[Federal Register Volume 67, Number 211 (Thursday, October 31, 2002)]
[Rules and Regulations]
[Pages 66318-66333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27661]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 4, 113 and 178

[T.D. 02-62]
RIN 1515-AD11


Presentation of Vessel Cargo Declaration to Customs Before Cargo 
Is Laden Aboard Vessel at Foreign Port for Transport to the United 
States

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the Customs Regulations to require the 
advance and accurate presentation of certain manifest information prior 
to lading at the foreign port and to encourage the presentation of this 
information electronically. The document also allows a non-vessel 
operating common carrier (NVOCC) having an International Carrier Bond 
to electronically present cargo manifest information to Customs. This 
information is required in advance and is urgently needed in order to 
enable Customs to evaluate the risk of smuggling weapons of mass 
destruction through the use of oceangoing cargo containers before goods 
are loaded on vessels for importation into the United States, while, at 
the same time, enabling Customs to facilitate the prompt release of 
legitimate cargo following its arrival in the United States. Failure to 
provide the required information in the time period prescribed may 
result in the delay of a permit to unlade and/or the assessment of 
civil monetary penalties or claims for liquidated damages.

EFFECTIVE DATE: December 2, 2002.

FOR FURTHER INFORMATION CONTACT:
    For Legal matters: Larry L. Burton, Office of Regulations and 
Rulings, (202-572-8724).
    For National Targeting Center issues: David Tipton, (202-927-0108).

[[Page 66319]]

    For Container Security Initiatives: Adam Wysocki, (202-927-0724).
    For Trade Compliance issues: Kimberly Nott, (202-927-0042).

SUPPLEMENTARY INFORMATION:

Background

    The Customs laws impose certain requirements upon vessels that will 
arrive in the United States to discharge their cargo. In particular, 
vessels destined for the United States must comply with 19 U.S.C. 1431, 
which requires that every vessel bound for the United States and 
required to make entry under 19 U.S.C. 1434 have a manifest that meets 
the requirements that are prescribed by regulation. To this end, under 
19 U.S.C. 1431(d), Customs may by regulation specify the form for, and 
the information and data that must be contained in, the vessel 
manifest, as well as the manner of production for, and the delivery or 
electronic transmittal of, the vessel manifest.
    Currently, Sec.  4.7, Customs Regulations (19 CFR 4.7), requires: 
That the master of every vessel arriving in the United States and 
required to make entry have on board the vessel a manifest in 
accordance with 19 U.S.C. 1431 and Sec.  4.7; and that an original and 
one copy of the manifest must be ready for production upon demand and 
must be delivered to the first Customs officer who demands the 
manifest. Sections 4.7(a) and 4.7a, Customs Regulations (19 CFR 4.7(a) 
and 4.7a), set forth the documentary and informational requirements 
that constitute the vessel manifest.
    Pursuant to Sec.  4.7(a), the cargo declaration (Customs Form 1302 
or its electronic equivalent) is one of the documents that comprises a 
vessel manifest. The cargo declaration must list all the inward foreign 
cargo on board the vessel regardless of the intended U.S. port of 
discharge of the cargo (Sec.  4.7a(c)(1)).
    Furthermore, 19 U.S.C. 1448 provides, in pertinent part, that no 
merchandise may be unladen from a vessel which is required to make 
entry under section 1434 until Customs has issued a permit for its 
unlading. In addition, under section 1448, Customs possesses a 
reasonable measure of regulatory discretion as to whether, and under 
what circumstances and conditions, to issue a permit to unlade incoming 
cargo from a vessel arriving in the United States. Section 4.30, 
Customs Regulations (19 CFR 4.30), lists the requirements and 
conditions under which Customs may issue a permit to unlade foreign 
merchandise from a vessel arriving in the United States.
    In addition, 19 U.S.C. 1436(a)(1) and (a)(4) provide that it is 
unlawful to fail to comply with sections 1431, 1433 or 1434 or any 
regulation prescribed under any of those statutory authorities. 
Moreover, 19 U.S.C. 1436(a)(2) states that it is unlawful to present or 
transmit, electronically or otherwise, any forged, altered or false 
document, paper, data or manifest to the Customs Service under 19 
U.S.C. 1431, 1433(d) or 1434. Under section 1436(b), the master of a 
vessel who commits any such violation is liable for a civil penalty of 
$5,000 for the first violation and $10,000 for each subsequent 
violation and any conveyance used in connection with any such violation 
is subject to seizure and forfeiture.

Proposed Rulemaking; Advance Presentation of Vessel Cargo Manifest to 
Customs; Required Information

    By a document published in the Federal Register (67 FR 51519) on 
August 8, 2002, Customs proposed to amend Sec.  4.7 to provide that, 
pursuant to 19 U.S.C. 1431(d), for any vessel subject to entry under 19 
U.S.C. 1434 upon its arrival in the United States, Customs must receive 
the vessel's cargo manifest (declaration) from the carrier 24 hours 
before the related cargo is laden aboard the vessel at the foreign 
port. The proposed rule also enumerated the specific informational 
elements that would need to be included in the submitted cargo 
manifest.

Necessity for Advance Presentation of Vessel Cargo Manifest to Customs

    As explained in the preamble of the Notice of Proposed Rulemaking 
(67 FR at 51520), the United States Customs Service recently launched 
the Container Security Initiative (``CSI''). CSI will secure an 
indispensable, but vulnerable link in the chain of global trade: 
Containerized shipping. Approximately 90% of world cargo moves by 
container; 200 million cargo containers are transported between the 
world's seaports each year, constituting the most critical component of 
global trade. Nearly half of all incoming trade to the United States 
(by value) arrives by ship, and most of that is in sea containers. 
Annually, nearly 6 million cargo containers are offloaded at U.S. 
seaports.
    There is, however, virtually no security for this critical global 
trading system. And the consequences of a terrorist incident using a 
container would be profound. As experts like Dr. Stephen E. Flynn, 
Senior Fellow, Council on Foreign Relations, have pointed out 
repeatedly, if terrorists used a sea container to conceal a weapon of 
mass destruction--a nuclear device, for example--and detonated it on 
arrival at a port, the impact on global trade and the global economy 
would be immediate and devastating. All nations would be affected 
because there would be no mechanism for identifying weapons of mass 
destruction before they reached our shores and before they posed a 
threat to the global economy.
    AI Qaeda and other terrorist organizations pose an immediate and 
substantial threat. And the threat is not just to harm and kill 
American citizens, it is a threat to damage and destroy the U.S. and 
the world economy.
    To address the threat terrorists pose to containerized shipping, 
Customs developed CSI. Under CSI, U.S. Customs is working with other 
governments to identify high-risk cargo containers and pre-screen those 
containers at the foreign ports before they are shipped to the U.S. CSI 
has four core elements:
    (1) Identify ``high-risk'' containers. In connection with its 
domestic targeting efforts, Customs has already established criteria 
and automated targeting tools for identifying ``high risk'' shipments. 
Indeed, every one of the shipments that arrives in the United States by 
sea container is currently assessed for risk using these tools and 
advance manifest data. If this data were provided earlier, Customs 
could use these same tools to detect high risk shipments before they 
were carried to the United States. Accordingly, to enhance domestic 
targeting and to enable overseas targeting and screening of containers, 
Customs has proposed a rule requiring accurate and detailed information 
to be transmitted before shipments are laden on vessels destined for 
the United States.
    (2) Pre-screen containers before they are shipped. As discussed 
above, to protect the United States and global trade from the risks 
posed by international terrorists, security screening should be done at 
the port of departure rather than the port of arrival.
    (3) Use technology to screen high-risk containers. Technology 
enables screening to be done rapidly without slowing down the movement 
of trade. This technology includes large-scale x-ray and gamma machines 
and radiation detection devices.
    (4) Use more secure containers to ensure the integrity of 
containers screened overseas.
    CSI thus offers real protection, on a day-to-day basis, for the 
primary system of international trade--a system on which all economies 
depend. Given the security afforded by CSI, the investments made by 
ports and

[[Page 66320]]

members of the trade to implement CSI represent relatively inexpensive 
forms of insurance against the terrorist threat. In the event of an 
attack using a cargo container, the CSI network of ports will be able 
to remain operational because those ports will already have an 
effective security system in place--one that will deter and prevent 
terrorists from using it. Without such a network, the damage to global 
trade caused by a terrorist attack involving international shipping 
would be staggering.
    In addition to protecting global trade, CSI should facilitate the 
flow of that trade. When a container has been pre-screened and sealed 
under CSI, U.S. Customs will not, absent additional information 
affecting its risk analysis, need to inspect it for security purposes 
when it reaches the U.S. Moreover, this system could reduce the 
processing time for certain shipments because the screening at a CSI 
port will in most cases take place during ``down time.'' Most 
containers sit on a terminal for an average of several days prior to 
lading. This window of ``down time'' will be used to screen containers 
for security purposes. On arrival at the U.S. seaport, the CSI-screened 
container should be released immediately by U.S. Customs, which could 
shave hours, if not days, off of the shipping cycle. In this manner, 
CSI should increase the speed and predictability for the movement of 
cargo containers shipped to the U.S.
    For these reasons, CSI is a critical component of the President's 
Homeland Security Strategy. It has also been endorsed by the G-8 as 
well as the World Customs Organization.
    As a result of this broad support, CSI has been expanding rapidly. 
When Customs launched CSI this past January, the first step was to 
implement CSI as quickly as possible in Canada and the top 20 ports (by 
volume) that ship to the United States. When fully implemented in these 
locations, CSI will substantially increase the security of the United 
States and the global trading system because the top 20 ports alone 
account for nearly 70% of all the containers shipped to U.S. seaports. 
To date, Canada, the Netherlands, Belgium, France, Germany, Singapore, 
Hong Kong, and Japan have agreed to implement CSI. These countries 
represent 11 of the top 20 ports. Customs anticipates that several 
other nations will agree to implement CSI in the near term, and that 
CSI will expand beyond the top 20 ports during the next year.
    CSI is already operational in Canada and the Netherlands. It will 
be implemented at several additional ports within the next 90 days. 
Given this explosive growth, it is critical that the information 
necessary to implement CSI fully be provided to Customs in the near 
term. For this reason, Customs proposed this rulemaking on August 8, 
2002 and, following the comment period, is issuing this final rule 
today.

Non-Vessel Operating Common Carriers (NVOCCs)

    Under the proposed rule, the conditions of the International 
Carrier Bond (19 CFR 113.64) were proposed to be amended to recognize 
the status of a Non-Vessel Operating Common Carrier (NVOCC) as a 
manifesting party and to obligate any NVOCC having such a bond and 
electing to provide cargo manifest information to Customs 
electronically under Sec.  4.7 and 4.7a to accurately transmit such 
information to Customs 24 or more hours before the related cargo is 
laden aboard the vessel at the foreign port. Breach of these 
obligations would result in liquidated damages against the NVOCC. For 
purposes of the proposed rule, a non-vessel operating common carrier 
(NVOCC) as a common carrier that does not operate the vessels by which 
the ocean transportation is provided, would be considered a shipper in 
its relationship with an ocean common carrier.

