[Federal Register Volume 65, Number 134 (Wednesday, July 12, 2000)]
[Proposed Rules]
[Pages 42893-42900]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17639]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 4, 19, 122, 123, 127, 141 and 142

RIN 1515-AC57


General Order Warehouses

AGENCY: Customs Service, Treasury.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Customs Regulations 
principally to create a new class of bonded warehouse exclusively for 
the receipt of general order merchandise, and to include procedures for 
authorizing and operating general order warehouses. This proposal is in 
response to a recent increase in the amount of unentered merchandise 
being moved into general order facilities. This increase has resulted 
from changes in the law, and it has prompted the importing community to 
request that Customs put in place uniform, national procedures for 
approving and operating warehouses receiving general order merchandise.
    In addition, changes are proposed to the Customs Regulations to 
implement certain amendments to the law made by the Customs 
modernization portion of the North American Free Trade Agreement 
Implementation Act. The amendments concern the circumstances where the 
title to unclaimed and abandoned merchandise vests in the Government, 
in lieu of sale of the merchandise at public auction.

DATES: Comments must be received on or before September 11, 2000.

ADDRESSES: Written comments may be addressed to and inspected at the 
Regulations Branch, U.S. Customs Service, 1300 Pennsylvania Avenue, 
NW., 3rd Floor, Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT: Gerard Bradley, Office of Field 
Operations, 202-927-0765.

SUPPLEMENTARY INFORMATION:

Background

    Title VI of the North American Free Trade Agreement Implementation 
Act, 107 Stat. 2057 (Pub. L. 103-182; December 8, 1993), popularly 
known as the Customs Modernization Act (Mod Act), amended a number of 
Customs and navigation laws.
    In particular, section 656 of the Mod Act amended 19 U.S.C. 1448(a) 
to provide, among other things, that the owner or master of any vessel 
or vehicle, or agent thereof, would be required to notify Customs of 
any merchandise or baggage unladen from the vessel or vehicle, for 
which entry was not made within the time prescribed by law or 
regulation; and if entry were not made within the prescribed time, the 
master or person in charge of the importing vessel or vehicle, or agent 
thereof, would be responsible for such unentered merchandise until it 
was removed from the carrier's control and placed in

[[Page 42894]]

