[Federal Register Volume 68, Number 154 (Monday, August 11, 2003)]
[Rules and Regulations]
[Pages 47453-47455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20328]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

19 CFR Part 103

RIN 1515-AD29
[CBP Decision 03-02]


Confidentiality of Commercial Information

AGENCY: Customs and Border Protection, Department of Homeland Security.

ACTION: Interim rule; solicitation of comments.

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SUMMARY: This document amends Chapter I of Title 19 of the Code of 
Federal Regulations on an interim basis regarding the disclosure 
procedures that the Bureau of Customs and Border Protection (CBP) 
follows when commercial information is provided to CBP by a business 
submitter. The predecessor of CBP--the U.S. Customs Service--as a 
component of the Treasury Department, had followed these procedures 
consistent with a Department of the Treasury regulation that 
implemented an Executive Order setting forth the procedure for the 
treatment of commercial information. As CBP is now a component of the 
Department of Homeland Security, CBP is setting forth this established 
policy in its own regulations.

DATES: This interim rule is effective August 11, 2003. Comments must be 
received on or before October 10, 2003.

ADDRESSES: Written comments may be addressed to the Customs and Border 
Protection Bureau, Office of Regulations and Rulings, Attention: 
Regulations Branch, 1300 Pennsylvania Avenue, NW., Washington, DC 
20229. Submitted comments may be inspected at Customs and Border 
Protection Bureau, 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: Joanne Roman Stump, Chief, Disclosure 
Law Branch, Office of Regulations and Rulings, (202) 572-8720.

SUPPLEMENTARY INFORMATION:

Background

    The regulations of the Bureau of Customs and Border Protection 
(CBP), regarding information requested pursuant to the Freedom of 
Information Act (FOIA), 5 U.S.C. 552, as amended, are set forth in part 
103 of Chapter I of Title 19 of the Code of Federal Regulations (19 CFR 
part 103). These regulations were the regulations of the former U.S. 
Customs Service (Customs). As a component of the Department of the 
Treasury, Customs supplemented its regulations with the Department of 
the Treasury regulations (found at 31 CFR part 1) regarding public 
access to records. Section 1.6 of the Department of the Treasury 
regulations (31 CFR 1.6) concerns the treatment of information 
denominated as ``business information''. This section provides that 
such information provided to the Department of the Treasury by a 
``business submitter'' shall not be disclosed pursuant to a FOIA 
request except in accordance with the provisions of the section. Part 
103 of 19 CFR does not have a similar provision and Customs followed 
the Department of the Treasury's disclosure procedure set forth in 31 
CFR 1.6 since it was promulgated in 1987.
    Section 1.6 was promulgated in accordance with Executive Order 
12600 of June 23, 1987, 52 FR 23781, 3 CFR part 1987, 235, 23 Weekly 
Comp.Pres. Doc. 727. Executive Order 12600 ordered the head of each 
Executive department to issue a predisclosure notification procedure 
for FOIA requests concerning confidential commercial information.
    On March 1, 2003, Customs was transferred from the Treasury 
Department to the new Department of Homeland Security (DHS). Pub. L. 
107-296, 6 U.S.C. 133, 116 Stat. 2135. DHS published procedures for the 
public on how to obtain information from DHS in an interim rule 
published in the Federal Register (68 FR 4055) on January 27, 2003. 
Under this rule, established at 6 CFR, Chapter I, part 5, the DHS FOIA 
provisions apply to all Department components transferred to the DHS, 
except to the extent that such component has adopted separate guidance 
under the FOIA (6 CFR 5.1(a)(2)).
    The DHS FOIA regulation at 6 CFR 5.8(c) provides that a submitter 
of business information will use good-faith efforts to designate, by 
appropriate markings, either at the time of submission or at a 
reasonable time thereafter, any portions of its submission that it 
considers to be protected from disclosure under exemption 4 of the 
FOIA. (Exemption 4 of the FOIA protects trade secrets and commercial or 
financial information that is privileged or confidential.) The 
regulations go on to say that, before business information will be 
released, notice will be provided to business submitters whenever (1) a 
FOIA request is made that seeks the business information that has been 
designated in good-faith as confidential, or (2) the DHS component 
agency has reason to believe the information may be protected from 
disclosure. When notice is provided, the submitter will be required to 
submit a detailed written statement specifying the grounds for 
withholding any portion of the information and must show why the 
information is a trade secret or commercial or financial information 
that is privileged or confidential.
    Customs, in accordance with the Treasury Regulations (31 CFR 1.6), 
had not required business submitters to designate information as 
protected from disclosure as privileged or confidential under exemption 
4 of the FOIA for the agency to not disclose ``commercial 
information'', defined as trade secret, commercial, or financial 
information obtained from a person. The Treasury regulations provide 
that a component of the Treasury Department can determine for itself 
that information it receives from business submitters will not be 
disclosed pursuant to a FOIA request. If the agency determines the 
information is confidential, it can protect the information as 
confidential without notifying the business submitter that a FOIA 
request has been received.
    For example, Customs routinely considered commercial information 
appearing on entry documents as confidential and privileged under 
exemption 4 of the FOIA. Customs did not require business submitters to 
designate that information as confidential and did not require the 
business submitters to respond to a notice from Customs with a written 
detailed statement specifying the reasons for the claim of 
confidentiality.
    Accordingly, CBP is issuing this document to assure the trading 
community that the transfer of Customs from Treasury to DHS will not 
affect the treatment of commercial information which business 
submitters provide to CBP. In this document CBP is amending its 
regulations on an interim basis to set forth the established policy it 
had been following pursuant to the Treasury regulations.