Penalties or Liquidated Damages for False or Untimely Filing of 
Manifest Data

    If the master of a vessel failed to present or transmit accurate 
manifest data in the required time period or presented or transmitted 
any false, forged or altered document, paper, manifest or data to 
Customs, the proposed regulations specified that monetary penalties 
could be assessed under the provisions of 19 U.S.C. 1436(b). Likewise, 
if an NVOCC having an International Carrier Bond elected to transmit 
such data electronically to Customs and failed to do so in the required 
time period or transmitted any false, forged or altered document, 
paper, manifest or data to Customs, the NVOCC could be liable for the 
payment of liquidated damages for breach of the conditions of the 
International Carrier Bond, in addition to any other applicable 
penalties.

Issuance of Permit To Unlade Cargo

    The proposed rule also provided that if the carrier did not present 
cargo declaration information to Customs prior to the lading of the 
cargo aboard the vessel at the foreign port, Customs could, in addition 
to assessment of civil monetary penalties, delay issuance of a permit 
to unlade the entire vessel or a portion thereof until all required 
information was received.

Preliminary Entry

    Finally, it was proposed that Sec.  4.8 be amended to make clear 
that the granting of preliminary entry by Customs would be conditioned 
upon the electronic submission of the Cargo Declaration (Customs Form 
(CF) 1302), as well as the provision to Customs either electronically 
or in paper form of all other forms required by Sec.  4.7.

Discussion of Comments

    A total of 78 commenters responded to the notice of proposed 
rulemaking. Nearly all of the commenters recognized the need to act 
immediately to protect the global trading systems, and in particular to 
protect the most important element in the movement of international 
trade--containerized cargo. They also recognized the urgency and 
seriousness of the threat posed by terrorist organizations and the 
smuggling of weapons of mass destruction, including radiological and 
nuclear materials. They complimented the Customs Service on newly 
created programs such as the Customs-Trade Partnership Against 
Terrorism (C-TPAT) and the Container Security Initiative (CSI), which 
are designed to address this threat.
    Most commenters questioned how the regulation would be implemented. 
They raised operational issues regarding the movement of containers, 
the security of containers and the interfaces between the U.S. Customs 
Service and the trade. They also noted that the regulation would 
require changes to existing business practices that could take several 
months to fully implement.
    While the aim of this regulation is to better secure containerized 
cargo from the threat of terrorism, it is important to note that 
carriers, shippers, importers and others should realize significant 
benefits from its implementation. Most notably, once a cargo container 
is pre-screened in a foreign port, in the absence of additional 
information affecting Customs risk analysis, Customs will rarely need 
to again screen the container or inspect its contents for security 
purposes upon arrival in the United States. This offers greater 
predictability for freight forwarders and importers to arrange for 
transportation upon discharge of the cargo. This and other benefits, 
however, will only be fully realized after the Customs Service is able 
to pre-screen containers overseas, using the accurate and complete 
information required by this regulation.
    We have carefully considered all of the comments, and as a result, 
we have

[[Page 66321]]

modified the proposed regulation in many respects. For example, many 
commenters questioned the need to include bulk shipments under the 
proposed regulation. After considering these comments, we have modified 
the proposed regulation to exempt bulk shipments from its requirements. 
Others requested greater assurances of confidentiality. In response, we 
will be taking steps appropriately to protect business sensitive 
information.
    In addition, we have considered the comments about the need for 
additional time to implement the reporting requirements because of 
potential changes in business practices. Balancing these comments 
against the pressing need to protect the national security of the 
United States and to protect the safe and secure movement of 
international trade, we have decided to not initiate any enforcement 
actions such as assessing penalties for non-fraudulent violations of 
this regulation for 60 days after the regulation goes into effect. 
There is an overriding national security need, however, to move as 
quickly as possible to protect the United States and the global trading 
system from terrorism, especially the profound threat of nuclear 
terrorism.
    Though enforcement actions for non-fraudulent violations of this 
regulation will not be initiated for 60 days after the regulation goes 
into effect, the U.S. Customs Service is prepared to receive automated 
manifest information immediately, which would allow Customs to offer 
facilitation benefits to those customers of carriers and NVOCCs that 
utilize CSI ports.
    We have made a good faith effort to make changes to the rule where 
appropriate at this time, but we recognize that not all of the 
modifications suggested by commenters relate to changes in the 
regulation itself, and that not all potential implementation issues 
could be foreseen. In the interest of maintaining an open dialogue with 
affected parties, and consistent with the long-standing Customs 
practice of working with the trade, Treasury is inviting the Advisory 
Committee on the Commercial Operations of the U.S. Customs Service 
(COAC) to convene a special subcommittee to advise the U.S. Customs 
Service on operational issues arising out of the implementation of this 
regulation.
    A complete description of the various issues raised by the 
commenters, together with Customs response to these issues, is set 
forth below.

19 U.S.C. 1431 as Authority for Regulations Notwithstanding Trade Act 
of 2002

    Comment: Twenty-one commenters questioned the validity of the 
proposed advance cargo manifest regulations under 19 U.S.C. 1431 in 
light of section 343(a) of the Trade Act of 2002 (Public Law 107-210; 
116. Stat. 933), that was enacted on August 6, 2002. Section 343(a) 
concerns the mandatory filing with Customs of advanced electronic 
information for cargo being imported into or exported from the United 
States by vessel, vehicle or aircraft. These commenters contend that 
the proposed advance cargo manifest regulations are in direct 
contradiction with the requirements imposed under section 343(a)(3) of 
the Trade Act of 2002. The underlying premise essentially asserted in 
this context is that Congress, in enacting section 343 of the Trade 
Act, effectively repealed any authority that Customs might have had to 
request advance manifest information under 19 U.S.C. 1431.
    Customs Response: Customs has concluded that both 19 U.S.C. 1431 
and section 343(a) of the Trade Act of 2002 co-exist within the Customs 
laws and the enactment of section 343(a) of the Trade Act did not and 
was not intended by Congress to implicitly repeal Customs authority to 
collect manifest information under section 1431. Briefly stated, 
therefore, Customs retains the authority under section 1431(b) and (d) 
to require the advance presentation of vessel cargo manifest 
information in accordance with the regulations being issued today.
    In addition, Customs will issue regulations, in accordance with 
section 343(a) of the Trade Act of 2002, that will require the advance 
electronic transmission of information on cargo destined for 
importation into the United States by vessel, vehicle or aircraft. In 
this regard, Customs will reconcile those regulations that are issued 
under the authority of section 343(a) with the regulations that are 
being issued today under the authority under 19 U.S.C. 1431.

Bulk and Break Bulk Cargo

    Comment: Several commenters inquired as to whether the 24 hour rule 
would apply to bulk and break bulk cargo. Many commenters requested 
that only certain data elements be required for such manifest 
submissions. Others commented that the Coast Guard 96 hour report of 
arrival requirements should be used for bulk and break bulk carriers 
for manifest submission to U.S. Customs in the United States.
    Customs Response: Customs has determined that the proposed rule 
will be amended in this final rule to provide that bulk cargo as 
defined in the rule will be exempt from the 24 hour rule; and, further, 
that break bulk cargo may be exempted from the 24 hour rule on a case 
by case basis. Companies that are exempted from the 24 hour rule must 
submit their cargo declaration information to U.S. Customs 24 hours 
prior to arrival in the U.S. if they are participants in the vessel AMS 
program or upon arrival if they are non-automated carriers. In response 
to the comment that the Coast Guard 96 hour report of arrival 
requirements should be used, the Coast Guard has merely proposed that 
requirement at this time. While Customs agrees with the idea, this 
cannot be implemented until the Coast Guard requirement is adopted.
    First, regarding bulk cargo, Customs defines such cargo as 
homogeneous cargo stowed in bulk, that is to say, loose in the hold and 
not enclosed in any container such as boxes, bales, bags, casks, and so 
on. It is also called bulk freight. Reference to a maritime dictionary 
reveals bulk cargo to be composed of (1) free flowing articles such as 
oil, grain, coal, ore, and so on, which can be pumped or run through a 
chute or handled by dumping; (2) articles that require mechanical 
handling such as bricks, pig iron, lumber, steel beams and so on.
    Second, Customs also recognizes that there are concerns that 
carriers have with other types of cargo known as break bulk. Break bulk 
is cargo that is not containerized, but which is otherwise packaged or 
bundled. This type of cargo may raise the same types of concealment and 
smuggling concerns as containerized cargo. Consequently, as indicated 
above, a carrier of break bulk cargo may apply for an exemption from 
the 24 hour rule; Customs will evaluate each application on a case by 
case basis.
    To apply for an exemption, the carrier must submit a written 
request for exemption to the U.S. Customs Service, National Targeting 
Center, 1300 Pennsylvania Ave., NW., Washington, DC 20229. Until an 
application for an exemption is granted, the carrier must comply with 
the 24 hour advance manifest requirement. The written request for 
exemption must clearly set forth information such that Customs may 
assess whether any security concerns exist, such as: The carrier's IRS 
number; the source, identity and means of the packaging or bundling of 
the commodities being shipped; the ports of call, both foreign and 
domestic; the number of vessels the carrier uses to transport break 
bulk cargo, along with

[[Page 66322]]

the names of these vessels and their International Maritime 
Organization numbers; and the list of the carrier's importers and 
shippers, identifying any who are members of C-TPAT (The Customs-Trade 
Partnership Against Terrorism).
    If Customs, by written response, provides an exemption to a break 
bulk carrier, the exemption is only applicable under the circumstances 
clearly set forth in the application for exemption. If circumstances 
set forth in the approved application change, it will be necessary to 
submit a new application.
    Customs may rescind an exemption granted to a carrier at any time.
    As noted above, companies receiving exemptions must submit their 
cargo declaration information to U.S. Customs 24 hours prior to arrival 
in the U.S. if they are participants in the vessel AMS program or upon 
arrival if they are non-automated carriers.

Non Vessel Operating Common Carriers Eligible to Participate

    Comment: In the August 8, 2002, proposed rule, Customs stated that 
Non Vessel Operating Common Carriers (NVOCC) licensed by the Federal 
Maritime Commission (FMC) would be eligible to become bonded with 
Customs and to electronically transmit manifest information directly to 
Customs. Several commenters pointed out that a separate category of 
NVOCC is not licensed by the FMC, but rather is registered with the 
agency. This latter group, unless identified by Customs as eligible to 
participate, would be unable to transmit information directly to 
Customs prior to foreign lading. It is requested that Customs allow 
registered NVOCCs to participate. In addition, one commenter advocated 
that shippers' associations, like NVOCCs, should be authorized to 
present the required manifest information electronically to Customs.
    Customs Response: Customs agrees that to the extent that members of 
the NVOCC community registered with the FMC become bonded with Customs, 
they should be included in the electronic filing program. Customs in 
this final rule has amended the proposed regulatory language in this 
regard to reflect this change. However, shippers' associations may not 
participate in the electronic filing program. Such associations of 
shippers are membership-only groups that are not currently regulated 
under U.S. law, and they are not licensed or registered with the FMC.

