Interim Final Rule

Tuesday,
November 25, 2008

Part II

Department of
Homeland Security
U.S. Customs and Border Protection

rwilkins on PROD1PC63 with RULES_2

19 CFR Parts 4, 12, 18, et al.
Importer Security Filing and Additional
Carrier Requirements; Final Rule

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

PO 00000

Frm 00001

Fmt 4717

Sfmt 4717

E:\FR\FM\25NOR2.SGM

25NOR2

71730

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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
Customs and Border Protection,
Department of Homeland Security.
ACTION: Interim final rule, solicitation of
comments.
AGENCY:

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 highrisk 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 § 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.

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,

rwilkins on PROD1PC63 with RULES_2

ADDRESSES:

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00002

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

rwilkins on PROD1PC63 with RULES_2

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)

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00003

Fmt 4701

Sfmt 4700

71731

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’’).
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
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.

E:\FR\FM\25NOR2.SGM

25NOR2

71732

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.
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
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
Existing requirements

rwilkins on PROD1PC63 with RULES_2

Requirement ............

Advance Cargo Information (i.e., Trade
Act Requirements or 24 Hour Rule)

2 CSMs are used to report terminal container
movements (e.g., loading and discharging the

VerDate Aug<31>2005

New requirements

18:00 Nov 24, 2008

Jkt 217001

Stow Plan

Container Status Messages

vessel) and to report the change in status of
containers (e.g., empty or full).

PO 00000

Frm 00004

Fmt 4701

Sfmt 4700

3 A container is shopped for heavy repair when
it is delivered to a facility for the purpose of being
repaired.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

71733

EXISTING CARRIER REQUIREMENTS VERSUS NEW CARRIER REQUIREMENTS—Continued

rwilkins on PROD1PC63 with RULES_2

Existing requirements

New requirements

Timing .....................

24 hours prior to lading

48 hours after departure; prior to arrival for voyages less than 48 hrs

Submission Method
Elements .................

vessel AMS
—Bill of Lading Number
—Foreign Port before vessel departs
for U.S.
—Carrier SCAC [Standard Carrier
Alpha Code]
—Carrier Assigned Voyage Number
—Date of Arrival at First U.S. Port
—Quantity
—Unit of measure of Quantity
—First Foreign Place of Receipt
—Commodity Description (or six-digit
HTSUS Number)
—Commodity Weight
—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

vessel AMS, sFTP, or email
With regard to the vessel,
—Vessel name (including international
maritime organization (IMO) number);
—Vessel operator; and
—Voyage number
With regard to each container,
—Container operator;
—Equipment number;
—Equipment size and type;
—Stow position;
—Hazmat code (if applicable);
—Port of lading; and
—Port of discharge.

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00005

Fmt 4701

Sfmt 4700

24 hours after the message is entered
into the carrier’s equipment tracking
system
sFTP
—Event code being reported, as defined in the ANSI X.12 or UN
EDIFACT standards;
—Container number;
—Date and time of the event being reported;
—Status of the container (empty or
full);
—Location where the event took place;
and
—Vessel identification associated with
the message if the container is associated with a specific vessel.

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

E:\FR\FM\25NOR2.SGM

25NOR2

71734

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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
Existing Requirements

New Requirements

Requirement
Timing ...........

Entry and Entry Summary 4
Entry within 15 calendar days of date of arrival; Entry summary within 10 working days of entry

Submission
Method.
Elements .......

ABI or paper

Importer Security Filing
24 hours prior to lading for 8 of the elements; as early as possible, in no event later than 24 hours prior to arrival, for 2 of
the elements
ABI or vessel AMS

—Bill of Lading Number
—Importer of Record Number *

Shipments Other Than FROB, IE Shipments and T&E Shipments:
—Seller
—Buyer
—Importer of record number/FTZ applicant identification number *
—Consignee number(s) *
—Manufacturer (or supplier)
—Ship to party
—Country of origin *
—Commodity HTSUS number *
—Container stuffing location
—Consolidator (stuffer)

—Foreign Port before vessel departs for U.S.
—Carrier SCAC
—Carrier Assigned Voyage Number
—Date of Arrival at First U.S. Port
—Quantity
—Unit of measure of Quantity
—First Foreign Place of Receipt
—Commodity Description
—Commodity HTSUS Number *
—Commodity Weight
—Shipper Name and Address
—Consignee Name and Address and Number *
—Country of Origin *
—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

FROB, IE Shipments and T&E Shipments:
—Booking party
—Foreign port of unlading
—Place of delivery
—Ship to party
—Commodity HTSUS number

rwilkins on PROD1PC63 with RULES_2

* 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
4 Importers are not currently required to submit
any information to CBP prior to foreign lading for
targeting purposes.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

last for twelve months after the effective
date and will apply to all aspects of the
filing rule.
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

PO 00000

Frm 00006

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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

rwilkins on PROD1PC63 with RULES_2

North East Coast:
• Ports of Newark/New York and Boston .........................................
South East Coast:
• Ports of Baltimore, Philadelphia, and Norfolk ...............................
• Ports of Charleston, Savannah, and Jacksonville .........................
• Ports of Miami, Port Everglades, and San Juan ...........................
Gulf Coast:
• Ports of Houston and New Orleans ..............................................
Northwest Pacific Coast:
• Ports of Seattle/Tacoma and Portland ..........................................
• Ports of Oakland/San Francisco ....................................................
Pacific Coast:
• Ports of Los Angeles/Long 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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

71735

30 days after publication.
45 days after publication.
60 days after publication.
75 days after publication.
90 days after publication.
105 days after publication.
120 days after publication.
135 days after publication.

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

PO 00000

Frm 00007

Fmt 4701

Sfmt 4700

is established (in new §§ 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

E:\FR\FM\25NOR2.SGM

25NOR2

rwilkins on PROD1PC63 with RULES_2

71736

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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 § 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 §§ 113.62(j), 113.64(e), and
113.73(c) and new § 113.63(g) and
Appendix D to part 113.
CBP is also making the following
additional changes from the proposed
rule:
(1) Proposed § 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 § 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
§ 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 § 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 § 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 § 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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

(7) The section heading for proposed
§ 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 § 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
§ 149.5(b) that may be posted for
Importer Security Filing purposes.
(10) Proposed § 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 § 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 § 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 § 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
5 Prior to publishing the NPRM, CBP posted a
‘‘strawman’’ proposal on the CBP website along
with a request for comments from the trade.