general order status in accordance with 19 U.S.C. 1490.
    In concert with this, section 658 of the Mod Act amended 19 U.S.C. 
1490 by deleting the requirement that a Customs officer take unentered 
merchandise into Customs custody and send it to a bonded warehouse. 
Instead, carriers are now required to notify both Customs and a bonded 
warehouse of the unentered merchandise, and the bonded warehouse would 
then have to arrange for the transportation and storage of the 
merchandise at the risk and expense of the consignee.
    These, and related, statutory amendments were implemented by a 
final rule document amending the Customs Regulations, that was 
published in the Federal Register (63 FR 51283) on September 25, 1998, 
as T.D. 98-74.
    Based on the statutory amendments, and the Customs Regulations 
implementing them, imported merchandise could not remain at the wharf, 
pier or other place of unlading more than 15 calendar days after its 
landing; or, if transferred from the arriving carrier to any party 
under a Customs-authorized permit to transfer or in-bond entry, the 
merchandise could not remain in the custody of that party more than 15 
calendar days after its receipt under a Customs-authorized permit to 
transfer or more than 15 calendar days after its arrival at the port of 
destination, as provided in Secs. 4.37, 122.50, 123.10, Customs 
Regulations (19 CFR 4.37, 122.50, 123.10). There is no provision in 
these regulations for any extension of this 15-day period.
    Customs and the trade have consequently seen an increase in the 
amount of unentered merchandise moving into general order facilities, 
including merchandise, such as hazardous materials, requiring 
specialized storage facilities. Due to this increase in merchandise 
moving into temporary storage in general order status, the trade 
community has sought the establishment of national, uniform criteria 
for the approval and operation of general order warehouses.
    Accordingly, by this document, Customs is proposing that a new 
class of bonded warehouse, a Class 11 warehouse, be established 
exclusively to handle the receipt of general order merchandise as 
described in Sec. 127.1, Customs Regulations (19 CFR 127.1). It is 
further proposed that a Class 3, 4, or 5 bonded warehouse, as described 
in Sec. 19.1(a)(3), (4), or (5), Customs Regulations (19 CFR 
19.1(a)(3), (4), or (5)), may likewise be used for the deposit of 
general order merchandise, but only if there is no Class 11 warehouse 
otherwise available to receive the merchandise, and provided the Class 
3, 4, or 5 warehouse has also been certified by the port director as 
meeting the criteria for a Class 11 warehouse, following an application 
under Sec. 19.2, Customs Regulations (19 CFR 19.2). So far as such 
warehouses are used for the purpose of handling general order goods, 
they will also be considered general order (Class 11) warehouses. 
Section 19.1, Customs Regulations (19 CFR 19.1), would be amended as 
necessary to address these matters.
    Class 1 warehouses, which are premises owned or leased by the 
Government for the deposit of unentered, seized or unclaimed 
merchandise, would, however, be retained as such, should the exigencies 
of the service as determined by the applicable port director require 
their occasional use.
    As already indicated, the application criteria set forth in 
Sec. 19.2 would apply as well to a warehouse where general order 
merchandise is to be sent. In addition, as a condition for approval of 
the application to establish a warehouse facility, at the discretion of 
the port director, minimum space requirements could be imposed for the 
storage of general order merchandise. The port director would need to 
post an announcement of these requirements by a written notice at the 
customhouse, and by any appropriate Customs-authorized electronic data 
interchange system. An applicant will not be subject to any minimum 
space requirements that are posted after the filing of his application.
    Furthermore, Sec. 19.2(f) would be amended to provide, in the case 
of applications from a business entity to establish a bonded warehouse, 
that Customs may require the submission of fingerprints from all 
employees of the business entity, as opposed to only those of all 
officers and managing officials. This requirement would apply to 
applications generally to establish a Customs bonded warehouse, 
including a general order warehouse. In this regard, there is a 
reasonably perceived need under the circumstances for a more thorough, 
comprehensive scrutiny of applicants, consistent with Customs movement 
toward a post-audit environment and the spirit of ``shared 
responsibility'' embodied in the Customs modernization provisions of 
the North American Free Trade Agreement Implementation Act.
    Additionally, a general order warehouse would have to satisfy the 
inventory and recordkeeping requirements in Sec. 19.12, Customs 
Regulations (19 CFR 19.12). However, the warehouse would have to do so 
through an automated inventory control and recordkeeping system. 
Existing Class 3, 4 and 5 warehouses that handle general order 
merchandise would be allowed a reasonable ``phase-in'' period 
(specifically, 2 years) after which their recordkeeping systems, at 
least insofar as they cover general order merchandise, must likewise be 
automated. Section 19.12 would be revised accordingly.
    To this end, Customs has recently seen an increase in the quantity 
of unentered, unclaimed merchandise being sent into general order, as 
discussed above. Requiring an automated inventory system for such 
merchandise would enhance effectiveness in managing and monitoring the 
greater number of general order transactions, and thus augment the 
ability to track and safeguard this merchandise, which would benefit 
both the importing community as well as the Government. Specifically, 
an automated system would assist importers of unentered cargo by 
enabling its more rapid location and the faster resolution of any 
problems associated with the entry and clearance of the cargo. Also, as 
noted, it would help protect the potential interest of the Government 
in the property, given that, generally speaking, if unentered property 
remains unclaimed for 6 months from the date of its importation, the 
title to such property may vest in the United States, and the property 
may be retained for official Government use, in accordance with 19 
U.S.C. 1491(b) (see infra).
    As is currently the case, the proprietor of a general order 
warehouse must arrange for the transportation of the merchandise to, 
and its storage at, the warehouse facility. It is observed that the 
warehouse proprietor is responsible for preparing a Customs Form (CF) 
6043 (Delivery Ticket), or other similar Customs document as designated 
by the port director or an electronic equivalent as authorized by 
Customs, that covers the proprietor's receipt of the merchandise and 
its transport to the warehouse from the custody of the carrier (or from 
any other party to whom custody of the merchandise has been transferred 
by a Customs-authorized permit to transfer or in-bond entry).
    Sections 4.37, 19.9, 122.50 and 123.10, Customs Regulations (19 CFR 
4.37, 19.9, 122.50 and 123.10), would be similarly amended in 
conformance with this latter, existing requirement. Also, for editorial 
purposes, in Sec. 19.9, the term ``bonded carrier'' would be 
substituted in place of ``cartman or lighterman''.

[[Page 42895]]

