume of business does not justify the creation of
CSMs, CBP is declining to impose an obligation upon carriers to create
or collect any CSM data pursuant to this rule.
Comments Regarding Scope of Requirements for CSMs
Some questioned whether CSMs are required for empty containers
since as proposed, 19 CFR 4.7d would require CSMs for containers laden
with cargo destined to arrive within the limits of a port in the United
States from a foreign port by vessel. For each CSM, however, it seems
that the ``status of the container (empty or full)'' must be reported.
Others observed that some of the events for which CSMs are required are
not reported via CSMs in all instances. For example, carriers may not
create or collect CSMs when bookings are confirmed, when a container
enters or exits a facility, when a vessel departs or arrives, when a
container undergoes an intra-terminal movement, or when a container is
ordered stuffed or stripped or confirmed stuffed or stripped. In
addition, loaded containers are not ``shopped for heavy repairs.''
Others noted that since CSMs are not created to meet regulatory
requirements a vessel operating carrier should not be responsible for
inaccuracies or incompleteness. In addition, there should not be an
obligation to ensure that each of the six data elements is in each CSM
since there is ``no requirement that a carrier create or collect any
CSM data.''
CBP Response
CSMs are required for all containers, including empty containers,
destined to arrive within the limits of a port in the United States
from foreign by vessel (if the carrier creates or collects a CSM in its
equipment tracking system). As commenters pointed out, each CSM must
include the status of the container as either empty or full. The
reference in the NPRM to containers ``laden with cargo destined to
arrive within the port limits in the United States'' was intended to
differentiate those containers that are destined for the United States
from containers that are not destined to arrive within the limits of a
port in the United States. Section 4.7d has been amended to clarify
that CSMs are required for all containers destined to arrive within the
limits of a port in the United States. It remains CBP's position at
this time to minimize the cost to carriers whose volume of business
does not justify the creation of CSMs by only requiring a carrier to
submit CSMs if the carrier creates or collects a CSM in its equipment
tracking system. Nevertheless, CBP believes that every CSM for
containers laden with cargo destined to arrive within the limits of a
port in the United States from foreign by vessel, by their very nature,
must contain the six required elements. Accordingly, while there is no
requirement that carriers create or collect any CSMs pursuant to this
rule, every CSM submitted to CBP must contain the six required elements
with the exception of the ``Vessel identification associated with the
message.'' This element is not required when a container has not yet
been associated with a specific vessel.
Comments Regarding Procedures
When the NPRM refers to ``loaded on'' and ``unloaded from''
messages, is CBP referring to CSMs generated when a container is loaded
or unloaded to or from a vessel or to or from a rail carrier? CBP
should also clarify whether the ``date and time of the event being
reported'' refers to the date and time when the event occurred in real-
time and not when it was entered into a carrier's equipment tracking
system and whether CBP will accept the carrier's definition of location
where the event took place as currently reported in their equipment
system. CBP should clarify what type of identification should be
transmitted for the ``vessel identification associated with the
message''--i.e., should this be a vessel name, number, IMO, vessel
operator, or other
[[Page 71742]]
identification? In addition, some CSMs will be created before there is
a vessel associated with the message. Commenters also stated that CBP
should clarify when a container is considered to have been ``confirmed
stuffed or stripped,''--i.e., will it be left up to the carrier's
discretion to define when they deem a booking has reached a
``confirmed'' status? A date should be optional for this CSM since
stuffing and stripping of containers is generally not performed by the
carrier. Finally, commenters questioned whether a do not load (DNL)
should be issued; whether an importer's cargo would be subject to
increased scrutiny if the carrier fails to submit a vessel stow plan or
container status messages; whether the Importer Security Filing filer
will be notified if a DNL is issued in this instance; and whether the
importer be liable for vessel stow plan and CSM related errors (e.g.,
when a carrier ``rolls over'' a container to another vessel and fails
to report this to CBP).
CBP Response
CSM events include messages about movements such as when a
container, which is destined to arrive within the limits of a port in
the United States by vessel, is loaded on or unloaded from any
conveyance. This includes vessel, feeder vessel, barge, rail, and truck
movements. The date and time when the event actually occurred should be
reported. The location as recorded in the carrier's equipment tracking
system should be reported. For purposes of the vessel identification,
CBP will accept whatever unique identifier is used within the carrier's
tracking system. CBP has changed the proposal in these interim final
regulations to require the vessel identification associated with the
message only if a container has been associated with a specific vessel.
With regard to confirmation of stuffing, a booking is ``confirmed'' by
a carrier's own booking system. Similarly, a container is confirmed
stuffed or stripped by a carrier's own booking system. Accordingly, it
is left up to the carrier's discretion to define when a booking is
deemed confirmed and a container is confirmed stuffed or stripped.
Finally, if a carrier fails to submit a vessel stow plan or container
status messages, when a carrier is required to do so, CBP may take
appropriate enforcement actions, including but not limited to, issuance
of a DNL, a prelude to a denial of a permit to unlade the container(s)
upon arrival in the United States. However, CBP will not notify the
party who filed the Importer Security Filing regarding DNL messages not
related to their Importer Security Filing. If parties wish to share
these data, they will need to do so privately. Regarding vessel stow
plan and CSM-related errors, the importer is not responsible for
submitting stow plans and CSMs to CBP and is therefore not liable for
inaccuracies or errors.
E. Public Comments; Carrier Requirements Generally
Comment
CBP should require the terminal operator to submit vessel stow
plans and container status messages. The vessel operator should be
responsible for filing CSMs and vessel stow plans when there is a
vessel sharing or space charter agreement. In the alternative, carriers
should be able to designate a third party to submit CSMs and the vessel
stow plan on the carrier's behalf.
CBP Response
CBP disagrees that terminal operators should be required to submit
vessel stow plans and container status messages. The vessel operator is
responsible for the submission of the vessel stow plan because it is
the party operating the vessel and transporting the cargo to the United
States. All vessel operating carriers who create or collect CSMs for
cargo that is destined to enter the limits of a port in the United
States, including slot and other vessel sharing partners, are
responsible for the submission of CSMs. In response to requests from
the trade, CBP will allow the responsible carrier to designate a third
party agent to transmit stow plans and CSMs. However, the obligation
and liability for those requirements remains with the carrier.
VI. Discussion of Comments Regarding Proposed Importer Requirements for
Vessel Cargo Destined to the United States
A. Overview; Proposed Importer Requirements
Pursuant to the authority of section 343(a) of the Trade Act of
2002, as amended by MTSA, and section 203 of the SAFE Port Act, in
order to enhance the security of the maritime environment, CBP proposed
to require importers, as defined in the proposal, or their agents, to
transmit an Importer Security Filing to CBP, for cargo other than FROB,
no later than 24 hours before cargo is laden aboard a vessel destined
to the United States. Because FROB is frequently laden based on a last-
minute decision by the carrier, the Importer Security Filing for FROB
was to be required any time prior to lading.\6\ Under the proposed
regulations, an Importer Security Filing was required for each
shipment, at the lowest bill of lading level (i.e., at the house bill
of lading level, if applicable). It is information from the relevant
house bill that CBP proposed to collect.
---------------------------------------------------------------------------
\6\ CBP did not propose to amend the timing requirements in 19
CFR part 4 requiring submission of advance manifest information 24
hours prior to lading.
---------------------------------------------------------------------------
Under the proposal, the party required to submit the Importer
Security Filing was the party causing the goods to enter the limits of
a port in the United States. The proposal stated that this party would
be construed as the carrier for FROB and as the party filing IE, T&E,
or FTZ documentation for those types of shipments. CBP proposed to
allow an importer, as defined in the proposal, as a business decision,
to designate an authorized agent to file the Importer Security Filing
on the importer's behalf. Under the proposed regulations, a party could
act as an authorized agent for purposes of filing the Importer Security
Filing if that party obtains access to ABI or AMS and obtains a bond.
Under the proposed regulations, importers, as defined in the
proposal, or their agents, would be required to transmit the Importer
Security Filing via a CBP-approved electronic data interchange system.
The proposal stated that the current approved electronic data
interchange systems for the Importer Security Filing was ABI and vessel
AMS and that, if CBP approves a different or additional electronic data
interchange system in the future, CBP would publish notice in the
Federal Register.
Under the proposed regulations, the party who filed the Importer
Security Filing would be required to update the Importer Security
Filing if, after the filing and before the goods arrive within the
limits of a port in the United States, there were changes to the
information filed or more accurate information becomes available.
Under the NPRM, CBP proposed to require ISF Importers to submit 10
elements for shipments consisting of goods intended to be entered into
the United States and goods intended to be delivered to an FTZ. For
goods to be delivered to an FTZ, CBP considered the importer to be the
party filing the FTZ documentation with CBP. CBP proposed to require
that the importer or the importer's agent must transmit these 10
elements to CBP. Under the proposal, five elements were required for
shipments consisting entirely of FROB and shipments consisting entirely
of
[[Page 71743]]
goods intended to be ``transported'' as IE or T&E in-bond shipments.
Under the proposal, for FROB, the importer would be construed as
the international carrier of the vessel arriving in the United States.
For IE and T&E in-bond shipments, the importer was construed as the
party filing the IE or T&E documentation with CBP.
1. Shipments Other Than FROB, IE Shipments, and T&E Shipments
Under the proposed regulations, for the Importer Security Filing
for shipments other than those consisting entirely of FROB and goods
intended to be ``transported'' in-bond as an IE or T&E, 10 elements
were required, unless specifically exempted. The manufacturer (or
supplier) name and address, country of origin, and commodity Harmonized
Tariff Schedule of the United States (HTSUS) number were to be linked
to one another at the line item level.
The 10 proposed required elements were:
(1) Manufacturer (or supplier) name and address. Name and address
of the entity that last manufactures, assembles, produces, or grows the
commodity or name and address of the supplier of the finished goods in
the country from which the goods are leaving. In the alternative, the
name and address of the manufacturer (or supplier) that is currently
required by the import laws, rules and regulations of the United States
(i.e., entry procedures) may be provided (this is the information that
is used to create the existing manufacturer identification (MID) number
for entry purposes).
(2) Seller name and address. Name and address of the last known
entity by whom the goods are sold or agreed to be sold. If the goods
are to be imported otherwise than in pursuance of a purchase, the name
and address of the owner of the goods must be provided.\7\
---------------------------------------------------------------------------
\7\ The party required for this element is consistent with the
information required on the invoice of imported merchandise. See 19
CFR 141.86(a)(2).
---------------------------------------------------------------------------
(3) Buyer name and address. Name and address of the last known
entity to whom the goods are sold or agreed to be sold. If the goods
are to be imported otherwise than in pursuance of a purchase, the name
and address of the owner of the goods must be provided.\8\
---------------------------------------------------------------------------
\8\ The party required for this element is consistent with the
information required on the invoice of imported merchandise. See 19
CFR 141.86(a)(2).
---------------------------------------------------------------------------
(4) Ship to name and address. Name and address of the first
deliver-to party scheduled to physically receive the goods after the
goods have been released from customs custody.
(5) Container stuffing location. Name and address(es) of the
physical location(s) where the goods were stuffed into the container.
For break bulk shipments, the name and address(es) of the physical
location(s) where the goods were made ``ship ready'' must be provided.
(6) Consolidator (stuffer) name and address. Name and address of
the party who stuffed the container or arranged for the stuffing of the
container. For break bulk shipments, the name and address of the party
who made the goods ``ship ready'' or the party who arranged for the
goods to be made ``ship ready'' must be provided.
(7) Importer of record number/FTZ applicant identification number.
Internal Revenue Service (IRS) number, Employer Identification Number
(EIN), Social Security Number (SSN), or CBP assigned number of the
entity liable for payment of all duties and responsible for meeting all
statutory and regulatory requirements incurred as a result of
importation. For goods intended to be delivered to an FTZ, the IRS
number, EIN, SSN, or CBP assigned number of the party filing the FTZ
documentation with CBP must be provided. The importer of record number
for Importer Security Filing purposes is the same as ``importer
number'' on CBP Form 3461.
(8) Consignee number(s). Internal Revenue Service (IRS) number,
Employer Identification Number (EIN), Social Security Number (SSN), or
CBP assigned number of the individual(s) or firm(s) in the United
States on whose account the merchandise is shipped. This element is the
same as the ``consignee number'' on CBP Form 3461.
(9) Country of origin. Country of manufacture, production, or
growth of the article, based upon the import laws, rules and
regulations of the United States. This element is the same as the
``country of origin'' on CBP Form 3461.
(10) Commodity HTSUS number. Duty/statistical reporting number
under which the article is classified in the Harmonized Tariff Schedule
of the United States (HTSUS). The HTSUS number is required to be
provided to the six-digit level. The HTSUS number may be provided up to
the 10-digit level. This element is the same as the ``H.S. number'' on
CBP Form 3461 and can only be used for entry purposes, if it is
provided at the 10-digit level or greater.
2. FROB, IE Shipments, and T&E Shipments
Under the proposed regulations, for the Importer Security Filing
for shipments consisting entirely of FROB and shipments consisting
entirely of goods intended to be ``transported'' in-bond as an IE or
T&E, five elements were to be provided in order to enhance the security
of the maritime environment.
The five proposed required elements were:
(1) Booking party name and address. Name and address of the party
who is paying for the transportation of the goods.
(2) Foreign port of unlading. Port code for the foreign port of
unlading at the intended final destination.
(3) Place of delivery. City code for the place of delivery.
(4) Ship to name and address. Name and address of the first
deliver-to party scheduled to physically receive the goods after the
goods have been released from customs custody.
(5) Commodity HTSUS number. Duty/statistical reporting number under
which the article is classified in the Harmonized Tariff Schedule of
the United States (HTSUS). The HTSUS number must be provided to the
six-digit level. The HTSUS number may be provided up to the 10-digit
level.
Four of the proposed Importer Security Filing elements are
identical to elements submitted for entry (CBP Form 3461) and entry
summary (CBP Form 7501) purposes. These elements are the importer of
record number, consignee number, country of origin, and commodity HTSUS
number when provided at the 10-digit level. CBP proposed to allow an
importer to submit these elements once to be used for both Importer
Security Filing and entry/entry summary purposes. Under the proposed
regulations, if an importer chooses to have these elements used for
entry/entry summary purposes, the Importer Security Filing and entry/
entry summary must be self-filed by the importer or filed by a licensed
customs broker in a single transmission to CBP. In addition, the HTSUS
number would be required at the 10-digit level.
As proposed, two of the Importer Security Filing elements are
identical to elements submitted for application to admit goods to an
FTZ (CBP Form 214). These elements are the country of origin and
commodity HTSUS number when provided at the 10-digit level. CBP
proposed to allow a filer to submit the Importer Security Filing and
CBP Form 214 in the same electronic transmission to CBP and to submit
the country of origin and commodity HTSUS number once to be used for
both Importer Security Filing and FTZ admission purposes. If the party
submitting the Importer Security Filing chose to have this element used
for FTZ admission purposes, the HTSUS number would be required at the
10-digit level.
[[Page 71744]]
B. Public Comments; Responsible Party
Comment
Under section 343(a) of the Trade Act of 2002, as amended, the
requirement to provide information to CBP is generally to be imposed
upon the party likely to have direct knowledge of the required
information. Although CBP has identified the importer (as defined in
the NPRM) as the party to send the data, it has not demonstrated that
the importer is in fact that party. The supplier, freight forwarder,
and/or carrier actually may have the most direct knowledge of the
required information. For example, some suppliers arrange their own
carriage and, therefore, the importer will not have the information
necessary to submit the Importer Security Filing. Similarly, the
importer may not even be aware that the merchandise has been shipped
until it arrives in the United States. CBP should require the party
with the best knowledge of the shipment to submit the Importer Security
Filing. Commenters suggested that CBP not create a new definition of
``importer'' for Importer Security Filing purposes only, but rather
adopt an alternate term. This party should be defined to include the
``importer'' (as defined in 19 CFR 101.1) or the duly authorized agent
of that party, and should include the traditional importer of record as
listed on the CBP Form 7501. In the alternative, the definition of
``importer'' should be the ``principal party of interest'' as that term
is used for the Shipper's Export Declaration or parties as defined for
Incoterms.
CBP Response
Based on CBP's experience in the movement of goods in international
trade, there is one party that is ultimately interested in and
responsible for causing goods to arrive in the United States. CBP has
determined that the party most likely to have direct knowledge of the
required information, and therefore, the party considered to be the ISF
Importer, is the party causing the goods to enter the limits of a port
in the United States. CBP also has determined that such party must be
the owner, purchaser, consignee or their agent (such as a licensed
broker) who as a result of this rulemaking will now have an obligation
to ascertain and report the data elements that CBP is requiring under
this rule to enhance its ability to target high risk cargo destined for
the United States. However, in recognition that there may be
circumstances where the ISF Importer may not reasonably be able to
verify the information, these regulations allow this party to submit
the information on the basis of what it reasonably believes to be true.
For FROB cargo, the ISF Importer is construed as the carrier. For IE
and T&E in-bond shipments, and goods to be delivered to an FTZ, the ISF
Importer is construed as the party filing the IE, T&E, or FTZ
documentation. For other types of shipments, this party will usually be
the importer of record. However, the party causing the goods to enter
the limits of a port in the United States may be different parties to a
transaction depending on the terms of the transaction and the parties
involved, and this party may be a party other than the importer of
record (e.g., for ``to order'' shipments). Therefore, requiring the
importer of record to submit the Importer Security Filing in all
instances would be inappropriate.
Comment
An international carrier may not have house bill of lading level
information for Importer Security Filings for FROB shipments because
NVOCCs may not provide the information to the vessel operating
carriers. Therefore, CBP should make the NVOCC responsible for Importer
Security Filings in these situations. In addition, NVOCCs do not
generate unique sub-house bills and, therefore, in order to comply with
the Importer Security Filing requirements, NVOCCs will need six months
to convert their systems. If the sub-house bill of lading number is
required for the Importer Security Filing, this should also be required
for AMS.
CBP Response
CBP disagrees that NVOCCs should be required to submit Importer
Security Filings. The obligation for the Importer Security Filing for
FROB remains with the vessel operating carrier because this is the
party choosing to transport the cargo to the United States. CBP
understands the house bill of lading level information may belong to
the NVOCCs. Therefore, CBP clarifies that the NVOCC can submit the
Importer Security Filing directly to CBP, if it does so as the vessel
operating carrier's agent. CBP is requiring an Importer Security Filing
at the lowest level to the house bill of lading level, if applicable.
CBP is not requiring Importer Security Filings for sub-house bills.
Comment
For FTZ goods, CBP should require the ``applicant on the FTZ
documentation filed with CBP'' to file the Importer Security Filing
rather than the ``party filing the FTZ documentation with CBP.'' For IE
and T&E shipments, commenters questioned whether the party required to
submit the Importer Security Filing is the party named on the CBP Form
7512 or the party that submits the CBP Form 7512. Who is responsible
for filing the Importer Security Filing for personal/household goods
and military/government shipments? Who is the responsible party for
delivered duty paid (DDP) shipments where the Importer Security Filing
``importer'' can be the overseas shipper? Commenters asked how NVOCCs
will comply with the Importer Security Filing requirements.
CBP Response
For IE and T&E in-bond shipments and goods to be delivered to an
FTZ, the ISF Importer is the party filing the documentation with CBP
and not merely a party delivering the form to CBP. For shipments,
including personal/household goods, military/government shipments, and
DDP shipments that are intended to be entered into the United States,
the ISF Importer would be the owner, purchaser, consignee, or agent
such as a licensed customs broker, as the party causing the goods to
enter the limits of the United States. If an NVOCC is the party
required to submit an Importer Security Filing on its own behalf, or as
an agent for another party, the NVOCC will need to submit the Importer
Security Filing pursuant to these regulations.
Comment
CBP should expand the manifest filing to include elements such as
the container stuffing location and consolidator (stuffer) rather than
require a separate Importer Security Filing submission. CBP should
require entry, with additional elements, be made prior to lading in
lieu of requiring a separate Importer Security Filing.
CBP Response
CBP disagrees that the advance cargo declaration filing should be
expanded. The data elements for the advance cargo declaration and the
Importer Security Filing are required pursuant to two distinct
statutory obligations, each with its own enforcement mechanism. With
regard to the container stuffing location and consolidator (stuffer),
CBP believes that the ``importer,'' as the party that ultimately has an
interest in the goods and the responsibility for causing the goods to
be placed on a vessel for delivery to the United States, has the most
control over the underlying transaction so the importer can require
this information be received by it more than 24 hours prior to lading
as part of terms and conditions of purchase
[[Page 71745]]
contracts. However, in response to requests from the trade, CBP will
allow carriers to submit an Importer Security Filing for IE, T&E, or
FROB cargo and the advance cargo declaration via the same electronic
transmission. CBP also disagrees that entry should be required, with
additional elements, prior to lading. CBP is not requiring that entry
be made 24 hours prior to lading. There are only four data elements on
the current entry (CBP Form 3461) and entry summary (CBP Form 7512)
that are among the 10 additional data elements CBP deems necessary for
high risk targeting enhancement under this rule. However, in response
to requests from the trade, CBP will allow an importer to submit the
entry or entry/entry summary data via the same electronic transmission
as the Importer Security Filing. If an importer chooses to do so,
transmission must be made by the party entitled to make entry pursuant
to 19 U.S.C. 1484 on its own behalf or a licensed customs broker.
Comment
In the NPRM, CBP stated that ``one party must aggregate and submit
all required elements.'' Does one party need to aggregate and submit
all elements per bill of lading, for each origin port, or for each
importer at all origin ports? CBP should aggregate portions of a single
Importer Security Filing, linked by the bill of lading, from multiple
parties (similar to the Automated Export System (AES)).
CBP Response
One party must aggregate and submit all required elements for each
individual Importer Security Filing. CBP will not aggregate portions of
a single Importer Security Filing because it would be overly burdensome
and costly for CBP to administer such a system. However, in response to
requests from the trade, CBP will allow ISF Importers to designate an
agent to submit the filing on behalf of the importer. While CBP
understands that some business practices may need to be altered (e.g.,
amendment of shipping documents) to obtain the required information at
an earlier point, CBP does not anticipate that these changes will be
unduly burdensome, especially given the one-year delayed compliance
period and other flexibilities that CBP is providing. See the
``Structured Review and Flexible Enforcement Period'' section of this
document for further discussion regarding the delayed compliance period
and flexibilities. CBP's ATDI testing has demonstrated that, in many
cases, importers were able to collect this information from
manufacturers, suppliers, and shippers at an earlier point by requiring
the container stuffing location and consolidator name and address be
provided as part of the regular commercial documentation.
C. Public Comments; Agents
Comment
Commenters stated that CBP should only allow U.S.-based entities or
Customs-Trade Partnership Against Terrorism (C-TPAT) members to act as
an agent for Importer Security Filing purposes. CBP should require
authorized agents, including foreign parties, to meet the standards
required of customs brokers when filing the Importer Security Filing,
including standards relating to security. Commenters also stated that
importers should be able to designate filers with CBP and Importer
Security Filings submitted by undesignated parties should be rejected.
Commenters asked what the liability would be for a party who
misrepresents that they are sending data on behalf of an importer.
CBP Response
CBP will not create functionality whereby an ISF Importer can
authorize alternate parties with CBP to file on their behalf. Nor will
CBP create functionality to document unauthorized parties. CBP does not
do this in its systems for other purposes and believes that it is best
for private parties to manage these types of business relationships to
allow for maximum flexibility. In order to provide this functionality,
CBP would need to create and maintain a system cross-referencing
millions of relationships between importers and their agents. This type
of functionality would be extremely costly to set up and maintain and
the potential advantages of such a system do not outweigh these costs.
In response to requests from the trade, an ISF Importer may, as a
business decision, designate an agent to file the Importer Security
Filing on the ISF Importer's behalf. CBP is not requiring the use of an
agent and the ISF Importer is ultimately responsible for the timely,
accurate, and complete submission of the Importer Security Filing. In
order to act as an agent for purposes of filing the Importer Security
Filing, a party must obtain access to ABI or AMS. CBP disagrees that
agents should be limited to U.S.-based entities or C-TPAT members.
Doing so would greatly limit the flexibility of ISF Importers in
selecting agents for Importer Security Filing purposes. The accuracy
and timeliness of Importer Security Filings is secured by a bond. An
agent can file the Importer Security Filing under the ISF Importer's
bond or, if the ISF Importer does not possess a required bond, the ISF
Importer may choose to designate a bonded agent to file the Importer
Security Filing under the agent's bond if the agent agrees to do so in
writing.
Comment
CBP should require the Importer Security Filing filer, when the
filer is an agent, to furnish the importer with a copy of the Importer
Security Filing submitted on the importer's behalf.
CBP Response
CBP disagrees. CBP believes that this is a matter between private
parties and, therefore, is not requiring the Importer Security Filing
to be shared among private parties.
Comment
Commenters asked whether an importer will be held liable if an
agent experiences problems with its systems resulting in a late,
incomplete, or inaccurate Importer Security Filing. Commenters also
stated that agents should not be liable for any lack of compliance with
vessel stow plans, container status messages, or Importer Security
Filings that are submitted on behalf of another party.
CBP Response
The ISF Importer is ultimately responsible for the timely,
accurate, and complete submission of the Importer Security Filing,
regardless of the cause for a late, inaccurate, or incomplete filing.
After analyzing the results of tests performed through ATDI and in
response to requests from the trade, CBP will allow ISF Importers and
carriers to use agents to submit Importer Security Filings, vessel stow
plans, and container status messages. However, the ISF Importer is
ultimately liable for the timely, accurate, and complete submission of
the Importer Security Filing and the carrier is ultimately responsible
for the timely, accurate, and complete submission of the vessel stow
plan and container status messages.
Comment
Because AMS users must be licensed by the Federal Maritime
Commission, this will severely limit the choices for filers, driving
self filers and brokers to utilize the Automated Broker Interface.
CBP Response
CBP disagrees that AMS users must be licensed by the Federal
Maritime Commission. Any party will be able to
[[Page 71746]]
obtain access to ABI or AMS, with CBP approval, for purposes of filing
an Importer Security Filing.
Comment
CBP has proposed to require a power of attorney to file an Importer
Security Filing on another's behalf, but did not specify a particular
form, the required language, the length of time, or the manner in which
powers of attorney must be stored. Under what authority will CBP
require production of power of attorney records? Is there a penalty for
not having a power of attorney on file? Will CBP allow an exemption to
the power of attorney requirement for goods consigned to the military,
the government, or for household/personal goods?
CBP Response
CBP is not requiring a particular form for a power of attorney for
Importer Security Filing purposes. However, 19 CFR 141.32 contains an
example of an acceptable general power of attorney with unlimited
authority. CBP has revised the regulations under this interim final
rule to require that powers of attorney must be in English. Pursuant to
19 U.S.C. 1508(a), CBP has also clarified in the regulations that
powers of attorney must be retained until revoked, and revoked powers
of attorney and letters of revocation must be retained for five years
after the date of revocation. Finally, CBP will not allow an exemption
to the power of attorney requirement for goods consigned to the
military, the government, or for personal/household goods. An exemption
is not merited as there is no less of a security risk associated with
these shipments. CBP still requires the certainty that powers of
attorney provide when parties are interacting with CBP.
D. Public Comments; Customs Business
Comment
Commenters stated that the Importer Security Filing, including
providing the HTSUS number (even at the six-digit level), importer of
record number, and consignee number, is ``customs business.''
Therefore, the Importer Security Filing should be restricted to
licensed Customs brokers. Other commenters stated that classification
at the 10-digit level is ``customs business'' and, therefore, when the
Importer Security Filing and entry are filed via the same electronic
transmission (unified filing), this submission constitutes ``customs
business.'' Non-brokers should be limited to the filing of the Importer
Security Filing alone.
CBP Response
``Customs business'' does not involve the mere electronic
transmission of data received for transmission to CBP, but does involve
classification for entry purposes. See 19 CFR 111.1. The six-digit
HTSUS number is intended exclusively for ensuring cargo safety and
security, and not for determining merchandise entry procedures that
fall within the scope of customs business. However, a 10-digit HTSUS
number is needed and is used for merchandise entry purposes and,
therefore, classification at the 10-digit level is considered customs
business. CBP disagrees that providing the importer of record number
and consignee number falls within the definition of customs business in
19 CFR 111.1. Pursuant to this interim final rule, if the Importer
Security Filing and entry or entry summary are provided via a single
electronic transmission to CBP, the party making the transmission must
be an importer acting on its own behalf or a licensed customs broker.
