[Federal Register Volume 68, Number 234 (Friday, December 5, 2003)]
[Rules and Regulations]
[Pages 68140-68177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29798]



[[Page 68139]]

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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, et al.



Required Advance Electronic Presentation of Cargo Information; Final 
Rule

  Federal Register / Vol. 68 , No. 234 / Friday, December 5, 2003 / 
Rules and Regulations  

[[Page 68140]]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

19 CFR Parts 4, 103, 113, 122, 123, 178 and 192

[CBP Dec. 03-32]
RIN 1651-AA49


Required Advance Electronic Presentation of Cargo Information

AGENCY: Customs and Border Protection, Homeland Security.

ACTION: Final rule.

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SUMMARY: This document amends the Customs Regulations to provide that 
the Bureau of 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 for 
purposes of ensuring cargo safety and security and preventing smuggling 
pursuant to the laws enforced and administered by CBP. These 
regulations are specifically intended to effectuate the provisions of 
section 343(a) of the Trade Act of 2002, as amended by the Maritime 
Transportation Security Act of 2002.

DATES: Effective Date: This rule is effective January 5, 2004.
    Compliance Dates: The various compliance dates for these 
regulations are set forth, as applicable, in Sec. Sec.  4.7(b)(5), 
122.48a(e), 123.91(e), 123.92(e), and 192.14(e).

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: Robert Rawls, Field Operations, 202-927-
5301.


SUPPLEMENTARY INFORMATION:

Background

    Section 343(a) of the Trade Act of 2002 (Pub. L. 107-210, 116 Stat. 
933, enacted on August 6, 2002), as amended by section 108 of the 
Maritime Transportation Security Act of 2002 (Pub. L. 107-295, 116 
Stat. 2064, enacted on November 25, 2002), required that the Secretary 
endeavor to promulgate final regulations not later than October 1, 
2003, providing for the mandatory collection of electronic cargo 
information by the Customs Service (now 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 (codified at 19 U.S.C. 2071 note), 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 ensure cargo safety and security and prevent 
smuggling pursuant to the laws that are enforced and administered by 
CBP.

Proposed Rulemaking

    Consequently, in accordance with the parameters set forth in 
section 343(a), as amended, a document was published in the Federal 
Register (68 FR 43574) on July 23, 2003, proposing 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 by sea, air, rail or truck.
    In part, section 343(a), as amended, required that a broad range of 
parties likely to be affected by the regulations be consulted and their 
comments be taken into consideration in developing these regulations. 
For this reason, separate public meetings were held in January 2003 to 
address specific issues, and to obtain public input, related to the 
advance electronic presentation of information, respectively, for sea, 
air, rail or truck cargo. The CBP also received numerous public 
comments via e-mail. In addition, extensive 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). For a detailed 
discussion of the development of the proposed rule, and the evaluation 
of the comments received as the result of the consultation process, see 
68 FR 43574-43592.

Discussion of Comments

    A total of 128 commenters responded in timely manner to the July 
23, 2003, notice of proposed rulemaking. What follows is a review of, 
and CBP's response to, the issues and questions that were presented by 
these commenters concerning the proposed regulations. The CBP also 
received comments pertaining to the preliminary regulatory impact 
analysis which was published as an appendix to the proposed rule. Those 
comments, and the corresponding CBP response, have been addressed 
separately immediately following this section under the heading, 
``Comments on Economic Analysis''. In addition, a summary of the 
findings contained in the regulatory impact analysis for this rule can 
be found in the ``REGULATORY ANALYSES'' section of this document. For 
more detailed information, the complete regulatory impact analysis is 
available on the following Web site, http://www.cbp.gov

General; Issues Affecting Multiple Modes; Issuance of Separate House 
Bills of Lading

    Comment: The requirement that a separate house bill of lading be 
issued for each shipper/consignee relationship imposed significant 
costs upon commerce. Carriers would now have to issue multiple bills of 
lading for each container of consolidated cargo, and they would charge 
a fee for each additional bill of lading, where the consolidated goods 
were tendered for shipment by a single freight forwarder and were 
destined to a single consignee in the United States. It was stated that 
CBP should modify AMS (the Automated Manifest System) so that it could 
receive vendor information for consolidated shipments without requiring 
the entry of entirely separate bills of lading.
    CBP Response: The CBP reasonably needs detailed shipper information 
on the house bill of lading because this information is critical for 
targeting purposes under section 343(a)(2) of the Trade Act of 2002, as 
amended (19 U.S.C. 2071 note, section (a)(2)). Thus, where a freight 
forwarder or other consolidator receives goods from several foreign 
vendors (shippers) for consolidation and shipment to a single consignee 
in the United States, listing the freight forwarder or other 
consolidator, instead of the foreign vendor, as the shipper on the 
house bill of lading would be at odds with the intent of section 
343(a). It is, of course, a business decision as to whether a forwarder 
or consolidator would choose to charge for any additional bill(s) of 
lading issued.
    However, at the present time, the AMS system generally lacks the 
capability to process data for multiple shippers/consignees from a 
single house

[[Page 68141]]

bill of lading. The AMS systems were built with a one-to-one 
relationship--one shipper to one consignee. To alter this would require 
a complete redesign of the system for all modes of transportation. In 
addition, it would also force the entire bill of lading to be placed on 
hold rather than one specific shipment. This is not a programming 
process that CBP can undertake at this time and, more specifically, 
detailed communication with the trade community would be required.

Confidentiality

    Comment: Proposed Sec.  103.31a should be revised to indicate that 
advance cargo information which contained classified or sensitive 
unclassified information would be released only in accordance with 
applicable regulations, statutes, and orders. Also, it was believed 
that the vessel cargo declaration information required to be reported 
in advance could be different from the manifest information envisioned 
in 19 U.S.C. 1431.
    CBP Response: Section 103.31a, as proposed pursuant to section 
343(a)(3)(G), as amended (19 U.S.C. 2071 note, section (a)(3)(G)), 
exempts from disclosure advance cargo data for all inbound and outbound 
air, rail, or truck cargo unless the owner of the information expressly 
agrees in writing to its release. In addition, as far as vessel cargo 
data collected under 19 U.S.C. 1431 is concerned, section 1431 already 
adequately addresses the conditions under which such information may 
not be disclosed, including where the information is authorized to be 
kept secret in the interest of national defense, as provided in 5 
U.S.C. 552(b)(1); or where disclosure of the information would pose a 
threat of personal injury or property damage (see 19 U.S.C. 
1431(c)(2)(A) & (B)).
    Comment: One commenter discussed the matter of public disclosure of 
outbound cargo information which would be required to be submitted to 
CBP electronically. It was stated that since cargo information on 
outbound ocean shipments would rely upon Automated Export System (AES) 
submissions and not upon vessel cargo manifests, such information 
should not be subject to the public disclosure provisions of 19 U.S.C. 
1431. Another commenter, however, fully supported the release of cargo 
data from outward vessel cargo manifests pursuant to the disclosure 
provisions of section 1431.
    CBP Response: The underlying cargo manifest statute in question, 19 
U.S.C. 1431, applies to both inbound and outbound cargoes. Although 
manifests are actually comprised of numerous documents, including the 
Shipper's Export Declaration (SED), the SED document itself is exempt 
from public disclosure pursuant to 13 U.S.C. 301(g) unless the 
Secretary of Commerce determines that such exemption would be contrary 
to the national interest.
    Also appearing in existing Customs Regulations (19 CFR 103.31) is a 
provision making available for copying and publication certain 
information and data appearing on outward manifests. The scope of that 
information is described and limited in Sec.  103.31. As in the case of 
inward vessel cargo manifest information, Sec.  103.31 also provides 
that certain parties may file certifications with CBP to request 
confidentiality for outward vessel cargo manifest information (19 CFR 
103.31(d)(2)).

Automated Manifest System (AMS)

    Comment: The CBP did not provide an updated response to the 
question of what carriers should do when the Automated Manifest System 
(AMS) was not functioning.
    CBP Response: The CBP currently has procedures in place for the 
processing of cargo when automated systems have experienced a level of 
failure. The CBP offices routinely accept voluntary submissions of 
paper documents during this time from trade members looking for 
immediate release. The CBP's automated systems are designed to queue 
transmissions sent from the trade during downtime, and the system 
automatically begins to issue status and release messages when service 
is restored.
    For the purposes of the 24-Hour rule, the trade has been instructed 
to present paper manifests to CBP in either the appropriate Container 
Security Initiative (CSI) port of departure, or at the Domestic port of 
arrival in order to allow for advance targeting. The CBP anticipates 
instructing the trade the same for the purposes of section 343(a) of 
the Trade Act of 2002. It will admittedly be difficult and not all 
submissions will be made promptly. The CBP will then use informed, 
considered judgement in the issuance of penalties, the mitigation of 
penalties and other possible action against particular shipments.
    If downtime is identified as severe and anticipated to last a 
significant period, the trade is notified and instructed to present 
papers entries, in-bond transportation documents and other release 
paperwork to the CBP offices. Carriers are instructed to present paper 
manifests for their arriving conveyances. As CBP manually processes the 
release and other paperwork, determining risk and satisfaction of all 
requirements to the best of the inspector's ability, copies of those 
documents are presented to the carriers to gain release of the cargo, 
or to demonstrate authorization for it to move in-bond or within the 
port.
    When the automated system resumes service, CBP policy is to enter 
the information about paper processing into the system to generate 
corresponding electronic release messages and to also ensure that 
historical records are updated, and the clocks for duties, taxes and 
fees are correctly started.
    Over the last years, the Automated Commercial System (ACS) has been 
very reliable in its processing and suffered very little unscheduled 
downtime. The CBP has made downtime requirements available on its Web 
site for the enforcement of the 24-Hour rule and will also do the same 
for the purposes of section 343(a) of the Trade Act of 2002.
    Comment: For ABI (Automated Broker Interface) filers (importer or 
brokers) that transmitted advance air or truck cargo data, it was asked 
whether their ABI Filer Codes would qualify as their unique 
identification code, or whether CBP would require that they obtain 
another code, such as an IATA (International Air Transport Association) 
code or a SCAC code (Standard Carrier Alpha Code).
    CBP Response: The ABI filer that transmits advance cargo data would 
be identified by its 3-digit ABI Filer Code. However, in the air 
environment, since the Air Automated Manifest System (Air AMS) requires 
a 7-character code to identify parties transmitting house air waybill 
level information, ABI filers electing to transmit such advance cargo 
data will be assigned codes in the format ``BCBPXXX'', where, in place 
of the ``XXX'', the ABI filer would insert its own unique 3-digit ABI 
filer code.
    Comment: Under the 24-hour rule for incoming vessel cargo, Non 
Vessel Operating Common Carriers (NVOCCs) had to apply for approval to 
become a Vessel AMS filer. The question was raised, in the context of 
other modes of inbound transportation (air and truck), as to whether an 
ABI filer of information would have to go through the same approval 
process, including some form of application and qualification testing, 
before being allowed to file advance cargo data with CBP for incoming 
shipments.
    CBP Response: ABI transmission capabilities are available to all 
entry filers who handle truck entries and that have been authorized to 
participate in ABI under the procedures prescribed in part 143, subpart 
A, Customs Regulations (19 CFR part 143, subpart