PO 00000

Frm 00008

Fmt 4701

Sfmt 4700

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.
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.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.

rwilkins on PROD1PC63 with RULES_2

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,

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00009

Fmt 4701

Sfmt 4700

71737

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

E:\FR\FM\25NOR2.SGM

25NOR2

71738

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00010

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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

rwilkins on PROD1PC63 with RULES_2

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 CBPapproved 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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00011

Fmt 4701

Sfmt 4700

71739

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

E:\FR\FM\25NOR2.SGM

25NOR2

71740

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00012

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

rwilkins on PROD1PC63 with RULES_2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

71741

D. Public Comments; Container Status
Messages

requirement that a carrier create or
collect any CSM data.’’

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
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.

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

PO 00000

Frm 00013

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

71742

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00014

Fmt 4701

Sfmt 4700

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.
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
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.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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

rwilkins on PROD1PC63 with RULES_2

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
(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
(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.
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).
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).

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

(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-

PO 00000

Frm 00015

Fmt 4701

Sfmt 4700

71743

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 sixdigit 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.

E:\FR\FM\25NOR2.SGM

25NOR2

71744

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

B. Public Comments; Responsible Party

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00016

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00017

Fmt 4701

Sfmt 4700

71745

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

E:\FR\FM\25NOR2.SGM

25NOR2

71746

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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

rwilkins on PROD1PC63 with RULES_2

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.’’ Nonbrokers should be limited to the filing
of the Importer Security Filing alone.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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 sixdigit 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

PO 00000

Frm 00018

Fmt 4701

Sfmt 4700

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.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00019

Fmt 4701

Sfmt 4700

71747

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

E:\FR\FM\25NOR2.SGM

25NOR2

71748

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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.

PO 00000

Frm 00020

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.

Comment

CBP Response

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.

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.

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 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

rwilkins on PROD1PC63 with RULES_2

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.

18:00 Nov 24, 2008

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

CBP Response

VerDate Aug<31>2005

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.

Jkt 217001

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.

71749

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

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.

CBP agrees. While CBP is not
requiring the HTSUS number at the 10digit 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.

9. Commodity HTSUS Number

Comment

Comment

Will CBP compare the HTSUS data
submitted in the Importer Security
Filing with the HTSUS data used at
entry?

CBP Response

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

PO 00000

Frm 00021

Fmt 4701

Sfmt 4700

CBP Response
Yes. CBP will use the information
available, including entry data, to

E:\FR\FM\25NOR2.SGM

25NOR2

71750

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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)?

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.

rwilkins on PROD1PC63 with RULES_2

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.

18:00 Nov 24, 2008

G. Public Comments; Technical Issues

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).

Comment

Jkt 217001

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

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 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

12. Place of Delivery

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

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.

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

CBP Response

VerDate Aug<31>2005

CBP Response

CBP agrees. CBP will accept Bureau of
Census Schedule K port codes for the
foreign port of unlading 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.

PO 00000

Frm 00022

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
protocols for when an approved
electronic interchange system is
experiencing technical difficulties (e.g.,
for scheduled maintenance).

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?

Comment

CBP Response

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.

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
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 reevaluated 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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

Importers may not possess the
technology to transmit these data
directly to CBP.

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

PO 00000

Frm 00023

Fmt 4701

Sfmt 4700

71751

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.

E:\FR\FM\25NOR2.SGM

25NOR2

71752

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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

rwilkins on PROD1PC63 with RULES_2

Comment
CBP should adopt standards for
address information, such as the use of
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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00024

Fmt 4701

Sfmt 4700

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?

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
CBP Response

Comment

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.

CBP should accept the entry
information submitted on CBP Forms
3461, 7501, and 214 as an update of the
Importer Security Filing.

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?

rwilkins on PROD1PC63 with RULES_2

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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00025

Fmt 4701

Sfmt 4700

71753

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 § 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.

E:\FR\FM\25NOR2.SGM

25NOR2

71754

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.
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 § 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.

rwilkins on PROD1PC63 with RULES_2

CBP Response
CBP will not create special provisions
for IT shipments that are cleared at an
inland destination.
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).

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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,

PO 00000

Frm 00026

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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
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.

rwilkins on PROD1PC63 with RULES_2

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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

Comment

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.

CBP should exempt temporary
importation bond (TIB) shipments from
the Importer Security Filing
requirements.

Comment
Shipments that transit through CSI
ports should be exempt from the
Importer Security Filing requirements.

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.

CBP Response

Comment

71755

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.

PO 00000

Frm 00027

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

71756

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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 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.

Frm 00028

Fmt 4701

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

CBP Response

PO 00000

Comment

Sfmt 4700

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 intercompany 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 intercompany moves.
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.
11 CBP is not amending existing advance manifest
information requirements in 19 CFR Part 4.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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.

PO 00000

Frm 00029

Fmt 4701

Sfmt 4700

71757

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
§ 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 noncontainerized, they are considered break
bulk for purposes of this rule. Bulk
cargo is defined in new § 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

E:\FR\FM\25NOR2.SGM

25NOR2

71758

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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.

PO 00000

Frm 00030

Fmt 4701

Sfmt 4700

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 nonexempt 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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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?

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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.

PO 00000

Frm 00031

Fmt 4701

Sfmt 4700

71759

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

E:\FR\FM\25NOR2.SGM

25NOR2

rwilkins on PROD1PC63 with RULES_2

71760

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00032

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.

rwilkins on PROD1PC63 with RULES_2

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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

71761

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.

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
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.

Comment

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

PO 00000

Frm 00033

Fmt 4701

Sfmt 4700

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 caseby-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

E:\FR\FM\25NOR2.SGM

25NOR2

71762

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

rwilkins on PROD1PC63 with RULES_2

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,

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00034

Fmt 4701

Sfmt 4700

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-bycase 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.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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 Filingrelated 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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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 Filingrelated 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.