Confidentiality of Manifest Information

    Comment: A number of commenters addressed the issue of the 
confidentiality of certain manifest information. The views expressed 
really concerned two different aspects of the need for 
confidentiality--that involving business and competitive advantage and 
that involving the matter of cargo security.
    One group, consisting primarily of the Non Vessel Operating Common 
Carrier (NVOCC) community, expressed concerns that the information 
which would be supplied to Customs under the proposed new procedures 
would be subject to release for publication. It was stated that such 
release would reveal confidential business information which could 
result in harm to the NVOCC community. It was suggested that NVOCC 
filers should be permitted to make biennial confidentiality 
certifications to Customs on behalf of the importers or consignees, 
pursuant to statute, which allows only the importers or consignees to 
submit biennial certifications for confidentiality of certain manifest 
information. It was also suggested that Customs should consider an 
NVOCC to be an ``attorney in fact'' for certification filing purposes 
since our regulations currently allowed an attorney of an importer or 
consignee to submit a certification on behalf of that importer or 
consignee.
    The second confidentiality concern expressed by commenters involved 
the matter of the security of the cargo itself. It was suggested that 
if Customs released certain manifest information shortly after its 
receipt, information identifying cargoes could be published even before 
vessels departed foreign ports bound for the United States.
    Customs Response: Customs recognizes the confidentiality concerns 
stated by these commenters. The premature disclosure of information 
about incoming cargo, particularly sensitive shipments, such as 
chemicals and the like, could not only undermine business 
relationships; it could also enable terrorist or criminal 
organizations, having advance information about incoming cargo, to 
attempt the theft or destruction of such cargo prior to or upon its 
arrival in the United States.
    Accordingly, in response to these matters, Customs intends to 
address these concerns to the extent allowable under existing law. To 
this end, 19 U.S.C. 1431(c) limits the parties eligible to make a 
necessary confidentiality certification to include only importers and 
consignees. While our regulations currently allow an attorney of an 
importer or consignee to file a client's certification, Customs simply 
cannot designate an NVOCC to be an ``attorney in fact'' for 
certification filing purposes. Proposed amendments to Part 103 of the 
Customs Regulations (19 CFR part 103) would be necessary. Given this 
fact, Customs will be issuing a separate Federal Register Notice of 
Proposed Rulemaking in the near future to expand upon those parties who 
may file a biennial certification on behalf of the importer or 
consignee. An immediately available option, however, is for NVOCC 
manifest information filers to request appropriate importers and 
consignees in the United States to file certifications with Customs on 
their own behalf, thus protecting the same range of information which 
is sought to be protected here.
    With regard to the concern that release of advance information 
prematurely can raise new security concerns, Customs will not be 
releasing information from cargo declarations until the complete 
manifest is filed with Customs. The statutory provision under 
consideration, 19 U.S.C. 1431(c), provides for the release for public 
disclosure of information, when contained in a vessel manifest. The 
statute does not specify when the information must be released to the 
public pursuant to 19 U.S.C. 1431(c). (Section 4.7 of the Customs 
Regulations (19 CFR 4.7) specifically identifies those documents 
comprising a vessel ``manifest''; such documents comprising the vessel 
manifest include the Vessel Entrance or Clearance Statement (CF-1300); 
Cargo Declaration (CF-1302); Ship's Stores Declaration (CF-1303); 
Crew's Effects Declaration (CF-1304, or optional INS Form, I-418); Crew 
List and I-418; and, Passenger List with I-418.)
    The August 8, 2002, document published in the Federal Register, by 
proposing to require advance filing of Cargo Declaration information, 
specifies that only a portion of a vessel's manifest, the CF 1302 
information, must be presented or transmitted prior to foreign lading. 
This requirement goes only to certain data which is made part of the 
larger manifest requirement. The manifest itself is filed with Customs 
at the time of vessel entry in any of the various ports of the United 
States. No information can be said to be contained in a ``vessel 
manifest'' as provided in section 1431, until the complete manifest is 
made available to Customs. Therefore, the release of information from 
manifests must await their filing of the entire and complete manifest 
with Customs at the time of formal entry of vessels in the United 
States.

Bonds for Non Vessel Operating Common Carriers (NVOCCs)

    Comment: One commenter stated that the proposal to amend provisions 
of the

[[Page 66323]]

Customs International Carrier Bond as presently set forth in Sec.  
113.64 (19 CFR 113.64) would be inappropriate since an NVOCC did not 
actually transport merchandise. Concern was also expressed that an 
NVOCC could be held accountable by Customs for delivery of cargo to an 
incorrect port of unlading by a carrier. Likewise, there was concern 
that an NVOCC could incur manifest violation penalties in instances 
where data was relayed to Customs by the NVOCC at least 24 hours in 
advance of scheduled vessel sailing time, but the vessel then loaded 
and departed earlier than scheduled.
    Customs Response: It is the current practice that vessel agents in 
the United States carry continuous International Carrier Bond coverage 
(19 CFR 113.1). They, likewise, do not transport cargoes. They are 
bonded in order that Customs may be assured that the revenue is 
protected and that prompt satisfaction of any liabilities incurred in 
the course of their dealings with Customs may occur. Likewise, the 
NVOCC community will be dealing with Customs and will be required to 
provide the same level of assurance with respect to the correctness of 
the information they submit. Provided the NVOCC adequately demonstrates 
that cargo declaration information was timely submitted to Customs and 
the carrier then loaded the containers prematurely, the NVOCC will not 
be liable.
    Comment: A commenter inquired as to how Customs would set bond 
amounts for NVOCC activities, and whether guidance to the ports would 
be forthcoming. The concern was that guidelines be made proportional to 
any claims for liquidated damages assessed against these parties.
    Customs Response: Customs port directors retain discretion for 
setting bond amounts in their respective jurisdictions. Customs 
Headquarters does intend to issue policy guidance on bond coverage 
specific to NVOCC activity. As in the past, such guidance will 
establish a minimum bond amount to be required. Using their discretion 
under our regulations, port directors are authorized to set higher 
amounts based upon their experience in the ports of entry.
    The guidelines provided to ports will not include guidance 
regarding proportionality of liquidated damages claims. Such claims 
are, as always, dependent upon the factual circumstances involved in 
any particular transaction relating to the breach of the bond 
conditions.

Permits To Unlade in United States Ports

    Comment: A few commenters addressed the issue of Customs granting 
permits to unlade merchandise in ports of the United States. The 
concern was that an entire vessel could be denied permission to unlade 
in circumstances where only a portion of the cargo was non-compliant 
with the rule on 24 hour advance notification to Customs. Port 
Authorities also expressed concern over potential port congestion.
    Customs Response: The statute governing the issuance of permits to 
unlade merchandise in the United States, 19 U.S.C. 1448, expressly 
provides that no merchandise shall be unladen from any vessel until 
entry has been made and a permit for the unlading of the same has been 
issued by the Customs Service. To the extent that Customs has 
identified a portion of arriving cargo which has not been laden in 
accordance with the requirements of the regulations, Customs has the 
authority to process that portion differently from the remainder. 
Customs will allow unloading of that portion of the cargo that has been 
laden in accordance with the regulations, unless circumstances require 
otherwise.

Liability Concerns and Legal Responsibilities

    Comment: Several commenters raised questions about various 
liability issues specifically relating to which party was legally 
responsible under penalty of law for submitting accurate manifest 
information to Customs; for any errors and omissions that were 
contained in submitted manifests; and for the failure to file manifests 
timely. Additionally, it was asked who would be responsible when 
manifested freight was left behind and was not delivered to the port 
for which it was manifested; or when diversions from or changes to the 
original port of call resulted in freight being delivered to a port 
other than the one for which the freight was manifested.
    Customs Response: Customs may initiate penalty actions against any 
party responsible for providing the required information. For example, 
if a non-vessel operating common carrier (NVOCC) elects to participate 
in the vessel Automated Manifest System (AMS) and transmits its 
information directly to Customs, the NVOCC is the responsible party and 
will be held liable for any manifest information found to be untimely 
presented and/or containing errors or omissions. This would also be the 
case if the NVOCC manifested cargo and the cargo is left behind. Timely 
communication between the vessel carrier and the NVOCC is required in 
order for the NVOCC to amend its manifest information to accurately 
list the cargo that is on board the vessel. Likewise, effective 
communication between the vessel carrier and the NVOCC is essential for 
changes to the ports of call and diversions of the vessel.
    If an NVOCC is a participant in the vessel AMS program, the NVOCC 
will be treated as a carrier for Customs purposes. Vessel operators who 
currently slot charter to other vessel AMS carriers will utilize the 
same procedures for notification that the slot charterer has used in 
providing its manifest to Customs. A slot charterer is a carrier 
leasing space on a vessel owned or operated by another carrier on a 
space available basis. The vessel operator is only responsible for 
ensuring that the NVOCC's Standard Carrier Alpha Code (SCAC), as 
described in 19 CFR 4.7a(c)(2)(iii), is included on the Customs Form 
(CF) 3171 that is presented to Customs. Failure to present the SCAC of 
all NVOCCs and slot charterers on board the vessel will result in a 
penalty against the vessel carrier under 19 U.S.C. 1436.
    Comment: A number of commenters asked for confirmation that Customs 
would not require containers to be off loaded for examination once 
clearance to load had been given. It was asked who would be liable for 
the costs incurred if Customs required unloading of a container at an 
intermediate foreign port.
    Customs Response: Customs will follow the current procedures for 
the examination of containers. Customs does not anticipate that a 
container already loaded in compliance with this rule would be required 
to be unloaded for examination except in exigent circumstances. In 
these rare instances, the carrier will be assessed the costs.

Automated Commercial Environment (ACE)

    Comment: Several commenters questioned how the proposed rule would 
link to the Automated Commercial Environment (ACE) program and whether 
partial bill of lading information could be reported to Customs. It was 
also requested that Customs enlarge the scope of those participants who 
were eligible to provide manifest information to include brokers, 
shippers and importers.
    Customs Response: The current system that Customs utilizes for 
electronic transmissions of vessel manifest data is the Vessel 
Automated Manifest System (AMS) which is a

[[Page 66324]]

component of the Customs Automated Commercial System (ACS). This system 
will not allow for brokers, importers or shippers to input manifest 
information. Additionally, this system will not accept partial bill of 
lading data to be transmitted by the carrier. The carrier will receive 
a reject message on that bill of lading.
    The ACE system is the new automated system being designed by 
Customs and it is in the developmental stages, consequently a precise 
answer as to how this will be handled under ACE is not available now. 
Working groups consisting of representatives from several Government 
agencies and the trade community have been continually meeting to 
ensure all issues and concerns are discussed and presented properly. 
The Trade Support Network (TSN) is one of these working groups and the 
appropriate subcommittee of the TSN will examine how the ACE program 
will meet the objectives of this rulemaking. Interested parties can get 
additional information as to the development of the ACE program at 
www.customs.gov. Users should select the Customs Modernization icon on 
the website, then type the letters ``TSN'' into the search box.

