[Federal Register Volume 68, Number 141 (Wednesday, July 23, 2003)]
[Proposed Rules]
[Pages 43574-43606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18558]



[[Page 43573]]

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Part II





Department of Homeland Security





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Bureau of Customs and Border Protection



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19 CFR Parts 4, 103, 113 et al.



Required Advance Electronic Presentation of Cargo Information; Proposed 
Rule

  Federal Register / Vol. 68, No. 141 / Wednesday, July 23, 2003 / 
Proposed Rules  

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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

19 CFR Parts 4, 103, 113, 122, 123 and 192

RIN 1515-AD33


Required Advance Electronic Presentation of Cargo Information

AGENCY: Customs and Border Protection, Homeland Security.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Customs Regulations to 
provide that Customs and Border Protection (CBP) must receive, by way 
of a CBP-approved electronic data interchange system, information 
pertaining to cargo before the cargo is either brought into or sent 
from the United States by any mode of commercial transportation (sea, 
air, rail or truck). The cargo information required is that which is 
reasonably necessary to enable high-risk shipments to be identified so 
as to prevent smuggling and ensure cargo safety and security pursuant 
to the laws enforced and administered by CBP. The proposed regulations 
are specifically intended to implement the provisions of section 343(a) 
of the Trade Act of 2002, as amended by the Maritime Transportation 
Security Act of 2002.

DATES: Written comments must be received on or before August 22, 2003.

ADDRESSES: Written comments are to be addressed to the Bureau of 
Customs and Border Protection (CBP), Office of Regulations and Rulings, 
Attention: Regulations Branch, 1300 Pennsylvania Avenue, NW., 
Washington, DC 20229. Submitted comments may be inspected at CBP, 799 
9th Street, NW., Washington, DC during regular business hours. 
Arrangements to inspect submitted comments should be made in advance by 
calling Mr. Joseph Clark at (202) 572-8768.

FOR FURTHER INFORMATION CONTACT:
    Legal matters: Glen E. Vereb, Office of Regulations and Rulings, 
(202) 572-8724;
    Trade compliance issues:
    Inbound vessel cargo: Kimberly Nott, Field Operations, 202-927-
0042;
    Inbound air cargo: David M. King, Field Operations, 202-927-1133;
    Inbound truck cargo: Enrique Tamayo, Field Operations, 202-927-
3112;
    Inbound rail cargo: Juan Cancio-Bello, Field Operations, 202-927-
3459;
    Outbound cargo, all modes: Erika Unangst, Field Operations, 202-
927-0284;
    For economic impact issues: Daniel J. Norman, Field Operations, 
202-927-4305.

SUPPLEMENTARY INFORMATION:

Background

    Section 343(a) of the Trade Act of 2002 (Public Law 107-210, 116 
Stat. 933, enacted on August 6, 2002), as amended by section 108 of the 
Maritime Transportation Security Act of 2002 (Public Law 107-295, 116 
Stat. 2064, enacted on November 25, 2002), and codified at 19 U.S.C. 
2071 note, requires that the Secretary endeavor to promulgate final 
regulations not later than October 1, 2003, that provide for the 
mandatory collection of electronic cargo information by the Customs 
Service (now part of the Bureau of Customs and Border Protection 
(CBP)), either prior to the arrival of the cargo in the United States 
or its departure from the United States by any mode of commercial 
transportation (sea, air, rail or truck). Under section 343(a), as 
amended, the information required must consist of that information 
about the cargo which is determined to be reasonably necessary to 
enable CBP to identify high-risk shipments so as to prevent smuggling 
and ensure cargo safety and security pursuant to the laws that are 
enforced and administered by CBP.
    Consequently, for the purposes set forth in section 343(a), as 
amended, and within the parameters prescribed in the statute, as 
highlighted below, this document proposes to amend the Customs 
Regulations in order to require the advance electronic transmission of 
information pertaining to cargo prior to its being brought into, or 
sent from, the United States.

CBP Authority for Issuance of Proposed Rule

    When the Trade Act of 2002 was enacted (Public Law 107-210; August 
6, 2002), CBP was part of the Department of the Treasury as the Customs 
Service. Thereafter, the Homeland Security Act of 2002 was enacted 
(Public Law 107-296; November 25, 2002), which created the Department 
of Homeland Security (DHS). Section 403 of the Homeland Security Act 
(the Act) transferred to the newly created Department the functions, 
personnel, assets, and liabilities of the Customs Service, including 
the functions of the Secretary of the Treasury relating thereto. 
Customs, later renamed as CBP, thereby became a component of DHS. 
Furthermore, the Department of the Treasury recently issued an order 
(Treasury Order 100-16, dated May 15, 2003) delegating to DHS certain 
Customs revenue functions that were otherwise retained by the Treasury 
Department under sections 412 and 415 of the Act. In accordance with 
the Homeland Security Act and this transfer and delegation of 
functions, certain matters, such as this proposed rule which is 
designed to ensure cargo safety and security rather than revenue 
assessment, now fall solely within the jurisdiction of DHS.
    Therefore, inasmuch as CBP is an integral component of DHS, and in 
view of the subject functions transferred/delegated in this regard from 
Treasury to DHS, this proposed regulation is being issued by CBP with 
the approval of DHS. Nevertheless, CBP has also coordinated the 
development of this proposed rule jointly with the Treasury Department.

Statutory Factors Governing Development of Regulations

    Under section 343(a), as amended, the requirement to provide 
particular cargo information to CBP is generally to be imposed upon the 
party likely to have direct knowledge of the required information. 
However, where doing so is not practicable, CBP in the proposed 
regulations must take into account how the party on whom the 
requirement is imposed acquires the necessary information under 
ordinary commercial practices, and whether and how this party is able 
to verify the information it has acquired. Where the party is not 
reasonably able to verify the information, the proposed regulations 
must allow the party to submit the information on the basis of what it 
reasonably believes to be true.
    Furthermore, in developing the regulations, CBP, as required, has 
taken into consideration the remaining parameters set forth in the 
statute, including:
    [sbull] The existence of competitive relationships among parties 
upon which the information collection requirements are imposed;
    [sbull] Differences among cargo carriers that arise from varying 
modes of transportation, different commercial practices and operational 
characteristics, and the technological capacity to collect and transmit 
information electronically;
    [sbull] The need for interim requirements to reflect the technology 
that is available at the time of promulgation of the regulations for 
purposes of the parties transmitting, and CBP receiving and

[[Page 43575]]

analyzing, electronic information in a timely fashion;
    [sbull] That the use of information collected pursuant to these 
regulations is to be only for ensuring cargo safety and security and 
preventing smuggling and not for determining merchandise entry or for 
any other commercial enforcement purposes;
    [sbull] The protection of the privacy of business proprietary and 
any other confidential cargo information that CBP receives under these 
regulations, with the exception that certain manifest information is 
required to be made available for public disclosure under 19 U.S.C. 
1431(c);
    [sbull] Balancing the likely impact on the flow of commerce with 
the impact on cargo safety and security in determining the timing for 
transmittal of required information;
    [sbull] Where practicable, avoiding requirements in the regulations 
that are redundant with one another or with requirements under other 
provisions of law; and
    [sbull] The need, where appropriate, for different transition 
periods for different classes of affected parties to comply with the 
electronic filing requirements in the regulations.
    Additionally, the statute requires that a broad range of parties, 
including importers, exporters, carriers, customs brokers, and freight 
forwarders, among other interested parties, likely to be affected by 
the regulations, be consulted and their comments obtained and evaluated 
as a prelude to the development and promulgation of the regulations. In 
furtherance of this, by a notice published in the Federal Register (67 
FR 70706) on November 26, 2002, the United States Customs Service, 
which is now merged into CBP, announced a series of public meetings in 
accordance with section 343(a) to assist in the formulation of these 
proposed regulations. The meetings were also announced on the Customs 
Web site.
    Separate meetings were scheduled and held to address specific 
issues related to the advance electronic presentation of information 
prior to the arrival or departure of air cargo (January 14, 2003), 
truck cargo (January 16, 2003), rail cargo (January 21, 2003) and sea 
cargo (January 23, 2003). ``Strawman'' proposals were offered by 
Customs at the meetings and were made available on the Customs Web 
site. In the meetings, members of the importing and exporting community 
made many significant observations, insights, and suggestions as to 
what CBP should consider and how CBP should proceed in composing the 
proposed regulations. Also, at the meetings and on the Customs Web 
site, suggestions and comments were solicited from the public. The CBP 
received numerous submissions via e-mail which similarly provided 
valuable insights and recommendations regarding the development of the 
proposed rule.
    Moreover, an extensive number of meetings were held with workgroups 
of the subcommittee on advance cargo information requirements of the 
Treasury Advisory Committee on the Commercial Operations of the U.S. 
Customs Service (COAC), which greatly assisted CBP in its development 
of these proposed regulations. Indeed, much of the input and 
recommendations from those members of the trade who participated in the 
public meetings, the various workgroups of the COAC subcommittee, as 
well as the views expressed in the many e-mail submissions in this 
matter, are reflected in these proposed regulations.
    In this regard, what follows is a review of, and CBP's response to, 
the most salient issues and recommendations that were presented 
pursuant to this consultation process, along with an overview of the 
proposed programs for advance information filing for cargo destined to, 
or departing from, the United States by vessel, air, rail or truck.

Public Comments; General

Costs of Automation; Economic Analysis

Comment
    Any implementing regulations compelling the advance presentation to 
CBP of electronic information for cargo destined to the United States, 
under section 343(a), as amended, would impose substantial automation 
costs on the carrier trade. The CBP should conduct an economic impact 
analysis to this effect.
CBP Response
    As is set forth below, there are electronic data transmission 
systems already in place in many of the modes. When coupled with the 
fact that much of the trade already uses these systems, it does not 
appear that requiring advance electronic cargo information would impose 
substantial costs on the trade.
    Nevertheless, Customs and Border Protection (CBP) has conducted an 
economic analysis to determine whether the proposed rule is an 
``economically significant regulatory action'' under Executive Order 
12866 and whether the requirements of the Regulatory Flexibility Act 
(RFA) (5 U.S.C. 601 et seq.) would apply to this rulemaking. It has 
been determined, as a result of the initial analysis conducted, that 
this proposed rule would not have a significant economic impact upon a 
substantial number of small entities under the RFA. This economic 
analysis is attached as an Appendix to this document. For the reasons 
set forth in the analysis, the agency does not make a certification at 
this time with regard to the regulatory requirements of 5 U.S.C. 603 
and 604. Comments are specifically requested as to the impact of the 
proposed rule on small entities.
    This rule is a ``significant regulatory action'' under Executive 
Order (E.O.) 12866 and has been reviewed by the Office of Management 
and Budget in accordance with that E.O. However, it is our preliminary 
determination that the proposed rule would not result in an 
``economically significant regulatory action'' under E.O. 12866, as 
regards the impact on the national economy.

Protection of Confidential Information Presented to CBP

Comment
    Cargo manifest data collected by CBP under section 343(a), as 
amended, should be kept confidential by the agency and not be released 
to the public.
CBP Response
    Section 343(a)(3)(G), as amended, expressly requires that CBP in 
its implementing regulations protect the privacy of any business 
proprietary and any other confidential cargo information that is 
furnished to CBP in accordance with section 343(a), except for any 
manifest information that is collected pursuant to section 431, Tariff 
Act of 1930, as amended (19 U.S.C. 1431), and required to be available 
for public disclosure pursuant to section 1431(c). It is emphasized in 
this connection that the application of section 1431(c) has been 
effectively limited only to vessel cargo manifest information (Sec.  
103.31, Customs Regulations (19 CFR 103.31)).
    As thus mandated by the law, CBP intends to accord full protection 
to the privacy of air, rail, or truck cargo information that is 
collected under section 343(a), as amended; to this effect, CBP has 
included in this document a proposed amendment to part 103, Customs 
Regulations (19 CFR part 103) (see proposed Sec.  103.31a)).

Information Technology; Interface With Other Government Agencies

Comment
    The regulations should avoid redundancy requirements with those of

[[Page 43576]]

other Federal agencies. There should be one filing procedure for all 
Federal agencies (e.g., the Food and Drug Administration (FDA); and the 
Animal and Plant Health Inspection Service (APHIS)). All data elements 
to be required by Federal agencies, both within and without the 
Department of Homeland Security (DHS), for traffic entering the United 
States should be coordinated through a single entity, preferably CBP. 
Toward this end, the notification requirements of other Federal 
agencies should be integrated into the CBP regulations for section 
343(a), as amended.
CBP Response
    To the extent feasible, CBP will continue to explore ways and 
methods to harmonize and synchronize information collection 
requirements among the several agencies involved, so that the cargo 
information CBP collects under section 343(a), as amended, may be 
provided by electronic means to other Federal offices. Indeed, efforts 
in this regard are already underway in connection with the development 
of the Automated Commercial Environment (ACE) and the International 
Trade Data System (ITDS) (a single system that will fully integrate all 
requisite information about goods entering and exiting the United 
States). These discussions may ultimately lead to a sole portal 
(``single window'') for receiving all inward cargo information that may 
be required to assist other agencies in administering and enforcing 
statutes enacted to further combat threats to the safety and security 
of the nation.
    However, at present, CBP is of necessity operating under severe 
time constraints in endeavoring to comply with the statutory deadline 
for promulgating final regulations under section 343(a) as a national 
security imperative. Given the limited time available, the construction 
of a fully-integrated, comprehensive multi-agency electronic data 
interchange system does not, at this moment, appear to be a practicable 
or feasible concept, especially in view of the multitude of 
technological modifications and substantial reprogramming that would be 
needed for existing systems in order to effectuate this; and 
withholding the implementation of the final regulations pending the 
completion of an undertaking of such magnitude would quite clearly be 
inconsistent with the urgency of the legislation.
    The CBP notes that other agencies, such as FDA, have different 
statutory requirements regarding advance notice of imports. The CBP 
further notes that, due to these different statutory requirements, 
these agencies may have different information needs to accomplish their 
different statutory mandates. For example, some of the information 
requirements in section 307 of the Public Health Security and 
Bioterrorism Preparedness and Response Act of 2002 to address food 
safety and security assessments, are different from those required by 
CBP. In some instances, the time needed by other agencies to receive, 
review, and respond to this information to accomplish their statutory 
mission may be different from the time required by CBP to assess and 
respond to information needed to achieve CBP's statutory mission. To 
the extent possible, CBP will work with other interested agencies to 
share the information collected under section 343(a), as amended, with 
other Federal agencies.

Postal Shipments

Comment
    The advance cargo information provisions for incoming cargo should 
apply to air/vessel shipments through the United States Postal Service 
(USPS).
CBP Response
    As prescribed in section 343(a)(3)(K), as amended, CBP has the 
authority, in consultation with the Postmaster General, to require 
advance cargo information for shipments by the USPS. The CBP still has 
this issue under consideration. Should a determination be made to 
extend the advance electronic cargo information mandate to USPS 
shipments, such postal shipments would be the subject of a separate 
notice of proposed rulemaking.

Overview; Electronic Filing; Shipper on Master/House Bills

    Pursuant to section 343(a)(1), as amended, cargo information for 
required inbound and outbound shipments must be transmitted to CBP by 
means of a CBP-approved electronic data interchange system. In this 
document, CBP is proposing that cargo information be transmitted or 
presented through existing CBP-approved data systems. As is further 
elucidated infra, for each incoming mode and for all outbound modes, 
these existing data systems are as follows:
    Outbound, all modes: Automated Export System (AES);
    Inbound vessels: Vessel Automated Manifest System (Vessel AMS);
    Inbound aircraft: Air Automated Manifest System (Air AMS);
    Inbound rail: Rail Automated Manifest System (Rail AMS);
    Inbound truck: Free And Secure Trade System (FAST); Pre-Arrival 
Processing System (PAPS) (which employs the Automated Broker Interface 
(ABI)); Border Release Advanced Screening and Selectivity program 
(BRASS, modified as appropriate); and Customs Automated Forms Entry 
System (CAFES) or ABI in-bond reporting.
    In this latter regard, and to the additional extent that future 
approved automated data systems are to be implemented, CBP, either 
generally or on a port-by-port basis, as applicable, will give advance 
notice of the effective date of implementation of the specific system 
at particular port(s) of arrival by publishing a notice to this effect 
in the Federal Register.

Master Bills/House Bills

    Generally speaking, a master bill of lading refers to the bill of 
lading that is generated by the incoming carrier covering a 
consolidated shipment. A consolidated shipment would consist of a 
number of separate shipments that have been received and consolidated 
into one shipment by a party such as a freight forwarder or a Non 
Vessel Operating Common Carrier (NVOCC) for delivery as a single 
shipment to the incoming carrier. The consolidated shipment, as noted, 
would be covered under the incoming carrier's master bill; and this 
master bill could reflect the name of the freight forwarder, the NVOCC 
or other such party as being the shipper (of the consolidated 
shipment). However, each of the shipments thus consolidated would be 
covered by what is referred to as a house bill. The house bill for each 
individual shipment in the consolidated shipment would reference the 
name of the actual shipper (which would be the actual foreign owner and 
exporter of the cargo to the United States). As will be seen from the 
data elements as proposed in this rulemaking, it is this latter 
information as to the identity of the actual shipper from the relevant 
house bill that CBP is seeking for targeting purposes.

Public Comments; Vessel Cargo Destined to the United States

Summary of Principal Comments

    Most of the comments received concerning the advance information 
reporting requirements for incoming vessel cargo evidenced an intent to 
revisit the ``24-hour rule'' that was issued and became effective last 
year (T.D. 02-62, 67 FR 66318; October 31, 2002).
    In brief, it was principally requested that advance cargo 
information filing by

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Non Vessel Operating Common Carriers (NVOCCs) be eliminated, due to a 
number of operational problems experienced by incoming carriers, that 
have resulted from limitations said to be inherent in the Vessel 
Automated Manifest System (AMS) when NVOCCs, as opposed to the vessel 
carriers, transmit shipment information to CBP; at the same time, 
though, it was advocated that importers should be permitted, at their 
discretion, to file through AMS certain information that would likely 
best be known to them as to the identification and nature of the 
incoming cargo. Also, it was asked that definitions be added to the 
regulations regarding those data elements pertaining to shipper and 
consignee information. In addition, it was asked that Department of 
Defense-contracted conveyances be exempted from the 24-hour rule.

CBP Response

    In sum, CBP stands by the 24-hour rule for incoming vessel cargo 
and does not contemplate any major change to it under this rulemaking, 
with one exception: to introduce the mandate that vessel carriers file 
their advance cargo manifest information with CBP electronically.
    As explained in the final rule (67 FR at 66319), the 24-hour pre-
lading requirement for incoming vessel cargo, especially containerized 
vessel cargo, is tied inextricably to the Container-Security Initiative 
(CSI). CSI was developed to secure an indispensable, but vulnerable, 
link in the chain of global trade: containerized shipping. Annually, 
more than 6 million cargo containers are off loaded at U.S. seaports. A 
core element of CSI is to pre-screen such containers at the port of 
departure before they are shipped. To enable this pre-screening to be 
done fully and effectively, it is essential that the required advance 
cargo declaration information be presented to CBP at least 24 hours 
prior to lading the cargo aboard the vessel at the foreign port.
    With the implementation of CSI and the 24-hour rule, CBP has been 
able to identify shipments that have posed potential threats; and 
security-related seizures of problematic shipments have occurred. In 
short, these programs--CSI coupled with the 24-hour rule--have become a 
critical bulwark against threats to the safety and security of United 
States seaports, trade, industry, and the country.

Non Vessel Operating Common Carriers (NVOCCs)

    In consideration of the competitive relationships that exist in the 
international freight forwarding field, those NVOCCs that seek to file 
required business proprietary and other confidential cargo information 
for their incoming shipments directly with CBP should be allowed to do 
so, rather than having to furnish such information to vessel carriers 
for electronic presentation to CBP. The CBP is confident that 
operational issues that have arisen in relation to the implementation 
of the 24-hour rule will over time be satisfactorily addressed; toward 
this end, CBP will continue to be available to assist the trade in 
resolving such issues.
    There is no consensus in the trade community as to whether 
importers should provide sea cargo data to CBP. When this split is 
coupled with the current design and functionality of the AMS system, 
CBP finds that allowing importers, at their discretion, to participate 
in advance electronic filing through the system would at this time be 
neither advisable nor practicable.

Government Vessels

    Government vessels falling within the purview of Sec.  4.5(a), 
Customs Regulations (19 CFR 4.5(a)), are exempt from the requirement to 
make entry, and, as such, they would already be exempt from having to 
comply with advance cargo declaration reporting under the 24-hour rule 
(see 19 CFR 4.7(a), (b)(2)). For purposes of enlarging upon those 
vessels that would be subject to such exemptions, it is noted that by a 
separate, interim rule, CBP will expand the definition of government 
vessels.

Data Elements--Shipper, Consignee; Date and Time of Departure

    With reference to the identity of the shipper, at the master bill 
level, for consolidated shipments, the identity of the Non Vessel 
Operating Common Carrier (NVOCC), freight forwarder, container station 
or other carrier would be sufficient. For non-consolidated shipments, 
and for each house bill in a consolidated shipment, the identity of the 
actual shipper (who is both the owner and the exporter) of the cargo 
from the foreign country would be needed. To elaborate, the foreign 
owner of the goods just before they are delivered for export, and who 
initially consigns and ships them from the foreign country, is the 
party who ultimately decides that the goods are to be disposed of in 
another country, such as the United States. The foreign shipper and 
owner of the goods is, therefore, the exporter, because this is the 
party initially responsible for causing the export. Section 
4.7a(c)(4)(viii), Customs Regulations (19 CFR 4.7a(c)(4)(viii)), would 
be revised to include the additional meaning of this data element.
    In addition, with reference to the identity of the consignee, for 
consolidated shipments, at the master bill level, the identity of the 
NVOCC, freight forwarder, container station or other carrier would be 
sufficient. However, parties identified as ``consolidators,'' even 
though they may also be NVOCCs, may not participate in Vessel AMS.
    For non-consolidated shipments, and for each house bill in a 
consolidated shipment, the consignee would be the party to whom the 
cargo would be delivered in the United States, with the exception of 
``FROB'' (Foreign Cargo Remaining On Board). If the name of the 
consignee, as described, is available, the carrier must disclose this 
information. However, where cargo is shipped ``to the order of [a named 
party],'' which is a common business practice, the carrier must report 
this named ``to order'' party as the consignee in the advance cargo 
information submission; and, if there is any other commercial party 
listed in the bill of lading for delivery or contact purposes, the 
carrier must also report this other commercial party's identity and 
contact information (address/phone number) in the ``Notify Party'' 
field of the advance electronic data transmission to CBP, to the extent 
that the CBP-approved electronic data interchange system is capable of 
receiving this data. Section 4.7a(c)(4)(ix) would be revised to include 
the added meaning of this data element.
    Also, Sec.  4.7a(c)(4) would further be amended to require the date 
and time of the departure of the vessel from foreign, as reflected in 
the vessel log.

Overview; Vessel Cargo Destined to the United States

Electronic Filing Mandate

    Under this proposed rule, in principal part, the 24-hour rule would 
be amended to provide that vessel carriers must present their cargo 
declarations to CBP by means of a CBP-approved electronic data 
interchange system, 24 hours before lading the cargo aboard the vessel 
in the foreign port.

Transition/Timetable for Compliance With Electronic Filing Mandate

    Within 90 days of the publication of this advance electronic cargo 
information requirement as a final rule in the Federal Register, all 
ocean carriers, and NVOCCs choosing to participate, must be automated 
on the Vessel AMS system at all ports of entry

[[Page 43578]]

in the United States where their cargo will initially arrive.