PO 00000

Frm 00035

Fmt 4701

Sfmt 4700

71763

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

E:\FR\FM\25NOR2.SGM

25NOR2

71764

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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 bufferstock 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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00036

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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.

PO 00000

Frm 00037

Fmt 4701

Sfmt 4700

71765

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 12month 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

E:\FR\FM\25NOR2.SGM

25NOR2

71766

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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
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
Discount
rate

Annualized costs
(2009–2018, $2008)

Terrorist attack
scenario

Absolute reduction
in baseline risk
required

Comments

Number of these
events that must be
avoided for benefits
to equal costs

Alternative 1 (chosen alternative): Importer Security Filings and Additional Carrier Requirements, bulk cargo exempt
3% ..............

7% ..............

$890 million to $6.6
billion.

$990 million to $7.0
billion.

Actual West Coast
Port Shutdown
(12-days).
Hypothetical Nuclear Attack.
Hypothetical Biological Attack.
Actual West Coast
Port Shutdown
(12-days).
Hypothetical Nuclear Attack.
Hypothetical Biological Attack.

0.59 to 4.38 ...........

< 0.01 to 0.02 ........
0.02 to 0.15 ...........
0.66 to 4.64 ...........

< 0.01 to 0.02 ........
0.02 to 0.16 ...........

One event in 3
months to 2
years.
One event in 60 to
500 years.
One event in 7 to
50 years.
One event in 3
months to 2
years.
One event in 60 to
400 years.
One event in 6 to
50 years.

Preferred Alternative: Most favorable
combination of cost and stringency.

Alternative 2: Importer Security Filings and Additional Carrier Requirements, bulk cargo not exempt
3% ..............

rwilkins on PROD1PC63 with RULES_2

7% ..............

$890 million to $6.6
billion.

$990 million to $7.0
billion.

Actual West Coast
Port Shutdown
(12-days).
Hypothetical Nuclear Attack.
Hypothetical Biological Attack.
Actual West Coast
Port Shutdown
(12-days).
Hypothetical Nuclear Attack.
Hypothetical Biological Attack.

0.59 to 4.39 ...........

< 0.01 to 0.02 ........
0.02 to 0.15 ...........
0.66 to 4.65 ...........

< 0.01 to 0.02 ........
0.02 to 0.16 ...........

One event in 3
months to 2
years.
One event in 60 to
500 years.
One event in 7 to
50 years.
One event in 3
months to 2
years.
One event in 60 to
400 years.
One event in 6 to
50 years.

More stringent than Alternative 1, but
limited expected additional benefit for
increased cost.

12 For each alternative, the Additional Carrier
Requirements apply only to containerized cargo.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

PO 00000

Frm 00038

Fmt 4701

Sfmt 4700

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

71767

TABLE 1—SUMMARY OF FINDINGS—Continued
Percent reductions in baseline risk that
must be achieved for benefits to equal
costs
Discount
rate

Annualized costs
(2009–2018, $2008)

Terrorist attack
scenario

Absolute reduction
in baseline risk
required

Comments

Number of these
events that must be
avoided for benefits
to equal costs

Alternative 3: Importer Security Filings only, bulk cargo exempt
3% ..............

7% ..............

$890 million to $6.6
billion.

$990 million to $7.0
billion.

Actual West Coast
Port Shutdown
(12-days).

0.59 to 4.37 ...........

One event in 3
months to 2
years.

Hypothetical Nuclear Attack.
Hypothetical Biological Attack.
Actual West Coast
Port Shutdown
(12-days).
Hypothetical Nuclear Attack.
Hypothetical Biological Attack.

< 0.01 to 0.02 ........

One event in 60 to
500 years.
One event in 7 to
50 years.
One event in 3
months to 2
years.
One event in 60 to
400 years.
One event in 6 to
50 years.

0.02 to 0.15 ...........
0.66 to 4.63 ...........
< 0.01 to 0.02 ........
0.02 to 0.16 ...........

Similar cost to Alternative 1 with decreased effectiveness. Importer Security Filings and Additional Carrier Requirements are not working in tandem.

Alternative 4: Additional Carrier Requirements only
3% ..............

rwilkins on PROD1PC63 with RULES_2

7% ..............

$2 million to $11
million.

$2 million to $12
million.

Actual West Coast
Port Shutdown
(12-days).

< 0.01 to 0.01 ........

One event in 100 to
700 years.

Hypothetical Nuclear Attack.

< 0.01 .....................

Hypothetical Biological Attack.
Actual West Coast
Port Shutdown
(12-days).
Hypothetical Nuclear Attack.

< 0.01 .....................

One event in
40,000 to
200,000 years.
One event in 4,000
to 20,000 years.
One event in 100 to
600 years.

Hypothetical Biological Attack.

< 0.01 .....................

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

< 0.01 to 0.01 ........
< 0.01 .....................

One event in
30,000 to
200,000 years.
One event in 4,000
to 20,000 years.

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

PO 00000

Frm 00039

Fmt 4701

Sfmt 4700

Least cost, but also least effective 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.

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

E:\FR\FM\25NOR2.SGM

25NOR2

71768

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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 10year 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% .......................................................................................................................................................................

$7.6 billion to $56 billion.
$7.0 billion to $49 billion.

Alternative 2: Importer Security Filings and Additional Carrier Requirements, bulk cargo not exempt
3% .......................................................................................................................................................................
7% .......................................................................................................................................................................

$7.6 billion to $56 billion.
$7.0 billion to $49 billion.

Alternative 3: Importer Security Filings only, bulk cargo exempt
3% .......................................................................................................................................................................
7% .......................................................................................................................................................................

$7.6 billion to $56 billion.
$7.0 billion to $49 billion.

Alternative 4: Additional Carrier Requirements only

rwilkins on PROD1PC63 with RULES_2

3% .......................................................................................................................................................................
7% .......................................................................................................................................................................

Again, the range presented in each
cell results from varying assumptions
about the estimated initial and
transaction costs for Importer Security

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

Filings, the potential for supply chain
delays, and the estimated costs to
transmit Vessel Stow Plans and CSMs to
CBP.

