E8-27048. Importer Security Filing and Additional Carrier Requirements

AGENCY:

Customs and Border Protection, Department of Homeland Security.

ACTION:

Interim final rule, solicitation of comments.

SUMMARY:

To help prevent terrorist weapons from being transported to the United States, vessel carriers bringing cargo to the United States are required to transmit certain information to Customs and Border Protection (CBP) about the cargo they are transporting prior to lading that cargo at foreign ports of entry. This interim final rule requires both importers and carriers to submit additional information pertaining to cargo to CBP before the cargo is brought into the United States by vessel. This information must be submitted to CBP by way of a CBP-approved electronic data interchange system. The required information is reasonably necessary to improve CBP's ability to identify high-risk shipments so as to prevent smuggling and ensure cargo safety and security. These regulations specifically fulfill the requirements of section 203 of the Security and Accountability for Every (SAFE) Port Act of 2006 and section 343(a) of the Trade Act of 2002, as amended by the Maritime Transportation Security Act of 2002.

DATES:

Effective Date: This rule is effective on January 26, 2009.

Compliance Dates: The compliance dates for these regulations are set forth in § 4.7c(d), 4.7d(f), and 149.2(g).

Comment Date: As provided in the “Public Participation” section of this document, comments are requested on certain aspects of the rule. Comments must be received on or before June 1, 2009.

ADDRESSES:

You may submit comments, identified by docket number, by one of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments via docket number USCBP-2007-0077.
Mail: Border Security Regulations Branch, Office of International Trade, U.S. Customs and Border Protection, 799 9th Street, NW., Washington, DC 20001.

Instructions: All submissions received must include the agency name and document number for this rulemaking. All comments received will be posted without change to http://www.regulations.gov, including any personal information provided. For detailed instructions on submitting comments and additional information on the rulemaking process, see the “Public Participation” heading of the SUPPLEMENTARY INFORMATION section of this document.

Docket: For access to the docket to read background documents or comments received, go to http://www.regulations.gov. Submitted comments may also be inspected on regular business days between the hours of 9 a.m. and 4:30 p.m. at the Office of International Trade, Customs and Border Protection, 799 9th Street, NW., 5th Floor, Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Mr. Joseph Clark at (202) 325-0118.

FOR FURTHER INFORMATION CONTACT:

Richard Di Nucci, Office of Field Operations, (202) 344-2513.

SUPPLEMENTARY INFORMATION:

I. Public Participation

II. Background

III. Carrier and Importer Requirements

A. Existing Requirements

B. New Carrier Requirements Under This Interim Final Rule

1. Vessel Stow Plans

2. Container Status Messages

C. New Importer Requirements Under This Interim Final Rule

D. Structured Review and Flexible Enforcement Period

E. Summary of Changes From NPRM

IV. Discussion of Comments Regarding This Rulemaking Generally

V. Discussion of Comments Regarding Proposed Carrier Requirements Relating to Vessel Cargo Destined to the United States

A. Overview; Vessel Stow Plan

B. Public Comments; Vessel Stow Plan

C. Overview; Container Status Messages

D. Public Comments; Container Status Messages

E. Public Comments; Carrier Requirements Generally

VI. Discussion of Comments Regarding Proposed Importer Requirements for Vessel Cargo Destined to the United States

A. Overview; Proposed Importer Requirements

1. Shipments Other Than FROB, IE Shipments, and T&E Shipments

2. FROB, IE Shipments, and T&E Shipments

B. Public Comments; Responsible Party

C. Public Comments; Agents

D. Public Comments; Customs Business

E. Public Comments; Bills of Lading

F. Public Comments; Required Elements

G. Public Comments; Technical Issues

H. Public Comments; Update and Withdrawal of Importer Security Filing

I. Public Comments; In-Bond Shipments

J. Public Comments; Importer Security Filing, Entry, and Application for FTZ Admission

K. Public Comments; Requests for Special Treatment

L. Public Comments; Importer Security Filing, Other Comments

VII. Discussion of Comments Regarding Proposed Amendments to Bond Requirements and Enforcement

A. Overview; Bond Conditions and Enforcement Related to the Proposed Importer Security Filing, Vessel Stow Plan, and Container Status Message Requirements

B. Public Comments; Bond Conditions and Enforcement Related to the Proposed Importer Security Filing, Vessel Stow Plan, and Container Status Message Requirements

C. Overview; Bond Conditions Related to the Trade Act Regulations

D. Public Comments; Bond Conditions Related to the Trade Act Regulations

VIII. Discussion of Comments Regarding the Cost, Benefit, and Feasibility Study

IX. Adoption of Proposal

X. Regulatory Analyses

A. Executive Order 12866

B. Regulatory Flexibility Act

C. Unfunded Mandates Reform Act

D. Paperwork Reduction Act

XI. Signing Authority

XII. Coordination of Interim Final Rule With Congress

XIII. Regulatory Amendments

Abbreviations and Terms Used in This Document

AAEI—American Association of Exporters and Importers

AAPA—American Association of Port Authorities

ABI—Automated Broker Interface

ACE—Automated Commercial Environment

AES—Automated Export System

AMS—Automated Manifest System

ANSI—American National Standards Institute

ATDI—Advance Trade Data Initiative

ATS—Automated Targeting System

BAPLIE—Bayplan/stowage plan occupied and empty locations message

CAMIR—Customs Automated Manifest Interface Requirements

CATAIR—Customs and Trade Automated Interface Requirements

CBP—Customs and Border Protection

CFR—Code of Federal Regulations

COAC—Departmental Advisory Committee on Commercial Operations of Customs and Border Protection and Related Homeland Security Functions

CSI—Container Security Initiative

CSM—Container status message

C-TPAT—Customs-Trade Partnership Against Terrorism

DDP—Delivered duty paidStart Printed Page 71731

DHS—U.S. Department of Homeland Security

DNL—Do not load

DUNS—Data Universal Numbering System

EIN—Employer identification number

FAQ—Frequently asked questions

FDA—U.S. Food and Drug Administration

FIRMS—Facilities Information and Resources Management System

FROB—Foreign cargo remaining on board

FTZ—Foreign trade zone

FR—Federal Register

GLN—Global Location Number

HTSUS—Harmonized Tariff Schedule of the United States

ICPA—International Compliance Professionals Association

IE—Immediate exportation

IIT—Instrument of international trade

IMO—International Maritime Organization

IRS—Internal Revenue Service

IT—Immediate transportation

ISF—Importer Security Filing

JIG—Joint Industry Group

LCL—Less than Container Load

MID—Manufacturer identification

MTSA—Maritime Transportation Security Act of 2002

NAM—National Association of Manufacturers

NCBFAA—National Customs Brokers and Forwarders Association of America

NII—Non-Intrusive Inspection

NPRM—Notice of Proposed Rule Making

NVOCC—Non-vessel operating common carrier

OCS—Outer Continental Shelf

OPA—Outward Processing Arrangement

OMB—Office of Management and Budget

PDF—Portable Document Format

PGA—Participating Government Agency

Pub. L.—Public Law

RILA—Retail Industry Leaders Association

RFA—Regulatory Flexibility Act of 1980

SAFE Port Act—Security and Accountability for Every Port Act of 2006

SBREFA—Small Business Regulatory Enforcement Fairness Act of 1996

sFTP—Secure File Transfer Protocol

SSN—Social Security Number

T&E—Transportation and exportation

TIB—Temporary Importation Bond

TSC—Technology Support Center

TSN—Trade Support Network

UMRA—Unfunded Mandates Reform Act of 1995

UN EDIFACT—United Nations rules for Electronic Data Interchange For Administration, Commerce and Transport

U.S.C.—United States Code

VIN—Vehicle Identification Number

VOCC—Vessel Operating Common Carrier

WHTI—Western Hemisphere Travel Initiative

WSC—World Shipping Council

I. Public Participation

Interested persons are invited to submit written comments on only the six data elements for which CBP is providing some type of flexibility (container stuffing location, consolidator (stuffer), manufacturer (or supplier), ship to party, country of origin, and commodity HTSUS number) and the requirements related to those elements discussed in section 149.2(b) and (f). CBP also invites comments on the revised Regulatory Assessment and Final Regulatory Flexibility Analysis, including compliance costs for various industry segments, the impact of the flexibilities provided in this rule, and the barriers to submitting Importer Security Filing data 24 hours prior to lading. We urge commenters to reference a specific portion of the rule, explain the reason for any recommended change, and include data, information, or authorities that support such recommended change.

II. Background

Section 203 of the Security and Accountability for Every Port Act of 2006 (Pub. L. 109-347, 120 Stat. 1884 (SAFE Port Act)) provides that the Secretary of Homeland Security (Secretary), acting through the Commissioner of CBP, shall promulgate regulations to “require the electronic transmission to the Department [of Homeland Security] of additional data elements for improved high-risk targeting, including appropriate security elements of entry data, as determined by the Secretary, to be provided as advanced information with respect to cargo destined for importation into the United States prior to loading of such cargo on vessels at foreign seaports.” Pursuant to this Act, and section 343(a) of the Trade Act of 2002 (19 U.S.C. 2071 note), CBP published a Notice of Proposed Rule Making (NPRM) in the Federal Register (73 FR 90) on January 2, 2008, proposing to require importers and carriers to submit additional information pertaining to cargo before the cargo is brought into the United States by vessel.

CBP has provided an overview of existing advance cargo information requirements and entry requirements below. For a detailed discussion of the advance cargo information requirements prior to this interim final rule, the statutory and regulatory histories, and the statutory factors governing development of these regulations, please see the NPRM published at 73 FR 90.

The proposed rule was known to the trade as both the “Importer Security Filing proposal” and the “10 + 2 proposal.” The name “10 + 2” is shorthand for the number of advance data elements CBP was proposing to collect. Carriers would be generally required to submit two additional data elements—a vessel stow plan and container status messages regarding certain events relating to containers loaded on vessels destined to the United States—to the elements they are already required to electronically transmit in advance (the “2” of “10+2”); and importers,^[1] as defined in the proposed regulations, would be required to submit 10 data elements—an Importer Security Filing containing 10 data elements (the “10” of “10+2”).

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 Start Printed Page 71732carriers 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		New requirements
Requirement	Advance Cargo Information (i.e., Trade Act Requirements or 24 Hour Rule)	Stow Plan	Container Status Messages
Start Printed Page 71733
Timing	24 hours prior to lading	48 hours after departure; prior to arrival for voyages less than 48 hrs	24 hours after the message is entered into the carrier's equipment tracking system
Submission Method	vessel AMS	vessel AMS, sFTP, or email	sFTP
Elements	—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	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.	—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.
	—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

C. New Importer Requirements Under This Interim Final Rule

This interim final rule requires Importer Security Filing (ISF) Importers, as defined in these regulations, or their agents, to transmit an Importer Security Filing to CBP, for cargo other than foreign cargo remaining on board (FROB), no later than 24 hours before cargo is laden aboard a vessel destined to the United States. See the “Structured Review and Flexible Enforcement Period” section of this document for flexibilities related to timing for certain Importer Security Filing elements. Because FROB is frequently laden based on a last-minute decision by the carrier, the Importer Security Filing for FROB is required any time prior to lading. An Importer Security Filing is required for each shipment, at the lowest bill of lading level (i.e., at the house bill of lading level, if applicable). The party required to submit the Importer Security Filing is the party causing the goods to enter the limits of a port in the United States. This party is the carrier for FROB and the party filing for the immediate exportation (IE), transportation and exportation (T&E), or foreign trade zone (FTZ) documentation for those types of shipments. The ISF Importer, as a business decision, may designate an authorized agent to file the Importer Security Filing on the ISF Importer's behalf. A party can act as an authorized agent for purposes of filing the Importer Security Filing if that party obtains access to ABI or AMS.

ISF Importers, or their agents, must transmit the Importer Security Filing via a CBP-approved electronic data interchange system. The current approved electronic data interchange systems for the Importer Security Filing is ABI and vessel AMS. If CBP approves a different or additional electronic data interchange system in the future, CBP will publish a notice in the Federal Register.