E. Public Comments; Bills of Lading
Comment
Commenters asked CBP to clarify whether the bill of lading number
(house and/or master) is a required data field, and whether the house
or master bill number is required. If the bill of lading number is
required, CBP should only require the house bill of lading number and
it should be added as an additional required data element for the
Importer Security Filing. Other commenters stated that carriers may not
generate bill of lading numbers early enough for an importer to submit
this information for Importer Security Filing purposes. Therefore, CBP
should require the bill of lading number prior to arrival in the United
States rather than 24 hours prior to lading. In the alternative, CBP
should require carriers to make the bill of lading number available no
later than 48 hours prior to lading the vessel or CBP should allow the
use of booking number in lieu of the bill of lading number. In any
event, the importer should not be penalized for a late Importer
Security Filing when a carrier fails to provide the bill of lading
number early enough. Commenters asked whether multiple Importer
Security Filings will be required when one bill of lading covers
multiple shipments. Commenters also stated that CBP should allow an
importer to file one Importer Security Filing for all bills of lading
in a shipment where the manufacturer, country of origin, and HTSUS
numbers are the same. Lastly, commenters asked how the Importer
Security Filing will be handled if the goods are divided and sold in
transit to at least two separate parties, resulting in two new bills of
lading.
CBP Response
A bill of lading number is integral to the Importer Security Filing
and therefore, must be provided with the Importer Security Filing. The
bill of lading number is not a data field, but an identifier which will
be provided in the header information. However, after further
consideration, CBP is requiring only the number for the bill of lading
at the lowest level (i.e., the regular straight/simple bill of lading
or house bill of lading) and not the master bill of lading number.
Under existing 24 Hour Rule requirements, the bill of lading number is
required for containerized cargo 24 hours prior to lading. For bulk
cargo and exempted break bulk cargo, the carrier must submit the bill
of lading number 24 hours prior to arrival. Under this interim final
rule, for containerized cargo, the Importer Security Filing is also
required 24 hours prior to lading. For break bulk cargo that is
exempted for 24 Hour Rule purposes, the Importer Security Filing is
required 24 hours prior to arrival. For bulk cargo, an Importer
Security Filing is not required. Accordingly, the bill of lading number
will be available for Importer Security Filing purposes, and has always
been a part of the transaction identification. CBP understands that
business processes may need to be changed to ensure that the importer,
as defined for these regulations, has the bill of lading number in a
timely fashion. Regarding bills of lading covering multiple shipments,
CBP has the capability to accept multiple Importer Security Filings per
bill of lading. CBP will issue a unique identification number for each
separate, not unified, Importer Security Filing as part of the
acceptance/rejection acknowledgment response. Modification of a
particular Importer Security Filing will be possible using the unique
identification number. Under this interim final rule, one Importer
Security Filing can satisfy multiple bills of lading. However, the
manufacturer (or supplier), country of origin, and commodity HTSUS
number elements must be linked to one another at the line item level.
Lastly, when a shipment is divided into a new or multiple new
shipments, each with its own house bill of lading number, the original
Importer Security Filing will need to be amended. In addition, a new
Importer Security Filing will be required for each new bill of lading
number.
[[Page 71747]]
F. Public Comments; Required Elements
1. Manufacturer (or Supplier)
Comment
Commenters stated that, in some cases, there may be no manufacturer
or the manufacturer may not be known. This may be the case for personal
effects entered on a CBP Form 3299, for antiques, or when the importer
purchases goods from a party who is not willing to provide the identity
of their supplier due to business confidentiality concerns. Commenters
also stated that the MID should be accepted for the manufacturer (or
supplier). If the MID is not accepted, CBP should set up a registration
system like the U.S. Food and Drug Administration (FDA) did for
bioterrorism purposes. Commenters asked which law, rule, or regulation
CBP was referring to in the NPRM which states that the name and address
of the manufacturer (or supplier) that is currently required by the
import laws, rules, and regulations of the United States may be
provided. Commenters stated that the supplier of the goods may not be
located in the ``country from which the goods are leaving'' and,
therefore, this element should be changed accordingly. Commenters
stated that the manufacturer (or supplier) requirements are
inconsistent with merchandise produced under Outward Processing
Arrangements (OPAs), for which importers must construct the MID based
on the origin conferring manufacturer. Commenters asked which address
should be used when a manufacturer has more than one address, including
a corporate address.
CBP Response
CBP recognizes that, in some cases, the manufacturer's identity may
be unavailable to the party responsible for filing the Importer
Security Filing. Accordingly, CBP is requiring the identity of the
manufacturer or the supplier of the finished goods if the actual
manufacturer is unknown. CBP disagrees that the MID should be accepted
for the manufacturer (or supplier). In general, the MID does not
include the complete address of the manufacturer. CBP believes that the
complete manufacturer's (or supplier's) name and address is a critical
piece of information to effectively target high risk cargo. Since the
current MID has limited targeting utility, CBP will not accept the
current MID as an alternative to the complete name and address of the
manufacturer. However, CBP will allow the trade to provide widely
recognized commercially accepted identification numbers such as Dun and
Bradstreet Data Universal Numbering System (DUNS) numbers as an
alternative. When referring to previously existing laws and
regulations, CBP is referring to title 19 of the United States Code
Annotated and title 19 of the Code of Federal Regulations. CBP agrees
that the supplier may not be located in the same country where the
goods are leaving. In this interim final rule, CBP clarifies that this
is the party supplying the finished goods in the country from which the
goods are leaving. In many instances, this party will be located in the
country from which the goods are leaving. In instances where the MID
for the origin conferring manufacturer is currently supplied for entry
purposes, the identity for this party should be provided in the
Importer Security Filing. When a manufacturer has more than one
address, CBP would like the address where the goods were actually
manufactured. CBP understands that, in certain cases, this address may
not be known to the ISF Importer and, therefore, will accept the
corporate address for the manufacturer or supplier.
2. Buyer
Comment
The buyer's identity may not be available at the time of shipment
and, when available, may not be applicable to each individual carton in
a shipment. This data element, as well as the ship to party, should not
be required prior to shipment, but at the time of the filing of the
entry. What party's identity should be provided for multi-tier
transactions, ``sold in shipments,'' and shipments involving a buying
agent? What if merchandise is sold in transit?
CBP Response
The Importer Security Filing elements must be reported at the
lowest bill of lading level. At this level, the buyer's identity should
be applicable to the entire shipment. If the buyer's name and address
is not available at the time of shipment, the identity of the owner,
consignee, or the buyer's agent should be provided instead on the
Importer Security Filing. For ``buying agent'' transactions, the buying
agent should be provided for the buyer element and the party who sold
the goods to the buying agent should be provided for the seller
element. If, after the filing is submitted and before the goods enter
the limits of a port in the United States, any of the information
submitted in an Importer Security Filing changes or more accurate
information becomes available, including changes to the buyer's
identity, the ISF Importer must update the filing.
3. Ship to Party
Comment
Commenters stated that the ship to party should not be required
because this party will be the importer of record. In addition, the
physical location where the container will arrive does not pose a
security risk as much as who is the party that caused the importation
to the United States. If the ship to party is required, CBP should
accept the identity of the importer or consignee as indicated on the
bill of lading when the ship to party is unknown when the Importer
Security Filing is submitted. Commenters also stated that the ship to
party should be kept confidential because it could be used by
competitors. Commenters also asked whether the ``ship to name'' needs
to be the name of a legal business entity. Can the importer transmit
the name of its distribution center, even though the distribution
center is not a separate legal entity in its own right? Will CBP accept
Facilities Information and Resources Management System (FIRMS) codes in
lieu of the name and address for the ship to party? Lastly, commenters
asked which address should be used when a ship to party has more than
one address, including a corporate address. Does a container freight
station constitute the first ship to party?
CBP Response
CBP has determined, as the result of internal and external
analysis, including analysis of ATDI testing, that the ship to party's
identity and address will allow CBP to more effectively assess the risk
of cargo destined for the United States. In some instances, the ship to
party may also be the importer of record or consignee. However, this is
not always the case. In addition, the importer of record's and
consignee's corporate offices usually differ from the actual delivery
address which is required for this element. Therefore, both parties'
identities are necessary for effective risk assessment. If the party
scheduled to physically receive the goods after the goods will be
released from CBP custody is unknown 24 hours prior to lading (e.g.,
``to order'' shipments), the filer must provide the identity of the
facility where the goods will be unladen. The filer must update this
element if, after the filing is submitted and before the goods enter
the limits of a port in the United States, the party scheduled to
physically receive the goods becomes known. All elements of the
Importer Security Filing, including
[[Page 71748]]
the ship to party information, will be kept confidential as per the
statutory requirements within the SAFE Port Act of 2006 and section
343(a) of the Trade Act of 2002. The ISF Importer must identify the
ship to party, regardless of whether that party is a separate legal
entity. However, CBP will accept a widely recognized commercially
accepted identification number such as the DUNS number or FIRMS code,
when applicable, for the ship to party. The first deliver-to party
scheduled to physically receive the goods after the goods have been
released from customs custody must be provided. A container freight
station can be the ship to party if it meets the parameters of the
definition in this rule that it is the first place of delivery after
the goods have been released from customs custody.
4. Container Stuffing Location
Comment
Commenters stated that importers do not know the container stuffing
location, except in the case of repetitive movements. Commenters also
stated that providing the container stuffing location would be
redundant in cases where shipments are stuffed by the manufacturer.
Commenters asked which location should be reported when multiple
containers are included on one bill of lading, and thus one Importer
Security Filing contains multiple containers stuffed in multiple
locations. Also, in some cases, there may be multiple stuffing
locations, such as for ``Less than Container Load'' (LCL) shipments.
Commenters also stated that CBP should accept the ``scheduled''
stuffing location in lieu of the actual stuffing location because the
actual location cannot be confirmed until stuffing is completed,
particularly in cases involving the use of a container freight station.
The container stuffing location may change at the last minute for
legitimate reasons. Lastly, commenters asked CBP to define ``ship
ready'' with regard to container stuffing location and consolidator
(stuffer) for break bulk cargo.
CBP Response
If an ISF Importer does not know an element, including container
stuffing location, this party must take steps necessary to obtain the
information. Where the ISF Importer receives any of the required
information, including container stuffing location, from another party,
CBP will take into consideration how, in accordance with ordinary
commercial practices, that party acquired the information, and whether
and how the importer is able to verify the information. If the
container is sealed at the manufacturer or factory facility, as is the
case for a factory load, this location should be provided for the
container stuffing location. CBP is aware that the same entity may be
provided for more than one element. In cases where the consolidator has
subcontracted out, or arranged a third party to do the actual stuffing,
the name and address of the party at whose location the container was
stuffed should be provided. When a container is stuffed at more than
one location and/or more than one container is on a single bill of
lading, all of the stuffing locations for the goods listed on the bill
of lading must be provided. However, an ISF Importer is not required to
submit container numbers and, when container numbers are reported, an
ISF Importer is not required to report which container was stuffed at
which location. CBP agrees that the ``scheduled'' stuffing location
should be accepted. The ISF Importer is required to report the
container stuffing location 24 hours prior to lading based on the ISF
Importer's knowledge at that time. However, the ISF Importer must
update the filing if, after the filing is submitted and before the
goods enter the limits of a port in the United States, any of the
information submitted changes or more accurate information, including
container stuffing location, becomes available. Regarding break bulk
cargo, break bulk cargo is made ``ship ready'' when the cargo is
palletized, lashed, wrapped, or otherwise prepared to be laden on a
vessel.
5. Consolidator (Stuffer)
Comment
The consolidator (stuffer) element should only be required when a
container is stuffed by a consolidator because the container stuffing
location already spells out the location where the physical container
will be stuffed.
CBP Response
CBP disagrees with the comment that the consolidator (stuffer)
element should be conditional. CBP is aware that the same entity may be
provided for more than one element. If an element is not provided, CBP
would have no way of knowing whether the element is not provided
because the same information is provided for another element or because
the ISF Importer merely failed to provide the information. In addition,
when the same information is provided for more than one element, the
additional burden on the trade should be minimal.
Comment
The ``last known'' consolidator should be required for the
consolidator (stuffer) element.
CBP Response
Even if there are multiple stuffing locations, there should only be
one party per bill of lading who stuffed the container or arranged for
the stuffing of the container.
6. Importer of Record Number/FTZ Applicant Identification Number
Comment
The importer of record number is not always known. For example,
what number should be provided for household goods and personal effects
where a foreign party without one of the required unique identification
numbers is importing their own goods?
CBP Response
The ISF Importer must submit the IRS number, EIN, SSN, or CBP
assigned number of the entity liable for payment of all duties and
responsible for meeting all statutory and regulatory requirements
incurred as a result of importation. For goods intended to be delivered
to an FTZ, the IRS number, EIN, SSN, or CBP assigned number of the
party filing the FTZ documentation with CBP must be provided. If this
party does not have an IRS number, EIN, SSN, or CBP assigned number
when the Importer Security Filing is submitted, this party must obtain
one. For household goods and personal effects where a foreign party
without one of the required unique identification numbers is importing
their own goods, the ISF Importer may provide the importer of record's
passport number, country of issuance, and date of birth.
Comment
The importer of record number should not be required prior to
shipment, but at the time of the filing of the entry.
CBP Response
CBP disagrees. In order for CBP to effectively target cargo before
it is loaded, the Importer Security Filing, including the importer of
record number or FTZ applicant identification number, must be received
by CBP 24 hours prior to lading (any time prior to lading for FROB).
CBP notes that section 203 of the SAFE Port Act requires that this
information be provided prior to lading of cargo at foreign seaports.
Comment
The importer of record may not always be the party responsible for
[[Page 71749]]
filing the Importer Security Filing and, therefore, CBP should clarify
that penalties and other liabilities will be applicable to the party
required to file the Importer Security Filing pursuant to proposed 19
CFR 149.1.
CBP Response
CBP recognizes that the importer of record may not always be the
party responsible for filing the Importer Security Filing. The ISF
Importer is required to post their bond to secure the timely, accurate,
and complete Importer Security Filing. When necessary, CBP will issue
penalties and claims for liquidated damages against that party.
7. Consignee Number(s)
Comment
The consignee number(s) may not be known prior to shipment from
overseas. What should be submitted for the consignee number(s) when a
shipment cannot be consigned to the importer at the time of filing? For
example, some shipments are consigned to a factory or a vendor's
negotiating bank. What number should be provided for household goods
and personal effects where a foreign party without one of the required
unique identification numbers is importing their own goods?
CBP Response
CBP understands that business practices may need to change in order
for the ISF Importer to determine who the consignee in the United
States is for a shipment 24 hours prior to lading. For example, for
shipments that are consigned to the importer, a factory, or vendor's
negotiating bank, where those parties will not be the actual consignee
if the goods are not consigned before arrival in the United States, the
ISF Importer may need to designate a warehouse in the United States to
receive the goods and, therefore, to be listed as the consignee. For
household goods and personal effects where a foreign party without one
of the required unique identification numbers is importing their own
goods, the ISF Importer may provide the importer of record's passport
number, country of issuance, and date of birth.
Comment
Can the unique identification number for a nominal consignee be
provided for the consignee number element?
CBP Response
Yes, the unique identification number for a nominal consignee may
be provided for the consignee number(s) element.
Comment
CBP should accept the name and address of the consignee in lieu of
the consignee number because of the sensitive nature of the consignee
number.
CBP Response
CBP disagrees. Based on external and internal analysis, CBP has
determined that the consignee number will provide more visibility into
the parties involved in a transaction than the name and address.
Comment
CBP should allow the use of the ACE ID or other universal
participating government agency (PGA) identifiers.
CBP Response
CBP disagrees because these identifiers do not currently exist in
the CBP systems. CBP will continue to explore the potential use of the
ACE ID and PGA identifiers in the future and as ACE is developed.
Comment
The consignee number(s) element should be consistent with the party
submitted to CBP on the CBP Form 3461 pursuant to 19 CFR 142.3(a)(6).
CBP Response
The party required for the consignee number(s) element is the same
party provided on the CBP Form 3461.
8. Country of Origin
Comment
The importer may not have direct knowledge of the country of
origin.
CBP Response
Where the ISF Importer receives any of the information from another
party, CBP will take into consideration how, in accordance with
ordinary commercial practices, the ISF Importer acquired such
information, and whether and how that party is able to verify this
information. Where that party is not reasonably able to verify such
information, CBP will permit the party to electronically present the
information on the basis of what the party reasonably believes to be
true.
9. Commodity HTSUS Number
Comment
The precise manifest description should be accepted in lieu of the
HTSUS number. The ISF Importer may lack the expertise to classify
merchandise and/or the ISF Importer may not know the HTSUS number prior
to lading. If CBP does require the HTSUS number, the HTSUS number
should be limited to the four-digit level because the four-digit number
provides sufficient information to properly assess risk factors.
CBP Response
CBP disagrees. Based on external and internal analysis, CBP has
determined that the six-digit HTSUS number will provide more visibility
into cargo imported into the United States than the four-digit HTSUS
number or a textual description because the six-digit number provides a
more specific classification of the cargo. Furthermore, the tariff
schedule is harmonized internationally to the six-digit level. If an
ISF Importer does not know an element that is required pursuant to the
regulations, including the HTSUS number at the six-digit level, the ISF
Importer must take steps necessary to obtain the information. CBP
recognizes that, for most importers, this information is known well
before the placement of the order for their goods because of the need
to determine duty cost and admissibility status prior to finalizing the
purchase contract or shipment contract.
Comment
CBP should allow the submission of the 10-digit HTSUS code
regardless of whether the Importer Security Filing is combined with the
entry. The HTSUS number is subject to change (e.g., based on the quota
fill status at the date of entry).
CBP Response
CBP agrees. While CBP is not requiring the HTSUS number at the 10-
digit level unless the Importer Security Filing is submitted via the
same electronic transmission as entry or entry/entry summary, CBP will
accept the HTSUS number at the 10-digit level if the Importer Security
Filing is submitted in a separate transmission. The ISF Importer must
update the filing if, after the filing is submitted and before the
goods enter the limits of a port in the United States, any of the
information submitted changes or more accurate information, including
HTSUS number, becomes available.
Comment
Will CBP compare the HTSUS data submitted in the Importer Security
Filing with the HTSUS data used at entry?
CBP Response
Yes. CBP will use the information available, including entry data,
to
[[Page 71750]]
analyze and assess risk and to validate Importer Security Filing data.
Comment
The HTSUS and country of origin do not have any security value to
CBP. In addition, this information is already required under the 24
Hour Rule.
CBP Response
CBP is requiring this information pursuant to Section 203 of the
SAFE Port Act, which requires the electronic transmission prior to
lading of additional data elements, including appropriate security
elements of entry data, as determined by the Secretary of Homeland
Security. Based on external and internal analysis, CBP has determined
that the HTSUS and country of origin will allow CBP to more accurately
assess risk. CBP is aware that some information is also provided at
other times and by other parties, such as for entry purposes on CBP
Forms 3461 and 7501. However, this information is often submitted after
the cargo departs on a vessel destined for the United States and, in
many cases, after the cargo arrives in the United States. By collecting
this information at an earlier point, CBP will be able to more
effectively target cargo prior to it being laden on a vessel at a
foreign port and prior to its arrival in the United States. In
addition, CBP is collecting supply chain information from more than one
party in order to more effectively validate the information.
Comment
Can an importer provide a single HTSUS number for multiple parts
when the number is the same at the six-digit level (i.e., as reported
on the CBP Form 7501)?
CBP Response
The HTSUS number is required to be provided to the six-digit level
and, therefore, a single HTSUS number may be provided for multiple
parts when the numbers are the same at the six-digit level.
Comment
Carriers are unable to provide the HTSUS number because they do not
see the invoice details. The six-digit HTSUS number should be an
optional element when a carrier submits an Importer Security Filing for
FROB, IE, and T&E cargo as it is for manifest filings for U.S. import
cargo. The precise cargo description should be accepted in lieu of the
HTSUS number.
CBP Response
CBP disagrees. The six-digit HTSUS number is sometimes provided by
members of the trade community on T&E and IE in-bond movements. CBP
understands that, in some cases, business practices may have to be
altered to obtain the required information in a timely fashion (e.g.,
requiring the information on commercial documents).
10. Booking Party
Comment
The definition of the booking party does not meet commercial
practices because the carrier may not know the party ``paying for the
transportation of the goods'' at the time of filing and there may be
more than one party that is paying for the transportation. CBP should
amend the definition of this element to be ``the party who initiates
the reservation of the cargo space for the shipment.'' In addition, the
booking party should only be required when it is available to the
carrier.
CBP Response
In response to comments and in an effort to align this element with
commercial practices, CBP has changed the definition for booking party
to be ``the party who initiates the reservation of the cargo space for
the shipment.''
11. Foreign Port of Unlading
Comment
CBP should accept Bureau of Census Schedule K port codes for the
foreign port of unlading element. When designating a source for port
codes, CBP should consider that the foreign port of unlading could be
an air or land port for cargo that is transferred to another mode.
CBP Response
CBP agrees. CBP will accept Bureau of Census Schedule K port codes
for the foreign port of unlading element.
12. Place of Delivery
Comment
Is the ``place of delivery'' the place of delivery under the terms
of the carrier's contract of carriage? CBP should accept port codes in
lieu of city codes for this element.
CBP Response
The place of delivery is the foreign location where the carrier's
responsibility for the transport of the goods terminates. CBP will
allow the use of UN Locodes or Schedule K codes, when applicable, for
this element.
G. Public Comments; Technical Issues
Comment
CBP should include the actual data fields that will need to be
submitted in the interim final rule. CBP should establish a guide for
developers that will include sample record sets for different business
scenarios. A test system and a technical FAQ should be made available
to developers.
CBP Response
CBP has amended the guides for developers, including the CATAIR,
CAMIR, and X.12 transaction messages, providing the technical
requirements necessary for submitting Importer Security Filings. These
documents include the actual data fields, and have been posted to the
``Automated Systems'' section of the CBP Web site. An electronic FAQ
will also be posted to the CBP Web site. In addition, the ability to
submit data to a test system and receive responses will be provided.
Comments
CBP should work with the trade to identify the mechanisms that are
needed for all parties to manage the Importer Security Filing.
Importers should receive a timely confirmation message, including a
unique identification number, indicating that the Importer Security
Filing has been received and accepted by CBP (or rejected listing
errors). Unique identifiers should also be created for amendments and
deletions.
CBP Response
CBP will send a response message to the Importer Security Filing
filer indicating whether an Importer Security Filing has been accepted
or rejected by CBP's systems. The response message will contain a
unique number generated by CBP. The ISF Importer may choose to share
this Importer Security Filing number with other parties. However, CBP
will not issue a new unique identifier when an Importer Security Filing
is amended or deleted.
Comment
How will a carrier validate that an Importer Security Filing has
been filed? Carriers should be notified through AMS. The filer should
also be able to identify additional parties to be notified of the
acknowledgement message.
CBP Response
AMS creates notifications of the status of the bill that go back to
the filer and any other parties nominated on the bill to receive such
notification. CBP will notify the filer of the bill of lading that
[[Page 71751]]
an Importer Security Filing has been received for the bill of lading
through this process.
Comment
How long will carrier submissions remain in the CBP data system
without being reconciled with Importer Security Filing submissions?
CBP Response
The carrier's advance cargo declaration is submitted pursuant to a
different regulatory requirement and is not dependent upon the
submission of Importer Security Filings.
Comment
How must the Importer Security Filings, vessel stow plans, and
container status messages be transmitted to CBP? The CAMIR should be
modified accordingly.
CBP Response
Importer Security Filings, stow plans, and container status
messages (CSMs) must be submitted via a CBP-approved electronic
interchange system. The current approved electronic interchange systems
for Importer Security Filings are the vessel AMS and ABI. CBP has re-
evaluated the electronic interchange systems that will best allow the
trade to submit vessel stow plans and container status messages and has
determined that stow plans must be submitted through vessel AMS, secure
file transfer protocol (sFTP), or email, and CSMs may be submitted
through sFTP. CBP will publish a notice in the Federal Register if
different or additional electronic data interchange systems are
approved in the future. CBP has amended the CATAIR, CAMIR, and X.12
transaction messages, providing the technical requirements necessary
for submitting Importer Security Filings. These documents have been
posted to the ``Automated Systems'' section of the CBP Web site.
Comment
The Importer Security Filing should be deemed to have taken place
upon submission, not CBP receipt.
CBP Response
CBP agrees. This provision of the regulatory text has been changed
accordingly. In the absence of specific evidence to the contrary,
however, the time of CBP's receipt of the Importer Security Filing will
be evidence of the time of submission by the filer. In response to
requests from the trade, CBP will transmit an acknowledgement to the
filer to confirm that CBP has received an Importer Security Filing. CBP
will publish FAQs regarding protocols for when an approved electronic
interchange system is experiencing technical difficulties (e.g., for
scheduled maintenance).
Comment
Importers may not possess the technology to transmit these data
directly to CBP.
CBP Response
If an ISF Importer does not possess the technology to transmit the
Importer Security Filing data to CBP, the importer can either obtain
the necessary technology or use an agent to submit the Importer
Security Filing on the ISF Importer's behalf.
Comment
CBP should allow a filer to initially submit a ``shell record'' of
partial Importer Security Filing data that can be subsequently amended
by multiple parties.
CBP Response
CBP disagrees. A shell record would not serve any targeting or risk
assessment purposes. Records of this type that could subsequently be
amended by multiple parties would create numerous problems, including a
lack of finality (CBP would not know when the final Importer Security
Filing information has been submitted and/or amended), security and
privacy issues (who will determine which parties can amend which
information), and cost (such a system would be expensive to develop and
maintain). The ISF Importer is ultimately responsible for the timely,
accurate, and complete submission of the Importer Security Filing. In
response to requests from the trade, an ISF Importer can designate an
agent to submit the filing on behalf of the ISF Importer. While CBP
understands that some business practices may need to be altered to
obtain the required information at an earlier point, CBP does not
anticipate that these changes will be unduly burdensome.
Comment
Importers should be allowed a review period before the Importer
Security Filing must be filed if it is filed by an agent.
CBP Response
The Importer Security Filing must be filed no later than 24 hours
prior to lading (any time prior to lading for FROB). However, see the
``Structured Review and Flexible Enforcement Period'' section of this
document for flexibilities related to timing for certain Importer
Security Filing elements. If an ISF Importer chooses to use an agent,
the ISF Importer may choose to include a ``review period'' as part of
their contract with their agent.
Comment
CBP should transmit an electronic acknowledgement to the filer
after an Importer Security Filing is received. This acknowledgement
should include a unique number which can be used by other parties to
verify that an Importer Security Filing has been filed. The importer
should be able to designate multiple parties to receive the
acknowledgement. Parties should also be able to query previously
submitted Importer Security Filings.
CBP Response
CBP will transmit an electronic acknowledgement to the filer only
when CBP receives an Importer Security Filing. The acknowledgement will
include a unique identification number. This number cannot be used to
perform a query in ABI or AMS. However, the party who submits the
advance manifest information and any notify party on the bill of lading
in AMS will receive all status notifications posted to that bill,
including the notification that an Importer Security Filing was
accepted for the bill of lading.
Comment
What will the procedures be when the Importer Security Filing
system is down? Will CBP's systems be able to handle the exponential
increase in data that will result from this rule?
CBP Response
CBP has planned for the expected increase of data that will result
from this rule. However, CBP will publish FAQs regarding protocols for
when an approved electronic interchange system is experiencing
technical difficulties (e.g., for scheduled maintenance).
Comment
The technical detail of the construct of the Importer Security
Filing should be developed consistent with CATAIR and CAMIR standards.
CBP should immediately release, and accept additional comments on, the
data formats for the new requirements, including templates and
instructions relating to the following: data type for each element
(alphanumeric, numeric, etc.), length for each element, address
information format, element definitions, hierarchy of message, and what
validations for existing data will be performed for these filings.