PO 00000

Frm 00040

Fmt 4701

Sfmt 4700

$0.02 billion to $0.1 billion.
$0.02 billion to $0.09 billion.

Annual undiscounted costs of the
regulation are presented in Table 3.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

71769

TABLE 3—ANNUAL UNDISCOUNTED COSTS BY YEAR, 2009–2018 ($2008, IN MILLIONS)

Year

2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

............................
............................
............................
............................
............................
............................
............................
............................
............................
............................

Alternative 1 (chosen
alternative):
importer security filings
and additional carrier
requirements, bulk
cargo exempt

Alternative 2:
importer security filings
and additional carrier
requirements, bulk
cargo not exempt

Alternative 3:
importer security filings
only, bulk cargo
exempt

$1,900 to $11,000 .......
1,900 to 7,100 .............
1,900 to 7,300 .............
290 to 4,600 ................
310 to 4,800 ................
320 to 5,100 ................
340 to 5,300 ................
360 to 5,600 ................
380 to 5,900 ................
400 to 6,200 ................

$1,900 to $11,000 .......
1,900 to 7,100 .............
1,900 to 7,300 .............
290 to 4,600 ................
310 to 4,800 ................
330 to 5,100 ................
340 to 5,300 ................
360 to 5,600 ................
380 to 5,900 ................
400 to 6,300 ................

$1,900 to $11,000 .......
1,900 to 7,100 .............
1,900 to 7,300 .............
290 to 4,600 ................
310 to 4,800 ................
320 to 5,100 ................
340 to 5,300 ................
360 to 5,600 ................
380 to 5,900 ................
400 to 6,200 ................

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 vesseltrips 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,

Alternative 4:
additional carrier
requirements only

$0.4 to $14.
0.4 to 14.
0.4 to 14.
0.3 to 7.
0.3 to 7.
0.3 to 7.
0.3 to 7.
0.3 to 7.
0.3 to 7.
0.4 to 7.

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 pershipment 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

rwilkins on PROD1PC63 with RULES_2

[$2008]
3% discount rate

7% discount rate

Importer Security Filing Costs: Alternatives 1 and 3 (bulk cargo exempt)
Total Present Value Cost ..................................
Number of shipments (10-year total) ................
Equivalent per shipment cost ............................

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

$7.5 billion to $56 billion ..................................
144 million ........................................................
$52 to $390 ......................................................

PO 00000

Frm 00041

Fmt 4701

Sfmt 4700

$6.9 billion to $49 billion.
144 million.
$48 to $341.

E:\FR\FM\25NOR2.SGM

25NOR2

71770

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
TABLE 4—COSTS PER SHIPMENT, MEDIAN VALUE OF SHIPMENT, VESSEL-TRIP, AND CARRIER—Continued
[$2008]
3% discount rate

Median value per shipment ...............................
Cost per median value ......................................

7% discount rate

$37,900 .............................................................
0.14 to 1.03 percent .........................................

$37,900.
0.13 to 0.90 percent.

Importer Security Filing Costs: Alternative 2 (bulk cargo not exempt)
Total Present Value Cost ..................................
Number of shipments (10-year total) ................
Equivalent per shipment cost ............................
Median value per shipment ...............................
Cost per median value ......................................

$7.6 billion to $56 billion ..................................
145 million ........................................................
$52 to $388 ......................................................
$38,200 .............................................................
0.14 to 1.02 percent .........................................

$7.0 billion to $49 billion.
145 million.
$48 to $339.
$38,200.
0.13 to 0.89 percent.

Vessel Stow Plan Costs: Alternatives 1, 2, and 4
Total present value cost ....................................
Number of non-bulk vessel-trips, small and
large carriers (10-year total).
Equivalent per vessel-trip cost ..........................

$3 million to $27 million ...................................
294,000 .............................................................

$2 million to $33 million.
294,000.

$9 to $90 ..........................................................

$8 to $78.

rwilkins on PROD1PC63 with RULES_2

Container Status Message Costs: Alternatives 1, 2, and 4
Total present value cost ....................................
Number of container carriers, large ..................
Equivalent per carrier cost ................................

$0.3 million to $54 million ................................
74 ......................................................................
$3,900 to $730,000 ..........................................

$0.3 million to $48 million.
74.
$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).

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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.

PO 00000

Frm 00042

Fmt 4701

Sfmt 4700

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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
occurrences

rwilkins on PROD1PC63 with RULES_2

NAICS code
424900
999990
423830
442110
488510
423220

............
............
............
............
............
............

VerDate Aug<31>2005

Percent of
sample

20
19
13
11
10
8

18:00 Nov 24, 2008

5.00
........................
3.25
2.75
2.50
2.00

Jkt 217001

PO 00000

Industry description
Miscellaneous Nondurable Goods Merchant Wholesalers.
UNKNOWN INDUSTRY.
Industrial Machinery and Equipment Merchant Wholesalers.
Furniture Stores.
Freight Transportation Arrangement.
Home Furnishing Merchant Wholesalers.

Frm 00043

Fmt 4701

Sfmt 4700

71771

E:\FR\FM\25NOR2.SGM

25NOR2

71772

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
TABLE 5—TOP INDUSTRIES FROM IMPORTERS SAMPLE (CONTAINERIZED CARGO)—Continued
Number of
occurrences

NAICS code
423120
423710
424320
424330
424490
423910
326199
423690
423990
424310
561499
423210
423430
423440
423450
424460
424480
442299
453220
236115
315191
325620
332510
333911
423320
423390
423940
424130
424340
441310

............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............
............