Maintaining a Paper Manifest on Board the Vessel

    Comment: Several commenters referred to the need for vessel 
carriers to maintain an original/copy of the manifest on board the 
vessel.
    Customs Response: The requirement to carry the paper manifest on 
board the vessel was waived during a Vessel Paperless Manifest Test. 
The test procedures will be amended by the effective date of this rule 
to state that vessel carriers must submit their cargo declaration 
information to Customs 24 hours prior to lading at a foreign port. The 
participants in the Vessel Paperless Manifest Test will not be required 
to maintain a paper copy of the manifest on board the vessel; however, 
one must be provided upon request. All carriers not participating in 
the test must maintain a paper copy of the complete manifest on board 
the vessel.
    Comment: Several commenters inquired whether carriers would be 
required to submit a final manifest prior to arrival in order to be 
permitted to unlade or whether the individual manifest reports 
submitted in advance would suffice.
    Customs Response: The distinction between a manifest and a cargo 
declaration must be appreciated. The cargo declaration is one of 
several documents which, when taken together, constitute a vessel 
manifest. In this rulemaking, by requiring the submission of cargo 
declaration information 24 hours prior to lading, Customs is 
eliminating the requirement for vessel carriers to submit an additional 
cargo declaration upon arrival in the United States. However, the 
remaining documents comprising the vessel manifest must be available 
for presentation upon entry of the vessel.

Requirements for U.S. Virgin Islands

    Comment: Various commenters sought clarification as to whether 
vessels operating from the U.S. Virgin Islands to the United States 
were included in the proposal. It was pointed out that shipments from 
the continental United States to Puerto Rico, Hawaii or Alaska would 
not be subject to the proposed advance manifest regulations.
    Customs Response: Vessels destined to Puerto Rico, Hawaii, and 
Alaska from the continental United States are considered to be 
operating between points in the Customs Territory. The U.S. Virgin 
Islands is located outside the Customs Territory and therefore vessels 
departing from there to the U.S. are subject to the 24 hour advanced 
manifest rule.

Military Cargo

    Comment: A number of commenters asked if the proposed rule applied 
to military cargo or other government shipments.
    Customs Response: Carriers of military cargo and other U.S. 
Government shipments are required to comply with the advance manifest 
regulations.

Clarification of Data Elements

    Comment: Several commenters requested clarification of the data 
elements required to be included on the cargo manifest.
    Customs Response: Customs has revised the regulations to include 
additional explanation and descriptive information, where appropriate, 
for those data elements that must be contained in the vessel's cargo 
manifest.
    Comment: Several commenters stated that requiring a precise 
description of the cargo would result in ``dummy'' information being 
presented to Customs and that certain data elements were not known 
until after the lading of containers. Additionally, if shippers were to 
attempt precise cargo descriptions, the result would be numerous 
corrections having to be made to the manifest as the vessel approached 
the United States.
    Customs Response: The so called ``dummy'' cargo descriptions are 
exactly what Customs cannot accept because they undermine our efforts 
to target threats to national security. Therefore, Customs is now 
requiring accurate cargo descriptions. Generic descriptions, 
specifically those such as ``FAK'' (``freight of all kinds''), 
``general cargo,'' and ``STC'' (``said to contain'') are not 
acceptable. Moreover, general characterizations such as ``chemicals'' 
or ``foodstuffs'' will be considered overbroad.
    Comment: Several commenters requested clarification on whether the 
proposed rule required the consignee name to be listed, or if it 
required the consignee name only if one were already provided when 
cargo was presented for shipment. Clarification was specifically 
requested on: Whether the owner or owner's representative meant the 
cargo owner; if there were a consignee, whether the shipper could 
decline to disclose the consignee by naming the cargo owner; and, 
whether the owner was to be listed only if there were no consignee 
indicated.
    Customs Response: The only time a consignee name would not be 
recorded is in the case of ``to order'' shipments where the merchandise 
is sold in transit. Many ``to order'' entities are listed as the 
consignee. A ``to order'' consignee is not the true consignee, but 
rather only an interested party, such as a bank, which is securing 
payment. Either the party holding title to the goods (the owner) or 
that party's representative has the real interest in a shipment. 
Accordingly, the owner or owner's representative is the party that must 
be listed in place of the consignee in the case of ``to order'' 
shipments. If the consignee's name is available, however, the shipper 
must disclose this information.
    Comment: A number of commenters requested that Customs clarify 
which seal number had to be provided: The seal of the shipper, the seal 
of the shipping line, or the Customs seal. Other commenters requested 
clarification on whether all loaded containers had to have an affixed 
seal.
    Customs Response: For all sealed containers, the number that must 
be identified is the seal number of the last person/company to load the 
container. Participants in C-TPAT (The Customs-Trade Partnership 
Against Terrorism) must affix seals to all loaded containers.
    Comment: Some commenters asserted that it was impossible to report 
the ``actual boarded quantities'' as required by proposed Sec.  
4.7a(c)(4)(x) 24 hours before the cargo was ``actually'' boarded.
    Customs Response: Customs recognizes the validity of the comments. 
Accordingly, we are removing this data element from the final rule. 
This matter

[[Page 66325]]

will be addressed in a separate Federal Register Notice of Proposed 
Rulemaking concerning Manifest Discrepancy Report filing.

Co-Loading

    Comment: Commenters questioned whether the proposed rulemaking 
would put an end to ``co-loading.'' Co-loading would occur when several 
NVOCC firms combined their cargo for movement under one NVOCC's master 
bill of lading, and each NVOCC had its own sub-set of house bills of 
lading and related manifests. Specifically, the scenario was presented 
where an automated NVOCC co-loaded with a non-automated NVOCC and the 
non-automated NVOCC presented the container to the vessel carrier. The 
question posed in this context was whether the manifest information 
would remain confidential and not be provided to the vessel carrier. In 
addition, clarification was requested as to whether the shipper, 
consignee, and cargo description information from all NVOCC house bills 
of lading (Master NVOCC and co-loading NVOCC) had to be included in the 
advance cargo manifest filing.
    Customs Response: The rulemaking will not put an end to co-loading. 
If an automated NVOCC co-loads with a non-automated NVOCC and the non-
automated NVOCC presents the container to the vessel carrier, the 
automated NVOCC is required to present its own bill of lading for that 
shipment directly to Customs via vessel AMS. The non-automated NVOCC 
must fully disclose and present the required manifest information for 
the related cargo to the vessel carrier for presentation to Customs via 
vessel AMS. Automated NVOCCs will not be authorized to submit paper 
manifests to the vessel carrier. The automated NVOCC who is co-loading 
should be aware, however, that its shipment could be held for 
examination based on Customs not receiving timely manifest information 
in the United States.
    If the situation is reversed and the non-automated NVOCC co-loads 
with the automated NVOCC with the automated NVOCC presenting the 
container to the vessel carrier, the automated NVOCC is required to 
transmit all bills of lading in the container via vessel AMS. Non-
automated NVOCCs that have shipments as part of a co-loaded container 
must fully disclose and present the required manifest information for 
their cargo to the automated NVOCC who would be required to present 
this information to Customs via vessel AMS. Each individual shipment 
must be input into the vessel AMS program with each individual shipper 
and consignee being identified along with the cargo description. Bills 
of lading stating the non-automated NVOCC to be either the shipper or 
consignee or setting forth the cargo description as ``consolidation'' 
is not authorized.
    Non-automated NVOCCs thus have two options to submit manifest 
information to Customs. The options are: (1) Submit manifest 
information, in paper, directly to the vessel carrier who is required 
to input all bills of lading from the non-automated NVOCC into the 
vessel AMS program; or (2) Become a participant in the vessel AMS 
program and submit manifest information to U.S. Customs either directly 
or through an automated Service Provider, Port Authority, or Vessel 
Agent. Only under the second option will the manifest information of a 
non-automated NVOCC remain confidential (not be disclosed to the vessel 
carrier). In any case, regardless of the option chosen, the non-
automated NVOCC is required to abide by the 24 hour advance manifest 
rule.
    As stated in 19 CFR 4.7a, NVOCCs that receive cargo in sealed 
containers from the shipper can rely on the shipper's declaration. This 
section provides specific language to be used with ``shippers load and 
count.'' However, in vessel AMS the shipper must be identified, not the 
NVOCC.

Vessel AMS Procedures

    Comment: Several commenters indicated that vessel AMS needed to be 
programmed to allow for the ocean carrier to update certain data 
elements even if the ocean carrier had not initiated the data 
transmission. In addition, requests were made to allow for a single 
transmission of individual bills of lading to Customs.
    Customs Response: The AMS program does not allow parties to change, 
add or delete manifest information on a transaction they have not 
initiated. Ocean carriers, NVOCCs and slot charterers need to 
communicate and provide lading information to the responsible parties 
in order to eliminate the possibilities that either cargo is laden on 
board without being properly manifested, or without appropriate changes 
being made to the bills of lading. The vessel AMS program was not 
designed to allow for the transmission of individual bills of lading, 
and such transmissions must be sent by batch. This matter is under 
review for inclusion in the ACE program.
    Comment: Several commenters requested clarification of the 
procedures upon vessel arrival in the first U.S. port relating to 
manifest filing, and time frames for submitting to Customs a permit to 
unlade on Customs Form (CF) 3171.
    Customs Response: Vessel carriers must submit their CF 3171s 48 
hours prior to arrival in the United States. Except for participants in 
the vessel paperless manifest test, vessel carriers, NVOCCs and slot 
charterers are required to submit manifests for empty containers on 
board to U.S. Customs 24 hours prior to arrival in the United States.
    Comment: Some commenters requested clarification on the process by 
which vessel carriers and NVOCCs, who were not automated, would present 
their paper manifests to Customs for both CSI and non-CSI ports. 
Clarification was also requested on the process for submitting manifest 
information to Customs during computer down times and when unsuccessful 
transmissions occurred.
    Customs Response: In presenting paper cargo declaration information 
to Customs at a CSI port, the authorized representative for the vessel 
carrier is required to submit directly to U.S. Customs officials at a 
designated site for that CSI port. The exact procedures for this 
process will vary from country to country based on various agreements 
signed under the CSI program. Each CSI location will determine the 
process based on these agreements. The U.S. Customs Service will 
provide detailed information to the trade community upon completion of 
signed agreements in each of the CSI locations.
    For those vessel carriers presenting paper cargo declaration 
information to Customs at non-CSI ports, the companies are responsible 
for ensuring that their cargo declaration information is provided to 
Customs in the United States 24 hours prior to lading at the foreign 
port. Facsimiles and non-AMS electronic messages sent directly to 
Customs are not authorized. Non-automated vessel carriers may either 
enlist the automated services of a Vessel Agent, Service Provider, 
local Port Authority, or a business partner in the U.S. The domestic 
party in receipt would deliver the cargo declaration information 
directly to Customs. Paper cargo declaration information must be 
presented to each intended U.S. port of arrival 24 hours prior to 
lading at a foreign port. However, due to the fact that the non-
automated vessel carrier has elected to submit paper cargo declaration 
information directly to Customs in the United States, the non-automated 
carrier is responsible for ensuring that complete cargo