    In those cases where the carrier or any other party to whom custody 
of the unentered merchandise has been transferred by a Customs-
authorized permit to transfer or in-bond entry fails to relinquish 
custody of the merchandise to a Customs-approved bonded warehouse, the 
carrier or other party would be liable for liquidated damages equal to 
the value of that merchandise under the terms and conditions of his 
international carrier or custodial bond, as applicable.
    On the other hand, if Customs finds that the proprietor cannot 
accept the goods because they are required to be exported or destroyed, 
or for other good cause, the goods would remain in the custody of the 
arriving carrier or in the custody of any party to whom the carrier has 
transferred the merchandise under a Customs-authorized permit to 
transfer or in-bond entry. In the event that merchandise cannot be 
accepted into a general order warehouse, and its exportation or 
destruction is required, as is the case with certain of the special 
categories of merchandise enumerated in Sec. 127.28, Customs 
Regulations (19 CFR 127.28), the carrier or other party would be 
responsible under bond for exporting or destroying the goods, as 
necessary.
    To implement the foregoing requirements, Secs. 4.37, 122.50 and 
123.10 would be further amended accordingly. In addition, Sec. 127.13, 
Customs Regulations (19 CFR 127.13), would be amended consistent with 
Secs. 4.37, 122.50 and 123.10.
    Furthermore, where the warehouse proprietor has taken merchandise 
into his custody, the proprietor would assume the responsibility and 
expense for the destruction of the merchandise, in the event that such 
destruction is found to be warranted under the circumstances (i.e., 
where the port director concludes that the merchandise has no 
commercial value or cannot be disposed of at public auction 
(unsalable)). The port director would authorize such destruction on a 
CF 3499, or on a similar Customs document as designated by the port 
director or an electronic equivalent as authorized by Customs. However, 
before destroying the merchandise, the warehouse proprietor would first 
have to make a reasonable effort to identify and inform the importer 
(owner) or consignee of the merchandise regarding its intended 
destruction. Section 127.14, Customs Regulations (19 CFR 127.14), would 
be revised to include these additional requirements.
    Also, the general authority citation for part 127, Customs 
Regulations (19 CFR part 127), appearing after its table of contents, 
would be revised, and specific authority citations would be added for 
certain regulatory sections in part 127 whose authority is not already 
included in the general authority citation for the part. Currently, the 
specific statutory authority citations for numerous regulatory sections 
in part 127 are set forth in parentheses immediately following the text 
of the sections. To eliminate unnecessary repetition, these 
parenthetical citations of authority appearing after the individual 
sections would be deleted.

Mod Act Changes; Title to Unclaimed Merchandise Vesting in Government

    In addition, Sec. 127.14(a) would be revised and a new subpart E 
would be added to part 127 essentially to conform with and implement a 
number of amendments made to 19 U.S.C. 1491 under section 659 of the 
Mod Act. Section 1491 previously provided that unclaimed and abandoned 
merchandise would be sold at public auction.
    However, 19 U.S.C. 1491, as amended by section 659 of the Mod Act, 
now provides that, as an alternative to selling unclaimed and abandoned 
merchandise at public auction, the title to the merchandise may instead 
vest in the United States following notice to all known interested 
parties, unless the merchandise is timely entered or withdrawn for 
consumption and all duties, taxes, fees, charges and other expenses 
accruing on the merchandise are paid. As amended, 19 U.S.C. 1491 also 
provides that in the event that title to such merchandise does vest in 
the Government, Customs may retain the property for its own official 
use, transfer the property to any other Federal, state or local agency, 
destroy the property, or otherwise dispose of it.
    Moreover, where any party who lost title to, or a substantial 
interest in, the merchandise, by virtue of title having vested in the 
Government, can establish such title or interest, section 1491, as 
amended, provides that the party, upon filing a timely and proper 
petition, may be paid the amount that it is believed the party would 
have received had the merchandise been sold and a proper claim for the 
surplus of the proceeds of sale been made under 19 U.S.C. 1493.
    In this latter regard, 19 U.S.C. 1493 provides that any surplus of 
proceeds from the sale of unclaimed and abandoned merchandise, that 
remains after the payment of certain enumerated charges, expenses, 
duties, taxes and fees, will be deposited in the Treasury, unless a 
proper claim for the surplus is filed with Customs.

Time Limit Within Which To Make Entry; Conforming Changes

    In conformance with the changes already made under T.D. 98-74 to 
Secs. 4.37, 122.50, and 123.10, Customs Regulations, as discussed 
above, Secs. 141.5 and 142.2, Customs Regulations (19 CFR 141.5, 
142.2), would likewise be changed to require that the entry of 
merchandise be made within 15 calendar days (as opposed to 5 working 
days) after landing from a vessel, aircraft or vehicle, or after 
arrival at the port of destination in the case of merchandise 
transported in bond. Also, the reference to entry having to be made 
``by the consignee'' would be removed from these sections, inasmuch as 
the entry law (see 19 U.S.C. 1484(a)) no longer requires this.

Comments

    Before adopting this proposal, consideration will be given to any 
written comments that are timely submitted to Customs. Customs 
specifically requests comments on the clarity of this proposed rule and 
how it may be made easier to understand. 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), 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, U.S. Customs Service, 1300 
Pennsylvania Avenue, NW., 3rd Floor, Washington, DC.

Regulatory Flexibility Act and Executive Order 12866

    The proposed amendments primarily dealing with general order 
warehouses are intended to expedite the handling and disposition of 
general order merchandise, and to further facilitate consistent and 
uniform treatment in the administration of general order warehouses. 
Also, the proposed amendments dealing with the Mod Act are intended to 
conform with, implement and enforce the provisions of the statutory law 
and ensure the protection of the revenue. As such, pursuant to the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it 
is certified that, if adopted, the proposed amendments will not have a 
significant economic impact on a substantial number of small entities. 
Accordingly, the proposed amendments are not subject to the regulatory 
analysis or other requirements of 5 U.S.C. 603 and 604. Nor do they 
meet the criteria

[[Page 42896]]

for a ``significant regulatory action'' as specified in E.O. 12866.