[[Page 71752]]
CBP Response
CBP has amended the CATAIR, CAMIR, and X.12 transaction messages,
providing the technical requirements necessary for submitting Importer
Security Filings. These documents have been posted to the ``Automated
Systems'' section of the CBP Web site. CBP disagrees that any further
notice and comment is necessary for technical changes.
Comment
CBP should codify all elements that require a name and address and
assign a unique identification number to each entity, or CBP should
accept widely recognized commercially acceptable identification numbers
such as DUNS numbers in lieu of the name and address.
CBP Response
CBP disagrees that a unique identifier number should be assigned to
each party listed in the Importer Security Filing because, at this
time, CBP is not technologically prepared to create such a system and
such a system would be unduly burdensome and expensive. However, CBP
will continue to explore the potential development and use of the ACE
ID in the future as ACE is developed. In response to requests from the
trade, CBP has changed the proposal in this interim final rule so that
widely recognized commercially accepted identification numbers (such as
DUNS numbers) will be accepted in lieu of the name and address.
Comment
CBP should provide a source, such as United Nations Location Codes
(UN Locodes), for city codes that are required for the ``place of
delivery'' element. An ABI query would be helpful to maintain the list
as updates are made to add or delete items on the list.
CBP Response
CBP agrees and, where applicable, such as ``place of delivery,''
CBP has adopted the use of UN Locodes and Schedule K codes. However,
CBP will not provide a table of codes in ABI or AMS that the trade can
query because these are available from other sources.\9\
---------------------------------------------------------------------------
\9\ UN Locodes are available on the United Nations Web site at
http://www.unece.org/cefact/codesfortrade/codes_index.htm. Schedule
K codes are available on the U.S. Army Corps of Engineers Web site
at http://www.iwr.usace.army.mil/NDC/wcsc/scheduleK/schedulek.htm.
---------------------------------------------------------------------------
Comment
CBP should adopt standards for address information, such as the use
of Global Location Number (GLN) standards. Such standards should be
harmonized on a global basis.
CBP Response
In response to requests from the trade, CBP has changed the
regulations, as proposed, so that widely recognized commercially
accepted identification numbers (such as DUNS numbers) will be accepted
in lieu of the name and address. At this time, however, CBP will not
accept the GLN because it is unclear whether the GLN is a widely
recognized and commercially accepted number. However, CBP will continue
to work with the trade to evaluate existing identification numbers such
as the GLN to determine which of these are appropriate for Importer
Security Filing purposes. CBP will also continue to explore the
potential development and use of the ACE ID in the future as ACE is
developed. CBP will continue to update the trade regarding acceptable
numbers in the form of FAQs, postings on the CBP Web site, and other
outreach to the trade. The technical requirements necessary for
submitting Importer Security Filings, including guidance relating to
the submission of address information, has been added to the CATAIR,
CAMIR, and X.12 transaction messages. These documents have been posted
to the ``Automated Systems'' section of the CBP Web site.
H. Public Comments; Update and Withdrawal of Importer Security Filing
Comment
The requirement that the party who initially filed the Importer
Security Filing must update the filing does not take into consideration
the dynamic nature of international trade. For example, goods may be
sold in transit. In addition, the SAFE Port Act and the Trade Act of
2002 do not contemplate an ongoing duty to update information on a post
loading basis. Any authorized party should be able to update the
filing.
CBP Response
The ISF Importer, as the party who causes the goods to enter the
limits of a port in the United States, submits (or uses an agent to
submit) the Importer Security Filing, and posts their bond. Therefore,
it is ultimately responsible for updating the Importer Security Filing
if, after the filing is submitted and before the goods enter the limits
of a port in the United States, any of the information submitted
changes or more accurate information becomes available. However, that
party may use an agent to update the Importer Security Filing. If goods
are sold in transit, the original Importer Security Filing filer must
notify CBP that the goods have been sold, including the party to whom
the goods have been sold.
Comment
The final importer should be able to see and update the Importer
Security Filing.
CBP Response
CBP disagrees. Importers will not be able to access specific
Importer Security Filing elements in CBP systems. Such functionality
would be too costly and raises security concerns. If an ISF Importer
wants to access Importer Security Filings that are submitted on their
behalf by an agent, the ISF Importer should obtain the information from
their agent.
Comment
How will a filer designate an update so that it is applied to the
correct Importer Security Filing, particularly in the case where there
are multiple filings for a single bill of lading?
CBP Response
CBP will issue a CBP-generated unique identifier for each Importer
Security Filing it receives. That unique number can be used by the
Importer Security Filing filer to amend an Importer Security Filing.
Comment
What if cargo is diverted while in transit, due to shifting
inventory/distribution needs? Will an Importer Security Filing need to
be updated if a shipment is split after the initial Importer Security
Filing has been filed?
CBP Response
Pursuant to this interim final rule, the Importer Security Filing
must be updated if, after the filing and before the goods enter the
limits of a port in the United States, there are changes to the
information filed, including when cargo is diverted into a shipment for
which a different number of elements is required (5 elements to 10
elements or 10 elements to 5 elements). In addition, when a shipment is
split resulting in (a) new bill of lading number(s), a new Importer
Security Filing must be filed for each new bill of lading because each
Importer Security Filing is associated with a bill of lading.
Comment
Does an Importer Security Filing need to be updated if a shipment
is rolled to a different vessel?
[[Page 71753]]
CBP Response
If the bill of lading number remains the same, a new Importer
Security Filing is not required, nor is an amendment required. However,
if a new bill of lading is issued or the bill number changes, a new
Importer Security Filing must be filed.
Comment
If a party reported on an Importer Security Filing remains the
same, but the address for that party changes, is an amendment required?
CBP Response
The Importer Security Filing must be amended if any of the
information submitted, including the address of a party, changes or
more accurate information becomes available.
Comment
The NPRM states that an Importer Security Filing must be amended if
there is a change ``before the goods enter the limits of a port in the
United States.'' Does ``port'' refer to the first port of arrival or
the port of discharge or the port of destination on the ocean bill of
lading?
CBP Response
The Importer Security Filing must be amended if there is a change
before the goods enter the limits of a port in the United States. For
goods that will be unladen in the United States, the Importer Security
Filing must be updated if there is a change before the goods enter the
port of discharge.
Comment
When an Importer Security Filing is submitted in the same
electronic transmission as entry, will both need to be amended
independently?
CBP Response
When an Importer Security Filing is initially submitted in the same
electronic transmission as entry, both can be amended via the same
electronic transmission. CBP has amended the CATAIR, CAMIR, and X.12
transaction messages, providing the technical requirements necessary
for amending Importer Security Filings. These documents have been
posted to the ``Automated Systems'' section of the CBP Web site. CBP
will continue to conduct outreach with the trade, fulfilling its
regulatory and statutory obligations, both during the delayed
compliance period and thereafter, via FAQs, postings on the CBP Web
site, and other outreach.
Comment
CBP should accept the entry information submitted on CBP Forms
3461, 7501, and 214 as an update of the Importer Security Filing.
CBP Response
CBP disagrees. Entry information will not be accepted in lieu of an
Importer Security Filing update. Entry is governed by a different
statutory provision, 19 U.S.C. 1484, and serves a much different
function. It is a well settled area of law that has distinct
limitations as to who may make entry, and what constitutes the act of
making entry on another's behalf, with its own discrete regulations and
limitations. Furthermore, most of the Importer Security Filing elements
are not current entry data elements nor is the totality of what
constitutes an entry necessarily compatible with what constitutes an
Importer Security Filing.
I. Public Comments; In-Bond Shipments
Comment
For shipments consisting entirely of FROB and shipments intended to
be transported in-bond as an IE or a T&E, does the IE or T&E in-bond
need to be created before an Importer Security Filing is submitted?
CBP Response
No. Parties are not required to file an in-bond document prior to
submission of an Importer Security Filing.
Comment
The submission of an Importer Security Filing consisting of 10
elements should serve as the request for permission to convert a
shipment from an IE or T&E shipment into a shipment that will be
entered into the United States. If CBP declines to accept the full
Importer Security Filing as the request for permission, permission
should be required from the port director of the original port of entry
or the port of entry filing. How will CBP indicate that permission has
been granted?
CBP Response
The ISF Importer must submit the complete Importer Security Filing
to CBP consisting of 10 elements as soon as a decision is made to
change the disposition of the cargo. However, CBP disagrees that this
submission should serve as the request for permission to convert an IE
or T&E shipment into a shipment that will be entered into the United
States. Instead, the party wishing to divert the cargo, must present
the request to CBP in writing at the original port of unlading and CBP
will indicate permission on the documentation.
Comment
CBP should clarify the application of proposed 19 CFR 18.5, which
would require permission to ``divert'' in-bond shipments regarding IE
in-bond shipment since IE shipments are retained within the port of
unlading. Will affirmative permission be required for such changes and,
if so, what is the purpose of such permission and on what basis would
CBP refuse permission?
CBP Response
For in-bond shipments which, at the time of transmission of the
Importer Security Filing are intended to be entered as an IE or T&E
shipment, permission to divert the in-bond movement to a port other
than the listed port of destination or export or to change the in-bond
entry into a consumption entry must be obtained from the port director
of the port of origin. Since IE shipments cannot be diverted, an ISF
Importer will need permission to change an IE entry to a consumption
entry or other type of entry.
Comment
Will an importer who submitted an Importer Security Filing
consisting of 10 elements, because the importer intended to enter the
shipment into the United States or deliver the goods to an FTZ, need to
file an Importer Security Filing consisting of five elements if the
shipment is changed to an IE, T&E, or FROB?
CBP Response
If an Importer Security Filing consisting of 10 elements pursuant
to new 19 CFR 149.3(a) was initially submitted for a shipment and the
shipment is changed to an IE, T&E, or FROB, the Importer Security
Filing must be updated pursuant to new Sec. 149.2(d). This update must
be performed by submission of an Importer Security Filing consisting of
five elements as listed in section 149.3(b) because these elements are
necessary to better assess the security risk of IE, T&E, and FROB
shipments.
Comment
CBP should ensure the regulations and AMS permit filing of an in-
bond request and issuance of an immediate transportation (IT) number
prior to loading at the foreign port.
[[Page 71754]]
CBP Response
CBP disagrees. CBP is not changing the protocols for filing in-bond
requests and issuing IT numbers because an IT number is not a required
data element of the Importer Security Filing and, therefore, amending
the in-bond system is unnecessary.
Comment
How will an importer request permission to divert an IE or T&E
shipment to a port other than the listed port of destination or export?
CBP Response
Pursuant to existing regulations, IE shipments may not be
diverted.\10\ The shipper must submit a request to divert a T&E
shipment to a port other than the listed port of destination or export
to the port director of the port of origin either in writing or, when
the function is available, electronically.
---------------------------------------------------------------------------
\10\ See 19 CFR 18.25. See also Policy and Procedures Manual
Supplement 3285-02 (February 22, 1982), Customs Directive 3280-01
(November 25, 1983), and HQ Ruling 113946 (July 7, 1997).
---------------------------------------------------------------------------
Comment
The importer's (or, truck/rail carrier's) failure to obtain
permission should not subject an ocean carrier's bond to liability.
CBP Response
The ISF Importer must provide a bond (or use an agent's bond) when
the original Importer Security Filing is submitted. This party is
liable for the accuracy of that Importer Security Filing, including any
failure to obtain permission for diversion of the cargo as required by
Sec. 18.5, as amended by this interim final rule. The party requesting
permission must submit a new Importer Security Filing consisting of 10
elements and must provide a bond at that time. The party submitting the
new Importer Security Filing consisting of 10 elements will be liable
for the accuracy of that Importer Security Filing.
Comment
Will CBP create special provisions for IT shipments which will be
cleared at an inland destination? If not, brokers located at inland
ports will be placed at a disadvantage.
CBP Response
CBP will not create special provisions for IT shipments that are
cleared at an inland destination.
J. Public Comments; Importer Security Filing, Entry, and Application
for FTZ Admission
Comment
CBP should finish its targeting and pre-clear shipments prior to
the shipment's arrival in port when entry or an application for
admission to an FTZ are filed at an earlier point (i.e., when entry,
entry summary, or FTZ application documentation are submitted via a
single electronic transmission as the Importer Security Filing).
CBP Response
CBP disagrees. CBP is not amending, at this time, the procedures
generally governing entry release and FTZ admission of imported goods.
The laws governing entry release and FTZ admission are governed by
different statutory authorities and were enacted for a variety of
purposes, such as commercial enforcement and preventing fraud, that are
distinct from assessing security risk. However, CBP will carefully
consider the merits of completing targeting and pre-clearance at an
earlier point in the vessel mode in the near future.
Comment
The Importer Security Filing is duplicative because it is basically
collecting entry data at an earlier point in time.
CBP Response
Pursuant to section 203 of the SAFE Port Act, the Secretary of
Homeland Security, acting through the Commissioner of CBP, must
promulgate regulations to require the electronic transmission of
additional data elements for improved high-risk targeting, including
appropriate security elements of entry data. While CBP recognizes that
several of the data elements are repeated in both the Importer Security
Filing and the entry documents, each of these submissions has a
different purpose. Pursuant to section 343(a) of the Trade Act of 2002,
``the use of the additional information collected pursuant to these
regulations is to be only for ensuring cargo safety and security and
preventing smuggling and not for determining merchandise entry or for
any other commercial enforcement purposes.'' However, in response to
requests from the trade, CBP will allow an importer to submit the entry
or entry/entry summary data via the same electronic transmission as the
Importer Security Filing, in which case an importer is only required to
provide the four common elements (importer of record number, consignee
number, country of origin, and HTSUS number if provided at the 10-digit
level) one time to be used for Importer Security Filing, entry, or
entry/entry summary purposes. If an importer chooses to submit the
Importer Security Filing and entry or entry/entry summary via the same
electronic transmission, CBP may use these four elements for commercial
enforcement purposes.
Comment
It would be commercially unfeasible to accomplish both entry and
the Importer Security Filing via the same electronic transmission in
many instances since brokers may not submit entry from outside of the
United States.
CBP Response
In response to requests from the trade, CBP will allow an importer
to submit the entry or entry/entry summary data via the same electronic
transmission as the Importer Security Filing. CBP is not requiring this
unified filing. If an importer chooses to do so, the consolidated
submission of both the Importer Security Filing and entry must be filed
by the party entitled to make entry pursuant to 19 U.S.C. 1484 on its
own behalf or a licensed customs broker. All existing requirements
regarding entry must still be met. CBP is not amending, at this time,
the regulations generally governing entry of imported goods.
Comment
Will a modification to the Importer Security Filing affect the
entry summary and impact the examination of the merchandise?
CBP Response
Whether filed as an initial submission or as a modification in a
unified filing, the Importer Security Filing or the entry/entry summary
will be accepted or rejected individually as separate and distinct
filings. The Importer Security Filing information, including updates,
will be used exclusively for ensuring cargo safety and security and
preventing smuggling and will not be used for determining merchandise
entry or for any other commercial enforcement purposes.
Comment
The importer should be able to submit the CBP Form 7501 along with
the Importer Security Filing 24 hours prior to lading.
CBP Response
Pursuant to this interim final rule, the Importer Security Filing
must be submitted 24 hours prior to lading (any
[[Page 71755]]
time prior to lading for FROB). Entry summary can also be submitted 24
hours prior to lading, either individually or via the same electronic
transmission as the Importer Security Filing.
Comment
In addition to the country of origin and the HTSUS number, the
manufacturer, ship to party, and consignee number elements for FTZ
goods are also duplicative with the information collected on CBP Form
214. The filer should only be required to submit these five elements
one time.
CBP Response
In an effort to minimize the redundancy of data transmitted to CBP,
this interim final rule allows a filer to submit the Importer Security
Filing and CBP Form 214 in the same electronic transmission to CBP and
to submit the country of origin and commodity HTSUS number once to be
used for both Importer Security Filing and FTZ admission purposes. If
the party submitting the Importer Security Filing chooses to have these
elements used for FTZ admission purposes, the HTSUS number must be
provided at the 10-digit level. CBP disagrees that the manufacturer,
ship to party, and consignee number are collected on CBP Form 214.
K. Public Comments; Requests for Special Treatment
Comment
How does CBP plan to address holds and DNLs on agricultural
products, where delay could result in irreparable damage to an
importer's relationship with its buyer(s)?
CBP Response
CBP will not institute special procedures for agricultural
products. DNLs are placed for security reasons and the status of a
shipment as ``perishable'' or ``non-perishable'' does not necessarily
indicate increased or decreased security risk. In all instances, CBP
will work with the trade to communicate holds and DNLs as quickly as
possible. It is the responsibility of the ISF Importer to resolve
Importer Security Filing issues that result in a hold or DNL.
Comment
CBP should exempt from the Importer Security Filing requirements
cargo that is refused admission or for another reason is returned from
a foreign country after having been exported from the United States.
CBP Response
CBP disagrees. Cargo refused admission at a foreign port is not
exempt from these regulations if that cargo will enter the limits of a
port in the United States via vessel. This cargo has been out of the
control of the exporter and CBP and, therefore, poses a possible
security risk.
Comment
CBP should exempt carnets from the Importer Security Filing
requirements because they are covered by an international convention.
If carnets are not exempted, CBP must gain acceptance from the
international convention that governs carnets prior to enforcement. At
a minimum, the HTSUS number should not be required for carnet
shipments.
CBP Response
CBP disagrees. Carnet shipments are not exempt from these
regulations if the cargo will enter the limits of a port in the United
States via vessel. These shipments are not inherently less of a risk
than other shipments.
Comment
CBP should exempt temporary importation bond (TIB) shipments from
the Importer Security Filing requirements.
CBP Response
CBP disagrees. An Importer Security Filing is required for TIB
shipments that will enter the limits of a port in the United States via
vessel. These shipments are not inherently less of a risk than other
shipments.
Comment
CBP has already vetted the supply chains of C-TPAT members and,
therefore, the Importer Security Filing requirements are duplicative
for C-TPAT members. Therefore, C-TPAT members, specifically tier three
members, should be exempt from the Importer Security Filing
requirements, especially when shipments have been subject to pre-export
scanning at a CSI port. C-TPAT members, including tier two and three
members, should be permitted to file on an account basis rather than on
a per-shipment basis (e.g., annual blanket filings). In the
alternative, C-TPAT members should be subject to a phase-in period,
permitted to submit fewer than all of the required Importer Security
Filing elements, permitted to submit the Importer Security Filing 12
hours prior to lading, and/or subject to reduced penalties.
CBP Response
CBP disagrees. CBP will use the Importer Security Filing to assess
the risk of individual shipments. For purposes of this rule, all cargo
arriving to the United States by vessel, regardless of the parties
involved, will be subject to the Importer Security Filing requirements.
CBP is not allowing exemption from, or alteration of, the requirement
that C-TPAT partners submit Importer Security Filing information in
advance of arrival. CBP believes that compliance with these regulations
complements supply chain security and efficiency procedures being
implemented by C-TPAT partners. Furthermore, it is emphasized that C-
TPAT membership will continue to be viewed in a positive light for
targeting purposes. It is more likely that shipments made by C-TPAT
members will be readily and expeditiously cleared, and not be delayed
for greater scrutiny. Other related advantages of C-TPAT partnership
may include essential security benefits for suppliers, employees, and
customers, such as a reduction in the number and extent of border
inspections and eligibility for account-based processes.
Comment
Shipments that transit through CSI ports should be exempt from the
Importer Security Filing requirements.
CBP Response
CBP disagrees. This rule is one part of CBP's layered approach to
cargo security. CBP's comprehensive strategy includes CSI, the 24 Hour
Rule, C-TPAT, and the Importer Security Filing. Importer Security
Filing data are particularly useful for cargo that transits through a
CSI port because CSI ports provide CBP the opportunity to review cargo
before it is laden on a vessel destined for the United States.
Comment
Shipments intended for a duty-free warehouse should be exempt from
the Importer Security Filing requirements. For duty-free stores,
vendors may ship directly to the manufacturer's site, yet later issue
the invoice from the United States or other location. In these
circumstances, the shipper only has a packing list or no invoice and
there is no way to determine the HTSUS number and country of origin at
the time of shipping.
CBP Response
CBP disagrees that an exemption is warranted. An Importer Security
Filing is required for merchandise destined for a duty-free warehouse.
These shipments
[[Page 71756]]
are not inherently less of a risk than other shipments. CBP is aware
that business practices may need to change (e.g., amendment of shipping
documents) to obtain this information 24 hours prior to lading. Where
the party is not reasonably able to verify the information 24 hours
prior to lading, the regulations allow the party to submit the
information on the basis of what it reasonably believes to be true. If
any of the information changes or more accurate information becomes
available before the goods enter the limits of a port in the United
States, the Importer Security Filing must be updated.
Comment
CBP should allow an exemption for shipments originally destined for
a foreign port (with the intent to remain foreign) that are diverted to
the United States because of an emergency. CBP should also allow an
exemption for shipments diverted to the United States that were
originally destined for a foreign sea port to be loaded on a rail car
or truck destined for the United States, in cases where the vessel is
diverted because of emergency.
CBP Response
CBP disagrees that a regulatory exemption is warranted. If an
emergency arises regarding cargo that was never intended to enter the
limits of a port in the United States for which an Importer Security
Filing was not filed, the ISF Importer is required to file an Importer
Security Filing. If an event occurs, including an emergency, affecting
cargo for which an Importer Security Filing was submitted, and the
event results in changes to any of the elements for that filing, the
ISF Importer is required to immediately amend the Importer Security
Filing. The ISF Importer will still be liable for enforcement actions
resulting from the late Importer Security Filing submission. However,
CBP will consider the totality of the circumstances surrounding the
event before any further CBP actions are taken.
Comment
CBP should allow an exemption for ferries or barges, especially
when merchandise is diverted to a ferry or barge when the land border
crossing is down.
CBP Response
An Importer Security Filing is not required if the movement of the
cargo by ferry or barge is considered to have crossed a ``land border''
crossing for CBP purposes. However, an Importer Security Filing is
required for cargo that is transported on a vessel that is required to
make formal vessel entry pursuant to 19 U.S.C. 1434 (see also 19 U.S.C.
1441 for vessels exempted from vessel entry).
Comment
FROB should be exempted from these requirements because, at the
time of loading, whether a cargo is destined to be FROB may not be
known or may be subject to change due to changes in port destinations
or due to last minute cargo being loaded which is destined for the
United States after cargo for other countries has been loaded.
CBP Response
CBP disagrees. If the cargo is known to be FROB prior to lading,
the ISF Importer must submit an Importer Security Filing consisting of
five elements. If the cargo is not known to be FROB (or an IE or T&E
shipment) and the cargo is intended to enter the limits of a port in
the United States 24 hours prior to lading, the importer must submit an
Importer Security Filing consisting of 10 elements. If an event occurs
(e.g., an emergency) affecting cargo for which an Importer Security
Filing was submitted, and the event results in changes to any of the
elements for that filing, the ISF Importer is required to immediately
amend the Importer Security Filing. If an Importer Security Filing was
not filed because the cargo was not intended to enter the limits of a
port in the United States by vessel, and the cargo will enter the
limits of a port in the United States, the importer must immediately
file an Importer Security Filing. In this case, the ISF Importer will
still be liable for enforcement actions resulting from the late
Importer Security Filing submission.
Comment
CBP should clarify that FROB cargo does not include U.S. export
cargo or foreign-to-foreign cargo.
CBP Response
U.S. export cargo that was not laden at a foreign port is outside
of the scope of this rule.
Comment
Will an Importer Security Filing be required for goods that are
discharged in a foreign port and transshipped via truck/rail into the
United States?
CBP Response
No. This rule only applies to cargo arriving in the limits of a
port in the United States by vessel.
Comment
Cargo that is imported by the Department of Defense should be
exempt from the Importer Security Filing requirements.
CBP Response
CBP agrees. If cargo arrives on a vessel for which vessel entry and
a manifest is required, an Importer Security Filing must be submitted.
However, if Department of Defense cargo arrives on a government vessel
as per 19 CFR 4.5 for which vessel entry and a manifest is not
required, an Importer Security Filing is not required.
Comment
The HTSUS number, manufacturer (or supplier), and seller should not
be required for personal effects.
CBP Response
CBP disagrees. The ISF Importer must submit an Importer Security
Filing for shipments consisting of personal effects. These shipments
are not inherently less of a risk than other shipments. All data
elements are required regardless of whether the parties identified in
the data elements are private or commercial.
Comment
Ship's equipment and carrier's inter-company moves should be exempt
from the Importer Security Filing requirements.
CBP Response
An Importer Security Filing is not required for ship's
equipment.\11\ However, unless otherwise exempted, the ISF Importer
must submit an Importer Security Filing for inter-company moves.
---------------------------------------------------------------------------
\11\ CBP is not amending existing advance manifest information
requirements in 19 CFR Part 4.
---------------------------------------------------------------------------
Comment
Why is CBP exempting instruments of international trade (IITs) from
the Importer Security Filing requirements?
CBP Response
CBP is requiring that IITs be reported via vessel stow plans and
container status messages. However, many of the Importer Security
Filing elements are not applicable to IIT shipments and CBP has
determined that the additional information would be of limited
targeting value.
Comment
CBP should not require Importer Security Filings for shipments
arriving in the United States via inland waterways, such as the Great
Lakes.
[[Page 71757]]
CBP Response
CBP disagrees. The SAFE Port Act of 2006 requires data elements for
cargo destined to the United States by vessel prior to loading of such
cargo on vessels at foreign seaports. Accordingly, the ISF Importer
must submit an Importer Security Filing for cargo arriving in the
United States via inland waterways.
Comment
CBP should clarify that these rules are not applicable to cargo
being returned to the United States from any vessel or outer
continental shelf (OCS) facility positioned over the U.S. OCS for the
purposes of engaging in OCS activities, as defined in 33 CFR 140.10.
CBP should carefully consider the fundamental difference between
cargoes returned to the United States from offshore locations and
cargoes imported to the United States from foreign countries in the
application of this rule. The cargoes shipped (returned) from offshore
locations to the United States have never made what CBP has in the past
referred to as ``a meaningful departure'' from the United States. In
the NPRM, CBP uses the term ``foreign port'' to determine the
applicability of reporting. The use of the term is significant and
correct so long as it is clearly defined as meaning the foreign port of
lading of a cargo container for transport to the United States. The
term ``foreign port'' has at times been used to include operations
involving the carriage of cargo to/from ``Hovering Vessels.'' However,
vessels positioned over the OCS to conduct OCS activities are clearly
not ``Hovering Vessels.'' In addition, the information required by
these regulations is, in some instance inapplicable to the OCS (e.g.,
port codes) and would provide no tangible benefit to CBP. The same
logic used for the Western Hemisphere Travel Initiative whereby persons
traveling to/from mobile offshore drilling units located on the OCS are
not required to present a passport to enter/re-enter the U.S. should be
applied to cargo for these requirements and the regulations should
exempt cargoes transported to/from the OCS. CBP should exempt equipment
brought into the United States from an OCS facility, whether the
equipment is new, unused, or damaged. CBP should exempt such equipment
as merchandise pursuant to 49 U.S.C. 55102, or as bulk cargo. CBP
should clarify whether foreign merchandise arriving at an OCS facility
within the coastwise waters of the United States is subject to the
Importer Security Filing requirement. CBP should clarify whether
equipment transported from the customs territory of the United States
to an OCS facility to be used for repair or emergency work, having
already been entered or is otherwise domestic, is subject to the
Importer Security Filing.
CBP Response
Domestic cargo (whether of U.S. origin, or of foreign origin and
having been formally entered), including cargo intended for repair or
emergency work, that is transported between CBP ports, or other places
within the customs territory of the United States, including an OCS
facility, is not subject to Importer Security Filing requirements.
