[Federal Register Volume 62, Number 147 (Thursday, July 31, 1997)]
[Proposed Rules]
[Pages 40992-40995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20227]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 4, 122, 123, 148 and 192

RIN 1515-AB99


Lay Order Period; General Order; Penalties

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations to 
require that the importing carrier notify a bonded warehouse proprietor 
of the presence of merchandise that has remained at the place of 
arrival or unlading beyond the lay order period without entry having 
been completed, thereby initiating the obligation of the bonded 
warehouse proprietor to arrange for transportation and storage of the 
unentered merchandise at the risk and expense of the consignee. The 
document also proposes to amend the Customs Regulations to provide for 
penalties against importing carriers for failure to notify Customs of 
the presence of such merchandise. These proposed regulatory changes 
reflect amendments to the underlying statutory authority enacted as 
part of the Customs Modernization provisions of the North American Free 
Trade Agreement Implementation Act. Finally, the document makes certain 
conforming changes to the Customs Regulations in order to reflect a 
number of other statutory amendments and repeals enacted by the Customs 
Modernization provisions and in order to reflect the recent 
recodification and reenactment of title 49, United States Code.

DATES: Comments must be received on or before September 29, 1997.

ADDRESSES: Written comments (preferably in triplicate) may be addressed 
to the Regulations Branch, Office of Regulations and Rulings, U.S. 
Customs Service, Franklin Court, 1301 Constitution Avenue NW., 
Washington, DC 20229. Comments submitted may be inspected at the 
Regulations Branch, Office of Regulations and Rulings, Franklin Court, 
1099 14th Street NW., Suite 4000, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Penalties Branch, 
Office of Regulations and Rulings (202) 482-6950.

SUPPLEMENTARY INFORMATION:

Background

    On December 8, 1993, amendments to certain Customs and navigation 
laws became effective as the result of enactment of the North American 
Free Trade Agreement Implementation Act, Public Law 103-182, 107 Stat. 
2057. Title VI of that Act sets forth Customs Modernization provisions 
that are popularly referred to as the Mod Act.
    Section 656 of the Mod Act amended section 448(a) of the Tariff Act 
of 1930 (19 U.S.C. 1448(a)) to provide, inter alia, that: (1) The owner 
or master of any vessel or vehicle, or the agent thereof, shall notify 
Customs of any merchandise or baggage unladen for which entry is not 
made within the time prescribed by law or regulation; (2) the

[[Page 40993]]