Paperwork Reduction Act

    The collections of information in this notice of proposed 
rulemaking have in part already been reviewed by the Office of 
Management and Budget (OMB) in accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3507) and assigned OMB Control Numbers 1515-0121 
(Information to be supplied by owner or lessee in support of 
application to establish a bonded warehouse facility); and 1515-0220 
(Notification regarding imported merchandise or baggage for which entry 
has not been made). An agency may not conduct or sponsor, and a person 
is not required to respond to, a collection of information unless the 
collection of information displays a valid control number.
    The remaining collection of information in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
(OMB) for review in accordance with the Paperwork Reduction Act of 1995 
(44 U.S.C. 3507). This collection of information is contained in 
Secs. 4.37(c), 19.9(a), 122.50(c), and 123.10(c). This information is 
necessary to expedite the handling and disposition of general order 
merchandise; ensure that merchandise and baggage imported into the 
United States has been properly accounted for in accordance with the 
requirements of the statutory law; and facilitate consistent and 
uniform treatment in the administration of general order warehouses. 
The likely respondents and/or recordkeepers are business organizations, 
including importers and carriers.
    Estimated total annual reporting and/or recordkeeping burden: 6600 
hours.
    Estimated average annual burden per respondent/recordkeeper: 33 
hours.
    Estimated number of respondents and/or recordkeepers: 200.
    Estimated annual frequency of responses: 20,000.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attention: Desk Officer of the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy should also be sent to the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, NW., 3rd Floor, Washington, DC 
20229. Comments should be submitted within the same time frame that 
comments are due regarding the substance of the proposal.
    Comments are invited on: (a) Whether the collection is necessary 
for the proper performance of the functions of the agency, including 
whether the information will have practical utility; (b) the accuracy 
of the agency's estimate of the burden of the collection of the 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; (d) ways to minimize the burden of the 
collection of information on respondents, including through the use of 
automated collection techniques or other forms of information 
technology; and (e) estimates of capital or startup costs and costs of 
operations, maintenance, and purchase of services to provide 
information.
    Part 178, Customs Regulations (19 CFR part 178), containing the 
list of approved information collections, would be appropriately 
revised upon adoption of the proposal as a final rule.

List of Subjects

19 CFR Part 4

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

19 CFR Part 19

    Bonds, Customs duties and inspection, Freight, Imports, Licensing, 
Reporting and recordkeeping requirements, Warehouses.

 19 CFR Part 122

    Air carriers, Aircraft, Airports, Air transportation, Baggage, 
Bonds, Customs duties and inspection, Foreign commerce and trade 
statistics, Freight, Imports, 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 127

    Customs duties and inspection, Exports, Freight, Reporting and 
recordkeeping requirements.

 19 CFR Part 141

    Customs duties and inspection, Entry of merchandise, Release of 
merchandise, Reporting and recordkeeping requirements.

 19 CFR Part 142

    Administrative practice and procedure, Common carriers (Carrier 
initiative program), Customs duties and inspection, Entry of 
merchandise (Line release), Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    It is proposed to amend parts 4, 19, 122, 123, 127, 141, and 142, 
Customs Regulations (19 CFR parts 4, 19, 122, 123, 127, 141 and 142), 
as set forth below.

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

    1. The general authority citation for part 4 and the relevant 
specific authority citation would continue 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 4.37 also issued under 19 U.S.C. 1448, 1457, 1490;
* * * * *
    2. It is proposed to amend Sec. 4.37 by adding a sentence after the 
third sentence in paragraph (c), by redesignating paragraphs (d), (e), 
(f), and (g), respectively, as paragraphs (e), (f), (g), and (h), and 
adding a new paragraph (d), and by adding two sentences at the end of 
paragraph (e) as thus redesignated, to read as follows:


Sec. 4.37  General order.

* * * * *
    (c) * * * The warehouse proprietor is responsible for preparing a 
Customs Form (CF) 6043 (Delivery Ticket), or other similar Customs 
document as designated by the port director or an electronic equivalent 
as authorized by Customs, to cover the proprietor's receipt of the 
merchandise and its transport to the warehouse from the custody of the 
arriving carrier (or from any party to whom custody of the merchandise 
was transferred by the carrier under a Customs-authorized permit to 
transfer or in-bond entry) (see Sec. 19.9 of this chapter). * * *
    (d) If the carrier or any other party to whom custody of the 
unentered merchandise has been transferred by a Customs-authorized 
permit to transfer or in-bond entry fails to relinquish custody of the 
merchandise to a Customs-approved bonded warehouse, the carrier or 
other party may be liable for liquidated damages equal to the value of 
that merchandise under the terms and conditions of his international 
carrier or custodial bond, as applicable.