Percent of
sample

7
7
7
7
7
6
5
5
5
5
5
4
4
4
4
4
4
4
4
3
3
3
3
3
3
3
3
3
3
3
207

Industry description

1.75
1.75
1.75
1.75
1.75
1.50
1.25
1.25
1.25
1.25
1.25
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
51.75

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

Motor Vehicle Supplies and New Parts Merchant Wholesalers.
Hardware Merchant Wholesalers.
Men’s and Boys’ Clothing and Furnishings Merchant Wholesalers.
Women’s, Children’s, and Infants’ Clothing and Accessories Merchant Wholesalers.
Other Grocery and Related Products Merchant Wholesalers.
Sporting and Recreational Goods and Supplies Merchant Wholesalers.
All Other Plastics Product Manufacturing.
Other Electronic Parts and Equipment Merchant Wholesalers.
Other Miscellaneous Durable Goods Merchant Wholesalers.
Piece Goods, Notions, and Other Dry Goods Merchant Wholesalers.
All Other Business Support Services.
Furniture Merchant Wholesalers.
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers.
Other Commercial Equipment Merchant Wholesalers.
Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers.
Fish and Seafood Merchant Wholesalers.
Fresh Fruit and Vegetable Merchant Wholesalers.
All Other Home Furnishings Stores.
Gift, Novelty, and Souvenir Stores.
New Single-Family Housing Construction (except Operative Builders).
Outerwear Knitting Mills.
Toilet Preparation Manufacturing.
Hardware Manufacturing.
Pump and Pumping Equipment Manufacturing.
Brick, Stone, and Related Construction Material Merchant Wholesalers.
Other Construction Material Merchant Wholesalers.
Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers.
Industrial and Personal Service Paper Merchant Wholesalers.
Footwear Merchant Wholesalers.
Automotive Parts and Accessories Stores.
ALL OTHER INDUSTRIES RECORDED IN SAMPLE.

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)
NAICS code
424900
423830
442110
488510
423220
423120

..........
..........
..........
..........
..........
..........

423710 ..........
424320 ..........
424330 ..........

rwilkins on PROD1PC63 with RULES_2

424490 ..........

Miscellaneous Nondurable Goods Merchant Wholesalers .....
Industrial Machinery and Equipment Merchant Wholesalers
Furniture Stores .......................................................................
Freight Transportation Arrangement .......................................
Home Furnishing Merchant Wholesalers ................................
Motor Vehicle Supplies and New Parts Merchant Wholesalers.
Hardware Merchant Wholesalers ............................................
Men’s and Boys’ Clothing and Furnishings Merchant Wholesalers.
Women’s, Children’s, and Infants’ Clothing and Accessories
Merchant Wholesalers.
Other Grocery and Related 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

VerDate Aug<31>2005

Percent of
sample

Industry description

18:00 Nov 24, 2008

Jkt 217001

Frm 00044

Fmt 4701

Sfmt 4700

Share of small
entities in U.S.
(percent)

5.00
3.25
2.75
2.50
2.00
1.75

100 employees .......................
100 employees .......................
$6.5 million .............................
$6.5 million .............................
100 employees .......................
100 employees .......................

93
92
50
75
75
71

1.75
1.75

100 employees .......................
100 employees .......................

86
83

1.75

100 employees .......................

100

1.75

100 employees .......................

86

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

PO 00000

‘‘Small’’
threshold

businesses meet SBA’s definition of a
small entity.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

71773

TABLE 7—CONTAINERIZED CARGO IMPORTERS, SUMMARY STATISTICS
Number of
appearances
in sample

Number of
industries
in sample

Number of
firms in
sample

Total
number of
entities
in U.S.

Number of
small
entities
in U.S.

Share small
(percent)

10+ .......................................................................................
6–9 .......................................................................................
5 ...........................................................................................
4 ...........................................................................................
3 ...........................................................................................
2 ...........................................................................................
1 ...........................................................................................

4
7
5
8
11
27
152

54
49
25
32
33
54
153

81,923
1,371,759
33,931
72,596
44,448
467,998
834,709

78,977
1,341,422
32,558
70,829
42,977
461,318
812,717

96.4
97.8
96.0
97.6
96.7
98.6
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 perindustry 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 overor understate small entities’ pershipment 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)
Number of
importers

rwilkins on PROD1PC63 with RULES_2

NAICS code
424900
423830
442110
488510
423220
423120
424330
424320
423710
424490

.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

PO 00000

Frm 00045

Fmt 4701

Sfmt 4700

E:\FR\FM\25NOR2.SGM

20
13
11
10
8
7
7
7
7
7

25NOR2

Total number
of shipments
114
51
27
175
76
60
25
121
49
10

Mean
value per
shipment ($)
$173,683
47,250
22,081
107,828
45,342
72,895
181,893
130,213
36,614
18,354

71774

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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)
Number of
entities

NAICS code

Lower Bound Estimate:
Once per year ...........................................
Twice yearly to less than monthly ............
Monthly to less than weekly .....................
Weekly to less than daily ..........................
Daily or greater .........................................
Anonymous ...............................................
Upper Bound Estimate:
Once per year ...........................................
Twice yearly to less than monthly ............
Monthly to less than weekly .....................
Weekly to less than daily ..........................
Daily or greater .........................................
Anonymous ...............................................

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

Number of
shipments

Security
filing fee

Initial,
onetime fee
(per entity
per shipment)

Total cost as
share of
mean value
(percent)

0
134,000
44,100
9,900
615
38,000

0
697,000
1,230,000
2,190,000
2,360,000
1,300,000

$75.00
60.00
45.00
30.00
15.00
22.50

............................
$4,817
900
113
7
730

0.07
4.73
0.92
0.14
0.02
0.73

370,000
262,000
66,900
18,100
1,480
144,000

456,000
1,380,000
1,640,000
1,810,000
1,180,000
1,300,000

75.00
60.00
45.00
30.00
15.00
22.50

............................
4,740
1,017
250
31
2,776

0.07
4.65
1.03
0.27
0.04
2.71

impact of these losses on small entities
is unknown.
The PIERS dataset includes
information on over 4,600 unique breakbulk 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
occurrences

rwilkins on PROD1PC63 with RULES_2

NAICS code

Percentage

423510 ................................................................................

8

10.67

423310 ................................................................................

6

8.00

336611
999990
424480
488510
423830

................................................................................
................................................................................
................................................................................
................................................................................
................................................................................

4
4
3
3
2

5.33
......................
4.00
4.00
2.67

424410 ................................................................................
424470 ................................................................................
424490 ................................................................................

2
2
2

2.67
2.67
2.67

424690 ................................................................................

2

2.67

511110 ................................................................................
........................................................................................