Whether any piece of equipment, new, unused, or damaged, is either
considered an OCS facility or device attached to an OCS facility, or is
subject to the provisions of 46 U.S.C. 55102, is decided on a case-by-
case basis. We note here, however, that a vessel that is positioned
over the OCS and is either anchored or moored to the seabed is
considered an OCS facility. Conversely, the party causing foreign
cargo, including cargo intended for repair or emergency work, to be
brought into the customs territory of the United States, whether it is
a CBP port or any other point within the customs territory of United
States, including an OCS facility, from a foreign port or place must
comply with Importer Security Filing requirements. The party causing
foreign cargo to arrive at an OCS facility must comply with Importer
Security Filing requirements using the port code of the nearest CBP
service port. CBP will consider the exigent circumstances surrounding
such transportation in the assessment of any liquidated damages claim
or other enforcement action.
Comment
Low risk repetitive shipments should be exempt from the Importer
Security Filing requirements. In the alternative, CBP should consider
an alternative data submission procedure which would take into account
repetitive shipments in which the content varies little from shipment
to shipment.
CBP Response
CBP disagrees. Repetitive shipments are not inherently of less risk
than other shipments. CBP will use the Importer Security Filing to
assess the risk of individual shipments and, therefore, no exemptions
to the Importer Security Filing requirements will be given for
repetitive shipments.
Comment
Roll on/roll off cargo should be exempt from the Importer Security
Filing requirements.
CBP Response
CBP disagrees. Roll on/roll off cargo is not inherently less of a
risk than other shipments. Therefore, an Importer Security Filing is
required for all cargo other than bulk cargo destined to enter the
limits of a port in the United States, including roll on/roll off
cargo.
Comment
Samples and trade show displays should be exempt from the Importer
Security Filing requirements. In the alternative, manufacturer (or
supplier) and country of origin should not be required for these
shipments.
CBP Response
CBP disagrees. Samples and trade show displays are not inherently
less of a risk than other shipments. Therefore, a complete Importer
Security Filing is required for samples and trade show displays.
Comment
Goods being imported into the U.S. Virgin Islands should be exempt
from the Importer Security Filing, stow plan, and CSM requirements.
CBP Response
The U.S. Virgin Islands are not part of the customs territory of
the United States and are, therefore, outside of the scope of this
rule.
Comment
CBP should maintain a list of break bulk cargo for which an
Importer Security Filing is required 24 hours prior to arrival.
Specifically, new and used vehicles and ISO tanks should be considered
break bulk.
CBP Response
For purposes of this interim final rule, break bulk cargo is
defined in new Sec. 149.1(d) as ``cargo that is not containerized, but
which is otherwise packaged or bundled.'' CBP does not maintain a list
of break bulk cargo. Rather, CBP considers applications for exemption
from the timing requirement under the 24 Hour Rule and the Importer
Security Filing requirements on a case-by-case basis. Regarding
vehicles, if vehicles are non-containerized, they are considered break
bulk for purposes of this rule. Bulk cargo is defined in new Sec.
149.1(c) as ``homogeneous cargo that is stowed loose in the hold and is
not enclosed in any container such as a box, bale, bag, cask, or the
like. * * * Specifically, bulk cargo is composed of either: (1) Free
flowing articles such as oil, grain, coal, ore, and the like, which can
be pumped or run through a chute or
[[Page 71758]]
handled by dumping; or (2) Articles that require mechanical handling
such as bricks, pig iron, lumber, steel beams, and the like.''
Regarding ISO tanks, a container that carries liquids is still a
container for purposes of this rule.
L. Public Comments; Importer Security Filing, Other Comments
Comment
Providing essentially the same information on a shipment-by-
shipment basis, albeit in different combinations and permutations will
not increase security. Instead, importers should be allowed and/or
required to provide a profile of suppliers, ship-to locations, etc.
CBP Response
It is unlikely that every element will be one hundred percent
identical in different shipments. CBP will use the Importer Security
Filing to assess the risk of individual shipments and, therefore, an
Importer Security Filing is required for each shipment. For purposes of
this rule, all cargo arriving to the United States by vessel, unless
specifically exempt, is subject to the Importer Security Filing
requirements.
Comment
The Importer Security Filing requirements are duplicative with FDA
submissions. DHS and the FDA should collect this information through
one submission.
CBP Response
CBP disagrees. These submissions are authorized by different laws
with different responsible parties and enforcement actions for failure
to comply. However, CBP will continue to evaluate all submissions and
ways to reduce the burden on the trade through eliminating redundant
submissions.
Comment
If CBP proceeds before ACE is fully functional, CBP should wait
until ACE is available before requiring linking of the manufacturer
name and address, country of origin, and HTSUS number. CBP should also
fulfill its commitment to integrating this data submission process with
the future ongoing development work and implementation of ACE. The
record formats should be compatible with those that will be required in
ACE without further changes in order to avoid additional programming
requirements for the trade.
CBP Response
CBP disagrees that the linking requirement should be postponed
until ACE is fully functional. The linking of the required data is
required at the entry level and not necessarily at the bill of lading
or invoice level. This is a process that is already required upon cargo
arrival for entry purposes on CBP Form 3461. The linking of the
required data will allow CBP to more effectively target high risk
shipments. Absent the linking of the data, CBP would need to consider
every possible permutation of the data and would, therefore, be forced
to designate cargo as high risk when it may not, in fact, be high risk.
As stated previously, CBP will take into account systems changes made
by the trade to comply with this rule as ACE is developed.
Comment
CBP will need to allow the filer the ability to designate an
Importer Security Filing as relating to either a consumption entry or
FTZ shipment; or an IE, T&E, or FROB shipment.
CBP Response
CBP agrees. The Importer Security Filing submission must indicate
whether the submission is for: (1) A shipment intended to be entered
into the United States or a shipment intended to be delivered to a
foreign trade zone, requiring an Importer Security Filing consisting of
10 elements; or (2) an IE, T&E, or FROB shipment, requiring an Importer
Security Filing consisting of five elements.
Comment
The NPRM did not propose to require container number as part of the
Importer Security Filing. How will CBP target containers for
examination when there are multiple containers on one bill of lading?
CBP Response
An ISF Importer will be given the option to provide container
numbers as part of the Importer Security Filing. If the ISF Importer
chooses to have one bill of lading cover multiple containers, all of
those containers will be subject to the same risk assessment.
Comment
Each Importer Security Filing filer should be issued a unique
``filer'' number.
CBP Response
Any party not already an ABI or AMS participant intending to
transmit Importer Security Filings through ABI or AMS will be issued a
filer code when they obtain ABI or AMS access to uniquely identify them
as the filer of the transmission.
Comment
Importers, and other designated parties, should be able to access
past Importer Security Filings.
CBP Response
CBP disagrees. Importers and other designated parties will not be
able to access past Importer Security Filings in CBP systems. As
discussed in response to another comment, such functionality would be
too costly and raises security and privacy concerns. However, CBP will
continue to evaluate this possibility as ACE is developed.
Comment
The requirement to request a ruling when an element does not exist
will jeopardize supply chain efficiency. When an element is unknown,
the importer should be allowed to leave a field blank or provide a code
indicating lack of knowledge without penalty. In the alternative, CBP
should provide for an expedited ruling procedure when an importer
believes that a required data element does not exist for a non-exempt
transaction type.
CBP Response
First, CBP is not requiring that the ISF Importer seek a ruling
when a data element is unknown. If an ISF Importer does not know an
element that is required pursuant to this interim final rule, the ISF
Importer must take steps necessary to obtain the information. If the
ISF Importer believes that a required data element does not exist for a
non-exempt transaction type, the ISF Importer should request a ruling
prior to the time required for the Importer Security Filing. The
advance rulings procedures found in 19 CFR part 177 remain available to
the public for this purpose. CBP disagrees that separate special ruling
procedures for Importer Security Filing are necessary because the part
177 procedures are sufficient to handle all questions that may arise.
Comment
CBP should not require importers to provide data of which they do
not have direct knowledge or cannot reasonably be expected to obtain.
CBP should have flexibility to identify appropriate alternatives to
elements that are unknown at the time of filing.
CBP Response
CBP believes that, in most cases, the Importer Security Filing
information is available to the party causing the goods to enter the
limits of a port in the United States. However, CBP is aware that
business practices may need to change (e.g., amendment of shipping
[[Page 71759]]
documents) to obtain this information 24 hours prior to lading. Where
the ISF Importer is not reasonably able to verify the information, the
regulations allow the party to submit the information on the basis of
what it reasonably believes to be true. In addition, as discussed in
the ``Structured Review and Flexible Enforcement Period'' section of
this document, this rule provides flexibilities with respect to certain
elements of Importer Security Filings such as the ability to provide a
range of possible responses based on the best data available in lieu of
a single specific response.
Comment
The importer should not be required to link the manufacturer (or
supplier), country of origin, and commodity HTSUS number. This
requirement is not included in the SAFE Port Act. Instead, CBP should
manipulate the data through the use of an improved algorithm, as
required by the SAFE Port Act, to best achieve effective security
screening.
CBP Response
Pursuant to section 203 of the SAFE Port Act, this interim final
rule requires the submission of additional data elements for improved
high-risk targeting, including appropriate security elements of entry
data. Importers are already required to link data in this way for entry
purposes and CBP currently uses these data to target. The line-item
linking will provide CBP with specific information about the origin of
the goods, the manufacturer/supplier of the goods and an accurate
description of the goods. For example, manhole covers, in and of
themselves are relatively benign. Goods with a specific country of
origin may not merit any special consideration. But manhole covers
coming from a specific manufacturer in a specific country of origin
have been found to be contaminated with radioactive waste.
Comment
Do the manufacturer (or supplier), country of origin, and commodity
HTSUS number need to be linked to one another at the invoice line item
level or the entry line item level?
CBP Response
The manufacturer (or supplier), country of origin, and commodity
HTSUS number must be linked to one another at the entry line level and
not at the invoice line item level. This is consistent with what the
trade provides to CBP for entry purposes and will allow CBP to better
assess the risk of cargo destined for the United States.
Comment
How will items with multiple HTSUS numbers be linked (e.g., a suit
could have up to four different 10-digit HTSUS numbers)?
CBP Response
Multiple HTSUS numbers will be linked at the line item level with
country of origin, and manufacturer. This will be similar to the
current CBP Form 3461 entry procedures.
Comment
CBP should wait until ACE is available before requiring linking of
data.
CBP Response
CBP disagrees. After careful consideration, DHS has determined that
immediate action is necessary to increase the security of cargo
entering the United States by vessel by improving CBP's risk assessment
capabilities. Existing CBP systems are prepared to receive the
manufacturer (or supplier), country of origin, and commodity HTSUS
number linked to one another. CBP will take into account systems
changes made by the trade to comply with this rule as ACE is developed.
Comment
CBP should require the same 10 elements that are required for
shipments intended to be entered into the United States for FROB cargo.
CBP Response
CBP disagrees. Several of the elements (e.g., importer of record
and consignee number) are not applicable to FROB shipments. Therefore,
CBP is requiring five elements which are applicable to FROB shipments.
Comment
CBP should require that an Importer Security Filing be filed 24
hours prior to lading for all cargo, including FROB.
CBP Response
Because FROB cargo is frequently laden based on a last-minute
decision by the carrier, the Importer Security Filing for FROB is not
required 24 hours prior to lading. Rather, the Importer Security Filing
for FROB is required any time prior to lading. Therefore, a carrier may
submit the Importer Security Filing for FROB cargo 24 hours prior to
lading if the carrier chooses to do so.
Comment
Carriers would be in the position of non-compliance when cargo is
transformed into FROB while en route, when cargo that was originally
intended to remain onboard the vessel (i.e., FROB) will be unladen in
the United States, or when additional cargo is booked at the last
minute.
CBP Response
An Importer Security Filing must be submitted to CBP no later than
24 hours before cargo that is intended to enter the limits of a port in
the United States is laden. See the ``Structured Review and Flexible
Enforcement Period'' section of this document for flexibilities related
to timing for certain Importer Security Filing elements. For FROB, the
Importer Security Filing must be submitted prior to lading. The ISF
Importer must update the filing if, before the goods enter the limits
of a port in the United States, any of the information submitted
changes or more accurate information becomes available, including when
cargo is transformed into FROB. CBP acknowledges the wide range of
logistical issues that carriers face that may change vessel patterns
and ultimately cargo status. The change in status of cargo needs to be
communicated to CBP as soon as that decision is made and Importer
Security Filing filings must be submitted immediately. However, the ISF
Importer will still be liable for enforcement actions resulting from
late Importer Security Filing submissions.
VII. Discussion of Comments Regarding Proposed Amendments to Bond
Requirements and Enforcement
In order to provide a clear enforcement mechanism for the proposed
requirements, CBP proposed to amend the regulations covering certain
bond conditions to include agreements to pay liquidated damages for
violations of the new proposed regulations. CBP also proposed to amend
the bond conditions for violations of the advance cargo information
requirements under the Trade Act regulations in order to make the
liquidated damages amounts for those violations consistent with the
liquidated damages amounts for violations of the proposed requirements.
A. Overview; Bond Conditions and Enforcement Related to the Proposed
Importer Security Filing, Vessel Stow Plan, and Container Status
Message Requirements
CBP will enforce the Importer Security Filing, vessel stow plan,
and container status message requirements
[[Page 71760]]
through the assessment of liquidated damages, in addition to penalties
applicable under other provisions of law.
CBP proposed to add a new condition to those provisions in 19 CFR
113.62 required to be included in a basic importation and entry bond.
Specifically, CBP proposed to amend 19 CFR 113.62 to include a
condition whereby the principal agrees to comply with the proposed
Importer Security Filing requirements. Under the proposed condition, if
the principal fails to comply with the proposed Importer Security
Filing requirements, the principal and surety (jointly and severally)
would pay liquidated damages equal to the value of the merchandise
involved in the default.
CBP also proposed to amend those provisions in 19 CFR 113.64
required to be included in an international carrier bond. Specifically,
CBP proposed to amend 19 CFR 113.64 to include three new conditions.
First, a new condition would be added whereby the principal agrees to
comply with the proposed Importer Security Filing requirements if the
principal elects to provide the Importer Security Filing on behalf of
an importer, as defined in the proposal. If the principal fails to
comply with the proposed Importer Security Filing requirements, the
principal and surety (jointly and severally) would agree to pay
liquidated damages equal to the value of the merchandise involved in
the default. Second, a new condition would be added whereby the
principal agrees to comply with the proposed vessel stow plan
requirements. If the principal fails to comply with the proposed vessel
stow plan requirements, the principal and surety (jointly and
severally) would agree to pay liquidated damages of $50,000 for each
vessel arrival. Third, a new condition would be added whereby the
principal agrees to comply with the proposed container status message
requirements. If the principal fails to timely provide CSMs for all
events that occur relating to a container, for which the carrier
creates or collects CSMs in its equipment tracking system, the
principal and surety (jointly and severally) would pay liquidated
damages of $5,000 for each violation, to a maximum of $100,000 per
vessel arrival.
Lastly, CBP proposed to amend those provisions in 19 CFR 113.73
required to be included in a foreign trade zone operator bond.
Specifically, CBP proposed to amend 19 CFR 113.73 to include a
condition whereby the principal agrees to comply with the Importer
Security Filing requirements. Under the proposed condition, if the
principal fails to comply with the proposed Importer Security Filing
requirements, the principal and surety (jointly and severally) would
pay liquidated damages equal to the value of the merchandise involved
in the default.
B. Public Comments; Bond Conditions and Enforcement Related to the
Proposed Importer Security Filing, Vessel Stow Plan, and Container
Status Message Requirements
Comment
When an agent submits an Importer Security Filing on behalf of an
importer, both parties should not be required to obtain bonds. If both
parties are required to have a bond, CBP should clarify who will be
responsible for liquidated damages. Will both parties be responsible?
Will an additional bond (or a separate bond rider) be required for the
Importer Security Filing and, if so, which type of bond (or rider)?
CBP Response
CBP agrees. The regulations have been changed to remove the
requirement that the filer have a separate bond. The ISF Importer, as
defined for purposes of these regulations, is ultimately liable for the
timely, accurate, and complete submission of the Importer Security
Filing. The regulations have also been changed to include a new
importer security filing bond and to allow the ISF Importer to use a
basic custodial bond or new importer security filing bond in addition
to the bond types included in the proposal. Therefore, the ISF Importer
must possess a basic importation and entry bond containing all the
necessary provisions of 19 CFR 113.62, a basic custodial bond
containing all the necessary provisions of 19 CFR 113.63, an
international carrier bond containing all the necessary provisions of
19 CFR 113.64, a foreign trade zone operator bond containing all the
necessary provisions of 19 CFR 113.73, or an importer security filing
bond as provided in Appendix D to part 113 of 19 CFR. If the ISF
Importer does not have one of these bonds, the party must obtain a bond
or designate a bonded agent to file under the agent's bond if the agent
agrees in writing.
Comment
Licensed customs brokers should be exempt from bond requirements
with regard to the Importer Security Filing.
CBP Response
A customs broker who submits an Importer Security Filing on behalf
of another party must do one of the following: (1) Submit the filing
under its own bond; or (2) at an ISF Importer's direction, submit the
filing under that party's bond.
Comment
The requirement that the Importer Security Filing filer have a bond
will ensure a high degree of diligence and perfection, especially when
the filer is a foreign entity.
CBP Response
CBP will enforce the Importer Security Filing, vessel stow plan,
and container status message requirements through the assessment of
liquidated damages, in addition to penalties applicable under other
provisions of law. CBP agrees that the requirement that a bond be
posted for the Importer Security Filing will ensure a high degree of
diligence. However, under this interim final rule, if the ISF Importer
does not have one of the required bonds, the importer may designate a
bonded agent to file under the agent's bond if the agent agrees in
writing.
Comment
Will a continuous or single transaction bond be required?
CBP Response
Generally, continuous bonds will be accepted for the Importer
Security Filing. Continuous bonds are verifiable electronically and
will give CBP more transparency into the party and bond's existence.
Requests to file single transaction bonds for Importer Security Filings
will be evaluated by CBP on a case-by-case basis consistent with
current practices.
Comment
How can an importer use an importation and entry bond for the
Importer Security Filing because an importer's liability under an
importation and entry bond attaches at the time of entry? Moreover,
liability attaches based on conditions that are beyond the importer's
control.
CBP Response
An ISF Importer will obligate its bond for purposes of submission
of the importer security filing. Not all basic importation bond
obligations attach at entry (for example, the obligation to comply with
airport security requirements.) An ISF Importer must possess a basic
importation and entry bond containing all the provisions of 19 CFR
113.62, a basic custodial bond containing all the provisions of 19 CFR
113.63, an international carrier bond containing all the provisions of
19 CFR 113.64, a foreign trade zone operator
[[Page 71761]]
bond containing all the provisions of 19 CFR 113.73, or an importer
security filing bond as provided in Appendix D of part 113 of 19 CFR in
order to submit an importer security filing. CBP has amended the
relevant bond provisions to provide that the principle agrees to comply
with Importer Security Filing requirements. CBP has also amended the
international carrier bond provisions to provide that the principle
agrees to comply with vessel stow plan and container status message
requirements.
Comment
If NVOCCs are excluded from the vessel stow plan and CSM
requirements, will CBP differentiate between International Carrier
Bonds required for vessel operating common carriers (VOCCs) and NVOCCs.
CBP Response
NVOCCs are not required to submit vessel stow plans and CSMs. The
responsible party's bond will be subject to liquidated damages.
Therefore, an NVOCC should not be subject to liquidated damages for
violations of the vessel stow plan and CSM requirements unless the
NVOCC posts its bond for this purpose (e.g., if the NVOCC submits a
vessel stow plan or CSMs on behalf of a vessel operating carrier).
Comment
Will CBP change the required bond amounts? If so, how will the bond
amount be calculated? The ability to obtain bonds for Importer Security
Filings would be undermined by an inability to quantify and underwrite
risks, which would limit importer and broker access to viable customs
bond providers. Furthermore, the ability to underwrite a foreign
company is very limited. In addition, some importers and carriers may
no longer qualify for the required bond because sureties may increase
their thresholds as a result of these new requirements. In any event,
the inclusion of liquidated damages provisions will result in a
significant increase in customs bonds costs. This increased cost has
not been quantified.
CBP Response
CBP is not increasing bond amounts through this rulemaking. If CBP
does increase bond amounts in the future, it will do so through
established procedures.
Comment
CBP should clarify that a bond must be in place at the time of
submission of the Importer Security Filing.
CBP Response
Pursuant to new 19 CFR 149.5, to be qualified to file Importer
Security Filing information, an ISF Importer must possess a bond or, if
an ISF Importer does not have a required bond, the ISF Importer can
have the agent submitting the Importer Security Filing post the agent's
bond.
Comment
Liquidated damages are inappropriate because they are not related
to the security goals of this rule and because the Importer Security
Filing is not ``customs business.'' In addition, CBP did not consult
with the trade regarding the proposed liquidated damages and bond
provisions and CBP has not offered a rational basis for the use of
liquidated damages in lieu of other deterrents, including the
following: Rejection of the Importer Security Filing, do not load
messages at the port of export, examination of the cargo, and detention
of the cargo at the port of entry for examination. CBP should only use
monetary penalties for Importer Security Filing violations.
CBP Response
The provisions of 19 U.S.C. 1623 authorize CBP to require such
bonds as deemed necessary to assure compliance with any provision of
law the CBP may be authorized to enforce. See 19 CFR 113.1. The fact
that the Importer Security Filing is not ``customs business'' is not
relevant to this statutory authorization. Liquidated damages for
breaches of bond conditions are appropriate for violations of the
Importer Security Filing.
Other enforcement actions, such as DNL messages and general cargo
examination authorities, may also be applicable and within the
discretion of CBP. Liquidated damages will allow for appropriate
enforcement in lieu of monetary penalties.
Comment
The proposed inclusion of provisions relating to the Importer
Security Filing requirements is contrary to the entry (commercial)
purposes of the basic importation and entry bond.
CBP Response
In an effort to minimize the burden on the trade, CBP is allowing
the use of the basic importation and entry bond, as modified by this
rulemaking, for Importer Security Filing purposes. The ISF Importer may
also obtain a basic custodial bond, an international carrier bond, a
foreign trade zone operator bond, or an importer security filing bond.
CBP disagrees that the inclusion of provisions relating to the Importer
Security Filing in the basic importation and entry bond is
inappropriate because, inasmuch as the obligation to provide this
information vests with the importer, it is reasonable to establish a
condition in the importer's bond to guarantee performance of that
obligation.
Comment
Can a carrier be indemnified for liquidated damages for loading a
container if the carrier can provide a valid Importer Security Filing
number and the bond ID of the filer?
CBP Response
ISF Importers are required to submit Importer Security Filings. A
carrier's ability to seek indemnification for liquidated damages from
another party for loading a container with an Importer Security Filing-
related problem is a private matter best handled by private parties
(i.e., through contractual instruments).
Comment
There does not appear to be any risk assessment associated with the
proposed liquidated damage amounts. Liquidated damages should be a set
amount per container rather than the value of the merchandise as
proposed.
CBP Response
After review of the comments and further consideration, CBP has
changed the liquidated damage amount for failure to timely, accurately,
and completely file an Importer Security Filing. If a party who is
responsible for filing the Importer Security Filing fails to timely,
accurately, and completely submit the Importer Security Filing, that
party will be subject to a claim for liquidated damages in the amount
of $5,000 per Importer Security Filing. Any demand for liquidated
damages will be subject to mitigation on a case-by-case basis. However,
mitigation will be the exception and not the rule for violations of
these requirements.
Comment
Why are liquidated damages amounts different for importers and
carriers under the proposed regulations?
CBP Response
In determining liquidated damages amounts, CBP considered the
nature of the obligation that vests for the bond principal. The
obligation to submit a vessel stow plan, which is submitted once per
vessel voyage, versus the obligation to submit Importer Security
Filings, which are submitted once per
[[Page 71762]]
bill of lading, and container status messages, which may be submitted
numerous times per container, provide different risk levels to CBP that
are treated differently when a breach of the obligation occurs. CBP
does not consider the identity of the bond principal when calculating
those risks and determining liquidated damages amounts.
Comment
The proposed liquidated damages provisions do not adhere to section
343(a)(3)(F) of the Trade Act of 2002 which states that ``[t]he
information collected pursuant to the regulations shall be used
exclusively for ensuring cargo safety and security and preventing
smuggling and shall not be used for determining merchandise entry or
for any other commercial enforcement purposes'' because the enforcement
provisions are consistent in scope with 19 U.S.C. 1592, which is for
commercial enforcement.
CBP Response
CBP will not use the information collected pursuant to these
regulations for determining entry or for any other commercial
enforcement purposes, such as for assessment of a penalty pursuant to
19 U.S.C. 1592. The liquidated damages provisions are completely
separate authorities granted to CBP to provide a contractual remedy for
any actions taken in violation of the customs laws for which a customs
bond is required to be in place, including Importer Security Filing
provisions. See 19 U.S.C. 1623 and the implementing regulations
contained in 19 CFR part 113. The mere similarity in enforcement
provisions will not affect CBP's ability to enforce provisions relating
to bonds.
Comment
CBP fails to link the nature of the violation with the party
responsible for the breach.
CBP Response
The party who posts their bond does so for the purpose of securing
the Importer Security Filing. Obligations that vest under the terms and
conditions of the bond are the responsibility of the bond principal.
When those obligations are breached, the bond principal and surety are
liable, jointly and severally, for any resultant liquidated damages. It
is, therefore, appropriate for CBP to hold these parties liable for any
breach of the bond conditions.
Comment
The proposed penalties are unreasonable and should be reduced,
capped, or eliminated. Penalties are unnecessary if other avenues such
as ``no load'' messages are utilized. DNLs are sufficient and the
imposition of fines of any sort is administratively burdensome and
actually less effective than other means. If CBP does utilize penalties
or liquidated damages, CBP should publish revised mitigation guidelines
governing the failure to comply with the Importer Security Filing
requirements and should only issue penalties in cases of willful or
repeat serious violations.
CBP Response
CBP disagrees. DNL holds are issued by CBP to alleviate risk.
Penalties and liquidated damages are appropriate responses for breaches
of the bond conditions or obligations imposed by law or regulation. If
the Importer Security Filing requirements are not met, CBP reserves the
right to use any enforcement remedy available in this rule, including,
but not limited to, the assessment of liquidated damages and penalties.
CBP will be issuing mitigation guidelines for these claims.
Comment
The proposed enforcement provisions should require a finding of
culpability. CBP should consider the party's intent and severity of the
violation when issuing penalties, and determining the penalty amounts,
for violations of these regulations. In addition, CBP should issue one
penalty if multiple violations result from the same fundamental error.
Importers should not be held accountable for the accuracy of a data
element they do not own or control. Fines should only be issued when
false data are knowingly reported, not for failure to file.
CBP Response
CBP may issue claims if an Importer Security Filing is not filed in
a timely, accurate, and complete manner. Failing to file is a serious
violation in that it deprives CBP of the ability to analyze and assess
the risk with regard to loading the cargo for transport to the United
States. If an ISF Importer does not know an element that is required
pursuant to the regulations, the importer must take steps necessary to
obtain the information. While CBP will not consider levels of
culpability in claim assessment, the agency will issue mitigation
guidelines for violations of these regulations.
Comment
Pursuant to the proposed regulations, ``where the presenting party
is not reasonably able to verify the [Importer Security Filing]
information, CBP will permit the party to electronically present the
information on the basis of what the party reasonably believes to be
true.'' Clarification is needed on what constitutes that the filer is
``reasonably able to verify'' and which situations will result in a
penalty.
CBP Response
CBP will issue penalties for violations of these regulations in
accordance with established penalty guidelines. However, where the
party electronically presenting to CBP the Importer Security Filing
receives any of this information from another party, CBP will take into
consideration how, in accordance with ordinary commercial practices,
the presenting party acquired such information, and whether and how the
presenting party is able to verify this information. Where the
presenting party is not reasonably able to verify such information, CBP
will permit the party to electronically present the information on the
basis of what the party reasonably believes to be true. CBP will make
this determination on a case-by-case basis.
Comment
The proposed amendment to 19 CFR 113.62 whereby the principle
agrees to ``comply with all Importer Security Filing requirements'' is
inappropriate.
CBP Response
CBP disagrees. The amendment to 19 CFR 113.62 is not intended to
recite the specific obligations, but merely enable CBP to enforce the
new requirements by allowing CBP to assess liquidated damages for
failure to comply with the bond provisions. Therefore, CBP believes
that changing the bond to reflect new obligations in this manner is
appropriate and allows for existing bonds to be used, thereby reducing
redundancy and burden for CBP and the trade.