[[Page 42897]]

    (e) * * * If the port director finds that the warehouse proprietor 
cannot accept the goods because they are required by law to be exported 
or destroyed (see Sec. 127.28 of this chapter), or for other good 
cause, the goods will remain in the custody of the arriving carrier or 
other party to whom the goods have been transferred under a Customs-
authorized permit to transfer or in-bond entry. In this event, the 
carrier or other party will be responsible under bond for exporting or 
destroying the goods, as necessary (see Secs. 113.63(c)(3) and 
113.64(b) of this chapter).
* * * * *

PART 19--CUSTOMS WAREHOUSES, CONTAINER STATIONS, AND CONTROL OF 
MERCHANDISE THEREIN

    1. The general and relevant specific authority citations for part 
19 would continue to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 20, 
Harmonized Tariff Schedule of the United States), 1624; Section 19.1 
also issued under 19 U.S.C. 1311, 1312, 1555, 1556, 1557, 1560, 
1561, 1562;
* * * * *
    2. It is proposed to amend Sec. 19.1 by adding a heading to 
paragraph (a), by revising paragraph (a)(1), by adding a new paragraph 
(a)(10), by adding a heading to paragraph (b), and by adding a new 
paragraph (c), to read as follows:


Sec. 19.1  Classes of customs warehouses.

    (a) Classifications. * * *
    (1) Class 1. Premises owned or leased by the Government, when the 
exigencies of the service as determined by the port director so 
require, and used for the storage of merchandise undergoing examination 
by Customs, under seizure, or pending final release from Customs 
custody. Unclaimed merchandise stored in such premises will be held 
under ``general order.''
* * * * *
    (10) Class 11. Bonded warehouses, known as ``general order 
warehouses'', established for the storage and disposition exclusively 
of general order merchandise as described in Sec. 127.1 of this 
chapter.
    (b) Manipulation. * * *
    (c) General order. General order merchandise as described in 
Sec. 127.1 of this chapter will be stored and disposed of in a Class 11 
warehouse. However, general order merchandise may also be sent to a 
warehouse of Class 3, 4, or 5, but only if there is no Class 11 
warehouse otherwise available to receive the merchandise, and provided 
the Class 3, 4, or 5 warehouse has also been certified by the port 
director as meeting the criteria for a Class 11 warehouse, following an 
application under Sec. 19.2, Customs Regulations (19 CFR 19.2). So far 
as such warehouses are used for the purpose of handling general order 
goods, they will also be considered general order (Class 11) 
warehouses. If there is no space at a warehouse of any of these classes 
available, the proprietor of such a warehouse, with the approval of the 
port director of the port nearest to where the warehouse is located, 
may rent or lease additional suitable premises for the storage of 
general order merchandise.
    3. It is proposed to amend Sec. 19.2 by adding a new paragraph (d), 
and by revising the second sentence of paragraph (f), to read as 
follows:


Sec. 19.2  Applications to bond.

* * * * *
    (d) An applicant desiring to establish a general order warehouse 
may need to establish, as a condition of approval of the application, 
that the warehouse will meet minimum space requirements imposed by the 
port director to accommodate the storage of general order merchandise. 
Any space requirements will be posted by written notice at the 
customhouse and on the appropriate Customs-authorized electronic data 
interchange system. An applicant will not be subject to any minimum 
space requirements that are posted after the filing of his application.
* * * * *
    (f) * * * The port director may require an individual applicant to 
submit fingerprints on Standard Form 87 at the time of filing the 
application, or in the case of applications from a business entity, may 
require the fingerprints, on Standard Form 87, of all employees of the 
business entity.
    4. It is proposed to amend Sec. 19.9 by revising paragraph (a) to 
read as follows:


Sec. 19.9  General order, abandoned, and seized merchandise.

    (a) Acceptance of merchandise. The general order warehouse 
proprietor is responsible for preparing a Customs Form (CF) 6043 
(Delivery Ticket), or other similar Customs document as designated by 
the port director or an electronic equivalent as authorized by Customs, 
to cover the proprietor's receipt of the merchandise and its transport 
to the warehouse from the custody of the arriving carrier (or from any 
party to whom custody of the merchandise was transferred by the carrier 
under a Customs-authorized permit to transfer or in-bond entry). A 
joint determination will be made by the warehouse proprietor and the 
bonded carrier of the quantity and condition of the goods or articles 
so delivered to the warehouse. Any discrepancy between the quantity and 
condition of the goods and that reported on CF 6043, or other similar 
Customs document as designated by the port director or an electronic 
equivalent as authorized by Customs, will be reported to the port 
director within two working days of the joint determination.
* * * * *
    5. It is proposed to amend Sec. 19.12 by revising the introductory 
text in paragraph (a) to read as follows:


Sec. 19.12  Inventory control and recordkeeping system.