[[Page 47454]]

Discussion of Interim Amendments Concerning the Disclosure of 
Commercial Information

    CBP is adding a new Sec.  103.35 to its regulations to set forth 
its policy under the FOIA for the disclosure of confidential commercial 
information. The text will provide that ``commercial information'', 
defined as ``trade secret, commercial, or financial information 
obtained from a person'', that has been provided to CBP by a business 
submitter will be considered privileged or confidential and will not be 
disclosed except as provided in the section. This section will explain 
the various notice requirements CBP must give to the business submitter 
whose commercial information is the subject of a FOIA request for 
information, the procedure a business submitter must follow to object 
to the proposed disclosure, the notice of intent to disclose provisions 
that CBP must follow when it decides to disclose requested commercial 
information, and exceptions to the notice requirements. There is no 
affirmative requirement of business submitters to designate information 
as privileged or confidential.
    It is noted that the new section does allow for a business 
submitter to designate information as confidential in Sec.  
103.35(b)(1)(i). Business submitters may avail themselves of this 
option when such a designation is feasible, as when submitting a ruling 
request. However, in situations when there is no method by which to 
designate information as confidential, such as on entry documentation, 
it is CBP's position that the commercial information will not be 
disclosed as a matter of policy. See Sec.  103.35(b)(2)(i).

Comments

    Before adopting these interim regulations as a final rule, 
consideration will be given to any written comments timely submitted to 
CBP, including comments on the clarity of this interim rule and how it 
may be made easier to understand. Comments submitted will be available 
for public inspection in accordance with the Freedom of Information Act 
(5 U.S.C. 552) and Sec.  103.11(b) of the Title 19 of the Code of 
Federal Regulations (19 CFR 103.11(b)), on regular business days 
between the hours of 9 a.m. and 4:30 p.m. at the Regulations Branch, 
Office of Regulations and Rulings, Customs and Border Protection 
Bureau, 799 9th Street, NW., Washington, DC. Arrangements to inspect 
submitted comments should be made in advance by calling Mr. Joseph 
Clark at (202) 572-8768.

Inapplicability of Prior Notice and Delayed Effective Date Requirements

    CBP has determined, pursuant to 5 U.S.C 553(b)(B), that it would be 
contrary to the public interest to issue this rule with prior notice 
because the rule sets forth an established treatment of commercial 
information and seeks to assure the trade community that such 
submissions will continue to be treated the same by CBP in the 
Department of Homeland Security as the information was treated when 
Customs was under the Department of the Treasury. For these reasons, 
and pursuant to 5 U.S.C. 553(d)(3), good cause exists to make this rule 
effective immediately without a 30-day delayed effective date. However, 
as previously stated, CBP invites comments before determining whether 
to adopt these interim regulations as a final rule.

The Regulatory Flexibility Act, and Executive Order 12866

    Because no notice of proposed rulemaking is required for interim 
regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C. 
601 et seq.), do not apply. Further, this document does not meet the 
criteria for a ``significant regulatory action'' as specified in E.O. 
12866.

List of Subjects in 19 CFR Part 103

    Administrative practice and procedure, Confidential commercial 
information, Freedom of information, Reporting and recordkeeping 
requirements.

Amendments to the Regulations

0
For the reasons set forth above, CBP amends part 103 of Title 19 of the 
Code of Federal Regulations (19 CFR part 103), as set forth below:

PART 103--AVAILABILITY OF INFORMATION

0
1. The general authority citation for part 103 continues, and a 
specific authority citation for Sec.  103.35 is added, to read as 
follows:

    Authority: 5 U.S.C. 301, 552, 552a; 19 U.S.C. 66, 1431, 1624, 
1628; 31 U.S.C. 9701.
* * * * *
    Section 103.35 also issued under E.O. 12600 of June 23, 1987.