[[Page 66326]]

declaration information for each port of call in the United States (via 
the paper procedure outlined in the paragraph below) is submitted to 
each Customs location for review 24 hours prior to lading at the 
foreign port. Failure to do so could result in penalties or denial of 
unlading privileges.
    In presenting cargo declaration information to Customs, a non-
automated vessel carrier may utilize an automated domestic Vessel 
Agent, Service Provider, or Port Authority; or the non-automated 
carrier may utilize either an automated or non-automated business 
partner. Where the carrier utilizes an automated party to present cargo 
declaration information electronically to Customs, notification of 
holds will be conducted via the vessel AMS program. However, if a non-
automated vessel carrier chooses to submit its information via a 
domestic representative using paper, Customs will notify the local U.S. 
representative of any holds. This notification will be indicated on a 
document that the local representative may pick up at the Customs port 
offices. It will be the local U.S. representative's responsibility 
either to provide necessary information to the ocean carrier or to 
provide a copy of relevant documentation to the foreign entity who in 
turn must provide a copy to the ocean carrier. Port directors in local 
ports will provide the details on the location for submitting paper 
cargo declaration information and the location and time that the 
notification document can be obtained.
    In presenting cargo declaration information to Customs, non-
automated NVOCCs may utilize an automated Service Provider, Vessel 
Agent, or Port Authority; however, a non-automated NVOCC may not 
utilize a non-automated business partner. U.S. Customs will not accept 
paper cargo declaration information from any automated party, which has 
originated from a non-automated NVOCC.
    With reference to unsuccessful transmissions through the vessel AMS 
program, Customs conducts testing programs with the participants prior 
to their going on-line to ensure that their computers are both sending 
and receiving accurate messages. Customs will not allow a company to go 
on-line if they have not successfully completed this testing program.
    The down time issues that have been raised are outlined in current 
Customs Directive 3240-075, Vessel Automated Manifest System, that is 
available to the trade community. Current acceptable down time is 2 
hours; however, it is within the port director's discretion to allow 
more than the recommended 2 hours if circumstances warrant. Carriers 
whose systems are down for extended periods of time should notify their 
assigned client representative and refer to the procedures outlined in 
the directive on how to submit paper cargo declaration information to 
Customs.
    Comment: Various commenters asked that Customs authorize exemptions 
for submission of any data elements which were viewed as being out of 
the control of an NVOCC.
    Customs Response: The vessel AMS program will not accept an absence 
of data elements. If all required information is not entered, the 
vessel AMS program will send a rejection message to the transmitting 
party. We note that there are slot charterers who are automated and who 
have been consistently operating without any difficulty. Vessel 
carriers, NVOCCs and slot charterers must have procedures in place so 
that if containers have been manifested by an NVOCC or a slot charterer 
and subsequently are not laden, the vessel carrier must notify the 
NVOCC or slot charterer in order that they may amend their manifests to 
show corrected information.
    Comment: Some commenters inquired as to how Customs would know when 
goods had been laden since the lading process was one that occurred 
over a period of time.
    Customs Response: Customs considered requiring an additional data 
element for carriers to indicate the estimated time of lading. It was 
determined that such a requirement would be an additional burden to the 
carriers, and potentially unnecessary. Carriers understand the 
logistics of their business, and Customs will rely on them to provide 
the required information 24 hours prior to lading. Indeed, they have 
every incentive to do so--in addition to penalties, any carrier that 
begins the lading process without providing manifest information 24 
hours before will be required to remove any containers that are 
identified for examination and which have already been laden.
    Comment: Several commenters asked about the procedures needed to 
identify the initial manifest transmission to Customs and when 
amendment transmissions were made to the manifest.
    Customs Response: The vessel AMS program has a transaction screen 
that allows the inspector to view all postings against each bill of 
lading. This means that each time a bill of lading is changed, added or 
deleted, Customs receives these transactions.
    Comment: A few commenters requested clarification on how the ocean 
carrier would determine if an automated NVOCC had submitted manifest 
information directly to Customs.
    Customs Response: Vessel AMS has a field identified as the Second 
Notify Party. The Second Notify Party lets the vessel carrier know when 
a bill is on file, and gives the vessel carrier the hold messages as 
well as all associated releases. Although this has not been a mandatory 
field in the past, Customs will now require this field to be completed 
by all automated NVOCCs and slot charterers.
    Comment: It was asserted that if a hold notification were not sent 
to the carrier at the port of loading but rather to an NVOCC located in 
a different time zone from the carrier, it would affect being able to 
respond rapidly to requests from Customs. It was observed that 
different time zones could cause confusion as to when the 24 hour 
period had expired.
    Customs Response: Carriers and NVOCCs will have to establish lines 
of communication for such circumstances. Customs will send 
notifications of a bill of lading on file to the party that provided 
the information to Customs in vessel AMS. The bill on file with Customs 
has a date and time stamp in vessel AMS, using Eastern Standard Time. 
Additionally, utilization of the Second Notify Party function in vessel 
AMS will allow for provision of additional information to the vessel 
carrier when an automated NVOCC or slot charterer receives hold 
messages on containers.

Load/No Load Messages to the Carriers

    Comment: Several commenters requested that carriers be given 
confirmation for every container or shipment that Customs approved for 
lading. Some commenters inquired as to whether an absence of 
notification to carriers by Customs would serve as an authorization for 
lading. Other commenters requested that carriers be allowed to begin 
lading after a specified period of time, but prior to the expiration of 
the 24 hour period.
    Customs Response: Customs agrees in principle with the notion of 
providing electronic confirmation messages to carriers which would 
authorize the lading of containers. However, the necessary programming 
cannot be accomplished before the regulations are implemented. Research 
will be undertaken to determine whether this capability in the vessel 
AMS program is feasible.
    Until the completion of work in vessel AMS allowing confirmation 
messages, Customs will not allow lading prior to expiration of the 24 
hour period and

[[Page 66327]]

will utilize the current operating procedures under which filers 
receive hold messages only.

Business Practice Issues

    Comment: Numerous commenters questioned the viability of obtaining 
detailed manifest information 24 hours prior to loading of cargo on 
board a vessel. In this respect, some commenters expressed concern over 
the impact of the requirement on the efficiency of their commercial 
operations, while other commenters focused more on the financial impact 
of the 24 hour requirement on their operations.
    A major concern was that movement of cargo would be disrupted and/
or delayed due to the detailed level of manifest information required 
because the information may not readily be available before cargo is 
loaded onto a vessel. It was feared that the new requirements could 
cause cargo to miss sailing dates and remain at docks which did not 
have adequate security or space available to store containers.
    The issue concerning financial impact involved changing business 
practices such as: Routing of vessels, work practices, personnel 
increases, automation costs including the cost of acquiring a bond, and 
the leasing of storage facilities.
    Customs Response: With regard to the concern that the proposed rule 
may adversely affect the efficiency of international shipping 
operations, Customs recognizes this legitimate concern and has taken at 
least three steps to address it in the development of the CSI and this 
rulemaking. First, it is important to note that it is the information 
about the contents of a shipping container, not the container itself, 
that must be presented to Customs 24 hours prior to lading at a foreign 
seaport. Under this rule, so long as the required information is 
provided to Customs 24 hours in advance of lading, the container itself 
may be brought to the seaport at a later time. Second, the development 
of this rule and the CSI have been designed to take advantage of the 
existing shipping cycle. In most foreign seaports, containers destined 
for the United States are often stored at terminals for several hours 
or several days before lading. This provides ample opportunity for 
Customs and its foreign CSI partners to identify and screen potentially 
high-risk containers within the normal shipping cycle and without 
causing any unnecessary delays. Third, as noted above, by screening 
potentially high-risk containers at foreign seaports during the normal 
shipping cycle, Customs should be able to significantly expedite the 
movement of containers upon arrival in the United States. This should 
not only reduce delays associated with targeting and screening 
containers upon arrival in the United States, it should also add 
greater predictability to the movement of containers through domestic 
seaports.
    Customs recognizes that some changes to business practices may be 
required in order to transmit the manifest data required under this 
rule. For example, although much, if not all, of the data required by 
Customs is available prior to lading because it is derived from 
information in the possession of carriers and NVOCCs or contained in 
the commercial documents generated prior to lading, Customs recognizes 
that businesses may not currently be configured to collect and transmit 
such information in compliance with the rule. This is one of the 
reasons that Customs has elected to phase-in enforcement of the rule 
over a 60 day period after the regulation goes into effect--to strike 
an appropriate balance between the needs of business and the need of 
the government to address the immediate threat that international 
terrorist organizations pose to the United States and the global 
economy.
    Customs also recognizes that not all potential changes to supply 
chain or business practices can be anticipated in the promulgation of a 
proposed rule or in the comments it generates. Accordingly, Customs 
will carefully monitor the implementation of the rule and, as noted 
above, Treasury is inviting COAC to create a subcommittee to advise 
Customs on operational concerns arising from the implementation.
    Comment: It was contended that requiring cargo manifest information 
to be submitted to Customs 24 hours before lading the cargo aboard the 
vessel at a foreign port would run counter to the ``just in time'' 
inventory practices in wide use today.
    Customs Response: Customs is requiring transmissions of cargo 
declaration information 24 hours in advance. Customs is not requiring 
that the cargo be ready for inspection or that the cargo be at the 
dock. However, Customs recognizes that this final rule could cause 
vessel carriers to change the current practice of sometimes adding last 
minute loads to vessels, but only if such loads were not manifested 24 
hours prior to their lading.
    Nonetheless, as noted above, most cargo destined for the United 
States sits at the foreign port for several hours to several days 
before lading. This regulation will have no effect on that practice.
    Comment: Numerous commenters requested generally that procedures 
required under the proposed rule be clarified. Many of these commenters 
addressed issues involving private contractual agreements between trade 
partners. Other matters where it was stated that further clarification 
was needed dealt with process and manifesting requirements of carriers, 
NVOCCs, involved ports, transshipment, and feeder vessels.
    Customs Response: To the extent that trade partners may enter into 
private contractual agreements, Customs would have no involvement. 
Required information will include the data elements mentioned in the 
rulemaking along with the information that is required on the cargo 
declaration (CF 1302). These requirements apply at all foreign ports 
where an inward foreign vessel carrier lades cargo destined to the 
U.S., including FROB (Foreign Cargo Remaining On Board) which is not 
going to be unladen in the United States. The term ``inward foreign 
carrier'' applies to all vessels coming from foreign locations to the 
U.S. A vessel that transships cargo between foreign locations or a 
vessel that does not call on a U.S. port is not required to submit 
manifest information under this rulemaking.
    The inward foreign vessel carrier that calls on many foreign ports 
before the U.S. will not have to re-transmit cargo declaration 
information already provided from previous foreign ports. Multiple 
original manifest transmissions can be submitted for the same carrier, 
vessel or voyage so long as AMS vessel arrival has not occurred. 
Carriers will only be required to transmit new cargo declaration 
information for each port of lading. Any NVOCCs and slot charterers, 
who are authorized to transmit manifest data in vessel AMS, will be 
subject to the same requirements as the vessel carrier to provide 
manifest information on cargo destined to the U.S., including FROB, as 
defined later in this document, at each foreign port of lading.