[[Page 68142]]

A). In this context, it is the carrier's responsibility to ensure that 
the ABI transmitter of cargo data (broker or importer) receives the 
appropriate corresponding transportation information via fax or other 
means.
    However, each new participant in the Air Automated Manifest System 
(Air AMS) will be required to undergo certification testing prior to 
full participation. Certification/authorization to participate in ABI 
will not, by itself, be sufficient to satisfy this requirement. The CBP 
will provide updated lists of approved Air AMS participants.
    Comment: Under the 24-hour rule, where an NVOCC filed the advance 
vessel cargo data, the NVOCC then had to perform other duties otherwise 
undertaken by the incoming ocean carrier for the arriving cargo, such 
as handling the arrival of the cargo, obtaining permits for its 
transfer, and coordinating any in-bond movements. However, as to 
incoming air cargo, provided that accurate links existed between the 
house and master bills of lading, the issue arose as to whether the 
incoming air carrier would be responsible for all of the documentary 
transactions related to the arrival and movement of the air freight 
once it had landed at the port of arrival.
    CBP Response: With consolidated shipments, given that an air 
carrier would transmit information for the incoming cargo at the master 
air waybill level, the carrier would be responsible for handling those 
transactions related to the arrival and movement of such cargo 
following its landing at the port of arrival. Coincident with this, any 
other eligible party transmitting (house bill) information for the 
incoming cargo would need to associate the house bill number with the 
master air waybill pertaining to such cargo (see Sec.  122.48a(d)(2)(i) 
in this final rule).
    Furthermore, CBP is currently working on additional programming 
changes to the Vessel Automated Manifest System (Vessel AMS) which 
would allow the incoming ocean carrier, after the cargo is landed at 
the port of arrival, to handle the movement of the cargo, and its 
clearance, etc., on the master bill of lading.
    Comment: It was remarked that all CBP automated systems in place 
had to be able to accommodate the required manifest reporting 
sufficiently for legitimate trade to continue to flow smoothly.
    CBP Response: The requirement that cargo information be 
electronically presented in advance allows CBP to effectively target 
any cargo that may need to be held for further examination prior to the 
arrival of the vessel or other conveyance, which thereby enables 
legitimate cargo to move smoothly through the chain of commerce.

C-TPAT Exemption

    Comment: It was proposed that ``low-risk'' companies and those who 
were engaged in supply-chain security programs, such as the Customs-
Trade Partnership Against Terrorism (C-TPAT), should be given a 
preference that would let such parties file their cargo declarations 
after, rather than prior to, the arrival of the cargo, or be subject to 
various relaxed restrictions in cargo information reporting. It was 
also suggested that CBP allow C-TPAT participants to use ``Buyers 
Consolidation'' (where multiple shippers/consignees were listed on a 
single bill of lading, instead of each shipper/consignee having to be 
included on a separate bill of lading). Otherwise, CBP was asked to 
explain what benefits accrued to C-TPAT members.
    CBP Response: The CBP will not allow exemption from, or alteration 
of, the requirement that C-TPAT partners submit cargo information in 
advance of arrival under these regulations, which includes the 
requirement that each shipper/consignee relationship be documented by a 
separate house bill of lading; and, moreover, CBP believes that 
compliance with these regulations complements supply chain security and 
efficiency procedures being implemented by C-TPAT partners.
    Furthermore, it is again emphasized that C-TPAT membership will 
continue to be viewed in a positive light for targeting purposes. It is 
more likely that shipments made by C-TPAT members will be readily and 
expeditiously cleared, and not be delayed for greater CBP scrutiny. 
Other related perquisites of C-TPAT partnership may include essential 
security benefits for suppliers, employees, and customers, such as a 
reduction in the number and extent of border inspections, an 
opportunity for self-policing rather than Customs verifications, and 
eligibility for account-based processes.
    Account-based processing is only offered to importers at this time. 
Account-based processing provides advantages to importers such as web-
based views into their importing history with CBP, the important 
elements of their bond sufficiency records, and the future ability to 
make periodic payments of the their duty statements. Each transaction 
is still reviewed as part of the manifest processing; while there may 
be a reduced number of trade compliance examinations, no account is 
exempt from enforcement or security screening.
    Comment: It was asked whether CBP would take into consideration 
low-risk status and participation in programs, such as C-TPAT, when 
minor reporting discrepancies occurred.
    CBP Response: While participants in programs such as C-TPAT will 
not be exempt from electronically filing their cargo information in 
advance, as noted above, such participation will also be taken into 
account in connection with the occurrence of minor discrepancies in the 
advance reporting of cargo data.

Exemption; U.S. Department of Defense (DoD)

    Comment: Concern was expressed about the movement of military cargo 
on U.S. Department of Defense (DoD)-chartered aircraft, vessels, or 
trucks where DoD had exclusive use and control of the conveyance. The 
revised advance reporting time standards could adversely affect transit 
time for DoD cargo in the commercial transportation system. Exemptions 
were requested from advance cargo information reporting for DoD-
chartered vessels, aircraft, and trucks.
    CBP Response: In the proposed rule, CBP agreed that an exemption 
from the requirement of entry would be extended to certain DoD-
chartered vessels or aircraft (see 68 FR at 43577 and 43579, 
respectively). To accomplish this, Sec. Sec.  4.5 and 122.41, Customs 
Regulations (19 CFR 4.5 and 122.41), are amended in this final rule 
document to exempt from entry requirements (but not from clearance 
requirements) any vessel or aircraft that is chartered by and 
exclusively carrying cargo, the property of the U.S. Department of 
Defense (DoD), where the DoD-chartered vessel or aircraft is manned 
entirely by the civilian crew of the vessel or air carrier under 
contract to DoD. Any vessel or aircraft exempt from entry would, of 
course, also be exempt from advance cargo information filing under this 
final rule.
    However, concerning trucks chartered by DoD, CBP has at least 
provisionally concluded that, balancing the potential risks posed 
against the costs at issue, an exemption from advance filing is not 
needed in this case. The advance filing time frame is sufficiently 
abbreviated that it should not have a negative effect on the transit 
time for military cargo moving in the commercial transportation chain 
(e.g., a mere 30 minutes advance notice in the case of Free And Secure 
Trade (FAST) trade participants) (see the discussion for incoming truck 
cargo, infra).

[[Page 68143]]

Other Government Agencies; Single Portal for Collecting Data

    Comment: It was advocated that CBP and the U.S. Food and Drug 
Administration (FDA) should harmonize the data elements and time frames 
for advance information that both agencies would now require. A single 
integrated computer system should be developed for the submission of 
advance information.
    CBP Response: The CBP is working diligently with the FDA towards 
integrated filing and risk management mechanisms. In fact, an agreement 
was reached in May 2003 between CBP and FDA to modify CBP's Automated 
Commercial System (ACS) to enable importers, in most cases, to use this 
system to satisfy the advance informational requirements of the Public 
Health Security and Bioterrorism Preparedness and Response Act of 2002 
(Public Law 107-188) (the Bioterrorism Act) and implementing 
regulations. In the Federal Register of October 10, 2003 (68 FR 58974), 
FDA, in conjunction with CBP, issued an interim final rule requiring 
prior notice of food imported into the United States, beginning on 
December 12, 2003. The interim final rule requires that the prior 
notice be submitted to FDA electronically via either the CBP's 
Automated Broker Interface (ABI)/ACS Interface or the FDA's Prior 
Notice System Interface. The interim final rule on prior notice of 
imported food shipments is available at http://www.cfsan.fda.gov/
[sim]lrd/fr03o10b.html. The CBP is also making modifications to ACS to 
allow ACS to be used to satisfy the prior notice requirements of the 
Bioterrorism Act.
    The CBP's Automated Commercial Environment (ACE) is intended to 
operate as a single window for the submission of import information to 
the Government, once it is developed and implemented as part of the 
International Trade Data System (ITDS). Nevertheless, in light of the 
urgent need, in particular, to implement both section 343(a), as 
amended, and the Bioterrorism Act, the Government cannot delay such 
implementation until a fully-interfaced, multi-agency electronic data 
interchange system is in place, either within ACS or ACE.

The Automated Commercial Environment (ACE)

    By way of additional perspective on the Automated Commercial 
Environment (ACE), CBP Modernization began in 2001, with the ACE 
focusing on import and export cargo operations. The ACE, as just noted, 
along with other entities will ultimately form one system providing a 
``single screen'' for the international business community to interact 
with CBP and other government agencies on import/export requirements. 
The ACE will power an expedited release process for carriers and 
shippers that have prefiled, been pre-approved, and have been subject 
to enforcement prescreening and targeting. An integrated risk 
management and targeting system will implement all types of enforcement 
and selectivity screening for commercial shipments. The ACE will 
provide both CBP and the business community with the tools and 
technology to ensure secure supply-chain management. The program will 
include tools that will provide for: advanced manifesting system for 
all modes of transportation; tracking of intermodal shipment movements 
and cargo moving in-bound; enhanced conveyance and transit cargo 
tracking for shipments from origin to destination. Finally, when 
exports are processed in ACE, CBP will have a complete end-to-end 
record of cross-border processing and international supply chain 
information.
    To date, ACE has provided the infrastructure to support the 
establishment of 41 Importer Accounts. These accounts have access to a 
quick view of their importing and compliance history as well as the 
functionality to print numerous reports. This functionality also 
provides for interaction between the Accounts and CBP in the form of an 
Action Plan and a Significant Activity Log. Both the Trade Community 
and CBP now have access to an electronic automated Harmonized Tariff 
Schedule. Near term functionality for ACE will include the 
establishment of 1100 Accounts to include brokers, importers and truck 
carriers. The establishment of these accounts will allow the account 
holders to pay duties and fees on a Monthly Periodic Statement (April 
2004) and provide for the capability of truck carriers to file an 
advanced electronic Truck Manifest (October 2004), which will support 
the legislative requirements of the Trade Act of 2002.