The party who filed the Importer Security Filing must update the Importer Security Filing if, after the filing and before the goods arrive within the limits of a port in the United States, there are changes to the information filed or more accurate information becomes available.

ISF Importers, or their agents, must submit 10 elements to CBP for shipments consisting of goods intended to be entered into the United States and goods intended to be delivered to an FTZ. ISF Importers, or their agents, must submit five elements to CBP for shipments consisting entirely of FROB and shipments consisting entirely of goods intended to be “transported” as IE or T&E in-bond shipments.

For shipments other than those consisting entirely of FROB and goods intended to be “transported” in-bond as an IE or T&E, the Importer Security Filing must consist of 10 elements, unless an element is specifically exempted. The manufacturer (or supplier), country of origin, and commodity Harmonized Tariff Schedule of the United States (HTSUS) number must be linked to one another at the line item level. The 10 elements are as follows: (1) Seller; (2) Buyer; (3) Importer of record number/Foreign trade zone applicant identification number; (4) Consignee number(s); (5) Manufacturer (or supplier); (6) Ship to party; (7) Country of origin; (8) Commodity HTSUS number; (9) Container stuffing location; and (10) Consolidator (stuffer).

For shipments consisting entirely of FROB and shipments consisting entirely of goods intended to be “transported” in-bond as an IE or T&E, the Importer Security Filing must consist of five elements, unless an element is specifically exempted. The five elements are as follows: (1) Booking party; (2) Foreign port of unlading; (3) Place of delivery; (4) Ship to party; and (5) Commodity HTSUS number.

Four of the Importer Security Filing elements are identical to elements submitted for entry (CBP Form 3461) and entry summary (CBP Form 7501) purposes. These elements are the importer of record number, consignee number, country of origin, and Start Printed Page 71734commodity 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	Entry and Entry Summary ⁴	Importer Security Filing
Timing	Entry within 15 calendar days of date of arrival; Entry summary within 10 working days of entry	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
Submission Method	ABI or paper	ABI or vessel AMS
Elements	—Bill of Lading Number —Importer of Record Number *	Shipments Other Than FROB, IE Shipments and T&E Shipments: —Seller
	—Foreign Port before vessel departs for U.S.	—Buyer
	—Carrier SCAC	—Importer of record number/FTZ applicant identification number *
	—Carrier Assigned Voyage Number	—Consignee number(s) *
	—Date of Arrival at First U.S. Port	—Manufacturer (or supplier)
	—Quantity	—Ship to party
	—Unit of measure of Quantity	—Country of origin *
	—First Foreign Place of Receipt	—Commodity HTSUS number *
	—Commodity Description	—Container stuffing location
	—Commodity HTSUS Number *	—Consolidator (stuffer)
	—Commodity Weight
	—Shipper Name and Address
	—Consignee Name and Address and Number *	FROB, IE Shipments and T&E Shipments:
	—Country of Origin *	—Booking party
	—Vessel Name	—Foreign port of unlading
	—Vessel Country	—Place of delivery
	—Vessel Number	—Ship to party
	—Foreign Port of Lading	—Commodity HTSUS number
	—Hazmat Code
	—Container numbers
	—Seal Numbers
	—Date of Departure from Foreign Port
	—Time of Departure from Foreign Port
* These elements are provided for Importer Security Filing and entry/entry summary or FTZ admission purposes.

D. Structured Review and Flexible Enforcement Period

In order to provide the trade sufficient time to adjust to the new requirements and in consideration of the business process changes that may be necessary to achieve full compliance, CBP will show restraint in enforcing the rule, taking into account difficulties that importers may face in complying with the rule, so long as importers are making satisfactory progress toward compliance and are making a good faith effort to comply with the rule to the extent of their current ability. This policy will last for twelve months after the effective date and will apply to all aspects of the filing rule.

In addition, this rule provides flexibility with respect to certain elements of the Importer Security Filings. This flexibility falls into two categories:

Two elements of the Importer Security Filings will be subject to flexibility as to timing. These elements are the Container stuffing location and Consolidator (stuffer). The ISF Importer must submit these elements as early as possible, and in any event no later than 24 hours prior to arrival in a U.S. port (or upon lading at the foreign port if that is later than 24 hours prior to arrival in a U.S. port).
Four elements will be subject to flexibility as to interpretation. These elements are the Manufacturer (or supplier), Ship to party, Country of origin, and Commodity HTSUS number. There is no special timing flexibility for these elements; they must be filed 24 hours prior to lading. However, CBP has added flexibility by allowing ISF Importers, in their initial filing, to provide a range of acceptable responses based on facts available to the importer at the time, in lieu of a single specific response (which may become known to the importer only at a later time). ISF Importers will be required to update Start Printed Page 71735their filings with respect to these elements as soon as more precise or more accurate information is available, in no event later than 24 hours prior to arrival at a U.S. port (or upon lading at the foreign port if that is later than 24 hours prior to arrival in a U.S. port). For example, 24 hours prior to lading:
The ISF Importer could identify the manufacturer as being one of three typically used manufacturers, with more precision to be provided in subsequent ISF updates.
The ISF Importer could submit the identity of the importer, consignee, or the facility where the goods will be unladen in the event that the ship to party is unavailable (e.g., “to order” shipments).
If the ISF Importer is, in good faith, unable to determine whether the country where the final stage of production of an article took place is the country of origin, the ISF Importer may provide the country where the final stage of production of the article took place in lieu of the country of origin, and update the ISF submission as soon as more accurate data are available.

The purpose of these flexibilities is to allow CBP to conduct a structured review of the elements, including an evaluation of any specific compliance difficulties that the trade may be encountering with respect to these elements. CBP may gather information by conducting reviews of particular importers to determine whether submission of all 10 data elements 24 hours prior to lading was in fact feasible and, if not, what barriers the importer encountered. The structured review will cover a range of enterprises, from small to large, and will include both integrated and nonintegrated supply chains.

The structured review will further be enhanced by comments filed in response to this publication. Although the rule is now final, CBP invites comments on the 6 data elements for which CBP is providing some type of flexibility (Container stuffing location, Consolidator (stuffer), Manufacturer (or supplier), Ship to party, Country of origin, and Commodity HTSUS number). These comments are due by June 1, 2009.

The structured review will also be enhanced by feedback provided in CBP's formal outreach program, described below. The information gathering phase of the structured review will end on June 1, 2009. All comments must be submitted to CBP by that date. We note, again, that CBP is not reopening the proposed rule in this action for comment; rather CBP is seeking comment on the requirements discussed in section 149.2(b) and (f) of this rule and the revised Regulatory Impact Assessment.

On the basis of information obtained during the structured review and public comments, DHS will undertake an analysis of the elements subject to flexibilities discussed in this section. The analysis will examine compliance costs for various industry segments, the impact of the flexibilities, the barriers to submitting these data 24 hours prior to lading, and the benefits of collecting these data. Based on that analysis, DHS, in coordination with other parts of the Executive Branch, will determine whether to eliminate, modify, or leave unchanged these requirements.

CBP is committed to fully supporting the trade community in its efforts to successfully implement the requirements of this rule. During the first months of implementation—(1) CBP will conduct an extended round of structured outreach activities to engage with the trade on all aspects of the rule with a series of regional seminars and trade round table discussions at all of CBP's major seaports of entry and other ports as needed or requested by the trade. (2) CBP will identify trade community operators who have established processes (or who have successfully re-engineered processes) to deliver the data timely to CBP to provide their colleagues in the community with business advice on how to comply with the regulatory requirements. (3) CBP's seminars will focus on all topics related to this rule, technical, operational, and process components, such as documentation adjustments (e.g., modifying the terms of letters of credit to require receipt of data to effect final payment) and developing automated solutions to track supply chain partners and commodity orders (e.g. creating vendor/supplier databases).

A proposed schedule for these outreach activities is as follows:

Regions	Proposed dates
North East Coast:
• Ports of Newark/New York and Boston	30 days after publication.
South East Coast:
• Ports of Baltimore, Philadelphia, and Norfolk	45 days after publication.
• Ports of Charleston, Savannah, and Jacksonville	60 days after publication.
• Ports of Miami, Port Everglades, and San Juan	75 days after publication.
Gulf Coast:
• Ports of Houston and New Orleans	90 days after publication.
Northwest Pacific Coast:
• Ports of Seattle/Tacoma and Portland	105 days after publication.
• Ports of Oakland/San Francisco	120 days after publication.
Pacific Coast:
• Ports of Los Angeles/Long Beach	135 days after publication.

Additional sessions will be scheduled based on trade community needs and feedback. All material discussed and presented at the seminars will be published on the CBP Web site along with Frequently Asked Questions (FAQs) and a general “How to Guide.” CBP will consider an entity's progress in the implementation of the rule during the delayed enforcement period as a mitigating factor in any enforcement action following the delayed enforcement period.

E. Summary of Changes From NPRM

As referenced below, CBP is making several significant changes from the proposed rule. These changes consist of the following:

(1) A compliance date of one year from the effective date of this final rule is established (in new §§ 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 Start Printed Page 71736lieu 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.

(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

V. Discussion of Comments Regarding Proposed Carrier Requirements Relating to Vessel Cargo Destined to the United States

A. Overview; Vessel Stow Plan

CBP proposed to require carriers to submit a vessel stow plan for vessels destined to the United States. Under the proposed regulations, carriers were required to transmit the stow plan for vessels transporting containers and/or break bulk cargo so that CBP received it no later than 48 hours after the carrier's departure from the last foreign port. For voyages less than 48 hours in duration, CBP was to receive the stow plan prior to the vessel's arrival at the first port in the United States. Bulk carriers were to be exempt from this requirement for vessels exclusively carrying bulk cargo. The proposal required carriers to submit the vessel stow plan via the CBP-approved electronic data interchange system. The current approved electronic data interchange system for the vessel stow plan is vessel AMS. The proposal stated that if CBP approves of different or additional electronic data interchange systems, CBP would publish a notice in the Federal Register.

Under the proposed regulations, the vessel stow plan was required to include standard information relating to the vessel and each container and unit of break bulk cargo laden on the vessel. The vessel stow plan was to include the following standard information:

With regard to the vessel,

(1) Vessel name (including international maritime organization (IMO) number);

(2) Vessel operator; and

(3) Voyage number.

With regard to each container or unit of break bulk cargo,

(1) Container operator, if containerized;

(2) Equipment number, if containerized;

(3) Equipment size and type, if containerized;

(4) Stow position;

(5) Hazmat-UN code;

(6) Port of lading; and

(7) Port of discharge.

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;

(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 Start Printed Page 71741at a port (These events are commonly referred to as “vessel departure” and “vessel arrival” notices);

(6) When a container which is destined to arrive within the limits of a port in the United States by vessel undergoes an intra-terminal movement;

(7) When a container which is destined to arrive within the limits of a port in the United States by vessel is ordered stuffed or stripped;

(8) When a container which is destined to arrive within the limits of a port in the United States by vessel is confirmed stuffed or stripped; and

(9) When a container which is destined to arrive within the limits of a port in the United States by vessel is shopped for heavy repair.

CBP is aware that it might be cost beneficial for some carriers to transmit all CSMs, rather than filter out CSMs relating to containers destined to the United States or relating only to the required events. Therefore, CBP proposed to allow carriers to transmit their “global” CSM messages, including CSMs relating to containers that do not contain cargo destined for importation into the United States and CSMs relating to events other than the required events. CBP stated in the proposal that by transmitting CSMs in addition to those required by the proposed regulations, a carrier would authorize CBP to access and use those data.

For each CSM submitted, the following information was proposed to be included:

(1) Event code being reported, as defined in the ANSI X.12 or UN EDIFACT standards;

(2) Container number;

(3) Date and time of the event being reported;

(4) Status of the container (empty or full);

(5) Location where the event took place; and

(6) Vessel identification associated with the message.