    (a) Systems capability. The proprietor of a Class 11 general order 
warehouse as described in Sec. 19.1 must have an automated inventory 
control and recordkeeping system. Proprietors of existing Class 3, 4, 
or 5 warehouses as described in Sec. 19.1 certified before [the date 
this rule becomes final] to receive general order merchandise must have 
automated inventory control and recordkeeping systems in place with 
respect to general order merchandise after a period of 2 years from 
[the date this rule becomes final]. All other warehouse proprietors 
have a choice of maintaining manual or automated inventory control and 
recordkeeping systems or a combination of manual and automated systems. 
All inventory control and recordkeeping systems must be capable of:
* * * * *

PART 122--AIR COMMERCE REGULATIONS

    1. The authority citation for part 122 would continue 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.

    2. It is proposed to amend Sec. 122.50 by revising the heading, by 
adding a sentence after the third sentence in paragraph (c), by 
redesignating paragraphs (d), (e) and (f), respectively, as paragraphs 
(e), (f) and (g), and adding a new paragraph (d), and by adding two 
sentences at the end of paragraph (e) as thus redesignated, to read as 
follows:


Sec. 122.50  General order merchandise.

    (c) * * * The warehouse proprietor is responsible for preparing a 
Customs Form (CF) 6043 (Delivery Ticket), or other similar Customs 
document as designated by the port director or an electronic equivalent 
as authorized by Customs, to cover the proprietor's receipt of the 
merchandise and its transport to the warehouse from the

[[Page 42898]]

custody of the arriving carrier (or from any party to whom custody of 
the merchandise was transferred by the carrier under a Customs-
authorized permit to transfer or in-bond entry) (see Sec. 19.9 of this 
chapter). * * *
    (d) If the carrier or any other party to whom custody of the 
unentered merchandise has been transferred by a Customs-authorized 
permit to transfer or in-bond entry fails to relinquish custody of the 
merchandise to a Customs-approved bonded warehouse, the carrier or 
other party may be liable for liquidated damages equal to the value of 
that merchandise under the terms and conditions of his international 
carrier or custodial bond, as applicable.
    (e) * * * If the port director finds that the warehouse proprietor 
cannot accept the goods because they are required by law to be exported 
or destroyed (see Sec. 127.28 of this chapter), or for other good 
cause, the goods will remain in the custody of the arriving carrier or 
other party to whom the goods have been transferred under a Customs-
authorized permit to transfer or in-bond entry. In this event, the 
carrier or other party will be responsible under bond for exporting or 
destroying the goods, as necessary (see Secs. 113.63(c)(3) and 
113.64(b) of this chapter).
* * * * *

PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO

    1. The general authority citation for part 123 would continue 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.
* * * * *
    2. It is proposed to amend Sec. 123.10 by revising the heading, by 
adding a sentence after the third sentence in paragraph (c), by 
redesignating paragraphs (d), (e) and (f), respectively, as paragraphs 
(e), (f) and (g), and adding a new paragraph (d), and by adding two 
sentences at the end of paragraph (e) as thus redesignated, to read as 
follows:


Sec. 123.10  General order merchandise.

* * * * *
    (c) * * * The warehouse proprietor is responsible for preparing a 
Customs Form (CF) 6043 (Delivery Ticket), or other similar Customs 
document as designated by the port director or an electronic equivalent 
as authorized by Customs, to cover the proprietor's receipt of the 
merchandise and its transport to the warehouse from the custody of the 
arriving carrier (or from any party to whom custody of the merchandise 
was transferred by the carrier under a Customs-authorized permit to 
transfer or in-bond entry) (see Sec. 19.9 of this chapter). * * *
    (d) If the carrier or any other party to whom custody of the 
unentered merchandise has been transferred by a Customs-authorized 
permit to transfer or in-bond entry fails to relinquish custody of the 
merchandise to a Customs-approved bonded warehouse, the carrier or 
other party may be liable for liquidated damages equal to the value of 
that merchandise under the terms and conditions of his international 
carrier or custodial bond, as applicable.
    (e) * * * If the port director finds that the warehouse proprietor 
cannot accept the goods because they are required by law to be exported 
or destroyed (see Sec. 127.28 of this chapter), or for other good 
cause, the goods will remain in the custody of the arriving carrier or 
other party to whom the goods have been transferred under a Customs-
authorized permit to transfer or in-bond entry. In this event, the 
carrier or other party will be responsible under bond for exporting or 
destroying the goods, as necessary (see Secs. 113.63(c)(3) and 
113.64(b) of this chapter).
* * * * *

PART 127--GENERAL ORDER, UNCLAIMED AND ABANDONED MERCHANDISE

    1. The general authority citation for part 127 would be revised, 
and specific sectional authority citations would be added, to read as 
follows:

    Authority:  19 U.S.C. 66, 1311, 1312, 1484, 1485, 1490, 1491, 
1492, 1493, 1506, 1559, 1563, 1623, 1624, 1646a; 26 U.S.C. 5753.
    Section 127.12 also issued under 19 U.S.C. 1753;
    Section 127.14 also issued under 19 U.S.C. 1555, 1556, 1557;
    Section 127.21 also issued under 19 U.S.C. 1753;
    Section 127.28 also issued under 15 U.S.C. 2612, 26 U.S.C. 5688;
    Sections 127.31, 127.36, 127.37 also issued under 19 U.S.C. 
1753.