Time Period for Implementing Advance Cargo Data Reporting

    Comment: Consideration should be given to making the advance 
reporting provisions operational on a region-by-region ``roll out.'' 
There should also be a liberal ``grace period'' permitted prior to 
enforcement of the new regulations so that both Government and the 
trade would have sufficient time to adjust to the new security 
requirements without disorganization or disruption.
    CBP Response: It is stressed that the differing effective dates of 
these regulations may be further delayed for the several modes, both 
inbound and outbound, as already provided variously in Sec. Sec.  
122.48a(e) (for inbound air cargo), 123.91(e) (for inbound rail cargo), 
123.92(e) (for inbound truck cargo), and 192.14(e) (for outbound cargo, 
all modes). Only as to incoming vessel cargo is there a firm effective 
date of March 4, 2004, by which time all participating advance cargo 
data filers must be operational on the Vessel Automated Manifest System 
(Vessel AMS).
    However, no matter when the various regulations in this final rule 
go into effect, CBP will adopt a phased-in enforcement process for 
these Trade Act Regulations similar to that which was utilized when the 
24-Hour Rule was implemented. Depending on the circumstances, CBP may 
take an ``informed compliance'' approach during a short period 
following the effective date of the rule. In appropriate circumstances, 
this approach would consist of performing audits of the carriers' and 
NVOCCs' (Non Vessel Operating Common Carriers') submissions and 
advising their owners or operators of problem areas that could have 
been subject to enforcement action.
    Following an initial 2-month period after issuance of the 24-Hour 
rule, CBP created an enforcement approach that focused first on 
egregious violations. The CBP experienced an enormous decrease in the 
instances of such problem submissions immediately before, and after, 
expiration of the initial period when the ``informed compliance'' 
approach was implemented.
    Therefore, in implementing these Trade Act Regulations, CBP has 
demonstrated experience in implementing a phased-in enforcement 
strategy and expects to develop similar plans with respect to these new 
advance cargo reporting requirements.
    Furthermore, as with the 24-hour rule, CBP intends to continue to 
work with the trade to achieve compliance with the requirements of 
these regulations. However, CBP does not believe that a region-by-
region implementation of the regulations would be either advantageous 
or advisable under the circumstances.
    Comment: Two commenters wanted a uniform advance notification 
enforcement date for all modes to include both outbound and inbound 
shipments.
    CBP Response: The implementation dates for all modes will vary, due 
to the readiness and availability of the

[[Page 68144]]

automated systems that support each mode and the degree to which the 
necessary technology is available to particular modes of 
transportation. This fully comports with the mandate of section 
343(a)(3)(D) and (E), as amended.

Bond Issues

    Comment: A question was presented as to whether electronic filers 
of advance cargo data through the Automated Manifest System (AMS) would 
need to possess an international carrier bond.
    CBP Response: Other than Automated Broker Interface (ABI) filers in 
the air environment (consisting of importers and brokers) (see Sec.  
122.48a(c)(2) in this final rule), electronic filers through AMS 
(whether Vessel, Air or Rail AMS) must possess an international carrier 
bond under 19 CFR 113.64. By contrast, an ABI filer of advance cargo 
data, that is an importer, would need to possess an amended basic 
importation and entry bond, as described in Sec.  113.62(j)(2) in this 
final rule; and an ABI broker who files advance cargo data would be 
obligated under 19 U.S.C. 1641 and 19 CFR part 111 to do so in the 
manner and in the time period prescribed in Sec.  122.48a in this final 
rule.
    Comment: A Customs bond could be written as a single transaction 
bond or as a continuous bond. It was recommended that CBP provide in 
the regulations that any bond needed for reporting cargo information 
prior to arrival be a continuous bond.
    CBP Response: The CBP does not agree with the commenter. The 
commenter suggests that the rule be amended to state that all bonds 
required in support of presentation of advanced manifest information 
must be continuous bonds. Continuous bonds are bonds taken out by 
principals that are in effect for a period of time (usually 1 year, 
with automatic renewal unless terminated) and insure all relevant 
transactions occurring in that period of time. In contrast, single 
transaction bonds are bonds that are taken out one at a time and are 
presented to insure only a single transaction or arrival. The rule only 
requires that a bond be posted. It does not matter whether that bond is 
continuous or single transaction and there is no need to provide for a 
bond type restriction.

Liability Concerns

    Comment: Where the party presenting information to CBP had acquired 
this information from another, and the information was determined to be 
false, clarification was requested as to how this would play a role in 
the penalty/liquidated damage process.
    CBP Response: Mindful of the requirements of section 343(a)(3)(B), 
as amended (19 U.S.C. 2071 note, section (a)(3)(B)), CBP will take the 
facts and circumstances of any such situation into account in 
determining whether a penalty/liquidated damages claim should be 
initiated and whether and/or to what extent such a claim should be 
mitigated. The CBP intends to issue mitigation guidelines in this 
matter.

Submission of Cargo Data in Advance of Arrival or Departure

    Comment: Having to present cargo information in advance for both 
exports and imports would add severely to port congestion in the U.S., 
and thus raise the costs and burdens of both types of trade.
    CBP Response: The CBP disagrees. The receipt of advance electronic 
information will reduce port congestion because CBP can make 
enforcement decisions before conveyances arrive in the United States. 
This has been true in the vessel environment for some time, and has 
been improved upon under the 24-hour rule because CBP can perform 
examinations overseas via the Container Security Initiative (CSI). 
Furthermore, CBP will use in implementing this final rule a phased-in 
compliance program, similar to that described above for the 24-Hour 
Rule, in order to make sure that technical violations do not 
unnecessarily disrupt the flow of goods across the U.S. border. 
Therefore, there is no compelling reason to conclude that congestion at 
U.S. ports will result.
    Comment: Further explanation was sought as to the basis for the 
differences among the time-frame reporting requirements for inbound and 
outbound shipments in all modes of transportation.
    CBP Response: Generally speaking, and as further discussed for each 
individual mode, infra, in determining the timing for transmittal of 
advance cargo data, CBP, as directed by the statute, took into account 
the differences existing among the different modes of transportation, 
both inbound and outbound, including differences in commercial 
practices, operational characteristics, and the technological capacity 
to collect and transmit information electronically; and, as the law 
also directed for each mode, CBP undertook to balance the likely impact 
on the flow of commerce with the impact on cargo safety and security.

Miscellaneous Issues

    Comment: Concern was expressed about information security 
requirements associated with advance notifications for shipments of 
radioactive material.
    CBP Response: Advance cargo information is transmitted to and 
received by CBP on a secure and encrypted data line. As for cargo 
arriving by vessel, manifest information for such cargo is not 
available for public disclosure until after the vessel has arrived; 
and, as previously indicated, in accordance with 19 U.S.C. 
1431(c)(2)(A) & (B), such information may be exempted from disclosure 
in the interest of national defense pursuant to 5 U.S.C. 552(b)(1), or 
where the disclosure would pose a threat of personal injury or property 
damage.
    Comment: In the future, CBP should allow the electronic submission 
of comments.
    CBP Response: Requiring written comments in response to a notice of 
proposed rulemaking is a matter of agency policy that is beyond the 
scope of this particular rulemaking. However, it is observed that 
comments via e-mail were invited and accepted regarding the development 
of the proposed rulemaking in this case (68 FR at 43575).
    Comment: A format for Frequently Asked Questions (FAQs) should be 
established for each mode of transportation on the CBP Web site, which 
should be regularly updated with new or revised questions.
    CBP Response: CBP intends to post FAQs for each mode of 
transportation on the CBP Web site (http://www.cbp.gov), which will be 
updated as necessary.
    Comment: One commenter offered to provide, at no cost to the 
Government, cargo inspections at the point of origin and then transmit 
the results of the inspections by way of a CBP-approved electronic data 
interchange system. The commenter requested only that CBP accept such 
inspected shipments as ``low risk'' and thus eligible for expedited 
clearance upon arrival.
    CBP Response: In effect, CBP believes that the same results would 
be achievable by joining the C-TPAT program (The Customs-Trade 
Partnership Against Terrorism). As already explained, participation in 
C-TPAT is considered as a positive factor in targeting shipments to 
determine whether cargo needs to be held at the port of arrival for 
examination or receipt of further information.
    Comment: Additional instruction was sought as to what terms would 
satisfy the requirement for a precise description for incoming cargo 
(Sec.  4.7a(c)(4)(vii); and proposed Sec. Sec.  122.48a(d)(1)(ix) and 
(d)(2)(iii), 123.91(d)(5), and 123.92(d)(9)). In

[[Page 68145]]

particular, for automotive producers, it was stated that obtaining a 
complete and correct list of the Harmonized Tariff Schedule (HTS) 
numbers for all exports of automotive parts and components could be a 
daunting task. One shipment could contain many types of original 
equipment manufacturer (OEM) or replacement parts; it was instead urged 
that CBP accept a generic cargo description such as ``New Autoparts'' 
regardless of the mode of transportation involved.
    CBP Response: CBP will issue an Acceptable and Non-Acceptable cargo 
description list as was done with the 24-Hour Rule for incoming vessel 
cargo. This list will be the same for all modes of transportation.
    Generally speaking, CBP has defined a precise cargo description as 
a description precise enough for CBP to be able to identify the shapes, 
physical characteristics, and likely packaging of the manifested cargo 
so that CBP can discern any anomalies in the cargo when a container is 
run through imaging equipment. Also, the description must be precise 
enough to identify any goods which may emit radiation.
    The requirement that a carrier/filer use cargo descriptions that 
would not be considered vague should not be overly burdensome. The CBP 
has undertaken continuous efforts prior to and since the promulgation 
of the 24-hour Advance Manifest Rule in the sea environment to educate 
all filers on cargo descriptions that would be considered vague as well 
as on issues raised by trade representatives. The cargo descriptions 
that are considered vague have been posted on the CBP Web site 
(Frequently Asked Questions) since March 2003. The descriptions were 
not designed to force carriers/filers to achieve entry level 
descriptions. In most cases, the descriptions require only one or two 
further qualification descriptors.
    Comment: Participation in such an electronic data interchange as 
the Automated Manifest System (AMS) should be covered by regulations 
pursuant to the Administrative Procedure Act that provide uniform 
requirements for enrollment and acceptance into these electronic filing 
programs, and that govern the suspension, revocation or modification of 
participation in these programs.
    CBP Response: Participation in the electronic systems described in 
this rulemaking was formerly voluntary as part of the National Customs 
Automation Program (NCAP) described in 19 U.S.C. 1411(a). As part of 
the Trade Act of 2002, Congress amended section 1411 to permit CBP to 
mandate use of the electronic systems of NCAP. To effectuate the 
requirement in section 343 of the Trade Act of 2002 for the electronic 
transmission of section 343 cargo information in compliance with 
Congress's timetable, CBP is mandating use of several of these existing 
NCAP electronic systems.
    The criteria for establishing connection with these systems were 
set forth in the notices of the tests of these systems (e.g., for the 
Vessel Automated Manifest System (Vessel AMS) program, see 61 FR 47782 
(September 10, 1996), and 67 FR 77318 (December 17, 2002)); the 
eligibility criteria for these programs also appear on the CBP Web 
site: http://www.cbp.gov/xp/cgov/import/operations_support/automated_systems/ams/.
    Because electronic filing is now mandatory, CBP will not prohibit 
or restrict use of the required systems by filers as it might under a 
voluntary test program. The CBP does reserve the right to take 
necessary technical steps to deny connections in the event of 
electronic attacks (e.g., denial of service attacks), but otherwise 
access will be available. Therefore, no procedures regarding suspension 
or revocation of access to these systems are required. Instead, CBP 
will ensure compliance with mandatory electronic filing requirements 
through monitoring by account managers, penalty assessments or claims 
for liquidated damages, as appropriate to the circumstances.