Carriers would be exempt from the CSM requirement for bulk and break bulk cargo. Under the proposed regulations, carriers would be required to submit CSMs via the CBP-approved electronic data interchange system. The current approved electronic data interchange system for CSMs is vessel AMS. The proposal stated that if CBP approves of a different or additional electronic data interchange system, CBP will publish notice in the Federal Register.

D. Public Comments; Container Status Messages

E. Public Comments; Carrier Requirements Generally

Comment

CBP should require the terminal operator to submit vessel stow plans and container status messages. The vessel operator should be responsible for filing CSMs and vessel stow plans when there is a vessel sharing or space charter agreement. In the alternative, carriers should be able to designate a third party to submit CSMs and the vessel stow plan on the carrier's behalf.

CBP Response

CBP disagrees that terminal operators should be required to submit vessel stow plans and container status messages. The vessel operator is responsible for the submission of the vessel stow plan because it is the party operating the vessel and transporting the cargo to the United States. All vessel operating carriers who create or collect CSMs for cargo that is destined to enter the limits of a port in the United States, including slot and other vessel sharing partners, are responsible for the submission of CSMs. In response to requests from the trade, CBP will allow the responsible carrier to designate a third party agent to transmit stow plans and CSMs. However, the obligation and liability for those requirements remains with the carrier.

VI. Discussion of Comments Regarding Proposed Importer Requirements for Vessel Cargo Destined to the United States

A. Overview; Proposed Importer Requirements

Pursuant to the authority of section 343(a) of the Trade Act of 2002, as amended by MTSA, and section 203 of the SAFE Port Act, in order to enhance the security of the maritime environment, CBP proposed to require importers, as defined in the proposal, or their agents, to transmit an Importer Security Filing to CBP, for cargo other than FROB, no later than 24 hours before cargo is laden aboard a vessel destined to the United States. Because FROB is frequently laden based on a last-minute decision by the carrier, the Importer Security Filing for FROB was to be required any time prior to lading.^[6] Under the proposed regulations, an Importer Security Filing was required for each shipment, at the lowest bill of lading level (i.e., at the house bill of lading level, if applicable). It is information from the relevant house bill that CBP proposed to collect.

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 Start Printed Page 71743goods intended to be “transported” as IE or T&E in-bond shipments.

Under the proposal, for FROB, the importer would be construed as the international carrier of the vessel arriving in the United States. For IE and T&E in-bond shipments, the importer was construed as the party filing the IE or T&E documentation with CBP.

1. Shipments Other Than FROB, IE Shipments, and T&E Shipments

Under the proposed regulations, for the Importer Security Filing for shipments other than those consisting entirely of FROB and goods intended to be “transported” in-bond as an IE or T&E, 10 elements were required, unless specifically exempted. The manufacturer (or supplier) name and address, country of origin, and commodity Harmonized Tariff Schedule of the United States (HTSUS) number were to be linked to one another at the line item level.

The 10 proposed required elements were:

(1) Manufacturer (or supplier) name and address. Name and address of the entity that last manufactures, assembles, produces, or grows the commodity or name and address of the supplier of the finished goods in the country from which the goods are leaving. In the alternative, the name and address of the manufacturer (or supplier) that is currently required by the import laws, rules and regulations of the United States (i.e., entry procedures) may be provided (this is the information that is used to create the existing manufacturer identification (MID) number for entry purposes).

(2) Seller name and address. Name and address of the last known entity by whom the goods are sold or agreed to be sold. If the goods are to be imported otherwise than in pursuance of a purchase, the name and address of the owner of the goods must be provided.^[7]

(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.

(5) Container stuffing location. Name and address(es) of the physical location(s) where the goods were stuffed into the container. For break bulk shipments, the name and address(es) of the physical location(s) where the goods were made “ship ready” must be provided.

(6) Consolidator (stuffer) name and address. Name and address of the party who stuffed the container or arranged for the stuffing of the container. For break bulk shipments, the name and address of the party who made the goods “ship ready” or the party who arranged for the goods to be made “ship ready” must be provided.

(7) Importer of record number/FTZ applicant identification number. Internal Revenue Service (IRS) number, Employer Identification Number (EIN), Social Security Number (SSN), or CBP assigned number of the entity liable for payment of all duties and responsible for meeting all statutory and regulatory requirements incurred as a result of importation. For goods intended to be delivered to an FTZ, the IRS number, EIN, SSN, or CBP assigned number of the party filing the FTZ documentation with CBP must be provided. The importer of record number for Importer Security Filing purposes is the same as “importer number” on CBP Form 3461.

(8) Consignee number(s). Internal Revenue Service (IRS) number, Employer Identification Number (EIN), Social Security Number (SSN), or CBP assigned number of the individual(s) or firm(s) in the United States on whose account the merchandise is shipped. This element is the same as the “consignee number” on CBP Form 3461.

(9) Country of origin. Country of manufacture, production, or growth of the article, based upon the import laws, rules and regulations of the United States. This element is the same as the “country of origin” on CBP Form 3461.

(10) Commodity HTSUS number. Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number is required to be provided to the six-digit level. The HTSUS number may be provided up to the 10-digit level. This element is the same as the “H.S. number” on CBP Form 3461 and can only be used for entry purposes, if it is provided at the 10-digit level or greater.

2. FROB, IE Shipments, and T&E Shipments

Under the proposed regulations, for the Importer Security Filing for shipments consisting entirely of FROB and shipments consisting entirely of goods intended to be “transported” in-bond as an IE or T&E, five elements were to be provided in order to enhance the security of the maritime environment.

The five proposed required elements were:

(1) Booking party name and address. Name and address of the party who is paying for the transportation of the goods.

(2) Foreign port of unlading. Port code for the foreign port of unlading at the intended final destination.

(3) Place of delivery. City code for the place of delivery.

(4) Ship to name and address. Name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody.

(5) Commodity HTSUS number. Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number must be provided to the six-digit level. The HTSUS number may be provided up to the 10-digit level.

Four of the proposed Importer Security Filing elements are identical to elements submitted for entry (CBP Form 3461) and entry summary (CBP Form 7501) purposes. These elements are the importer of record number, consignee number, country of origin, and commodity HTSUS number when provided at the 10-digit level. CBP proposed to allow an importer to submit these elements once to be used for both Importer Security Filing and entry/entry summary purposes. Under the proposed regulations, if an importer chooses to have these elements used for entry/entry summary purposes, the Importer Security Filing and entry/entry summary must be self-filed by the importer or filed by a licensed customs broker in a single transmission to CBP. In addition, the HTSUS number would be required at the 10-digit level.

As proposed, two of the Importer Security Filing elements are identical to elements submitted for application to admit goods to an FTZ (CBP Form 214). These elements are the country of origin and commodity HTSUS number when provided at the 10-digit level. CBP proposed to allow a filer to submit the Importer Security Filing and CBP Form 214 in the same electronic transmission to CBP and to submit the country of origin and commodity HTSUS number once to be used for both Importer Security Filing and FTZ admission purposes. If the party submitting the Importer Security Filing chose to have this element used for FTZ admission purposes, the HTSUS number would be required at the 10-digit level.Start Printed Page 71744

B. Public Comments; Responsible Party

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.

CBP is not requiring a particular form for a power of attorney for Importer Security Filing purposes. However, 19 CFR 141.32 contains an example of an acceptable general power of attorney with unlimited authority. CBP has revised the regulations under this interim final rule to require that powers of attorney must be in English. Pursuant to 19 U.S.C. 1508(a), CBP has also clarified in the regulations that powers of attorney must be retained until revoked, and revoked powers of attorney and letters of revocation must be retained for five years after the date of revocation. Finally, CBP will not allow an exemption to the power of attorney requirement for goods consigned to the military, the government, or for personal/household goods. An exemption is not merited as there is no less of a security risk associated with these shipments. CBP still requires the certainty that powers of attorney provide when parties are interacting with CBP.

D. Public Comments; Customs Business

Comment

Commenters stated that the Importer Security Filing, including providing the HTSUS number (even at the six-digit level), importer of record number, and consignee number, is “customs business.” Therefore, the Importer Security Filing should be restricted to licensed Customs brokers. Other commenters stated that classification at the 10-digit level is “customs business” and, therefore, when the Importer Security Filing and entry are filed via the same electronic transmission (unified filing), this submission constitutes “customs business.” Non-brokers should be limited to the filing of the Importer Security Filing alone.

CBP Response

“Customs business” does not involve the mere electronic transmission of data received for transmission to CBP, but does involve classification for entry purposes. See 19 CFR 111.1. The six-digit HTSUS number is intended exclusively for ensuring cargo safety and security, and not for determining merchandise entry procedures that fall within the scope of customs business. However, a 10-digit HTSUS number is needed and is used for merchandise entry purposes and, therefore, classification at the 10-digit level is considered customs business. CBP disagrees that providing the importer of record number and consignee number falls within the definition of customs business in 19 CFR 111.1. Pursuant to this interim final rule, if the Importer Security Filing and entry or entry summary are provided via a single electronic transmission to CBP, the party making the transmission must be an importer acting on its own behalf or a licensed customs broker.

E. Public Comments; Bills of Lading

Comment

Commenters asked CBP to clarify whether the bill of lading number (house and/or master) is a required data field, and whether the house or master bill number is required. If the bill of lading number is required, CBP should only require the house bill of lading number and it should be added as an additional required data element for the Importer Security Filing. Other commenters stated that carriers may not generate bill of lading numbers early enough for an importer to submit this information for Importer Security Filing purposes. Therefore, CBP should require the bill of lading number prior to arrival in the United States rather than 24 hours prior to lading. In the alternative, CBP should require carriers to make the bill of lading number available no later than 48 hours prior to lading the vessel or CBP should allow the use of booking number in lieu of the bill of lading number. In any event, the importer should not be penalized for a late Importer Security Filing when a carrier fails to provide the bill of lading number early enough. Commenters asked whether multiple Importer Security Filings will be required when one bill of lading covers multiple shipments. Commenters also stated that CBP should allow an importer to file one Importer Security Filing for all bills of lading in a shipment where the manufacturer, country of origin, and HTSUS numbers are the same. Lastly, commenters asked how the Importer Security Filing will be handled if the goods are divided and sold in transit to at least two separate parties, resulting in two new bills of lading.

CBP Response

A bill of lading number is integral to the Importer Security Filing and therefore, must be provided with the Importer Security Filing. The bill of lading number is not a data field, but an identifier which will be provided in the header information. However, after further consideration, CBP is requiring only the number for the bill of lading at the lowest level (i.e., the regular straight/simple bill of lading or house bill of lading) and not the master bill of lading number. Under existing 24 Hour Rule requirements, the bill of lading number is required for containerized cargo 24 hours prior to lading. For bulk cargo and exempted break bulk cargo, the carrier must submit the bill of lading number 24 hours prior to arrival. Under this interim final rule, for containerized cargo, the Importer Security Filing is also required 24 hours prior to lading. For break bulk cargo that is exempted for 24 Hour Rule purposes, the Importer Security Filing is required 24 hours prior to arrival. For bulk cargo, an Importer Security Filing is not required. Accordingly, the bill of lading number will be available for Importer Security Filing purposes, and has always been a part of the transaction identification. CBP understands that business processes may need to be changed to ensure that the importer, as defined for these regulations, has the bill of lading number in a timely fashion. Regarding bills of lading covering multiple shipments, CBP has the capability to accept multiple Importer Security Filings per bill of lading. CBP will issue a unique identification number for each separate, not unified, Importer Security Filing as part of the acceptance/rejection acknowledgment response. Modification of a particular Importer Security Filing will be possible using the unique identification number. Under this interim final rule, one Importer Security Filing can satisfy multiple bills of lading. However, the manufacturer (or supplier), country of origin, and commodity HTSUS number elements must be linked to one another at the line item level. Lastly, when a shipment is divided into a new or multiple new shipments, each with its own house bill of lading number, the original Importer Security Filing will need to be amended. In addition, a new Importer Security Filing will be required for each new bill of lading number.Start Printed Page 71747

F. Public Comments; Required Elements

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

7. Consignee Number(s)

8. Country of Origin

Comment

The importer may not have direct knowledge of the country of origin.