    2. It is proposed to amend part 127 by removing the statutory 
authority citations that appear in parentheses immediately below the 
texts of Secs. 127.1, 127.2, 127.11 through 127.14, 127.21, 127.23 
through 127.29, and 127.31 through 127.37.
    3. It is proposed to amend Sec. 127.13 by revising paragraph (a) to 
read as follows:


Sec. 127.13  Storage of unclaimed and abandoned merchandise.

    (a) Place of storage. A Class 11 bonded warehouse or warehouse of 
Class 3, 4, or 5, certified by the port director as qualified to 
receive general order merchandise, will be responsible for the 
transportation and storage of unclaimed and abandoned merchandise, upon 
due notification to the proprietor of the warehouse by the arriving 
carrier (or other party to whom the carrier has transferred the 
merchandise under a Customs-authorized permit to transfer or in-bond 
entry), as provided in Secs. 4.37(c), 122.50(c), and 123.10(c) of this 
chapter. If no warehouse of these classes is available to receive 
general order merchandise, or if the merchandise requires specialized 
storage facilities which are unavailable in a bonded facility, the port 
director, after having received notice of the presence of unentered 
merchandise or baggage in accordance with the provisions of this 
section, will direct the storage of the merchandise by the carrier or 
by any other appropriate means.
* * * * *
    4. It is proposed to amend Sec. 127.14 by revising paragraph (a) to 
read as follows:


Sec. 127.14  Disposition of merchandise in Customs custody beyond time 
fixed by law.

    (a) Merchandise subject to sale or other disposition. (1) General. 
If storage or other charges due the United States have not been paid on 
merchandise remaining in Customs custody after the expiration of the 
bond period in the case of merchandise entered for warehouse, or after 
the expiration of the general order period, as defined in Sec. 127.4, 
in any other case, even though any duties due have been paid, such 
merchandise will be sold as provided in subpart C of this part, 
retained for official use as provided in subpart E of this part, 
destroyed, or otherwise disposed of as authorized by the Commissioner 
of Customs under the law, unless the merchandise is entered or 
withdrawn for consumption in accordance with paragraph (b) of this 
section.
    (2) Destruction of merchandise. (i) Proprietor responsibility. If 
the port director concludes that merchandise in general order has no 
commercial value or is otherwise unsalable and cannot be disposed of at 
public auction (see Sec. 127.29), and that its destruction is 
warranted, the warehouse proprietor must assume responsibility under 
bond, including the expense, for destroying the merchandise (see 
Sec. 113.63(c)(3) of this chapter). The port director will authorize 
such destruction on Customs Form (CF) 3499, or on a similar Customs 
document as designated by the port director or an electronic equivalent 
as authorized by Customs.
    (ii) Notice of destruction. Before destroying the merchandise, the

[[Page 42899]]

warehouse proprietor must first make a reasonable effort under bond 
(see Sec. 113.63(b) and (c) of this chapter), to identify and inform 
the importer (owner) or consignee regarding the intended destruction of 
the merchandise. When the appropriate party is identified, notice of 
destruction will be provided to the party on Customs Form (CF) 5251, 
appropriately modified, or other similar Customs document as designated 
by the port director or an electronic equivalent as authorized by 
Customs, at least 30 calendar days prior to the date of intended 
destruction.
* * * * *
    5. It is proposed to amend part 127 by adding a new subpart E to 
read as follows:
Subpart E--Title to Unclaimed and Abandoned Merchandise Vesting in 
Government
127.41   Government title to unclaimed and abandoned merchandise.
127.42   Disposition of merchandise owned by Government.
127.43   Petition of party for surplus proceeds had merchandise been 
sold.

Subpart E--Title to Unclaimed and Abandoned Merchandise Vesting in 
Government


Sec. 127.41  Government title to unclaimed and abandoned merchandise.

    (a) Vesting of title in Government. At the end of the 6-month 
period noted in Sec. 127.11, at which time merchandise having thus 
remained in Customs custody is considered as unclaimed and abandoned, 
the port director, with the concurrence of the Commissioner of Customs, 
may, in lieu of sale of the merchandise as provided in subpart C of 
this part, provide notice to all known interested parties under 
paragraph (b) of this section that the title to such merchandise will 
be considered as vesting in the United States, free and clear of any 
liens or encumbrances, as of the 30th day after the date of the notice 
unless, before the 30th day, the merchandise is entered or withdrawn 
for consumption and all duties, taxes, fees, transfer and storage 
charges, and any other expenses that may have accrued on the 
merchandise are paid.
    (b) Notice to known interested parties. Notice that the title to 
unclaimed and abandoned merchandise will vest in the United States, as 
described in paragraph (a) of this section, will be sent to the 
following parties on Customs Form (CF) 5251, appropriately modified, or 
other similar Customs document as designated by the port director or an 
electronic equivalent as authorized by Customs:
    (1) Importer, if known;
    (2) Consignee, if name and address can be ascertained;
    (3) Shipper, or the shipper's representative or agent, if 
merchandise is consigned to order or the consignee cannot be 
ascertained; and
    (4) Any other known interested parties.
    (c) Appraisement of merchandise. Before title to unclaimed and 
abandoned merchandise is vested in the United States, the merchandise 
will be appraised in accordance with section 402, Tariff Act of 1930, 
as amended (19 U.S.C. 1401a).