Vessel Cargo Destined to the United States

Submission Time Frames

    Comment: Seven commenters advocated that the pre-arrival and post-
loading data submissions acceptable for the other modes should also be 
acceptable for maritime cargo. There should be no significant 
differences in risk between air and maritime cargoes. The 24-hour pre-
loading requirement could disrupt ``Just In Time'' (JIT) delivery 
systems.
    CBP Response: As explained in the 24-hour rule (67 FR at 66319) and 
as reiterated in the proposed rule in this case (68 FR at 43577), the 
24-hour pre-lading requirement for vessel cargo, especially 
containerized vessel cargo, is tied inextricably to the Container 
Security Initiative (CSI), a core element of which is to pre-screen 
vessel cargo containers at the foreign port of departure before they 
are loaded onto the vessel for shipment to the United States. To enable 
such pre-screening to be done fully and successfully, it is essential 
that the related cargo data be transmitted to CBP at least 24 hours 
prior to lading the cargo aboard the vessel.
    In relation to JIT deliveries, CBP requires the electronic 
transmission of cargo declaration information 24 hours in advance; CBP 
is not requiring that the cargo be ready for inspection or that the 
cargo be at the dock. However, CBP recognizes the 24-hour pre-lading 
reporting may occasion some changes in the practice of sometimes adding 
last minute loads to vessels, but only if such loads were not 
manifested 24 hours prior to their lading.

Exemption From Advance Filing

Bulk/Break Bulk Cargo

    Comment: It was requested that consideration be given to exempting 
bulk cargoes from the requirement of electronically having to submit 
cargo declarations.
    CBP Response: CBP has given bulk, and some break-bulk shipments, 
exemptions from the requirement to file 24-hours prior to loading, but 
these entities will still be required to file their cargo declarations 
electronically.
    Comment: Section 4.7(b)(2), Customs Regulations (19 CFR 4.7(b)(2)), 
implied, erroneously, that only vessels exclusively carrying bulk or 
break bulk cargo could be exempted from having to report such cargo 24 
hours prior to loading the cargo aboard the vessel in the foreign port.
    CBP Response: The CBP agrees. Section 4.7(b)(2) will be revised to 
make it clear, in agreement with Sec.  4.7(b)(4), that for vessels that 
carry both non-exempt cargo and exempt bulk/break bulk cargo, only the 
non-exempt cargo must be reported on the electronic cargo declaration 
24 hours prior to loading such cargo in a foreign port.

Data Elements

Precise Cargo Description; 6-Digit HTS Number

    Comment: Section 4.7a(c)(4)(vii) stated that either a precise cargo 
description or the 6-digit Harmonized Tariff Schedule (HTS) number for 
the cargo had to be provided. However, the Vessel AMS system in fact 
required a narrative cargo description and (if desired) an HTSUS 6-
digit number for the cargo, or the transmitted bill of lading would be 
rejected.
    CBP Response: Currently, AMS does require text in the description 
field of the electronic transmission, or AMS will reject the 
transmission, even though a 6-digit HTSUS number is also provided in 
the appropriate field of the transmission. The CBP intends shortly to 
effect programming changes to allow for either a precise cargo 
description or

[[Page 68146]]

the 6-digit HTSUS number; but until such time as these programming 
changes are adopted, AMS participants which provide the HTSUS number 
will also have to enter a cargo description in the description field of 
the electronic transmission. However, as an alternative to providing a 
precise cargo description in the description field of the transmission, 
the applicable 6-digit HTSUS number may instead be included in the 
description field to satisfy the current programming requirement that 
some text appear in this field.
    Comment: In light of the recent final rule regarding corporate 
compliance activity (CBP Dec. 03-15, 68 FR 47455; August 11, 2003), the 
question arose as to whether the submission by the electronic filer of 
the 6-digit HTSUS number via AMS would fall within the purview of 
``Customs business'' under 19 CFR part 111.
    CBP Response: ``Customs business'' does not involve the mere 
electronic transmission of data received for transmission to CBP (19 
CFR 111.1). Moreover, the 6-digit HTSUS number is intended exclusively 
for ensuring cargo safety and security, and not for determining 
merchandise entry or for any other commercial admissibility or 
enforcement purposes which fall within the scope of Customs business. 
An 8-digit HTSUS number is needed and is used for merchandise entry 
purposes.
    The ``corporate compliance activity'' rule dealt with the conduct 
of ``Customs Business'' as established by statute (19 U.S.C. 1641). The 
activities covered under that rule all relate to the entry of 
merchandise, not its manifesting. Reporting commodity identification by 
use of 6-digit HTSUS numbers, rather than the more specific 8- or 10-
digit designations, was included because there is international 
agreement and uniformity at the 6-digit level. Use of HTSUS 
designations is merely offered by CBP as an option to be used in place 
of a precise narrative description of cargo content.

Definition of Shipper; Consignee

    Comment: A number of questions were raised with respect to the 
provision in proposed Sec.  4.7a(c)(4)(viii) that, for consolidated 
shipments, the shipper listed on the house bill of lading be the owner 
and exporter of the goods from the foreign country. In sum, it was 
basically asserted that this would be inconsistent with the commercial 
practice of the transportation trade which essentially identified the 
shipper as the party with whom the carrier had a contractual 
relationship, and that it was improper for the U.S. Government to 
unilaterally change this practice. It was also said to be at odds with 
the prevailing requirement that the foreign vendor or manufacturer be 
listed as the shipper on a house bill.
    CBP Response: In light of the above comments, CBP has closely 
reviewed what shipper information must be listed on a house bill of 
lading for a consolidated shipment. Cargo information collected under 
this rule is not intended for commercial purposes, but rather for 
purposes of ensuring cargo safety and security as part of an 
antiterrorism national security initiative (see 19 U.S.C. 2071 note, 
section (a)(3)(F)). Otherwise stated, it is essential that CBP receive 
house level information on the identity of the shipper that will enable 
an accurate national-security risk assessment concerning the related 
cargo. To this specific end, CBP will thus accept as the shipper on a 
house bill of lading the identity of the foreign vendor, supplier, 
manufacturer, or other similar party. Also, the shipper's address must 
be a foreign address. By contrast, CBP will not accept the carrier, 
NVOCC, freight forwarder or consolidator as valid house level 
information on the identity of the shipper.
    Accordingly, proposed Sec.  4.7a(c)(4)(viii), as well as proposed 
Sec. Sec.  122.48a(d)(1)(x), 122.48a(d)(2)(vi), 123.91(d)(6) and 
123.92(d)(11), are thus revised in this final rule.
    Comment: Greater guidance was requested as to what would be 
acceptable in the Notify Party field of the electronic transmission 
(proposed Sec.  4.7a(c)(4)(ix)). It was thought that if there was any 
other commercial party listed in the bill of lading, such party would 
be included in the Notify Party field; otherwise, this field would be 
left blank.
    CBP Response: The CBP requires that if the cargo has not yet been 
sold or is shipped ``to order'', and there is no consignee information, 
then the Notify Party field must include the identity of a responsible 
party in the United States. Such a responsible party could include any 
other commercial party that is listed in the bill of lading for 
delivery or contact purposes.

Date and Time of Departure of Vessel From Foreign Port

    Comment: With respect to proposed Sec.  4.7a(c)(4)(xv) and (xvi), 
it was asserted that the information concerning the date and time that 
the vessel departed for the United States as reflected in the vessel 
log could not be provided 24 hours prior to foreign lading of the cargo 
aboard the vessel.
    Also, a question arose concerning whether these data elements 
referred to the date and time of departure from the foreign port of 
loading with respect to which the 24-hour declaration was made, or the 
date and time of departure from the last foreign port before sailing to 
the United States.
    CBP Response: The date and time of departure should capture the 
date and time that the vessel departs from the foreign port of loading 
with respect to which the 24-hour cargo declaration is made (see Sec.  
4.7(b)(2) in this final rule). However, CBP will not require the 
information as to the date and time of vessel departure to be 
transmitted 24 hours prior to the lading of the cargo at the foreign 
port. Instead, the time frame for reporting these two data elements 
will be either: (1) No later than 24 hours after departure from the 
foreign port of lading, for those vessels that will arrive in the 
United States more than 24 hours after sailing from that foreign port; 
or (2) no later than the time of presentation of a permit to unlade 
(Customs Form (CF) 3171, or electronic equivalent), for those vessels 
that will arrive less than 24 hours after sailing from the foreign port 
of lading. Proposed Sec.  4.7a(c)(4)(xv) and (xvi) are revised in this 
final rule to include these additional provisions.
    Also, the transmission of these date and time data elements may be 
handled as an amendment to the vessel header, which will eliminate the 
need for each bill of lading to be amended.