CBP Response

Where the ISF Importer receives any of the information from another party, CBP will take into consideration how, in accordance with ordinary commercial practices, the ISF Importer acquired such information, and whether and how that party is able to verify this information. Where that party is not reasonably able to verify such information, CBP will permit the party to electronically present the information on the basis of what the party reasonably believes to be true.

9. Commodity HTSUS Number

J. Public Comments; Importer Security Filing, Entry, and Application for FTZ Admission

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 Start Printed Page 71760through the assessment of liquidated damages, in addition to penalties applicable under other provisions of law.

CBP proposed to add a new condition to those provisions in 19 CFR 113.62 required to be included in a basic importation and entry bond. Specifically, CBP proposed to amend 19 CFR 113.62 to include a condition whereby the principal agrees to comply with the proposed Importer Security Filing requirements. Under the proposed condition, if the principal fails to comply with the proposed Importer Security Filing requirements, the principal and surety (jointly and severally) would pay liquidated damages equal to the value of the merchandise involved in the default.

CBP also proposed to amend those provisions in 19 CFR 113.64 required to be included in an international carrier bond. Specifically, CBP proposed to amend 19 CFR 113.64 to include three new conditions. First, a new condition would be added whereby the principal agrees to comply with the proposed Importer Security Filing requirements if the principal elects to provide the Importer Security Filing on behalf of an importer, as defined in the proposal. If the principal fails to comply with the proposed Importer Security Filing requirements, the principal and surety (jointly and severally) would agree to pay liquidated damages equal to the value of the merchandise involved in the default. Second, a new condition would be added whereby the principal agrees to comply with the proposed vessel stow plan requirements. If the principal fails to comply with the proposed vessel stow plan requirements, the principal and surety (jointly and severally) would agree to pay liquidated damages of $50,000 for each vessel arrival. Third, a new condition would be added whereby the principal agrees to comply with the proposed container status message requirements. If the principal fails to timely provide CSMs for all events that occur relating to a container, for which the carrier creates or collects CSMs in its equipment tracking system, the principal and surety (jointly and severally) would pay liquidated damages of $5,000 for each violation, to a maximum of $100,000 per vessel arrival.

Lastly, CBP proposed to amend those provisions in 19 CFR 113.73 required to be included in a foreign trade zone operator bond. Specifically, CBP proposed to amend 19 CFR 113.73 to include a condition whereby the principal agrees to comply with the Importer Security Filing requirements. Under the proposed condition, if the principal fails to comply with the proposed Importer Security Filing requirements, the principal and surety (jointly and severally) would pay liquidated damages equal to the value of the merchandise involved in the default.

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.

In view of the foregoing, and following careful consideration of the comments received and further review of the matter, CBP has concluded that the proposed regulations with the modifications discussed above should be adopted as follows:

The requirements in section 149.2(b) regarding the timing of transmission for 6 of the 10 Importer Security Filing elements (Container stuffing location, Consolidator (stuffer), Manufacturer (or supplier), Ship to party, Country of origin, and Commodity HTSUS number) and section 149.2(f) regarding the flexible requirements for 4 of the elements (Manufacturer (or supplier), Ship to party, Country of origin, and Commodity HTSUS number) are adopted as an interim final rule. CBP invites comments on these requirements.
All other requirements in this rule are adopted as a final rule. CBP is not inviting comments on these requirements.

X. Regulatory Analyses

A. Executive Order 12866

This rule is considered to be an economically significant regulatory action under Executive Order 12866 because it may result in the expenditure of over $100 million in any one year. Accordingly, this rule has been reviewed by the Office of Management and Budget (OMB). The following summary presents the costs and benefits of the rule plus a range of alternatives considered. (The “Regulatory Assessment” can be found in the docket for this rulemaking: http://www.regulations.gov; see also http://www.cbp.gov).

In the analysis that follows, CBP has estimated the costs of the rule assuming that all affected entities are compliant upon the effective date of the rule, which likely overstates costs. Additionally, our analysis presents a low and high cost estimate. The costs for the high scenario incorporate potential supply chain delay impacts of 1 to 3 days. We analyzed the potential for supply chain delays based on our interviews with trade representatives and comments to the NPRM. As stated previously, CBP is committed to ensuring that its trade partners are positioned to successfully implement the requirements of this rule and will work with the trade during the delayed compliance period and thereafter. Based on the magnitude of the impact of potential delay in the high-cost scenario, estimated at billions of dollars annually, CBP has determined that a 12-month delayed compliance period for the rule and flexible requirements for 6 of the 10 Importer Security Filing elements are prudent and necessary steps to minimize the delay costs that could result from the rule and to ensure that these high costs are not, in fact, realized. See the “Structured Review and Flexible Enforcement Period” section of this document for further discussion regarding the delayed compliance period and flexibilities. CBP believes that the direct result of these modifications and the extensive outreach initiative will be a positive downward pressure on supply chain delay costs, and the true impacts of this rule are much more likely to be reflected in the low-cost scenario presented, where no supply chain delays are assumed.

In this analysis, we first estimate current and future baseline conditions in the absence of the rule using 2005 shipping data. In this baseline analysis, we characterize and estimate the number of unique shipments, carriers, and vessel-trips potentially affected by the rule. We then identify the incremental measures that importers and carriers will take to meet the requirements of the rule and estimate the costs of these activities, as well as the cost to CBP of implementing the rule. Next, relying on published literature, we identify hypothetical Start Printed Page 71766scenarios 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
Discount rate	Annualized costs (2009-2018, $2008)	Terrorist attack scenario	Percent reductions in baseline risk that must be achieved for benefits to equal costs		Comments
Discount rate	Annualized costs (2009-2018, $2008)	Terrorist attack scenario	Absolute reduction in baseline risk required	Number of these events that must be avoided for benefits to equal costs	Comments
Alternative 1 (chosen alternative): Importer Security Filings and Additional Carrier Requirements, bulk cargo exempt
3%	$890 million to $6.6 billion	Actual West Coast Port Shutdown (12-days)	0.59 to 4.38	One event in 3 months to 2 years	Preferred Alternative: Most favorable combination of cost and stringency.
		Hypothetical Nuclear Attack	< 0.01 to 0.02	One event in 60 to 500 years
		Hypothetical Biological Attack	0.02 to 0.15	One event in 7 to 50 years
7%	$990 million to $7.0 billion	Actual West Coast Port Shutdown (12-days)	0.66 to 4.64	One event in 3 months to 2 years
		Hypothetical Nuclear Attack	< 0.01 to 0.02	One event in 60 to 400 years
		Hypothetical Biological Attack	0.02 to 0.16	One event in 6 to 50 years
Alternative 2: Importer Security Filings and Additional Carrier Requirements, bulk cargo not exempt
3%	$890 million to $6.6 billion	Actual West Coast Port Shutdown (12-days)	0.59 to 4.39	One event in 3 months to 2 years	More stringent than Alternative 1, but limited expected additional benefit for increased cost.
		Hypothetical Nuclear Attack	< 0.01 to 0.02	One event in 60 to 500 years
		Hypothetical Biological Attack	0.02 to 0.15	One event in 7 to 50 years
7%	$990 million to $7.0 billion	Actual West Coast Port Shutdown (12-days)	0.66 to 4.65	One event in 3 months to 2 years
		Hypothetical Nuclear Attack	< 0.01 to 0.02	One event in 60 to 400 years
		Hypothetical Biological Attack	0.02 to 0.16	One event in 6 to 50 years
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Alternative 3: Importer Security Filings only, bulk cargo exempt
3%	$890 million to $6.6 billion	Actual West Coast Port Shutdown (12-days)	0.59 to 4.37	One event in 3 months to 2 years	Similar cost to Alternative 1 with decreased effectiveness. Importer Security Filings and Additional Carrier Requirements are not working in tandem.
		Hypothetical Nuclear Attack	< 0.01 to 0.02	One event in 60 to 500 years
		Hypothetical Biological Attack	0.02 to 0.15	One event in 7 to 50 years
7%	$990 million to $7.0 billion	Actual West Coast Port Shutdown (12-days)	0.66 to 4.63	One event in 3 months to 2 years
		Hypothetical Nuclear Attack	< 0.01 to 0.02	One event in 60 to 400 years
		Hypothetical Biological Attack	0.02 to 0.16	One event in 6 to 50 years
Alternative 4: Additional Carrier Requirements only
3%	$2 million to $11 million	Actual West Coast Port Shutdown (12-days)	< 0.01 to 0.01	One event in 100 to 700 years	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.
		Hypothetical Nuclear Attack	< 0.01	One event in 40,000 to 200,000 years
		Hypothetical Biological Attack	< 0.01	One event in 4,000 to 20,000 years
7%	$2 million to $12 million	Actual West Coast Port Shutdown (12-days)	< 0.01 to 0.01	One event in 100 to 600 years
		Hypothetical Nuclear Attack	< 0.01	One event in 30,000 to 200,000 years
		Hypothetical Biological Attack	< 0.01	One event in 4,000 to 20,000 years

The annualized cost range presented in each cell results from varying assumptions about the estimated initial and transaction costs for Importer Security Filings, the potential for supply chain delays, and the estimated costs to transmit Vessel Stow Plans and CSMs to CBP.

To estimate the full range of the total costs for complying with the rule, for the four alternatives we develop a high cost scenario and a low cost scenario by assuming certain values for the key cost factors. Annualized costs for Alternatives 1 through 3 range from $890 million to $7.0 billion, depending on the discount rate applied, the cost scenario, whether or not bulk shipments are exempt, and whether or not the Additional Carrier Requirements are required. The annualized costs for Alternative 4 are substantially lower, ranging from $2 million to $12 million. However, this alternative is the least stringent and effective option because it only collects data on the conveyance of the shipment.

Ideally, the quantification and monetization of the benefits of this regulation would involve estimating the current level of risk of a successful terrorist attack, absent this regulation, and the incremental reduction in risk resulting from implementation of the rule. We would then multiply the change by an estimate of the value individuals place on such a risk reduction to produce a monetary estimate of direct benefits. However, existing data limitations and a lack of complete understanding of the true risks posed by terrorists prevent us from establishing the incremental risk reduction attributable to this rule. As a result, we undertake a break-even analysis to inform decision-makers of the necessary incremental change in the probability of such an event occurring that would result in direct benefits equal to the costs of the rule.

In the break-even analysis, we identify three types of terrorist attack scenarios that may be prevented by the regulation and obtain cost estimates of the consequences of these events from publicly available literature. The analysis compares the annualized costs Start Printed Page 71768of the regulation to the avoided costs of each event to estimate the reduction in the probability of such events (also presented in terms of “odds,” e.g., a 0.25 reduction in the probability of an event occurring in a single year implies that one additional event must be avoided in a four-year period) that must be achieved for the benefits of the regulation to equal the costs. The reduction in the odds of terrorist events are rough estimates that do not take into account changes in risk through time or factors that may affect willingness to pay to avoid the consequences of these events, such as changes in income.

For each attack scenario, Table 1 indicates what would need to occur for the costs of each alternative to equal its benefits, assuming the alternative only reduces the risk of a single event of that type of attack. As summarized in Table 1, the break-even risk reductions for Alternative 4 are significantly lower than the other three alternatives, reflecting the significantly lower costs associated with requiring only the Additional Carrier Requirements. The breakeven results for the remaining three alternatives are similar because the costs of these options are not very different. For the most severe attack scenario (a hypothetical nuclear attack in a major city), the rule must result in the avoidance of one such event in a time period of 60 to 500 years for the benefits of the regulation to equal the costs. For the least severe of the three hypothetical attack scenarios (costs of the actual 12-day West Coast port shutdown), the estimated costs of a single incident are closer in value to the annualized costs of the rule. As a result, if the rule only reduced the risk of a single attack on a port, a shutdown would need to be avoided at a rate of once in three months to two years for the benefits of the rule to equal costs. The results expressed as absolute reductions in baseline risk also show higher reductions needed if port attacks only are mitigated (about 0.59 to 4.65) and lesser reductions associated with prevention of the more catastrophic events. We note that this analysis is highly sensitive to the chosen incident scenarios.