Comments; Air Cargo Destined to the United States

Time Frame for Presenting Advance Cargo Information to CBP

Comment
    The time frames for presenting electronic cargo information to CBP 
for air cargo prior to the cargo's arrival in the United States that 
were set forth in the ``strawman'' proposal (12 hours in advance of 
foreign lading generally, and 8 hours in advance of foreign lading in 
the case of express courier shipments) were excessively long. Such 
lengthy advance time frames would destroy ``just-in-time'' delivery 
systems. Instead, it was chiefly recommended that the time frame be one 
hour prior to arrival in the United States; other commenters, however, 
thought that the time frame for transmission should be determined on a 
country-by-country basis, or, in the alternative, at the time of 
``wheels-up'' on the aircraft.
    Also, it was asserted that the advance notice time frame should be 
consistent within each mode of transport; alternatively, it was 
suggested that the advance filing time frame for charter flights should 
be shorter than for other flights, and that there should be special 
procedures for time-sensitive cargoes (short haul).
CBP Response
    The time frames in the ``strawman'' proposal were put forth only 
for purposes of stimulating a dialogue with the importing trade 
regarding the development of an appropriate time frame for the 
electronic submission of information for inbound air cargo. This issue 
is central to the implementation of section 343(a) of the Trade Act of 
2002, as amended.
    Accordingly, after considering the feedback received from the 
importing trade in response to the ``strawman,'' CBP is proposing in 
this rulemaking that information for inbound air cargo be 
electronically presented no later than the time of departure of the 
aircraft for the United States (no later than the time that wheels are 
up on the aircraft, and it is en route directly to the United States), 
in the case of aircraft departing for the United States from any 
foreign port or place in North America, which includes locations in 
Mexico, Central America, South America (from north of the Equator 
only), the Caribbean, and Bermuda. For aircraft departing for the 
United States from any other foreign area, information for the inbound 
air cargo would be required to be electronically presented to CBP no 
later than 4 hours prior to the arrival of the aircraft at the first 
port of arrival in the United States.
    At present, CBP believes that these time frames (no later than 
``wheels-up'' or 4 hours prior to arrival, as applicable) should enable 
CBP to properly conduct a risk assessment for incoming air cargo and, 
if found advisable, to make preparations to hold the cargo for further 
information or for examination, as required to ensure cargo safety and 
security under section 343(a), as amended. At the same time, CBP has 
determined that these time frames should realistically accommodate the 
concerns of the trade, and should not disrupt the flow of commerce. 
Indeed, an important reason for the different time frames proposed is 
the need to obviate disruptions in the flow of commerce; given this 
consideration, the effect on ``just-in-time'' (``JIT'') delivery 
systems should be nonexistent.
    The time frames proposed for submitting electronic information to 
CBP for inbound air cargo would thus be consistent for all air cargo 
shipments regardless of the type of operator or the nature of the 
cargo; the time frames would differ based only upon the foreign area 
from which the incoming air carrier was departing for the United 
States.

Parties Required/Eligible To Participate in Advance Cargo Information 
Filing

Comment
    It was asked whether freight forwarders to the United States would 
be required to participate in advance cargo information filing. In the 
alternative, it was requested that advance electronic shipment 
information be supplied to CBP by the foreign shipper (the exporter to 
the United States) or by the U.S. importer. In addition, it was 
recommended that freight deconsolidators (Container Freight Stations) 
be allowed to transmit in-bond information electronically to CBP at the 
house air waybill level. In this overall context, it was further 
mentioned that CBP would need to specify what type of bond would be 
required for any non-carrier commercial participants in advance 
electronic cargo information filing under section 343(a), as amended. 
Also, two commenters urged that cargo information be supplied to CBP by 
the foreign country (government).
    It was also generally stated that some parties in the air 
environment would simply be unable to comply with the advance 
electronic cargo information requirements. In any case, it was asserted 
that any liability for the accuracy of the information that a party 
presented to CBP should fall upon the entity that supplied the 
information to the presenting party.
CBP Response
    Inbound air carriers that are otherwise required to make entry 
under Sec.  122.41, Customs Regulations (19 CFR 122.41), would be 
required to file advance cargo information electronically with CBP. The 
existing automated air cargo manifest system (the Air Automated 
Manifest System (Air AMS)) was originally designed and structured to 
receive electronic data directly from the incoming air carrier.
    Nevertheless, in addition to the incoming air carrier's mandatory 
participation in presenting advance electronic air cargo information, 
CBP has concluded that one of a number of other parties would be able 
to voluntarily present to CBP a part of the electronic information 
required for the inbound air cargo. These parties could consist of one 
of the following:
    (1) An ABI (Automated Broker Interface) filer as identified by its 
ABI filer code (this entity could be either the importer of the cargo 
or the importer's authorized Customs broker);
    (2) A Container Freight Station/deconsolidator as identified by its 
FIRMS (Facilities Information and Resources Management System) code;
    (3) An Express Consignment Carrier Facility likewise identified by 
its FIRMS code; or
    (4) Any air carrier as identified by its IATA (International Air 
Transport Authority) code, that arranged to have the incoming air 
carrier transport cargo to the United States.
    Unlike Vessel AMS, as explained above, and Rail AMS, as discussed 
below, Air AMS has the existing design capabilities and functionality 
to, and in fact already does, accept information from parties other 
than the importing carrier for inward cargo shipments. The CBP expects 
to make this capability to supply data available to a wider group of 
trade members, as appropriate, and to make any systems modifications 
necessary to accommodate possible variations in the order in which data 
might be received.
    Hence, along with the incoming air carrier for whom participation 
in Air AMS is compulsory, any one of the foregoing parties could elect 
to supply certain data for air cargo to CBP, provided that the party 
established the communication protocol required by CBP for properly 
presenting electronic data through the system, and provided further 
that the party, other than an

[[Page 43579]]

importer or broker, was in possession of a Customs international 
carrier bond containing all the necessary provisions of 19 CFR 113.64.
    However, in the case of cargo shipments transported under a 
consolidated master air waybill, only one party could supply 
information for all such cargo so shipped.
    It is observed that the importer or its authorized agent would be 
the party in the United States most likely to have direct knowledge as 
to particular information about the nature and destination of the 
cargo. Secondly, a facility, such as a Consolidator or an Express 
Consignment Carrier, that handled the shipment and/or arranged for its 
delivery to the incoming carrier, would also have access to particular 
information about the cargo, more so than the incoming carrier. 
Generally speaking, for consolidated shipments, information in the 
direct possession of such a facility would consist of data from its 
house air waybill(s) that would not be directly known by the incoming 
carrier.
    Thus, in recognition of possible competitive relationships that a 
party such as a container freight station, freight forwarder, or 
express consignment or other carrier, might have with the incoming air 
carrier, such party would have the opportunity, if it so elected, to 
present the required information directly to CBP, as opposed to having 
to present this information to the inward air carrier or a service 
provider who would, on its behalf, transmit this information for the 
cargo to CBP.
    In any event, it would not be realistic or feasible to seek to 
obligate a foreign country (government) to transmit advance cargo 
information for commercial cargo sent from that country to the United 
States; and it is submitted in this connection that section 
343(a)(3)(B), as amended, clearly envisages the electronic filing of 
cargo information by appropriate commercial or business entities, 
rather than foreign governments.
    Since the party from whom electronic air cargo information would be 
required might not necessarily, in all situations, be the party with 
direct knowledge of that information, CBP would take into consideration 
how, in accordance with ordinary commercial practices, the electronic 
filer acquired such information, and whether and how the filer was able 
to verify this information. Where the party electronically presenting 
the cargo information to CBP was not reasonably able to verify such 
information, CBP would permit the party to electronically present the 
information on the basis of what the party reasonably believed to be 
true.
Comment
    There should be an exemption from the advance cargo filing 
requirements for aircraft that are owned or leased by the Department of 
Defense.
CBP Response
    Aircraft, including public aircraft as defined in 19 CFR 122.1(i), 
that are exempt from entry under 19 CFR 122.41 would be exempt from 
advance cargo information filing under this proposed rule. It is noted 
that by a separate, interim rule, CBP will expand upon those aircraft 
that are subject to such an exemption from entry.
Comment
    Participants in the Customs-Trade Partnership Against Terrorism (C-
TPAT), and related parties, should be excluded from the advance cargo 
information requirement or should be subject to a reduced time frame 
within which the advance cargo information must be transmitted.
CBP Response
    The CBP disagrees with this suggestion. However, participation in 
C-TPAT would be considered as one factor in targeting whether cargo 
needed to be held upon arrival pending the receipt of further 
information or for examination. Such additional information, if 
required, would have to be made available at the port of arrival.

Required Cargo Information; Availability/Correction of Data Transmitted

Comment
    For freight forwarders that might participate in the advance 
electronic filing of cargo information, it was asked what information 
they would specifically be required to transmit to CBP.
CBP Response
    The specific data elements that would be required from a 
participating party are enumerated below under the heading ``Overview; 
Air Cargo Destined to the United States'' (see ``Additional Data 
Elements from Incoming Carriers; Other Participants''); and these data 
elements are also set forth in proposed Sec.  122.48a(d). A freight 
forwarder could be included among those parties that could participate 
voluntarily in electronic cargo information filing, provided that the 
freight forwarder was either an ABI filer, a Container Freight Station/
deconsolidator or an Express Consignment Carrier Facility; that it had 
posted a Customs international carrier bond containing all necessary 
provisions of 19 CFR 113.64; and that it had established the 
communication protocol required by CBP for properly presenting 
electronic data through the system.
Comment
    The CBP should clearly define the meaning of those data elements 
which must be presented for inbound air cargo.
CBP Response
    The CBP believes that the proposed data elements to be required in 
advance for incoming air cargo are fairly well known; however, a number 
of the data elements set out in the proposed regulations are 
accompanied by detailed explanations as to their meaning. Should it be 
called for, CBP will include additional definitions for those elements 
about which the importing air community might prefer greater 
elucidation.
    Therefore, CBP requests comments in response to this proposed rule 
especially concerning those data elements contained in proposed Sec.  
122.48a(d) for which the importing air community seeks additional 
guidance.
Comment
    Most of the necessary data for incoming cargo would not necessarily 
be available prior to its lading aboard the aircraft. Moreover, the 
line-item Harmonized Tariff Schedule (HTS) number for air cargo would 
not be available prior to the departure of the aircraft. The air 
carrier would not always have information for cargo at the house air 
waybill level; and CBP should allow in-transit consolidations to be 
reported at the master air waybill level. Also, CBP should permit an 
air carrier to submit electronic cargo data for shipments brought in by 
truck.
CBP Response
    Because CBP proposes to require advance cargo information for 
incoming aircraft either no later than the time of ``wheels-up'' or no 
later than 4 hours prior to arrival in the United States, as applicable 
(and not prior to the foreign lading of the cargo aboard the aircraft), 
the commenters' concerns as to the availability of the necessary data 
for the cargo prior to foreign lading are addressed.
    Nevertheless, concerning the possible unavailability of the 6-digit 
HTS number for the cargo prior to foreign departure, it is emphasized 
that either a precise description of the cargo or its HTS 6-digit 
tariff subheading would be sufficient. In any case, under the

[[Page 43580]]

proposal, as already explained, the line-item HTS number for the cargo 
would essentially not be required prior to the departure of the 
aircraft for the United States.
    As to the carrier not always having cargo information from the 
house air waybill, should another party, such as an ABI filer, elect to 
participate in advance automated cargo information filing, the carrier 
would only be responsible for transmitting information from the master 
air waybill. However, if another electronic filer did not participate 
in transmitting needed cargo information to CBP, the incoming carrier 
would need to obtain the house air waybill information from the 
relevant party for presentation to CBP.
    In-transit consolidations of inbound cargo typically present the 
same issues of cargo safety and security as other inbound shipments. 
Thus, the complete house air waybill information would be required from 
the carrier or the other party electing to participate in advance cargo 
information filing. Also, should an air carrier choose to ship freight 
by truck, advance cargo information would be required to be presented 
to CBP through the truck processing system (see proposed Sec.  123.92); 
electronic air documents would not be accepted in lieu of advance 
electronic truck cargo information.
Comment
    If cargo were bumped from one flight to a later flight, there 
should be no need to re-transmit related cargo information that was 
previously transmitted to CBP.
CBP Response
    Given the time frames proposed, since cargo information would 
essentially not be required prior to the departure of the aircraft for 
the United States, this issue should not present a significant concern.
Comment
    The CBP should allow changes and additions to electronically 
transmitted manifest information in accordance with current manifest 
discrepancy reporting policies.
CBP Response
    Complete and accurate information would need to be presented to CBP 
for cargo aboard the aircraft no later than the time period specified 
for the particular foreign area from which the aircraft departs for the 
United States. As for any changes in the cargo information already 
transmitted for a flight, the procedures for discrepancy reporting will 
be the subject of a separate rulemaking.

Pre-Departure Screening of Cargo; Cargo Inspections in the United 
States

Comment
    Air cargo security is already highly regulated by the 
Transportation Security Administration (TSA), the Federal Aviation 
Administration (FAA), and other agencies and foreign governments. As 
such, there should be no pre-departure screening process required for 
incoming air cargo. In the alternative, it was advocated that CBP 
should consider a CSI (Container Security Initiative)-type program for 
air cargo. In the event that pre-departure/lading information is 
necessary for pre-screening purposes, CBP should provide a positive 
load/no-load message to the electronic filer. Also, for cargo that may 
be identified as high risk, CBP should not compel inspections of such 
cargo at locations in the United States that are merely technical 
stops.
CBP Response
    There will be no pre-departure-screening-and-hold process applied 
to air cargo under this proposal. While CBP may consider the 
possibility of developing a CSI-type initiative for air cargo based on 
a number of factors, including the terrorist threat, the success of 
industry security programs, and the success of this rulemaking and 
related CBP security efforts, such a proposal falls outside the scope 
of this rulemaking.
    In addition, inspections of cargo in the United States conducted 
for the purpose of ensuring cargo safety and security and for the 
prevention of smuggling would only be conducted if the cargo had been 
identified as potentially posing a safety, security or smuggling risk; 
and CBP would work with the carrier and other affected Government 
agencies to determine an appropriate location to examine such 
potentially high-risk cargo. In appropriate cases, however, landing 
rights could be denied to an incoming carrier if advance cargo 
information was not timely, accurately, and completely presented to CBP 
(see proposed Sec.  122.14).
Comment
    The possible need for a carrier to retain cargo in a staging/
storage area at a foreign location in order to comply with a pre-
departure advance information requirement for inbound cargo would 
create a security risk for the cargo that would not otherwise exist.
CBP Response
    As indicated, the time frames proposed for the advance reporting of 
air cargo information have been designed so as to preclude any need to 
retain cargo in a foreign area in order to comply with the pre-arrival 
reporting mandate.

Requested Exemptions/Exclusions From Electronic Filing Requirements

Comment
    Advance electronic information should not be required for inbound 
air cargo in diplomatic pouches. Merchandise brought in by the air 
carrier for its own use should be exempt as well from the advance 
electronic information provisions. Also, letters and documents should 
be exempted from the detailed advance electronic cargo information 
submission. It was further asked whether the advance filing 
requirements would apply to hand-carried merchandise or merchandise 
checked in passenger baggage.
CBP Response
    For purposes of this rulemaking, all air cargo shipped under an air 
waybill, regardless of its nature, would be subject to the advance 
electronic reporting provisions. This would include diplomatic pouches 
and letters and documents. Also, merchandise brought in by an air 
carrier for its own use would be subject to the same advance cargo 
information filing requirements that would apply to other incoming 
cargo. However, hand-carried merchandise and merchandise contained in 
passenger baggage would not be subject to the advance cargo information 
requirements in this rulemaking; such merchandise would be included in 
the passenger baggage declaration.

Required Information Technology; Trade Support; Transition Periods

Comment
    It was asked whether CBP would provide staffing for data/targeting 
analysis and related trade support on an around-the-clock basis; and 
two commenters were insistent that CBP conduct extensive training in 
Air AMS filing procedures at all ports. Various concerns were also 
expressed as to the ability of CBP to effectively analyze advance cargo 
information.
CBP Response
    An automated targeting system for performing a risk assessment for 
incoming air cargo will be fully in place upon the effective date of 
the final regulations. Automated data/targeting analysis for risk 
assessment will be available at all times. Related trade support will 
be available during regular

[[Page 43581]]

port hours; and CBP will conduct any training that CBP personnel might 
need in Air AMS procedures.
Comment
    To effectuate the filing of electronic cargo information under 
section 343(a), as amended, CBP should consider integrating advanced 
information technology (IT) products into its current automated 
manifest filing system. Additionally, the Automated Commercial 
Environment (ACE) system should be compatible with the implementing 
regulations. Also, there should be a grace period given under the 
implementing regulations in order to afford trade participants the 
chance to make suitable changes to their computer programming; and 
there should likewise be a grace period allowed during which such trade 
participants could bring the detail and accuracy of their advance 
information filing up to the level that CBP would require.
CBP Response
    While disposed to explore any advances in IT products, CBP will 
largely rely, at least initially, upon the Air AMS, with appropriate 
future modifications, as the principal vehicle to achieve the goal of 
advance air cargo information presentation under section 343(a), as 
amended. However, any new system developed within the framework of ACE 
will be compatible with the implementing regulations. For this reason, 
therefore, the implementing regulations will refer generally to a CBP-
approved electronic data interchange system (rather than to Air AMS, 
specifically).
    The CBP contemplates that, pursuant to section 343(a)(3)(J), as 
amended, the effective date that would be set for the final 
implementing regulations following their promulgation should afford 
sufficient time for Air AMS participants to make suitable changes to 
their programming for the advance transmission of cargo data; and the 
effective date would similarly incorporate a reasonable grace period 
within which Air AMS participants should be able to bring their advance 
data filing up to the level of detail and accuracy that CBP seeks. 
Specifically, the proposed effective date, and the provisions for 
delaying the effective date, for compliance with the advance 
presentation of electronic air cargo information to CBP under section 
343(a), as amended, are contained in proposed Sec.  122.48a(e).

Overview; Air Cargo Destined to the United States

Electronic Systems To Be Used

    Air carriers, and certain other parties authorized for voluntary 
participation in the program, must transmit through a CBP-approved 
electronic data interchange system advance cargo air waybill 
information, in accordance with the ``Transition and Implementation 
Timeline'' discussed below. The current CBP system for transmitting air 
cargo information is the Air Automated Manifest System (Air AMS). Also, 
certain express consignment carriers have proprietary electronic data 
systems which CBP personnel can access. The CBP will permit the use of 
these electronic proprietary systems, provided that the participants 
are capable of providing the data in a suitable electronic format to 
CBP for the purposes of ensuring cargo safety and security and 
preventing smuggling, unless CBP determines that it is necessary to 
migrate those participants to Air AMS. In addition, these express 
consignment carriers will be required to provide CBP with an electronic 
record of the data in a CBP-approved storage medium. All other express 
consignment carriers, including those that currently submit information 
to CBP using paper documents, will be required to participate in Air 
AMS.

Data Submission Timelines

    Air carriers and other parties electing to participate in the 
program would transmit the required information to CBP no later than 
the time of departure (``wheels-up'') for aircraft that are departing 
for the United States from any foreign port or place in North America, 
including locations in Mexico, Central America, South America (from 
north of the Equator only), the Caribbean, and Bermuda. For aircraft 
departing for the United States from any other foreign area, such 
carriers and other parties would transmit the required information to 
CBP no later than 4 hours prior to the arrival of the aircraft at the 
first port of arrival in the United States. This amount of time should 
enable CBP to conduct an adequate analysis of the data and to select 
individual shipments for further document review or physical 
examination, while not disrupting the flow of commerce and ``just-in-
time'' delivery systems.

Parties Required/Eligible To Present Advance Electronic Cargo 
Information

    All carriers required to enter under Sec.  122.41, Customs 
Regulations (19 CFR 122.41), would be required to participate in the 
electronic data interchange system and present the necessary cargo 
information to CBP.
    The carrier will only need to be automated at each port where 
entrance and clearance of the aircraft is required. Incoming air 
carriers and other authorized parties who choose to do so may 
participate in Air AMS until CBP migrates to a different processing 
system. For this reason, the implementing regulations will refer only 
to a ``CBP-approved electronic data interchange system'' in order to 
accommodate the future migration to any superseding data processing 
systems.
    In addition to an incoming air carrier for whom participation will 
be mandatory, one of the following parties may elect to transmit 
particular data to CBP for incoming cargo: an ABI filer (importer or 
its Customs broker); a Container Freight Station/deconsolidator as 
identified by its FIRMS code; an Express Consignment Carrier Facility 
likewise identified by its FIRMS code; or an air carrier as identified 
by its IATA code, that arranged to have the incoming air carrier 
transport the cargo to the United States. To be qualified to file cargo 
information electronically, the party would need to establish the 
communication protocol required by CBP for properly presenting 
electronic information through the data interchange system; and, except 
for an importer or broker, the party would have to possess a Customs 
international carrier bond containing all the necessary provisions of 
19 CFR 113.64.
    Consequently, the carrier will either have to obtain all the needed 
cargo shipment information for presentation to CBP, or the carrier will 
need to obtain the unique identifier of the party that will separately 
transmit to CBP a portion of the required data for the cargo; the other 
party's unique identifier code would have to accompany the carrier's 
data transmission to CBP, so that CBP could associate the subject cargo 
shipment with both electronic transmissions related to the cargo.
    Permission to unlade all or part of the cargo could be denied or 
delayed, and penalties and/or liquidated damages could be assessed, 
where the air carrier or other electronic filer transmitted inaccurate, 
incomplete or untimely information to CBP.

Information Required From Air Carriers

    An incoming air carrier would need to transmit all of the necessary 
information for non-consolidated air waybills. For consolidated 
shipments: the carrier would have to present to CBP all the required 
information from the master air

[[Page 43582]]

waybill record; and the carrier would supply all the information for 
associated house air waybill records where another authorized party did 
not electronically transmit information for the associated house air 
waybills directly to CBP. If another approved party did transmit the 
information, the carrier would not be required to electronically supply 
such information.
    The carrier would still be required under 19 U.S.C. 1431 to have a 
manifest for all cargo aboard the aircraft, whether that cargo was 
manifested under a non-consolidated air waybill or a house air waybill 
that was part of a consolidation.
    These proposed regulations apply to air cargo that would be entered 
into the United States, as well as to in-transit air cargo including 
any cargo which remained aboard the aircraft on the same through 
flight.