Secretary of the Treasury shall by regulation prescribe administrative 
penalties not to exceed $1,000 for each bill of lading for which notice 
is not given; (3) any such administrative penalty shall be subject to 
mitigation and remission under section 618 of the Tariff Act of 1930, 
as amended (19 U.S.C. 1618); and (4) such unentered merchandise or 
baggage shall be the responsibility of the master or person in charge 
of the importing vessel or vehicle, or agent thereof, until it is 
removed from the carrier's control in accordance with section 490 of 
the Tariff Act of 1930, as amended (19 U.S.C. 1490). This document 
proposes to revise paragraph (a) of Sec. 4.37 of the Customs 
Regulations (19 CFR 4.37) and add new Sec. 122.50 and Sec. 123.10 (19 
CFR 122.50 and 19 CFR 123.10) to implement these Mod Act statutory 
changes for air, land and sea carriers. Under the proposed regulatory 
text, importing carriers would be afforded a five-working-day lay order 
period after the conclusion of an initial five-working-day period after 
unlading or arrival of merchandise to notify Customs, in writing or by 
any Customs-authorized electronic data interchange system, of the 
presence of the unentered merchandise or baggage. Penalties may result 
if, after the five-day lay order period, Customs has not been notified 
of the presence of the merchandise. Applications for lay order will no 
longer be required on Customs Form 3171; the form will continue to be 
maintained for other purposes.
    Section 658 of the Mod Act amended section 490 of the Tariff Act of 
1930 (19 U.S.C. 1490) to provide that: (1) Except in the case of U.S. 
government importations, the importing carrier shall notify the bonded 
warehouse of any imported merchandise for which entry is not made 
within the time prescribed by law or regulation, or for which entry is 
incomplete because of failure to pay estimated duties, fees or 
interest, or for which entry cannot be made for want of proper 
documents or other cause, or which Customs believes is not correctly 
and legally invoiced; and (2) after such notification from the 
importing carrier, the bonded warehouse shall arrange for the 
transportation and storage of the merchandise at the risk and expense 
of the consignee. This document proposes to revise paragraph (b) of 
Sec. 4.37 of the Customs Regulations and add Secs. 122.50 and 123.10 to 
the Customs Regulations to implement these Mod Act statutory changes. 
The proposed regulatory text requires the carrier to provide the 
appropriate notification, in writing or by any Customs-authorized 
electronic data interchange system, and also requires that the bonded 
warehouse operator take possession of the merchandise within five 
working days after receipt of such notification or else be liable for 
liquidated damages under the terms and conditions of his custodial bond 
(and with a cross-reference to 113.63(a)(1) of the Customs Regulations 
which Customs believes provides an appropriate basis for such 
liability). In addition, it is proposed to amend paragraph (d) of 
Sec. 4.37 by replacing the word ``owner'' by ``consignee'' to align on 
the corresponding statutory language.
    Section 611 of the Mod Act amended section 436 of the Tariff Act of 
1930 (19 U.S.C. 1436), inter alia, by including therein a reference to 
46 U.S.C. App. 91, with the result that penalties for violations of 
outbound vessel manifest filing requirements would be incurred under 
the provisions of 19 U.S.C. 1436 rather than under 46 U.S.C. App. 91. 
This document proposes to amend Sec. 192.4 of the Customs Regulations 
(19 CFR 192.4) to reflect this change.
    Section 690 of the Mod Act provided for the repeal of a number of 
statutory provisions, some of which are still referred to in parts 4 
and 122 of the Customs Regulations (19 CFR parts 4 and 122). This 
document proposes to correct those outdated references by removing them 
or replacing them with references to their successor statutory 
provisions.
    Finally, Pub. L. 103-272, 108 Stat. 745, dated July 5, 1994, 
reenacted and recodified the provisions of title 49, United States 
Code. Section 2(b) thereof reenacted as a new section (19 U.S.C. 1644a) 
certain title 49 provisions dealing with the application, to civil 
aircraft, of the laws and regulations regarding the entry and clearance 
of vessels. This document proposes to amend parts 122, 123 and 148 of 
the Customs Regulations (19 CFR parts 122, 123 and 148) by updating the 
``49 U.S.C. App.'' statutory references therein to reflect the changes 
made by section 2(b) or other provisions of Pub. L. 103-272.

Comments

    Before adopting this proposed regulation as a final rule, 
consideration will be given to any written comments timely submitted to 
Customs. Comments submitted will be available for public inspection in 
accordance with the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4 
of the Treasury Department Regulations (31 CFR 1.4), and Sec. 103.11(b) 
of the Customs Regulations (19 CFR 103.11(b)), on regular business days 
between the hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch, 
Office of Regulations and Rulings, U.S. Customs Service, Franklin 
Court, 1099 14th St. NW., 4th floor, Washington, DC.

Inapplicability of the Regulatory Flexibility Act and Executive Order 
12866

    For the reasons set forth above and because the proposed amendments 
conform the Customs Regulations to statutory requirements that are 
already in effect, pursuant to the provisions of the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., it is certified that the 
proposed amendments, if adopted, will not have a significant economic 
impact on a substantial number of small entities. Accordingly, the 
amendments are not subject to the regulatory analysis or other 
requirements of 5 U.S.C. 603 and 604. Further, this document does not 
meet the criteria for a ``significant regulatory action'' as specified 
in E.O. 12866.

List of Subjects

19 CFR Part 4

    Cargo vessels, Common carriers, Customs duties and inspection, 
Entry, Exports, Fishing vessels, Imports, Maritime carriers, Passenger 
Vessels, Penalties, Reporting and recordkeeping requirements, Shipping, 
Vessels, Yachts.

19 CFR Part 122

    Air carriers, Aircraft, Airports, Air transportation, Baggage, 
Bonds, Customs duties and inspection, Foreign commerce and trade 
statistics, Freight, Imports, Penalties, Reporting and recordkeeping 
requirements.

19 CFR Part 123

    Aircraft, Canada, Customs duties and inspection, Imports, 
International boundaries, International traffic, Mexico, Motor 
carriers, Railroads, Reporting and recordkeeping requirements, Trade 
agreements, Vehicles, Vessels.