Vessel AMS Issues

Importer Participation in Vessel AMS

    Comment: It was stated that the party most likely to have the 
information needed for targeting was the U.S. importer, while the 
incoming carrier would only be able to provide information which was 
received from the charterer of the vessel.
    CBP Response: CBP finds that allowing importers to participate in 
advance electronic filing through Vessel AMS would at this time be 
neither advisable nor practicable, given the current design and 
functionality of the Vessel AMS system and the lack of consensus in the 
trade community as to whether importers should furnish sea cargo data 
to CBP.
    Comment: A shipper should be allowed to file advance cargo data 
through AMS.
    CBP Response: Again, given the prevailing operation of the Vessel 
AMS, CBP finds that allowing freight forwarders who are not NVOCCs, and 
other parties identified as ``consolidators,'' even though they may be 
NVOCCs (see 68 FR at 43577) to

[[Page 68147]]

participate in the Vessel AMS electronic data interchange system would 
at this time be neither advisable nor practicable.
    Comment: It was stated that the Shipper field in Vessel AMS could 
not accommodate more than 3 or 4 lines of information. This could prove 
inadequate in the case of consolidated shipments where there could be 
multiple shippers.
    CBP Response: This inability of the Shipper field in Vessel AMS to 
capture multiple shipper data is academic inasmuch as CBP requires that 
for each shipper/consignee relationship a separate bill of lading be 
issued. This mandate for a separate house bill of lading for each 
shipper/consignee relationship constitutes a critical component for 
automated targeting purposes in identifying high-risk shipments.
    Comment: With respect to proposed Sec.  4.7(b)(5), which provided 
that carriers, and participating NVOCCs, would need to become automated 
at all ports of entry where their cargo would initially arrive, it was 
asked whether it would be the Vessel AMS computer mainframe's problem 
to forward the carrier's transmission to the appropriate Customs port 
of entry.
    CBP Response: Ocean carriers and NVOCCs currently operational on 
Vessel AMS, although not at all ports of entry, will now be required to 
become operational at all such ports. Any carrier or NVOCC that 
hereafter becomes automated on Vessel AMS will thereby be automated at 
all ports. Since the automation of electronic filers through Vessel AMS 
will per se encompass all ports of entry, proposed Sec.  4.7(b)(5) is 
revised in this final rule by removing the phrase, ``where their cargo 
will initially arrive''. However, carriers must indicate in their 
respective electronic transmissions each port of arrival where their 
incoming cargo will be discharged.
    Comment: Non Vessel Operating Common Carriers (NVOCCs) should be 
required to electronically present advance cargo information directly 
to CBP.
    CBP Response: The CBP disagrees. As discussed in the proposed rule 
(68 FR at 43576-43577), certain segments of the trade in fact urged 
that advance cargo information filing by NVOCCs be eliminated due to 
operational problems with Vessel AMS, that resulted when NVOCCs, as 
opposed to the incoming carriers, filed cargo data directly with CBP. 
Nevertheless, in consideration of the competitive relationships that 
exist in the international freight forwarding field, CBP continues to 
believe that NVOCCs who wish to do so may become automated on Vessel 
AMS, but that they should not be compelled to do so.
    Comment: It was observed that a large number of NVOCCs operational 
on Vessel AMS seemed to opt out of the system at various ports, for 
apparently no authorized reason. Vessel carriers were said to be unable 
to audit or police this.
    CBP Response: Those NVOCCs who choose to become automated on Vessel 
AMS must be automated in all ports. While NVOCCs do have the ability to 
decertify in AMS, they would then be required to submit detailed 
information to carriers for transmission to CBP for all ports of 
discharge. If a question should arise as to whether or not an NVOCC is 
automated, the vessel carrier may contact its CBP client representative 
for verification.
    Comment: It was asked whether there was a maximum reporting window 
for transmitting cargo data in advance through Vessel AMS.
    CBP Response: Vessel AMS has the capacity to retain electronic 
transmission information up to a maximum of nine months prior to the 
cargo's Estimated Date of Arrival (EDA).

Confidentiality

    Comment: It was unclear whether the shipper specific information 
would be publicly disclosed, and whether such information from both 
master and house bills of lading would be involved. It was remarked 
that disclosing this information would defeat the purpose of direct 
filing by NVOCCs.
    CBP Response: Information collected pursuant to 19 U.S.C. 1431, 
including information from both master and house bills, is available 
for public disclosure in accordance with section 1431(c). However, 
under the authority of section 1431(c)(1)(A), information relating to 
the identity of a foreign shipper to an importer or consignee in the 
United States will not be disclosed if a claim for confidential 
treatment for such information is made by using the procedure 
prescribed in 19 CFR 103.31(d)(1).

Implementation Period for Rule

    Comment: It was thought that 90 days was too short a period from 
the date of publication of the final rule within which a non-automated 
carrier would need to develop software and programming in Vessel AMS. A 
period of 120 days was requested.
    CBP Response: The CBP believes that 90 days is an adequate and 
reasonable time frame within which to permit a non-automated vessel 
carrier to become automated on Vessel AMS. The CBP will continue to 
work with the trade to achieve compliance with these advance cargo 
reporting provisions.
    In selecting 90 days following publication as an implementation 
period for mandatory vessel AMS participation, CBP sought to strike a 
proper balance between the needs of the affected public in adjusting to 
the new requirements, and meeting the needs of the United States in 
implementing anti-terrorism measures without undue delay. Ninety days 
strikes that balance.

Procedure for Amending Cargo Declarations

    Comment: The proposed rule did not mention the procedures for 
amending electronic cargo declarations following their transmission. 
This would also apply for goods that were sold while in transit.
    CBP Response: Complete and accurate information would need to be 
presented to CBP for cargo to be laden aboard the vessel no later than 
24 hours prior to lading the cargo aboard the vessel at the foreign 
port. As for any changes in the cargo information already transmitted, 
the procedures for amending the cargo declaration including discrepancy 
reporting regarding vessels as well as all other modes will be the 
subject of a separate rulemaking. Prior to the promulgation of new 
rules concerning discrepancy reporting, the procedures for phased-in 
compliance as explained above will be employed to address changes that 
must be made to the transmitted cargo declaration. It should be 
recognized that each time a bill of lading is amended, it may be 
subject to increased targeting and at risk for examination.

Enforcement

    Comment: Procedures should be outlined for cargo that arrived 
without pre-notification or with incomplete information.
    CBP Response: In all modes of transportation discussed in this 
rulemaking, the carrier must notify CBP immediately upon arrival or as 
soon as it realizes that it did not submit the proper information. The 
carrier should then present or transmit the cargo declaration 
information. Upon arrival in the U.S. port, the cargo declaration will 
be placed on hold until CBP has had the opportunity to review the 
documentation, and conduct any necessary examinations. Appropriate 
penalties may also be issued. If CBP determines that this has become a 
common occurrence for a carrier, this could eventually lead to denial 
of a permit to unlade. Additionally, CBP will notify the United States 
Coast

[[Page 68148]]

Guard of a vessel with unmanifested cargo that is scheduled to arrive. 
If the arriving cargo is food, CBP and FDA are working closely together 
to ensure they coordinate policies and procedures for dealing with 
movement of the cargo.

Miscellaneous Matters

    Comment: The view was expressed that the ocean carrier would be 
reluctant to accept an NVOCC's shipment due to liability concerns, and/
or would react, to protect itself from CBP enforcement, by imposing 
extraordinary and erroneous evidentiary or indemnity obligations on the 
NVOCC.
    CBP Response: The CBP is currently programming Vessel AMS to accept 
additional bill of lading types that will allow NVOCCs to submit 
commodity information to CBP that will protect proprietary information 
from the carrier, and that will enable the vessel carrier to submit 
master bills of lading to CBP pertaining to the transportation 
information for the cargo.
    Comment: In proposed Sec.  4.7(b)(1), it was stated that the 
original and one copy of the manifest must be ready for production on 
demand. It was asserted that the only original manifest carried on 
board the vessel upon arrival would be the dangerous goods manifest.
    CBP Response: Under Sec.  4.7(b)(1), there is no requirement that 
the original vessel cargo declaration be carried aboard the vessel in 
those cases where the cargo declaration has already been filed in 
advance electronically. The CBP decided not to enforce the paper cargo 
declaration (Customs Form (CF) 1302) rule for formal entrance if a 
carrier or NVOCC has successfully automated. However, where the cargo 
declaration has been filed in advance electronically, and a paper copy 
is not aboard the vessel, the carrier will be afforded a reasonable 
time within which to generate a paper cargo declaration, should a paper 
copy be requested by CBP. The CBP will periodically assess this policy 
to ensure that it is not having an adverse effect on operations.
    Comment: The proposed rules, especially those related to ocean 
imports, did not address the status of shippers' associations as 
shippers and transportation intermediaries and apparently did not give 
them the right to file the required manifest information directly to 
CBP.
    CBP Response: The CBP has determined that shippers associations are 
not licensed or registered with the Federal Maritime Commission (FMC). 
Moreover, such associations cannot be construed to be carriers of cargo 
in the same sense as ocean carriers or NVOCCS. Therefore, shippers 
associations will not be permitted to participate in Vessel AMS.

Air Cargo Destined to the United States

Time Frame Requirements for Transmitting Advance Cargo Data

    Comment: Several commenters requested that the time frames in 
proposed Sec.  122.48a(b) in which the electronic cargo information was 
transmitted be reduced and that exceptions for certain points of origin 
be included.
    CBP Response: The CBP recognizes the business practices of the air 
cargo industry and the necessity of adequate time to properly analyze 
the electronic cargo information and to deploy inspectional resources 
when required. These issues were carefully considered when establishing 
the time frames specified in these regulations.
    Specifically, CBP weighed the question of an appropriate time frame 
for air from many angles. To better gauge industry requirements, CBP 
conducted public meetings (one for each modality), and set up an email 
address to facilitate the submission of comments by carriers, 
importers, exporters, freight forwarders, customs brokers, other U.S. 
Government agencies, foreign governments, as well as local, national 
and international trade organizations, and private citizens, etc. It 
should be noted that this elective comment period was in addition to 
the formal comment period required for the Notice of Proposed Rule 
Making. The CBP also met intensively with the Treasury Advisory 
Committee on the Commercial Operations of the U.S. Customs Service 
(COAC), which resulted in additional unified recommendations for each 
modality. The CBP assessed internal operational considerations such as 
the speed at which the various electronic data interchanges are able to 
process information, the time required for CBP personnel to review the 
output and determine the appropriate action, and the time needed to 
deploy personnel to respond.
    Comment: Further explanation was requested on whether the time 
frames for flights from nearby foreign areas in proposed Sec.  
122.48a(b)(1) included such flights to the territories of the United 
States, such as Guam and Puerto Rico.
    CBP Response: The time frame for nearby flights would include such 
flights to Puerto Rico because it is part of the Customs territory of 
the United States. However, flights to Guam are not included in the 
advance cargo reporting requirements, as Guam is not part of the 
Customs territory. The CBP finds that a distinction in the time frames 
for advance filing based upon geographical considerations, as opposed 
to the duration of the flight, is more administratively feasible.