Lead Time

    Comment: Several commenters asked about the time frame that would 
be given to implement the proposed rulemaking. There were two suggested 
time frames for implementing the advance manifest regulations that were 
mentioned repetitively by the commenters: one requested a lead time of 
six months, and the other requested one year to implement a phased-in 
approach.
    Customs Response: This rulemaking responds to an urgent national 
security

[[Page 66328]]

issue and must be implemented promptly. Customs must begin receiving 
advanced cargo declaration information to strengthen CSI and to reduce 
the risk of smuggling weapons of mass destruction and other contraband 
into the United States. As previously mentioned, however, in 
recognition of industry concerns, Customs has determined to delay full 
enforcement for a period of 60 days following the effective date of the 
new requirements. This, when taken together with the 30-day post 
publication period generally provided, will allow a total of 90 days 
from publication date to full enforcement.

Proposed Rule Will Result in Loss of U.S. Ports Business to Canadian 
Ports

    Comment: A number of the commenters were concerned that they would 
lose business to Canadian ports due to the new regulations. They feared 
that cargo would initially go to Canada and then come to the U.S. via 
truck/rail to circumvent the regulations.
    Customs Response: Customs has targeting personnel stationed at 
seaports in Canada and cooperation with Canadian authorities has been 
excellent. If either Customs administration suspected that goods were 
being routed in an attempt to evade scrutiny, those goods would be 
likely to be treated as high risk.

Requirements for ``FROB'' CARGO and NVOCCs

    Comment: Several commenters questioned whether the new regulations 
would apply to FROB cargo (Foreign Cargo Remaining On Board). They also 
stated that carriers could refuse U.S. bound cargo once faced with the 
new requirements.
    Customs Response: The definition of ``FROB'' cargo is cargo that is 
loaded in a foreign port and which is to be unloaded in another foreign 
port with an intervening vessel stop in one or more ports in the United 
States. Customs considers ``FROB'' cargo a security concern because 
although the cargo does not have a final destination in the U.S., the 
cargo is transiting the U.S. Currently, carriers must correctly report 
FROB cargo upon arrival in the United States. Under the new 
regulations, FROB cargo must be reported 24 hours in advance of 
loading.

Request That Carrier Be Exempt From Rule if Participant in C-TPAT

    Comment: Several commenters that were participants in C-TPAT (the 
Customs-Trade Partnership Against Terrorism) requested that they either 
be exempted from the advance manifest regulations or that they be 
allowed to present cargo manifest information at some point before the 
vessel arrived in the United States, rather than before the vessel 
departed from the foreign country. It was further requested that there 
be maintained a ``known shipper list'' which could enable Customs to 
expedite cargo clearance. These commenters also sought the ability to 
make changes to manifest information without time constraints being 
imposed.
    Customs Response: While C-TPAT participants will not be excluded 
from the advance reporting requirements, their participation will be 
taken into account during the targeting process.

A Denial/Delay in Granting Permit To Unlade Will Cause Port Congestion

    Comment: A number of commenters, specifically Port Authorities, 
were concerned that if permits to unlade were denied the result could 
be congestion at U.S. ports.
    Customs Response: Permits may be granted to unlade properly 
manifested merchandise on a vessel but denied for the remainder of the 
cargo for which manifest information has not been accurately and/or 
timely received by Customs. Thus, depending on the circumstances, only 
that portion of the cargo for which advance information is not provided 
may not be unladen. Moreover, if the advance information is not timely 
provided, the subject cargo should not be laden on the vessel. 
Therefore, there is no reason to conclude that this final rule will 
cause congestion at U.S. ports.

Time for Presenting Manifest Should Be When Vessel Departs or Later

    Comment: Several commenters stated that the ability to submit their 
manifest at time of foreign departure or later would be more feasible.
    Customs Response: The purpose of this rulemaking is to allow 
sufficient time for U.S. Customs to review and target cargo that may 
pose a threat to the U.S., specifically weapons of mass destruction, 
including nuclear and radiological materials and weapons, and to deny 
that cargo from being loaded on board vessels before they depart for 
the U.S. Having to interdict such cargo once it reaches our shores 
would simply be too late. Customs believes that the 24 hour period 
specified in the advance cargo declaration regulations is essential to 
achieving this goal.

Need for Risk Analysis Regarding Implementation of 24 Hour Rule

    Comment: Some commenters suggested that Customs conduct a risk 
analysis before implementing the 24 hour rule.
    Customs Response: As noted above, Customs has analyzed the risks 
that international terrorists pose to the United States and the global 
trading system. These risks are profound. This analysis led to the 
development of CSI and the promulgation of this 24 hour advance cargo 
declaration rule.

The 24 Hour Requirement Is Too Long for Short Voyages/Hauls

    Comment: Several commenters indicated that 24 hours was too much 
time to ask for information in advance for voyages that were less than 
24 hours in length.
    Customs Response: Customs will not exempt short hauls from the 
regulation. Cargoes placed aboard vessels on short voyages pose the 
same potential risks as those laded aboard vessels on longer voyages. 
Customs recognizes that compliance with the regulations may require 
certain changes in business practices, as previously discussed, but 
these changes are necessary to protect the United States and global 
shipping.

Handling of Empty Containers Aboard Vessels

    Comment: Several commenters asked whether the advance manifest 
regulations required that empty containers be manifested and whether, 
if so, information would have to be submitted to Customs 24 hours in 
advance. Additionally, it was stated in this connection that empty 
containers were used to complete stowage plans and were loaded at the 
last minute, depending on available space. It was stated that carriers 
would be faced with additional costs for the storage of empty 
containers if they did not make the voyage.
    Customs Response: Carriers will not be required to submit 
information on empty containers 24 hours in advance of lading. For 
vessel AMS participants, information on empty containers must be 
submitted on a single bill of lading which lists all container numbers. 
For those carriers that present paper cargo declarations, empty 
containers must be listed on a single paper bill of lading with all 
container numbers listed. Submission of the empty container manifest 
information, whether paper or automated, will be due to U.S. Customs at 
least 24 hours prior to arrival in the United States, with the 
exception of those participants in the current vessel paperless 
manifest test, who must continue to file manifest information for empty 
containers 48 hours prior to arrival in the United States.

[[Page 66329]]

Correction of Manifest Information

    Comment: Several commenters raised the question of whether they 
would be permitted to update information which was provided to Customs 
prior to lading while they were enroute to the United States.
    Customs Response: The main goals of the advance cargo declaration 
information program are (1) to receive accurate information (2) prior 
to lading in a foreign port. Only in this way can Customs use all of 
its targeting tools to identify potentially high risk shipments and 
prevent them from being placed aboard vessels in the first place. 
Accurate information is essential if Customs is going to be successful 
in preventing terrorists from using sea carriers to transport 
instruments of terrorism to the United States. We recognize, however, 
that updated or different information may be provided to carriers after 
lading. As this information would assist in our efforts to assess the 
risks associated with those shipments, we would expect to be provided 
with such information, and will ensure that there are mechanisms to do 
so. It must be understood, however, that an acceptance of certain 
changes in information after foreign lading will not justify any 
initial submission which is not, to the best information and belief of 
the filer, true and complete at the time of submission. Indeed, Customs 
will not tolerate such practices.
    Customs recognizes that to accommodate manifest updates and 
changes, amendments will be necessary to our regulations governing the 
filing of Manifest Discrepancy Reports. Such changes will be the 
subject of a separate Federal Register publication as soon as possible.
    Comment: Several commenters inquired about manifest discrepancy 
reports. It was asked whether carriers would be able to rely on the 
shippers' declaration regarding the contents of sealed containers. In 
addition, confirmation was requested that carriers would not be subject 
to penalties for incorrect manifest information provided by shippers.
    Customs Response: As indicated in the prior response, Customs will 
be providing new rules for manifest discrepancy reports. A Notice of 
Proposed Rulemaking covering that matter will be published in the 
Federal Register. Until such time, carriers must continue to follow the 
current regulations concerning manifest discrepancy reports. This 
includes the guidelines for carriers using the shipper's declaration on 
sealed containers. Customs will not allow the manifest discrepancy 
report to be utilized in lieu of the provision of accurate and complete 
manifest information under the 24 hour rule.

Regulatory Flexibility Act; Executive Order 12866

    Comment: Three commenters contended that the proposed advance 
manifest regulations would have a significant economic impact on a 
substantial number of small businesses, specifically non-vessel 
operating common carriers (NVOCCs), under the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et seq.), and thus should be subject to the 
preparation of a regulatory flexibility analysis as provided under the 
RFA. Two of these commenters also asserted in this context that the 
proposed rule constituted a ``significant regulatory action'' under 
E.O. 12866.
    Customs Response: Customs is requiring advance manifest information 
in order to improve security at our nation's seaports and to more 
effectively enforce against all types of smuggling through our nation's 
borders. The information that Customs is collecting pursuant to this 
rulemaking is a necessary part of accomplishing these goals. Because 
the information being requested is information to which the master of 
the vessel should already have access, there is no indication that 
providing the additional information on the Customs Form (CF) 1302 to 
Customs 24 hours in advance of lading at the foreign port would result 
in a significant economic impact on a substantial number of small 
businesses.
    Moreover, Customs has given the option to any small businesses 
involved in providing this information of providing the advance 
manifest information in paper form, rather than electronically, for 
those businesses that are not yet automated. Likewise, for those 
businesses that are automated, the advanced electronic filing would 
ultimately reduce filing costs because of the ability to submit the 
information electronically directly to Customs. Further, Customs has 
allowed for a delay of implementation of the new regulations in order 
to allow time for businesses to adjust to the new filing requirements.
    Finally, none of the commenters has submitted evidence to Customs 
demonstrating the way in which these regulations would have a 
significant economic impact on small businesses. As such, Customs 
stands by its initial certification that a regulatory flexibility 
analysis pursuant to the Regulatory Flexibility Act is not applicable 
here.
    Additionally, whether the Regulatory Flexibility Act applies to 
certain entities in a rulemaking turns on whether such entities are the 
``targets'' of the rulemaking. To this end, the advance cargo manifest 
regulations that are the subject of this rulemaking are based upon 19 
U.S.C. 1431. In pertinent part, 19 U.S.C. 1431(b) requires the master 
of a vessel (that is, the vessel carrier) to provide vessel cargo 
manifest information to Customs. It is thus the vessel carriers 
themselves to which these regulations are directed, and carriers are 
ultimately responsible under these regulations for providing mandatory 
cargo manifest information to Customs.
    There is no requirement that NVOCCs participate in these advance 
manifest regulations; rather, Customs is merely affording NVOCCs the 
option under these regulations to provide cargo manifest data directly 
to Customs on behalf of the vessel carrier in order to protect what the 
NVOCC believes to be confidential business information. If NVOCCs do 
not wish to participate in the filing of advance cargo manifest 
information with Customs, the NVOCCs may properly elect to provide such 
information to the vessel carriers directly, for it is the vessel 
carriers, as emphasized above, that are obligated under these 
regulations to furnish this information to Customs. At most, therefore, 
the NVOCCs referenced in this rule are only indirectly affected by the 
subject regulations due to the nature of their business relationship 
with the vessel carriers.
    In sum, no specific evidence was submitted by commenters 
establishing that there are a substantial number of small entities that 
are ``targets'' of the rulemaking.
    Because Customs recognizes there will be costs involved in 
businesses changing their practices to comply with these national 
security-driven regulations, Customs will phase-in full implementation 
of this advance manifest rule over a period of 90 days. Specifically, 
these regulations will not be effective until 30 days after the date of 
publication of this final rule in the Federal Register. In addition, 
Customs will not initiate any enforcement actions such as assessing 
penalties for non-fraudulent violations of these regulations until 60 
days after the effective date of this final rule. This phased-in 
implementation regime should reduce and minimize costs involved in 
complying with the new regulations.
    Accordingly, the certification set forth in the proposed rule 
relating to the inapplicability of the Regulatory Flexibility Act in 
this case is revised in