Specific Data Elements; Air Carriers

    In the following listing of data elements for air carriers, an 
``M'' next to any element indicates that the data element would be 
mandatory in all cases; a ``C'' next to the data element indicates that 
the data element was conditional and would be transmitted to CBP if the 
condition were present for that particular air waybill.
    (1) Air waybill number (M) (The air waybill number is the 
International Air Transport Association (IATA) standard 11-digit 
number);
    (2) Trip/flight number (M);
    (3) Carrier/ICAO (International Civil Aviation Organization) code 
(M) (The approved electronic data interchange system supports both 3- 
and 2-character ICAO codes, provided that the final digit of the 2-
character code is not a numeric value);
    (4) Airport of arrival (M) (The 3-alpha character ICAO code 
corresponding to the first airport of arrival in the Customs territory 
of the United States (for example, Chicago O'Hare = ORD; Los Angeles 
International Airport = LAX));
    (5) Airport of origin (M) (The 3-alpha character ICAO code 
corresponding to the airport from which a shipment began its 
transportation by air to the United States (for example, if a shipment 
began its transportation from Hong Kong (HKG), and it transits through 
Narita, Japan (NRT), en route to the United States, the airport of 
origin is HKG, not NRT));
    (6) Scheduled date of arrival (M);
    (7) Total quantity based on the smallest external packing unit (M) 
(for example, 2 pallets containing 50 pieces each would be considered 
as 100, not 2);
    (8) Total weight (M) (may be expressed in either pounds or 
kilograms);
    (9) Cargo description (M) (for consolidated shipments, the word 
``Consolidation'' is a sufficient description for the master air 
waybill record; for non-consolidated shipments, a precise cargo 
description or the 6-digit Harmonized Tariff Schedule (HTS) number must 
be provided);
    (10) Shipper name and address (M) (for consolidated shipments, this 
may be the name and address of the consolidator, express consignment or 
other carrier, for the master air waybill record; for non-consolidated 
shipments, this must be the name and address of the actual shipper (the 
owner and exporter) of the merchandise from the foreign country);
    (11) Consignee name and address (M) (for consolidated shipments, 
this may be the name and address of the container freight station, 
express consignment or other carrier, for the master air waybill 
record; for non-consolidated shipments, this must be the name and 
address of the party to whom the cargo will be delivered, with the 
exception of ``FROB'' (Foreign Cargo Remaining On Board));
    (12) Consolidation identifier (C);
    (13) Split shipment indicator (C) (this data element includes 
information indicating the particular portion of the split shipment 
that will arrive; the boarded quantity of that portion of the split 
shipment (based on the smallest external packing unit); and the boarded 
weight of that portion of the split shipment (expressed in either 
pounds or kilograms));
    (14) Permit to proceed information (C) (this element includes the 
permit-to-proceed destination airport (the 3-alpha character ICAO code 
corresponding to the permit-to-proceed destination airport); and the 
scheduled date of arrival at the permit-to-proceed destination 
airport);
    (15) Identifier of other party which is to submit additional air 
waybill information (C);
    (16) In-bond information (C) (this data element includes the 
destination airport; the international/domestic identifier (the in-bond 
type indicator); the in-bond control number, if there is one (C); and 
the onward carrier identifier, if applicable (C)); and
    (17) Local transfer facility (C).

Additional Data Elements From Incoming Carriers; Other Participants

    In addition to the data elements listed in items ``1'' through 
``17'' above, the incoming air carrier, or another eligible electronic 
filer electing to do so, must transmit the following information to CBP 
for the inward cargo:
    (1) The master air waybill number and the associated house air 
waybill number (M) (the house air waybill number may be up to 12 
alphanumeric characters (each alphanumeric character that is indicated 
on the paper house air waybill document must be included in the 
electronic transmission; alpha characters may not be eliminated));
    (2) Foreign airport of origin (M) (The 3-alpha character ICAO code 
corresponding to the airport from which a shipment began its 
transportation by air to the United States (for example, if a shipment 
began its transportation from Hong Kong (HKG), and it transits through 
Narita, Japan (NRT), en route to the United States, the airport of 
origin is HKG, not NRT));
    (3) Cargo description (M) (a precise description of the cargo or 
the 6-digit Harmonized Tariff Schedule (HTS) number must be provided. 
Generic descriptions, specifically those such as ``FAK'' (``freight of 
all kinds''), ``general cargo'', and ``STC'' (``said to contain'') are 
not acceptable);
    (4) Total quantity based on the smallest external packing unit (M) 
(for example, 2 pallets containing 50 pieces each would be considered 
as 100, not 2);
    (5) Total weight of cargo (M) (may be expressed in either pounds or 
kilograms);
    (6) Shipper name and address (M) (the name and address of the 
actual shipper (the owner and exporter) of the cargo from the foreign 
country);
    (7) Consignee name and address (M) (the name and address of the 
party to whom the cargo will be delivered in the United States, with 
the exception of ``FROB''); and
    (8) In-bond information (C) (this data element includes the 
destination airport; the international/domestic identifier (the in-bond 
type indicator); the in-bond control number, if there is one (C); and 
the onward carrier identifier, if applicable (C)).

Advance Electronic Information for Letters and Documents

    For purposes of compliance with the advance cargo information 
filing requirements under section 343(a), as amended, letters and 
documents would be subject to the same procedures as all other types of 
cargo. Such ``letters and documents'' comprise the data (for example, 
business records and diagrams) described in General Note 19(c), 
Harmonized Tariff Schedule of the United States (HTSUS); personal 
correspondence, whether on paper, cards, photographs, tapes, or other 
media; and securities and similar evidence of value described in 
subheading 4907, HTSUS, but not

[[Page 43583]]

including monetary instruments covered under 31 U.S.C. 5301-5322.

Electronic Freight Status Notifications

    If the facility (carrier, deconsolidator, or other party) currently 
holding the goods was automated, that party would have to honor all 
freight status notifications transmitted by CBP. Cargo could not be 
transferred to another facility, moved under the provisions of the in-
bond regulations or released to the consignee except upon electronic 
status notifications from CBP. Should the cargo be transferred to a 
non-automated facility (e.g., a Container Freight Station, a carrier 
facility in another port, or the like), that facility would be required 
to accept only paper documents for the disposition of the cargo.

Transition and Implementation Timeline

    All air carriers, and those authorized parties that choose to 
participate in presenting advance cargo information electronically to 
CBP through the approved automated system, would be expected to comply 
with the provisions of these regulations on and after 90 days from the 
date that the final rule in this matter is published in the Federal 
Register. However, CBP could delay the implementation of the final 
regulations at a given port until the necessary training had been 
provided to CBP personnel at that port. Also, CBP could delay the 
effective date of the final regulations in the event that any essential 
programming changes to the applicable CBP-approved electronic data 
interchange system were not in place. Finally, CBP could delay the 
effective date of the regulations if further time were required to 
complete certification testing of new participants. Any such delay 
would be the subject of a notice provided through the Federal Register

Electronic System Failure; Downtime

    Should the approved electronic data interchange system go down, the 
incoming air carrier and, if applicable, any other electronic filer 
would have to submit a hard copy equivalent of all required electronic 
cargo information to CBP either no later than ``wheels-up'' or no later 
than 4 hours prior to the arrival of the aircraft in the United States, 
depending upon the foreign area from which the incoming aircraft 
departs for the United States.

Comments; Rail Cargo Destined to the United States

Time Frame for Transmitting Information; Impact on Commerce

Comment
    Various suggestions were made regarding the time in which advance 
rail cargo data would need to be electronically presented to CBP. 
Specifically, the following time frames were put forth: 4 hours prior 
to departure for the United States; 4 hours prior to arrival in the 
United States; 2 hours prior to arrival; and under 2 hours prior to 
arrival. By contrast, it was stated that the time frame set forth in 
the ``strawman'' proposal (24 hours prior to lading in the foreign 
country) was unworkable/unrealistic. It was also stated that any time 
frame that CBP proposed should not adversely impact ``just-in-time'' 
shipping practices.
CBP Response
    The time frame in the ``strawman'' was put forth only as a 
perfunctory proposal, merely for the purpose of eliciting feedback from 
the trade in order to assist CBP in developing an appropriate time 
frame for inclusion in the proposed regulations. After considering the 
various recommendations from the rail trade, CBP agrees with those 
commenters who recommended that electronic cargo data for incoming rail 
cargo be presented no later than 2 hours prior to the arrival of the 
cargo at a United States port of entry.
    The CBP is of the opinion that this minimum 2-hour period for 
presenting rail cargo information electronically in advance of arrival 
is a reasonable and practical time frame for the submission of the 
necessary cargo data, and one that should not disrupt the flow of rail 
commerce into the country. This view is based in large part on the 
understanding that rail carriers will transmit cargo data on many types 
of shipments (e.g., intermodal sea traffic) as it becomes available, 
thereby limiting the amount of data that is transmitted 2 hours prior 
to arrival.
    At present, CBP finds that this is the minimum time period needed 
to perform the requisite risk analysis in relation to the transmitted 
data, and, if necessary, to request further information about the 
cargo, or to arrange for its examination in those instances, which are 
anticipated to be rare, where an examination should be found warranted.
    Rail carriers need to be advised, however, that while CBP is 
confident that the targeting can be accomplished within the 2-hour 
period, it may result in more trains spending time at the border 
uncoupling cars in order for them to be examined. Nevertheless, CBP is 
confident that this proposed time frame should not have any notable 
impact upon rail business practices, including ``just-in-time'' (JIT'') 
inventory shipments. In this latter respect, CBP is aware that commerce 
has increasingly relied on ``JIT'' shipping as a more cost effective 
way of conducting business.

Party Required To Present Data to CBP

Comment
    One commenter asked that the shipper (the exporter from the foreign 
country) and the United States importer be required to transmit the 
required cargo data to CBP. Another commenter said that the shipper 
should supply the data. Three commenters asserted that data should be 
accepted utilizing current systems and that the trade not be forced to 
incur extraordinary expenses for system upgrades which might only have 
to be quickly replaced due to the establishment of the Automated 
Commercial Environment (ACE).
CBP Response
    While it is recognized that the shipper and/or the United States 
importer could be the parties most likely to possess direct knowledge 
of particular information about the incoming rail cargo, CBP has 
initially concluded that it should be incumbent upon the rail carrier 
to submit the required information for the cargo. Simply stated, the 
current CBP-approved electronic data interchange system (the Rail 
Automated Manifest System (Rail AMS)) is essentially structured and 
programmed only to receive such data directly from the carrier. 
Accepting advance cargo information from the shipper and/or the United 
States importer would not be practicable in the present automated rail 
environment.
    The CBP will employ the prevailing system to electronically 
transmit and receive cargo information pending the advent of the 
Automated Commercial Environment (ACE). When ACE is established and in 
place, it may have the capability to receive data from the foreign 
exporter and/or the U.S. importer.

Requested Exemptions From the Advance Electronic Filing Requirements

Comment
    Vessel-to-rail containers and bulk/break-bulk shipments should be 
exempted from the filing requirements.

[[Page 43584]]

Members of C-TPAT (the Customs-Trade Partnership Against Terrorism) and 
participants in the FAST (Free And Secure Trade) system should be 
exempted from having to present advance electronic cargo data for their 
shipments; and the Department of Defense (DoD) should have exemptions 
based on the nature of their shipments (descriptions for sensitive 
military cargo should be general).
CBP Response
    Generally speaking, it is the view of CBP that a straightforward 
and streamlined regulation, unencumbered with multiple special 
exemptions, would present the most workable system especially with 
respect to the rail environment. Given the abbreviated time frame 
proposed (no later than 2 hours prior to arrival at a U.S. port of 
entry), CBP believes that the rail community in particular should be 
able to comply with the advance transmission of needed cargo data, with 
no measurable disruption in the flow of cross-border commerce; this 
should render moot most of the special requests for exemptions from the 
proposed advance filing requirements.
    Nevertheless, CBP is proposing to exempt one category of cargo from 
the advance automated notification rule: Domestic cargo that would 
arrive by train at one port from another in the United States after 
transiting a foreign country would not be subject to the advance 
electronic information filing requirement for incoming cargo; but 
advance information for such domestic cargo may be electronically 
presented to CBP, if desired.

Required Data Elements

Comment
    Required data elements to be transmitted to CBP should be clearly 
set forth; and CBP should give clear instructions as to what level of 
data would be sought.
CBP Response
    The proposed data elements for incoming rail cargo are contained in 
proposed Sec.  123.91(d). A number of the data elements contained in 
this proposed regulation are accompanied by explanations. The CBP will 
include additional definitions for those elements about which the 
importing rail community may desire greater elucidation. To assist in 
making this determination, CBP requests comments especially concerning 
those data elements for which the importing rail community seeks 
further guidance.

Information Technology; High Risk Cargo

Comment
    The CBP would need to automate any ports that were not already 
automated in order to enable the port to transmit or receive electronic 
data as part of the advance information filing program.
CBP Response
    The CBP will automate any remaining port that is not now 
operational on the existing CBP-approved electronic data interchange 
system (Rail AMS).
Comment
    Mandatory automation under section 343(a), as amended, would place 
additional pressure on trade participants. The CBP should take steps to 
ensure that its offices would be fully staffed around-the-clock at all 
rail crossings in order to handle any eventualities resulting from the 
implementation of the final advance cargo information filing 
regulations.
CBP Response
    The CBP will make every effort to ensure that there will be 
sufficient staff to assist the trade in effectively complying with the 
regulations. The CBP is aware that effectively administering the 
advance cargo information program will undoubtedly place upon it 
additional burdens, especially on some of the smaller ports along the 
border.
Comment
    Railroads rely extensively on Automated Line Release. The CBP 
should retain the C-4 Line Release Program (19 CFR part 142, subpart D) 
for the rail industry; eliminating Line Release would negatively affect 
carriers participating in Rail AMS as it would delay the time required 
for rail release.
CBP Response
    For the present, CBP intends to keep some type of Line Release, 
which might necessitate only some slight changes in names and terms.
Comment
    The CBP should establish procedures to be followed if Rail AMS were 
not functioning properly when a carrier attempted to file information 
through the system. Specific backup systems should be designated in the 
event of unplanned outages of either CBP's system or the rail carriers' 
systems.
CBP Response
    The CBP contemplates that the existing procedures of presenting a 
paper copy of the electronic data elements would still be used, with 
some adjustments as appropriate.
Comment
    Should an examination of any cargo aboard the incoming train be 
found warranted, the train should be allowed to proceed to the first 
inland port where the examination would be conducted.
CBP Response
    Absent special circumstances, all security-related examinations 
under section 343(a), as amended, would occur at or near the border.

Transition Period for Complying with Advance Cargo Information Filing

Comment
    A number of commenters advocated that they be afforded a transition 
period for complying with the regulations, without specifying what the 
period should be. One commenter asked for a period of 180 days; another 
suggested that different periods be allowed for different types of 
affected parties; and another requested that there be a period similar 
to the 90-day transition period granted for incoming vessel cargo under 
the ``24-hour rule'' (T.D. 02-62, 67 FR 66318; October 31, 2002).
CBP Response
    The CBP, as noted, seeks uniformity and simplicity in its advance 
cargo reporting rule for rail traffic, and agrees with the 
recommendation that a 90-day transition period would be adequate under 
the circumstances, particularly given that the rail industry is highly 
automated. Hence, a rail carrier would need to begin the electronic 
transmission to CBP of the required cargo information 90 days from the 
date that the port of arrival becomes automated.

Overview; Rail Cargo Destined to the United States

Rail Carrier Transmittal of Required Information for Incoming Cargo

    For any train requiring a train sheet under 19 CFR 123.6, that 
would have commercial cargo aboard, the rail carrier would be required 
to electronically present to CBP certain information concerning the 
incoming cargo no later than 2 hours prior to arrival at a United 
States port of entry. Specifically, based upon the transition/timetable 
as discussed below under ``Transition Period,'' to effect the advance 
electronic transmission of the required rail cargo information to CBP, 
the rail carrier would have to use a CBP-approved electronic data 
interchange system.

[[Page 43585]]

Currently, the CBP-approved automated system for this purpose is the 
Rail Automated Manifest System (Rail AMS).
    As indicated, the current CBP-approved automated system (Rail AMS) 
for electronically collecting cargo information for incoming rail cargo 
is programmed and structured to receive cargo data only from the inward 
rail carrier. Additionally, it is highly practicable and 
administratively expeditious for CBP to obtain the necessary cargo data 
from rail carriers as these carriers would already have the most direct 
contact with CBP, as opposed to the foreign shipper (exporter), a 
foreign freight forwarder, or the U.S. importer, who could, 
nevertheless, be more likely to have direct knowledge of particular 
information involving the incoming cargo. For this latter reason, and 
as a pre-requisite to accepting the cargo, the carrier would need to 
receive any necessary cargo information from the foreign shipper and 
owner of the cargo or from a freight forwarder, as applicable.

Foreign Cargo Transiting the United States

    Any foreign cargo arriving by train for transportation in transit 
across the United States would be subject to the advance electronic 
information filing requirement for incoming cargo. This includes 
foreign cargo being transported from one foreign country into another, 
and cargo arriving by train for transportation through the United 
States from one point to another in the same foreign country. Further, 
cargo that was to be unladen from the arriving train and entered, in 
bond, for exportation, or for transportation and exportation, in 
another vehicle or conveyance would also be subject to this advance 
electronic information filing requirement.

Exemption From Filing Mandate; Domestic Cargo Transiting Foreign 
Country

    With respect to incoming rail cargo, CBP believes that, as a 
general proposition, exemptions from the advance electronic filing 
requirements would unduly complicate the administration of the program. 
In consideration of the fairly abbreviated time frame for transmitting 
the electronic cargo information, CBP finds that a basic, uniformly-
imposed advance filing requirement would occasion only minimal 
disruption to cross-border commerce in the rail environment.
    Nevertheless, domestic cargo that would arrive by train at one port 
from another in the United States after transiting a foreign country 
would not be subject to the advance electronic information filing 
requirement for incoming cargo; however, advance information for such 
domestic cargo could be electronically presented to CBP, if desired.

Specific Information Required From the Carrier

    The rail carrier must electronically present to CBP the following 
cargo shipment information for all incoming cargo, as outlined above, 
that would arrive in the United States by train:
    (1) The rail carrier identification SCAC code (the unique Standard 
Carrier Alpha Code assigned for each carrier by the National Motor 
Freight Traffic Association; see 19 CFR 4.7a(c)(2)(iii));
    (2) The carrier-assigned conveyance name, equipment number and trip 
number;
    (3) The scheduled date and time of arrival of the train at the 
first port of entry in the United States;
    (4) The numbers and quantities of the cargo laden aboard the train 
as contained in the carrier's bill of lading, either master or house, 
as applicable (this means the quantity of the lowest external packaging 
unit; containers and pallets do not constitute acceptable information; 
for example, a container holding 10 pallets with 200 cartons should be 
described as 200 cartons);
    (5) 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);
    (6) The shipper's complete name and address, or identification 
number, from the bill(s) of lading (this means the actual owner 
(exporter) of the cargo from the foreign country; listing a freight 
forwarder or broker under this category is not acceptable; the 
identification number will be a unique number to be assigned by CBP 
upon the implementation of the Automated Commercial Environment);
    (7) The complete name and address of the consignee, or 
identification number, from the bill(s) of lading (The consignee is the 
party to whom the cargo will be delivered in the United States. 
However, in the case of cargo shipped ``to the order of [a named 
party],'' the carrier must identify this named ``to order'' party as 
the consignee; and, if there is any other commercial party listed in 
the bill of lading for delivery or contact purposes, the carrier must 
also report this other commercial party's identity and contact 
information (address/phone number) in the ``Notify Party'' field of the 
advance electronic data transmission to CBP, to the extent that the 
CBP-approved electronic data interchange system is capable of receiving 
this data. The identification number will be a unique number assigned 
by CBP upon implementation of the Automated Commercial Environment);
    (8) The place where the rail carrier takes possession of the cargo 
shipment;
    (9) Internationally recognized hazardous material code when such 
materials are being shipped by rail;
    (10) Container numbers (for containerized shipments) or the rail 
car numbers; and
    (11) The seal numbers for all seals affixed to containers and/or 
rail cars, to the extent that the electronic system can accept this 
information (currently, Rail AMS only has the capability to accept two 
seal numbers per container; the electronic presentation of up to two 
seal numbers for each container would be considered as constituting 
full compliance with this data element).

Electronic Freight Status Notifications

    If the party holding the goods was automated, that party would have 
to honor all freight status notifications transmitted by CBP. Cargo 
could not be transferred to a facility, moved under the provisions of 
the in-bond regulations or released to the consignee except upon 
electronic status notifications from CBP.

Transition Period

    The CBP will be automating any existing port that currently is not 
able to receive or transmit electronic information through the CBP-
approved electronic data interchange system. There are currently up to 
12 ports, most of them Permit Ports, that would require automation and 
training for CBP staff who are unfamiliar with the electronic data 
interchange system. Rail carriers would have to commence the advance 
electronic transmission to CBP of the required cargo information on and 
after 90 days from the date that CBP publishes a notice in the Federal 
Register informing affected carriers that Rail AMS is in place and 
operational at the port of entry where the train would initially arrive 
in the United States.

Electronic System Failure; Downtime

    Should the automated system fail, after going online, existing 
procedures, with some adjustments, if necessary,

[[Page 43586]]

would be used for presenting a hard copy equivalent of the electronic 
documentation to CBP.

Public Comments; Truck Cargo Destined to the United States

Summary of Principal Comments

    The following comments were received regarding the procedures for 
advance reporting of inbound cargo information for trucks:
    1. Any provision for pre-reporting information for inbound truck 
cargo should be pre-arrival, rather than pre-lading; and it was 
variously recommended that such notification be required no earlier 
than either 15 minutes or 30 minutes prior to reaching the port of 
arrival in the United States. These time frames are necessary to 
account for the ``just-in-time'' delivery systems that have been 
developed around land border operations.
    2. To accomplish the electronic transmission of the requisite data 
to CBP, on an interim basis, pending the establishment of the 
electronic truck multi-modal manifest system in the Automated 
Commercial Environment (ACE), the trade should be able to satisfy the 
pre-notification requirements of the statute by using existing systems/
programs, such as PAPS (the Pre-Arrival Processing System), BRASS (the 
Border Release Advanced Screening and Selectivity program, and FAST 
(the Free and Secure Trade program). In particular, CBP should take 
into consideration the importance of the role of the BRASS system in 
expediting the flow of traffic at the land borders.
    No new information-submission systems should be initiated or 
imposed during the interim period. The proposed pre-reporting 
provisions should be uniform for all ports on the U.S./Canada as well 
as the U.S./Mexico borders. Filers should not be held liable for 
incorrect/incomplete information supplied by others.
    3. There should be transition periods for implementing advance 
cargo information transmissions for the trucking industry that would 
take into account the fact that the industry has, at present, multiple 
sectors with varying, limited degrees of automation; indeed, much of 
the trucking trade on the U.S./Mexico border is currently not 
automated. Further, a contingency plan for handling shipments arriving 
without any pre-notification should be created and publicized.
    4. CBP should expand its hours of operation to 24 hours a day, 
seven days a week and have sufficient staffing to perform any 
inspections during those hours.
    5. Participation in special programs such as the Customs-Trade 
Partnership Against Terrorism (C-TPAT) should be taken into account by 
CBP and CBP should work with the Canadian government under the Shared 
Border Accords to arrive at common procedures and requirements to ease 
the burden on the trade.
CBP Response
    Taking into account the flexibility provided by the Trade Act 
(e.g., developing interim measures based on existing technology to 
enable CBP to identify high-risk shipments), CBP agrees that, on an 
interim basis, existing systems, especially the Free and Secure Trade 
(FAST) system, will be employed, being enhanced and adapted as 
appropriate, to effect the advance presentation of the necessary 
commodity and carrier information for inbound truck cargo, as a prelude 
to the creation and activation of the Truck Manifest module in ACE. 
(The Truck Manifest module in ACE will be the subject of a separate 
notice in the Federal Register.) However, regardless of what actual 
program(s)/procedure(s) may be employed at any given time or place to 
comply with the pre-arrival information filing requirements of section 
343(a), as amended, the regulations, for uniformity and continuity, 
will simply reflect that the required data elements must be presented 
through a CBP-approved electronic data interchange system.