Comment
Who will receive DNL messages resulting from Importer Security
Filing problems? CBP should add a mandatory field to the existing 24
Hour Rule for an Importer Security Filing confirmation number and
should timely issue a DNL to the carrier against the AMS manifest
filing when a number is not present or when there are problems with the
Importer Security Filing. CBP should also transmit DNLs to the importer
so that Importer Security Filing-related DNLs can be resolved.
[[Page 71763]]
CBP Response
Consistent with current practice, DNL messages will be sent to the
AMS filer of the associated bill of lading and any ``secondary notify
party'' associated with the bill of lading. CBP will also communicate
electronically to the filer of the Importer Security Filing when there
are Importer Security Filing-related inaccuracies. In addition, CBP
will send a status notification message to the AMS filer and any
``secondary notify party'' when an Importer Security Filing has been
submitted and matched by CBP with a bill of lading. CBP has not added a
field to the 24 Hour Rule manifest filing for an Importer Security
Filing confirmation number because the ISF Filer is not required to
submit the Importer Security Filing before the carrier submits the 24
Hour Rule advance cargo information.
Comment
Will CBP issue ``no load'' directives to carriers and terminal
operators in the case of failure to file timely and/or complete
Importer Security Filings?
CBP Response
CBP has issued internal directives for port personnel in order to
harmonize actions within CBP. However, CBP will not issue separate ``no
load'' directives to carriers and terminal operators for Importer
Security Filing-related DNLs. CBP has adopted a delayed compliance
period following the effective date of this rule, during which CBP will
work with the trade to assist them in achieving full compliance,
thereby minimizing the issuance of DNLs. See the ``Structured Review
and Flexible Enforcement Period'' section of this document for further
discussion regarding the delayed compliance period.
Comment
CBP should issue a DNL for any bill of lading that does not have
the Importer Security Filing on file at the time the carrier files the
24 Hour advance manifest data.
CBP Response
It would be inappropriate and premature for CBP to issue an
Importer Security Filing-related DNL when the carrier files the 24 Hour
Rule advance manifest data because the Importer Security Filing is
required 24 hours prior to lading (any time prior to lading for FROB).
Therefore, CBP will not issue DNL messages for missing Importer
Security Filings until the Importer Security Filing time period has
passed (i.e., 24 hours prior to lading for cargo other than FROB and
any time prior to lading for FROB).
Comment
An importer's goods that are part of a consolidated shipment may be
delayed if the Importer Security Filing by one of the other parties in
the consolidated shipment is not timely filed, resulting in a DNL for
the container. CBP should permit the portion of a consolidated shipment
for which an Importer Security Filing has been received to split from
the shipment.
CBP Response
CBP will follow existing DNL procedures for Importer Security
Filing-related DNLs.
Comment
CBP should provide an affirmative message that specific cargo is
approved to be laden.
CBP Response
CBP disagrees. CBP will continue to follow existing DNL procedures
and will not issue affirmative load messages.
Comment
What are the carrier's responsibilities with regard to the Importer
Security Filing and loading of containers onboard a vessel? Carriers
should not be impacted in any way, including liability under the
carrier bond, if there are shipments onboard where a filing was not
done.
CBP Response
The ISF Importer is required to submit the Importer Security
Filing. For FROB, the ISF Importer is construed as the carrier because
there is no importer of record and the carrier is the party causing the
goods to enter the limits of a port in the United States by
transporting the goods to the United States. For IE and T&E in bond
shipments, and goods to be delivered to an FTZ, the ISF Importer is
construed as the party filing the IE, T&E, or FTZ documentation because
there is no importer of record and this is the party principally
causing the goods to enter the limits of a port in the United States.
CBP will issue a DNL to instruct a carrier not to load specific cargo,
including cargo for which a complete and accurate Importer Security
Filing has not been filed. Vessel operating carriers are prohibited
from loading such cargo. If a carrier is the party required to submit
the Importer Security Filing (i.e., FROB cargo), the carrier will be
liable for the timeliness and accuracy of the Importer Security Filing.
C. Overview; Bond Conditions Related to the Trade Act Regulations
CBP proposed to amend the liquidated damages amounts for violations
of the advance cargo information requirements under 19 CFR 4.7 and 4.7a
to be $5,000 for each violation of the advance cargo information
requirements, to a maximum of $100,000 per conveyance arrival.
D. Public Comments; Bond Conditions Related to the Trade Act
Regulations
Comment
CBP's proposal to amend 19 CFR 4.7, 4.7a, and 113.64 to assess
liquidated damages in the amount of $5,000 for each violation of the
advance cargo information requirements, to a maximum of $100,000 per
conveyance arrival, would have a significant impact on other modes of
transportation besides vessel.
CBP Response
CBP agrees that there will be an unintended impact on other modes
through this regulatory amendment in that there will be a $100,000
damage cap on vessel conveyance arrivals which does not exist for
arrivals in other transportation modes. Accordingly, to make assessment
consistent, CBP is amending the provisions of newly redesignated 19 CFR
113.64(d) to provide for the $100,000 cap on all other conveyance
arrivals.
VIII. Discussion of Comments Regarding the Cost, Benefit, and
Feasibility Study
Comment
Commenters stated that the Regulatory Assessment underestimates
costs because it did not account for delay to coordinate data
collection among relevant parties nor did it account for increased
infrastructure costs to house delayed goods. Commenters cited an
economic study (See David Hummels, Time as a Trade Barrier (July 2001)
(unpublished paper, Purdue University) (on file with author).) which
estimated that a day of delay is approximately equivalent to a one
percent tariff on imported goods and that this rule will result in a
reduced demand for imports.
CBP Response
Based on the public comments, CBP has revised its cost and benefit
analysis, a summary of which is presented below. The revised analysis
includes a new methodology for estimating the costs due to potential
delays in the supply chain by estimating the economic
[[Page 71764]]
welfare losses to U.S. importers. These estimated losses sufficiently
account for costs associated with these delays, including additional
inventory carrying costs, the costs to hold larger buffer-stock
inventories to accommodate variation in arrival time, depreciation in
shipment value, and storage and security costs. The analysis relies on
the economic study that estimated the value of a one-day delay to be
equivalent to approximately a one percent tariff, however we apply more
precise percentages obtained directly from the study's author for each
relevant category of imported goods. Furthermore, our revised analysis
appropriately includes only consumer surplus lost to U.S. importers,
whereas the commenters' estimate results in an overestimate of the
total loss that is greater than the sum of both consumer surplus lost
to U.S. importers and producer surplus lost to foreign manufacturers,
suppliers, and distributors.
Comment
Commenters stated that costs of delay should be applied to all
shipments, not just consolidated shipments.
CBP Response
CBP's revised cost and benefit analysis, a summary of which is
presented below, includes unconsolidated or full container shipments in
the estimation of welfare losses to U.S. importers arising from
potential delays in the supply chain.
Comment
Commenters stated that a risk assessment was not conducted and that
this rule will not reduce risk. Commenters also asked how the filing of
the Importer Security Filing would deter terrorist attacks. Lastly,
commenters stated that CBP did not provide any evidence of a benefit
from the rule if promulgated.
CBP Response
The purpose of the rule is to improve CBP's ability to prevent
smuggling and ensure cargo safety and security. The additional cargo
information will assist CBP in focusing its security resources on those
shipments that pose the highest risk. In the ``break-even'' analysis
presented in the Regulatory Assessment, CBP described several terrorist
attack scenarios that could potentially be affected by the rule. The
break-even analysis is not intended to measure the risk of attack that
will occur with implementation of the rule; rather, the break-even
analysis is intended to inform the reader of the absolute reduction in
baseline risk that would have to occur in order for the annualized
costs of the rule to equal the benefits. CBP cannot determine if this
risk reduction will occur or if this level of risk reduction is
achievable through implementation of this rule.
Comment
Commenters stated that increased bond costs, liquidated damages,
and penalty costs were not accounted for in the Regulatory Assessment.
CBP Response
CBP agrees. The economic analysis assumes that parties subject to
the requirements of the rule will comply with those requirements.
During the one-year delayed enforcement period, CBP will work with the
trade to assist them in achieving compliance with this rule.
Comment
The Regulatory Assessment did not estimate the costs and benefits
of requiring data elements to be linked at the line-item level.
CBP Response
CBP agrees. CBP is not able to isolate estimates of costs or
benefits at this very specific level of detail. The cost estimated for
a security filing is intended to cover the range of potential
activities involved with collecting and compiling the data for an
Importer Security Filing, including the costs of linking data.
Comment
The Regulatory Assessment did not account for all of the elements
of an importer's supply chain and the economic analysis did not account
for start-up costs.
CBP Response
CBP agrees. However, CBP could not realistically account for the
tens of thousands of possible supply chain relationships that include
importers. In addition, many of the supply chain entities are based
overseas (foreign), and therefore their compliance costs do not
represent the incremental costs borne by U.S. entities. Instead,
through conversations with trade representatives, CBP developed a range
of costs in the form of an Importer Security Filing transaction fee
that is intended to include any costs incurred by the various parties
within the supply chain that are then ultimately passed on to the
importers. CBP's revised cost and benefit analysis, a summary of which
is presented below, includes an estimate of the start-up or initial
costs incurred by importers or their designated filing agents to
implement the rule's requirements.
Comment
The Regulatory Assessment should account for two days of delay in
the supply chain as a result of this rule.
CBP Response
CBP agrees. CBP has revised the cost and benefit analysis, a
summary of which is presented below, by assuming two or three days of
delay during the first year of implementation. For subsequent years,
however, the analysis assumes a decrease in delay to one day, based on
conversations with trade representatives who were drawing on their
experience with the 24 Hour Rule. Generally, representatives were in
agreement that initial implementation of the 24 Hour Rule's
requirements caused some delays in the supply chain, which decreased
noticeably in subsequent years as they adapted to the new requirements.
CBP expects a similar situation upon implementation of this rule, and
notes that CBP has adopted a delayed compliance period following the
effective date of this rule. See the ``Structured Review and Flexible
Enforcement Period'' section of this document for further discussion
regarding the delayed compliance period.
Comment
The Regulatory Assessment understated recurring costs for large
importing operations.
CBP Response
CBP acknowledges that the recurring costs for a particular importer
to comply with this rule will be driven largely by factors such as the
number of Importer Security Filings the importer has to complete, the
complexity of the importer's supply chain and business style, and the
level of the importer's sophistication. However, we do not have the
data or information to characterize each of the estimated 200,000 to
750,000 unique importers by these factors or to quantify the extent to
which the recurring costs would reliably change with these factors. Due
to limitations in the available data, we varied the recurrent,
transaction costs for Importer Security Filings based on importer
transaction volume (e.g., highest volume importers have the lowest
recurrent transaction costs). The trade representatives most commonly
cited transaction volume as a factor in determining the transaction
costs. From their experience with entry filing or manifest fees charged
by brokers or carriers, brokers and carriers are likely
[[Page 71765]]
to charge lower security filing fees to their customers importing a
large number of shipments on an annual basis. The transaction costs
applied in the Regulatory Assessment are consistent with quantified per
transaction cost estimates provided by other commenters.
Comment
The annual recordkeeping burden estimated was too low.
CBP Response
CBP disagrees. The annual recordkeeping burden of 52.3 hours per
importer is intended to represent the average burden for all importers,
ranging from those that have very few shipments per year to those that
have more than a thousand shipments per year. The Regulatory Assessment
finds that most importers are small; specifically, in 2005, more than
70 to 85 percent of all importers imported fewer than 12 shipments. We
believe that most of these smaller importers will have a burden lower
than the 52.3 hours we estimated.
Comment
The trade representatives interviewed in conjunction with the
Regulatory Assessment were not a representative sample.
CBP Response
CBP disagrees. CBP interviewed more than 20 representatives from a
broad range of the parties likely to be affected by the interim final
rule, including small and large importers, vessel and non-vessel
operating common carriers, freight forwarders, brokers, trade groups
and consultants, and trade software providers. In addition, CBP
considered the additional input expressed by the trade in their public
comments to the proposed rule during its revision of the cost and
benefit analysis, a summary of which is presented below.
Comment
Commenters stated that the Regulatory Assessment was ``unreliable''
and ``flawed.'' The costs of the rule cannot be known until CBP
releases the data formats that will be required for the Importer
Security Filing.
CBP Response
While these commenters were dissatisfied with the economic
analysis, they did not submit specific information that would enhance
the current analysis. These commenters did not submit alternative
analyses that more robustly considered the impacts on affected
entities. CBP is required to prepare an economic analysis to be
considered as part of the NPRM. The analysis prepared for the NPRM was
reviewed by the Office of Management and Budget (OMB) in accordance
with Executive Order 12866 and OMB Circular A-4. According to OMB
Circular A-4, a good regulatory analysis should include: (1) A
statement of the need for the proposed action, (2) an examination of
alternative approaches, and (3) an evaluation of the benefits and
costs--quantitative and qualitative--of the proposed action and the
main alternatives identified by the analysis.
Comment
Customs brokers would incur additional costs as a result of this
rule and these costs would be passed on to the importer.
CBP Response
CBP agrees with this comment, and the cost and benefit analysis
does assume that any costs, both initial and recurring, incurred by
brokers to comply with the rule's requirements would be passed on to
the importers in the form of an Importer Security Filing transaction
fee.
IX. Adoption of Proposal
In view of the foregoing, and following careful consideration of
the comments received and further review of the matter, CBP has
concluded that the proposed regulations with the modifications
discussed above should be adopted as follows:
The requirements in section 149.2(b) regarding the timing
of transmission for 6 of the 10 Importer Security Filing elements
(Container stuffing location, Consolidator (stuffer), Manufacturer (or
supplier), Ship to party, Country of origin, and Commodity HTSUS
number) and section 149.2(f) regarding the flexible requirements for 4
of the elements (Manufacturer (or supplier), Ship to party, Country of
origin, and Commodity HTSUS number) are adopted as an interim final
rule. CBP invites comments on these requirements.
All other requirements in this rule are adopted as a final
rule. CBP is not inviting comments on these requirements.
X. Regulatory Analyses
A. Executive Order 12866
This rule is considered to be an economically significant
regulatory action under Executive Order 12866 because it may result in
the expenditure of over $100 million in any one year. Accordingly, this
rule has been reviewed by the Office of Management and Budget (OMB).
The following summary presents the costs and benefits of the rule plus
a range of alternatives considered. (The ``Regulatory Assessment'' can
be found in the docket for this rulemaking: http://www.regulations.gov;
see also http://www.cbp.gov).
In the analysis that follows, CBP has estimated the costs of the
rule assuming that all affected entities are compliant upon the
effective date of the rule, which likely overstates costs.
Additionally, our analysis presents a low and high cost estimate. The
costs for the high scenario incorporate potential supply chain delay
impacts of 1 to 3 days. We analyzed the potential for supply chain
delays based on our interviews with trade representatives and comments
to the NPRM. As stated previously, CBP is committed to ensuring that
its trade partners are positioned to successfully implement the
requirements of this rule and will work with the trade during the
delayed compliance period and thereafter. Based on the magnitude of the
impact of potential delay in the high-cost scenario, estimated at
billions of dollars annually, CBP has determined that a 12-month
delayed compliance period for the rule and flexible requirements for 6
of the 10 Importer Security Filing elements are prudent and necessary
steps to minimize the delay costs that could result from the rule and
to ensure that these high costs are not, in fact, realized. See the
``Structured Review and Flexible Enforcement Period'' section of this
document for further discussion regarding the delayed compliance period
and flexibilities. CBP believes that the direct result of these
modifications and the extensive outreach initiative will be a positive
downward pressure on supply chain delay costs, and the true impacts of
this rule are much more likely to be reflected in the low-cost scenario
presented, where no supply chain delays are assumed.
In this analysis, we first estimate current and future baseline
conditions in the absence of the rule using 2005 shipping data. In this
baseline analysis, we characterize and estimate the number of unique
shipments, carriers, and vessel-trips potentially affected by the rule.
We then identify the incremental measures that importers and carriers
will take to meet the requirements of the rule and estimate the costs
of these activities, as well as the cost to CBP of implementing the
rule. Next, relying on published literature, we identify hypothetical
[[Page 71766]]
scenarios describing representative terrorist attacks potentially
prevented by this regulation and estimate the economic costs (i.e., the
consequences) of these events. We compare these consequences to the
costs of the regulation and estimate the reduction in the probability
of a successful terrorist attack resulting from the regulation that
would be required for the benefits of the regulation to equal the costs
of the regulation.
As of the projected effective date of the regulation, we estimate
that approximately 11 million import shipments conveyed by 1,000
different carrier companies operating 37,000 unique voyages or vessel-
trips for delivery to between 200,000 and 750,000 ISF Importers in the
United States will be subject to the rule. Table 1 summarizes the
results of the regulatory analysis. We consider and evaluate the
following four alternatives:
Alternative 1 (the chosen alternative): Importer Security Filings
and Additional Carrier Requirements are required. Bulk cargo is exempt
from the Importer Security Filing requirements; \12\
---------------------------------------------------------------------------
\12\ For each alternative, the Additional Carrier Requirements
apply only to containerized cargo.
---------------------------------------------------------------------------
Alternative 2: Importer Security Filings and Additional Carrier
Requirements are required. Bulk cargo is not exempt from the Importer
Security Filing requirements;
Alternative 3: Only Importer Security Filings are required. Bulk
cargo is exempt from the Importer Security Filing requirements; and,
Alternative 4: Only the Additional Carrier Requirements are
required.
We estimate costs separately for the Importer Security Filing
requirements (up to 10 importer data elements) and the Additional
Carrier Requirements (Vessel Stow Plans and CSMs). The estimated costs
for the Importer Security Filing requirements are developed on a per-
importer and per-shipment basis and applied to the estimated number of
importers and shipments annually for a period of 10 years (2009 through
2018). In addition, we estimate the welfare losses to U.S. importers
arising from potential delays in the supply chain that may result from
having to meet the required filing deadline of 24 hours prior to lading
at the foreign port. The estimated costs for the Additional Carrier
Requirements are developed on a per-carrier and per-vessel trip basis
and applied to the estimated number of carriers and vessel trips in
each year of the 10-year analysis period.
Table 1--Summary of Findings
----------------------------------------------------------------------------------------------------------------
Percent reductions in baseline
risk that must be achieved for
benefits to equal costs
Annualized costs ------------------------------------
Discount rate (2009-2018, Terrorist attack Number of these Comments
$2008) scenario Absolute events that must
reduction in be avoided for
baseline risk benefits to
required equal costs
----------------------------------------------------------------------------------------------------------------
Alternative 1 (chosen alternative): Importer Security Filings and Additional Carrier Requirements, bulk cargo
exempt
----------------------------------------------------------------------------------------------------------------
3%............. $890 million to Actual West Coast 0.59 to 4.38.... One event in 3 Preferred
$6.6 billion. Port Shutdown months to 2 Alternative: Most
(12-days). years. favorable
combination of cost
and stringency.
Hypothetical < 0.01 to 0.02.. One event in 60
Nuclear Attack. to 500 years.
Hypothetical 0.02 to 0.15.... One event in 7
Biological to 50 years.
Attack.
7%............. $990 million to Actual West Coast 0.66 to 4.64.... One event in 3
$7.0 billion. Port Shutdown months to 2
(12-days). years.
Hypothetical < 0.01 to 0.02.. One event in 60
Nuclear Attack. to 400 years.
Hypothetical 0.02 to 0.16.... One event in 6
Biological to 50 years.
Attack.
----------------------------------------------------------------------------------------------------------------
Alternative 2: Importer Security Filings and Additional Carrier Requirements, bulk cargo not exempt
----------------------------------------------------------------------------------------------------------------
3%............. $890 million to Actual West Coast 0.59 to 4.39.... One event in 3 More stringent than
$6.6 billion. Port Shutdown months to 2 Alternative 1, but
(12-days). years. limited expected
additional benefit
for increased cost.
Hypothetical < 0.01 to 0.02.. One event in 60
Nuclear Attack. to 500 years.
Hypothetical 0.02 to 0.15.... One event in 7
Biological to 50 years.
Attack.
7%............. $990 million to Actual West Coast 0.66 to 4.65.... One event in 3
$7.0 billion. Port Shutdown months to 2
(12-days). years.
Hypothetical < 0.01 to 0.02.. One event in 60
Nuclear Attack. to 400 years.
Hypothetical 0.02 to 0.16.... One event in 6
Biological to 50 years.
Attack.
----------------------------------------------------------------------------------------------------------------
[[Page 71767]]
Alternative 3: Importer Security Filings only, bulk cargo exempt
----------------------------------------------------------------------------------------------------------------
3%............. $890 million to Actual West Coast 0.59 to 4.37.... One event in 3 Similar cost to
$6.6 billion. Port Shutdown months to 2 Alternative 1 with
(12-days). years. decreased
effectiveness.
Importer Security
Filings and
Additional Carrier
Requirements are not
working in tandem.
Hypothetical < 0.01 to 0.02.. One event in 60
Nuclear Attack. to 500 years.
Hypothetical 0.02 to 0.15.... One event in 7
Biological to 50 years.
Attack.
7%............. $990 million to Actual West Coast 0.66 to 4.63.... One event in 3
$7.0 billion. Port Shutdown months to 2
(12-days). years.
Hypothetical < 0.01 to 0.02.. One event in 60
Nuclear Attack. to 400 years.
Hypothetical 0.02 to 0.16.... One event in 6
Biological to 50 years.
Attack.
----------------------------------------------------------------------------------------------------------------
Alternative 4: Additional Carrier Requirements only
----------------------------------------------------------------------------------------------------------------
3%............. $2 million to $11 Actual West Coast < 0.01 to 0.01.. One event in 100 Least cost, but also
million. Port Shutdown to 700 years. least effective
(12-days). alternative. Does
not meet the
statutory
requirements of
Section 203 of the
SAFE Port Act nor
provide data on
shipment history.
Importer Security
Filings and
Additional Carrier
Requirements are not
working in tandem.
Hypothetical < 0.01.......... One event in
Nuclear Attack. 40,000 to
200,000 years.
Hypothetical < 0.01.......... One event in
Biological 4,000 to 20,000
Attack. years.
7%............. $2 million to $12 Actual West Coast < 0.01 to 0.01.. One event in 100
million. Port Shutdown to 600 years.
(12-days).
Hypothetical < 0.01.......... One event in
Nuclear Attack. 30,000 to
200,000 years.
Hypothetical < 0.01.......... One event in
Biological 4,000 to 20,000
Attack. years.
----------------------------------------------------------------------------------------------------------------
The annualized cost range presented in each cell results from
varying assumptions about the estimated initial and transaction costs
for Importer Security Filings, the potential for supply chain delays,
and the estimated costs to transmit Vessel Stow Plans and CSMs to CBP.
To estimate the full range of the total costs for complying with
the rule, for the four alternatives we develop a high cost scenario and
a low cost scenario by assuming certain values for the key cost
factors. Annualized costs for Alternatives 1 through 3 range from $890
million to $7.0 billion, depending on the discount rate applied, the
cost scenario, whether or not bulk shipments are exempt, and whether or
not the Additional Carrier Requirements are required. The annualized
costs for Alternative 4 are substantially lower, ranging from $2
million to $12 million. However, this alternative is the least
stringent and effective option because it only collects data on the
conveyance of the shipment.
Ideally, the quantification and monetization of the benefits of
this regulation would involve estimating the current level of risk of a
successful terrorist attack, absent this regulation, and the
incremental reduction in risk resulting from implementation of the
rule. We would then multiply the change by an estimate of the value
individuals place on such a risk reduction to produce a monetary
estimate of direct benefits. However, existing data limitations and a
lack of complete understanding of the true risks posed by terrorists
prevent us from establishing the incremental risk reduction
attributable to this rule. As a result, we undertake a break-even
analysis to inform decision-makers of the necessary incremental change
in the probability of such an event occurring that would result in
direct benefits equal to the costs of the rule.
In the break-even analysis, we identify three types of terrorist
attack scenarios that may be prevented by the regulation and obtain
cost estimates of the consequences of these events from publicly
available literature. The analysis compares the annualized costs
[[Page 71768]]
of the regulation to the avoided costs of each event to estimate the
reduction in the probability of such events (also presented in terms of
``odds,'' e.g., a 0.25 reduction in the probability of an event
occurring in a single year implies that one additional event must be
avoided in a four-year period) that must be achieved for the benefits
of the regulation to equal the costs. The reduction in the odds of
terrorist events are rough estimates that do not take into account
changes in risk through time or factors that may affect willingness to
pay to avoid the consequences of these events, such as changes in
income.
For each attack scenario, Table 1 indicates what would need to
occur for the costs of each alternative to equal its benefits, assuming
the alternative only reduces the risk of a single event of that type of
attack. As summarized in Table 1, the break-even risk reductions for
Alternative 4 are significantly lower than the other three
alternatives, reflecting the significantly lower costs associated with
requiring only the Additional Carrier Requirements. The breakeven
results for the remaining three alternatives are similar because the
costs of these options are not very different. For the most severe
attack scenario (a hypothetical nuclear attack in a major city), the
rule must result in the avoidance of one such event in a time period of
60 to 500 years for the benefits of the regulation to equal the costs.
For the least severe of the three hypothetical attack scenarios (costs
of the actual 12-day West Coast port shutdown), the estimated costs of
a single incident are closer in value to the annualized costs of the
rule. As a result, if the rule only reduced the risk of a single attack
on a port, a shutdown would need to be avoided at a rate of once in
three months to two years for the benefits of the rule to equal costs.
The results expressed as absolute reductions in baseline risk also show
higher reductions needed if port attacks only are mitigated (about 0.59
to 4.65) and lesser reductions associated with prevention of the more
catastrophic events. We note that this analysis is highly sensitive to
the chosen incident scenarios.
Total present value costs of the rule are presented in Table 2,
based on the cost projections we estimate for the 10-year analysis
period, 2009 through 2018. Applying a discount rate of three percent,
the total costs of Alternatives 1, 2, and 3 are projected to range from
$7.6 billion to $56 billion over 10 years depending on the cost
scenario, whether or not bulk shipments are exempt, and whether or not
Additional Carrier Requirements are required. If a discount rate of
seven percent is applied instead, total costs range from $7.0 billion
to $49 billion. Under Alternative 2, which requires Importer Security
Filings for both non-bulk cargo and bulk cargo, costs are not
significantly higher because the number of bulk shipments is relatively
small compared to the number of non-bulk shipments. Under Alternative
3, costs are not significantly lower because the estimated costs for
the Additional Carrier Requirements are relatively small compared to
the estimated costs for the Importer Security Filings. The present
value costs for Alternative 4 are significantly lower than the other
three alternatives, ranging from $16 million to $95 million.
As a result, the relatively large difference in values between the
lower end (e.g., present value cost of $7.6 billion at a discount rate
of three percent) and higher end ($56 billion) of the estimated total
cost range for Alternatives 1, 2, and 3 is attributable primarily to
the cost scenario and not on whether or not Importer Security Filings
for bulk shipments or the Additional Carrier Requirements are required.
The higher end of the estimated total cost range reflects the
variations made for the high cost scenario, and more specifically, the
assumption that delays in the supply chain would occur as a result of
this rule. For the high cost scenario, our present value estimate of
the welfare loss to U.S. importers arising from delays in the supply
chain is approximately $43 billion (at a discount rate of three
percent).
Table 2--Total Present Value Costs, 2009-2018 $2008
------------------------------------------------------------------------
Discount rate Present value costs
------------------------------------------------------------------------
Alternative 1 (chosen alternative): Importer Security Filings and
Additional Carrier Requirements, bulk cargo exempt
------------------------------------------------------------------------
3%........................... $7.6 billion to $56 billion.
7%........................... $7.0 billion to $49 billion.
------------------------------------------------------------------------
Alternative 2: Importer Security Filings and Additional Carrier
Requirements, bulk cargo not exempt
------------------------------------------------------------------------
3%........................... $7.6 billion to $56 billion.
7%........................... $7.0 billion to $49 billion.