Sec. 127.42  Disposition of merchandise owned by Government.

    (a) Disposition. If title to any unclaimed and abandoned 
merchandise vests in the United States under Sec. 127.41, the 
merchandise may be retained by Customs for its official use, or in 
Customs discretion, the merchandise may be transferred to any other 
Federal, state or local agency, destroyed or disposed of otherwise.
    (b) Payment of charges and expenses. All transfer and storage 
charges or expenses accruing on retained or transferred merchandise 
will be paid by the receiving agency.


Sec. 127.43  Petition of party for surplus proceeds had merchandise 
been sold.

    (a) Filing of petition. Under section 491(d), Tariff Act of 1930, 
as amended (19 U.S.C. 1491(d)), any party who can satisfactorily 
establish title to or a substantial interest in unclaimed and abandoned 
merchandise, the title to which has vested in the United States, may 
file a petition for the surplus proceeds that would have been payable 
to the party had the merchandise been sold and a proper claim made 
under section 493, Tariff Act of 1930, as amended (19 U.S.C. 1493).
    (b) When and with whom filed. The petition may be filed with the 
port director at whose direction the title to the merchandise was 
vested in the United States. If the party received notice under 
Sec. 127.41(b), the petition must be filed within 30 calendar days 
after the day on which title vested in the United States. If the party 
can satisfactorily establish that such notice was not received, the 
party must file the petition within 30 calendar days of learning of the 
vesting but not later than 90 calendar days from the vesting.
    (c) Evidence required. The petition must show the party's title to 
or interest in the merchandise, and be supported, as appropriate, with 
the original bill of lading, bill of sale, contract, mortgage, or other 
satisfactory documentary evidence, or a certified copy of the 
foregoing. Also, if applicable, the petition must be supported by 
satisfactory proof that the petitioner did not receive notice that 
title to the merchandise would vest in the United States and was in 
such circumstances as prevented the receipt of notice.
    (d) Payment of claim. If the claim of the owner, consignee, or 
other party having title to or a substantial interest in the 
merchandise, is properly established as provided in this section, the 
party may be paid out of the Treasury of the United States the amount 
that it is believed the party would have received under 19 U.S.C. 1493 
had the merchandise been sold and a proper claim for the surplus of the 
proceeds of sale been made under that provision (see Sec. 127.36). In 
determining the amount that may have been payable under 19 U.S.C. 1493, 
given that the merchandise was not in fact sold at public auction under 
19 U.S.C. 1491(a), the appraisement of the merchandise, as provided in 
Sec. 127.41(c), will be taken into consideration. By virtue of the 
authority delegated to the port director in this matter, any payment 
made as provided under this paragraph in connection with the filing of 
a petition under paragraph (b) of this section will be final and 
conclusive on all parties.
    (e) Doubtful claim. Any doubtful claim for payment along with all 
pertinent documents and information available to the port director will 
be forwarded to the Assistant Commissioner, Office of Finance, for 
instructions. The decision of the Assistant Commissioner, Office of 
Finance, with respect to any petition filed under this section will be 
final and conclusive on all parties.

PART 141--ENTRY OF MERCHANDISE

    1. The general authority citation for part 141 would continue to 
read as follows:

    Authority: 19 U.S.C. 66, 1448, 1484, 1624.

    2. It is proposed to revise Sec. 141.5 to read as follows:


Sec. 141.5  Time limit for entry.

    Merchandise for which entry is required will be entered within 15 
calendar days after landing from a vessel, aircraft or vehicle, or 
after arrival at the port of destination in the case of merchandise 
transported in bond. Merchandise for which timely entry is not made 
will be treated in accordance with Sec. 4.37 or Sec. 122.50 or 
Sec. 123.10 of this chapter.

[[Page 42900]]

PART 142--ENTRY PROCESS

    1. The authority citation for part 142 would continue to read as 
follows:

    Authority: 19 U.S.C. 66, 1448, 1484, 1624.

    2. It is proposed to amend Sec. 142.2 by revising paragraph (a) to 
read as follows:


Sec. 142.2  Time for filing entry.

    (a) General rule: After arrival of merchandise. Merchandise for 
which entry is required will be entered within 15 calendar days after 
landing from a vessel, aircraft or vehicle, or after arrival at the 
port of destination in the case of merchandise transported in bond.
* * * * *

    Approved: May 19, 2000.
Raymond W. Kelly,
Commissioner of Customs.
Dennis M. O'Connell,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-17639 Filed 7-11-00; 8:45 am]
BILLING CODE 4820-02-P