Air Freight Forwarder Issues

    Comment: It was asked whether CBP would permit foreign indirect air 
carriers (non-U.S.-based freight forwarders that issue their house 
bills of lading for air freight shipments) to qualify as one of the 
authorized filers of information through the Air Automated Manifest 
System (Air AMS).
    CBP Response: Other than the incoming air carrier, parties eligible 
to transmit inbound electronic air cargo information are enumerated in 
Sec.  122.48a(c)(1) in this final rule. Any foreign indirect air 
carrier that is not one of the parties specified in Sec.  122.48a(c)(1) 
would have to fully disclose and present the required data for the 
inbound air cargo to the incoming air carrier or other eligible 
electronic filer, as applicable, which would then present such data to 
CBP.
    Comment: It was advocated that CBP require freight forwarders, 
Customs brokers and consolidators to participate in Air AMS.
    CBP Response: The CBP disagrees. Such parties may elect to provide 
the data directly to CBP if they are one of the parties specified in 
Sec.  122.48a(c)(1), or they may provide the data to the incoming air 
carrier which will transmit such data directly to CBP.
    Comment: Two commenters wanted to know whether it was CBP's 
intention that freight forwarders filing advance cargo data obtain two 
bonds--an international carrier bond and a custodial bond.
    CBP Response: A freight forwarder filing advance air cargo data 
would be required to have an international carrier's bond under Sec.  
122.48a(c)(2). In addition, if the freight forwarder or any other 
eligible party were responsible for supplying in-bond information and 
for transporting cargo in-bond under the provisions of part 18 of the 
Customs Regulations (19 CFR part 18), such party would also need a 
Customs custodial bond.
    The international carrier bond is required of carriers arriving 
from foreign locations. That bond exists to guarantee performance with 
regard to (among other things) conveyance arrival, entry and clearance, 
cargo manifesting and disposition, and passenger and crew control. The 
conditions of the international carrier bond appear at 19 CFR 113.64. A 
custodial bond is required of any party that transports merchandise 
domestically, either between ports of entry or within a single

[[Page 68149]]

port of entry, before that merchandise has been entered for consumption 
with duties paid thereon and its admissibility into the commerce 
determined. The custodial bond conditions appear at 19 CFR 113.63. The 
custodian of the merchandise guarantees compliance with all regulations 
governing the receipt, carriage, safekeeping and disposition of 
merchandise transported or held.

Diversion/Fuel Stop Issues

    Comment: It was asked whether the rule allowed for aircraft to stop 
for fueling at a U.S. location prior to arriving at its final 
destination. Four commenters requested that fuel stops be exempt from 
reporting requirements from the U.S. port of arrival to the port of 
destination.
    CBP Response: Section 122.48a does not prohibit an aircraft from 
including a fuel stop in its itinerary; however, that stop may be the 
port of arrival in the United States for purposes of Sec.  122.48a(b). 
Fuel stops will not be excluded from the advance reporting requirement 
because it is vital to security to target at the first port of arrival 
and, if necessary, to examine cargo at that location.
    Comment: If an aircraft were diverted for reasons such as weather 
or equipment problems, it was requested that this not be considered 
part of the manifest reporting requirement if passengers and cargo were 
not to be discharged there.
    CBP Response: The CBP understands that aircraft may be diverted due 
to weather and/or equipment problems. When this situation occurs, the 
airline must notify CBP at the designated first port of arrival (the 
diverted port) as soon as it realizes it is not going to initially 
reach the original port of arrival. The carrier would then need to re-
transmit the electronic cargo information with corrections to reflect 
the new (diverted) arrival port.

Air AMS Testing/Problems

    Comment: Outstanding operational programming issues should be 
completed prior to the implementation of the final rule.
    CBP Response: The CBP is diligently working on an outstanding list 
of operational issues and will continue to correct these issues. Under 
Sec.  122.48a(e)(2), the implementation date for advance air cargo 
reporting may be delayed if necessary modifications to the CBP-approved 
electronic data interchange system are not yet in place.
    Comment: Qualified air freight forwarders electing to participate 
in advance electronic cargo reporting should be tested on the approved 
data interchange system prior to the implementation of the final rule.
    CBP Response: Appropriate testing will be given to all parties who 
develop Air AMS communications with CBP. Those parties who elect to use 
a service provider will be tested via the service provider.
    Comment: Programming should be provided between the Automated 
Broker Interface (ABI) and the Air AMS system so that data information 
could be shared (alternate filers could be brokers and forwarders).
    CBP Response: Cargo selectivity information provided through ABI is 
distinct from the electronic cargo information required through Air AMS 
under Sec.  122.48a. The data elements to satisfy compliance with this 
regulation must be provided through Air AMS; Air AMS is accessible to 
ABI filers.
    Comment: The Air AMS system should be changed to preclude an inward 
air carrier from refusing to authorize (nominate) another eligible 
party as an agent who had elected to transmit consolidated cargo data 
directly to CBP; and the system should be programmed to notify such 
other party of its authorization (nomination) by the inward carrier.
    CBP Response: The Air AMS system will independently accept 
information from each of the parties that supply data to satisfy the 
advance cargo reporting requirements of Sec.  122.48a. In other words, 
the inward carrier will no longer need to authorize or nominate another 
eligible party in order to enable that party to supply house air 
waybill information to CBP. The identification of another eligible 
filer in the agent (``AGT'') line will be merely for the purpose of 
notifying CBP that this party will transmit the house air waybill 
information, which may be effected either prior to or after the 
carrier's transmission of the master air waybill record to CBP.
    Comment: The Air AMS system should be changed to allow for the 
transmission of a notification that air cargo data had been received or 
that the air cargo manifest had been accepted with the date and time 
specified. This feature was said to be currently available in Vessel 
AMS.
    CBP Response: The Air AMS transmits a Freight Error Report message 
if an air waybill record does not pass certain data acceptance edits. 
In addition, the Air AMS also provides a Freight Status Query feature 
that allows an Air AMS participant to query the status of an air 
waybill record. This feature is available to the Air AMS participant 
that transmitted the original message and to Air AMS participants that 
have been properly nominated by the carrier that transmits the master 
air waybill data.
    Comment: One commenter was of the opinion that airlines did not 
want to be obligated to input house air waybill information on behalf 
of an air freight forwarder.
    CBP Response: Under Sec.  122.48a, unless another qualified party 
elects to participate in the Air AMS system, the relevant house air 
waybill information must be furnished to the incoming air carrier for 
presentation to CBP.
    Comment: It was asked how a carrier would provide any required 
cargo data if the records were in the possession of a third party that 
was not one of the parties identified in proposed Sec.  122.48a(c)(1).
    CBP Response: Under Sec.  122.48a(c)(4), any third party entity in 
possession of required data for inbound air cargo must fully disclose 
and present such data to the carrier for presentation to CBP.

In-Bond Issues

    Comment: Participants in Air AMS should be permitted to create 
subsequent in-bond transactions to close out air manifests at both the 
master air waybill and house air waybill levels.
    CBP Response: This is included in the regulation (see Sec.  
122.48a(a)(1) in this final rule). In-bond information may of course be 
included at both the master and house air waybill levels (see Sec.  
122.48a(d)(1)(xvi) and (d)(2)(viii) in this final rule).
    Comment: It was thought that Air AMS could not handle in-bonds for 
one consolidated express shipment.
    CBP Response: The Air AMS system is capable of processing in-bond 
information for all house air waybills under a consolidated master air 
waybill.
    Comment: The Air AMS programming should be altered to allow for 
more than one in-bond warehouse per location.
    CBP Response: Cargo covered by each master air waybill may be 
transferred to any warehouse location with a unique FIRMS (Facilities 
Information and Resources Management System) code within the limits of 
a port of entry.
    Comment: The scope and timing of the carrier's transmission of any 
in-bond information should be clarified. Specifically, it was asked 
whether it would be necessary to allow transmission of this information 
after arrival of the cargo in the United States, and whether such 
information would be used for the movement of the subject cargo from 
the first port of arrival to the master bill destination location.
    CBP Response: The data elements specified in Sec.  122.48a(d)(1), 
including

[[Page 68150]]

any in-bond information in Sec.  122.48a(d)(1)(xvi), if applicable, 
will be analyzed by CBP for the purposes of identifying high-risk 
cargo. Such data elements must be supplied within the respective 
advance time frames prescribed in Sec.  122.48a(b).
    Comment: In-bond information (from a party other than the incoming 
carrier) might not be known by origin or prior to its arrival in the 
United States. It was asked whether information related to the 
subsequent in-bond movement of the cargo could thereafter be 
transmitted to CBP prior to the in-bond movement being authorized.
    CBP Response: The CBP recognizes that the in-bond destination for 
cargo covered by house air waybills may not be known prior to the 
arrival of the aircraft in the United States. If such information is 
provided outside of the required time frame prescribed in Sec.  
122.48a(b), it will be treated as a change to the original information.
    Comment: It was asked whether CAFES (Customs Automated Forms Entry 
System) was compatible with Air AMS for use on in-bonds.
    CBP Response: CAFES is not yet compatible with Air AMS for 
merchandise arriving via air.

Truck/Air Issues

    Comment: The use of Air AMS should be allowed for goods transiting 
the border by truck in lieu of a truck manifest. It was advocated that 
Customs brokers at the border should be required to transmit data 
through Air AMS for cargo that originated as an air shipment and 
arrived in a contiguous foreign country, notwithstanding that the cargo 
would be crossing the border into the United States by truck.
    CBP Response: The Air AMS system is the electronic cargo reporting 
data interchange for merchandise arriving via an aircraft. Merchandise 
arriving via another mode of transportation, including by truck, must 
be reported in the manner specified for such mode. Thus, if the 
merchandise crosses the U.S. border on a truck, such merchandise is not 
considered to be an air shipment, notwithstanding that such cargo may 
have arrived in the contiguous foreign country by air. As such, in the 
event that merchandise, which was previously reported to arrive via an 
aircraft, should change its mode of transportation prior to arrival in 
the United States, the previously transmitted information must be 
cancelled and then reported in the manner appropriate to the actual 
mode of transportation employed in bringing the merchandise into the 
United States.