19 CFR Part 148

    Aliens, Baggage, Crewmembers, Customs duties and inspection, 
Declarations, Foreign officials, Government employees,International 
organizations, Privileges and Immunities, Reporting and recordkeeping 
requirements.
    19 CFR Part 192
    Aircraft, Customs duties and inspection, Export Control, Penalties, 
Reporting and recordkeeping requirements, Seizures and forfeiture, 
Vehicles, Vessels.

[[Page 40994]]

Proposed Amendments to the Regulations

    For the reasons stated above, it is proposed to amend parts 4, 122, 
123, 148 and 192 of the Customs Regulations (19 CFR parts 4, 122, 123, 
148 and 192) as set forth below:

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

    1. The general authority citation for part 4 and the specific 
authority citations for Secs. 4.7a, 4.36 and 4.37 continue to read, and 
the specific authority citations for Secs. 4.9 and 4.68 are revised to 
read, as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624; 
46 U.S.C. App. 3, 91.
* * * * *
    Section 4.7a also issued under 19 U.S.C. 1498, 1584;
* * * * *
    Section 4.9 also issued under 42 U.S.C. 269;
* * * * *
    Section 4.36 also issued under 19 U.S.C. 1431, 1457, 1458, 46 
U.S.C. App. 100;
    Section 4.37 also issued under 19 U.S.C. 1448, 1457, 1490;
* * * * *
    Section 4.68 also issued under 46 U.S.C. App. 817d, 817e;
* * * * *


Secs. 4.7a, 4.12, 4.36, and 4.37  [Amended]

    2. Part 4 is amended by removing and reserving footnotes 17, 24, 
71, and 74 in Secs. 4.7a(a), 4.12(a)(3), and 4.36(c), and 4.37(d).


Sec. 4.6  [Amended]

    3. In Sec. 4.6, paragraph (c) is amended by removing the reference 
``19 U.S.C. 1585'' and adding, in its place, the reference ``19 U.S.C. 
1436''.


Sec. 4.7a  [Amended]

    4. In Sec. 4.7a, the first sentence of paragraph (a) is amended by 
removing the words ``, required by section 432, Tariff Act of 1930, to 
be separately specified''.


Sec. 4.36  [Amended]

    5. In Sec. 4.36, paragraph (c) is amended by removing the words 
``within the purview of the proviso to the first subdivision of section 
431 of the Tariff Act of 1930''.
    6. In Sec. 4.37, paragraph (d) is amended by removing the word 
``owner'' and adding, in its place, the word ``consignee'' and 
paragraphs (a) and (b) are revised to read as follows:


Sec. 4.37  Lay order; general order.

    (a) Any merchandise or baggage regularly landed but not covered by 
a permit for its release shall be allowed to remain at the place of 
unlading until the close of business on the fifth working day after the 
day the vessel was entered. Within an additional five-working-day lay 
order period following the expiration of the original five-working day 
period after landing, 19 U.S.C. 1448(a) requires the master or owner of 
the vessel or the agent thereof to notify Customs of any such 
merchandise or baggage for which entry has not been made. Such 
notification shall be provided in writing or by any Customs-authorized 
electronic data interchange system. Failure to provide such 
notification may result in assessment of a monetary penalty of up to 
$1,000 per bill of lading against the master or owner of the vessel or 
the agent thereof as provided in 19 U.S.C. 1448(a).
    (b) In addition to the notification to Customs referred to in 
paragraph (a) of this section, within five working days following the 
expiration of the lay order period specified in paragraph (a) of this 
section, 19 U.S.C. 1490(a) requires the master or owner of the vessel 
or the agent thereof to provide notification of the presence of such 
unreleased and unentered merchandise or baggage to a bonded warehouse 
certified by the port director as qualified to receive general order 
merchandise. Such notification shall be provided in writing or by any 
Customs-authorized electronic data interchange system. It shall then be 
the responsibility of the bonded warehouse proprietor to arrange for 
the transportation and storage of the merchandise or baggage at the 
risk and expense of the consignee. Any unentered merchandise or baggage 
shall remain the responsibility of the master or person in charge of 
the importing vessel or the agent thereof until it is removed from his 
control in accordance with this paragraph. If the bonded warehouse 
operator fails to take possession of the merchandise or baggage within 
five working days after receipt of notification of the presence of the 
unentered and unreleased merchandise or baggage, he shall be liable for 
the payment of liquidated damages under the terms and conditions of his 
custodial bond (see Sec. 113.63(a)(1) of this chapter).
* * * * *

PART 122--AIR COMMERCE REGULATIONS

    1. The authority citation for Part 122 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 58b, 66, 1433, 1436, 1448, 
1459, 1590, 1594, 1623, 1624, 1644, 1644a.