Interim Measures

    As indicated, until the development of the Truck Manifest Module in 
ACE, CBP will employ existing systems on both the Northern and Southern 
borders to receive and evaluate information for incoming truck 
shipments. These systems are FAST, PAPS (which uses the Automated 
Broker Interface (ABI)), BRASS (which would be modified as necessary), 
and CAFES (the Customs Automated Forms Entry System) or ABI in-bond 
reporting.
    The Pre-Arrival Processing System (PAPS) is a method of speeding 
the release of Border Cargo Selectivity or regular Cargo Selectivity 
entries on the land border. The shipment data required to submit an 
entry through the Automated Broker Interface (ABI) must be provided to 
the entry filer by the shipper or the carrier or other trade partner in 
advance of the conveyance arrival. Also included in that ABI data is 
the Pro-Bill or Bill of Lading assigned to the shipment by the carrier 
and the Standard Carrier Alpha Code (SCAC) assigned to the carrier. 
That code and number is submitted through ABI to CBP by the entry 
filer. The carrier provides the driver with a bar-coded representation 
of that information to accompany the paper inward manifest (CF 7533) 
and invoices. The CBP inspector uses that bar code to retrieve the 
electronic record and targeting results in the automated system. The 
carrier can then be processed without the necessity of stopping at the 
entry filer's office and be released from either the primary truck 
inspection booth or from the cargo examination facility.
    The advance transmission, via fax or other means, of the SCAC/Pro-
bill number from the carrier or shipper to the filer eliminates the 
requirement of any return communication from the filer to the carrier. 
The submission of the ABI data in advance of arrival eliminates the 
need for carriers to park in an import lot and spend additional time at 
an entry filer's office; traffic congestion decreases and efficiencies 
in the release process increase.
    The electronic filer would have to present commodity and 
transportation information to CBP for the subject cargo no later than 
either 30 minutes or 1 hour prior to the carrier's arrival at a United 
States port of entry, depending upon the specific CBP-approved system 
employed in transmitting the required data, with the exception of CAFES 
and BRASS, as described below. This 30-minute or 1-hour period would be 
measured by the time that CBP receives the information, as opposed to 
the time that the electronic filer transmits the information for the 
cargo. The CBP believes that this time period, in relation to the 
particular automated system used, would be the minimum period needed to 
perform a targeting analysis for cargo selectivity, and, if found 
warranted, to arrange for an inspection or examination of the cargo 
following its arrival. This advance cargo information reporting 
requirement would thus be the same at all ports, depending on the 
approved system used to present the cargo information to CBP.
    Specifically, in this latter respect, under the Free and Secure 
Trade (FAST) system, the electronic filer would have to present 
commodity and transportation information to CBP for the subject cargo 
no later than 30 minutes prior to the carrier's arrival at a United 
States port of entry. The CBP believes that FAST shipments can be 
screened and targeted, as appropriate, with less advance notification 
than would otherwise be necessary, because of the prior screening 
incurred by the parties to the FAST transaction, including the driver. 
However, under PAPS or ABI in-bond reporting, the required cargo data 
would need to be

[[Page 43587]]

presented no later than 1 hour prior to arrival at the U.S. port of 
entry. By contrast, for CAFES and BRASS (as modified), given the 
limitations of these systems, the necessary information would be 
submitted upon arrival at the first port of entry.
    The only system currently in effect that allows carrier 
transmission of data electronically to CBP is FAST, with respect to 
those transactions that have data submitted totally through an 
electronic interface with CBP. Other participants in FAST have the 
electronic shipment data transmitted via the entry filer in the 
Automated Broker Interface (ABI) system of the Automated Commercial 
System (ACS), while the carrier/driver presents a paper manifest for 
the goods on the conveyance. In either case, the driver must be a 
registered driver in the FAST Driver Registration Program. Under the 
FAST system, the electronic filer would need to present cargo data to 
CBP no later that 30 minutes prior to the carrier's arrival at a U.S. 
port of entry.
    Additionally, CBP acknowledges the role that BRASS (formerly Line 
Release (19 CFR part 142, subpart D)) plays in the expeditious movement 
of cargo on the land border. However, the current methodology utilized 
in BRASS for trucks does not allow for an advance electronic notice 
prior to arrival. The BRASS system is, and remains, heavily based upon 
the presentation of paper manifests, invoices and C-4 bar code labels 
(19 CFR 142.43(b)). It is observed, though, that CBP has already 
instituted an electronic form of BRASS in the Rail Automated Manifest 
System, and intends to do the same with the introduction of a Truck 
Automated Manifest System in ACE. In the interim, CBP intends to allow 
the continuation of BRASS for trucks, but may institute some additional 
requirements or otherwise modify BRASS in order to increase the 
security of BRASS transactions.
    The CBP proposes a gradual transition from the reliance on the 
paper based BRASS release system. With the incorporation of a fully 
electronic version of BRASS planned in the new automated truck manifest 
scheduled for delivery under the Automated Commercial Environment 
(ACE), CBP does not propose making any changes to the method in which 
the current paper based BRASS operates. A gradual reduction in the 
parties eligible to utilize the existing paper based BRASS system is 
planned, with limitations in participation based on concerns of other 
government agencies, the level of compliance within past BRASS 
shipments and the volume of usage over the course of the preceding 
year. Additionally, CBP will take measures considered necessary to 
ensure the security of the BRASS program by incorporating voluntary 
program requirements such as FAST Driver registration and participation 
in the Customs-Trade Partnership Against Terrorism.
    Moreover, for in-bond shipments transiting the United States that 
arrive by truck, as an interim procedure, CBP will also make use of 
those systems that are currently available, since the necessity for 
screening advance data for in-bond truck shipments must be addressed 
while awaiting future automated systems in the truck environment. In 
particular, the Customs Automated Forms Entry System (CAFES) will be 
utilized to prepare the Customs Form (CF) 7512 in-bond document at all 
land border crossings where no other automation is available for in-
bond shipments. While this capability does not include advance notice 
of the details of a shipment, it does include automated screening when 
the shipment arrives and is processed by CBP. As an alternative, 
carriers or their agents may use the Automated Broker Interface (ABI) 
to transmit in-bond information for shipments arriving by truck.

Interim Transition Periods

    Furthermore, CBP recognizes the merit, and necessity, of affording 
suitable transition periods for implementing the regulations for inward 
truck cargo. To this effect, CBP proposes that cargo information be 
filed electronically for truck cargo that would arrive at a United 
States port of entry on and after 90 days from the date that CBP has 
published a notice in the Federal Register informing affected carriers 
that:
    (1) The approved data interchange is in place and fully operational 
at that port; and
    (2) The carrier must commence the presentation of the required 
advance cargo information through the approved system.
    During these interim periods, however, if CBP suspected that goods 
were being routed in an attempt to evade advance scrutiny at an 
automated United States port of arrival, those goods would very likely 
be treated as high risk upon their arrival at a non-automated port.

Mandatory Filing by Truck Carrier; Voluntary Importer Participation

    Under the proposed pre-notification program, the incoming truck 
carrier would be obliged to submit all essential information to CBP 
within the designated time period. However, the United States importer, 
or its Customs broker, if electing to do so, could instead timely file 
with CBP any required commodity and other data that it possessed in 
relation to the cargo. Such information would likely be directly known 
by the importer or its broker. If the importer or broker did elect to 
file the commodity data with CBP, the carrier would have to present the 
required data pertaining to the transportation of the cargo. Such 
information would, of course, be best known by the carrier.
    In any event, should the electronic filer of the cargo information 
receive any of this information from another party, the law mandates 
that where the electronic filer is not reasonably able to verify the 
information received, the regulations must allow the filer to transmit 
the information based on what it reasonably believes to be true. The 
CBP has expressly included this mandate in the proposed regulations.
    The CBP will make every effort to ensure that there will be 
sufficient staff to assist the trade in effectively complying with the 
regulations. The CBP is aware that effectively administering the 
advance cargo information program will undoubtedly place additional 
burdens upon it, especially on some of the smaller ports along the 
border.
    Finally, CBP will not propose a contingency plan for handling cargo 
that is not pre-reported in accordance with the regulations; once 
implemented at a port, the advance reporting provisions would be 
mandatory for all required cargo. For any inward cargo for which 
advance electronic commodity and transportation information was not 
presented to CBP, as otherwise required in the regulations, the 
transporting carrier could be refused admission to the United States, 
or be denied a permit to unlade such cargo.

Overview; Truck Cargo Destined to the United States

Transmittal of Required Information for Incoming Cargo

    For any truck required to report its arrival under 19 CFR 123.1(b), 
that will have commercial cargo aboard, CBP must electronically receive 
from the inbound truck carrier, and from the United States importer, or 
its Customs broker, if they choose to do so, certain information 
concerning the incoming cargo. Except as provided for BRASS and CAFES 
under the previous section concerning ``Interim Measures,'' CBP must 
receive such cargo information by means of a CBP-approved electronic

[[Page 43588]]

data interchange system no later than either 30 minutes (for FAST) or 1 
hour (for PAPS and ABI in-bond reporting) prior to the carrier's 
arrival at a United States port of entry.

Foreign Cargo Transiting the United States

    For foreign cargo transiting the United States in-bond, as an 
interim measure, CBP intends to employ CAFES or ABI in-bond reporting 
when either of these systems is available at the given port of arrival. 
In addition, any foreign cargo arriving by truck for transportation in 
transit across the United States would be subject to the advance 
electronic information filing requirement for incoming cargo when the 
Truck Manifest module in the Automated Commercial Environment (ACE) is 
implemented and made mandatory at the port of arrival. This reporting 
requirement for in-transit cargo would include foreign cargo being 
transported by truck from one foreign country to another (19 CFR 
123.31(a)), and cargo being transported from point to point in the same 
foreign country (19 CFR 123.31(b); and 19 CFR 123.42). Further, cargo 
that is to be unladen from the arriving truck and entered, in bond, for 
exportation, or for transportation and exportation, in another vehicle 
or conveyance would also be subject to this advance electronic 
information filing requirement, either under CAFES or ABI in-bond 
reporting, or under ACE when it is implemented and made mandatory at 
the port of arrival. However, as previously observed, the 
implementation of ACE will be the subject of a future Federal Register 
notice.

Exemptions; Domestic Cargo Transiting Foreign Country; Certain Informal 
Entries

    By contrast, domestic cargo transported by truck to one port from 
another in the United States by way of a foreign country (19 CFR 
123.21; and 19 CFR 123.41) is not subject to the advance electronic 
filing requirement for incoming cargo. However, such information may be 
electronically transmitted in advance to CBP, if desired, when the 
electronic cargo information system is made available at the port of 
arrival.
    Similarly, the following merchandise would be exempt from the 
advance cargo information reporting requirements under this proposed 
rule, to the extent that such merchandise qualifies for informal entry 
pursuant to part 143, subpart C, Customs Regulations (19 CFR part 143, 
subpart C): (1) Merchandise which may be informally entered on Customs 
Form (CF) 368 or 368A (cash collection or receipt); (2) Goods, 
unconditionally or conditionally free, not exceeding $2,000 in value, 
that are eligible for entry under CF 7523; and (3) Products of the 
United States being returned, for which entry is prescribed on CF 3311. 
In these instances, the paper entry document alone would serve as both 
the manifest and entry.

Affected Parties

    The incoming truck carrier must present the required commodity and 
transportation information in advance to CBP electronically via the 
CBP-approved electronic data interchange, currently through FAST, PAPS, 
BRASS (modified as necessary), CAFES or ABI in-bond reporting, and, 
when available, through ACE. However, the United States importer, or 
its Customs broker, if choosing to do so, may instead electronically 
submit to CBP, within the designated time period, that portion of the 
required information that it possesses in relation to the cargo. Where 
the importer, or broker, elects to file a portion of the cargo 
information, the carrier would be responsible for timely presenting to 
CBP the remainder of the required data.

Specific Information Required

    The cargo data elements that would need to be presented 
electronically to CBP, on an interim basis, are those data elements 
that are currently required under FAST. The anticipated data elements 
for electronic submission under ACE have not been completely finalized 
yet. The data elements that would be required under ACE will be 
identified at a future date pursuant to a future Federal Register 
notice.
    Accordingly, the following commodity and transportation 
information, as applicable, would have to be electronically transmitted 
to and received by CBP for all required incoming cargo arriving in the 
United States by truck, to the extent that the particular CBP-approved 
electronic data interchange system employed can accept this 
information:
    (1) Conveyance number, and (if applicable) equipment number (the 
number of the conveyance is its Vehicle Identification Number (VIN) or 
its license plate number and state of issuance; the equipment number, 
if applicable, refers to the identification number of any trailing 
equipment or container attached to the power unit);
    (2) Carrier identification (this is the truck carrier 
identification SCAC code (the unique Standard Carrier Alpha Code) 
assigned for each carrier by the National Motor Freight Traffic 
Association; see 19 CFR 4.7a(c)(2)(iii));
    (3) Trip number and, if applicable, the transportation reference 
number for each shipment (the transportation reference number is the 
freight bill number, or Pro Number, if such a number has been generated 
by the carrier);
    (4) Container number(s) (for any containerized shipment) (if 
different from the equipment number), and the seal numbers for all 
seals affixed to the equipment or container(s);
    (5) The foreign location where the truck carrier takes possession 
of the cargo destined for the United States;
    (6) The scheduled date and time of arrival of the truck at the 
first port of entry in the United States;
    (7) The numbers and quantities for the cargo laden aboard the truck 
as contained in the bill(s) of lading (this means the quantity of the 
lowest external packaging unit; containers and pallets do not 
constitute acceptable information; for example, a container holding 10 
pallets with 200 cartons should be described as 200 cartons);
    (8) The weight of the cargo, or, for a sealed container, the 
shipper's declared weight of the cargo;
    (9) A precise description of the cargo or the Harmonized Tariff 
Schedule (HTS) numbers to the 6-digit level under which the cargo will 
be classified (Generic descriptions, specifically those such as FAK 
(``freight of all kinds''), ``general cargo,'' and ``STC'' (``said to 
contain'') are not acceptable);
    (10) Internationally recognized hazardous material code when such 
cargo is being shipped by truck;
    (11) The shipper's complete name and address, or identification 
number, from the bill(s) of lading (this is the actual shipper (the 
owner and exporter) of the cargo from the foreign country; the 
identification number will be a unique number to be assigned by CBP 
upon the implementation of the Automated Commercial Environment); and
    (12) The complete name and address of the consignee, or 
identification number, from the bill(s) of lading (this is the party to 
whom the cargo will be delivered in the United States, with the 
exception of ``FROB'' (Foreign Cargo Remaining On Board); the 
identification number will be a unique number assigned by CBP upon 
implementation of the Automated Commercial Environment).

Transition/Timetable for Compliance

    The incoming truck carrier and, if electing to do so, the United 
States importer, or its Customs broker, must present the advance 
electronic cargo

[[Page 43589]]

data to CBP, as discussed above, at the particular port of entry where 
the truck will arrive in the United States on and after 90 days from 
the date that CBP has published a notice in the Federal Register 
informing affected carriers that:
    (1) The approved data interchange is in place and fully operational 
at that port; and
    (2) The carrier must commence the presentation of the required 
advance cargo information through the approved system.

Comments; Cargo Departing From the United States; All Modes

    The following comments were received regarding the electronic 
submission of cargo data for outbound shipments.

Setting Transmittal Times for Electronically Presenting Information

Comment
    The time frames proposed by Customs were too long, would 
significantly impede or eliminate Just-in-Time (``JIT'') business 
practices, and impede or eliminate express shipping services.
CBP Response
    The pre-departure filing time frames set forth in this proposed 
rule for export cargo information reporting are far shorter than the 
24-hour period prior to lading that was included in the ``strawman'' 
proposals. As previously indicated, the time frames set forth in the 
``strawman'' proposals were only intended to stimulate feedback from 
the trade, for consideration by CBP in formulating time frames for 
presenting the required cargo data under this proposed rule. The time 
frames proposed in this rule, discussed in further detail below, range 
from 24 hours prior to departure for vessels to not later than 1 hour 
prior to departure for trucks.
    In determining the time frames for the advance reporting of 
information for outbound cargo in this proposed rule, CBP considered 
existing commercial practices. The CBP also took into account the 
minimum amount of time necessary to perform automated targeting and 
analysis and to request further information about the cargo or to 
schedule its examination, in the event that a shipment were identified 
as being potentially high-risk. The CBP also considered the different 
threats to the United States and others posed by outbound shipments. It 
is anticipated that these time frames are sufficiently abbreviated that 
there will be no palpable impact on ``JIT'' business/inventory 
practices.
Comment
    The reporting time frames should be based on when the electronic 
filer transmits the information, as opposed to when the Government-
administered automated system verifies the receipt of the transmitted 
information.
CBP Response
    There is no mechanism in the approved electronic data interchange 
system (currently, the Automated Export System (AES)) for capturing the 
date and time of submission by the filer. The time of receipt is 
quantified by the time that an Internal Transaction Number (ITN) is 
generated, and the system records this date and time.
    The AES has an Office of Management and Budget (OMB) performance 
measure for 2003 which sets the goal of monitoring and tuning trade 
processing to maintain the average monthly percent of filer 
transmissions with a turnaround time below one minute at 95%. The AES 
consistently meets this new performance measure. The CBP cannot monitor 
compliance and/or perform enforcement based on the date and time of 
submission by the filer.

Load/No Load Messages

Comment
    The trade expressed the need for both a ``No Load'' message, and an 
``OK to Load'' message for both imports and exports.
CBP Response
    The CBP sees ``No Load'' situations for exports as an extremely 
infrequent occurrence. Therefore, a constant stream of ``OK to Load'' 
messages would not be useful to the export process.
    The AES Commodity module, which will be used to meet the Trade Act 
mandate, currently does not have the capability to provide an automated 
``No Load'' or ``Hold'' message to the carrier. The AES Commodity 
module does provide feedback to the United States Principal Party in 
Interest (USPPI) or its authorized filing agent in the form of warning 
messages for data inconsistencies as well as for data errors in cases 
where the system cannot accept the data as transmitted. (The CBP will 
use the term ``USPPI,'' as defined in 15 CFR part 30; the term 
``Exporter'' will not be used again in this document.) A ``No Load'' 
message transmitted to the USPPI or its filing agent is not the most 
efficient notification path for denying lading to a specific shipment. 
A ``No Load'' message will be feasible when export manifest modules for 
all modes are in place in AES.
    At the time of promulgation of a final rule in this matter, 
automated manifest options will not be available for air, truck, and 
rail modes in AES. For the purposes of this rulemaking, pursuant to the 
Trade Act of 2002, CBP has determined that the option of waiting for 
the availability of automated export manifest systems in AES does not 
meet the intent of the Trade Act to improve cargo safety and security 
in the near term. Accordingly, should export manifest modules not be 
available upon the effective date of a final rule in this matter, CBP 
proposes to collect the following 6 transportation data elements for 
outbound cargo, which should otherwise be readily known to the USPPI or 
its authorized agent, as further discussed, infra: Mode of 
transportation; Carrier identification; Conveyance name; Country of 
ultimate destination; Estimated date of exportation; and Port of 
exportation.

Exemptions; Retention of Post-Departure Filing

Comment
    The trade strongly supported retaining the Option 4 Post-Departure 
filing privilege.
CBP Response
    The CBP supports a structured system of exemptions and/or pre-
approval programs that recognize the varying degrees of risk associated 
with export shipments and the different threats posed to the United 
States and others by such shipments. Given the differences in in-bond 
and export shipments, a limited post-departure filing option may be 
appropriate for certain types of export shipments. The CBP will work 
with the Bureau of Census and the trade in designing these programs, 
building upon current initiatives such as AES Option 4, the Customs-
Trade Partnership Against Terrorism (C-TPAT), and the Transportation 
Security Administration's (TSA's) ``Known Shipper'' Program. The C-TPAT 
is a joint government-business initiative designed to enhance security 
procedures over the entire supply chain of incoming cargo while 
improving the flow of trade. In return for tightening the security of 
their supply chains, C-TPAT participants can get their cargo processed 
through CBP faster.
    At the present time, while not exempting any USPPI from the advance 
pre-departure cargo information reporting requirements, this rulemaking 
supports post-departure reporting by highly compliant exporters. The 
CBP and Census will develop and implement

[[Page 43590]]

changes to post-departure reporting jointly, and as appropriate.
Comment
    The trade indicated a need for priority/exemption for a range of 
commodities and transaction types. Examples of commodities proposed for 
exemption were bulk cargo, perishables, and human organs/perishable 
medical products. Related or ``twin plant'' shipments were also 
suggested as candidates for exemption.
CBP Response
    The CBP is not planning to eliminate exemptions or pre-approval 
programs in regulations promulgated pursuant to the Trade Act. The CBP 
agrees with the exemption of select export shipments such as human 
organs, perishable medical supplies, and emergency humanitarian aid. As 
such, the scope of future exemptions and the requirements for 
participation in low-risk exporter programs for reporting export 
commodity data will be determined jointly by CBP and Census.

Internal Transaction Number; External Transaction Number

Comment
    The External Transaction Number (XTN) was preferred by most of 
those who commented. The XTN is generated by the USPPI or its 
authorized agent who transmits the electronic data. At the same time, 
some support in the trade community was expressed for the Internal 
Transaction Number (ITN), and there was near unanimity that CBP should 
not require reporting of both numbers. The ITN is the AES system-
generated number that indicates that the transmission of required 
export cargo information has been received and accepted through the 
system.
CBP Response
    The preference for the XTN is understandable, but because an XTN 
can be generated and annotated on export documents without transmitting 
shipment data to AES, the XTN is susceptible to abuse. This assertion 
is supported by a 60-day AES exemption statement survey conducted by 
CBP during the summer of 2002. Then Customs (now CBP) field locations 
nationwide audited over 13,000 AES exemption statements and found 25% 
to be invalid at the time of export. Therefore, CBP's position will be 
to require that the ITN number be annotated on the appropriate export 
documents for shipments which require full pre-departure reporting. 
However, CBP wishes to especially emphasize in this regard that the 
annotation of the ITN number on any export documentation will not be 
required or enforced until the implementation of the redesign of the 
AES commodity module, which is anticipated to be completed in mid 2004.
    The ITN provides a link to a create date and time for the record in 
AES from which to verify compliance with pre-departure filing 
requirements. The ITN is also consistent in format, starting with an 
``X'', followed by an 8-position date (century, year, month, day) and a 
6-position sequential number that is assigned by the AES system. In 
addition, the AES mainframe typically returns the ITN in less than one 
minute.
    By contrast, External Transaction Numbers (XTNs) consist of the 9-
digit electronic filer identification and a Shipment Reference Number 
(SRN) that are separated by a hyphen. The SRN may contain up to 17 
letters, numbers and symbols, allowing for a longer format with more 
variability than the ITN.
    The CBP notes that ITNs will not be required for shipments 
authorized for post-departure (currently AES Option 4) reporting of 
export cargo information. The post-departure filing citation annotated 
on export documentation will continue to conform to approved formats 
contained in the Bureau of Census Foreign Trade Statistics Regulations 
(FTSR) (15 CFR part 30).
    The CBP recognizes conditions under which ITNs will not be 
available due to a failure of an automated system. Procedures for 
dealing with system downtime--where the Government's electronic system 
and/or the USPPI's system for receiving and processing export cargo 
data fails--will be detailed in the Automated Export System Trade 
Interface Requirements handbook (AESTIR), and any successor 
publication. The AESTIR is available on the CBP Web site (http://www.cbp.gov).