Shipments by U.S. Postal Service; Letters and Documents Otherwise 
Shipped

    Comment: A number of commenters believed that the advance cargo 
reporting rules should be applied to shipments through the United 
States Postal Service (USPS).
    CBP Response: Paragraph K of section 343(a)(3) of the Trade Act of 
2002 (19 U.S.C. 2071 note, section (a)(3)(K)), compels consultation 
with the Postmaster General in considering what type of electronic 
cargo information requirements should be imposed upon carriers of mail 
shipments through 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 rulemaking procedure. 
Current procedures regarding the processing of shipments for the USPS 
will remain in effect.
    Comment: Shipments of letters and documents, including the material 
described in General Note 19(c), Harmonized Tariff Schedule of the 
United States (HTSUS), that were transported by air otherwise than 
through the USPS, should also be exempted from full advance cargo 
reporting requirements.
    CBP Response: The CBP has decided to make the requirements for 
advance cargo information for letters and documents the subject of a 
separate publication in the Federal Register. Proposed Sec.  
122.48a(d)(3) concerning advance cargo information requirements for 
letters and documents is thus removed from this final rule.

Liability Issues

    Comment: Should the shipper provide inaccurate information in the 
description, shipper or consignee fields, it was urged that the 
incoming carrier or other electronic filer presenting such information 
to CBP not be held liable.
    CBP Response: Whether or not liability would be imposed on a 
carrier in such circumstances would be governed by section 
343(a)(3)(B), as amended, and Sec.  122.48a(c)(5) in this final rule. 
Section 122.48a(c)(5) provides that CBP will take into consideration 
how, in accord with ordinary commercial practices, the presenting party 
acquired the information submitted and whether and how that party is 
able to verify such information. Where the information is not 
reasonably verifiable, the party will be permitted to present such 
information based upon a reasonable belief as to its accuracy.
    Comment: Three commenters wanted to know whether the carrier would 
be liable for the submission of house air waybill information where 
another party that elected to furnish this information to CBP did not 
do so.
    CBP Response: The carrier will indicate in the master air waybill 
record if another party will be transmitting the house air waybill 
data. If such other party fails to comply with the advance cargo 
reporting provisions, this party, and not the incoming carrier, will be 
held liable.
    Comment: One commenter inquired as to who would be responsible for 
submitting advance cargo data in the case of a chartered aircraft.
    CBP Response: In the case of a time or voyage charter, the aircraft 
owner/operator is the party required to transmit the information. In 
the case of a bareboat charter, where the charterer in effect becomes 
the owner of the aircraft (the owner pro hac vice), the bareboat 
charterer would be responsible for reporting the cargo information to 
CBP.
    Comment: A question was presented as to what kind of penalty would 
be imposed on airlines that failed to meet the advance time frame 
submission.
    CBP Response: An incoming air carrier failing to meet the advance 
reporting time frame may be liable under 19 U.S.C. 1584 as well as 
under other pertinent penalty provisions (see Sec.  122.161, Customs 
Regulations; 19 CFR 122.161). Should another party electing to file 
advance cargo information fail to do so, such party may be liable for 
liquidated damages pursuant to its Customs bond.
    Comment: It was asked who would be responsible for transmitting 
cargo data to CBP where a number of freight forwarders co-loaded cargo.
    CBP Response: Either the incoming carrier or one of the parties 
qualified to do so under Sec.  122.48a(c)(1) will be responsible for 
supplying the information for all house air waybills under a single 
consolidated master air waybill.

Data Elements

    Comment: A couple of commenters took exception to the requirement 
that the flight number for the incoming aircraft be reported 4 hours 
prior to arrival. The flight number could change. Also, it was unclear 
how the indirect air carrier would know the exact flight number.
    CBP Response: Only the incoming carrier is responsible for the 
transmission of the flight number. The carrier should be aware of its 
flight

[[Page 68151]]

number at the time of its required transmission.
    Comment: It was stated that the proposed data elements designated 
as conditional (``C'') were not currently captured and would require 
significant modifications to the freight reservations, reporting and 
tracking systems and that this would be at significant cost to the 
carrier.
    CBP Response: These data elements are essential to effective cargo 
targeting. It is also observed that these data elements have previously 
been received from other air carriers through Air AMS.
    Comment: Three commenters inquired as to whether the carrier would 
still have to provide house air waybill numbers, pieces, weight and 
description on its paper air cargo manifest.
    CBP Response: Under proposed Sec.  122.48(a), except as otherwise 
provided, a paper air cargo manifest need not be filed for any aircraft 
required to enter under Sec.  122.41. In addition, proposed Sec.  
122.48(a) is further changed in this final rule to eliminate the 
requirement that a cargo manifest be retained aboard any aircraft 
required to enter under Sec.  122.41; however, a copy of the air cargo 
manifest (Customs Form (CF) 7509) must otherwise be made available to 
CBP upon demand.
    Comment: It was asked how a company would obtain a unique 
identifier (which would be transmitted by the carrier to indicate its 
separate transmission of a portion of the required data elements).
    CBP Response: A Container Freight Station (CFS) and an Express 
Consignment Carrier Facility (ECCF) would be identified by its FIRMS 
(Facilities Information and Resources Management System) code. An air 
carrier would be identified by its IATA (International Air Transport 
Association) code. All other parties would be assigned a unique 
identifier by the Client Representative Branch of CBP's Office of 
Information and Technology (OIT) upon commencement of certification 
testing in Air AMS.
    Comment: More information was requested as to the description that 
would be required on the master air waybill in the case of shipments of 
dangerous goods. It was noted that IATA requirements did not permit a 
characterization of ``consolidation'' to be indicated as a description 
on the master bill.
    CBP Response: For the purposes of satisfying Sec.  122.48a only, a 
cargo description of ``consolidation'' is sufficient at the master air 
waybill level. However, carriers may elect to provide additional 
information in the description field at the master bill level if they 
choose to do so.
    Comment: Two commenters believed that current Air AMS programming 
did not allow for alpha-numeric characters of house air waybill numbers 
to be transmitted as printed on the paper house air waybill. They 
inquired as to how this would be handled.
    CBP Response: Each party providing electronic cargo information 
must support alphanumeric characters for house air waybill records when 
alpha characters appear on the printed house air waybill. The CBP 
recognizes that some current Air AMS participants will need to undergo 
programming changes in order to support this feature.
    Comment: One commenter noted that, quite often, the Importer of 
Record and the ``deliver to'' party (the ultimate consignee) were not 
the same party. The commenter wanted to know whether there would be a 
problem if the consignee were located somewhere other than the arrival 
and/or destination port.
    CBP Response: The consignee need not be located at the arrival or 
destination port. Paragraphs (d)(1)(xi) and (d)(2)(vii) of proposed 
Sec.  122.48a are revised in this final rule to so indicate.
    Comment: One commenter urged that CBP allow disclaimers such as 
``said to contain'' or ``shipper's load and count''.
    CBP Response: The characterization, ``Said to contain'', is not an 
acceptable cargo description. The approved use of ``shipper's load and 
count'' is outlined in Sec.  4.7a(c)(3)(ii), Customs Regulations (19 
CFR 4.7a(c)(3)(ii)).
    Comment: Three commenters did not agree with the requirement that 
the smallest external packaging unit be stated; a simple pallet count 
should be allowed.
    CBP Response: The CBP disagrees. Such reporting is essential to 
ensure that no additional packages have been introduced into palletized 
cargo.
    Comment: It was requested that the Automated Broker Interface (ABI) 
be made mandatory for all forwarders and brokers to transmit house data 
to CBP for air shipments.
    CBP Response: The ABI is not the system by which electronic cargo 
information is to be collected under the provisions of Sec.  122.48a.

Definitions

    Comment: Under proposed Sec.  122.48a(b)(1), one commenter wanted 
to know what was meant by the time of departure for the United States; 
and in proposed Sec.  122.48a(b)(2), it was asked whether the time of 
arrival in the United States would be the scheduled or the actual time 
of arrival.
    CBP Response: As expressly stated in Sec.  122.48a(b)(1), the 
electronic cargo information must be received no later than the time of 
departure of the aircraft from foreign, which is the time that the 
wheels are up on the aircraft and it is en route directly to the United 
States (the trigger time is the time of departure of the aircraft for 
the United States). Proposed Sec.  122.48a(b)(1) is thus further 
clarified in this final rule. And in Sec.  122.48a(b)(2), the 
electronic cargo information must be received 4 hours prior to the 
actual arrival of the aircraft in the United States.
    Comment: One commenter stated that gray areas still persisted as to 
the cargo covered by the regulation, and asked, in this respect, 
whether company material or aircraft parts for use by the airline would 
need to be reported.
    CBP Response: As specified in the background discussion of the 
proposed rule (see 68 FR at 43580), 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.
    Comment: With reference to proposed Sec.  122.48a(d)(1)(xii), the 
identity of the party who issued the ``consolidation identifier'' was 
requested.
    CBP Response: The consolidation identifier is transmitted by the 
incoming air carrier to designate an air waybill record as a ``master'' 
air waybill.
    Comment: In proposed Sec.  122.48a(d)(1)(xvii), one commenter 
wanted to know what a ``local transfer facility'' was.
    CBP Response: A local transfer facility is merely a Container 
Freight Station as identified by its FIRMS code or the warehouse of 
another air carrier as identified by its carrier code. Proposed Sec.  
122.48a(d)(1)(xvii) is revised in this final rule to include this 
additional explanatory material.

Air AMS Issues

    Comment: It was asserted that mandatory participation in the Air 
Automated Manifest System (Air AMS) could not be required due to the 
fact that it was a voluntary program.
    CBP Response: Section 343(a)(1) of the Trade Act of 2002, as 
amended (19 U.S.C. 2071 note, section (a)(1)), gives CBP the authority 
to require the advance reporting of cargo information through an 
electronic data interchange system; and Air AMS is such a system. 
Moreover, Air AMS was developed as a component of the National Customs 
Automation Program (NCAP) (19 U.S.C. 1411(a)); and, in section 338 of 
the Trade Act of 2002, Congress amended 19 U.S.C. 1411(b) to permit CBP 
to

[[Page 68152]]

require the electronic submission of information that CBP is obliged to 
collect.
    Comment: One commenter asked when the Air AMS specifications and 
testing protocol would be made available to the trade.
    CBP Response: The CBP will post the Air AMS specifications and 
testing protocols on its Web site as soon as possible. Such 
specifications and testing protocols will set forth the programming and 
operational details of the system.
    Comment: Since a filer could be a party with a Container Freight 
Station (CFS) location or a Facilities and Information Resources 
Management System (FIRMS) code, two commenters inquired as to whether 
this implied that the advance cargo transmission would have to be made 
from a particular U.S. location.
    CBP Response: The electronic cargo information may be sent from any 
location, provided that the electronic filer is one of the parties 
specified in Sec.  122.48a(c)(1).
    Comment: It was declared that carriers currently participating in 
Air AMS did not have uniform system requirements or uniform procedures 
at all ports of entry. The CBP should compel uniformity in system 
requirements and procedures at all ports.
    CBP Response: The promulgation and implementation of these 
regulations and the enforcement of their provisions will increase 
uniformity of carrier participation in Air AMS. For instance, 
currently, there are several methods to process cargo information and 
they vary at each location. This is due to the lack of authority for 
CBP to require automation of cargo information. This regulation will 
provide that authority and therefore increase uniformity. The CBP 
believes that all cargo declarations will be processed the same at each 
location. However, variations may exist in the execution of the entry 
not in the manifest. Each port is a little different and therefore some 
variations will exist but not to the extent that is occurring on a 
daily basis.