2
39

2.67
52.00

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’’

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

Industry description
Metal Service Centers and Other Metal Merchant
Wholesalers.
Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers.
Ship Building and Repairing.
UNKNOWN INDUSTRY.
Fresh Fruit and Vegetable Merchant Wholesalers.
Freight Transportation Arrangement.
Industrial Machinery and Equipment Merchant
Wholesalers.
General Line Grocery Merchant Wholesalers.
Meat and Meat Product Merchant Wholesalers.
Other Grocery and Related Products Merchant
Wholesalers.
Other Chemical and Allied Products Merchant
Wholesalers.
Newspaper Publishers.
ALL OTHER INDUSTRIES RECORDED IN SAMPLE.

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

PO 00000

Frm 00046

Fmt 4701

Sfmt 4700

that a substantial number of small
break-bulk importers will be affected by
the rule.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

71775

TABLE 11—SHARE OF SMALL ENTITIES IN THE TOP 10 INDUSTRIES (BREAK-BULK CARGO)
Percent of
sample

NAICS code

Industry description

423510 .............

Metal Service Centers and Other Metal Merchant Wholesalers.
Lumber, Plywood, Millwork, and Wood Panel Merchant
Wholesalers.
Ship Building and Repairing ....................................................
Fresh Fruit and Vegetable Merchant Wholesalers ..................
Freight Transportation Arrangement ........................................
Industrial Machinery and Equipment Merchant Wholesalers ..
General Line Grocery Merchant Wholesalers .........................
Meat and Meat Product Merchant Wholesalers ......................
Other Grocery and Related Products Merchant Wholesalers
Other Chemical and Allied Products Merchant Wholesalers ..

423310 .............
336611
424480
488510
423830
424410
424470
424490
424690

.............
.............
.............
.............
.............
.............
.............
.............

Table 12 reports summary statistics
on our sample of 75 break-bulk
importers. Only two industries appeared

‘‘Small’’ threshold

Share of small
entities
(percent)

10.67

100 employees ...........

63

8.00

100 employees ...........

100

5.33
4.00
4.00
2.67
2.67
2.67
2.67
2.67

1,000 employees ........
100 employees ...........
$6.5 million .................
100 employees ...........
100 employees ...........
100 employees ...........
100 employees ...........
100 employees ...........

75
33
0
100
100
100
100
50

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
appearances
in sample

Number of
industries
in sample

Number of
firms in sample

Total number of
entities in U.S.

Number of
small entities
in U.S.

Share small
(percent)

6+ .....................................................................
5 .......................................................................
4 .......................................................................
3 .......................................................................
2 .......................................................................
1 .......................................................................

2
0
1
2
6
34

14
0
4
6
12
39

13,771
............................
1,670
16,228
49,028
196,116

12,883
............................
1,642
15,552
46,938
186,854

93.6

Total ..........................................................

45

75

276,813

263,869

95.3

1

(1)

98.3
95.8
95.7
95.3

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
importers

NAICS code

rwilkins on PROD1PC63 with RULES_2

423510
423310
336611
424480
488510
423830
424410
424470
424490
424690

.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................
.............................................................................................................................

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00047

Fmt 4701

Sfmt 4700

Total number
of shipments
8
6
4
3
3
2
2
2
2
2

922
28
10
238
31
2
10
16
13
68

Mean value
per shipment
($)
$145,731
303,095
509,161
77,106
520,999
743,823
140,086
40,493
76,597
56,595

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.

E:\FR\FM\25NOR2.SGM

25NOR2

71776

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
TABLE 14—RELATIVE COST OF SECURITY FILING REQUIREMENTS (BREAK-BULK CARGO)
Number of
entities

NAICS code

Lower Bound Estimate:
Once per year ..................................................
Twice yearly to less than monthly ...................
Monthly to less than weekly ............................
Weekly to less than daily .................................
Daily or greater ................................................
Anonymous ......................................................
Upper Bound Estimate:
Once per year ..................................................
Twice yearly to less than monthly ...................
Monthly to less than weekly ............................
Weekly to less than daily .................................
Daily or greater ................................................
Anonymous ......................................................

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 breakbulk 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

Number of
shipments

Security
filing fee

Initial,
onetime fee (per
entity per
shipment)

Total cost as
share of mean
value
(percent)

0
2,740
693
216
14
272

0
11,400
15,700
42,400
60,000
9,630

$75.00
60.00
45.00
30.00
15.00
22.50

............................
6,013
1,104
127
6
707

0.02
1.96
0.37
0.05
0.01
0.24

7,870
4,470
1,050
490
30
1,040

7,870
18,200
25,400
56,100
21,900
9,630

75.00
60.00
45.00
30.00
15.00
22.50

............................
6,157
1,032
218
35
2,686

0.02
2.01
0.35
0.08
0.02
0.88

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
business
entities

rwilkins on PROD1PC63 with RULES_2

Carrier size
0–100 employees ............................................................................................................................................
101–250 employees ........................................................................................................................................
251–500 employees ........................................................................................................................................
501–5,000 employees .....................................................................................................................................

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

PO 00000

Frm 00048

Fmt 4701

Sfmt 4700

E:\FR\FM\25NOR2.SGM

456
13
8
15

25NOR2

Average annual
revenues
$6,000,000
59,000,000
105,000,000
450,000,000

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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

71777

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
Container
carriers

Vessel trips

Worst-case
annual costs

Costs as share
of revenue
(percent)

1 .......................................................................................................................................
2–10 .................................................................................................................................
11–100 .............................................................................................................................
101–1,000 ........................................................................................................................
1,001+ ..............................................................................................................................

51
116
183
70
4

$50
500
5,000
116,667
136,667

0.00
0.01
0.05
1.28
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
Container
carriers

rwilkins on PROD1PC63 with RULES_2

Vessel trips

Worst-case
annual costs

Costs as share
of revenue
(percent)

1 .......................................................................................................................................
2–10 .................................................................................................................................
11–100 .............................................................................................................................
101–1,000 ........................................................................................................................
1,001+ ..............................................................................................................................