0
2. Section 103.35 is added to subpart C to read as follows:


Sec.  103.35  Confidential commercial information; exempt.

    (a) In general. For purposes of this section, ``commercial 
information'' is defined as trade secret, commercial, or financial 
information obtained from a person. Commercial information provided to 
CBP by a business submitter will be treated as privileged or 
confidential and will not be disclosed pursuant to a Freedom of 
Information Act (FOIA) request or otherwise made known in any manner 
except as provided in this section.
    (b) Notice to business submitters of FOIA requests for disclosure. 
Except as provided in paragraph (b)(2) of this section, CBP will 
provide business submitters with prompt written notice of receipt of 
FOIA requests or appeals that encompass their commercial information. 
The written notice will describe either the exact nature of the 
commercial information requested, or enclose copies of the records or 
those portions of the records that contain the commercial information. 
The written notice also will advise the business submitter of its right 
to file a disclosure objection statement as provided under paragraph 
(c)(1) of this section. CBP will provide notice to business submitters 
of FOIA requests for the business submitter's commercial information 
for a period of not more than 10 years after the date the business 
submitter provides CBP with the information, unless the business 
submitter requests, and provides acceptable justification for, a 
specific notice period of greater duration.
    (1) When notice is required. CBP will provide business submitters 
with notice of receipt of a FOIA request or appeal whenever:
    (i) The business submitter has in good faith designated the 
information as commercially- or financially-sensitive information. The 
business submitter's claim of confidentiality should be supported by a 
statement by an authorized representative of the business entity 
providing specific justification that the information in question is 
considered confidential commercial or financial information and that 
the information has not been disclosed to the public; or
    (ii) CBP has reason to believe that disclosure of the commercial 
information could reasonably be expected to cause substantial 
competitive harm.
    (2) When notice is not required. The notice requirements of this 
section will not apply if:
    (i) CBP determines that the commercial information will not be 
disclosed;
    (ii) The commercial information has been lawfully published or 
otherwise made available to the public; or
    (iii) Disclosure of the information is required by law (other than 
5 U.S.C. 552).

[[Page 47455]]

    (c) Procedure when notice given.--(1) Opportunity for business 
submitter to object to disclosure. A business submitter receiving 
written notice from CBP of receipt of a FOIA request or appeal 
encompassing its commercial information may object to any disclosure of 
the commercial information by providing CBP with a detailed statement 
of reasons within 10 days of the date of the notice (exclusive of 
Saturdays, Sundays, and legal public holidays). The statement should 
specify all the grounds for withholding any of the commercial 
information under any exemption of the FOIA and, in the case of 
Exemption 4, should demonstrate why the information is considered to be 
a trade secret or commercial or financial information that is 
privileged or confidential. The disclosure objection information 
provided by a person pursuant to this paragraph may be subject to 
disclosure under the FOIA.
    (2) Notice to FOIA requester. When notice is given to a business 
submitter under paragraph (b)(1) of this section, notice will also be 
given to the FOIA requester that the business submitter has been given 
an opportunity to object to any disclosure of the requested commercial 
information. The requester will be further advised that a delay in 
responding to the request may be considered a denial of access to 
records and that the requester may proceed with an administrative 
appeal or seek judicial review, if appropriate. The notice will also 
invite the FOIA requester to agree to a voluntary extension(s) of time 
so that CBP may review the business submitter's disclosure objection 
statement.
    (d) Notice of intent to disclose. CBP will consider carefully a 
business submitter's objections and specific grounds for nondisclosure 
prior to determining whether to disclose commercial information. 
Whenever CBP decides to disclose the requested commercial information 
over the objection of the business submitter, CBP will provide written 
notice to the business submitter of CBP's intent to disclose, which 
will include:
    (1) A statement of the reasons for which the business submitter's 
disclosure objections were not sustained;
    (2) A description of the commercial information to be disclosed; 
and,
    (3) A specified disclosure date which will not be less than 10 days 
(exclusive of Saturdays, Sundays, and legal public holidays) after the 
notice of intent to disclose the requested information has been issued 
to the business submitter. Except as otherwise prohibited by law, CBP 
will also provide a copy of the notice of intent to disclose to the 
FOIA requester at the same time.
    (e) Notice of FOIA lawsuit. Whenever a FOIA requester brings suit 
seeking to compel the disclosure of commercial information covered by 
paragraph (b)(1) of this section, CBP will promptly notify the business 
submitter in writing.

    Dated: June 20, 2003.
Robert C. Bonner,
Commissioner, Customs and Border Protection.
[FR Doc. 03-20328 Filed 8-8-03; 8:45 am]
BILLING CODE 4820-02-P