[[Page 66330]]

this final rule to reflect the foregoing considerations.
    Also, we do not believe that this national security-related rule 
constitutes a ``significant regulatory action'' under E.O. 12866.

Paperwork Burden

    Comment: Several commenters stated that the accuracy of the 
agency's estimate of the information collection burden published in the 
proposed rule was vastly understated. It was stated that the numbers 
did not take into consideration the added time and paperwork, even in 
an automated environment, that will be required by the need for earlier 
information as supply chain documentation requirements will need to be 
overhauled.
    Customs Response: Customs agrees with the commenters that the 
estimate of the information collection burden published in the notice 
of proposed rulemaking is understated and, accordingly, is upwardly 
adjusting the estimate of the burden.
    Customs notes that the adjustment it is making to the estimated 
burden hours is not entirely due to the requirement to provide manifest 
information 24 hours prior to lading. Based upon the comments, Customs 
reviewed the previously approved information collection burden for 
preparing the vessel manifest and concluded that those numbers needed 
an upward adjustment. Accordingly, the upward adjustment stated in this 
document reflects both an adjustment due to this rule and an adjustment 
to the numbers that existed for the previous long-standing manifesting 
requirement.
    Regarding any increase in burden due to overhaul of supply chain 
documentation requirements, Customs agrees that the number of hours 
spent collecting information may initially be high while business 
practices are adjusting. Eventually, however, Customs expects that the 
burden will decrease as the supply chain gets used to the new way of 
doing business.

Adoption of Proposal

    In view of the foregoing, and following careful consideration of 
the comments received and further review of the matter, Customs has 
concluded that the proposed regulations with the modifications 
discussed above should be adopted as a final rule.

Regulatory Flexibility Act and Executive Order 12866

    As stated in Customs response above, Customs is requiring advance 
manifest information in order to improve security at our nation's 
seaports and to more effectively enforce against all types of smuggling 
through our nation's borders. The information that Customs is 
collecting pursuant to this rulemaking is a necessary part of 
accomplishing these goals. Because the information being requested is 
information to which the master of the vessel should already have 
access, there is no indication that providing the additional 
information on the Customs Form (CF) 1302 to Customs 24 hours in 
advance of lading at the foreign port would result in a significant 
economic impact on a substantial number of small businesses.
    Moreover, Customs has given the option to any small businesses 
involved in providing this information of providing the advance 
manifest information in paper form, rather than electronically, for 
those businesses that are not yet automated. Likewise, for those 
businesses that are automated, the advanced electronic filing would 
ultimately reduce filing costs because of the ability to submit the 
information electronically directly to Customs. Further, Customs has 
allowed for a delay of implementation of the new regulations in order 
to allow time for businesses to adjust to the new filing requirements.
    Finally, none of the commenters has submitted evidence to Customs 
demonstrating the way in which these regulations would have a 
significant economic impact on small businesses. As such, Customs 
stands by its initial certification that a regulatory flexibility 
analysis pursuant to the Regulatory Flexibility Act is not applicable 
here.
    The advance presentation to Customs of vessel manifest information 
for cargo destined for the United States as prescribed in this final 
rule is intended to expedite the release of incoming cargo while, at 
the same time, ensuring maritime safety and protecting national 
security. To this end, it is the vessel carriers themselves, which are 
mostly very large concerns, to which these regulations are targeted and 
that are ultimately responsible under these regulations for providing 
mandatory cargo manifest information to Customs.
    By contrast, regarding non-vessel operating common carriers 
(NVOCCs), many of which are asserted to be small businesses, there is 
no requirement whatever that these entities participate in these 
advance manifest regulations; rather, Customs is merely affording 
NVOCCs the option under these regulations of providing cargo manifest 
data directly to Customs on behalf of the vessel carrier in order to 
protect what the NVOCC believes to be confidential business 
information. At best, therefore, the NVOCCs referenced in this rule are 
only indirectly affected by the subject regulations due to the nature 
of their business relationship with the vessel carriers. Hence, if 
NVOCCs do not wish to participate in the filing of advance cargo 
manifest information with Customs, the NVOCCs may properly elect to 
provide such information to the vessel carriers directly, for it is the 
vessel carriers, as emphasized above, that are obligated under these 
regulations to furnish this information to Customs.
    Given the above reasons, pursuant to the provisions of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.), it is certified that 
these final regulations do not have a significant economic impact on a 
substantial number of small entities. Accordingly, these 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 for a ``significant 
regulatory action'' as specified in E.O. 12866.

Paperwork Reduction Act

    The collection of information in this final rule document was 
submitted for review and has been approved by the Office of Management 
and Budget (OMB) in accordance with the requirements of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1515-
0001 (Transportation Manifest (Cargo Declaration)). 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.
    The collection of information in this final rule document is 
contained in Sec.  4.7a(c)(4). This information is required and will be 
used to deter smuggling by determining the security conditions under 
which cargo was maintained prior to and following its delivery for 
lading aboard a vessel for shipment to the United States. The likely 
respondents and/or recordkeepers are business or other for-profit 
institutions. The estimated average annual burden associated with this 
information collection is 49.8 hours per respondent or recordkeeper.
    Comments on the accuracy of this burden estimate and suggestions 
for reducing this burden 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.

[[Page 66331]]

Customs Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229.
    Part 178, Customs Regulations (19 CFR part 178), containing the 
list of approved information collections, is revised to reflect this 
additional information collection.

List of Subjects

19 CFR Part 4

    Administrative practice and procedure, Arrival, Cargo vessels, 
Customs duties and inspection, Declarations, Entry, Freight, Harbors, 
Hazardous substances, Imports, Inspection, Landing, Maritime carriers, 
Merchandise, Reporting and recordkeeping requirements, Shipping, 
Vessels.

19 CFR Part 113

    Bonds, Customs duties and inspection, Exports, Foreign commerce and 
trade statistics, Freight, Imports, Reporting and recordkeeping 
requirements.

19 CFR Part 178

    Administrative practice and procedure, Collections of information, 
Imports, Paperwork requirements, Reporting and recordkeeping 
requirements.

Amendments to the Regulations

    Parts 4, 113 and 178, Customs Regulations (19 CFR parts 4, 113 and 
178), are amended 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 citations 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 4.7 also issued under 19 U.S.C. 1581(a); 46 U.S.C. App. 
883a, 883b;
    Section 4.7a also issued under 19 U.S.C. 1498, 1584;
    Section 4.8 also issued under 19 U.S.C. 1448, 1486;
* * * * *
    Section 4.30 also issued under 19 U.S.C. 288, 1446, 1448, 1450-
1454, 1490;
* * * * *


    2. Section 4.7 is amended by revising its section heading; by 
redesignating the existing text of paragraph (b) as paragraph (b)(1) 
and revising the first sentence of newly redesignated paragraph (b)(1); 
and by adding new paragraphs (b)(2), (b)(3), (b)(4) and (e) to read as 
follows:


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

* * * * *
    (b)(1) In addition to any Cargo Declaration that has been filed in 
advance as prescribed in paragraph (b)(2) of this section, the original 
and one copy of the manifest must be ready for production on demand. * 
* *
    (2) For any vessel subject to paragraph (a) of this section, except 
for any vessel exclusively carrying bulk or break bulk cargo as 
prescribed in paragraph (b)(4) of this section, Customs must receive 
from the carrier the vessel's Cargo Declaration, Customs Form 1302, or 
a Customs-approved electronic equivalent, 24 hours before such cargo is 
laden aboard the vessel at the foreign port (see Sec.  4.30(n)(1)). 
Participants in the Vessel Automated Manifest System (AMS) are required 
to provide the vessel's cargo declaration electronically.
    (3)(i) Where a non-vessel operating common carrier (NVOCC), as 
defined in paragraph (b)(3)(ii) of this section, delivers cargo to the 
vessel carrier for lading aboard the vessel at the foreign port, the 
NVOCC, if licensed by or registered with the Federal Maritime 
Commission and in possession of an International Carrier Bond 
containing the provisions of Sec.  113.64 of this chapter, may 
electronically transmit the corresponding required cargo manifest 
information directly to Customs through the Vessel Automated Manifest 
System (AMS) 24 or more hours before the related cargo is laden aboard 
the vessel at the foreign port (see Sec.  113.64(c) of this chapter); 
in the alternative, the NVOCC must fully disclose and present the 
required manifest information for the related cargo to the vessel 
carrier which, if automated, is required to present this information to 
Customs via the vessel AMS system.
    (ii) A non-vessel operating common carrier (NVOCC) means a common 
carrier that does not operate the vessels by which the ocean 
transportation is provided, and is a shipper in its relationship with 
an ocean common carrier. The term ``non-vessel operating common 
carrier'' does not include freight forwarders as defined in part 112 of 
this chapter.
    (4) Carriers of bulk cargo as specified in paragraph (b)(4)(i) of 
this section and carriers of break bulk cargo to the extent provided in 
paragraph (b)(4)(ii) of this section are exempt with respect to that 
cargo from the requirement set forth in paragraph (b)(2) of this 
section that a cargo declaration be filed with Customs 24 hours before 
such cargo is laden aboard the vessel at the foreign port. Any carriers 
of bulk or break bulk cargo that are exempted from the filing 
requirement of paragraph (b)(2) of this section must present their 
cargo declarations to Customs 24 hours prior to arrival in the U.S. if 
they are participants in the vessel AMS program, or upon arrival if 
they are non-automated carriers. These carriers must still report 24 
hours in advance of loading any containerized or non-qualifying break 
bulk cargo they will be transporting.
    (i) A carrier is exempt from the filing requirement of paragraph 
(b)(2) of this section with respect to the bulk cargo it is 
transporting. Bulk cargo is defined for purposes of this section 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:
    (A) 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
    (B) Articles that require mechanical handling such as bricks, pig 
iron, lumber, steel beams, and the like.
    (ii) A carrier of break bulk cargo may apply for an exemption from 
the filing requirement of paragraph (b)(2) of this section with respect 
to the break bulk cargo it will be transporting. For purposes of this 
section, break bulk cargo is cargo that is not containerized, but which 
is otherwise packaged or bundled.
    (A) To apply for an exemption, the carrier must submit a written 
request for exemption to the U.S. Customs Service, National Targeting 
Center, 1300 Pennsylvania Ave., NW., Washington, DC 20229. Until an 
application for an exemption is granted, the carrier must comply with 
the 24 hour advance manifest requirement set out in paragraph (b)(2) of 
this section. The written request for exemption must clearly set forth 
information such that Customs may assess whether any security concerns 
exist, such as: The carrier's IRS number; the source, identity and 
means of the packaging or bundling of the commodities being shipped; 
the ports of call, both foreign and domestic; the number of vessels the 
carrier uses to transport break bulk cargo, along with the names of 
these vessels and their International Maritime Organization numbers; 
and the list of the carrier's importers and shippers, identifying any 
who are members of C-TPAT (The Customs-Trade Partnership Against 
Terrorism).
    (B) Customs will evaluate each application for an exemption on a 
case by case basis. If Customs, by written