Overview; Cargo Departing From the United States; All Modes

Outward Cargo Information Reporting; System To Be Used

    To ensure the safety and security of cargo that would be sent from 
the United States, as mandated by section 343(a), as amended, CBP would 
use the existing approved electronic data interchange system for 
receiving export commodity data from the United States Principal Party 
in Interest (USPPI). The current system being used for this purpose is 
called the Automated Export System (AES).
    The CBP has elected, in consultation and cooperation with the 
Bureau of Census, to utilize the commodity module of the AES (the 
automated Shipper's Export Declaration), to meet the mandate of the 
Trade Act. At such time as automated manifest modules are available for 
all modes, these enhanced capabilities will be reviewed to determine 
additional compliance with the Trade Act of 2002.
    This is a considered decision recognizing that at the time of 
promulgation of the final rule under section 343(a), as amended, the 
filing of export data via the AES will not be mandatory. In short, it 
is intended that the final rule in this matter for the advance filing 
of cargo information for all reportable outbound shipments not be 
implemented until Bureau of Census regulations under the Security 
Assistance Act (Pub. L. 107-228) are implemented.
    Since the inception of AES, the elimination of the paper Shipper's 
Export Declaration (SED) has been the ultimate goal, and with the 
passage of the Security Assistance Act, the Bureau of Census has the 
authority to mandate the electronic filing of all reportable export 
shipments, with promulgation of regulations planned for mid 2004. Prior 
to mandatory electronic filing for all reportable export shipments, the 
Department of Commerce, Bureau of Census, will publish a rule requiring 
mandatory electronic reporting for commodities on the Commerce Control 
List (CCL), and U.S. Munitions List (USML), planned for the summer of 
2003.
    The CBP, however, does intend to accomplish several things with 
this rulemaking:
    (1) Articulate a commitment to strengthening export reporting 
processes in concert with external agency partners such as the 
Department of Commerce (the Bureau of Census and the Bureau of Industry 
and Security), the Department of State (the Directorate of Defense 
Trade Controls), the Department of Treasury (Office of Foreign Assets 
Control), the Department of Transportation, the Drug Enforcement 
Administration, and the Environmental Protection Agency;
    (2) Establish time frames for automated reporting that will support 
targeting for high risk exports and allow CBP or other Government 
agencies to respond prior to export; and
    (3) Establish the system generated Internal Transaction Number as 
the accepted proof of automated filing, for all reportable exports not 
eligible for exemption.
    Utilizing the automated SED within the AES combined with mandatory 
filing under Census complies with the intent of the Trade Act to 
collect

[[Page 43591]]

advance cargo information electronically from the party with the best 
knowledge of that information. Under current automated practices, the 
USPPI or its authorized agent has the capability to transmit export 
information electronically, and with limited exceptions, has knowledge 
of the data transmitted.

Time Frames for Presenting Information

    A USPPI, or its authorized agent, participating in advance cargo 
information filing would have to present export cargo information 
through the AES commodity module for outbound shipments, as follows:
    (1) For vessel cargo, the participating USPPI or its authorized 
agent must transmit and verify system acceptance of export vessel cargo 
information no later than 24 hours prior to the departure of the 
vessel;
    (2) For air cargo, including cargo being transported by Air Express 
Couriers, the participating USPPI or its authorized agent must transmit 
and verify system acceptance of export air cargo information no later 
than 2 hours prior to the scheduled departure time of the aircraft;
    (3) For truck cargo, including cargo departing by Express 
Consignment Courier, the participating USPPI or its authorized agent 
must present and verify system acceptance of export truck cargo 
information no later than 1 hour prior to the arrival of the truck at 
the border; and
    (4) For rail cargo, the participating USPPI or its authorized agent 
must transmit and verify system acceptance of export rail cargo 
information no later than 4 hours prior to the time at which the engine 
is attached to the train to go foreign.
    The preceding time frames are provided by CBP as minimum 
guidelines. All parties involved in export transactions should be 
advised that filing electronic cargo information as far in advance as 
practicable reduces the need for CBP to delay export of that cargo to 
complete any screening or examinations deemed to be necessary.
    The foregoing time frames for reporting information about outbound 
vessel, air, truck and rail cargo only apply to shipments without an 
export license, that require full pre-departure reporting of shipment 
data, in order to comply with the advance cargo information filing 
requirements under section 343(a), as amended. The USPPI or its 
authorized agent may refer to proposed Sec.  192.14(e) for specific 
guidance concerning the effective date for the time frames detailed 
herein. Requirements placed on exports controlled by other Government 
agencies will remain in force unless changed by the agency having the 
regulatory authority to do so. The CBP will also continue to require a 
72-hour advance notice for vehicle exports pursuant to 19 CFR 
192.2(c)(1) and (c)(2)(i). The USPPI or its authorized agent should 
refer to the relevant titles in the Code of Federal Regulations for the 
pre-filing requirements of other Government agencies.

Electronic Filer of Export Cargo Information; Proposed Requirements

    The USPPI, or its authorized agent, who participates in reporting 
export data electronically via the commodity module (the automated 
Shipper's Export Declaration) of the AES, would continue to transmit 
and verify that such data had been accepted through the system, but 
would have to do so no later than the time, in advance of departure, 
prescribed for each mode of transportation under this proposed rule. 
The USPPI or its authorized agent may refer to proposed Sec.  192.14(e) 
for specific information concerning effective dates for procedures 
outlined herein.
    Since the AES Commodity Module already captures the requisite 
export data, and to avoid redundancy with existing export reporting 
requirements, no new commodity or transportation data elements would 
need to be required under section 343(a), as amended. Specifically, the 
export cargo information collected from USPPIs or their authorized 
agents is contained in the Bureau of Census electronic Shipper's Export 
Declaration (SED) that is presented to CBP through the AES. Those 
export commodity data elements that are required to be reported 
electronically through AES are also found in Sec.  30.63 of the Bureau 
of Census Regulations (15 CFR 30.63). The required transportation data 
elements are defined below in accordance with 15 CFR 30.63.
    1. Mode of transportation. The mode of transportation is defined as 
that by which the goods are exported or shipped (vessel, air, rail, or 
truck).
    2. Carrier identification. The USPPI or its authorized agent should 
reasonably be expected to know the identification of the carrier that 
would actually be transporting the merchandise out of the United 
States. For vessel, rail and truck shipments, the unique carrier 
identifier would be its 4-character Standard Carrier Alpha Code (SCAC); 
for aircraft, this identifier would be the 2- or 3-character 
International Air Transport Association (IATA) code.
    3. Conveyance name. The conveyance name would be the name of the 
carrier (for sea carriers, the name of the vessel; for others, the 
carrier name).
    4. Country of ultimate destination. This is the country as known to 
the USPPI or its authorized agent at the time of exportation, where the 
cargo is to be consumed or further processed or manufactured. This 
country would be identified by the 2-character International Standards 
Organization (ISO) code for the country of ultimate destination.
    5. Estimated date of exportation. The participating USPPI or its 
authorized agent must report the date the cargo is scheduled to leave 
the United States for all modes of transportation. If the actual date 
is not known, the participating USPPI or authorized agent must report 
the best estimate as to the time of departure.
    6. Port of exportation. The port of exportation would be designated 
by its unique code, as set forth in Annex C, Harmonized Tariff Schedule 
of the United States (HTSUS).

Identifying High-Risk Shipments

    The CBP finds that the data elements that the USPPI would have to 
timely present through AES covering both the commodity and 
transportation information for outbound cargo should prove to be 
sufficient for identifying and targeting potentially high-risk 
shipments. For outbound cargo that CBP has identified as high-risk, the 
carrier, after being duly notified by CBP, would be responsible for 
delivering the cargo for inspection/examination; if the cargo 
identified as high-risk had already departed, CBP would exercise its 
authority to demand that the cargo be redelivered (see 19 CFR 
113.64(g)(2)).
    Notably, in the case of outbound cargo, identifying high-risk 
shipments would principally be concerned with interdicting any 
attempted illegal export of technology, and associated goods and 
materials, that could be employed by terrorist organizations abroad in 
the construction of weapons of mass destruction (WMDs), such as nuclear 
and radiological dispersal devices (``dirty bombs''), that would be 
intended ultimately for use either here in the United States or in 
another country.

Proposed Requirement; Carrier Data

    The CBP has made a prudent judgment that the transportation data, 
along with the commodity data (both collected in the AES Commodity 
Module), that CBP proposes to require from the participating USPPI or 
its authorized agent, would be sufficient for effective targeting and 
risk assessment under section 343(a), as amended.

[[Page 43592]]

    Additional information for outward cargo is not readily available 
in advance of departure because exporting carriers, who have direct 
knowledge of this information, generally do not now have the electronic 
capability to furnish cargo data through AES. Specifically, there are 
no carrier manifest modules in AES, except for the vessel carrier 
module which is voluntary and does not yet include the capability to 
receive cargo data directly from Non Vessel Operating Common Carriers 
(NVOCCs). Therefore, implementation of mandatory automated cargo data 
processes for vessel operators in the absence of other such modules 
would create uneven requirements within and across modes of 
transportation.
    Conversely, to presently obligate USPPIs or their authorized agents 
to transmit transportation data additional to that which is collected 
in the AES Commodity Module would be impracticable because such 
information would not necessarily otherwise be obtainable in a timely 
enough manner to meet the proposed advance electronic reporting 
procedures; this would inevitably delay and disrupt the movement of 
cross-border traffic.
    Against this overall backdrop, therefore, CBP has concluded that 
its proposal to require pre-existing data elements for outward cargo 
represents a sound and sensible initial step in establishing a solid 
informational bulwark against threats to cargo safety and security, and 
one which would not adversely impact or impinge upon the flow of cross-
border commerce.
    To this end, and pursuant to Bureau of Census regulations that are 
due to be issued next year, the current AES system is to be upgraded 
and reprogrammed so as to enable, and require, that USPPIs or their 
authorized agents transmit, verify acceptance and annotate an ITN 
(unless otherwise exempt from pre-departure filing) on export documents 
presented to the exporting carrier in accordance with the time frames 
and procedures outlined in this rule. Nevertheless, CBP and the 
exporting trade agree with the advisability of creating carrier 
manifest modules in AES or a successor system that would facilitate the 
reporting of additional cargo information for outbound cargo.
    Complete transportation data from exporting carriers would be 
collected for every export shipment when CBP has the system 
capabilities set up to receive this data directly from carriers. Once 
this requisite technology is approved and incorporated into an 
automated system, CBP will then review these new capabilities to 
determine additional compliance with the Trade Act of 2002. The CBP 
would then propose its own regulations in the Federal Register calling 
for exporting carriers, in advance of departure, to electronically file 
their outward cargo information with CBP through the approved system.

Proof of Electronic Filing; System Verification of Data Acceptance

    For each export shipment to be laden, the participating USPPI, or 
its authorized agent, must furnish to the outbound carrier a proof of 
electronic filing citation covering the cargo to be laden, for 
annotation on the outward manifest, waybill, or other export 
documentation when cargo information is reported electronically; in the 
alternative, the USPPI, or authorized agent, would be responsible for 
providing to the exporting carrier an appropriate low-risk exporter 
citation (currently Option 4) or an exemption statement for the cargo. 
The carrier may not load cargo without the related electronic filing 
citation (e.g., the ITN), low-risk exporter citation, or an appropriate 
exemption statement.
    The proof of electronic filing citation, low-risk exporter 
citation, or exemption statement, will conform to the approved formats 
found in the Bureau of Census Foreign Trade Statistics Regulations 
(FTSR) (15 CFR part 30), or on the Census Web site (http://www.census.gov/foreign-trade/regulations/index.html).
    When successfully transmitting cargo data for a shipment through 
the system, the USPPI or its authorized agent will receive a system-
generated confirmation number, known as an Internal Transaction Number 
(ITN), which constitutes verification that the data transmitted has 
been accepted by the system. For transmitted data that passes system 
edits, the current approved electronic data interchange (AES) returns 
this confirmation number routinely in less than one minute. This 
enables CBP to base the monitoring and enforcement of the time frames 
on the actual time of receipt (of the data) rather than on its 
transmission, which cannot be quantified. When the redesign of the AES 
commodity module is in place, the proof of export filing citation will 
need to include the ITN.

Exemptions From Reporting Requirements

    Exemptions from reporting requirements for certain cargo are under 
the authority of the Bureau of Census (15 CFR 30.50 through 30.58). The 
proposed CBP regulations under section 343(a), as amended, would 
likewise encompass these exemptions.

Transition Period; Implementation

    For successfully targeting potentially high-risk export commodity 
shipments, CBP supports the employment of current AES systems that are 
already heavily in use and widely available to USPPIs. With Internet 
connections, as noted, AES allows new USPPIs that are relatively small 
businesses, to be brought into the system fairly easily and 
inexpensively. To this end, the proposed regulations for the specified 
pre-departure reporting of cargo commodity and transportation 
information for outbound shipments, together with the requirement of 
the ITN, would be implemented concurrent with the completion of the 
redesign of the AES commodity module and the implementation of 
mandatory filing regulations by the Department of Commerce pursuant to 
Public Law 107-228.

Future Rulemaking Regarding Related Laws

Waterborne Cargo; Section 343(b), Trade Act of 2002

    Section 343(b), Trade Act of 2002, as amended (codified at 19 
U.S.C. 1431a), requiring proper documentation for all cargo to be 
exported by vessel, will be the subject of a separate publication in 
the Federal Register.

Transportation Security Administration--Cargo Security Programs

    It is also stressed that the final regulations that will be issued 
to implement section 343(a), as amended, may, in the foreseeable 
future, be subject to modification as necessary to accommodate a cargo 
security program that may be developed by the Transportation Security 
Administration (TSA) in accordance with the Aviation and Transportation 
Security Act (Public Law 107-71,115 Stat. 597; November 19, 2001) (49 
U.S.C. 114(d), (f)(10); 44901(a), (f)).

Comments

    Before adopting these proposed amendments, consideration will be 
given to any written comments that are timely submitted to Customs and 
Border Protection (CBP). The CBP specifically requests comments on the 
clarity of the proposed rule and how it may be made easier to 
understand. Comments are especially requested as to the sufficiency of 
the explanations that accompany the proposed data elements, as well as 
the impact on small business entities under the Regulatory Flexibility 
Act. Comments submitted will be available for public inspection in

[[Page 43593]]

accordance with the Freedom of Information Act (5 U.S.C. 552), and 
Sec.  103.11(b), Customs Regulations (19 CFR 103.11(b)), at the Bureau 
of Customs and Border Protection, 799 9th Street, NW., Washington, D.C. 
during regular business hours. Arrangements to inspect submitted 
comments should be made in advance by calling Mr. Joseph Clark at (202) 
572-8768.

Regulatory Flexibility Act and Executive Order 12866

    Customs and Border Protection (CBP) has conducted an economic 
analysis to determine whether the requirements of the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601 et seq.) would apply to this 
rulemaking. It has been determined, as a result of the initial analysis 
conducted, that this proposed rule would not have a significant 
economic impact upon a substantial number of small entities as required 
by the RFA. This economic analysis is attached as an Appendix to this 
document. For the reasons set forth in the analysis, the agency does 
not make a certification at this time with regard to the regulatory 
requirements of 5 U.S.C. 603 and 604. Also, this rule is a 
``significant regulatory action'' under Executive Order (E.O.) 12866 
and has been reviewed by the Office of Management and Budget in 
accordance with that E.O. However, it is our preliminary determination 
that the proposed rule would not result in an ``economically 
significant regulatory action'' under E.O. 12866, as regards the impact 
on the national economy.

Paperwork Reduction Act

    The collection of information in this document is contained in 
Sec. Sec.  4.7a, 122.48a, 123.91, 123.92, and 192.14. Under these 
sections, the information would be required and used to determine the 
safety and security conditions under which cargo to be brought into or 
sent from the United States was maintained prior to its arrival or 
departure. The likely respondents and/or recordkeepers are air, truck, 
rail and vessel carriers, Non Vessel Operating Common Carriers 
(NVOCCs), freight forwarders, deconsolidators, express consignment 
facilities, importers, exporters, and Customs brokers. The collection 
of information encompassed within this proposed rule has been submitted 
to the Office of Management and Budget (OMB) for review in accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507). 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.
    Estimated annual reporting and/or recordkeeping burden: 2,299,640 
hours.
    Estimated average annual burden per respondent/recordkeeper: 52.3 
hours.
    Estimated number of respondents and/or recordkeepers: 43,960.
    Estimated annual frequency of responses: 14,297,259.
    Comments on this collection of information should be sent to the 
Office of Management and Budget, Attention: Desk Officer of the 
Department of Homeland Security, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy should also be sent to the 
Regulations Branch, Office of Regulations and Rulings, Bureau of 
Customs and Border Protection, 1300 Pennsylvania Avenue, NW., 
Washington, DC 20229. Comments should be submitted within the time 
frame that comments are due on the substance of the proposal.
    Comments are invited on: (a) Whether the collection is necessary 
for the proper performance of the functions of the agency, including 
whether the information will have practical utility; (b) the accuracy 
of the agency's estimate of the burden of the collection of the 
information; (c) ways to enhance the quality, utility, and clarity of 
the information to be collected; (d) ways to minimize the burden of the 
collection of information on respondents, including through the use of 
automated collection techniques or other forms of information 
technology; and (e) estimates of capital or startup costs and costs of 
operations, maintenance, and purchase of services to provide 
information.
    Part 178, Customs Regulations (19 CFR part 178), containing the 
list of approved information collections, would be revised to add 
appropriate references to the above-cited regulatory sections, upon the 
adoption of the proposal as a final rule.

List of Subjects

19 CFR Part 4

    Administrative practice and procedure, Arrival, Cargo vessels, 
Common carriers, Customs duties and inspection, Declarations, Entry, 
Exports, Foreign commerce and trade statistics, Freight, Imports, 
Inspection, Maritime carriers, Merchandise, Penalties, Reporting and 
recordkeeping requirements, Shipping, Vessels.

19 CFR Part 103

    Administrative practice and procedure, Computer technology, 
Confidential business information, Electronic filing, Freedom of 
information, Reporting and recordkeeping requirements.

19 CFR Part 113

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

19 CFR Part 122

    Administrative practice and procedure, Advance notice of arrival, 
Advance notice requirements, Air cargo, Air cargo manifest, Air 
carriers, Aircraft, Air transportation, Commercial aircraft, Customs 
duties and inspection, Entry procedure, Foreign commerce and trade 
statistics, Freight, Imports, Penalties, Reporting and recordkeeping 
requirements, Security measures.

19 CFR Part 123

    Administrative practice and procedure, Aircraft, Canada, Common 
carriers, Customs duties and inspection, Entry of merchandise, Freight, 
Imports, International traffic, Mexico, Motor carriers, Railroads, 
Reporting and recordkeeping requirements, Vehicles, Vessels.

19 CFR Part 192

    Administrative practice and procedure, Aircraft, Customs duties and 
inspection, Exports, Foreign trade statistics, Law enforcement, Motor 
vehicles, Reporting and recordkeeping procedures, Vehicles, Vessels.

Proposed Amendments to the Regulations

    It is proposed to amend parts 4, 103, 113, 122, 123, and 192, 
Customs Regulations (19 CFR parts 4, 103, 113, 122, 123, and 192), as 
set forth below.

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

    1. The general authority citation for part 4 would be revised, and 
the relevant specific authority citations would continue, to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624, 
2071 note; 46 U.S.C. App. 3, 91;
* * * * *
    Section 4.7 also issued under 19 U.S.C. 1581(a); 46 U.S.C. App. 
883a, 883b;
* * * * *
    Section 4.61 also issued under 46 U.S.C. App. 883;
* * * * *
    2. Amend Sec.  4.7 by:
    a. Revising the first sentence of paragraph (b)(1);
    b. Revising paragraph (b)(2);

[[Page 43594]]

    c. Removing the words, ``if automated'', where appearing in 
paragraph (b)(3)(i);
    d. Adding a new paragraph (b)(3)(iii); and
    e. Adding a new paragraph (b)(5).
    The revisions and additions would read as follows:


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

* * * * *
    (b)(1) With the exception of 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) Subject to the effective date provided in paragraph (b)(5) of 
this section, and with the exception of any vessel exclusively carrying 
bulk or authorized break bulk cargo as prescribed in paragraph (b)(4) 
of this section, Customs and Border Protection (CBP) must receive from 
the incoming carrier, for any vessel covered under paragraph (a) of 
this section, the CBP-approved electronic equivalent of the vessel's 
Cargo Declaration (Customs Form 1302), 24 hours before the cargo is 
laden aboard the vessel at the foreign port (see Sec.  4.30(n)(1)). The 
current approved system for presenting electronic cargo declaration 
information to CBP is the Vessel Automated Manifest System (AMS).
* * * * *
    (3) * * *
    (iii) Where the party electronically presenting to CBP the cargo 
information required in Sec.  4.7a(c)(4) receives any of this 
information from another party, CBP will take into consideration how, 
in accordance with ordinary commercial practices, the presenting party 
acquired such information, and whether and how the presenting party is 
able to verify this information. Where the presenting party is not 
reasonably able to verify such information, CBP will permit the party 
to electronically present the information on the basis of what the 
party reasonably believes to be true.
* * * * *
    (5) Within 90 days of [the publication of this paragraph as a final 
rule in the Federal Register], all ocean carriers, and NVOCCs electing 
to participate, must be automated on the Vessel AMS system at all ports 
of entry in the United States where their cargo will initially arrive.
* * * * *
    3. Amend Sec.  4.7a by:
    a. Revising paragraphs (c)(4)(viii) and (c)(4)(ix);
    b. Removing the word ``and'' after paragraph (c)(4)(xiii); and
    c. Adding new paragraphs (c)(4)(xv) and (c)(4)(xvi).
    The revisions and additions would read as follows:


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

* * * * *
    (c) Cargo Declaration. * * *
    (4) * * *
    (viii) The shipper's complete name and address, or identification 
number, from all bills of lading. (At the master bill level, for 
consolidated shipments, the identity of the Non Vessel Operating Common 
Carrier (NVOCC), freight forwarder, container station or other carrier 
is sufficient; for non-consolidated shipments, and for each house bill 
in a consolidated shipment, the identity of the actual shipper (the 
owner and exporter) of the cargo from the foreign country is required; 
the identification number will be a unique number assigned by CBP upon 
the implementation of the Automated Commercial Environment);
    (ix) The complete name and address of the consignee, or 
identification number, from all bills of lading. (For consolidated 
shipments, at the master bill level, the NVOCC, freight forwarder, 
container station or other carrier may be listed as the consignee. For 
non-consolidated shipments, and for each house bill in a consolidated 
shipment, the consignee is the party to whom the cargo will be 
delivered in the United States, with the exception of ``FROB''. 
However, in the case of cargo shipped ``to order of [a named party],'' 
the carrier must report this named ``to order'' party as the consignee; 
and, if there is any other commercial party listed in the bill of 
lading for delivery or contact purposes, the carrier must also report 
this other commercial party's identity and contact information 
(address/phone number) in the ``Notify Party'' field of the advance 
electronic data transmission to CBP, to the extent that the CBP-
approved electronic data interchange system is capable of receiving 
this data. The identification number will be a unique number assigned 
by CBP upon implementation of the Automated Commercial Environment);
* * * * *
    (xv) Date of departure from foreign, as reflected in the vessel 
log; and
    (xvi) Time of departure from foreign, as reflected in the vessel 
log.
* * * * *
    4. Amend Sec.  4.61 by adding a new paragraph (c)(24) to read as 
follows:


Sec.  4.61  Requirements for clearance.

* * * * *
    (c) Verification of compliance.
* * * * *
    (24) Electronic receipt of required vessel cargo information (see 
192.14(c) of this chapter).
* * * * *

PART 103--AVAILABILITY OF INFORMATION

    1. The general authority citation for part 103 would continue, and 
a specific authority citation would be added for Sec.  103.31a in 
appropriate numerical order, to read as follows:

    Authority: 5 U.S.C. 301, 552, 552a; 19 U.S.C. 66, 1624; 31 
U.S.C. 9701;
* * * * *
    Section 103.31a also issued under 19 U.S.C. 2071 note;
* * * * *
    2. Amend subpart C of part 103 by adding a new Sec.  103.31a to 
read as follows:


Sec.  103.31a  Advance electronic information for air, truck, and rail 
cargo.

    Advance cargo information that is electronically presented to 
Customs and Border Protection (CBP) for inbound or outbound air, rail, 
or truck cargo in accordance with Sec.  122.48a, 123.91, 123.92, or 
192.14 of this chapter, is per se exempt from disclosure under Sec.  
103.12(d), unless CBP receives a specific request for such records 
pursuant to Sec.  103.5, and the owner of the information expressly 
agrees in writing to its release.