Total present value costs of the rule are presented in Table 2, based on the cost projections we estimate for the 10-year analysis period, 2009 through 2018. Applying a discount rate of three percent, the total costs of Alternatives 1, 2, and 3 are projected to range from $7.6 billion to $56 billion over 10 years depending on the cost scenario, whether or not bulk shipments are exempt, and whether or not Additional Carrier Requirements are required. If a discount rate of seven percent is applied instead, total costs range from $7.0 billion to $49 billion. Under Alternative 2, which requires Importer Security Filings for both non-bulk cargo and bulk cargo, costs are not significantly higher because the number of bulk shipments is relatively small compared to the number of non-bulk shipments. Under Alternative 3, costs are not significantly lower because the estimated costs for the Additional Carrier Requirements are relatively small compared to the estimated costs for the Importer Security Filings. The present value costs for Alternative 4 are significantly lower than the other three alternatives, ranging from $16 million to $95 million.

As a result, the relatively large difference in values between the lower end (e.g., present value cost of $7.6 billion at a discount rate of three percent) and higher end ($56 billion) of the estimated total cost range for Alternatives 1, 2, and 3 is attributable primarily to the cost scenario and not on whether or not Importer Security Filings for bulk shipments or the Additional Carrier Requirements are required. The higher end of the estimated total cost range reflects the variations made for the high cost scenario, and more specifically, the assumption that delays in the supply chain would occur as a result of this rule. For the high cost scenario, our present value estimate of the welfare loss to U.S. importers arising from delays in the supply chain is approximately $43 billion (at a discount rate of three percent).

Table 2—Total Present Value Costs, 2009-2018 $2008
Discount rate	Present value costs
Alternative 1 (chosen alternative): Importer Security Filings and Additional Carrier Requirements, bulk cargo exempt
3%	$7.6 billion to $56 billion.
7%	$7.0 billion to $49 billion.
Alternative 2: Importer Security Filings and Additional Carrier Requirements, bulk cargo not exempt
3%	$7.6 billion to $56 billion.
7%	$7.0 billion to $49 billion.
Alternative 3: Importer Security Filings only, bulk cargo exempt
3%	$7.6 billion to $56 billion.
7%	$7.0 billion to $49 billion.
Alternative 4: Additional Carrier Requirements only
3%	$0.02 billion to $0.1 billion.
7%	$0.02 billion to $0.09 billion.

Again, the range presented in each cell results from varying assumptions about the estimated initial and transaction costs for Importer Security Filings, the potential for supply chain delays, and the estimated costs to transmit Vessel Stow Plans and CSMs to CBP.

Annual undiscounted costs of the regulation are presented in Table 3.Start Printed Page 71769

Table 3—Annual Undiscounted Costs by Year, 2009-2018 ($2008, in Millions)
Year	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	Alternative 4: additional carrier requirements only
2009	$1,900 to $11,000	$1,900 to $11,000	$1,900 to $11,000	$0.4 to $14.
2010	1,900 to 7,100	1,900 to 7,100	1,900 to 7,100	0.4 to 14.
2011	1,900 to 7,300	1,900 to 7,300	1,900 to 7,300	0.4 to 14.
2012	290 to 4,600	290 to 4,600	290 to 4,600	0.3 to 7.
2013	310 to 4,800	310 to 4,800	310 to 4,800	0.3 to 7.
2014	320 to 5,100	330 to 5,100	320 to 5,100	0.3 to 7.
2015	340 to 5,300	340 to 5,300	340 to 5,300	0.3 to 7.
2016	360 to 5,600	360 to 5,600	360 to 5,600	0.3 to 7.
2017	380 to 5,900	380 to 5,900	380 to 5,900	0.3 to 7.
2018	400 to 6,200	400 to 6,300	400 to 6,200	0.4 to 7.

As shown in Table 3, annual discounted costs are highest in the first years of implementation, then decrease notably, then steadily increase for the remainder of the 10-year period of analysis. Costs are highest in the first year as the potential for supply chain delays are greatest during initial implementation of the rule. Also in the first years of implementation, we account for software costs incurred by those importers who import frequently to the United States. These software costs are amortized over the first three years (until 2011), not for the full 10 years of the analysis. Steady increases from 2012 to the end of the analysis period reflect our projected annual increases in the number of shipments, the value of shipments, and the vessel-trips into the United States.

The results indicate that Alternative 1 provides the most favorable combination of cost and stringency. While Alternative 2 might be considered more stringent because it does not exempt bulk cargo from the Importer Security Filing requirements, the impact of this is expected to be slight, because the number of bulk shipments is relatively small compared to the number of non-bulk shipments. Alternative 3 is expected to have costs similar to Alternative 1, but will be less stringent because it only requires Importer Security Filings and does not include data that verify the information on the cargo manifest and identify and track the movement, location, and status of cargo (and in particular, containerized cargo) from the time its transport is booked until its arrival in the United States. Without the Additional Carrier Requirements, CBP will not be able to assess the specific risks associated with the many individual movements and transfers involved in shipping cargo to the United States. Thus, an important element of CBP's layered, risk-based approach to cargo security would, consequently, be omitted.

Alternatives 3 and 4 are not chosen, in part, because it is CBP's judgment that neither of these options will be as effective as the selected option. Specifically, the Importer Security Filing requirements and the Additional Carrier Requirements work in tandem. The Additional Carrier Requirements focus on the conveyance of the goods and are distinct from the Importer Security Filing elements, which are focused on the merchandise and the parties involved in the acquisition process. Specifically, Vessel Stow Plans will assist CBP in validating other advanced cargo information submissions by allowing CBP to, among other things, better detect unmanifested containers without relying on physical verification methods that are manpower intensive and costly. CSMs will provide CBP with additional transparency into the custodial environment through which inter-modal containers are handled and transported before arrival in the United States. Because CSMs are created independently of the manifest, CBP can utilize them to corroborate other advanced data elements, including Importer Security Filings and those elements related to container and conveyance origin. This corroboration with other advanced data messages, including Importer Security Filings, and an enhanced view into the international supply chain will contribute to the security of the United States and the international supply chain through which containers and imported cargo are shipped to U.S. ports.

Based on this analysis of alternatives, CBP has determined that Alternative 1 provides the most favorable balance between security outcomes and impacts to maritime transportation. As summarized in Table 4, the incremental costs of this regulation, on a per-shipment basis, is a small fraction of the value of a shipment. The relatively high cost of the rule over 10 years is driven by the large volume of shipments rather than high per-transaction costs. Shipment data indicate that the median value of a shipment of goods imported into the United States is approximately $38,000. As shown in Table 4, the increase in costs of imported shipments will range from $48 to $390 per shipment, depending on the discount rate applied, the cost scenario, and whether or not bulk shipments are exempt. The added costs of this regulation are estimated to be only 0.13 percent to 1.03 percent of the median value of $38,000 per shipment.

Table 4—Costs per Shipment, Median Value of Shipment, Vessel-Trip, and Carrier
[$2008]
	3% discount rate	7% discount rate
Importer Security Filing Costs: Alternatives 1 and 3 (bulk cargo exempt)
Total Present Value Cost	$7.5 billion to $56 billion	$6.9 billion to $49 billion.
Number of shipments (10-year total)	144 million	144 million.
Equivalent per shipment cost	$52 to $390	$48 to $341.
Start Printed Page 71770
Median value per shipment	$37,900	$37,900.
Cost per median value	0.14 to 1.03 percent	0.13 to 0.90 percent.
Importer Security Filing Costs: Alternative 2 (bulk cargo not exempt)
Total Present Value Cost	$7.6 billion to $56 billion	$7.0 billion to $49 billion.
Number of shipments (10-year total)	145 million	145 million.
Equivalent per shipment cost	$52 to $388	$48 to $339.
Median value per shipment	$38,200	$38,200.
Cost per median value	0.14 to 1.02 percent	0.13 to 0.89 percent.
Vessel Stow Plan Costs: Alternatives 1, 2, and 4
Total present value cost	$3 million to $27 million	$2 million to $33 million.
Number of non-bulk vessel-trips, small and large carriers (10-year total)	294,000	294,000.
Equivalent per vessel-trip cost	$9 to $90	$8 to $78.
Container Status Message Costs: Alternatives 1, 2, and 4
Total present value cost	$0.3 million to $54 million	$0.3 million to $48 million.
Number of container carriers, large	74	74.
Equivalent per carrier cost	$3,900 to $730,000	$3,700 to $650,000.

The rule may increase the time shipments are in transit, particularly for shipments conveyed in containers. Especially for shipments consolidated in containers, the supply chain is generally more complex and the importer has less control of the flow of goods and exchange of associated security filing information. Foreign cargo consolidators may be consolidating multiple shipments from one or more shippers in a container destined for one or more buyers or consignees. In order to ensure that the security filing data are provided by the shippers to the ISF Importers (or their designated agents) and is then transmitted to and accepted by CBP in advance of the 24 hour deadline, carriers and consolidators may advance their cut-off times for receipt of shipments and associated Importer Security Filing data.

These advanced cut-off times would help prevent a carrier or consolidator from having to unpack or unload a container in the event the security filing for one of the shipments contained in the container is inadequate or not accepted by CBP. For example, carriers or consolidators may require shippers to submit, transmit, or obtain CBP acceptance of their security filing data before their shipments are stuffed in the container, before the container is sealed, or before the container is delivered to the port for lading. In such cases, importers may experience additional delays in their supply chain to accommodate these advanced cut-off times imposed by their carriers or consolidators. The costs associated with these delays include: (1) Higher inventory carrying costs; (2) the need to hold larger buffer-stock inventories to accommodate variation in arrival time; (3) depreciation in shipment value; (4) costs of storage at the manufacturer, freight forwarder, consolidator, or port; and (5) costs for additional security to protect the freight from tampering. To capture all of these costs in our estimate of the impact of time delays, we estimate the welfare loss to U.S. importers by relying on estimates of the willingness to pay for reducing transit time. The high end of the cost ranges presented in Table 4 assumes an initial supply chain delay of three days (consolidated container shipments) or two days (unconsolidated or full container shipments) for the first year of implementation (2009) and a delay of one day for years 2 through 10 (2010-2018).

B. Regulatory Flexibility Act

In response to the requirements of the Regulatory Flexibility Act (RFA) of 1980, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) and Executive Order 13272, entitled “Proper Consideration of Small Entities in Agency Rulemaking,” federal agencies must consider the potential distributional impact of rules on small businesses, small governmental jurisdictions, and small organizations during the development of their rules.

The types of entities subject to the rule's requirements include all importers receiving shipments via vessel and all vessel operating common carriers (VOCCs) transporting containerized shipments via vessel to the United States. One, the other, or both of the types of entities will be affected depending on the alternative under consideration. The results of our screening analysis indicated that the proposed rule may significantly impact a substantial number of small importers or carriers, and CBP conducted an Initial Regulatory Flexibility Analysis (IRFA) to further assess these impacts. The IRFA provided a detailed analysis of the potential impact of the proposed rule on small entities and was made available for public comment at the same time as the proposed rule on January 2, 2008.