[[Page 66332]]

response, provides an exemption to a break bulk carrier, the exemption 
is only applicable under the circumstances clearly set forth in the 
application for exemption. If circumstances set forth in the approved 
application change, it will be necessary to submit a new application.
    (C) Customs may rescind an exemption granted to a carrier at any 
time.
* * * * *
    (e) Failure to provide manifest information; penalties/liquidated 
damages. Any master who fails to provide manifest information as 
required by this section, or who presents or transmits electronically 
any document required by this section that is forged, altered or false, 
or who fails to present or transmit the information required by this 
section in a timely manner, may be liable for civil penalties as 
provided under 19 U.S.C. 1436, in addition to penalties applicable 
under other provisions of law. In addition, if any non-vessel operating 
common carrier (NVOCC) as defined in paragraph (b)(3)(ii) of this 
section elects to transmit cargo manifest information to Customs 
electronically and fails to do so in the manner and in the time period 
required by paragraph (b)(3)(i) of this section, or electronically 
transmits any false, forged or altered document, paper, manifest or 
data to Customs, such NVOCC may be liable for the payment of liquidated 
damages as provided in Sec.  113.64(c) of this chapter, in addition to 
any other penalties applicable under other provisions of law.

    3. Section Sec.  4.7a is amended by revising the first sentence of 
paragraph (c)(1), and by adding new paragraphs (c)(4) and (f) to read 
as follows:


Sec.  4.7a  Inward manifest; information required; alternative forms.

* * * * *
    (c) Cargo Declaration. (1) The Cargo Declaration (Customs Form 1302 
or a Customs-approved electronic equivalent) must list all the inward 
foreign cargo on board the vessel regardless of the U.S. port of 
discharge, and must separately list any other foreign cargo remaining 
on board (``FROB''). For the purposes of this part, ``FROB'' means 
cargo which is laden in a foreign port, is intended for discharge in a 
foreign port, and remains aboard a vessel during either direct or 
indirect stops at one or more intervening United States ports. * * *
* * * * *
    (4) In addition to the cargo manifest information required in 
paragraphs (c)(1)-(c)(3) of this section, for all inward foreign cargo, 
the Cargo Declaration, either on Customs Form 1302, or on a separate 
sheet or Customs-approved electronic equivalent, must state the 
following:
    (i) The last foreign port before the vessel departs for the United 
States;
    (ii) The carrier SCAC code (the unique Standard Carrier Alpha Code 
assigned for each carrier; see paragraph (c)(2)(iii) of this section);
    (iii) The carrier-assigned voyage number;
    (iv) The date the vessel is scheduled to arrive at the first U.S. 
port in Customs territory;
    (v) The numbers and quantities from the carrier's ocean bills of 
lading, either master or house, as applicable (this means that the 
carrier must transmit the quantity of the lowest external packaging 
unit; containers and pallets are not acceptable manifested quantities; 
for example, a container containing 10 pallets with 200 cartons should 
be manifested as 200 cartons);
    (vi) The first foreign port where the carrier takes possession of 
the cargo destined to the United States;
    (vii) A precise description (or the Harmonized Tariff Schedule 
(HTS) numbers to the 6-digit level under which the cargo is classified 
if that information is received from the shipper) and weight of the 
cargo or, for a sealed container, the shipper's declared description 
and weight of the cargo. Generic descriptions, specifically those such 
as ``FAK'' (``freight of all kinds''), ``general cargo'', and ``STC'' 
(``said to contain'') are not acceptable;
    (viii) The shipper's complete name and address, or identification 
number, from all bills of lading. (The identification number will be a 
unique number assigned by U.S. Customs upon the implementation of the 
Automated Commercial Environment);
    (ix) The complete name and address of the consignee or the owner or 
owner's representative, or identification number, from all bills of 
lading. (The identification number will be a unique number assigned by 
U.S. Customs upon implementation of the Automated Commercial 
Environment);
    (x) The vessel name, country of documentation, and official vessel 
number. (The vessel number is the International Maritime Organization 
number assigned to the vessel);
    (xi) The foreign port where the cargo is laden on board;
    (xii) Internationally recognized hazardous material code when such 
materials are being shipped;
    (xiii) Container numbers (for containerized shipments); and
    (xiv) The seal numbers for all seals affixed to containers.
* * * * *
    (f) Failure to provide manifest information; penalties/liquidated 
damages. Any master who fails to provide manifest information as 
required by this section, or who presents or transmits electronically 
any document required by this section that is forged, altered or false, 
may be liable for civil penalties as provided under 19 U.S.C. 1436, in 
addition to penalties applicable under other provisions of law. In 
addition, if any non-vessel operating common carrier (NVOCC) as defined 
in Sec.  4.7(b)(3)(ii) elects to transmit cargo manifest information to 
Customs electronically, and fails to do so as required by this section, 
or transmits electronically any document required by this section that 
is forged, altered or false, such NVOCC may be liable for liquidated 
damages as provided in Sec.  113.64(c) of this chapter, in addition to 
other penalties applicable under other provisions of law.

    4. Section 4.8 is amended by revising the second and third 
sentences of paragraph (b) to read as follows:


Sec.  4.8  Preliminary entry.

* * * * *
    (b) Requirements and conditions. * * * The granting of preliminary 
vessel entry by Customs at or subsequent to arrival of the vessel, is 
conditioned upon the presentation to and acceptance by Customs of all 
forms, electronically or otherwise, comprising a complete manifest as 
provided in Sec.  4.7, except that the Cargo Declaration, Customs Form 
(CF) 1302, must be presented to Customs electronically in the manner 
provided in Sec.  4.7(b)(2). Vessels seeking preliminary entry in 
advance of arrival must do so: By presenting to Customs the electronic 
equivalent of a complete Customs Form 1302 (Cargo Declaration), in the 
manner provided in Sec.  4.7(b), showing all cargo on board the vessel; 
and by presenting Customs Form 3171 electronically no less than 48 
hours prior to vessel arrival. * * *
* * * * *

    5. Section 4.30 is amended by adding a new paragraph (n) to read as 
follows:


Sec.  4.30  Permits and special licenses for unlading and lading.

* * * * *
    (n)(1) Customs will not issue a permit to unlade before it has 
received the cargo declaration information pursuant to Sec.  4.7(b). In 
cases in which Customs does not receive complete cargo manifest 
information from the carrier or

[[Page 66333]]

from the NVOCC, in the manner and format required by Sec.  4.7(b), 24 
hours prior to the lading of the cargo aboard the vessel at the foreign 
port, Customs may delay issuance of a permit to unlade the entire 
vessel until all required information is received. Customs may also 
decline to issue a permit to unlade the specific cargo for which a 
declaration is not received 24 hours before lading in a foreign port. 
Furthermore, where the carrier does not present an advance cargo 
manifest to Customs electronically, in the manner provided in Sec.  
4.7(b)(2), preliminary entry pursuant to Sec.  4.8(b) will be denied.
    (2) In addition, while the advance presentation of the cargo 
manifest for any vessel subject to Sec.  4.7(b)(2) may be made in paper 
form or by electronic transmission through a Customs-approved 
electronic data interchange system, the submission of an electronic 
manifest for the cargo in this regard, as opposed to a paper manifest, 
will further facilitate the prompt issuance of a permit to unlade the 
cargo.

PART 113--CUSTOMS BONDS

    1. The general authority citation for part 113 continues to read as 
follows:

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


    2. Section 113.64 is amended by revising the first sentence of 
paragraph (a); and by redesignating paragraphs (c), (d), (e) and (f) as 
paragraphs (d), (e), (f) and (g), respectively, and adding a new 
paragraph (c) to read as follows:


Sec.  113.64  International carrier bond conditions.

    (a) Agreement to Pay Penalties, Duties, Taxes, and Other Charges. 
If any vessel, vehicle, or aircraft, or any master, owner, or person in 
charge of a vessel, vehicle or aircraft, or any non-vessel operating 
common carrier as defined in Sec.  4.7(b)(3)(ii) of this chapter incurs 
a penalty, duty, tax or other charge provided by law or regulation, the 
obligors (principal and surety, jointly and severally) agree to pay the 
sum upon demand by Customs. * * *
* * * * *
    (c) Non-vessel operating common carrier (NVOCC). If a non-vessel 
operating common carrier (NVOCC) as defined in Sec.  4.7(b)(3)(ii) of 
this chapter elects to provide vessel cargo manifest information to 
Customs electronically, the NVOCC, as a principal under this bond, in 
addition to compliance with the other provisions of this bond, also 
agrees to provide such manifest information to Customs in the manner 
and in the time period required by Sec. Sec.  4.7(b) and 4.7a(c) of 
this chapter. If the NVOCC, 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 regulation violated.
* * * * *

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

    1. The 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.


    2. Section 178.2 is amended by adding a new listing in the table in 
appropriate numerical order to read as follows:

------------------------------------------------------------------------
                                                             OMB control
           19 CFR section                  Description           No.
------------------------------------------------------------------------
 
                                * * * * *
Sec.   4.7a(c)(4)..................  Transportation            1515-0001
                                      manifest (cargo
                                      declaration).
 
                                * * * * *
------------------------------------------------------------------------


Robert C. Bonner,
Commissioner of Customs.
    Aproved: October 25, 2002.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 02-27661 Filed 10-30-02; 8:45 am]
BILLING CODE 4820-02-P