Sec. 122.2  [Amended]

    2. Section 122.2 is amended by removing the reference ``49 U.S.C. 
App. 1509(c)'' and adding, in its place, the reference ``19 U.S.C. 1644 
and 1644a''.


Sec. 122.49  [Amended]

    3. Section 122.49(f) is amended by removing the words ``sections 
440 (concerning post entry) and 584 (concerning manifest violations), 
Tariff Act of 1930, as amended (19 U.S.C. 1440, 1584), apply'' and 
adding, in their place, the words ``section 584 (concerning manifest 
violations), Tariff Act of 1930, as amended (19 U.S.C. 1584), 
applies''.
    4. In subpart E, Sec. 122.50 is added to read as follows:


Sec. 122.50  Lay order; general order.

    (a) Any merchandise or baggage regularly landed but not covered by 
a permit for its release shall be allowed to remain at the place of 
unlading until the close of business on the fifth working day after the 
day the aircraft was entered. Within an additional five-working-day lay 
order period following the expiration of the original five-working day 
period after landing, 19 U.S.C. 1448(a) requires the pilot or owner of 
the aircraft or the agent thereof to notify Customs of any such 
merchandise or baggage for which entry has not been made. Such 
notification shall be provided in writing or by any Customs-authorized 
electronic data interchange system. Failure to provide such 
notification may result in assessment of a monetary penalty of up to 
$1,000 per bill of lading against the pilot or owner of the aircraft or 
the agent thereof as provided in 19 U.S.C. 1448(a).
    (b) In addition to the notification to Customs referred to in 
paragraph (a) of this section, within five working days following the 
expiration of the lay order period specified in paragraph (a) of this 
section, 19 U.S.C. 1490(a) requires the pilot or owner of the aircraft 
or the agent thereof to provide notification of the presence of such 
unreleased and unentered merchandise or baggage to a bonded warehouse 
certified by the port director as qualified to receive general order 
merchandise. Such notification shall be provided in writing or by any 
Customs-authorized electronic data interchange system. It shall then be 
the responsibility of the bonded warehouse proprietor to arrange for 
the transportation and storage of the merchandise or baggage at the 
risk and expense of the consignee. Any unentered merchandise or baggage 
shall

[[Page 40995]]

remain the responsibility of the pilot or person in charge of the 
importing aircraft or the agent thereof until it is removed from his 
control in accordance with this paragraph. If the bonded warehouse 
operator fails to take possession of the merchandise or baggage within 
five working days after receipt of notification of the presence of the 
unentered and unreleased merchandise or baggage, he shall be liable for 
the payment of liquidated damages under the terms and conditions of his 
custodial bond (see Sec. 113.63(a)(1) of this chapter).


Sec. 122.161  [Amended]

    5. In Sec. 122.161, the first sentence is amended by removing the 
reference ``Sec. 122.14'' and adding, in its place, the words ``subpart 
S of this part'' and by removing the reference ``49 U.S.C. App. 1474'' 
and adding, in its place, the reference ``19 U.S.C. 1644 and 1644a''.


Sec. 122.165  [Amended]

    6. In Sec. 122.165, the first sentence of paragraph (a) is amended 
by removing the parenthetical reference ``(49 U.S.C. App. 1508(b))'' 
and adding, in its place, the parenthetical reference ``(49 U.S.C. 
41703)'', and the second sentence of paragraph (b) is amended by 
removing the reference ``49 U.S.C. App. 1471'' and adding, in its 
place, the reference ``49 U.S.C. Chapter 463''.

PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO

    1. The general authority citation for part 123 and the specific 
authority citation for Sec. 123.8 are revised to read, and the specific 
authority citation for Sec. 123.1 continues to read, as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1436, 
1448, 1624.