At the publication of the interim final rule, if CBP still determines that it cannot certify the rule, then it must prepare and make available a Final Regulatory Flexibility Analysis (FRFA). As discussed below, CBP cannot certify that the rule will not have a significant impact on a substantial number of small importers. It can certify the rule relative to the impact on small carriers; however, for the purpose of simplicity, the FRFA presented here includes both importers and carriers. The following is a summary of the FRFA. For full details on the complete analysis, please refer to the Final Regulatory Flexibility Act analysis contained in the “Regulatory Assessment,” which can be found in the Start Printed Page 71771docket 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)
NAICS code	Number of occurrences	Percent of sample	Industry description
424900	20	5.00	Miscellaneous Nondurable Goods Merchant Wholesalers.
999990	19		UNKNOWN INDUSTRY.
423830	13	3.25	Industrial Machinery and Equipment Merchant Wholesalers.
442110	11	2.75	Furniture Stores.
488510	10	2.50	Freight Transportation Arrangement.
423220	8	2.00	Home Furnishing Merchant Wholesalers.
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423120	7	1.75	Motor Vehicle Supplies and New Parts Merchant Wholesalers.
423710	7	1.75	Hardware Merchant Wholesalers.
424320	7	1.75	Men's and Boys' Clothing and Furnishings Merchant Wholesalers.
424330	7	1.75	Women's, Children's, and Infants' Clothing and Accessories Merchant Wholesalers.
424490	7	1.75	Other Grocery and Related Products Merchant Wholesalers.
423910	6	1.50	Sporting and Recreational Goods and Supplies Merchant Wholesalers.
326199	5	1.25	All Other Plastics Product Manufacturing.
423690	5	1.25	Other Electronic Parts and Equipment Merchant Wholesalers.
423990	5	1.25	Other Miscellaneous Durable Goods Merchant Wholesalers.
424310	5	1.25	Piece Goods, Notions, and Other Dry Goods Merchant Wholesalers.
561499	5	1.25	All Other Business Support Services.
423210	4	1.00	Furniture Merchant Wholesalers.
423430	4	1.00	Computer and Computer Peripheral Equipment and Software Merchant Wholesalers.
423440	4	1.00	Other Commercial Equipment Merchant Wholesalers.
423450	4	1.00	Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers.
424460	4	1.00	Fish and Seafood Merchant Wholesalers.
424480	4	1.00	Fresh Fruit and Vegetable Merchant Wholesalers.
442299	4	1.00	All Other Home Furnishings Stores.
453220	4	1.00	Gift, Novelty, and Souvenir Stores.
236115	3	0.75	New Single-Family Housing Construction (except Operative Builders).
315191	3	0.75	Outerwear Knitting Mills.
325620	3	0.75	Toilet Preparation Manufacturing.
332510	3	0.75	Hardware Manufacturing.
333911	3	0.75	Pump and Pumping Equipment Manufacturing.
423320	3	0.75	Brick, Stone, and Related Construction Material Merchant Wholesalers.
423390	3	0.75	Other Construction Material Merchant Wholesalers.
423940	3	0.75	Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers.
424130	3	0.75	Industrial and Personal Service Paper Merchant Wholesalers.
424340	3	0.75	Footwear Merchant Wholesalers.
441310	3	0.75	Automotive Parts and Accessories Stores.
	207	51.75	ALL OTHER INDUSTRIES RECORDED IN SAMPLE.

In most industries, information on revenues or number of employees is used to define whether an entity is “small” for the purpose of RFA/SBREFA analyses. For the top ten industries appearing in our sample, Table 6 reports SBA's thresholds used to define “small” entities in each industry and the share of entities in the United States that meet that definition. For each industry, the share of entities considered small is at least 50 percent. For most industries, the share of entities considered small is at least 75 percent.

Table 6—Share of Small Entities in Each of the Top 10 Industries (Containerized Cargo)
NAICS code	Industry description	Percent of sample	“Small” threshold	Share of small entities in U.S. (percent)
424900	Miscellaneous Nondurable Goods Merchant Wholesalers	5.00	100 employees	93
423830	Industrial Machinery and Equipment Merchant Wholesalers	3.25	100 employees	92
442110	Furniture Stores	2.75	$6.5 million	50
488510	Freight Transportation Arrangement	2.50	$6.5 million	75
423220	Home Furnishing Merchant Wholesalers	2.00	100 employees	75
423120	Motor Vehicle Supplies and New Parts Merchant Wholesalers	1.75	100 employees	71
423710	Hardware Merchant Wholesalers	1.75	100 employees	86
424320	Men's and Boys' Clothing and Furnishings Merchant Wholesalers	1.75	100 employees	83
424330	Women's, Children's, and Infants' Clothing and Accessories Merchant Wholesalers	1.75	100 employees	100
424490	Other Grocery and Related Products Merchant Wholesalers	1.75	100 employees	86

Table 7 reports summary statistics on our sample of 400 importers. For example, it shows that four industries appeared more than ten times in the sample, accounting for 54 individual firms. Within the United States, there are 81,923 entities in those four industries, and 96.4 percent of those businesses meet SBA's definition of a small entity.Start Printed Page 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+	4	54	81,923	78,977	96.4
6-9	7	49	1,371,759	1,341,422	97.8
5	5	25	33,931	32,558	96.0
4	8	32	72,596	70,829	97.6
3	11	33	44,448	42,977	96.7
2	27	54	467,998	461,318	98.6
1	152	153	834,709	812,717	97.4
Total	214	400	2,907,364	2,840,798	97.7

Based on these summary statistics, we conclude that the majority of firms in industries conducting importing activities are likely to be small entities. Therefore, a substantial number of small entities are likely to be affected by the rule. Next, we estimate whether the costs to these importers of implementing the regulation are likely to be significant.

Typically, Federal agencies compare per-business compliance costs to annual revenues of small entities in various size classes to determine the impact of the regulation on small entities. For this rule, such a comparison requires a significant amount of data given that the rule potentially affects hundreds of industries. Annual compliance costs are driven by the number of shipments an importer makes security filings on each year. To estimate the number of shipments per small entity, we ideally would: (1) Take our PIERS dataset of shipments and group the shipments by business; (2) group the businesses by NAICS code; (3) determine the number of businesses in each NAICS code that meet the definition of a small entity; (4) and examine the number and value of shipments by those entities.

We have completed the first step: Identifying approximately 200,000 importers in our sample dataset. As discussed previously, we were able to use Dun and Bradstreet data to identify the appropriate NAICS code for 400 of these 200,000 importers. Next, we conservatively assume that the majority of importers in each NAICS code are small entities. However, estimating the typical number of shipments in each industry is problematic. In 75 percent of the industries identified in our sample of 400 importers, the number of entities affected is less than five. Although we have shipment data for these businesses, these data are unlikely to provide a meaningful sample of shipment volume or value on an industry by industry basis.

Alternatively, when we extrapolate our PIERS dataset to estimate shipments for the entire year, we are able to calculate lower and upper bound estimates of the number of importers and stratify these importers by shipping volume. However, we cannot reliably translate this stratification on a per-industry basis. More importantly, we do not believe that shipment volume is necessarily a good predictor of whether an entity is considered to be a small business in its industry. For example, a small entity with a business model that is heavily dependent on overseas manufacturers may import many shipments a month, while a large entity relying primarily on domestic suppliers may import only one shipment a year.

For these reasons, we are unable to estimate average shipment volume for small entities, preventing us from comparing compliance costs to importers' revenues. Instead, we compare per-shipment compliance costs to the average value of all affected shipments. This comparison may over- or understate small entities' per-shipment compliance costs if their shipment value is higher or lower than the average. In addition, the ratio of compliance costs to shipment value may under- or overstate the significance of the costs depending on the purpose of those shipments and their resale value in the United States.

We calculate information on the mean value of shipments from the PIERS database for all industries identified in our sample. We include all shipments associated with an entity identified within a certain industry. Table 8 presents the mean shipment value and the number of shipments for each of the top 10 industries. These mean values are provided simply for illustration of our data limitations and to provide a sense of the range of mean shipment values.

Table 8—Mean Value per Shipment in the Top 10 Industries (Containerized Cargo)
NAICS code	Number of importers	Total number of shipments	Mean value per shipment ($)
424900	20	114	$173,683
423830	13	51	47,250
442110	11	27	22,081
488510	10	175	107,828
423220	8	76	45,342
423120	7	60	72,895
424330	7	25	181,893
424320	7	121	130,213
423710	7	49	36,614
424490	7	10	18,354

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)
NAICS code	Number of entities	Number of shipments	Security filing fee	Initial, one- time fee (per entity per shipment)	Total cost as share of mean value (percent)
Lower Bound Estimate:
Once per year	0	0	$75.00		0.07
Twice yearly to less than monthly	134,000	697,000	60.00	$4,817	4.73
Monthly to less than weekly	44,100	1,230,000	45.00	900	0.92
Weekly to less than daily	9,900	2,190,000	30.00	113	0.14
Daily or greater	615	2,360,000	15.00	7	0.02
Anonymous	38,000	1,300,000	22.50	730	0.73
Upper Bound Estimate:
Once per year	370,000	456,000	75.00		0.07
Twice yearly to less than monthly	262,000	1,380,000	60.00	4,740	4.65
Monthly to less than weekly	66,900	1,640,000	45.00	1,017	1.03
Weekly to less than daily	18,100	1,810,000	30.00	250	0.27
Daily or greater	1,480	1,180,000	15.00	31	0.04
Anonymous	144,000	1,300,000	22.50	2,776	2.71

In our upper-bound impact estimate, importers of containerized shipments may also experience a loss in consumer surplus associated with delays. While these losses represent lost value, they do not represent actual expenditures. The impact of these losses on small entities is unknown.

The PIERS dataset includes information on over 4,600 unique break-bulk importers. We took a random sample from that dataset and collected financial information on the entities from Dun & Bradstreet until we had data on 75 entities. Table 10 details the top industries in our sample ranked by number of occurrences.

Table 10—Top Industries From Importers Sample (Break-Bulk Cargo)
NAICS code	Number of occurrences	Percentage	Industry description
423510	8	10.67	Metal Service Centers and Other Metal Merchant Wholesalers.
423310	6	8.00	Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers.
336611	4	5.33	Ship Building and Repairing.
999990	4		UNKNOWN INDUSTRY.
424480	3	4.00	Fresh Fruit and Vegetable Merchant Wholesalers.
488510	3	4.00	Freight Transportation Arrangement.
423830	2	2.67	Industrial Machinery and Equipment Merchant Wholesalers.
424410	2	2.67	General Line Grocery Merchant Wholesalers.
424470	2	2.67	Meat and Meat Product Merchant Wholesalers.
424490	2	2.67	Other Grocery and Related Products Merchant Wholesalers.
424690	2	2.67	Other Chemical and Allied Products Merchant Wholesalers.
511110	2	2.67	Newspaper Publishers.
	39	52.00	ALL OTHER INDUSTRIES RECORDED IN SAMPLE.

We present the share of entities considered small in each of the top ten industries from our PIERS sample. Table 11 reports those definitions of “small” from the SBA and the share of entities that are small. For most industries, the share of entities considered small is at least 75 percent. Therefore, we assume that a substantial number of small break-bulk importers will be affected by the rule.Start Printed Page 71775

Table 11—Share of Small Entities in the Top 10 Industries (Break-Bulk Cargo)
NAICS code	Industry description	Percent of sample	“Small” threshold	Share of small entities (percent)
423510	Metal Service Centers and Other Metal Merchant Wholesalers	10.67	100 employees	63
423310	Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers	8.00	100 employees	100
336611	Ship Building and Repairing	5.33	1,000 employees	75
424480	Fresh Fruit and Vegetable Merchant Wholesalers	4.00	100 employees	33
488510	Freight Transportation Arrangement	4.00	$6.5 million	0
423830	Industrial Machinery and Equipment Merchant Wholesalers	2.67	100 employees	100
424410	General Line Grocery Merchant Wholesalers	2.67	100 employees	100
424470	Meat and Meat Product Merchant Wholesalers	2.67	100 employees	100
424490	Other Grocery and Related Products Merchant Wholesalers	2.67	100 employees	100
424690	Other Chemical and Allied Products Merchant Wholesalers	2.67	100 employees	50

Table 12 reports summary statistics on our sample of 75 break-bulk importers. Only two industries appeared in the sample more than five times, accounting for 14 firms. For all industries importing break-bulk shipments, over 93 percent of the firms in that industry are small entities.