------------------------------------------------------------------------
Alternative 3: Importer Security Filings only, bulk cargo exempt
------------------------------------------------------------------------
3%........................... $7.6 billion to $56 billion.
7%........................... $7.0 billion to $49 billion.
------------------------------------------------------------------------
Alternative 4: Additional Carrier Requirements only
------------------------------------------------------------------------
3%........................... $0.02 billion to $0.1 billion.
7%........................... $0.02 billion to $0.09 billion.
------------------------------------------------------------------------
Again, the range presented in each cell results from varying
assumptions about the estimated initial and transaction costs for
Importer Security Filings, the potential for supply chain delays, and
the estimated costs to transmit Vessel Stow Plans and CSMs to CBP.
Annual undiscounted costs of the regulation are presented in Table
3.
[[Page 71769]]
Table 3--Annual Undiscounted Costs by Year, 2009-2018 ($2008, in Millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alternative 1 (chosen
alternative): importer Alternative 2: importer
security filings and security filings and Alternative 3: importer Alternative 4: additional
Year additional carrier additional carrier security filings only, bulk carrier requirements only
requirements, bulk cargo requirements, bulk cargo not cargo exempt
exempt exempt
--------------------------------------------------------------------------------------------------------------------------------------------------------
2009......................... $1,900 to $11,000............ $1,900 to $11,000............ $1,900 to $11,000............ $0.4 to $14.
2010......................... 1,900 to 7,100............... 1,900 to 7,100............... 1,900 to 7,100............... 0.4 to 14.
2011......................... 1,900 to 7,300............... 1,900 to 7,300............... 1,900 to 7,300............... 0.4 to 14.
2012......................... 290 to 4,600................. 290 to 4,600................. 290 to 4,600................. 0.3 to 7.
2013......................... 310 to 4,800................. 310 to 4,800................. 310 to 4,800................. 0.3 to 7.
2014......................... 320 to 5,100................. 330 to 5,100................. 320 to 5,100................. 0.3 to 7.
2015......................... 340 to 5,300................. 340 to 5,300................. 340 to 5,300................. 0.3 to 7.
2016......................... 360 to 5,600................. 360 to 5,600................. 360 to 5,600................. 0.3 to 7.
2017......................... 380 to 5,900................. 380 to 5,900................. 380 to 5,900................. 0.3 to 7.
2018......................... 400 to 6,200................. 400 to 6,300................. 400 to 6,200................. 0.4 to 7.
--------------------------------------------------------------------------------------------------------------------------------------------------------
As shown in Table 3, annual discounted costs are highest in the
first years of implementation, then decrease notably, then steadily
increase for the remainder of the 10-year period of analysis. Costs are
highest in the first year as the potential for supply chain delays are
greatest during initial implementation of the rule. Also in the first
years of implementation, we account for software costs incurred by
those importers who import frequently to the United States. These
software costs are amortized over the first three years (until 2011),
not for the full 10 years of the analysis. Steady increases from 2012
to the end of the analysis period reflect our projected annual
increases in the number of shipments, the value of shipments, and the
vessel-trips into the United States.
The results indicate that Alternative 1 provides the most favorable
combination of cost and stringency. While Alternative 2 might be
considered more stringent because it does not exempt bulk cargo from
the Importer Security Filing requirements, the impact of this is
expected to be slight, because the number of bulk shipments is
relatively small compared to the number of non-bulk shipments.
Alternative 3 is expected to have costs similar to Alternative 1, but
will be less stringent because it only requires Importer Security
Filings and does not include data that verify the information on the
cargo manifest and identify and track the movement, location, and
status of cargo (and in particular, containerized cargo) from the time
its transport is booked until its arrival in the United States. Without
the Additional Carrier Requirements, CBP will not be able to assess the
specific risks associated with the many individual movements and
transfers involved in shipping cargo to the United States. Thus, an
important element of CBP's layered, risk-based approach to cargo
security would, consequently, be omitted.
Alternatives 3 and 4 are not chosen, in part, because it is CBP's
judgment that neither of these options will be as effective as the
selected option. Specifically, the Importer Security Filing
requirements and the Additional Carrier Requirements work in tandem.
The Additional Carrier Requirements focus on the conveyance of the
goods and are distinct from the Importer Security Filing elements,
which are focused on the merchandise and the parties involved in the
acquisition process. Specifically, Vessel Stow Plans will assist CBP in
validating other advanced cargo information submissions by allowing CBP
to, among other things, better detect unmanifested containers without
relying on physical verification methods that are manpower intensive
and costly. CSMs will provide CBP with additional transparency into the
custodial environment through which inter-modal containers are handled
and transported before arrival in the United States. Because CSMs are
created independently of the manifest, CBP can utilize them to
corroborate other advanced data elements, including Importer Security
Filings and those elements related to container and conveyance origin.
This corroboration with other advanced data messages, including
Importer Security Filings, and an enhanced view into the international
supply chain will contribute to the security of the United States and
the international supply chain through which containers and imported
cargo are shipped to U.S. ports.
Based on this analysis of alternatives, CBP has determined that
Alternative 1 provides the most favorable balance between security
outcomes and impacts to maritime transportation. As summarized in Table
4, the incremental costs of this regulation, on a per-shipment basis,
is a small fraction of the value of a shipment. The relatively high
cost of the rule over 10 years is driven by the large volume of
shipments rather than high per-transaction costs. Shipment data
indicate that the median value of a shipment of goods imported into the
United States is approximately $38,000. As shown in Table 4, the
increase in costs of imported shipments will range from $48 to $390 per
shipment, depending on the discount rate applied, the cost scenario,
and whether or not bulk shipments are exempt. The added costs of this
regulation are estimated to be only 0.13 percent to 1.03 percent of the
median value of $38,000 per shipment.
Table 4--Costs per Shipment, Median Value of Shipment, Vessel-Trip, and
Carrier
[$2008]
------------------------------------------------------------------------
3% discount rate 7% discount rate
------------------------------------------------------------------------
Importer Security Filing Costs: Alternatives 1 and 3 (bulk cargo exempt)
------------------------------------------------------------------------
Total Present Value Cost........ $7.5 billion to $6.9 billion to
$56 billion. $49 billion.
Number of shipments (10-year 144 million....... 144 million.
total).
Equivalent per shipment cost.... $52 to $390....... $48 to $341.
[[Page 71770]]
Median value per shipment....... $37,900........... $37,900.
Cost per median value........... 0.14 to 1.03 0.13 to 0.90
percent. percent.
------------------------------------------------------------------------
Importer Security Filing Costs: Alternative 2 (bulk cargo not exempt)
------------------------------------------------------------------------
Total Present Value Cost........ $7.6 billion to $7.0 billion to
$56 billion. $49 billion.
Number of shipments (10-year 145 million....... 145 million.
total).
Equivalent per shipment cost.... $52 to $388....... $48 to $339.
Median value per shipment....... $38,200........... $38,200.
Cost per median value........... 0.14 to 1.02 0.13 to 0.89
percent. percent.
------------------------------------------------------------------------
Vessel Stow Plan Costs: Alternatives 1, 2, and 4
------------------------------------------------------------------------
Total present value cost........ $3 million to $27 $2 million to $33
million. million.
Number of non-bulk vessel-trips, 294,000........... 294,000.
small and large carriers (10-
year total).
Equivalent per vessel-trip cost. $9 to $90......... $8 to $78.
------------------------------------------------------------------------
Container Status Message Costs: Alternatives 1, 2, and 4
------------------------------------------------------------------------
Total present value cost........ $0.3 million to $0.3 million to
$54 million. $48 million.
Number of container carriers, 74................ 74.
large.
Equivalent per carrier cost..... $3,900 to $730,000 $3,700 to
$650,000.
------------------------------------------------------------------------
The rule may increase the time shipments are in transit,
particularly for shipments conveyed in containers. Especially for
shipments consolidated in containers, the supply chain is generally
more complex and the importer has less control of the flow of goods and
exchange of associated security filing information. Foreign cargo
consolidators may be consolidating multiple shipments from one or more
shippers in a container destined for one or more buyers or consignees.
In order to ensure that the security filing data are provided by the
shippers to the ISF Importers (or their designated agents) and is then
transmitted to and accepted by CBP in advance of the 24 hour deadline,
carriers and consolidators may advance their cut-off times for receipt
of shipments and associated Importer Security Filing data.
These advanced cut-off times would help prevent a carrier or
consolidator from having to unpack or unload a container in the event
the security filing for one of the shipments contained in the container
is inadequate or not accepted by CBP. For example, carriers or
consolidators may require shippers to submit, transmit, or obtain CBP
acceptance of their security filing data before their shipments are
stuffed in the container, before the container is sealed, or before the
container is delivered to the port for lading. In such cases, importers
may experience additional delays in their supply chain to accommodate
these advanced cut-off times imposed by their carriers or
consolidators. The costs associated with these delays include: (1)
Higher inventory carrying costs; (2) the need to hold larger buffer-
stock inventories to accommodate variation in arrival time; (3)
depreciation in shipment value; (4) costs of storage at the
manufacturer, freight forwarder, consolidator, or port; and (5) costs
for additional security to protect the freight from tampering. To
capture all of these costs in our estimate of the impact of time
delays, we estimate the welfare loss to U.S. importers by relying on
estimates of the willingness to pay for reducing transit time. The high
end of the cost ranges presented in Table 4 assumes an initial supply
chain delay of three days (consolidated container shipments) or two
days (unconsolidated or full container shipments) for the first year of
implementation (2009) and a delay of one day for years 2 through 10
(2010-2018).
B. Regulatory Flexibility Act
In response to the requirements of the Regulatory Flexibility Act
(RFA) of 1980, as amended by the Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA) and Executive Order 13272, entitled
``Proper Consideration of Small Entities in Agency Rulemaking,''
federal agencies must consider the potential distributional impact of
rules on small businesses, small governmental jurisdictions, and small
organizations during the development of their rules.
The types of entities subject to the rule's requirements include
all importers receiving shipments via vessel and all vessel operating
common carriers (VOCCs) transporting containerized shipments via vessel
to the United States. One, the other, or both of the types of entities
will be affected depending on the alternative under consideration. The
results of our screening analysis indicated that the proposed rule may
significantly impact a substantial number of small importers or
carriers, and CBP conducted an Initial Regulatory Flexibility Analysis
(IRFA) to further assess these impacts. The IRFA provided a detailed
analysis of the potential impact of the proposed rule on small entities
and was made available for public comment at the same time as the
proposed rule on January 2, 2008.
At the publication of the interim final rule, if CBP still
determines that it cannot certify the rule, then it must prepare and
make available a Final Regulatory Flexibility Analysis (FRFA). As
discussed below, CBP cannot certify that the rule will not have a
significant impact on a substantial number of small importers. It can
certify the rule relative to the impact on small carriers; however, for
the purpose of simplicity, the FRFA presented here includes both
importers and carriers. The following is a summary of the FRFA. For
full details on the complete analysis, please refer to the Final
Regulatory Flexibility Act analysis contained in the ``Regulatory
Assessment,'' which can be found in the
[[Page 71771]]
docket for this rulemaking: http://www.regulations.gov; see also http://www.cbp.gov. CBP invites comments on this FRFA and will update it with
the final rule.
A succinct statement of the objectives of, and legal basis for, the
rule: Section 203(b) of the Security and Accountability for Every Port
Act (SAFE Port Act) of 2006 states that the Secretary of Homeland
Security ``shall require the electronic transmission to the Department
of additional data elements for improved high-risk targeting, including
appropriate elements of entry data * * * to be provided as advanced
information with respect to cargo destined for importation into the
United States prior to loading of such cargo on vessels at foreign
ports.'' The information required is that which is reasonably necessary
to enable high-risk shipments to be identified so as to prevent
smuggling and ensure cargo safety and security pursuant to the laws
enforced and administered by CBP. In addition, section 343(a) of the
Trade Act of 2002 states that the Secretary of Homeland Security
``shall promulgate regulations providing for the transmission * * * of
information pertaining to cargo destined for importation into the
United States.* * *''
A summary of the significant issues raised by the public comments
in response to the IRFA, a summary of the assessment of the agency of
such issues, and a statement of any changes made in the proposed rule
as a result of such comments: CBP received several comments
specifically addressing impacts to small entities.
Comments suggested that CBP should consider an exemption of small
business from some requirements of the rule. CBP believes that the
language of the SAFE Port Act does not allow it to exempt small
entities from the regulation. Furthermore, although we do not have
explicit information regarding the portion of importers who are small
entities, the information provided in the screening analysis suggests
that the majority of affected entities are likely to be small
businesses. Exempting most importers would significantly diminish the
effectiveness of the rule.
Comments suggested that CBP attempt to calculate the number of
entities that will cease operations as a result of the requirements of
the rule. Data are not readily-available that would allow us to
segregate all the importers in the PIERS dataset, which was the primary
dataset used in the primary analysis (summarized in the previous
section), the IRFA, and the FRFA by North American Industry
Classification System (NAICS) code. This step is necessary to identify
the proportion of small entities affected by the rule. Furthermore, we
are unable to estimate a distribution of the number of shipments by
industry and size category. As a result, given the currently available
data, we are unable to estimate the magnitude of the impact to small
entities in each industry and the number of businesses that may be
forced to cease operations as a result of the rule.
Comments reported that the costs associated with software purchase
were underestimated for small entities. In response to these comments,
we revised the primary analysis and the FRFA to include initial, one-
time costs of $25,000 to address this perceived understatement of costs
in the Regulatory Assessment that accompanied the proposed rule. Note
that we assume importers transporting only one shipment annually do not
incur this cost.
Commenters suggested that CBP conduct a prototype test with small
entity volunteers to better understand the potential impact to these
businesses. CBP is adopting a delayed compliance period whereby CBP
will work with the trade following the effective date of the interim
final rule to assist them in achieving full compliance with minimal
disruption. See the ``Structured Review and Flexible Enforcement
Period'' section of this document for further discussion regarding the
delayed compliance period. The interim final rule also provides
flexibility with respect to certain elements of the Importer Security
Filings. Additionally, as part of CBP's pre-existing Advance Trade Data
Initiative (ATDI), CBP has worked with a wide variety of volunteers
from the world trade community to test the trade's ability to provide
data, including some elements of the Importer Security Filing, to CBP.
ATDI has proven that the industry has access to the required data and
can get the data to CBP.
A description of, and, where feasible, an estimate of the number of
small entities to which the rule will apply: As discussed earlier, the
interim final rule applies to all entities importing containerized,
break-bulk, or Ro-Ro shipments into the United States. The regulation
also applies to VOCCs transporting shipments via vessel to the United
States. The majority of the affected entities are likely to be small.
In the summary of impacts presented here, we focus on Alternative 1,
the chosen alternative and the interim final rule. For the complete
results for all alternatives, please refer to the detailed Final
Regulatory Flexibility Act analysis, which is contained in the
``Regulatory Assessment,'' which can be found in the docket for this
rulemaking: http://www.regulations.gov; see also http://www.cbp.gov.
The regulation will affect importers in the form of initial, one-
time costs and transaction fees for collecting and transmitting the
security filing as well as consumer surplus losses if the rule delays
the supply chain. For the purposes of our screening analysis, importers
are not an industry as defined by SBA. Rather, many industries import
goods subject to the rule. We must determine the number of importers
that belong to each of these industries, and then determine the
appropriate industry-specific measure of a ``small entity.''
Our PIERS dataset includes information on over 200,000 unique
importers. We took a random sample of importers from the dataset and
collected market data on the entities from Dun & Bradstreet until we
had information describing 400 entities (a statistically significant
sample, 5 percent margin of error). Table 5 details the top industries
importing containerized cargo, identified by NAICS code, in our sample
and ranks them by number of occurrences.
Table 5--Top Industries From Importers Sample (Containerized Cargo)
------------------------------------------------------------------------
Number of Percent of
NAICS code occurrences sample Industry description
------------------------------------------------------------------------
424900............ 20 5.00 Miscellaneous
Nondurable Goods
Merchant
Wholesalers.
999990............ 19 .............. UNKNOWN INDUSTRY.
423830............ 13 3.25 Industrial Machinery
and Equipment
Merchant
Wholesalers.
442110............ 11 2.75 Furniture Stores.
488510............ 10 2.50 Freight
Transportation
Arrangement.
423220............ 8 2.00 Home Furnishing
Merchant
Wholesalers.
[[Page 71772]]
423120............ 7 1.75 Motor Vehicle
Supplies and New
Parts Merchant
Wholesalers.
423710............ 7 1.75 Hardware Merchant
Wholesalers.
424320............ 7 1.75 Men's and Boys'
Clothing and
Furnishings
Merchant
Wholesalers.
424330............ 7 1.75 Women's, Children's,
and Infants'
Clothing and
Accessories
Merchant
Wholesalers.
424490............ 7 1.75 Other Grocery and
Related Products
Merchant
Wholesalers.
423910............ 6 1.50 Sporting and
Recreational Goods
and Supplies
Merchant
Wholesalers.
326199............ 5 1.25 All Other Plastics
Product
Manufacturing.
423690............ 5 1.25 Other Electronic
Parts and Equipment
Merchant
Wholesalers.
423990............ 5 1.25 Other Miscellaneous
Durable Goods
Merchant
Wholesalers.
424310............ 5 1.25 Piece Goods,
Notions, and Other
Dry Goods Merchant
Wholesalers.
561499............ 5 1.25 All Other Business
Support Services.
423210............ 4 1.00 Furniture Merchant
Wholesalers.
423430............ 4 1.00 Computer and
Computer Peripheral
Equipment and
Software Merchant
Wholesalers.
423440............ 4 1.00 Other Commercial
Equipment Merchant
Wholesalers.
423450............ 4 1.00 Medical, Dental, and
Hospital Equipment
and Supplies
Merchant
Wholesalers.
424460............ 4 1.00 Fish and Seafood
Merchant
Wholesalers.
424480............ 4 1.00 Fresh Fruit and
Vegetable Merchant
Wholesalers.
442299............ 4 1.00 All Other Home
Furnishings Stores.
453220............ 4 1.00 Gift, Novelty, and
Souvenir Stores.
236115............ 3 0.75 New Single-Family
Housing
Construction
(except Operative
Builders).
315191............ 3 0.75 Outerwear Knitting
Mills.
325620............ 3 0.75 Toilet Preparation
Manufacturing.
332510............ 3 0.75 Hardware
Manufacturing.
333911............ 3 0.75 Pump and Pumping
Equipment
Manufacturing.
423320............ 3 0.75 Brick, Stone, and
Related
Construction
Material Merchant
Wholesalers.
423390............ 3 0.75 Other Construction
Material Merchant
Wholesalers.
423940............ 3 0.75 Jewelry, Watch,
Precious Stone, and
Precious Metal
Merchant
Wholesalers.
424130............ 3 0.75 Industrial and
Personal Service
Paper Merchant
Wholesalers.
424340............ 3 0.75 Footwear Merchant
Wholesalers.
441310............ 3 0.75 Automotive Parts and
Accessories Stores.
207 51.75 ALL OTHER INDUSTRIES
RECORDED IN SAMPLE.
------------------------------------------------------------------------
In most industries, information on revenues or number of employees
is used to define whether an entity is ``small'' for the purpose of
RFA/SBREFA analyses. For the top ten industries appearing in our
sample, Table 6 reports SBA's thresholds used to define ``small''
entities in each industry and the share of entities in the United
States that meet that definition. For each industry, the share of
entities considered small is at least 50 percent. For most industries,
the share of entities considered small is at least 75 percent.
Table 6--Share of Small Entities in Each of the Top 10 Industries (Containerized Cargo)
----------------------------------------------------------------------------------------------------------------
Share of small
NAICS code Industry description Percent of ``Small'' threshold entities in
sample U.S. (percent)
----------------------------------------------------------------------------------------------------------------
424900................... Miscellaneous Nondurable 5.00 100 employees.......... 93
Goods Merchant Wholesalers.
423830................... Industrial Machinery and 3.25 100 employees.......... 92
Equipment Merchant
Wholesalers.
442110................... Furniture Stores............ 2.75 $6.5 million........... 50
488510................... Freight Transportation 2.50 $6.5 million........... 75
Arrangement.
423220................... Home Furnishing Merchant 2.00 100 employees.......... 75
Wholesalers.
423120................... Motor Vehicle Supplies and 1.75 100 employees.......... 71
New Parts Merchant
Wholesalers.
423710................... Hardware Merchant 1.75 100 employees.......... 86
Wholesalers.
424320................... Men's and Boys' Clothing and 1.75 100 employees.......... 83
Furnishings Merchant
Wholesalers.
424330................... Women's, Children's, and 1.75 100 employees.......... 100
Infants' Clothing and
Accessories Merchant
Wholesalers.
424490................... Other Grocery and Related 1.75 100 employees.......... 86
Products Merchant
Wholesalers.
----------------------------------------------------------------------------------------------------------------
Table 7 reports summary statistics on our sample of 400 importers.
For example, it shows that four industries appeared more than ten times
in the sample, accounting for 54 individual firms. Within the United
States, there are 81,923 entities in those four industries, and 96.4
percent of those businesses meet SBA's definition of a small entity.
[[Page 71773]]
Table 7--Containerized Cargo Importers, Summary Statistics
----------------------------------------------------------------------------------------------------------------
Number of Number of Total number Number of
Number of appearances in sample industries in firms in of entities in small entities Share small
sample sample U.S. in U.S. (percent)
----------------------------------------------------------------------------------------------------------------
10+............................. 4 54 81,923 78,977 96.4
6-9............................. 7 49 1,371,759 1,341,422 97.8
5............................... 5 25 33,931 32,558 96.0
4............................... 8 32 72,596 70,829 97.6
3............................... 11 33 44,448 42,977 96.7
2............................... 27 54 467,998 461,318 98.6
1............................... 152 153 834,709 812,717 97.4
-------------------------------------------------------------------------------
Total....................... 214 400 2,907,364 2,840,798 97.7
----------------------------------------------------------------------------------------------------------------
Based on these summary statistics, we conclude that the majority of
firms in industries conducting importing activities are likely to be
small entities. Therefore, a substantial number of small entities are
likely to be affected by the rule. Next, we estimate whether the costs
to these importers of implementing the regulation are likely to be
significant.
Typically, Federal agencies compare per-business compliance costs
to annual revenues of small entities in various size classes to
determine the impact of the regulation on small entities. For this
rule, such a comparison requires a significant amount of data given
that the rule potentially affects hundreds of industries. Annual
compliance costs are driven by the number of shipments an importer
makes security filings on each year. To estimate the number of
shipments per small entity, we ideally would: (1) Take our PIERS
dataset of shipments and group the shipments by business; (2) group the
businesses by NAICS code; (3) determine the number of businesses in
each NAICS code that meet the definition of a small entity; (4) and
examine the number and value of shipments by those entities.
We have completed the first step: Identifying approximately 200,000
importers in our sample dataset. As discussed previously, we were able
to use Dun and Bradstreet data to identify the appropriate NAICS code
for 400 of these 200,000 importers. Next, we conservatively assume that
the majority of importers in each NAICS code are small entities.
However, estimating the typical number of shipments in each industry is
problematic. In 75 percent of the industries identified in our sample
of 400 importers, the number of entities affected is less than five.
Although we have shipment data for these businesses, these data are
unlikely to provide a meaningful sample of shipment volume or value on
an industry by industry basis.
Alternatively, when we extrapolate our PIERS dataset to estimate
shipments for the entire year, we are able to calculate lower and upper
bound estimates of the number of importers and stratify these importers
by shipping volume. However, we cannot reliably translate this
stratification on a per-industry basis. More importantly, we do not
believe that shipment volume is necessarily a good predictor of whether
an entity is considered to be a small business in its industry. For
example, a small entity with a business model that is heavily dependent
on overseas manufacturers may import many shipments a month, while a
large entity relying primarily on domestic suppliers may import only
one shipment a year.
For these reasons, we are unable to estimate average shipment
volume for small entities, preventing us from comparing compliance
costs to importers' revenues. Instead, we compare per-shipment
compliance costs to the average value of all affected shipments. This
comparison may over- or understate small entities' per-shipment
compliance costs if their shipment value is higher or lower than the
average. In addition, the ratio of compliance costs to shipment value
may under- or overstate the significance of the costs depending on the
purpose of those shipments and their resale value in the United States.
We calculate information on the mean value of shipments from the
PIERS database for all industries identified in our sample. We include
all shipments associated with an entity identified within a certain
industry. Table 8 presents the mean shipment value and the number of
shipments for each of the top 10 industries. These mean values are
provided simply for illustration of our data limitations and to provide
a sense of the range of mean shipment values.
Table 8--Mean Value per Shipment in the Top 10 Industries (Containerized Cargo)
----------------------------------------------------------------------------------------------------------------
Mean value
NAICS code Number of Total number per shipment
importers of shipments ($)
----------------------------------------------------------------------------------------------------------------
424900.......................................................... 20 114 $173,683
423830.......................................................... 13 51 47,250
442110.......................................................... 11 27 22,081
488510.......................................................... 10 175 107,828
423220.......................................................... 8 76 45,342
423120.......................................................... 7 60 72,895
424330.......................................................... 7 25 181,893
424320.......................................................... 7 121 130,213
423710.......................................................... 7 49 36,614
424490.......................................................... 7 10 18,354
----------------------------------------------------------------------------------------------------------------
[[Page 71774]]
Table 9 reports the initial, one-time costs (reported on a per-
shipment basis) and the security filing fee for importer frequency
classes. In addition, the table reports the percentage share that the
cost of the security filing requirements plays as a part of the mean
value per shipment. In each case presented below, the security filing
cost represents an increase of less than 4.7 percent of the value of
the shipment. We recognize that small entities' mean value per shipment
may be higher or lower than $103,164; therefore, the impact to small
entities may be greater than the percentages reported in the table. The
results suggest that costs of complying with the rule may be
significant relative to the value of an affected shipment.
Table 9--Relative Cost of Security Filing Requirements (Containerized Cargo)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Initial, one-
Number of Number of Security filing time fee (per Total cost as
NAICS code entities shipments fee entity per share of mean
shipment) value (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lower Bound Estimate:
Once per year............................................. 0 0 $75.00 ................ 0.07
Twice yearly to less than monthly......................... 134,000 697,000 60.00 $4,817 4.73
Monthly to less than weekly............................... 44,100 1,230,000 45.00 900 0.92
Weekly to less than daily................................. 9,900 2,190,000 30.00 113 0.14
Daily or greater.......................................... 615 2,360,000 15.00 7 0.02
Anonymous................................................. 38,000 1,300,000 22.50 730 0.73
Upper Bound Estimate:
Once per year............................................. 370,000 456,000 75.00 ................ 0.07
Twice yearly to less than monthly......................... 262,000 1,380,000 60.00 4,740 4.65
Monthly to less than weekly............................... 66,900 1,640,000 45.00 1,017 1.03
Weekly to less than daily................................. 18,100 1,810,000 30.00 250 0.27
Daily or greater.......................................... 1,480 1,180,000 15.00 31 0.04
Anonymous................................................. 144,000 1,300,000 22.50 2,776 2.71
--------------------------------------------------------------------------------------------------------------------------------------------------------
In our upper-bound impact estimate, importers of containerized
shipments may also experience a loss in consumer surplus associated
with delays. While these losses represent lost value, they do not
represent actual expenditures. The impact of these losses on small
entities is unknown.
The PIERS dataset includes information on over 4,600 unique break-
bulk importers. We took a random sample from that dataset and collected
financial information on the entities from Dun & Bradstreet until we
had data on 75 entities. Table 10 details the top industries in our
sample ranked by number of occurrences.
Table 10--Top Industries From Importers Sample (Break-Bulk Cargo)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of
NAICS code occurrences Percentage Industry description
--------------------------------------------------------------------------------------------------------------------------------------------------------
423510...................................... 8 10.67 Metal Service Centers and Other Metal Merchant Wholesalers.
423310...................................... 6 8.00 Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers.
336611...................................... 4 5.33 Ship Building and Repairing.
999990...................................... 4 ............ UNKNOWN INDUSTRY.
424480...................................... 3 4.00 Fresh Fruit and Vegetable Merchant Wholesalers.
488510...................................... 3 4.00 Freight Transportation Arrangement.
423830...................................... 2 2.67 Industrial Machinery and Equipment Merchant Wholesalers.