    Section 123.1 also issued under 19 U.S.C. 1459;
* * * * *
    Section 123.8 also issued under 19 U.S.C. 1450-1454, 1459;
* * * * *
    2. The specific authority citation for Sec. 123.11 is removed.


Sec. 123.1  [Amended]

    3. In Sec. 123.1, paragraph (a)(2) is amended by removing the words 
``sections 1433 or 1644 of title 19, United States Code (19 U.S.C. 
1433, 1644), or section 1509 of title 49, United States Code App. (49 
U.S.C. App. 1509),'' and adding, in their place, the words ``section 
1433, 1644 or 1644a of title 19, United States Code (19 U.S.C. 1433, 
1644, 1644a),''.
    4. In subpart A, Sec. 123.10 is added to read as follows:


Sec. 123.10  Lay order; general order.

    (a) Any merchandise or baggage regularly landed but not covered by 
a permit for its release shall be allowed to remain at the place of 
unlading until the close of business on the fifth working day after the 
day the vehicle was entered. Within an additional five-working-day lay 
order period following the expiration of the original five-working day 
period after unlading, 19 U.S.C. 1448(a) requires the operator or owner 
of the vehicle or the agent thereof to notify Customs of any such 
merchandise or baggage for which entry has not been made. Such 
notification shall be provided in writing or by any Customs-authorized 
electronic data interchange system. Failure to provide such 
notification may result in assessment of a monetary penalty of up to 
$1,000 per bill of lading against the operator or owner of the vehicle 
or the agent thereof as provided in 19 U.S.C. 1448(a).
    (b) In addition to the notification to Customs referred to in 
paragraph (a) of this section, within five working days following the 
expiration of the lay order period specified in paragraph (a) of this 
section, 19 U.S.C. 1490(a) requires the operator or owner of the 
vehicle or the agent thereof to provide notification of the presence of 
such unreleased and unentered merchandise or baggage to a bonded 
warehouse certified by the port director as qualified to receive 
general order merchandise. Such notification shall be provided in 
writing or by any Customs-authorized electronic data interchange 
system. It shall then be the responsibility of the bonded warehouse 
proprietor to arrange for the transportation and storage of the 
merchandise or baggage at the risk and expense of the consignee. Any 
unentered merchandise or baggage shall remain the responsibility of the 
operator or person in charge of the importing vehicle or the agent 
thereof until it is removed from his control in accordance with this 
paragraph. If the bonded warehouse operator fails to take possession of 
the merchandise or baggage within five working days after receipt of 
notification of the presence of the unentered and unreleased 
merchandise or baggage, he shall be liable for the payment of 
liquidated damages under the terms and conditions of his custodial bond 
(see Sec. 113.63(a)(1) of this chapter).

PART 148--PERSONAL DECLARATIONS AND EXEMPTIONS

    1. The authority citation for part 148 continues to read in part as 
follows:

    Authority: 19 U.S.C. 66, 1496, 1498, 1624. The provisions of 
this part, except for subpart C, are also issued under 19 U.S.C. 
1202 (General Note 20, Harmonized Tariff Schedule of the United 
States).

* * * * *


Sec. 148.67  [Amended]

    2. In Sec. 148.67, paragraph (b) is amended by removing the words 
``section 1474 of title 49, United States Code,'' and adding, in their 
place, the reference ``19 U.S.C. 1644 and 1644a''.

PART 192--EXPORT CONTROL

    1. The authority citation for Part 192 continues to read as 
follows:

    Authority: 19 U.S.C. 66, 1624, 1627a, 1646a.


Sec. 192.4  [Amended]

    2. In Sec. 192.4, the first sentence is amended by removing the 
reference ``46 U.S.C. App. 91'' and adding, in its place, the reference 
``19 U.S.C. 1436'' and the second sentence is amended by removing the 
words ``a liability of not more than $1,000 nor less than $500 will be 
incurred'' and adding, in their place, the words ``a liability for 
penalties may be incurred''.
Samuel H. Banks,
Acting Commissioner of Customs.
    Approved: May 21, 1997.
Dennis M. O'Connell,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 97-20227 Filed 7-30-97; 8:45 am]
BILLING CODE 4820-02-P