PART 113--CUSTOMS BONDS

    1. The authority citation for part 113 would continue to read as 
follows:

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

    2. Amend Sec.  113.62 by:
    a. Revising the heading of paragraph (j), and redesignating its 
current text as paragraph (j)(1);
    b. Adding a new paragraph (j)(2); and
    c. Revising paragraph (l)(1) by adding the citation, ``(j)(2),'', 
after the citation, ``(i),''.
    The revision and addition to paragraph (j) read as follows:


Sec.  113.62  Basic importation and entry bond conditions.

* * * * *
    (j) Agreement to comply with electronic entry and/or advance cargo 
information filing requirements. (1) * * *
    (2) If the principal elects to provide advance inward air or truck 
cargo information to Customs and Border Protection (CBP) 
electronically, the principal agrees to provide such cargo information 
to CBP in the manner and

[[Page 43595]]

in the time period required, respectively, under Sec.  122.48a or 
123.92 of this chapter. If the principal defaults with regard to these 
obligations, the principal and surety (jointly and severally) agree to 
pay liquidated damages of $5,000 for each regulation violated.
* * * * *
    3. Amend Sec.  113.64 by revising the first sentence of paragraph 
(a); and by revising 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, slot charterer, or any non-
vessel operating common carrier as defined in Sec.  4.7(b)(3)(ii) of 
this chapter or other party as specified in Sec.  122.48a(c)(2) 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 and Border Protection 
(CBP). * * *
* * * * *
    (c) Non-vessel operating common carrier (NVOCC); other party. If a 
slot charterer, non-vessel operating common carrier (NVOCC) as defined 
in Sec.  4.7(b)(3)(ii) of this chapter, or other party specified in 
Sec.  122.48a(c)(2) of this chapter, elects to provide advance cargo 
information to CBP electronically, the NVOCC or other party, as a 
principal under this bond, in addition to compliance with the other 
provisions of this bond, also agrees to provide such cargo information 
to CBP in the manner and in the time period required under those 
respective sections. If the NVOCC or other party, 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 122--AIR COMMERCE REGULATIONS

    1. The general authority citation for part 122 would be revised to 
read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 58b, 66, 1431, 1433, 1436, 
1448, 1459, 1590, 1594, 1623, 1624, 1644, 1644a, 2071 note.
* * * * *
    2. Amend Sec.  122.12 by revising the heading of paragraph (c) and 
adding a sentence at the end of paragraph (c) to read as follows:


Sec.  122.12  Operation of international airports.

* * * * *
    (c) FAA rules; denial of permission to land. * * * In addition, 
except in the case of an emergency or forced landing (see Sec.  
122.35), permission to land at an international airport may be denied 
if advance electronic information for incoming foreign cargo aboard the 
aircraft has not been received as provided in Sec.  122.48a.
* * * * *
    3. Amend Sec.  122.14 by:
    a. Redesignating paragraphs (d)(4) and (d)(5) as paragraphs (d)(5) 
and (d)(6), respectively;
    b. Adding a new paragraph (d)(4); and
    c. Revising newly redesignated paragraph (d)(5).
    The addition and revision would read as follows:


Sec.  122.14  Landing rights airport.

* * * * *
    (d) Denial or withdrawal of landing rights. * * *
    (4) Advance cargo information has not been received as provided in 
Sec.  122.48a;
    (5) Other reasonable grounds exist to believe that Federal rules 
and regulations pertaining to safety, including cargo safety and 
security, and Customs, or other inspectional activities have not been 
followed; or
* * * * *
    4. Amend Sec.  122.33 by:
    a. Revising paragraph (a), introductory text; and
    b. Revising paragraph (a)(1).
    The revisions read as follows:


Sec.  122.33  Place of first landing.

    (a) The first landing of an aircraft entering the United States 
from a foreign area will be:
    (1) At a designated international airport (see Sec.  122.13), 
provided that permission to land has not been denied pursuant to Sec.  
122.12(c);
* * * * *
    5. Amend Sec.  122.38 by:
    a. Adding a sentence at the end of paragraph (c); and
    b. Adding a new paragraph (g).
    The additions would read as follows:


Sec.  122.38  Permit and special license to unlade and lade.

* * * * *
    (c) Term permit or special license. * * * In addition, a term 
permit or special license to unlade or lade already issued will not be 
applicable to any inbound or outbound flight, with respect to which 
Customs and Border Protection (CBP) has not received the advance 
electronic cargo information required, respectively, under Sec.  
122.48a or 192.14(b)(1)(ii) of this chapter (see paragraph (g) of this 
section).
* * * * *
    (g) Advance receipt of electronic cargo information. The CBP will 
not issue a permit to unlade or lade cargo upon arrival or departure of 
an aircraft, and a term permit or special license already issued will 
not be applicable to any inbound or outbound flight, with respect to 
which CBP has not received the advance electronic cargo information 
required, respectively, under Sec.  122.48a or 192.14 of this chapter. 
In cases in which CBP does not receive complete cargo information in 
the time and manner and in the electronic format required by Sec.  
122.48a or 192.14 of this chapter, as applicable, CBP may delay 
issuance of a permit or special license to unlade or lade cargo, and a 
term permit or special license to unlade or lade already issued may not 
apply, until all required information is received. The CBP may also 
decline to issue a permit or special license to unlade or lade, and a 
term permit or special license already issued may not apply, with 
respect to the specific cargo for which advance information is not 
timely received electronically, as specified in Sec.  122.48a or 
192.14(b)(1)(ii) of this chapter.
    6. Amend Sec.  122.48 by revising paragraph (a) to read as follows:


Sec.  122.48  Air cargo manifest.

    (a) When required. Except as provided in paragraphs (d) and (e) of 
this section, an air cargo manifest need not be filed for any aircraft 
required to enter under Sec.  122.41. However, an air cargo manifest 
for all cargo on board together with the general declaration must be 
kept aboard any aircraft required to enter under Sec.  122.41, for 
production upon demand.
* * * * *
    7. Amend subpart E of part 122 by adding a new Sec.  122.48a to 
read as follows:


Sec.  122.48a  Electronic information for air cargo required in advance 
of arrival.

    (a) General requirement. Pursuant to section 343(a), Trade Act of 
2002, as amended (19 U.S.C. 2071 note), and subject to paragraph (e) of 
this section, for any inbound aircraft required to enter under Sec.  
122.41, that will have commercial cargo aboard, Customs and Border 
Protection (CBP) must electronically receive from the inbound air 
carrier and, if applicable, an approved party as specified in paragraph 
(c)(1) of this section, certain information concerning the incoming 
cargo, as enumerated, respectively, in paragraphs (d)(1) and (d)(2) of 
this section. The CBP must receive such

[[Page 43596]]

information no later than the time frame prescribed in paragraph (b) of 
this section. The advance electronic transmission of the required cargo 
information to CBP must be effected through a CBP-approved electronic 
data interchange system.
    (1) Cargo remaining aboard aircraft; cargo to be entered under 
bond. Air cargo arriving from and departing for a foreign country on 
the same through flight and cargo that is unladen from the arriving 
aircraft and entered, in bond, for exportation, or for transportation 
and exportation (see subpart J of this part), are subject to the 
advance electronic information filing requirement under paragraph (a) 
of this section.
    (2) Diplomatic pouches. When goods comprising a diplomatic or 
consular bag (including cargo shipments, containers, and the like) that 
belong to the United States or to a foreign government are shipped 
under an air waybill, such cargo is subject to the advance reporting 
requirements of paragraph (a) of this section.
    (b) Time frame for presenting data. (1) Nearby foreign areas. In 
the case of aircraft under paragraph (a) of this section that depart 
for the United States from any foreign port or place in North America, 
including locations in Mexico, Central America, South America (from 
north of the Equator only), the Caribbean, and Bermuda, CBP must 
receive the required cargo information no later than the time of the 
departure of the aircraft for the United States (no later than the time 
that wheels are up on the aircraft, and it is en route directly to the 
United States).
    (2) Other foreign areas. In the case of aircraft under paragraph 
(a) of this section that depart for the United States from any foreign 
area other than that specified in paragraph (b)(1) of this section, CBP 
must receive the required cargo information no later than 4 hours prior 
to the arrival of the aircraft in the United States.
    (c) Party electing to file advance electronic cargo data. (1) Other 
filer. In addition to incoming air carriers for whom participation is 
mandatory, one of the following parties meeting the qualifications of 
paragraph (c)(2) of this section, may elect to transmit to CBP the 
electronic data for incoming cargo that is listed in paragraph (d)(2) 
of this section:
    (i) An Automated Broker Interface (ABI) filer (importer or its 
Customs broker) as identified by its ABI filer code;
    (ii) A Container Freight Station/deconsolidator as identified by 
its FIRMS (Facilities Information and Resources Management System) 
code;
    (iii) An Express Consignment Carrier Facility as identified by its 
FIRMS code; or,
    (iv) An air carrier as identified by its carrier IATA 
(International Air Transport Association) code, that arranged to have 
the incoming air carrier transport the cargo to the United States.
    (2) Eligibility. To be qualified to file cargo information 
electronically, a party identified in paragraph (c)(1) of this section 
must establish the communication protocol required by CBP for properly 
presenting cargo information through the approved data interchange 
system. Also, other than a broker or an importer (see 113.62(j)(2) of 
this chapter), the party must possess a Customs international carrier 
bond containing all the necessary provisions of Sec.  113.64 of this 
chapter.
    (3) Nonparticipation by other party. If another party as specified 
in paragraph (c)(1) of this section does not participate in advance 
electronic cargo information filing, the party that arranges for and/or 
delivers the cargo shipment to the incoming carrier must fully disclose 
and present to the carrier the cargo information listed in paragraph 
(d)(2) of this section; and the incoming carrier, on behalf of the 
party, must present this information electronically to CBP under 
paragraph (a) of this section.
    (4) Required information in possession of third party. Any other 
entity in possession of required cargo data that is not the incoming 
air carrier or a party described in paragraph (c)(1) of this section 
must fully disclose and present the required data for the inbound air 
cargo to either the air carrier or other electronic filer, as 
applicable, which must present such data to CBP.
    (5) Party receiving information believed to be accurate. Where the 
party electronically presenting the cargo information required in 
paragraph (d) of this section receives any of this information from 
another party, CBP will take into consideration how, in accordance with 
ordinary commercial practices, the presenting party acquired such 
information, and whether and how the presenting party is able to verify 
this information. Where the presenting party is not reasonably able to 
verify such information, CBP will permit the party to electronically 
present the information on the basis of what that party reasonably 
believes to be true.
    (d) Non-consolidated/consolidated shipments. For non-consolidated 
shipments, the incoming air carrier must transmit to CBP all of the 
information for the air waybill record, as enumerated in paragraph 
(d)(1) of this section. For consolidated shipments: The incoming air 
carrier must transmit to CBP the information listed in paragraph (d)(1) 
of this section that is applicable to the master air waybill; and the 
air carrier must transmit cargo information for all associated house 
air waybills as enumerated in paragraph (d)(2) of this section, unless 
another party as described in paragraph (c)(1) of this section 
electronically transmits this information directly to CBP.
    (1) Cargo information from air carrier. The incoming air carrier 
must present to CBP the following data elements for inbound air cargo 
(an ``M'' next to any listed data element indicates that the data 
element is mandatory in all cases; a ``C'' next to the listed data 
element indicates that the data element is conditional and must be 
transmitted to CBP only if the particular information pertains to the 
inbound cargo):
    (i) Air waybill number (M) (The air waybill number is the 
International Air Transport Association (IATA) standard 11-digit 
number);
    (ii) Trip/flight number (M);
    (iii) Carrier/ICAO (International Civil Aviation Organization) code 
(M) (The approved electronic data interchange system supports both 3- 
and 2-character ICAO codes, provided that the final digit of the 2-
character code is not a numeric value);
    (iv) Airport of arrival (M) (The 3-alpha character ICAO code 
corresponding to the first airport of arrival in the Customs territory 
of the United States (for example, Chicago O'Hare = ORD; Los Angeles 
International Airport = LAX));
    (v) Airport of origin (M) (The 3-alpha character ICAO code 
corresponding to the airport from which a shipment began its 
transportation by air to the United States (for example, if a shipment 
began its transportation from Hong Kong (HKG), and it transits through 
Narita, Japan (NRT), en route to the United States, the airport of 
origin is HKG, not NRT));
    (vi) Scheduled date of arrival (M);
    (vii) Total quantity based on the smallest external packing unit 
(M) (for example, 2 pallets containing 50 pieces each would be 
considered as 100, not 2);
    (viii) Total weight (M) (may be expressed in either pounds or 
kilograms);
    (ix) Precise cargo description (M) (for consolidated shipments, the 
word ``Consolidation'' is a sufficient description for the master air 
waybill record; for non-consolidated shipments, a precise cargo 
description or the 6-digit Harmonized Tariff Schedule (HTS) number must 
be provided (generic descriptions, specifically those such as ``FAK'' 
(``freight of all kinds''), ``general

[[Page 43597]]

cargo'', and ``STC'' (``said to contain'') are not acceptable));
    (x) Shipper name and address (M) (for consolidated shipments, the 
identity of the consolidator, express consignment or other carrier, is 
sufficient for the master air waybill record; for non-consolidated 
shipments, the identity of the actual shipper (who is the owner and 
exporter) of the merchandise from the foreign country is required);
    (xi) Consignee name and address (M) (for consolidated shipments, 
the identity of the container station, express consignment or other 
carrier is sufficient for the master air waybill record; for non-
consolidated shipments, the name and address of the party to whom the 
cargo will be delivered is required, with the exception of ``AFROB'' 
(Foreign Cargo Remaining On Board));
    (xii) Consolidation identifier (C);
    (xiii) Split shipment indicator (C) (this data element includes 
information indicating the particular portion of the split shipment 
that will arrive; the boarded quantity of that portion of the split 
shipment (based on the smallest external packing unit); and the boarded 
weight of that portion of the split shipment (expressed in either 
pounds or kilograms));
    (xiv) Permit to proceed information (C) (this element includes the 
permit-to-proceed destination airport (the 3-alpha character ICAO code 
corresponding to the permit-to-proceed destination airport); and the 
scheduled date of arrival at the permit-to-proceed destination 
airport);
    (xv) Identifier of other party which is to submit additional air 
waybill information (C);
    (xvi) In-bond information (C) (this data element includes the 
destination airport; the international/domestic identifier (the in-bond 
type indicator); the in-bond control number, if there is one (C); and 
the onward carrier identifier, if applicable (C)); and
    (xvii) Local transfer facility (C).
    (2) Cargo information from carrier or other filer. The incoming air 
carrier must present the following additional information to CBP for 
the incoming cargo, unless another party as specified in paragraph 
(c)(1) of this section elects to present this information directly to 
CBP. Information for all house air waybills under a single master air 
waybill consolidation must be presented electronically to CBP by the 
same party. (An ``M'' next to any listed data element indicates that 
the data element is mandatory in all cases; a ``C'' next to any listed 
data element indicates that the data element is conditional and must be 
transmitted to CBP only if the particular information pertains to the 
inbound cargo):
    (i) The master air waybill number and the associated house air 
waybill number (M) (the house air waybill number may be up to 12 
alphanumeric characters (each alphanumeric character that is indicated 
on the paper house air waybill document must be included in the 
electronic transmission; alpha characters may not be eliminated));
    (ii) Foreign airport of origin (M) (The 3-alpha character ICAO code 
corresponding to the airport from which a shipment began its 
transportation by air to the United States (for example, if a shipment 
began its transportation from Hong Kong (HKG), and it transits through 
Narita, Japan (NRT), en route to the United States, the airport of 
origin is HKG, not NRT));
    (iii) Cargo description (M) (a precise description of the cargo or 
the 6-digit Harmonized Tariff Schedule (HTS) number must be provided);
    (iv) Total quantity based on the smallest external packing unit (M) 
(for example, 2 pallets containing 50 pieces each would be considered 
as 100, not 2);
    (v) Total weight of cargo (M) (may be expressed in either pounds or 
kilograms);
    (vi) Shipper name and address (M) (the name and address of the 
actual shipper (who is the owner and exporter) of the cargo from the 
foreign country);
    (vii) Consignee name and address (M) (the name and address of the 
party to whom the cargo will be delivered in the United States, with 
the exception of ``FROB'' (Foreign Cargo Remaining On Board)); and
    (viii) In-bond information (C) (this data element includes the 
destination airport; the international/domestic identifier (the in-bond 
type indicator); the in-bond control number, if there is one (C); and 
the onward carrier identifier, if applicable (C).
    (3) Letters and documents. For purposes of advance electronic cargo 
information filing under this section, letters and documents being 
shipped to the United States are handled under the same procedures as 
all other types of cargo. Such shipments are subject to the same 
detailed data elements that are otherwise required for incoming air 
cargo under paragraphs (d)(1) and (d)(2) of this section. The term 
``letters and documents'' as used in this paragraph means:
    (i) The data (for example, records, diagrams, other business data) 
as described in General Note 19(c), Harmonized Tariff Schedule of the 
United States (HTSUS);
    (ii) Securities and similar evidence of value described in 
subheading 4907, HTSUS, other than monetary instruments covered under 
31 U.S.C. 5301-5322; and
    (iii) Personal correspondence, whether on paper, cards, 
photographs, tapes, or other media.
    (e) Effective date of this section. (1) General. Subject to 
paragraph (e)(2) of this section, all affected air carriers, and other 
parties as specified in paragraph (c)(1) of this section that elect to 
participate in advance automated cargo information filing, must comply 
with the requirements of this section on and after 90 days from the 
date that this section is published as a final rule in the Federal 
Register.
    (2) Delay in effective date of section. The CBP may delay the 
general effective date of this section in the event that any necessary 
modifications to the approved electronic data interchange system are 
not yet in place. Also, CBP may delay the general effective date of 
this section at a given port until CBP has afforded any necessary 
training to CBP personnel at that port. In addition, CBP may delay 
implementation if further time is required to complete certification 
testing of new participants. Any such delay would be the subject of an 
announcement in the Federal Register.
    8. Amend subpart G of part 122 by adding a new Sec.  122.66 to read 
as follows:


122.66  Clearance or permission to depart denied.

    If advance electronic air cargo information is not received as 
provided in Sec.  192.14 of this chapter, Customs and Border Protection 
may deny clearance or permission for the aircraft to depart from the 
United States.

PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO

    1. The general authority citation for part 123 would be revised, 
and the relevant specific sectional authority citation would continue, 
to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 23, Harmonized 
Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1436, 
1448, 1624, 2071 note.
* * * * *
    Section 123.8 also issued under 19 U.S.C. 1450-1454, 1459;
* * * * *
    2. Amend Sec.  123.8 by:
    a. Adding a sentence after the second sentence in paragraph (a); 
and
    b. Adding a sentence at the end of paragraph (d).
    The additions would read as follows:

[[Page 43598]]

123.8  Permit or special license to unlade or lade a vessel or vehicle.

    (a) Permission to unlade or lade. * * * Permission to unlade or 
lade a truck may be denied for any cargo with respect to which advance 
electronic information has not been received as provided in Sec.  
123.92 or 192.14 of this chapter, as applicable.* * *
* * * * *
    (d) Term permit or special license. * * * A term permit or special 
license to unlade or lade a truck already issued will not be applicable 
as to any cargo with respect to which advance electronic information 
has not been received as provided in Sec.  123.92 or 192.14 of this 
chapter, as applicable.
    3. Amend part 123 by adding a new subpart J to read as follows:

Subpart J--Advance Information for Cargo Arriving by Rail or Truck


Sec.  123.91  Electronic information for rail cargo required in advance 
of arrival.


Sec.  123.92  Electronic information for truck cargo required in 
advance of arrival.

Subpart J--Advance Information for Cargo Arriving by Rail or Truck


Sec.  123.91  Electronic information for rail cargo required in advance 
of arrival.

    (a) General requirement. Pursuant to section 343(a), Trade Act of 
2002, as amended (19 U.S.C. 2071 note), and subject to paragraph (e) of 
this section, for any train requiring a train sheet under Sec.  123.6, 
that will have commercial cargo aboard, Customs and Border Protection 
(CBP) must electronically receive from the rail carrier certain 
information concerning the incoming cargo, as enumerated in paragraph 
(d) of this section, no later than 2 hours prior to the arrival of the 
cargo at the United States port of entry. Specifically, to effect the 
advance electronic transmission of the required rail cargo information 
to CBP, the rail carrier must use a CBP-approved electronic data 
interchange system.
    (1) Through cargo in transit to a foreign country. Cargo arriving 
by train for transportation in transit across the United States from 
one foreign country to another; and cargo arriving by train for 
transportation through the United States from point to point in the 
same foreign country are subject to the advance electronic information 
filing requirement for incoming cargo under paragraph (a) of this 
section.
    (2) Cargo under bond. Cargo that is to be unladed from the arriving 
train and entered, in bond, for exportation, or for transportation and 
exportation, in another vehicle or conveyance is also subject to the 
advance electronic information filing requirement under paragraph (a) 
of this section.
    (b) Exception; cargo in transit from point to point in the United 
States. Domestic cargo transported by train to one port from another in 
the United States by way of a foreign country is not subject to the 
advance electronic information filing requirement for incoming cargo 
under paragraph (a) of this section.
    (c) Incoming rail carrier. (1) Receipt of data; acceptance of 
cargo. As a pre-requisite to accepting the cargo, the carrier must 
receive, from the foreign shipper and owner of the cargo or from a 
freight forwarder, as applicable, any necessary cargo shipment 
information, as listed in paragraph (d) of this section, for electronic 
transmission to CBP.
    (2) Accuracy of information received by rail carrier. Where the 
rail carrier electronically presenting the cargo information required 
in paragraph (d) of this section receives any of this information from 
another party, CBP will take into consideration how, in accordance with 
ordinary commercial practices, the rail carrier acquired such 
information, and whether and how the carrier is able to verify this 
information. Where the rail carrier is not reasonably able to verify 
such information, CBP will permit the carrier to electronically present 
the information on the basis of what the carrier reasonably believes to 
be true.
    (d) Cargo information required. The rail carrier must 
electronically transmit to CBP the following information for all 
required incoming cargo that will arrive in the United States by train:
    (1) The rail carrier identification SCAC code (the unique Standard 
Carrier Alpha Code assigned for each carrier by the National Motor 
Freight Traffic Association; see Sec.  4.7a(c)(2)(iii) of this 
chapter);
    (2) The carrier-assigned conveyance name, equipment number and trip 
number;
    (3) The scheduled date and time of arrival of the train at the 
first port of entry in the United States;
    (4) The numbers and quantities of the cargo laden aboard the train 
as contained in the carrier's bill of lading, either master or house, 
as applicable (this means the quantity of the lowest external packaging 
unit; containers and pallets do not constitute acceptable information; 
for example, a container holding 10 pallets with 200 cartons should be 
described as 200 cartons);
    (5) A precise cargo description (or the Harmonized Tariff Schedule 
(HTS) number(s) 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);
    (6) The shipper's complete name and address, or identification 
number, from the bill(s) of lading (this means the actual owner 
(exporter) of the cargo from the foreign country; listing a freight 
forwarder or broker under this category is not acceptable; the 
identification number will be a unique number to be assigned by CBP 
upon the implementation of the Automated Commercial Environment);
    (7) The complete name and address of the consignee, or 
identification number, from the bill(s) of lading (The consignee is the 
party to whom the cargo will be delivered in the United States. 
However, in the case of cargo shipped ``to order of [a named party],'' 
the carrier must identify this named ``to order'' party as the 
consignee; and, if there is any other commercial party listed in the 
bill of lading for delivery or contact purposes, the carrier must also 
report this other commercial party's identity and contact information 
(address/phone number) in the ``Notify Party'' field of the advance 
electronic data transmission to CBP, to the extent that the CBP-
approved electronic data interchange system is capable of receiving 
this data. The identification number will be a unique number assigned 
by CBP upon implementation of the Automated Commercial Environment);
    (8) The place where the rail carrier takes possession of the cargo 
shipment;
    (9) Internationally recognized hazardous material code when such 
materials are being shipped by rail;
    (10) Container numbers (for containerized shipments) or the rail 
car numbers; and
    (11) The seal numbers for all seals affixed to containers and/or 
rail cars to the extent that CBP's data system can accept this 
information (for example, if a container has more than two seals, and 
only two seal numbers can be accepted through the system per container, 
the carrier's electronic presentation of two of these seal numbers for 
the container would be considered as constituting full compliance with 
this data element).
    (e) Effective date for compliance with this section. Rail carriers 
must commence the advance electronic transmission to CBP of the 
required cargo information, 90 days from the date that CBP publishes 
notice in the Federal Register informing affected carriers that the 
approved electronic data

[[Page 43599]]

interchange system is in place and operational at the port of entry 
where the train will first arrive in the United States.