424410...................................... 2 2.67 General Line Grocery Merchant Wholesalers.
424470...................................... 2 2.67 Meat and Meat Product Merchant Wholesalers.
424490...................................... 2 2.67 Other Grocery and Related Products Merchant Wholesalers.
424690...................................... 2 2.67 Other Chemical and Allied Products Merchant Wholesalers.
511110...................................... 2 2.67 Newspaper Publishers.
39 52.00 ALL OTHER INDUSTRIES RECORDED IN SAMPLE.
--------------------------------------------------------------------------------------------------------------------------------------------------------
We present the share of entities considered small in each of the
top ten industries from our PIERS sample. Table 11 reports those
definitions of ``small'' from the SBA and the share of entities that
are small. For most industries, the share of entities considered small
is at least 75 percent. Therefore, we assume that a substantial number
of small break-bulk importers will be affected by the rule.
[[Page 71775]]
Table 11--Share of Small Entities in the Top 10 Industries (Break-Bulk Cargo)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Share of small
NAICS code Industry description Percent of ``Small'' threshold entities
sample (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
423510................................ Metal Service Centers and Other Metal Merchant 10.67 100 employees........... 63
Wholesalers.
423310................................ Lumber, Plywood, Millwork, and Wood Panel Merchant 8.00 100 employees........... 100
Wholesalers.
336611................................ Ship Building and Repairing....................... 5.33 1,000 employees......... 75
424480................................ Fresh Fruit and Vegetable Merchant Wholesalers.... 4.00 100 employees........... 33
488510................................ Freight Transportation Arrangement................ 4.00 $6.5 million............ 0
423830................................ Industrial Machinery and Equipment Merchant 2.67 100 employees........... 100
Wholesalers.
424410................................ General Line Grocery Merchant Wholesalers......... 2.67 100 employees........... 100
424470................................ Meat and Meat Product Merchant Wholesalers........ 2.67 100 employees........... 100
424490................................ Other Grocery and Related Products Merchant 2.67 100 employees........... 100
Wholesalers.
424690................................ Other Chemical and Allied Products Merchant 2.67 100 employees........... 50
Wholesalers.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 12 reports summary statistics on our sample of 75 break-bulk
importers. Only two industries appeared in the sample more than five
times, accounting for 14 firms. For all industries importing break-bulk
shipments, over 93 percent of the firms in that industry are small
entities.
Table 12--Break-Bulk Importers, Summary Statistics
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of small
Number of appearances in sample industries in Number of firms Total number of entities in Share small
sample in sample entities in U.S. U.S. (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
6+............................................................ 2 14 13,771 12,883 93.6
5............................................................. 0 0 ................ ................ \(1)\
4............................................................. 1 4 1,670 1,642 98.3
3............................................................. 2 6 16,228 15,552 95.8
2............................................................. 6 12 49,028 46,938 95.7
1............................................................. 34 39 196,116 186,854 95.3
-----------------------------------------------------------------------------------------
Total..................................................... 45 75 276,813 263,869 95.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Not applicable.
Table 13 details the mean shipment value and the number of
shipments for each of the top 10 industries. These mean values are
provided simply for illustration of our data limitations and to provide
a sense of the range of mean shipment values.
Table 13--Mean Value per Shipment in the Top Ten Industries (Break-Bulk Cargo)
----------------------------------------------------------------------------------------------------------------
Number of Total number of Mean value per
NAICS code importers shipments shipment ($)
----------------------------------------------------------------------------------------------------------------
423510.................................................... 8 922 $145,731
423310.................................................... 6 28 303,095
336611.................................................... 4 10 509,161
424480.................................................... 3 238 77,106
488510.................................................... 3 31 520,999
423830.................................................... 2 2 743,823
424410.................................................... 2 10 140,086
424470.................................................... 2 16 40,493
424490.................................................... 2 13 76,597
424690.................................................... 2 68 56,595
----------------------------------------------------------------------------------------------------------------
Table 14 reports the initial, one-time costs (reported on a per-
shipment basis) and the security filing fee for importer frequency
classes. In addition, the table reports the percentage share that the
cost of the security filing requirements plays as a part of the mean
value per shipment. In each case presented below, the security filing
cost represents an increase of less than 2 percent of the value of the
shipment. In most cases, the security filing cost represents an
increase of less than 0.4 percent of the value of the shipment. We
recognize that small entities' mean value per shipment may be higher or
lower than $309,174; therefore, the filing costs may represent a
smaller or larger percentage of the total value.
[[Page 71776]]
Table 14--Relative Cost of Security Filing Requirements (Break-Bulk Cargo)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Initial, one-
Number of Number of Security filing time fee (per Total cost as
NAICS code entities shipments fee entity per share of mean
shipment) value (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Lower Bound Estimate:
Once per year................................................. 0 0 $75.00 ................ 0.02
Twice yearly to less than monthly............................. 2,740 11,400 60.00 6,013 1.96
Monthly to less than weekly................................... 693 15,700 45.00 1,104 0.37
Weekly to less than daily..................................... 216 42,400 30.00 127 0.05
Daily or greater.............................................. 14 60,000 15.00 6 0.01
Anonymous..................................................... 272 9,630 22.50 707 0.24
Upper Bound Estimate:
Once per year................................................. 7,870 7,870 75.00 ................ 0.02
Twice yearly to less than monthly............................. 4,470 18,200 60.00 6,157 2.01
Monthly to less than weekly................................... 1,050 25,400 45.00 1,032 0.35
Weekly to less than daily..................................... 490 56,100 30.00 218 0.08
Daily or greater.............................................. 30 21,900 15.00 35 0.02
Anonymous..................................................... 1,040 9,630 22.50 2,686 0.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
The security filing cost as a share of the mean value of shipments
made by other industries (outside of the top 10) is in many instances
higher than 1 percent. Therefore, we would ideally compare each
entity's total annual compliance costs to annual revenues. However,
based on our 96-day PIERS data sample set, we are not able to predict
the number of break-bulk shipments made each year by these entities.
Therefore, we cannot predict annual compliance costs and are unable to
make a determination as to whether the effects of the rule are
significant for a substantial number of small break-bulk importers.
We do not complete the same analysis for roll-on/roll-off (Ro-Ro)
cargo importers. We referenced Dun & Bradstreet for information on
approximately 100 importers and found that information was only
available for six entities. A closer examination of the 100 importers
suggested that the majority are private individuals, which are not
considered small entities.
According to the SBA-defined small business size standards for
Vessel Operating Common Carriers (VOCCs), which fall under NAICS 483111
(Deep Sea Freight Transportation), firms with fewer than 500 employees
are considered to be small entities. Dun and Bradstreet's Market
Identifiers report 492 entities operating within NAICS 483111. Of these
492 entities, 477 are firms that report fewer than 500 employees.
We have concerns about the reliability of the Dun & Bradstreet data
in the case of this particular business area. First, CBP's Vessel
Automated Manifest System (Vessel AMS) database identifies 1,179
carriers importing shipments to the United States in 2005. This is more
than double the number of entities identified in the Dun & Bradstreet
list or the 487 entities identified by the U.S. Census Bureau. It would
appear that a considerable number of VOCCs do not have deep sea cargo
transportation as their primary area of business and that this NAICS
classification is missing a significant number of entities. Second, we
understand the focus of the RFA/SBREFA analysis to be on U.S., and not
foreign, small businesses. There is no expeditious and economical
method of assessing the corporate nationality of either the Vessel AMS
or Dun & Bradstreet list of shipping companies. We are aware, however,
that the majority of the shipping lines carrying containers into the
United States, regardless of size, operate under foreign ownership.
In the absence of alternative data sources, we proceed to conduct
the screening analysis relying on descriptive financial information
about NAICS 483111 entities found in the Dun & Bradstreet database and
the number of VOCCs identified in Vessel AMS. We also conclude that a
substantial number of small entities are likely to be directly affected
by the regulation under the rule.
For data on revenues and employees, we use the Dun & Bradstreet
data for the 477 entities with fewer than 500 employees. Table 15
summarizes the total annual average revenues (2004) for firms within
NAICS 483111, organized by ranges of employee-size classes.
Specifically, we organize the Dun & Bradstreet company data by the
employee-size classes and then calculate the average revenue of
companies within that size class. Businesses with zero to 100 employees
have average annual revenues of $6 million, those with 101 to 250
employees have average annual revenues of $59 million, and those with
251 to 500 employees have average annual revenues of $105 million.
Table 15--Average Annual Revenue Estimates (Carriers)
------------------------------------------------------------------------
Number of
Carrier size business Average annual
entities revenues
------------------------------------------------------------------------
0-100 employees..................... 456 $6,000,000
101-250 employees................... 13 59,000,000
251-500 employees................... 8 105,000,000
501-5,000 employees................. 15 450,000,000
------------------------------------------------------------------------
[[Page 71777]]
The first of the two Additional Carrier Requirements is the Vessel
Stow Plan, which will be required of carriers carrying containerized
cargo. Our calculations assume that the cost to a small entity of
submitting a Vessel Stow Plan will depend on the number of vessel trips
completed. Carriers that complete between one and 100 vessel trips per
year are assigned a cost of $50 per trip. Larger carriers (those that
complete at least 101 vessel trips per year) are assigned a one-time
fixed cost of $50,000 and a variable cost of $100 per trip. Because we
do not know the number of vessel trips undertaken by carriers in the
various size classes, we conservatively assume that for every trip
volume, some of the carriers may be small entities.
We estimate that the average annual revenue of small carriers is
$9.1 million, which represents the average of the average annual
revenues of small business entities identified in Table 15, weighted by
the number of business entities. In Table 16, we present each category
of carrier (based on the annual number of vessel trips) with their
corresponding annual worst-case cost of submitting Vessel Stow Plans.
We then divide these costs by the average annual revenue of $9.1
million, and as shown in Table 16, we estimate that the average share
of revenue of submitting Vessel Stow Plans for small carriers is 0.25
percent, which does not rise to the level of a significant cost to
carriers.
Table 16--Vessel Stow Plan Costs
----------------------------------------------------------------------------------------------------------------
Costs as share
Vessel trips Container Worst-case of revenue
carriers annual costs (percent)
----------------------------------------------------------------------------------------------------------------
1......................................................... 51 $50 0.00
2-10...................................................... 116 500 0.01
11-100.................................................... 183 5,000 0.05
101-1,000................................................. 70 116,667 1.28
1,001+.................................................... 4 136,667 1.50
-----------------------------------------------------
Total................................................. 424 22,851 0.25
----------------------------------------------------------------------------------------------------------------
The second of the two Additional Carrier Requirements is the
Container Status Message (CSM), which will be required of carriers
carrying containerized cargo, provided they already collect and
maintain CSM data in their electronic equipment tracking systems. Our
calculations assume that the cost to a small entity associated with
submitting CSMs will depend on the number of vessel trips completed.
Carriers that complete between one and 100 vessel trips per year will
experience no cost associated with submitting CSMs. Larger carriers
(those that complete at least 101 vessel trips per year) are assigned a
one-time fixed cost of $250,000 and a variable cost of $55,000 per
year. In Table 17, we present each category of carrier (based on the
annual number of vessel trips) with their corresponding annual worst-
case cost of submitting CSMs. We then divide these costs by the average
annual small carrier revenue of $9.1 million, as calculated previously
for Vessel Stow Plans. As shown in Table 17, we estimate that the
average share of revenue of submitting CSMs for small carriers is 0.16
percent, which again does not rise to the level of a significant cost
to carriers.
Table 17--Container Status Message Costs
----------------------------------------------------------------------------------------------------------------
Costs as share
Vessel trips Container Worst-case of revenue
carriers annual costs (percent)
----------------------------------------------------------------------------------------------------------------
1......................................................... 58 $0 0.00
2-10...................................................... 162 0 0.00
11-100.................................................... 175 0 0.00
101-1,000................................................. 45 138,333 1.52
1,001+.................................................... 2 138,333 1.52
-----------------------------------------------------
Total................................................. 442 14,710 0.16
----------------------------------------------------------------------------------------------------------------
The two costs for two additional carrier elements are additive for
containerized cargo, so the average cost share would be 0.41 percent
(0.25 percent plus 0.16 percent). Therefore, we conclude that the
additional data elements required for the VOCCs are unlikely to result
in a significant cost to small entities.
A description of the projected reporting, recordkeeping and other
compliance requirements of the rule, including an estimate of the
classes of small entities that will be subject to the requirement and
the type of professional skills necessary for preparation of the report
or record: The requirements of the rule are expected to be submitted
electronically by importers or VOCCs (or an agent representing either).
Professional skills necessary for preparation of the report or record
include basic administrative and recordkeeping skills used to manage
data transaction, shipment, manifest, security, and other data used in
the commercial supply chain environment, along with a working knowledge
of import shipment arrangements, brokerage, conveyance/shipping, and
consolidation customs procedures and regulation.
A description of the steps the agency has taken to minimize the
significant adverse economic impact on small entities consistent with
the stated objectives of applicable statutes, including a statement of
the factual, policy, and legal reasons for selecting the alternative
adopted in the rule and why each of the other significant alternatives
to the rule considered by the agency was rejected: We have previously
described the alternatives and why Alternative 1 was ultimately
[[Page 71778]]
selected as the interim final rule. Given the prevalence of small
entities conducting importing activities and the need for all entities
to participate for the rule to be effective, CBP is not exempting small
entities from the regulation.
Conclusion: In summary, because the interim final rule affects all
importers and carriers bringing goods to the United States, it likely
affects a substantial number of small entities in each industry
conducting these activities. Based on the data limitations discussed
above, we are uncertain whether these effects will be significant on a
per-entity basis for importers. Therefore, based on the results of this
analysis, CBP cannot certify that the rule will not have a significant
impact on a substantial number of small importing entities. As a
result, we have conducted a FRFA. Based on the analysis presented
above, we believe that a substantial number of small VOCCs are not
likely to be significantly affected.
C. Unfunded Mandates Reform Act
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA) requires
agencies to assess the effects of their regulatory actions on State,
local, and tribal governments and the private sector. The regulation is
exempt from these requirements under 2 U.S.C. 1503 (Exclusions) which
states that UMRA ``shall not apply to any provision in a bill, joint
resolution, amendment, motion, or conference report before Congress and
any provision in a proposed or final federal regulation that is
necessary for the national security or the ratification or
implementation of international treaty obligations.''
D. Paperwork Reduction Act
The collections of information encompassed within this interim
final rule have been submitted to OMB for review in accordance with the
Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under OMB control
number 1651-0001. An agency may not conduct, and a person is not
required to respond to, a collection of information unless the
collection of information displays a valid control number assigned by
OMB.
There are three collections of information in this document. The
collections are contained in 19 CFR 4.7c, 4.7d, and 149.2. This
information will be used by CBP to further improve the ability of CBP
to identify high-risk shipments so as to prevent smuggling and ensure
cargo safety and security. The likely respondents and/or recordkeepers
are individuals and businesses.
Under Sec. 4.7c, a vessel stow plan is required from a carrier
when that carrier causes a vessel to arrive in the United States.
Vessel stow plans are used to transmit information about cargo loaded
aboard a vessel. The estimated average annual burden associated with
the information collection in Sec. 4.7c is 102.6 hours per carrier.
Under Sec. 4.7d, container status messages are required from an
incoming carrier for all containers destined to be transported by that
carrier and to arrive within the limits of a port in the United States
by vessel. Container status messages serve to facilitate the intermodal
handling of containers by streamlining the information exchange between
trading partners involved in administration, commerce, and transport of
containerized shipments. The messages can also be used to report
terminal container movements (e.g., loading and discharging the vessel)
and to report the change in status of containers (e.g., empty or full).
Container status messages will provide CBP with additional transparency
into the custodial environment through which inter-modal containers are
handled and transported before arrival and after unlading in the United
States. This enhanced view (in corroboration with other advance data
messages) into the international supply chain would contribute to the
security of the United States and in the international supply chain
through which containers and import cargos reach ports in the United
States. The estimated average annual burden associated with the
information collection in Sec. 4.7d is 91.3 hours per carrier.
Under Sec. 149.2, an Importer Security Filing, consisting of
security elements of entry data for cargo destined to the United
States, is required from the ISF Importer, as defined in these
regulations. For shipments other than FROB cargo, IE and T&E in-bond
shipments, and goods to be delivered to an FTZ, the ISF Importer will
be the owner, purchaser, consignee, or agent such as a licensed customs
broker. For FROB, the ISF Importer will be the carrier. For IE and T&E
in-bond shipments, and goods to be delivered to an FTZ, the ISF
Importer will be the party filing the IE, T&E, or FTZ documentation.
The estimated average annual burden associated with the information
collection in Sec. 149.2 is 52.3 hours per respondent or recordkeeper.
Comments on the accuracy of these burden estimates and suggestions
for reducing this burden should be sent to the Border Security
Regulations Branch, Office of International Trade, U.S Customs and
Border Protection, 1300 Pennsylvania Avenue, NW., (Mint Annex),
Washington, DC 20229.
The list of approved information collections, contained in 19 CFR
Part 178, is being amended as appropriate to reflect the approved
information collections covered by this interim final rule.
XI. Signing Authority
The signing authority for these amendments falls under 19 CFR
0.1(b). Accordingly, this document is signed by the Secretary of
Homeland Security (or his delegate).
XII. Coordination of Interim Final Rule With Congress
Pursuant to section 343(a)(3)(L) (19 U.S.C. 2071 note, section
(a)(3)(L)), the required report regarding this interim final rule
document has been timely made to the Committees on Finance and
Commerce, Science, and Transportation of the Senate and the Committees
on Ways and Means and Transportation and Infrastructure of the House of
Representatives.
XIII. Regulatory Amendments
List of Subjects
19 CFR part 4
Customs duties and inspection, Freight, Maritime carriers,
Reporting and recordkeeping requirements, Vessels.
19 CFR part 12
Customs duties and inspection, Reporting and recordkeeping
requirements.
19 CFR part 18
Common carriers, Customs duties and inspection, Freight, Penalties,
Reporting and recordkeeping requirements, Surety bonds.
19 CFR part 101
Customs duties and inspection, Vessels.
19 CFR part 103
Administrative practice and procedure, Confidential business
information, Courts, Freedom of information, Law enforcement, Privacy,
Reporting and recordkeeping requirements.
19 CFR part 113
Common carriers, Customs duties and inspection, Freight, Reporting
and recordkeeping requirements, Surety bonds.
[[Page 71779]]
19 CFR part 122
Administrative practice and procedure, Customs duties and
inspection, Penalties, Reporting and recordkeeping requirements.
19 CFR part 123
Customs duties and inspection, Freight, Reporting and recordkeeping
requirements, Vessels.
19 CFR part 141
Customs duties and inspection, Reporting and recordkeeping
requirements.
19 CFR part 143
Customs duties and inspection, Reporting and recordkeeping
requirements.
19 CFR part 149
Arrival, Declarations, Customs duties and inspection, Freight,
Importers, Imports, Merchandise, Reporting and recordkeeping
requirements, Shipping, Vessels.
19 CFR part 178
Reporting and recordkeeping requirements.
19 CFR part 192
Penalties, Reporting and recordkeeping requirements, Vessels.
Amendments to the Regulations
0
Parts 4, 12, 18, 101, 103, 113, 122, 123, 141, 143, 149, and 192 of
title 19, Code of Federal Regulations (19 CFR parts 4, 12, 18, 101,
103, 113, 122, 123, 141, 143, 149, 178, and 192), are amended as set
forth below.
PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES
0
1. The general authority citation for part 4 is revised, the relevant
specific authority citations are revised, and the specific authority
citation for sections 4.7c and 4.7d is added to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624,
2071 note; 46 U.S.C. 60105;
* * * * *
Section 4.7 also issued under 19 U.S.C. 1581(a);
Section 4.7a also issued under 19 U.S.C. 1498, 1584;
* * * * *
Sections 4.7c and 4.7d also issued under 6 U.S.C. 943.
* * * * *
0
2. Amend Sec. 4.7 by revising paragraph (b)(2); and
0
a. In paragraph (e), by removing the phrase ``in addition to penalties
applicable under other provisions of law'' at the end of the first
sentence and adding in its place the phrase ``in addition to damages
under the international carrier bond of $5,000 for each violation
discovered''; and
0
b. In paragraph (e), by removing the phrase ``, in addition to any
other penalties applicable under other provisions of law'' at the end
of the paragraph and adding in its place ``of $5,000 for each violation
discovered''.
The revised paragraph (b)(2) reads as follows:
Sec. 4.7 Inward foreign manifest; production on demand; contents and
form; advance filing of cargo declaration.
* * * * *
(b) * * *
(2) In addition to the vessel stow plan requirements pursuant to
Sec. 4.7c of this part and the container status message requirements
pursuant to Sec. 4.7d of this part, subject to the effective date
provided in paragraph (b)(5) of this section, and with the exception of
any bulk or authorized break bulk cargo as prescribed in paragraph
(b)(4) of this section, Customs and Border Protection (CBP) must
receive from the incoming carrier, for any vessel covered under
paragraph (a) of this section, the CBP-approved electronic equivalent
of the vessel's Cargo Declaration (Customs Form 1302), 24 hours before
the cargo is laden aboard the vessel at the foreign port (see Sec.
4.30(n)(1)). The current approved system for presenting electronic
cargo declaration information to CBP is the Vessel Automated Manifest
System (AMS).
* * * * *
Sec. 4.7a [Amended]
0
3. Amend Sec. 4.7a(f) by:
0
a. Removing the phrase ``in addition to penalties applicable under
other provisions of law'' at the end of the first sentence and adding
in its place ``in addition to damages under the international carrier
bond of $5,000 for each violation discovered''; and
0
b. Removing the phrase ``, in addition to other penalties applicable
under other provisions of law'' at the end of the paragraph and adding
in its place ``of $5,000 for each violation discovered''.
0
4. Add a new Sec. 4.7c to read as follows:
Sec. 4.7c Vessel stow plan.
Vessel stow plan required. In addition to the advance filing
requirements pursuant to Sec. Sec. 4.7 and 4.7a of this part and the
container status message requirements pursuant to Sec. 4.7d of this
part, for all vessels subject to Sec. 4.7(a) of this part, except for
any vessel exclusively carrying break bulk cargo or bulk cargo as
prescribed in Sec. 4.7(b)(4) of this part, the incoming carrier must
submit a vessel stow plan consisting of vessel and container
information as specified in paragraphs (b) and (c) of this section
within the time prescribed in paragraph (a) of this section via the
CBP-approved electronic data interchange system.
(a) Time of transmission. Customs and Border Protection (CBP) must
receive the stow plan no later than 48 hours after the vessel departs
from the last foreign port. For voyages less than 48 hours in duration,
CBP must receive the stow plan prior to arrival at the first U.S. port.
(b) Vessel information required to be reported. The following
information must be reported for each vessel:
(1) Vessel name (including international maritime organization
(IMO) number);
(2) Vessel operator; and
(3) Voyage number.
(c) Container information required to be reported. The following
information must be reported for each container carried on each vessel:
(1) Container operator;
(2) Equipment number;
(3) Equipment size and type;
(4) Stow position;
(5) Hazmat code (if applicable);
(6) Port of lading; and
(7) Port of discharge.
(d) Compliance date of this section. (1) General. Subject to
paragraph (d)(2) of this section, all affected ocean carriers must
comply with the requirements of this section on and after January 26,
2010.
(2) Delay in compliance date of section. CBP may, at its sole
discretion, delay the general compliance date set forth in paragraph
(d)(1) of this section in the event that any necessary modifications to
the approved electronic data interchange system are not yet in place or
for any other reason. Notice of any such delay will be provided in the
Federal Register.
0
5. Add a new section 4.7d to read as follows:
Sec. 4.7d Container status messages.
(a) Container status messages required. In addition to the advance
filing requirements pursuant to Sec. Sec. 4.7 and 4.7a of this part
and the vessel stow plan requirements pursuant to Sec. 4.7c of this
part, for all containers destined to arrive within the limits of a port
in the United States from a foreign port by vessel, the incoming
carrier must submit messages regarding the status of the events as
specified in paragraph (b) of this section if the carrier creates or
[[Page 71780]]
collects a container status message (CSM) in its equipment tracking
system reporting that event. CSMs must be transmitted to Customs and
Border Protection (CBP) within the time prescribed in paragraph (c) of
this section via a CBP-approved electronic data interchange system.
There is no requirement that a carrier create or collect any CSMs under
this paragraph that the carrier does not otherwise create or collect on
its own and maintain in its electronic equipment tracking system.
(b) Events required to be reported. The following events must be
reported if the carrier creates or collects a container status message
in its equipment tracking system reporting that event:
(1) When the booking relating to a container which is destined to
arrive within the limits of a port in the United States by vessel is
confirmed;
(2) When a container which is destined to arrive within the limits
of a port in the United States by vessel undergoes a terminal gate
inspection;
(3) When a container, which is destined to arrive within the limits
of a port in the United States by vessel, arrives or departs a facility
(These events take place when a container enters or exits a port,
container yard, or other facility. Generally, these CSMs are referred
to as ``gate-in'' and ``gate-out'' messages.);
(4) When a container, which is destined to arrive within the limits
of a port in the United States by vessel, is loaded on or unloaded from
a conveyance (This includes vessel, feeder vessel, barge, rail and
truck movements. Generally, these CSMs are referred to as ``loaded on''
and ``unloaded from'' messages);
(5) When a vessel transporting a container, which is destined to
arrive within the limits of a port in the United States by vessel,
departs from or arrives at a port (These events are commonly referred
to as ``vessel departure'' and ``vessel arrival'' notices);
(6) When a container which is destined to arrive within the limits
of a port in the United States by vessel undergoes an intra-terminal
movement;
(7) When a container which is destined to arrive within the limits
of a port in the United States by vessel is ordered stuffed or
stripped;
(8) When a container which is destined to arrive within the limits
of a port in the United States by vessel is confirmed stuffed or
stripped; and
(9) When a container which is destined to arrive within the limits
of a port in the United States by vessel is stopped for heavy repair.
(c) Time of transmission. For each event specified in paragraph (b)
of this section that has occurred, and for which the carrier creates or
collects a container status message (CSM) in its equipment tracking
system reporting that event, the carrier must transmit the CSM to CBP
no later than 24 hours after the CSM is entered into the equipment
tracking system.
(d) Contents of report. The report of each event must include the
following:
(1) Event code being reported, as defined in the ANSI X.12 or UN
EDIFACT standards;
(2) Container number;
(3) Date and time of the event being reported;
(4) Status of the container (empty or full);
(5) Location where the event took place; and
(6) Vessel identification associated with the message if the
container is associated with a specific vessel.
(e) A carrier may transmit other container status messages in
addition to those required pursuant to paragraph (b) of this section.
By transmitting additional container status messages, the carrier
authorizes Customs and Border Protection (CBP) to access and use those
data.
(f) Compliance date of this section. (1) General. Subject to
paragraph (f)(2) of this section, all affected ocean carriers must
comply with the requirements of this section on and after January 26,
2010.
(2) Delay in compliance date of section. CBP may, at its sole
discretion, delay the general compliance date set forth in paragraph
(f)(1) of this section in the event that any necessary modifications to
the approved electronic data interchange system are not yet in place or
for any other reason. Notice of any such delay will be provided in the
Federal Register.
PART 12--SPECIAL CLASSES OF MERCHANDISE
0
6. The general authority citation for part 12 and specific authority
citation for Sec. 12.3 continue to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i),
Harmonized Tariff Schedule of the United States (HTSUS)), 1624;
* * * * *
Section 12.3 also issued under 7 U.S.C. 135h, 21 U.S.C. 381;
* * * * *
Sec. 12.3 [Amended]
0
7. Amend Sec. 12.3(b)(2) and (c) by removing references to ``Sec.
113.62(l)(1)'' and adding in their place ``Sec. 113.62(m)(1)''.
PART 18--VESSELS IN FOREIGN AND DOMESTIC TRADES
0
8. The general authority citation for part 18 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i),
Harmonized Tariff Schedule of the United States), 1551, 1552, 1553,
1623, 1624;
* * * * *
0
9. Amend Sec. 18.5 by:
0
a. In paragraph (a), removing the reference to ``paragraphs (c), (d),
(e) and (f)'' and adding in its place ``paragraphs (c), (d), (e), (f),
and (g)''; and
0
b. Adding a new paragraph (g).