Table 12—Break-Bulk Importers, Summary Statistics
Number of 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+	2	14	13,771	12,883	93.6
5	0	0			⁽¹⁾
4	1	4	1,670	1,642	98.3
3	2	6	16,228	15,552	95.8
2	6	12	49,028	46,938	95.7
1	34	39	196,116	186,854	95.3
Total	45	75	276,813	263,869	95.3
¹ Not applicable.

Table 13 details the mean shipment value and the number of shipments for each of the top 10 industries. These mean values are provided simply for illustration of our data limitations and to provide a sense of the range of mean shipment values.

Table 13—Mean Value per Shipment in the Top Ten Industries (Break-Bulk Cargo)
NAICS code	Number of importers	Total number of shipments	Mean value per shipment ($)
423510	8	922	$145,731
423310	6	28	303,095
336611	4	10	509,161
424480	3	238	77,106
488510	3	31	520,999
423830	2	2	743,823
424410	2	10	140,086
424470	2	16	40,493
424490	2	13	76,597
424690	2	68	56,595

Table 14 reports the initial, one-time costs (reported on a per-shipment basis) and the security filing fee for importer frequency classes. In addition, the table reports the percentage share that the cost of the security filing requirements plays as a part of the mean value per shipment. In each case presented below, the security filing cost represents an increase of less than 2 percent of the value of the shipment. In most cases, the security filing cost represents an increase of less than 0.4 percent of the value of the shipment. We recognize that small entities' mean value per shipment may be higher or lower than $309,174; therefore, the filing costs may represent a smaller or larger percentage of the total value.Start Printed Page 71776

Table 14—Relative Cost of Security Filing Requirements (Break-Bulk Cargo)
NAICS code	Number of entities	Number of shipments	Security filing fee	Initial, one- time fee (per entity per shipment)	Total cost as share of mean value (percent)
Lower Bound Estimate:
Once per year	0	0	$75.00		0.02
Twice yearly to less than monthly	2,740	11,400	60.00	6,013	1.96
Monthly to less than weekly	693	15,700	45.00	1,104	0.37
Weekly to less than daily	216	42,400	30.00	127	0.05
Daily or greater	14	60,000	15.00	6	0.01
Anonymous	272	9,630	22.50	707	0.24
Upper Bound Estimate:
Once per year	7,870	7,870	75.00		0.02
Twice yearly to less than monthly	4,470	18,200	60.00	6,157	2.01
Monthly to less than weekly	1,050	25,400	45.00	1,032	0.35
Weekly to less than daily	490	56,100	30.00	218	0.08
Daily or greater	30	21,900	15.00	35	0.02
Anonymous	1,040	9,630	22.50	2,686	0.88

The security filing cost as a share of the mean value of shipments made by other industries (outside of the top 10) is in many instances higher than 1 percent. Therefore, we would ideally compare each entity's total annual compliance costs to annual revenues. However, based on our 96-day PIERS data sample set, we are not able to predict the number of break-bulk shipments made each year by these entities. Therefore, we cannot predict annual compliance costs and are unable to make a determination as to whether the effects of the rule are significant for a substantial number of small break-bulk importers.

We do not complete the same analysis for roll-on/roll-off (Ro-Ro) cargo importers. We referenced Dun & Bradstreet for information on approximately 100 importers and found that information was only available for six entities. A closer examination of the 100 importers suggested that the majority are private individuals, which are not considered small entities.

According to the SBA-defined small business size standards for Vessel Operating Common Carriers (VOCCs), which fall under NAICS 483111 (Deep Sea Freight Transportation), firms with fewer than 500 employees are considered to be small entities. Dun and Bradstreet's Market Identifiers report 492 entities operating within NAICS 483111. Of these 492 entities, 477 are firms that report fewer than 500 employees.

We have concerns about the reliability of the Dun & Bradstreet data in the case of this particular business area. First, CBP's Vessel Automated Manifest System (Vessel AMS) database identifies 1,179 carriers importing shipments to the United States in 2005. This is more than double the number of entities identified in the Dun & Bradstreet list or the 487 entities identified by the U.S. Census Bureau. It would appear that a considerable number of VOCCs do not have deep sea cargo transportation as their primary area of business and that this NAICS classification is missing a significant number of entities. Second, we understand the focus of the RFA/SBREFA analysis to be on U.S., and not foreign, small businesses. There is no expeditious and economical method of assessing the corporate nationality of either the Vessel AMS or Dun & Bradstreet list of shipping companies. We are aware, however, that the majority of the shipping lines carrying containers into the United States, regardless of size, operate under foreign ownership.

In the absence of alternative data sources, we proceed to conduct the screening analysis relying on descriptive financial information about NAICS 483111 entities found in the Dun & Bradstreet database and the number of VOCCs identified in Vessel AMS. We also conclude that a substantial number of small entities are likely to be directly affected by the regulation under the rule.

For data on revenues and employees, we use the Dun & Bradstreet data for the 477 entities with fewer than 500 employees. Table 15 summarizes the total annual average revenues (2004) for firms within NAICS 483111, organized by ranges of employee-size classes. Specifically, we organize the Dun & Bradstreet company data by the employee-size classes and then calculate the average revenue of companies within that size class. Businesses with zero to 100 employees have average annual revenues of $6 million, those with 101 to 250 employees have average annual revenues of $59 million, and those with 251 to 500 employees have average annual revenues of $105 million.

Table 15—Average Annual Revenue Estimates (Carriers)
Carrier size	Number of business entities	Average annual revenues
0-100 employees	456	$6,000,000
101-250 employees	13	59,000,000
251-500 employees	8	105,000,000
501-5,000 employees	15	450,000,000

The first of the two Additional Carrier Requirements is the Vessel Stow Plan, which will be required of carriers carrying containerized cargo. Our calculations assume that the cost to a small entity of submitting a Vessel Stow Plan will depend on the number of vessel trips completed. Carriers that complete between one and 100 vessel trips per year are assigned a cost of $50 per trip. Larger carriers (those that complete at least 101 vessel trips per year) are assigned a one-time fixed cost of $50,000 and a variable cost of $100 per trip. Because we do not know the number of vessel trips undertaken by carriers in the various size classes, we conservatively assume that for every trip volume, some of the carriers may be small entities.

We estimate that the average annual revenue of small carriers is $9.1 million, which represents the average of the average annual revenues of small business entities identified in Table 15, weighted by the number of business entities. In Table 16, we present each category of carrier (based on the annual number of vessel trips) with their corresponding annual worst-case cost of submitting Vessel Stow Plans. We then divide these costs by the average annual revenue of $9.1 million, and as shown in Table 16, we estimate that the average share of revenue of submitting Vessel Stow Plans for small carriers is 0.25 percent, which does not rise to the level of a significant cost to carriers.

Table 16—Vessel Stow Plan Costs
Vessel trips	Container carriers	Worst-case annual costs	Costs as share of revenue (percent)
1	51	$50	0.00
2-10	116	500	0.01
11-100	183	5,000	0.05
101-1,000	70	116,667	1.28
1,001+	4	136,667	1.50
Total	424	22,851	0.25

The second of the two Additional Carrier Requirements is the Container Status Message (CSM), which will be required of carriers carrying containerized cargo, provided they already collect and maintain CSM data in their electronic equipment tracking systems. Our calculations assume that the cost to a small entity associated with submitting CSMs will depend on the number of vessel trips completed. Carriers that complete between one and 100 vessel trips per year will experience no cost associated with submitting CSMs. Larger carriers (those that complete at least 101 vessel trips per year) are assigned a one-time fixed cost of $250,000 and a variable cost of $55,000 per year. In Table 17, we present each category of carrier (based on the annual number of vessel trips) with their corresponding annual worst-case cost of submitting CSMs. We then divide these costs by the average annual small carrier revenue of $9.1 million, as calculated previously for Vessel Stow Plans. As shown in Table 17, we estimate that the average share of revenue of submitting CSMs for small carriers is 0.16 percent, which again does not rise to the level of a significant cost to carriers.

Table 17—Container Status Message Costs
Vessel trips	Container carriers	Worst-case annual costs	Costs as share of revenue (percent)
1	58	$0	0.00
2-10	162	0	0.00
11-100	175	0	0.00
101-1,000	45	138,333	1.52
1,001+	2	138,333	1.52
Total	442	14,710	0.16

The two costs for two additional carrier elements are additive for containerized cargo, so the average cost share would be 0.41 percent (0.25 percent plus 0.16 percent). Therefore, we conclude that the additional data elements required for the VOCCs are unlikely to result in a significant cost to small entities.

A description of the projected reporting, recordkeeping and other compliance requirements of the rule, including an estimate of the classes of small entities that will be subject to the requirement and the type of professional skills necessary for preparation of the report or record: The requirements of the rule are expected to be submitted electronically by importers or VOCCs (or an agent representing either). Professional skills necessary for preparation of the report or record include basic administrative and recordkeeping skills used to manage data transaction, shipment, manifest, security, and other data used in the commercial supply chain environment, along with a working knowledge of import shipment arrangements, brokerage, conveyance/shipping, and consolidation customs procedures and regulation.

A description of the steps the agency has taken to minimize the significant adverse economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the rule and why each of the other significant alternatives to the rule considered by the agency was rejected: We have previously described the alternatives and why Alternative 1 was ultimately Start Printed Page 71778selected as the interim final rule. Given the prevalence of small entities conducting importing activities and the need for all entities to participate for the rule to be effective, CBP is not exempting small entities from the regulation.

Conclusion: In summary, because the interim final rule affects all importers and carriers bringing goods to the United States, it likely affects a substantial number of small entities in each industry conducting these activities. Based on the data limitations discussed above, we are uncertain whether these effects will be significant on a per-entity basis for importers. Therefore, based on the results of this analysis, CBP cannot certify that the rule will not have a significant impact on a substantial number of small importing entities. As a result, we have conducted a FRFA. Based on the analysis presented above, we believe that a substantial number of small VOCCs are not likely to be significantly affected.

C. Unfunded Mandates Reform Act

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA) requires agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. The regulation is exempt from these requirements under 2 U.S.C. 1503 (Exclusions) which states that UMRA “shall not apply to any provision in a bill, joint resolution, amendment, motion, or conference report before Congress and any provision in a proposed or final federal regulation that is necessary for the national security or the ratification or implementation of international treaty obligations.”

D. Paperwork Reduction Act

The collections of information encompassed within this interim final rule have been submitted to OMB for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under OMB control number 1651-0001. An agency may not conduct, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number assigned by OMB.

There are three collections of information in this document. The collections are contained in 19 CFR 4.7c, 4.7d, and 149.2. This information will be used by CBP to further improve the ability of CBP to identify high-risk shipments so as to prevent smuggling and ensure cargo safety and security. The likely respondents and/or recordkeepers are individuals and businesses.

Under § 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, 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

19 CFR part 122

Administrative practice and procedure
Customs duties and inspection
Penalties
Reporting and recordkeeping requirements

19 CFR part 123

Customs duties and inspection
Freight
Reporting and recordkeeping requirements
Vessels

19 CFR part 141

Customs duties and inspection
Reporting and recordkeeping requirements

19 CFR part 143

Customs duties and inspection
Reporting and recordkeeping requirements

19 CFR part 149

Arrival
Declarations
Customs duties and inspection
Freight
Importers
Imports
Merchandise
Reporting and recordkeeping requirements
Shipping
Vessels

19 CFR part 178

Reporting and recordkeeping requirements

19 CFR part 192

Penalties
Reporting and recordkeeping requirements
Vessels

Amendments to the Regulations

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;

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 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:

§ 4.7

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

(b) * * *

(2) In addition to the vessel stow plan requirements pursuant to § 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 CBP-approved electronic equivalent of the vessel's Cargo Declaration (Customs Form 1302), 24 hours before the cargo is laden aboard the vessel at the foreign port (see § 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 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 Start Printed Page 71780collects 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;

(6) When a container which is destined to arrive within the limits of a port in the United States by vessel undergoes an intra-terminal movement;

(7) When a container which is destined to arrive within the limits of a port in the United States by vessel is ordered stuffed or stripped;

(8) When a container which is destined to arrive within the limits of a port in the United States by vessel is confirmed stuffed or stripped; and

(9) When a container which is destined to arrive within the limits of a port in the United States by vessel is stopped for heavy repair.