58
162
175
45
2

$0
0
0
138,333
138,333

0.00
0.00
0.00
1.52
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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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

PO 00000

Frm 00049

Fmt 4701

Sfmt 4700

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

E:\FR\FM\25NOR2.SGM

25NOR2

71778

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.’’

rwilkins on PROD1PC63 with RULES_2

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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

recordkeepers are individuals and
businesses.
Under § 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 § 4.7c is 102.6
hours per carrier.
Under § 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 § 4.7d is 91.3 hours per
carrier.
Under § 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 § 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,

PO 00000

Frm 00050

Fmt 4701

Sfmt 4700

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.

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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
■ 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:

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.

§ 4.7 Inward foreign manifest; production
on demand; contents and form; advance
filing of cargo declaration.

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
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
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;

rwilkins on PROD1PC63 with RULES_2

*

*
*
*
*
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.
*
*
*
*
*
■ 2. Amend § 4.7 by revising paragraph
(b)(2); and
■ a. In paragraph (e), by removing the
phrase ‘‘in addition to penalties

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

*
*
*
*
(b) * * *
(2) In addition to the vessel stow plan
requirements pursuant to § 4.7c of this
part and the container status message
requirements pursuant to § 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 CBPapproved 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 § 4.30(n)(1)). The current
approved system for presenting
electronic cargo declaration information
to CBP is the Vessel Automated
Manifest System (AMS).
*
*
*
*
*
§ 4.7a

[Amended]

3. Amend § 4.7a(f) by:
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
■ 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’’.
■ 4. Add a new § 4.7c to read as follows:
■
■

§ 4.7c

Vessel stow plan.

Vessel stow plan required. In addition
to the advance filing requirements
pursuant to §§ 4.7 and 4.7a of this part
and the container status message
requirements pursuant to § 4.7d of this
part, for all vessels subject to § 4.7(a) of
this part, except for any vessel

PO 00000

Frm 00051

Fmt 4701

Sfmt 4700

71779

exclusively carrying break bulk cargo or
bulk cargo as prescribed in § 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.
■ 5. Add a new section 4.7d to read as
follows:
§ 4.7d

Container status messages.

(a) Container status messages
required. In addition to the advance
filing requirements pursuant to §§ 4.7
and 4.7a of this part and the vessel stow
plan requirements pursuant to § 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

E:\FR\FM\25NOR2.SGM

25NOR2

rwilkins on PROD1PC63 with RULES_2

71780

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

(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
6. The general authority citation for
part 12 and specific authority citation
for § 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;
*
*
*
*
*
§ 12.3

[Amended]

7. Amend § 12.3(b)(2) and (c) by
removing references to ‘‘§ 113.62(l)(1)’’

■

PO 00000

Frm 00052

Fmt 4701

Sfmt 4700

and adding in their place
‘‘§ 113.62(m)(1)’’.
PART 18—VESSELS IN FOREIGN AND
DOMESTIC TRADES
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;

*

*
*
*
*
9. Amend § 18.5 by:
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
■ b. Adding a new paragraph (g).
The new paragraph (g) reads as
follows:
■
■

§ 18.5

Diversion.

*

*
*
*
*
(g) For in-bond shipments which, at
the time of transmission of the Importer
Security Filing as required by § 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 inbond 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
10. The general authority citation for
part 103 continues, and the specific
authority citation for § 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;
*
*
*
*
*
■ 11. Revise § 103.31a to read as
follows:
§ 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 § 103.12(d),
unless CBP receives a specific request
for such records pursuant to § 103.5,
and the owner of the information
expressly agrees in writing to its release:

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
(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 § 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 § 149.2 of this
chapter;
(c) Vessel stow plan information that
is electronically presented to CBP for
inbound vessels in accordance with
§ 4.7c of this chapter; and
(d) Container status message
information that is electronically
presented for inbound containers in
accordance with § 4.7d of this chapter.
PART 113—CUSTOMS BONDS
12. The general authority citation for
part 113 continues to read as follows:

■

Authority: 19 U.S.C. 66, 1623, 1624.

*

*
*
*
*
13. Amend § 113.62 by:
a. Redesignating paragraphs (j)
through (l) as paragraphs (k) through
(m);
■ b. Adding new paragraph (j);
■ 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’’.
■ 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)’’;
■ e. In newly redesignated paragraph
(m)(4), replacing the reference to
‘‘paragraph (l)(1)’’ and adding in its
place ‘‘paragraph (m)(1)’’; and
■ 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:
■
■

§ 113.62 Basic importation and entry bond
conditions.

rwilkins on PROD1PC63 with RULES_2

*

*
*
*
*
(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.
*
*
*
*
*
■ 14. Amend § 113.63 by:

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

a. Redesignating paragraphs (g) and
(h) as paragraphs (h) and (i); and
■ b. Adding new paragraph (g);
The new paragraph (g) reads as
follows:
■

§ 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.
*
*
*
*
*
■ 15. Amend § 113.64 by:
■ a. Redesignating paragraphs (d)
through (g) as paragraphs (h) through
(k);
■ b. Redesignating paragraph (c) as
paragraph (d);
■ c. Adding new paragraphs (c), (e), (f),
and (g); and
■ 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:
§ 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 §§ 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

PO 00000

Frm 00053

Fmt 4701

Sfmt 4700

71781

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.
*
*
*
*
*
■ 16. Amend § 113.73 by:
■ a. Redesignating paragraphs (c) and
(d) as paragraphs (d) and (e); and
■ b. Adding a new paragraph (c).
The new paragraph (c) reads as
follows:
§ 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 $5,000 for each violation.
*
*
*
*
*
■ 17. Add a new Appendix D to part 113
to read as follows:
Appendix D to Part 113—Importer
Security Filing Bond
Importer Security Filing Bond
KNOW ALL MEN BY THESE PRESENTS,
thatlll of lll, as principal having
Customs and Border Protection (CBP)
Identification Number lll and lll, as
surety are held and firmly bound unto the
United States of America up to the sum of
lll dollars ($llll) for the payment of
which we bind ourselves, our heirs,
executors, administrators, successors, and

E:\FR\FM\25NOR2.SGM

25NOR2

71782

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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 lll, 20ll, 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:
lllllllllllllllllllll
(Name)
lllllllllllllllllllll
(Address)
lllllllllllllllllllll
(Name)
lllllllllllllllllllll
(Address)
lllllllllllllllllllll
(Principal Name) (Seal)
lllllllllllllllllllll
lllllllllllllllllllll
(Principal Address)
lllllllllllllllllllll
(Surety Name) (Seal)
Surety No. lllllllllllllll
lllllllllllllllllllll
lllllllllllllllllllll
lllllllllllllllllllll
(Surety Mailing Address)
Surety Agent Name lllllllllll
Surety Agent ID Number lllllllll

PART 122—AIR COMMERCE
REGULATIONS
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.