Sec.  123.92  Electronic information for truck cargo required in 
advance of arrival.

    (a) General requirement. Pursuant to section 343(a) of the Trade 
Act of 2002, as amended (19 U.S.C. 2071 note), and subject to paragraph 
(e) of this section, for any truck required to report its arrival under 
Sec.  123.1(b), that will have commercial cargo aboard, Customs and 
Border Protection (CBP) must electronically receive from the party 
described in paragraph (c) of this section certain information 
concerning the cargo, as enumerated in paragraph (d) of this section. 
The CBP must receive such cargo information by means of a CBP-approved 
electronic data interchange system no later than either 30 minutes or 1 
hour prior to the carrier's arrival at a United States port of entry, 
or such lesser time as authorized, based upon the CBP-approved system 
employed to present the information.
    (1) Through cargo in transit to a foreign country. Cargo arriving 
by truck in transit through the United States from one foreign country 
to another (Sec.  123.31(a)); and cargo arriving by truck for 
transportation through the United States from one point to another in 
the same foreign country (Sec.  123.31(b); Sec.  123.42) are subject to 
the advance electronic information filing requirement in paragraph (a) 
of this section.
    (2) Cargo entered under bond. Cargo that is to be unladed from the 
arriving truck and entered, in bond, for exportation, or for 
transportation and exportation, in another vehicle or conveyance are 
also subject to the advance electronic information filing requirement 
in paragraph (a) of this section.
    (b) Exceptions from advance reporting requirements. (1) Cargo in 
transit from point to point in the United States. Domestic cargo 
transported by truck and arriving at one port from another in the 
United States after transiting a foreign country (Sec.  123.21; Sec.  
123.41) is exempt from the advance electronic filing requirement for 
incoming cargo under paragraph (a) of this section.
    (2) Certain informal entries. The following merchandise is exempt 
from the advance cargo information reporting requirements under 
paragraph (a) of this section, to the extent that such merchandise 
qualifies for informal entry pursuant to part 143, subpart C, of this 
chapter:
    (i) Merchandise which may be informally entered on Customs Form 
(CF) 368 or 368A (cash collection or receipt);
    (ii) Merchandise unconditionally or conditionally free, not 
exceeding $2,000 in value, eligible for entry on CF 7523; and
    (iii) Products of the United States being returned, for which entry 
is prescribed on CF 3311.
    (c) Carrier; and importer or broker. (1) Single party presentation. 
Except as provided in paragraph (c)(2) of this section, the incoming 
truck carrier must present all required information to CBP in the time 
and manner prescribed in paragraph (a) of this section.
    (2) Dual party presentation. The United States importer, or its 
Customs broker, may elect to present to CBP a portion of the required 
information that it possesses in relation to the cargo. Where the 
broker, or the importer (see Sec.  113.62(j)(2) of this chapter), 
elects to submit such data, the carrier is responsible for presenting 
to CBP the remainder of the information specified in paragraph (d) of 
this section.
    (3) Party receiving information believed to be accurate. Where the 
party electronically presenting the cargo information required in 
paragraph (d) of this section receives any of this information from 
another party, CBP will take into consideration how, in accordance with 
ordinary commercial practices, the presenting party acquired such 
information, and whether and how the presenting party is able to verify 
this information. Where the presenting party is not reasonably able to 
verify such information, CBP will permit the party to electronically 
present the information on the basis of what the party reasonably 
believes to be true.
    (d) Cargo information required. The following commodity and 
transportation information, as applicable, must be electronically 
transmitted to and received by CBP for all required incoming cargo 
arriving in the United States by truck, to the extent that the 
particular CBP-approved electronic data interchange system employed can 
accept this information:
    (1) Conveyance number, and (if applicable) equipment number (the 
number of the conveyance is its Vehicle Identification Number (VIN) or 
its license plate number and State of issuance; the equipment number, 
if applicable, refers to the identification number of any trailing 
equipment or container attached to the power unit);
    (2) Carrier identification (this is the truck carrier 
identification SCAC code (the unique Standard Carrier Alpha Code) 
assigned for each carrier by the National Motor Freight Traffic 
Association; see Sec.  4.7a(c)(2)(iii) of this chapter);
    (3) Trip number and, if applicable, the transportation reference 
number for each shipment (the transportation reference number is the 
freight bill number, or Pro Number, if such a number has been generated 
by the carrier);
    (4) Container number(s) (for any containerized shipment) (if 
different from the equipment number), and the seal numbers for all 
seals affixed to the equipment or container(s);
    (5) The foreign location where the truck carrier takes possession 
of the cargo destined for the United States;
    (6) The scheduled date and time of arrival of the truck at the 
first port of entry in the United States;
    (7) The numbers and quantities for the cargo laden aboard the truck 
as contained in the bill(s) of lading (this means the quantity of the 
lowest external packaging unit; containers and pallets do not 
constitute acceptable information; for example, a container holding 10 
pallets with 200 cartons should be described as 200 cartons);
    (8) The weight of the cargo, or, for a sealed container, the 
shipper's declared weight of the cargo;
    (9) A precise description of the cargo or the Harmonized Tariff 
Schedule (HTS) numbers to the 6-digit level under which the cargo will 
be classified (generic descriptions, specifically those such as FAK 
(``freight of all kinds''), ``general cargo,'' and ``STC'' (``said to 
contain'') are not acceptable);
    (10) Internationally recognized hazardous material code when such 
cargo is being shipped by truck;
    (11) The shipper's complete name and address, or identification 
number, from the bill(s) of lading (the identity of the actual shipper 
(the owner and exporter) of the cargo from the foreign country is 
required; the identification number will be a unique number to be 
assigned by CBP upon the implementation of the Automated Commercial 
Environment); and
    (12) The complete name and address of the consignee, or 
identification number, from the bill(s) of lading (the consignee is the 
party to whom the cargo will be delivered in the United States, with 
the exception of ``FROB'' (Foreign Cargo Remaining On Board); the 
identification number will be a unique number assigned by CBP upon 
implementation of the Automated Commercial Environment).
    (e) Effective date for compliance with this section. The incoming 
truck carrier and, if electing to do so, the United States importer, or 
its Customs broker,

[[Page 43600]]

must present the necessary cargo data to CBP at the particular port of 
entry where the truck will arrive in the United States on and after 90 
days from the date that CBP has published a notice in the Federal 
Register informing affected carriers that:
    (1) The approved data interchange is in place and fully operational 
at that port; and
    (2) The carrier must commence the presentation of the required 
cargo information through the approved system.

PART 192--EXPORT CONTROL

    1. The authority citation for part 192 would be revised to read as 
follows:

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

    2. Amend subpart B of part 192 by adding a new Sec.  192.14 to read 
as follows:


Sec.  192.14  Electronic information for outward cargo required in 
advance of departure.

    (a) General requirement. Pursuant to section 343(a), Trade Act of 
2002, as amended (19 U.S.C. 2071 note), and subject to paragraph (e) of 
this section, for any commercial cargo that is to be transported out of 
the United States by vessel, aircraft, rail, or truck, unless exempted 
under paragraph (d) of this section, the United States Principal Party 
in Interest (USPPI), or its authorized agent, must electronically 
transmit for receipt by Customs and Border Protection (CBP), no later 
than the time period specified in paragraph (b) of this section, 
certain cargo information, as enumerated in paragraph (c) of this 
section. Specifically, to effect the advance electronic transmission of 
the required cargo information to CBP, the USPPI or its authorized 
agent must use a CBP-approved electronic data interchange system 
(currently, the Automated Export System (AES)).
    (b) Presentation of data. (1) Time for presenting data. USPPIs or 
their authorized agents must electronically transmit and verify system 
acceptance of required cargo information for outbound cargo no later 
than the time period specified as follows (see paragraph (b)(3) of this 
section):
    (i) For vessel cargo, the USPPI or its authorized agent must 
transmit and verify system acceptance of export vessel cargo 
information no later than 24 hours prior to the departure of the 
vessel;
    (ii) For air cargo, including cargo being transported by Air 
Express Couriers, the USPPI or its authorized agent must transmit and 
verify system acceptance of export air cargo information no later than 
2 hours prior to the scheduled departure time of the aircraft;
    (iii) For truck cargo, including cargo departing by Express 
Consignment Courier, the USPPI or its authorized agent must transmit 
and verify system acceptance of export truck cargo information no later 
than 1 hour prior to the arrival of the truck at the border; and
    (iv) For rail cargo, the USPPI or its authorized agent must 
transmit and verify system acceptance of export rail cargo information 
no later than 4 hours prior to the time at which the engine is attached 
to the train to go foreign.
    (2) Applicability of time frames. The time periods in paragraph 
(b)(1) of this section for reporting required export cargo information 
to CBP for outward vessel, air, truck, or rail cargo only apply to 
shipments without an export license, that require full pre-departure 
reporting of shipment data, in order to comply with the advance cargo 
information filing requirements under section 343(a), as amended. 
Paragraph (e) of this section details effective dates for compliance 
with the time frames provided in paragraph (b)(1) of this section. 
Requirements placed on exports controlled by other Government agencies 
will remain in force unless changed by the agency having the regulatory 
authority to do so. The CBP will also continue to require 72-hour 
advance notice for vehicle exports pursuant to Sec.  192.2(c)(1) and 
(c)(2)(i) of this part. USPPIs or their authorized agents should refer 
to the relevant titles of the Code of Federal Regulations for pre-
filing requirements of other Government agencies.
    (3) System verification of data acceptance. Once the USPPI or its 
authorized agent has transmitted the data required under paragraphs 
(c)(1) and (c)(2) of this section, and the CBP-approved electronic 
system has received and accepted this data, the system will generate 
and transmit to the USPPI a confirmation number (this number is known 
as the Internal Transaction Number (ITN)), which verifies that the data 
has been accepted as transmitted for the outgoing shipment.
    (c) Information required. (1) Currently collected commodity data. 
The export cargo information to be collected from USPPIs or their 
authorized agents for outbound cargo is already contained in the Bureau 
of Census electronic Shipper's Export Declaration (SED) that the USPPI 
or its authorized agent currently presents to CBP through the approved 
electronic system. The AES Commodity Module already captures the 
requisite export data, so no new data elements for export cargo are 
required under this section. The export cargo data elements that are 
required to be reported electronically through the approved system are 
also found in Sec.  30.63 of the Bureau of Census Regulations (15 CFR 
30.63).
    (2) Transportation data. Reporting of the following transportation 
information is currently mandatory for the vessel, air, truck, and rail 
modes (see also paragraph (c)(3) of this section):
    (i) Mode of transportation (the mode of transportation is defined 
as that by which the goods are exported or shipped (vessel, air, rail, 
or truck));
    (ii) Carrier identification (for vessel, rail and truck shipments, 
the unique carrier identifier is the 4-character Standard Carrier Alpha 
Code (SCAC); for aircraft, the carrier identifier is the 2-or 3-
character International Air Transport Association (IATA) code);
    (iii) Conveyance name (the conveyance name is the name of the 
carrier; for sea carriers, this is the name of the vessel; for others, 
the carrier name);
    (iv) Country of ultimate destination (this is the country as known 
to the USPPI at the time of exportation, where the cargo is to be 
consumed or further processed or manufactured; this country would be 
identified by the 2-character International Standards Organization 
(ISO) code for the country of ultimate destination);
    (v) Estimated date of exportation (the USPPI or its authorized 
agent must report the date the cargo is scheduled to leave the United 
States for all modes of transportation; if the actual date is not 
known, the USPPI or its authorized agent must report the best estimate 
as to the time of departure); and
    (vi) Port of exportation (the port where the outbound cargo 
actually departs from the United States is designated by its unique 
code, as set forth in Annex C, Harmonized Tariff Schedule of the United 
States (HTSUS)).
    (3) Proof of electronic filing; exemption from filing. The USPPI, 
or its authorized agent, must furnish to the outbound carrier a proof 
of electronic filing citation (the ITN), low-risk exporter citation 
(currently, the Option 4 filing citation), or exemption statement, for 
annotation on the carrier's outward manifest, waybill, or other export 
documentation covering the cargo to be shipped. The proof of electronic 
filing citation, low-risk exporter citation, or exemption statement, 
will conform to the approved data formats found in the Bureau of

[[Page 43601]]

Census Foreign Trade Statistics Regulations (FTSR) (15 CFR part 30).
    (4) Carrier responsibility. (i) Loading of cargo. The carrier may 
not load cargo without first receiving from the USPPI or its authorized 
agent either the related electronic filing citation as prescribed under 
paragraph (c)(3) of this section, or an appropriate exemption statement 
for the cargo as specified in paragraph (d) of this section.
    (ii) High-risk cargo. For cargo that CBP has identified as 
potentially high-risk, the carrier, after being duly notified by CBP, 
will be responsible for delivering the cargo for inspection/
examination. If the cargo identified as high risk has already departed, 
CBP will exercise its authority to demand that the export carrier 
redeliver the cargo in accordance with the terms of its international 
carrier bond (see Sec.  113.64(g)(2) of this chapter).
    (5) USPPI receipt of information believed to be accurate. Where the 
USPPI or its authorized agent electronically presenting the cargo 
information required in paragraphs (c)(1) and (c)(2) of this section 
receives any of this information from another party, CBP will take into 
consideration how, in accordance with ordinary commercial practices, 
the USPPI or its authorized agent acquired this information, and 
whether and how the USPPI or authorized agent is able to verify this 
information. Where the USPPI or authorized agent is not reasonably able 
to verify any information received, CBP will permit this party to 
electronically present the information on the basis of what it 
reasonably believes to be true.
    (d) Exemptions from reporting; Census exemptions applicable. The 
USPPI or authorized agent must furnish to the outbound carrier an 
appropriate exemption statement (low-risk exporter or other exemption) 
for any export shipment laden that is not subject to pre-departure 
electronic information filing under this section. The exemption 
statement will conform to the proper format approved by the Bureau of 
Census. Any exemptions from reporting requirements for export cargo are 
enumerated in Sec. Sec.  30.50 through 30.58 of the Bureau of Census 
Regulations (15 CFR 30.50 through 30.58). These exemptions are equally 
applicable under this section.
    (e) Effective date for compliance. The requirements of this 
section, including the pre-departure time frames for reporting export 
cargo information for required shipments, and the requirement of the 
ITN, will be implemented concurrent with the completion of the redesign 
of the AES commodity module and the effective date of mandatory filing 
regulations that will be issued by the Department of Commerce pursuant 
to the Security Assistance Act (Pub. L. 107-228). This date will be 
announced in the Federal Register.

Robert C. Bonner,
Commissioner, Customs and Border Protection.
    Approved: July 17, 2003.

Tom Ridge,
Secretary, Department of Homeland Security.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix--Regulatory Flexibility Act and Executive Order 12866

    The Bureau of Customs and Border Protection (CBP) conducted the 
analysis below to concurrently address the requirements of the 
Regulatory Flexibility Act (RFA) of 1980 and Executive Order 12866. 
Those provisions require, respectively, that CBP (1) assess the 
impact of proposed rules on small business entities via an initial 
regulatory flexibility analysis and (2) determine if the proposed 
rule is a significant regulatory action, defined as having annual 
impact on the United States economy of $100 million or more. 
Critical to recognize is the RFA's focus of the proposed rule's 
effect on small, United States-based entities, as established by the 
standards identified in Panel 1 below.

                             Panel 1.--Industry Size Standards for Small Entities\1\
----------------------------------------------------------------------------------------------------------------
                                                        NAICS
          Mode                Industry grouping         sector            Standard of measure--less than
                                                      identifier
----------------------------------------------------------------------------------------------------------------
Air....................  Scheduled and Non-          48  1500 employees.
                          Scheduled Freight.                 112
                                                     48
                                                            1212
Rail...................  Short Haul................  48  500 employees.
                                                            2112
Vessel.................  Deep Sea..................  48  500 employees.
                                                            3111
Truck..................  (a) General Freight, Local  48  $21.5 million gross annual revenues.
                                                            4110
                         (b) General Freight, Long   48
                          Distance.                         4121
                         (b) General Freight, Long   48
                          Distance & Less Than              4122
                          Truckload.
                         (c) Specialized Freight,    ...........
                          Local.
                         (e) Specialized Freight,    48
                          Long Distance.                    4220
                                                     48
                                                           4230
----------------------------------------------------------------------------------------------------------------
\1\ Source: Small Business Size Standards Matched to North American Industry Classification Systems (NAICS),
  Small Business Administration, October 1, 2002.

A. Need for and Objective of the Proposed Rule

    The proposed rule responds to the requirements of section 343(a) 
of the Trade Act of 2002, as amended (19 U.S.C. 2071 note). That Act 
requires that CBP implement procedures which require the advanced 
electronic submission of cargo information for both imports into and 
exports from the United States while not unduly impeding the flow of 
lawful trade. The fundamental objective of the proposed rule centers 
on providing CBP with sufficient detailed information on trade flows 
within a sufficient advanced timeframe such that CBP may exercise 
review, targeting and inspection of those shipments with the purpose 
of identifying and subsequently inspecting those high risk shipments 
with potential application to terrorist activities.

B. Description and Estimates of Small Entities Affected by the Proposed 
Rule

    The proposed rule centers on two key features: (a) electronic 
submission of cargo information and (b) that information's 
submission prior to arrival into/departure from the United States. 
The advanced submission requirements vary by mode of transport, 
reflecting operational requirements and conditions for those modes. 
The advanced submission timeframes by mode are summarized in Panel 2 
below:

[[Page 43602]]



                          Panel 2.--Summary of Electronic Submission Timeframes by Mode
----------------------------------------------------------------------------------------------------------------
                                                                                              Outbound baseline
                                               Inbound baseline time-                          time-frame for
         Mode                  Inbound           frame for advanced         Outbound         advanced electronic
                                               electronic submission                             submission
----------------------------------------------------------------------------------------------------------------
Vessel................  All cargo requiring    24 hours prior to      All cargo requiring   24 hours prior to
                         reporting for CBP      lading at foreign      reporting under       departure.
                         purposes.              port of departure.     current Census
                                                                       regulations. \1\
Air...................  All cargo requiring    4 hours prior to       All cargo requiring   2 hours prior to
                         reporting for CBP      arrival in US. \2\.    reporting under       scheduled
                         purposes.                                     current Census        departure.
                                                                       regulations. \1\
Rail..................  All cargo requiring    2 hours prior to       All cargo requiring   4 hours prior to
                         reporting for CBP      arrival at 1st US      reporting under       attachment of
                         purposes.              port.                  current Census        engine to train to
                                                                       regulations. \1\      go foreign.
Truck.................  All cargo requiring    30 minutes or 1 hour   All cargo requiring   1 hour prior to
                         reporting for CBP      prior to arrival at    reporting under       scheduled border
                         purposes.              1st US port.           current Census        crossing.
                                                                       regulations. \1\
----------------------------------------------------------------------------------------------------------------
\1\ Note: As a matter of clarification and definition of the proposal's coverage, United States exports to
  Canada are not subject to advanced electronic cargo information submission under this proposal unless (a) the
  merchandise is licensable by Department of State or Department of Defense regulations or (b) the merchandise
  is transiting Canada with a 3rd country destination.
\2\ Note: However, in the case of cargo requiring reporting for CBP purposes that departs for the United States
  from any foreign port or place in North America (including locations in Mexico), Central America, South
  America (from north of the Equator only), the Caribbean, and Bermuda, the cargo information must be received
  no later than the time of the departure of the aircraft for the United States (no later than the time that
  wheels are up on the aircraft, and it is en route directly to the United States.)

The General Theory

    In classical economic theory, the value and volume of the supply 
and demand for goods and services in a national economy exist under 
conditions of an equilibrium price for those goods and services, 
both domestically, through national income accounting components, 
and internationally, through the net trade component. Disruptions, 
or changes, in that state of equilibrium occur regularly and 
frequently, with concomitant changes in supply and demand. Sources 
of such changes can be of a cyclical, secular or random noise 
variety, ranging in gravity and comprehensiveness in effect from 
major, as in large sustained increases in international energy 
prices, to small, as in damage to a large retailer's distribution 
center, to negligible, as in the brief closure for periodic 
maintenance of a single manufacturing plant. Each such significant 
change results in the economic model's initial equilibrium adjusting 
and readjusting via the mechanism of elasticities of price with 
respect to demand until all multiplier effects are exhausted and a 
new state of equilibrium is achieved, both nationally and 
internationally via competing goods and services. The significance 
of change to a new equilibrium will depend on the gravity of that 
initial change.

The Specific Regulatory Case

    In the case of the current considered proposed rule on advanced 
electronic submission of cargo information, such a proposed rule 
represents, to one degree or another, a change in the national and 
international economic system's equilibrium. To the extent that the 
rule requires substantive process adjustments by producers, 
carriers, brokers, importers and exporters, then the proposed rule 
would represent an effective change in system equilibrium, resulting 
in subsequent substantial changes in supply, demand and price. To 
the extent that the rule's effect on trade participants is slight to 
negligible, then the rule's effect would not measurably alter system 
equilibrium.
    In the sections below, CBP will identify, isolate, explore, 
explain and estimate the extent of the proposed rule's impact on the 
national United States economy pursuant to E.O. 12866 and net trade 
component by means of identifying the process adjustments expected 
for small business entities under the RFA. The CBP intends to 
supplement this initial regulatory impact analysis under E.O. 12866, 
and this initial regulatory flexibility analysis under the RFA with 
an expanded, more comprehensive follow-up assessment conducted by a 
private source under contract. The summary of operational change, 
presented in Panel 2 above, serves as a map to the estimation of the 
rule's impact.

Commonalities of Proposed Rule

    The proposed rule offers certain conditions in common for all 
trade participants regardless of mode:
    (1) Advanced information submission, albeit with different 
timeframes for different modes;
    (2) Mandatory electronic filing;
    (3) Costs to be incurred for compliance include those which are 
recurring and those which are one-time only;
    (4) Mandatory use of already existing government approved 
electronic data interchange systems, notably the Automated Export 
System (AES) for all export transactions; Automated Manifest System 
(AMS) with applications for inbound rail, air, and vessel shipments; 
and other modules, such as the NCAP (National Customs Automation 
Program) prototype, with special application for truck modal 
operations;
    (5) Internet access to CBP data interchanges for information 
submission and message transaction;
    (6) Submitter's choice to exercise preference to employ third 
parties for information submission; and
    (7) ``Just-in-time'' manufacturing considerations, common in 
CBP's prior ``Strawman'' proposals, are eliminated as a result of 
substantive reductions in timeframes for prior data submission.

Air Mode Inbound

    The proposed rule establishes timeframes of 4 hours for 
electronic submission of information prior to the aircraft's arrival 
in the United States, or no later than the time of ``wheels-up'' in 
the case of certain nearby foreign areas. Panel 3 below summarizes 
the volume of inbound air cargo by principal air carrier segment.