(c) Time of transmission. For each event specified in paragraph (b) of this section that has occurred, and for which the carrier creates or collects a container status message (CSM) in its equipment tracking system reporting that event, the carrier must transmit the CSM to CBP no later than 24 hours after the CSM is entered into the equipment tracking system.

(d) Contents of report. The report of each event must include the following:

(1) Event code being reported, as defined in the ANSI X.12 or UN EDIFACT standards;

(2) Container number;

(3) Date and time of the event being reported;

(4) Status of the container (empty or full);

(5) Location where the event took place; and

(6) Vessel identification associated with the message if the container is associated with a specific vessel.

(e) A carrier may transmit other container status messages in addition to those required pursuant to paragraph (b) of this section. By transmitting additional container status messages, the carrier authorizes Customs and Border Protection (CBP) to access and use those data.

(f) Compliance date of this section. (1) General. Subject to paragraph (f)(2) of this section, all affected ocean carriers must comply with the requirements of this section on and after January 26, 2010.

(2) Delay in compliance date of section. CBP may, at its sole discretion, delay the general compliance date set forth in paragraph (f)(1) of this section in the event that any necessary modifications to the approved electronic data interchange system are not yet in place or for any other reason. Notice of any such delay will be provided in the Federal Register.

PART 12—SPECIAL CLASSES OF MERCHANDISE

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)” 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 in-bond movement to a port other than the listed port of destination or export or to change the in-bond entry into a consumption entry must be obtained from the port director of the port of origin. Such permission would only be granted upon receipt by Customs and Border Protection (CBP) of a complete Importer Security Filing as required by part 149 of this chapter.

PART 103—AVAILABILITY OF INFORMATION

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:Start Printed Page 71781

(a) Advance cargo information that is electronically presented to Customs and Border Protection (CBP) for inbound or outbound air, rail, or truck cargo in accordance with § 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.

(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:

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 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, that___ of ___, as principal having Customs and Border Protection (CBP) Identification Number ___ and ___, as surety are held and firmly bound unto the United States of America up to the sum of ___ dollars ($____) for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and Start Printed Page 71782assigns, jointly and severally, firmly by these presents.

Whereas, the named principal (including the named principal's employees, agents and contractors) agrees to comply with all Importer Security Filing requirements set forth in 19 CFR part 149, including but not limited to providing security filing information to CBP in the manner and in the time period prescribed by regulation.

Whereas, if the named principal incurs any claim that relates to any of the requirements set forth in 19 CFR part 149, the obligors (principal and surety, jointly and severally) agree to pay any amount prescribed by law or regulation upon demand by CBP.

This bond is effective ___, 20__, and remains in force for one year beginning with the effective date and for each succeeding annual period, or until terminated. This bond constitutes a separate bond for each period in the amount listed above for liabilities that accrue in each period. The intention to terminate this bond must be conveyed within the period and manner prescribed in the CBP Regulations.

SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF:

(Name)

(Address)

(Name)

(Address)

(Principal Name) (Seal)

(Principal Address)

(Surety Name) (Seal)

Surety No.

(Surety Mailing Address)

Surety Agent Name

Surety Agent ID Number

PART 122—AIR COMMERCE REGULATIONS

§ 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 Start Printed Page 71783Filing 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) in-bond shipments, and goods to be delivered to a foreign trade zone (FTZ), the ISF Importer will be the goods' owner, purchaser, consignee, or agent such as a licensed customs broker. For FROB cargo, the ISF Importer will be the carrier. For IE and T&E in-bond shipments, and goods to be delivered to an FTZ, the ISF Importer will be the party filing the IE, T&E, or FTZ documentation.

(b) Importation. For purposes of this part, “importation” means the point at which cargo arrives within the limits of a port in the United States.

(c) Bulk cargo. For purposes of this part, “bulk cargo” is defined as homogeneous cargo that is stowed loose in the hold and is not enclosed in any container such as a box, bale, bag, cask, or the like. Such cargo is also described as bulk freight. Specifically, bulk cargo is composed of either:

(1) Free flowing articles such as oil, grain, coal, ore, and the like, which can be pumped or run through a chute or handled by dumping; or

(2) Articles that require mechanical handling such as bricks, pig iron, lumber, steel beams, and the like.

(d) Break bulk cargo. For purposes of this part, “break bulk cargo” is defined as cargo that is not containerized, but which is otherwise packaged or bundled.

§ 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 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 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 six-digit HTSUS number at the lowest bill of lading level (i.e., at the house bill of lading level, if applicable). The manufacturer (or supplier), country of origin, and commodity HTSUS number must be linked to one another at the line item level.

(1) Seller. Name and address of the last known entity by whom the goods are sold or agreed to be sold. If the goods are to be imported otherwise than in pursuance of a purchase, the name and address of the owner of the goods must be provided. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.

(2) Buyer. Name and address of the last known entity to whom the goods are sold or agreed to be sold. If the goods are to be imported otherwise than in pursuance of a purchase, the name and address of the owner of the goods must be provided. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.

(3) Importer of record number/Foreign trade zone applicant identification number. Internal Revenue Service (IRS) number, Employer Identification Number (EIN), Social Security Number (SSN), or CBP assigned number of the entity liable for payment of all duties Start Printed Page 71784and responsible for meeting all statutory and regulatory requirements incurred as a result of importation. For goods intended to be delivered to a foreign trade zone (FTZ), the IRS number, EIN, SSN, or CBP assigned number of the party filing the FTZ documentation with CBP must be provided.

(4) Consignee number(s). Internal Revenue Service (IRS) number, Employer Identification Number (EIN), Social Security Number (SSN), or CBP assigned number of the individual(s) or firm(s) in the United States on whose account the merchandise is shipped.

(5) Manufacturer (or supplier). Name and address of the entity that last manufactures, assembles, produces, or grows the commodity or name and address of the party supplying the finished goods in the country from which the goods are leaving. In the alternative the name and address of the manufacturer (or supplier) that is currently required by the import laws, rules and regulations of the United States (i.e., entry procedures) may be provided (this is the information that is used to create the existing manufacturer identification (MID) number for entry purposes). A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.

(6) Ship to party. Name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.

(7) Country of origin. Country of manufacture, production, or growth of the article, based upon the import laws, rules and regulations of the United States.

(8) Commodity HTSUS number. Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number must be provided to the six-digit level. The HTSUS number may be provided up to the 10-digit level. This element can only be used for entry purposes if it is provided at the 10-digit level or greater by the importer of record or its licensed customs broker.

(9) Container stuffing location. Name and address(es) of the physical location(s) where the goods were stuffed into the container. For break bulk shipments, as defined in § 149.1 of this part, the name and address(es) of the physical location(s) where the goods were made “ship ready” must be provided. A widely recognized commercially accepted identification number for this element may be provided in lieu of the name and address.

(10) Consolidator (stuffer). Name and address of the party who stuffed the container or arranged for the stuffing of the container. For break bulk shipments, as defined in § 149.1 of this part, the name and address of the party who made the goods “ship ready” or the party who arranged for the goods to be made “ship ready” must be provided. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.

(b) FROB, IE shipments, and T&E shipments. For shipments consisting entirely of foreign cargo remaining on board (FROB) and shipments intended to be transported in-bond as an immediate exportation (IE) or transportation and exportation (T&E), the following elements must be provided for each good listed at the six-digit HTSUS number at the lowest bill of lading level (i.e., at the house bill of lading level, if applicable).

(1) Booking party. Name and address of the party who initiates the reservation of the cargo space for the shipment. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.

(2) Foreign port of unlading. Port code for the foreign port of unlading at the intended final destination.

(3) Place of delivery. City code for the place of delivery.

(4) Ship to party. Name and address of the first deliver-to party scheduled to physically receive the goods after the goods have been released from customs custody. A widely recognized commercially accepted identification number for this party may be provided in lieu of the name and address.

(5) Commodity HTSUS number. Duty/statistical reporting number under which the article is classified in the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS number must be provided to the six-digit level. The HTSUS number may be provided to the 10-digit level.

§ 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 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 Start Printed Page 71785must 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;

(d) Commodity HTSUS number if this number is provided at the 10-digit level.

PART 178—APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

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

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

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.

19 CFR section	Description	OMB Control No.

* * * * * * *
§ 4.7c	Vessel stow plan
§ 4.7d	Container status messages

* * * * * * *
§ 149.2	Importer Security Filing

* * * * * * *

PART 192—EXPORT CONTROL

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

Authority: 19 U.S.C. 66, 1624, 1646c. Subpart A also issued under 19 U.S.C. 1627a, 1646a, 1646b; subpart B also issued under 13 U.S.C. 303; 19 U.S.C. 2071 note; 46 U.S.C. 91.

§ 192.14

[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)”.

Dated: November 7, 2008.

Michael Chertoff,

Secretary.

Footnotes

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.

Back to Citation

2. CSMs are used to report terminal container movements (e.g., loading and discharging the vessel) and to report the change in status of containers (e.g., empty or full).

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

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

Prior to publishing the NPRM, CBP posted a “strawman” proposal on the CBP website along with a request for comments from the trade. Back to Citation

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.

Back to Citation

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).

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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).

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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.

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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).

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11.

CBP is not amending existing advance manifest information requirements in 19 CFR Part 4. Back to Citation

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

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[FR Doc. E8-27048 Filed 11-24-08; 8:45 am]

BILLING CODE 9111-14-P

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Document Information

Comments Received:: 0 Comments
Published:: 11/25/2008
Department:: U.S. Customs and Border Protection
Entry Type:: Rule
Action:: Interim final rule, solicitation of comments.
Document Number:: E8-27048
Pages:: 71729-71785 (57 pages)
Docket Numbers:: Docket Number USCBP-2007-0077, CBP Dec. 08-46
RINs:: 1651-AA70: Importer Security Filing and Additional Carrier Requirements
RIN Links:: https://www.federalregister.gov/regulations/1651-AA70/importer-security-filing-and-additional-carrier-requirements
Topics:: Administrative practice and procedure, Common carriers, Confidential business information, Courts, Customs duties and inspection, Freedom of information, Freight, Imports, Law enforcement, Maritime carriers, Penalties, Privacy, Reporting and recordkeeping requirements, Surety bonds, Vessels
PDF File:: e8-27048.pdf
CFR: (24): 19 CFR 4.7; 19 CFR 12.3; 19 CFR 18.5; 19 CFR 113.62; 19 CFR 113.63; More ...

E8-27048. Importer Security Filing and Additional Carrier Requirements

AGENCY:

ACTION:

SUMMARY:

DATES:

ADDRESSES:

FOR FURTHER INFORMATION CONTACT:

SUPPLEMENTARY INFORMATION:

Table of Contents

Abbreviations and Terms Used in This Document

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 Plan

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

Comment

CBP Response

Comment

Comment Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response

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

Comments Regarding Responsibilities

CBP Response

Comments Regarding Procedures

CBP Response

Comments Regarding Scope of Requirements for Stow Plan

CBP Response

Comments Regarding the Timing for Submission of the Stow Plan

CBP Response

C. Overview; Container Status Messages

D. Public Comments; Container Status Messages

Comments Regarding Responsibilities

CBP Response

Comments Regarding Scope of Requirements for CSMs

CBP Response

Comments Regarding Procedures

CBP Response

E. Public Comments; Carrier Requirements Generally

Comment

CBP Response

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

Comment

CBP Response

Comment

CBP Response

Comment

CBP Response