*

*

§ 122.48a

*

*

*

[Amended]

19. Amend § 122.48a(c)(2) by
removing the reference to
‘‘§ 113.62(j)(2)’’ and adding in its place
‘‘§ 113.62(k)(2)’’.

rwilkins on PROD1PC63 with RULES_2

■

PART 123—CUSTOMS RELATIONS
WITH CANADA AND MEXICO
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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

United States (HTSUS)), 1431, 1433, 1436,
1448, 1624, 2071 note.

*

*

*

§ 123.92

*

*

[Amended]

21. Amend § 123.92(c)(2) by removing
the reference to ‘‘§ 113.62(j)(2)’’ and
adding in its place ‘‘§ 113.62(k)(2)’’.

■

PART 141—ENTRY OF MERCHANDISE
22. The general authority citation for
part 141 and specific authority citation
for § 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.
§ 141.113

[Amended]

23. Amend § 141.113(b) by removing
the reference to ‘‘§ 113.62(l)(1)’’ and
adding in its place ‘‘§ 113.62(m)(1)’’.

■

24. The general authority citation for
part 143 continues to read as follows:

■

Authority: 19 U.S.C. 66, 1481, 1484, 1498,
1624.

25. Revise § 143.1 to read as follows:

§ 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
§ 111.1 of this chapter;
(2) Importers as defined in § 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 § 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 § 149.2 of this chapter
if that party fulfills the eligibility

PO 00000

Frm 00054

Fmt 4701

Sfmt 4700

PART 146—FOREIGN TRADE ZONES
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.

27. Amend § 146.32 by:
a. Removing all references to
‘‘Customs Form 214’’ and adding in
their place ‘‘CBP Form 214’’ wherever
they appear;
■ b. Redesignating paragraph (a) as
paragraph (a)(1); and
■ c. Adding a new paragraph (a)(2).
The new paragraph (a)(2) reads as
follows:
■
■

PART 143—SPECIAL ENTRY
PROCEDURES

■

requirements contained in § 149.5 of
this chapter. If a party other than a
customs broker as defined in § 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 § 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).

§ 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.
*
*
*
*
*
■ 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

E:\FR\FM\25NOR2.SGM

25NOR2

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
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.
§ 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) inbond 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.

rwilkins on PROD1PC63 with RULES_2

§ 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
§ 149.4(a) of this part, the ISF Importer,
as defined in § 149.1 of this part, or
authorized agent (see § 149.5 of this
part) must submit in English the
Importer Security Filing elements
prescribed in § 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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

pursuant to § 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 § 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
§ 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
§ 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
§ 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

PO 00000

Frm 00055

Fmt 4701

Sfmt 4700

71783

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.
§ 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 sixdigit 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

E:\FR\FM\25NOR2.SGM

25NOR2

rwilkins on PROD1PC63 with RULES_2

71784

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations

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 sixdigit 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 § 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

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

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 § 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 sixdigit 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 sixdigit level. The HTSUS number may be
provided to the 10-digit level.
§ 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 § 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 § 149.1 of this part, of bulk
cargo are also exempt from filing an

PO 00000

Frm 00056

Fmt 4701

Sfmt 4700

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 § 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 § 149.1 of this
part, of break bulk cargo are also exempt
with respect to that cargo from the
requirement set forth in § 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 § 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.
§ 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 § 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 § 113.62 of this chapter, a
basic custodial bond containing all the
necessary provisions of § 113.63 of this
chapter, an international carrier bond
containing all the necessary provisions
of § 113.64 of this chapter, a foreign
trade zone operator bond containing all
the necessary provisions of § 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

E:\FR\FM\25NOR2.SGM

25NOR2

71785

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / Rules and Regulations
must make powers of attorney and
letters of revocation available to
representatives of Customs and Border
Protection upon request.
§ 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 § 149.2 of this part via the
same electronic transmission as entry or
entry/entry summary documentation
pursuant to § 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

30. Amend § 178.2 by adding new
listings for §§ 4.7c, 4.7d, and 149.2 in
appropriate numerical sequence
according to the section number under
the columns indicated, to read as
follows:

■

§ 178.2

Listing of OMB control numbers.

29. The general authority citation for
part 178 continues to read as follows:

■

19 CFR section

OMB Control
No.

Description

*
*
§ 4.7c .........................................................
§ 4.7d ........................................................

*
*
Vessel stow plan.
Container status messages.

*

*

*

*
*
§ 149.2 ......................................................

*
Importer Security Filing.

*

*

*

*

*

*

*

*

*

*

*

PART 192—EXPORT CONTROL

1646a, 1646b; subpart B also issued under 13
U.S.C. 303; 19 U.S.C. 2071 note; 46 U.S.C. 91.

31. The general authority citation for
part 192 continues to read as follows:

§ 192.14

■

Authority: 19 U.S.C. 66, 1624, 1646c.
Subpart A also issued under 19 U.S.C. 1627a,

rwilkins on PROD1PC63 with RULES_2

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44
U.S.C. 3501 et seq.

VerDate Aug<31>2005

18:00 Nov 24, 2008

Jkt 217001

[Amended]

32. Amend § 192.14(c)(4)(ii) by
removing the reference to
‘‘§ 113.64(g)(2)’’ and adding in its place
‘‘§ 113.64(k)(2)’’.

■

PO 00000

Frm 00057

Fmt 4701

Sfmt 4700

Dated: November 7, 2008.
Michael Chertoff,
Secretary.
[FR Doc. E8–27048 Filed 11–24–08; 8:45 am]
BILLING CODE 9111–14–P

E:\FR\FM\25NOR2.SGM

25NOR2