                               Panel 3.--Inbound Air Cargo Activity, January 2003
----------------------------------------------------------------------------------------------------------------
                                                                                  Airway bill      Median number
                             Air carrier segment                                   volume (in      of U.S. ports
                                                                                   thousands)         served
----------------------------------------------------------------------------------------------------------------
Total Volume (355 Active Air Carriers).......................................              3,270  ..............
    (A) Volume of Express Consignment Carriers: Major carriers...............      2,410 (73.7%)              14
    (B) Other Air Cargo......................................................        860 (26.3%)  ..............
        Top 14 Carriers......................................................        460 (14.1%)               9

[[Page 43603]]

 
        Remaining 338 Carriers...............................................        400 (12.3%)              3
----------------------------------------------------------------------------------------------------------------
Source: Automated Commercial System.

    In addition to requiring information submission four hours prior 
to arrival in the United States, or no later than the time of 
``wheels-up'' in the case of certain nearby foreign areas, air 
carriers will be required to provide their own interface capability 
with the government approved electronic interchange at each U.S. 
Port of Arrival served by that carrier. The current government 
approved interchange is the Automated Manifest System--Air (AAMS). 
Those carriers will no longer be required to present a hard copy of 
their manifest upon arrival. Only in the event that the data 
interchange system is temporarily unavailable by malfunction would 
carriers be required to present a hard copy of their cargo manifest.
    The data in Panel 3 establishes several relevant considerations 
in assessing the proposed rule's impact. The large majority of air 
inbound shipments (73.7%), as measured by airway bills, is accounted 
for by a relatively small number of large express consignment 
carriers. Those carriers currently are highly automated and 
currently have the capacity at virtually no cost to comply with the 
data submission provisions of the proposed rule. Measured by median, 
those carriers import shipments into 13 U.S. ports of arrival and 
long ago equipped those sites for AAMS transmissions.
    These express consignment carriers would likely not be affected 
by the proposed rule even in the case of short haul flights, largely 
originating in Mexico and Canada, inasmuch as they would only be 
required to submit AAMS information no later than the time of 
departure from the foreign area (no later than the time of ``wheels-
up''). As a result, there would be no delay in departure from the 
foreign source necessitated in order to meet a pre-arrival reporting 
requirement. In any event, in operational practice, those carriers 
often engage more economical land shipment instead of higher cost 
air movement for short haul moves.
    As a result of the above data and operational considerations, 
CBP concludes that these large carriers are substantially unaffected 
by the proposed rule.
    The CBP estimates that these same factors and conclusion above 
hold for the second tier of air carriers, comprising 14.1% of airway 
bill volume. Those 14 carriers arrive at a median 9 U.S. Ports of 
Arrival.
    The CBP data establish that a remaining 338 small carriers 
account for 12.3% of inbound air volume, serving a median 3 Ports of 
Arrival. Operating on a manual hard copy basis upon arrival, a 
majority of those 338 entities are foreign owned and fall out of the 
scope of the RFA. For those U.S. based small air carriers, CBP 
estimates that one time costs would be incurred to establish data 
transmission capability at the median three arrival ports. To a 
significant degree, those one time costs would be mitigated by 
recurring operational efficiencies related to standard business 
operations and more rapid CBP processing and release of shipments, 
allowing more rapid turnaround of the aircraft and crew for 
increased revenue generation activities.
    International inbound mail shipments are included in the cargo 
volumes cited above. However, advanced data submission for mail 
shipments through the United States Postal Service (USPS) is 
excluded from consideration in the proposed rule. To this end, 
reflecting the restrictive condition of involvement of sovereign 
foreign governments and pre-existing international treaties 
governing the movement of international inbound mail shipments, CBP 
contemplates that such shipments will not at this time be subject to 
the terms and conditions of the proposed rule.

Truck Mode Inbound; Rail Mode Inbound

    Panel 4 below illustrates the volume of truck and rail traffic 
reported on the Northern and Southern borders:

                      Panel 4.--Conveyance Arrivals
------------------------------------------------------------------------
                 Mode                    FY 2002 volume  (in thousands)
------------------------------------------------------------------------
Total Commercial Aircraft............  574.3.
Total Trucks.........................  12,258.0.
  At Southern Border.................  349.8 (2.9%).
  At Northern Border.................  11,908.2 (97.2%).
Total Trains.........................  44.3.
  At Southern Border.................  8.4 (19%).
  At Northern Border.................  35.9 (81%).
Total Vessels........................  226.2.
------------------------------------------------------------------------
Source: Automated Commercial System.

Truck Mode Inbound; Explanation and Analysis of Data

    The proposed rule requires cargo information submission either 
30 minutes or 1 hour prior to arrival at the first U.S. Port of 
Arrival. As noted in Panel 4 above, the large majority of truck 
arrivals (97.2%) occurs at Northern Border ports. The CBP estimates 
that 60% of this inbound mode arrives with manually presented hard 
copy cargo information and, therefore, would be subject to changed 
operations to comply with the proposed rule. Further, consultations 
with industry sources suggest that the Northern Border supports an 
estimated 22,000 individual truck entities, of which 15,000 meet 
Small Business Administration standards as small entities (see Panel 
1 above). A substantial portion of the 15,000 small trucking firms 
are Canada-based and, therefore, beyond the scope of the RFA's 
consideration. The portion of this segment which is U.S. based will 
be required to incur one time costs for hardware and software for 
data transmission.
    While hardware requirements and software cost relatively little 
and while Internet transmission is distinctly low cost, those firms 
will be required to expend time for data entry. Compared to normal, 
pre-proposal operation standards, that factor could represent a 
significant cost.
    On the other hand, CBP estimates that recurring annual costs of 
data transmission are low. Further, certain other benefits 
representing lower operating costs will be realized. Electronic 
transmission will represent a lower cost burden on record keeping 
for those entities as well as speed cargo information submission and 
physical border release of the conveyance at the U.S. port of 
arrival for those shipments. Such electronic efficiencies could be 
expected to translate directly into lower daily operational costs 
for entities. Also, the likelihood is substantial that U.S. based 
small truck entities will develop cooperative and commercial 
arrangements with exporters. Such arrangements would likely involve 
provision to the truck entity of data in readily transmittable 
format, thus reducing the data entry burden of this segment.
    As yet another mitigating factor, small truck entities may 
choose to engage the data services of port authorities or commercial 
service providers. Further still, there is a social good to be 
considered in that faster conveyance release at the port of arrival 
will translate directly into less local traffic congestion at the 
port and lower diesel emissions for residents of the locality. While 
complex to quantify, such commercial and health benefits cannot 
responsibly be neglected because tangible social welfare and 
commercial benefits will result.
    Less than 3% of truck activity takes place at Southern Border 
sites (see Panel 4 above). An unestablished number of trucking 
entities operate in that geographic environment. However, long-term 
operational observation establishes that much of that border's truck 
volume centers on servicing the maquiladora industry based in the 
local Mexican border area. These Mexican-based plants are owned and 
operated in the large majority for the assembly function by large 
U.S. and multinational corporations (Chapter 98, Subchapter II, 
Harmonized Tariff Schedule of the United States (HTSUS) (Articles 
Exported and Returned, Advanced or Improved Abroad)). Such U.S. and 
multinational corporations are highly automated in their record 
keeping and cargo information transmission capabilities.
    Further, a substantial majority of that north bound traffic 
relies on lower cost Mexican-based trucking entities operating in a 
shuttle

[[Page 43604]]

fashion to supply finished products to distribution facilities 
located on U.S. territory. Such foreign owned trucking entities are 
beyond the scope of the RFA's consideration.
    If small U.S. based truck companies engage data transmitting 
aids at a commercially negotiated cost, one would reasonably expect 
that truck companies would pass those costs downstream. Such a cost 
increase may encourage a change in competitive relationships with 
comparable transportation services offered by rail carriers. Further 
consideration, however, mitigates the likelihood and significance of 
any competitive modal shift in that such shifts depend highly on the 
(1) nature of the merchandise to be transported, (2) elasticities of 
price with respect to demand for those commodities for trade 
participants and (3) the inherent established time and location-of-
service flexibility of trucking versus rail transport.
    In summary for this inbound mode, a certain substantial number 
of U.S. based small truck entities operating on the Northern Border 
may experience measurable cost of operation impact from the proposed 
rule. However, CBP estimates that many of those costs would be 
offset by concomitant operational efficiencies directly resulting 
from an operational shift from pre-proposal manual hard copy 
practices to electronic filing and expedited border release, freeing 
up resources for expanded revenue generation opportunities.

Rail Mode Inbound; Explanation and Analysis of Data

    The proposed rule establishes that cargo information will be 
electronically submitted 2 hours prior to arrival at the first U.S. 
port of arrival. As noted in Panel 4 above, 81% of rail volume 
occurs at Northern Border ports. The CBP estimates that all but 6 
rail carriers already submit cargo information electronically. Only 
those 6 carriers would be affected by the proposed rule, and of 
those 6, some may not qualify as a small entity according to Panel 1 
SBA standards. The operational effect of the proposal would be 
mitigated to a substantial degree by operational efficiencies 
attributable to electronic filing. Further mitigation is identified 
by the proposal's provision that the filing requirement will become 
mandatory within 90 days of CBP port automation to allow Rail AMS. 
The CBP establishes that 12 border ports still remain to be made 
operational for Rail AMS operation.

Vessel Mode Inbound

    The proposed rule establishes that cargo information will be 
transmitted to CBP 24 hours prior to lading at the foreign port of 
departure, a standard which is consistent and exactly compatible 
with the earlier implemented Container Security Initiative (CSI). An 
estimated 50% of inbound vessel volume is accounted for by the 
previously implemented CSI program. The CBP estimates that a further 
45% of inbound vessel cargo volume already participates in AMS 
electronic transmission, leaving only 5% of this vessel volume to be 
affected by the proposed rule. Also, because of the transportation 
timeframes inherent in long haul vessel transport, the filing time 
requirement is not expected to impose a measurable operational 
burden on carriers. And based on capital and labor requirements and 
practices in this segment, it is highly unlikely that these carriers 
would meet SBA small entity standards (see Panel 1 above). Further 
still, few carriers are U.S. based and thus properly considered 
under provisions of the RFA.

All Modes Outbound

    Panel 5, below, illustrates the increasing volume of export 
shipments, from 1995 through 2002, that have been reported 
electronically through the Automated Export System (AES); and Panel 
6, below, reflects, as of February 2003, the vastly increased number 
of export shipments being reported through AES as a percentage of 
the total number of export shipments reported, both electronically 
and on paper.

                                        Panel 5.--Volume of AES Shipments
                                  [External transaction numbers, in thousands]
----------------------------------------------------------------------------------------------------------------
                            Year                                 Total         Air       Rail/Truck     Vessel
----------------------------------------------------------------------------------------------------------------
1995........................................................          0.4            0            0          0.4
1996........................................................         21.4            0            0         21.4
1997........................................................         60.7          0.2          3.6         56.9
1998........................................................        221.0         30.3         81.1        109.6
1999........................................................       1038.5        486.4        262.7        289.5
2000........................................................       7140.9       4053.3       1407.0       1676.2
2001........................................................       8819.0       4424.3       1586.3       2800.7
2002........................................................       9424.0       4788.8       1832.9      2785.0
----------------------------------------------------------------------------------------------------------------
Source: Bureau of the Census.


                                     Panel 6.--Export Records, February 2003
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                                        AES as
                            Mode                                Via AES     Via paper      Total      percent of
                                                                               SED        records       total
----------------------------------------------------------------------------------------------------------------
Air.........................................................        421.3         80.7        502.1         83.9
Vessel......................................................        286.3         11.7        298.0         96.1
Truck/Rail..................................................        261.3         52.7        314.0         83.3
                                                             --------------
      Total.................................................        968.9        145.2       1114.1        87.0
----------------------------------------------------------------------------------------------------------------
Source: Bureau of the Census.

All Modes Outbound; Explanation and Analysis of Data

    The participation of outbound shipments in the proposed rule's 
reporting requirements will be concurrent with the completion of the 
redesign of the AES commodity module and mandatory, effective with a 
future regulatory publication by the Department of Commerce. For 
purposes of this proposed rule, the treatment below of outbound 
regulatory flexibility and E.O. 12866 impact is presented for 
information purposes solely.
    The proposed rule states that exporters (U.S. Principal Parties 
in Interest--USPPI's) or their authorized agents will file commodity 
export information via the existing government approved data 
interchange, AES, within certain time frames prior to departure from 
the U.S. (see Panel 2 for time frames).
    The use of AES has risen dramatically since its inception in 
1995 (see Panel 5), such that currently AES transactions account for 
87% of all export records (see Panel 6). Because of the large 
majority already participating in AES filing, only 13% of export 
records will be affected by the proposed rule.
    Because of modal travel and preparation times, CBP does not 
identify notable operational hardship in meeting border

[[Page 43605]]

crossing filing times for any mode. In fact, the air express 
consignment burden is decreased compared to imports by a 1 hour 
timeframe prior to departure. Filings may take place via low cost 
Internet transmission. In filing, the USPPI will submit 
electronically to CBP a self generated external transaction number 
(XTN), receiving from CBP an internal transaction number (ITN), 
which is a system verification and approval (confirmation) number 
for cargo shipment information. Actual performance establishes that 
the ITN turnaround is routinely less than 1 minute. Only in the case 
that the USPPI chooses to engage in a third party commercial data 
transmission agent would the ITN/XTN turnaround require greater 
time, an estimated 15-30 minutes.
    As in the Truck Mode Inbound section above, a potential impact 
may be experienced by small truck entities serving Northern border 
export transactions. However, as detailed in the Note to Panel 2, 
United States exports to Canada are not subject to advanced 
electronic cargo information submission under this proposal unless 
(a) the merchandise is licensable by Department of State or 
Department of Defense regulations or (b) the merchandise is 
transiting Canada with a 3rd country destination. Such a reporting 
factor may reasonably be expected to mitigate any burden on small 
trucking entities in providing a significant portion of the 
remaining 13% of outbound AES data.
    Further with respect to outbound small truck entities, as also 
noted in the Truck Mode Inbound section above, certain cost lowering 
operational efficiencies will flow from the proposal's obligation to 
employ electronic filing, namely: (a) Electronic transmission will 
represent a lower cost burden on record keeping for those entities; 
(b) more rapid cargo information submission; and (c) more rapid 
physical border release of the conveyance at the U.S. port of 
arrival for those shipments. Such electronic efficiencies could be 
expected to translate directly into lower daily operational costs 
for entities, either partially or entirely offsetting one-time data 
transmission costs.

Executive Order 12866 and Significant Regulatory Action

Sector of Impact Identified

    Outbound merchandise shipments generated by the United States 
Postal Service (USPS) may or may not be included within the scope of 
the proposed rule. In the event of inclusion, as a hybrid-type 
``publicly owned private corporation'', the USPS would be 
responsible for data entry and transmission of an estimated 30 
million outbound merchandise transactions (i.e., parcel shipments) 
per year. While not included in the framework of the small entity 
oriented RFA, this organization and the proposal's effects become 
relevant in E.O. 12866 considerations which relate to impacts on the 
national economy. The CBP estimates that USPS would incur costs of 
$4-$6 per outbound transaction in order to perform data entry or 
purchase data entry services for each export transaction, yielding a 
total impact of $120-$180 million annually. Reasonably expected is 
that the USPS would request and be permitted to pass that cost to 
exporters (U.S.-based consumers) through some mechanism of, 
effectively, a user fee.
    In the case that outbound international mail shipments are 
indeed included in the proposed rule, then such an impact readily 
qualifies this proposal as a significant regulatory action, 
surpassing the $100 million economic impact threshold established by 
the Executive Order. In the case that such shipments are removed or 
waived from the proposal at a later time, then the proposed rule's 
categorization as a significant regulatory action would no longer 
hold.

Competitive Relationship Effect

    In the event of the USPS being obliged to provide outbound 
shipment data, then CBP estimates that the proposed rule would 
increase the degree of commercial competition between USPS and 
express consignment carriers. The U.S. Customs Service (now merged 
into CBP) prepared a detailed report to Congress in late 1997 
identifying a series of factors of preferential Customs treatment 
available to USPS and not available to express consignment carriers. 
One of those identified factors focused on the Customs requirement 
for express carriers to provide detailed export transaction data 
with no equivalent requirement for USPS export shipments. By 
requiring USPS to provide the same data elements as express carriers 
in the same timeframe, the proposed rule would eliminate one key 
element of disparate treatment, effectively leveling the playing 
field between these two exporting entities and bringing both parties 
into more equal business operating practices.

C. Automation Costs of Participation in Advance Electronic Cargo 
Information Submission

    CBP estimates below the following costs of shipper/carrier/
importer/exporter compliance with electronic transmission 
requirements within the proposed rule's time frame for submission. 
The data were gathered from discussions with software providers and 
trade participants active in electronic data transmission with CBP.

Air Mode

    Air mode is estimated to incur the greater of the costs for all 
modes. In order to purchase software, a large air carrier would 
incur costs of $5,000-$25,000 as a one-time license fee and $6,000/
year in maintenance costs, plus an estimated $20,000/yr. in 
operating costs, primarily labor. If the air carrier chose to 
develop the transmission software independently, the carrier would 
incur development costs of an estimated $100,000, plus annual 
operating costs of $400,000, primarily labor. If the air carrier 
were to seek transmission services from a service provider, the 
carrier would incur costs of $500-$2,000 in one time subscription 
fees, plus an annual minimum $6,000 cost.
    In estimating air industry total costs of compliance with the 
proposed rule, CBP established that 260 of the total 355 air 
carriers are American-based. The CBP estimates that these 260 
carriers will choose information transmission compliance options in 
the following distribution: (a) 5 to develop software, maintain 
system and transmit at their own initiative; (b) 50 to purchase 
software, maintain and transmit; and (c) 205 to employ service 
providers for software, maintenance and transmission. Employing that 
distribution, CBP estimates the following transmission costs of 
compliance, broken down by both one-time and recurring annual costs:

                Estimated Air Mode Costs of Transmission
                         [Thousands of dollars]
------------------------------------------------------------------------
                                                               Recurring
           Transmission option selected              One time    annual
                                                      costs      costs
------------------------------------------------------------------------
I. Develop........................................       $500     $2,000
II. Purchase......................................        750      1,300
III. Service Providers............................        205      1,230
                                                   ---------------------
    Total.........................................      1,455      4,530
------------------------------------------------------------------------

Truck Mode

    In consideration of the truck mode, the primary cost for a 
shipper/carrier would involve complying with the Automated Broker 
Interface (ABI) Selectivity practices.
    Specifically, there are approximately 13,400 trucking firms that 
will eventually have to move from a paper-based system to an 
electronic system.* Compliance with the Automated Broker Interface 
Selectivity practices would require, at a minimum, a facsimile 
transmission within the proposed rule's time frame for advance 
information.
    Therefore, this rule would impose a small capital cost (a fax 
machine for firms that do not already own a fax machine), and a per-
transmission cost. Firms could also avail themselves of a commercial 
transmission service; however, the per-transmission cost may be less 
cost-effective than a personal fax machine for a firm involved in 
many shipments. The per-transmission cost should be minimal, since 
the information that firms would need to send already must be 
gathered and presented at the time of arrival under current 
procedures. The CBP also assumes that most trucking firms will 
already own a fax machine. If 50% of firms must invest in a fax 
machine (a likely overestimate) at approximately $150 per machine, 
the total cost of this rule for the trucking industry would be a 
one-time cost of approximately $1 million. The CBP also makes a 
preliminary determination that this rulemaking would not result in 
any other changes in business practices that would impose additional 
costs to trucking firms. We request comments on these assumptions.

(*CBP estimates the following already in the analysis: (22,000 Truck 
firms at the Canada border + 350 Truck firms at Mexico border) * 
(.60 that are currently paper based) = 13,410).)

Vessel and Rail Modes

    Vessel and rail carriers are the least affected in terms of cost 
of transmission because of those carriers' already high 
participation rate in electronic transmission meeting the proposed 
rule's requirements. In practical terms, costs of data submission 
for

[[Page 43606]]

these segments of the trade are adjudged near negligible.

D. Recordkeeping and Reporting Requirements

    The proposed rule does not include additional, new recordkeeping 
requirements. Instead, because of the reliance of the proposal on 
electronic transmissions, the proposal may well simplify and reduce 
existing recordkeeping obligations of the trade participants. In 
terms of reporting requirements, the proposal carefully relies on 
using existing government approved electronic data interchange tools 
already in widespread use by trade participants.

E. Alternatives Considered

    The CBP considered and incorporated alternative methodologies 
into the proposed rule's data submission requirements on trade 
community participants. In developing the proposed rule, CBP sought 
to balance the operational needs of legitimate commercial cargo 
flows with a meaningful and effective timeframe for identifying, 
targeting and inspecting potentially high risk merchandise 
shipments. In order to identify that balance, CBP proposed 
requirements for advance electronic submission by mode in 
``Strawman'' proposals. Those initial standards proposed submission 
timetables ranging from 24 hours prior to departure to 4-24 hours 
prior to lading and subsequent cargo movement.
    Substantial public comment and public hearings followed the 
``Strawman'' Proposals, offering multiple alternatives. With a high 
degree of uniformity and consistency, those alternatives focused on 
several common issues: (1) Using already existing automated systems, 
such as AES and AMS for data submission; (2) different, more compact 
timeframes for provision of advanced information, oriented primarily 
around the objective of non-disruption of standard business 
transportation practices and commercially critical ``just-in-time'' 
delivery systems; and (3) re-focus of advanced data submission from 
a pre-lading basis to, respectively, a pre-arrival-into or pre-
departure-from U.S. basis.
    In response to public expressions and explanations, CBP, 
subsequent to the ``Strawman'' Proposals, effectively re-focused the 
time and transportation scheduling basis for the advanced electronic 
data submissions (see Panel 2 above vs. original Strawman framework) 
such that the proposed rule fairly closely reflects the philosophy 
and principles of the publicly expressed alternatives.

F. Conclusion

Regulatory Flexibility Act (RFA)

    With respect to RFA considerations, CBP concludes that the 
proposed rule will result in no significant economic impact on a 
substantial number of small U.S. entities because:
    (1) The proposed rule's reporting timeframes are reasonably 
compatible with modern shipping practices and capabilities and 
fundamentally reflect the alternative approaches presented by those 
commercial interests;
    (2) The high volume of inbound and outbound transactions already 
currently reported on an electronic basis;
    (3) Low cost of electronic transmission of the required data;
    (4) Accessibility to and use of already existing government 
approved electronic data interchange mechanisms;
    (5) Subsequent operating efficiencies resulting from electronic 
filing, resulting in enhanced revenue generating activities of small 
carriers;
    (6) Exclusion of most exports to Canada from Bureau of the 
Census reporting;
    (7) The RFA's exclusion from consideration of non-U.S. entities;
    (8) Availability of existing Discrepancy Reporting authority for 
carriers to update/correct previously submitted cargo data; and
    (9) Reporting timeframes which do not interfere with critical 
``just-in-time'' delivery systems.

Executive Order 12866

    With respect to Executive Order 12866, CBP concludes that, 
should USPS export transactions be included within the scope of the 
proposal's reporting requirements, the proposal qualifies as a 
significant regulatory action, with annual national economic cost 
greater than $100 million because USPS costs incurred would likely 
be recouped as user fees charged to U.S. exporters. The reverse 
conclusion would hold in the event that USPS export transactions are 
not included within the proposed rule. Further, in the case that 
USPS exports are included, the USPS--express consignment commercial 
competitive relationship would be more equalized.

[FR Doc. 03-18558 Filed 7-17-03; 3:39 pm]
BILLING CODE 4820-02-P