The new paragraph (g) reads as follows:
Sec. 18.5 Diversion.
* * * * *
(g) For in-bond shipments which, at the time of transmission of the
Importer Security Filing as required by Sec. 149.2 of this chapter,
are intended to be entered as an immediate exportation (IE) or
transportation and exportation (T&E) shipment, permission to divert the
in-bond movement to a port other than the listed port of destination or
export or to change the in-bond entry into a consumption entry must be
obtained from the port director of the port of origin. Such permission
would only be granted upon receipt by Customs and Border Protection
(CBP) of a complete Importer Security Filing as required by part 149 of
this chapter.
PART 103--AVAILABILITY OF INFORMATION
0
10. The general authority citation for part 103 continues, and the
specific authority citation for Sec. 103.31a is revised to read as
follows:
Authority: 5 U.S.C. 301, 552, 552a; 19 U.S.C. 66, 1624; 31
U.S.C. 9701.
* * * * *
Section 103.31a also issued under 19 U.S.C. 2071 note and 6 U.S.C.
943;
* * * * *
0
11. Revise Sec. 103.31a to read as follows:
Sec. 103.31a Advance electronic information for air, truck, and rail
cargo; Importer Security Filing information for vessel cargo.
The following types of advance electronic information are per se
exempt from disclosure under Sec. 103.12(d), unless CBP receives a
specific request for such records pursuant to Sec. 103.5, and the
owner of the information expressly agrees in writing to its release:
[[Page 71781]]
(a) Advance cargo information that is electronically presented to
Customs and Border Protection (CBP) for inbound or outbound air, rail,
or truck cargo in accordance with Sec. 122.48a, 123.91, 123.92, or
192.14 of this chapter;
(b) Importer Security Filing information that is electronically
presented to CBP for inbound vessel cargo in accordance with Sec.
149.2 of this chapter;
(c) Vessel stow plan information that is electronically presented
to CBP for inbound vessels in accordance with Sec. 4.7c of this
chapter; and
(d) Container status message information that is electronically
presented for inbound containers in accordance with Sec. 4.7d of this
chapter.
PART 113--CUSTOMS BONDS
0
12. The general authority citation for part 113 continues to read as
follows:
Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *
0
13. Amend Sec. 113.62 by:
0
a. Redesignating paragraphs (j) through (l) as paragraphs (k) through
(m);
0
b. Adding new paragraph (j);
0
c. In newly redesignated paragraph (k), removing the phrase ``$5,000
for each regulation violated'' and adding in its place ``$5,000 for
each violation''.
0
d. In newly redesignated paragraph (m)(1), removing the reference to
``paragraphs (a), (g), (i), (j)(2), or (k)'' and adding in its place
``paragraphs (a), (g), (i), (j), (k)(2), or (l)'';
0
e. In newly redesignated paragraph (m)(4), replacing the reference to
``paragraph (l)(1)'' and adding in its place ``paragraph (m)(1)''; and
0
f. In newly redesignated paragraph (m)(5), removing the reference to
``paragraph (k)'' and adding in its place ``paragraph (l)''.
The new paragraph (j) reads as follows:
Sec. 113.62 Basic importation and entry bond conditions.
* * * * *
(j) The principal agrees to comply with all Importer Security
Filing requirements set forth in part 149 of this chapter including but
not limited to providing security filing information to Customs and
Border Protection in the manner and in the time period prescribed by
regulation. If the principal defaults with regard to any obligation,
the principal and surety (jointly and severally) agree to pay
liquidated damages of $5,000 for each violation.
* * * * *
0
14. Amend Sec. 113.63 by:
0
a. Redesignating paragraphs (g) and (h) as paragraphs (h) and (i); and
0
b. Adding new paragraph (g);
The new paragraph (g) reads as follows:
Sec. 113.63 Basic custodial bond conditions.
* * * * *
(g) The principal agrees to comply with all Importer Security
Filing requirements set forth in part 149 of this chapter including but
not limited to providing security filing information to Customs and
Border Protection in the manner and in the time period prescribed by
regulation. If the principal defaults with regard to any obligation,
the principal and surety (jointly and severally) agree to pay
liquidated damages of $5,000 per violation.
* * * * *
0
15. Amend Sec. 113.64 by:
0
a. Redesignating paragraphs (d) through (g) as paragraphs (h) through
(k);
0
b. Redesignating paragraph (c) as paragraph (d);
0
c. Adding new paragraphs (c), (e), (f), and (g); and
0
d. In newly redesignated paragraph (d), removing the phrase ``$5,000
for each regulation violated'' and adding in its place ``$5,000 for
each violation, to a maximum of $100,000 per conveyance arrival''.
New paragraphs (c), (e), (f), and (g) read as follows:
Sec. 113.64 International carrier bond conditions.
* * * * *
(c) Agreement to provide advance cargo information. The incoming
carrier agrees to provide advance cargo information to CBP in the
manner and in the time period required under Sec. Sec. 4.7 and 4.7a of
this chapter. If the incoming carrier, as principal, defaults with
regard to these obligations, the principal and surety (jointly and
severally) agree to pay liquidated damages of $5,000 for each
violation, to a maximum of $100,000 per conveyance arrival.
* * * * *
(e) Agreement to comply with Importer Security Filing requirements.
If the principal elects to provide the Importer Security Filing
information to Customs and Border Protection (CBP), the principal
agrees to comply with all Importer Security Filing requirements set
forth in part 149 of this chapter including but not limited to
providing security filing information to CBP in the manner and in the
time period prescribed by regulation. If the principal defaults with
regard to any obligation, the principal and surety (jointly and
severally) agree to pay liquidated damages of $5,000 for each
violation.
(f) Agreement to comply with vessel stow plan requirements. If the
principal causes a vessel to arrive within the limits of a port in the
United States, the principal agrees to submit a stow plan in the manner
and in the time period required pursuant to part 4.7c of this chapter.
If the principal defaults with regard to this obligation, the principal
and surety (jointly and severally) agree to pay liquidated damages of
$50,000 for each vessel arrival.
(g) Agreement to comply with container status message requirements.
If the principal causes a vessel to arrive within the limits of a port
in the United States, the principal agrees to submit container status
messages in the manner and in the time period required pursuant to part
4.7d of this chapter. If the principal defaults with regard to these
obligations, the principal and surety (jointly and severally) agree to
pay liquidated damages of $5,000 for each violation, to a maximum of
$100,000 per vessel arrival.
* * * * *
0
16. Amend Sec. 113.73 by:
0
a. Redesignating paragraphs (c) and (d) as paragraphs (d) and (e); and
0
b. Adding a new paragraph (c).
The new paragraph (c) reads as follows:
Sec. 113.73 Foreign trade zone operator bond conditions.
* * * * *
(c) Agreement to comply with Importer Security Filing requirements.
The principal agrees to comply with all Importer Security Filing
requirements set forth in part 149 of this chapter including but not
limited to providing security filing information to Customs and Border
Protection (CBP) in the manner and in the time period prescribed by
regulation. If the principal defaults with regard to any obligation,
the principal and surety (jointly and severally) agree to pay
liquidated damages of $5,000 for each violation.
* * * * *
0
17. Add a new Appendix D to part 113 to read as follows:
Appendix D to Part 113--Importer Security Filing Bond
Importer Security Filing Bond
KNOW ALL MEN BY THESE PRESENTS, that------ of ------, as principal
having Customs and Border Protection (CBP) Identification Number --
---- and ------, as surety are held and firmly bound unto the United
States of America up to the sum of ------ dollars ($--------) for
the payment of which we bind ourselves, our heirs, executors,
administrators, successors, and
[[Page 71782]]
assigns, jointly and severally, firmly by these presents.
Whereas, the named principal (including the named principal's
employees, agents and contractors) agrees to comply with all
Importer Security Filing requirements set forth in 19 CFR part 149,
including but not limited to providing security filing information
to CBP in the manner and in the time period prescribed by
regulation.
Whereas, if the named principal incurs any claim that relates to
any of the requirements set forth in 19 CFR part 149, the obligors
(principal and surety, jointly and severally) agree to pay any
amount prescribed by law or regulation upon demand by CBP.
This bond is effective ------, 20----, and remains in force for
one year beginning with the effective date and for each succeeding
annual period, or until terminated. This bond constitutes a separate
bond for each period in the amount listed above for liabilities that
accrue in each period. The intention to terminate this bond must be
conveyed within the period and manner prescribed in the CBP
Regulations.
SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF:
-----------------------------------------------------------------------
(Name)
-----------------------------------------------------------------------
(Address)
-----------------------------------------------------------------------
(Name)
-----------------------------------------------------------------------
(Address)
-----------------------------------------------------------------------
(Principal Name) (Seal)
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(Principal Address)
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(Surety Name) (Seal)
Surety No.-------------------------------------------------------------
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(Surety Mailing Address)
Surety Agent Name------------------------------------------------------
Surety Agent ID Number-------------------------------------------------
PART 122--AIR COMMERCE REGULATIONS
0
18. The general authority citation for part 122 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 58b, 66, 1431, 1433, 1436,
1448, 1459, 1590, 1594, 1623, 1624, 1644, 1644a, 2071 note.
* * * * *
Sec. 122.48a [Amended]
0
19. Amend Sec. 122.48a(c)(2) by removing the reference to ``Sec.
113.62(j)(2)'' and adding in its place ``Sec. 113.62(k)(2)''.
PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO
0
20. The general authority citation for part 123 continues to read as
follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1436,
1448, 1624, 2071 note.
* * * * *
Sec. 123.92 [Amended]
0
21. Amend Sec. 123.92(c)(2) by removing the reference to ``Sec.
113.62(j)(2)'' and adding in its place ``Sec. 113.62(k)(2)''.
PART 141--ENTRY OF MERCHANDISE
0
22. The general authority citation for part 141 and specific authority
citation for Sec. 141.113 continue to read as follows:
Authority: 19 U.S.C. 66, 1448, 1484, 1624.
* * * * *
Section 141.113 also issued under 19 U.S.C. 1499, 1623.
Sec. 141.113 [Amended]
0
23. Amend Sec. 141.113(b) by removing the reference to ``Sec.
113.62(l)(1)'' and adding in its place ``Sec. 113.62(m)(1)''.
PART 143--SPECIAL ENTRY PROCEDURES
0
24. The general authority citation for part 143 continues to read as
follows:
Authority: 19 U.S.C. 66, 1481, 1484, 1498, 1624.
0
25. Revise Sec. 143.1 to read as follows:
Sec. 143.1 Eligibility.
The Automated Broker Interface (ABI) is a module of the Customs
Automated Commercial System (ACS) which allows participants to transmit
data electronically to CBP through ABI and to receive transmissions
through ACS. Its purposes are to improve administrative efficiency,
enhance enforcement of customs and related laws, lower costs and
expedite the release of cargo.
(a) Participants for entry and entry summary purposes. Participants
in ABI for the purposes of transmitting data relating to entry and
entry summary may be:
(1) Customs brokers as defined in Sec. 111.1 of this chapter;
(2) Importers as defined in Sec. 101.1 of this chapter; and
(3) ABI service bureaus, that is, an individual, partnership,
association or corporation which provides communications facilities and
data processing services for brokers and importers, but which does not
engage in the conduct of customs business as defined in Sec. 111.1 of
this chapter.
(b) Participants for Importer Security Filing purposes. Any party
may participate in ABI solely for the purposes of filing the Importer
Security Filing pursuant to Sec. 149.2 of this chapter if that party
fulfills the eligibility requirements contained in Sec. 149.5 of this
chapter. If a party other than a customs broker as defined in Sec.
111.1 of this chapter or an importer as defined in 19 U.S.C. 1484
submits the Importer Security Filing, no portion of the Importer
Security Filing can be used for entry or entry summary purposes
pursuant to Sec. 149.5 of this chapter.
(c) Participants for other purposes. Upon approval by CBP, any
party may participate in ABI for other purposes, including transmission
of protests, forms relating to in-bond movements (CBP Form 7512), and
applications for FTZ admission (CBP Form 214).
PART 146--FOREIGN TRADE ZONES
0
26. The general authority citation for part 146 continues to read as
follows:
Authority: 19 U.S.C. 66, 81a-81u, 1202 (General Note 3(i),
Harmonized Tariff Schedule of the United States), 1623, 1624.
0
27. Amend Sec. 146.32 by:
0
a. Removing all references to ``Customs Form 214'' and adding in their
place ``CBP Form 214'' wherever they appear;
0
b. Redesignating paragraph (a) as paragraph (a)(1); and
0
c. Adding a new paragraph (a)(2).
The new paragraph (a)(2) reads as follows:
Sec. 146.32 Application and permit for admission of merchandise.
(a)(1) * * *
(2) CBP Form 214 and Importer Security Filing submitted via a
single electronic transmission. If an Importer Security Filing is filed
pursuant to part 149 of this chapter via the same electronic
transmission as CBP Form 214, the filer is only required to provide the
following fields once to be used for Importer Security Filing and CBP
Form 214 purposes:
(i) Country of origin; and
(ii) Commodity HTSUS number if this number is provided at the 10-
digit level.
* * * * *
0
28. Add part 149 to chapter I to read as follows:
PART 149--IMPORTER SECURITY FILING
Sec.
149.1 Definitions.
149.2 Importer security filing--requirement, time of transmission,
verification of information, update, withdrawal, compliance date.
149.3 Data elements.
149.4 Bulk and break bulk cargo.
149.5 Eligibility to file an Importer Security Filing, authorized
agents.
149.6 Entry and entry summary documentation and Importer Security
[[Page 71783]]
Filing submitted via a single electronic transmission.
Authority: 5 U.S.C. 301; 6 U.S.C. 943; 19 U.S.C. 66, 1624, 2071
note.
Sec. 149.1 Definitions.
(a) Importer Security Filing Importer. For purposes of this part,
``Importer Security Filing (ISF) Importer'' means the party causing
goods to arrive within the limits of a port in the United States by
vessel. For shipments other than foreign cargo remaining on board
(FROB), immediate exportation (IE) and transportation and exportation
(T&E) in-bond shipments, and goods to be delivered to a foreign trade
zone (FTZ), the ISF Importer will be the goods' owner, purchaser,
consignee, or agent such as a licensed customs broker. For FROB cargo,
the ISF Importer will be the carrier. For IE and T&E in-bond shipments,
and goods to be delivered to an FTZ, the ISF Importer will be the party
filing the IE, T&E, or FTZ documentation.
(b) Importation. For purposes of this part, ``importation'' means
the point at which cargo arrives within the limits of a port in the
United States.
(c) Bulk cargo. For purposes of this part, ``bulk cargo'' is
defined as homogeneous cargo that is stowed loose in the hold and is
not enclosed in any container such as a box, bale, bag, cask, or the
like. Such cargo is also described as bulk freight. Specifically, bulk
cargo is composed of either:
(1) Free flowing articles such as oil, grain, coal, ore, and the
like, which can be pumped or run through a chute or handled by dumping;
or
(2) Articles that require mechanical handling such as bricks, pig
iron, lumber, steel beams, and the like.
(d) Break bulk cargo. For purposes of this part, ``break bulk
cargo'' is defined as cargo that is not containerized, but which is
otherwise packaged or bundled.
Sec. 149.2 Importer security filing--requirement, time of
transmission, verification of information, update, withdrawal,
compliance date.
(a) Importer security filing required. For cargo arriving by
vessel, with the exception of any bulk cargo pursuant to Sec. 149.4(a)
of this part, the ISF Importer, as defined in Sec. 149.1 of this part,
or authorized agent (see Sec. 149.5 of this part) must submit in
English the Importer Security Filing elements prescribed in Sec. 149.3
of this part within the time specified in paragraph (b) of this section
via a CBP-approved electronic interchange system.
(b) Time of transmission. With the exception of any break bulk
cargo pursuant to Sec. 149.4(b) of this part, ISF Importers must
submit:
(1) Seller, buyer, importer of record number / foreign trade zone
applicant identification number, and consignee number(s) (as defined in
Sec. 149.3(a)(1) through (4) of this part) no later than 24 hours
before the cargo is laden aboard the vessel at the foreign port.
(2) Manufacturer (or supplier), ship to party, country of origin,
and commodity HTSUS number (as defined in Sec. 149.3(a)(5) through (8)
of this part) no later than 24 hours before the cargo is laden aboard
the vessel at the foreign port.
(3) Container stuffing location and consolidator (stuffer) (as
defined in Sec. 149.3(a)(9) and (10) of this part) as early as
possible, in no event later than 24 hours prior to arrival in a United
States port (or upon lading at a foreign port that is less than a 24
hour voyage to the closest United States port).
(4) The data elements required under Sec. 149.3(b) of this part
for FROB, prior to lading aboard the vessel at the foreign port.
(c) Verification of information. Where the party electronically
presenting to CBP the Importer Security Filing required in paragraph
(a) of this section receives any of this information from another
party, CBP will take into consideration how, in accordance with
ordinary commercial practices, the presenting party acquired such
information, and whether and how the presenting party is able to verify
this information. Where the presenting party is not reasonably able to
verify such information, CBP will permit the party to electronically
present the information on the basis of what the party reasonably
believes to be true.
(d) Update of Importer Security Filing. The party who submitted the
Importer Security Filing pursuant to paragraph (a) of this section must
update the filing if, after the filing is submitted and before the
goods enter the limits of a port in the United States, any of the
information submitted changes or more accurate information becomes
available.
(e) Withdrawal of Importer Security Filing. If, after an Importer
Security Filing is submitted pursuant to paragraph (a) of this section,
the goods associated with the Importer Security Filing are no longer
intended to be imported to the United States, the party who submitted
the Importer Security Filing must withdraw the Importer Security Filing
and transmit to CBP the reason for such withdrawal.
(f) Flexible Requirements. For each of the four data elements
required under paragraph (b)(2) of this section ISF Importers will be
permitted to submit an initial response or responses based on the best
available data available at the time that, in accordance with paragraph
(d) of this section, ISF Importers will be required to update as soon
as more precise or more accurate information is available, in no event
less than 24 hours prior to arrival at a U.S. port (or upon lading at a
foreign port that is less than a 24 hour voyage to the closest U.S.
port).
(g) Compliance date of this section. (1) General. Subject to
paragraph (g)(2) of this section, ISF Importers must comply with the
requirements of this section on and after January 26, 2010.
(2) Delay in compliance date of section. CBP may, at its sole
discretion, delay the general compliance date set forth in paragraph
(g)(1) of this section in the event that any necessary modifications to
the approved electronic data interchange system are not yet in place or
for any other reason. Notice of any such delay will be provided in the
Federal Register.
Sec. 149.3 Data elements.
(a) Shipments intended to be entered into the United States and
shipments intended to be delivered to a foreign trade zone. Except as
otherwise provided for in paragraph (b) of this section, the following
elements must be provided for each good listed at the six-digit HTSUS
number at the lowest bill of lading level (i.e., at the house bill of
lading level, if applicable). The manufacturer (or supplier), country
of origin, and commodity HTSUS number must be linked to one another at
the line item level.
(1) Seller. Name and address of the last known entity by whom the
goods are sold or agreed to be sold. If the goods are to be imported
otherwise than in pursuance of a purchase, the name and address of the
owner of the goods must be provided. A widely recognized commercially
accepted identification number for this party may be provided in lieu
of the name and address.
(2) Buyer. Name and address of the last known entity to whom the
goods are sold or agreed to be sold. If the goods are to be imported
otherwise than in pursuance of a purchase, the name and address of the
owner of the goods must be provided. A widely recognized commercially
accepted identification number for this party may be provided in lieu
of the name and address.
(3) Importer of record number/Foreign trade zone applicant
identification number. Internal Revenue Service (IRS) number, Employer
Identification Number (EIN), Social Security Number (SSN), or CBP
assigned number of the entity liable for payment of all duties
[[Page 71784]]
and responsible for meeting all statutory and regulatory requirements
incurred as a result of importation. For goods intended to be delivered
to a foreign trade zone (FTZ), the IRS number, EIN, SSN, or CBP
assigned number of the party filing the FTZ documentation with CBP must
be provided.
(4) Consignee number(s). Internal Revenue Service (IRS) number,
Employer Identification Number (EIN), Social Security Number (SSN), or
CBP assigned number of the individual(s) or firm(s) in the United
States on whose account the merchandise is shipped.
(5) Manufacturer (or supplier). Name and address of the entity that
last manufactures, assembles, produces, or grows the commodity or name
and address of the party supplying the finished goods in the country
from which the goods are leaving. In the alternative the name and
address of the manufacturer (or supplier) that is currently required by
the import laws, rules and regulations of the United States (i.e.,
entry procedures) may be provided (this is the information that is used
to create the existing manufacturer identification (MID) number for
entry purposes). A widely recognized commercially accepted
identification number for this party may be provided in lieu of the
name and address.
(6) Ship to party. Name and address of the first deliver-to party
scheduled to physically receive the goods after the goods have been
released from customs custody. A widely recognized commercially
accepted identification number for this party may be provided in lieu
of the name and address.
(7) Country of origin. Country of manufacture, production, or
growth of the article, based upon the import laws, rules and
regulations of the United States.
(8) Commodity HTSUS number. Duty/statistical reporting number under
which the article is classified in the Harmonized Tariff Schedule of
the United States (HTSUS). The HTSUS number must be provided to the
six-digit level. The HTSUS number may be provided up to the 10-digit
level. This element can only be used for entry purposes if it is
provided at the 10-digit level or greater by the importer of record or
its licensed customs broker.
(9) Container stuffing location. Name and address(es) of the
physical location(s) where the goods were stuffed into the container.
For break bulk shipments, as defined in Sec. 149.1 of this part, the
name and address(es) of the physical location(s) where the goods were
made ``ship ready'' must be provided. A widely recognized commercially
accepted identification number for this element may be provided in lieu
of the name and address.
(10) Consolidator (stuffer). Name and address of the party who
stuffed the container or arranged for the stuffing of the container.
For break bulk shipments, as defined in Sec. 149.1 of this part, the
name and address of the party who made the goods ``ship ready'' or the
party who arranged for the goods to be made ``ship ready'' must be
provided. A widely recognized commercially accepted identification
number for this party may be provided in lieu of the name and address.
(b) FROB, IE shipments, and T&E shipments. For shipments consisting
entirely of foreign cargo remaining on board (FROB) and shipments
intended to be transported in-bond as an immediate exportation (IE) or
transportation and exportation (T&E), the following elements must be
provided for each good listed at the six-digit HTSUS number at the
lowest bill of lading level (i.e., at the house bill of lading level,
if applicable).
(1) Booking party. Name and address of the party who initiates the
reservation of the cargo space for the shipment. A widely recognized
commercially accepted identification number for this party may be
provided in lieu of the name and address.
(2) Foreign port of unlading. Port code for the foreign port of
unlading at the intended final destination.
(3) Place of delivery. City code for the place of delivery.
(4) Ship to party. Name and address of the first deliver-to party
scheduled to physically receive the goods after the goods have been
released from customs custody. A widely recognized commercially
accepted identification number for this party may be provided in lieu
of the name and address.
(5) Commodity HTSUS number. Duty/statistical reporting number under
which the article is classified in the Harmonized Tariff Schedule of
the United States (HTSUS). The HTSUS number must be provided to the
six-digit level. The HTSUS number may be provided to the 10-digit
level.
Sec. 149.4 Bulk and break bulk cargo.
(a) Bulk cargo exempted from filing requirement. For bulk cargo
that is exempt from the requirement set forth in Sec. 4.7(b)(2) of
this chapter that a cargo declaration be filed with Customs and Border
Protection (CBP) 24 hours before such cargo is laden aboard the vessel
at the foreign port, ISF Importers, as defined in Sec. 149.1 of this
part, of bulk cargo are also exempt from filing an Importer Security
Filing with respect to that cargo.
(b) Break bulk cargo exempted from time requirement. For break bulk
cargo that is exempt from the requirement set forth in Sec. 4.7(b)(2)
of this chapter for carriers to file a cargo declaration with Customs
and Border Protection (CBP) 24 hours before such cargo is laden aboard
the vessel at the foreign port, ISF Importers, as defined in Sec.
149.1 of this part, of break bulk cargo are also exempt with respect to
that cargo from the requirement set forth in Sec. 149.2 of this part
to file an Importer Security Filing with CBP 24 hours before such cargo
is laden aboard the vessel at the foreign port. Any importers of break
bulk cargo that are exempted from the filing requirement of Sec. 149.2
of this part must present the Importer Security Filing to CBP 24 hours
prior to the cargo's arrival in the United States. These ISF Importers
must still report 24 hours in advance of loading any containerized or
non-qualifying break bulk cargo they will be importing.
Sec. 149.5 Eligibility to file an Importer Security Filing,
authorized agents.
(a) Eligibility. To be qualified to file Importer Security Filing
information electronically, a party must establish the communication
protocol required by Customs and Border Protection for properly
presenting the Importer Security Filing through the approved data
interchange system. If the Importer Security Filing and entry or entry
summary are provided via a single electronic transmission to CBP
pursuant to Sec. 149.6(b) of this part, the party making the
transmission must be an importer acting on its own behalf or a licensed
customs broker.
(b) Bond required. The ISF Importer must possess a basic
importation and entry bond containing all the necessary provisions of
Sec. 113.62 of this chapter, a basic custodial bond containing all the
necessary provisions of Sec. 113.63 of this chapter, an international
carrier bond containing all the necessary provisions of Sec. 113.64 of
this chapter, a foreign trade zone operator bond containing all the
necessary provisions of Sec. 113.73 of this chapter, or an importer
security filing bond as provided in Appendix D to part 113 of this
chapter. If an ISF Importer does not have a required bond, the agent
submitting the Importer Security Filing on behalf of the ISF Importer
may post the agent's bond.
(c) Powers of attorney. Authorized agents must retain powers of
attorney in English until revoked. Revoked powers of attorney and
letters of revocation must be retained for five years after the date of
revocation. Authorized agents
[[Page 71785]]
must make powers of attorney and letters of revocation available to
representatives of Customs and Border Protection upon request.
Sec. 149.6 Entry and entry summary documentation and Importer
Security Filing submitted via a single electronic transmission.
If the Importer Security Filing is filed pursuant to Sec. 149.2 of
this part via the same electronic transmission as entry or entry/entry
summary documentation pursuant to Sec. 142.3 of this chapter, the
importer is only required to provide the following fields once to be
used for Importer Security Filing, entry, or entry/entry summary
purposes, as applicable:
(a) Importer of record number;
(b) Consignee number;
(c) Country of origin; and
(d) Commodity HTSUS number if this number is provided at the 10-
digit level.
PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS
0
29. The general authority citation for part 178 continues to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
0
30. Amend Sec. 178.2 by adding new listings for Sec. Sec. 4.7c, 4.7d,
and 149.2 in appropriate numerical sequence according to the section
number under the columns indicated, to read as follows:
Sec. 178.2 Listing of OMB control numbers.
----------------------------------------------------------------------------------------------------------------
19 CFR section Description OMB Control No.
----------------------------------------------------------------------------------------------------------------
* * * * * * *
Sec. 4.7c........................... Vessel stow plan........................
Sec. 4.7d........................... Container status messages...............
* * * * * * *
Sec. 149.2.......................... Importer Security Filing................
* * * * * * *
----------------------------------------------------------------------------------------------------------------
PART 192--EXPORT CONTROL
0
31. The general authority citation for part 192 continues to read as
follows:
Authority: 19 U.S.C. 66, 1624, 1646c. Subpart A also issued
under 19 U.S.C. 1627a, 1646a, 1646b; subpart B also issued under 13
U.S.C. 303; 19 U.S.C. 2071 note; 46 U.S.C. 91.
Sec. 192.14 [Amended]
0
32. Amend Sec. 192.14(c)(4)(ii) by removing the reference to ``Sec.
113.64(g)(2)'' and adding in its place ``Sec. 113.64(k)(2)''.
Dated: November 7, 2008.
Michael Chertoff,
Secretary.
[FR Doc. E8-27048 Filed 11-24-08; 8:45 am]
BILLING CODE 9111-14-P