Implementation of Advance Air Cargo Data Filing Requirements

    Comment: Seven commenters wanted more time to obtain access to 
relevant Air AMS software and communications equipment in order to make 
their computer interface with the system operational. The CBP was 
requested to accommodate the interface schedules of the carriers in 
this regard. Three other commenters wanted a general delayed effective 
date of 180 days from the date the final rule was published. One 
commenter recommended that the rule be delayed until all ports were 
operational on the system and all necessary training had been 
completed. Another commenter believed that CBP was not properly staffed 
or trained in Air AMS to support its nationwide implementation. A 
further commenter suggested that CBP implement a phased-in approach, by 
carrier, origin and destination, and that a ``web portal'' be installed 
for use by carriers and other authorized filers unable to interface 
with the Air AMS system.
    CBP Response: Section 343(a), as amended, was enacted on August 6, 
2002, and clearly required that cargo data would need to be filed 
electronically. To this end, in the public meeting that was held for 
incoming air cargo on January 14, 2003, CBP stated that the accepted 
electronic interface would be the Air AMS system. Therefore, air 
carriers have had over one year to conduct proper research as to what 
type of software and computer interface options are available and what 
each has to offer. As such, CBP will only delay the general effective 
date of Sec.  122.48a until March 4, 2004 for the specific reasons 
described in Sec.  122.48a(e)(2).
    Additionally, CBP has already identified all airports that require 
training in Air AMS and whether those air carriers that call on those 
airports are automated. By making use of this list and working with the 
air carriers concerned, CBP will coordinate with carriers that are 
ready to go online in airports that are not yet automated in order to 
ensure that the inspectors are properly trained, and that the air 
carrier has proper points of contact at that airport. However, CBP has 
determined that a web portal feature is not feasible at this time.
    Furthermore, it is vital that the training for inspectors coincide 
as closely as possible with air carriers becoming automated in a port. 
If CBP trains the inspectors and there are no automated air carriers 
for several months, the training is not useful because the inspectors 
will not be utilizing their new skills. Therefore, the training must 
occur within a few weeks of an air carrier notifying CBP that it is 
going to become automated in a specific port.
    Toward this end, CBP is striving to improve the Air AMS training 
that is available to the field inspectors. Currently, there are four 
Air AMS training classes that are held at the Federal Law Enforcement 
Training Center (FLETC) each year. In addition, CBP is developing a 
computer-based training course that will be required for each inspector 
at all airport locations.

System Irregularities; Paper Manifest Requirement

    Comment: One commenter requested specific details regarding the 
technical support for any problems that might be experienced during 
data transmissions.
    CBP Response: Requests for resolution of ordinary cargo 
transmission problems should be coordinated with CBP personnel at each 
port. In addition, each Air AMS participant has been/will be assigned a 
CBP client representative who is available to assist with more 
technical guidance.
    Comment: Three commenters no longer wanted to keep a paper air 
cargo manifest on board the aircraft since CBP was mandating electronic 
cargo information. In addition, the requirement for keeping a paper 
General Declaration on board should be deleted since all the 
information was sent in advance of arrival through the Advance 
Passenger Information System (APIS).
    CBP Response: As already noted, a paper air cargo manifest (Customs 
Form (CF) 7509) will no longer be required to be kept aboard the 
aircraft, but must otherwise be available for production upon demand. 
Proposed Sec.  122.48(a) is changed in this final rule to reflect this. 
However, the General Declaration (CF 7507) will still be required as it 
contains data elements not otherwise collected through APIS or Air AMS.
    Comment: Five commenters asked how an air carrier would comply with 
the advance cargo notification requirements without keeping a record of 
every single house air waybill in addition to the archived copy of each 
master air waybill.
    CBP Response: Section 122.48a does not require the incoming air 
carrier to transmit or maintain records for house air waybill data when 
such data is transmitted by another electronic filer.
    Comment: Seven commenters recommended that a CBP office be 
established at all airports to respond to various irregularities.
    CBP Response: Each airport concerned will have a designated point 
of contact to address and resolve matters involving Air AMS.

In-Transit Issues

    Comment: Four commenters suggested that in-transit cargo that 
remained on board the aircraft should be excluded from the proposed 
rule.
    CBP Response: The CBP disagrees. Such cargo could pose a cargo 
safety or security risk to the same extent as other cargo that arrives 
in the United States.

[[Page 68153]]

    Comment: It was believed that the proposed regulations did not 
clearly address whether air cargo that merely transited, and would not 
be discharged in, the United States was subject to compliance with the 
advance reporting time frames.
    CBP Response: In accordance with Sec.  122.48a(a)(1), cargo that 
transits the United States, whether or not it is unladen from the 
aircraft, is subject to the advance reporting requirements of the 
regulation. Technical requirements to report such information 
electronically will be specified in the Air AMS technical manual.
    Comment: One commenter was concerned about who would be required to 
report required cargo data for in-transit cargo.
    CBP Response: Such information must be provided either by the 
incoming air carrier or one of the other specified parties in Sec.  
122.48a(c)(1).

Hand-Carried Baggage

    Comment: Five commenters advocated that hand-carried merchandise 
should be subject to the advance cargo reporting provisions.
    CBP Response: Hand-carried merchandise is covered by the 
requirements for passenger baggage and is not considered cargo subject 
to advance reporting under Sec.  122.48a.

Landing Rights

    Comment: Five commenters suggested that CBP specify in proposed 
Sec.  122.14(d) that denial of landing rights would occur only if a 
known security threat aboard a particular aircraft posed a higher 
threat to safety and security than an emergency diversion to 
alternative airports that could also refuse landing rights. Four other 
commenters believed that CBP should not deny landing rights or 
permission to unlade cargo based upon inaccurate information received 
from other parties.
    CBP Response: The provision to deny landing rights is generally 
intended for those air carriers that fail, repeatedly and egregiously, 
to furnish timely and accurate cargo information in advance. In such a 
situation, CBP would have the authority to deny landing rights for that 
air carrier in the future. Assuredly, this provision would not be 
executed without careful deliberation and dialogue with the air carrier 
as to its lack of compliance.
    In addition, pursuant to section 343(a)(3)(B), as amended, and 
Sec.  122.48a(c)(5), as already noted, if the carrier electronically 
transmitting cargo information has received any of this information 
from another party, CBP, in deciding issues of liability, will take 
into account how, in accordance with ordinary commercial practices, the 
carrier acquired the transmitted information and whether the carrier 
was reasonably able to verify the information. Depending upon these 
circumstances, CBP reserves the authority to deny landing rights or 
permission to unlade if an air carrier fails to fulfill its 
responsibilities under these regulations.

Corrections to Cargo Information

    Comment: Five commenters wanted clarification as to the procedure 
for making any changes to the cargo information already transmitted for 
a flight.
    CBP Response: Complete and accurate information would need to be 
presented to CBP for cargo laden aboard the aircraft no later than the 
applicable time specified in Sec.  122.48a(b). As for any changes in 
the cargo information already transmitted for a flight, the procedures 
for amending the cargo declaration including discrepancy reporting will 
be the subject of a separate rulemaking.
    Comment: Two commenters inquired about who would be responsible in 
the case of a data discrepancy between a master air waybill and a house 
air waybill.
    CBP Response: The party that transmits the information would be 
responsible for its correction. Communication between the air carrier 
and any other electronic filer for the incoming cargo should be 
maintained in order to avoid such discrepancies.
    Comment: It was asked whether an electronic transmission to correct 
inaccurate data could be initiated from the port of destination when 
the initial electronic transmission occurred at the point of departure 
for the United States.
    CBP Response: Any party supplying information will be able to 
correct such information, regardless of the station from which its 
transmission electronically originated.

Cargo Transfer

    Comment: A question arose as to whether the deconsolidator's 
Facilities and Information Resources Management System (FIRMS) code or 
the carrier's identifier would be needed for incoming cargo that would 
be handled through a local transfer facility; and whether such 
information could be transmitted after arrival of the cargo.
    CBP Response: A FIRMS code is the necessary data element for cargo 
that would be transferred to a deconsolidator or a Container Freight 
Station (CFS) within the limits of the port. Should the cargo be 
intended for transfer to another carrier's station within the port, the 
code of that carrier is required. Proposed Sec.  122.48a(d)(1)(xvii), 
as already mentioned, is revised in this final rule to include this 
additional explanation. This information must be transmitted in advance 
of arrival together with the other required data in Sec.  122.48a(d)(1) 
and (d)(2).

Split Shipments

    Comment: Because shipments that were split by the incoming carrier 
would affect the transmission for that cargo by another electronic 
filer, the rules for the handling of split shipments in Air AMS should 
be further clarified.
    CBP Response: When the incoming air carrier elects to split a 
master air waybill into multiple arrivals, the carrier will be required 
to transmit to CBP a number of additional data elements for each house 
air waybill covered by the master air waybill record. Specifically, the 
carrier will be required to transmit the house air waybill number, 
certain transportation and arrival information, the manifested and 
boarded quantities, and the manifested and boarded weights. As such, 
the informational requirements for split shipments described in 
proposed Sec.  122.48a(d)(1)(xiii) are revised and included in this 
final rule as a new Sec.  122.48a(d)(3) (proposed Sec.  122.48a(d)(3) 
dealing with the summary manifesting of letters and documents, as 
previously noted, is deleted from this final rule and will be the 
subject of a separate Federal Register publication). Also, further 
technical specifications regarding the issue of split shipments will be 
provided in the Air AMS technical guidelines.

Changes in Business Practices

    Comment: One commenter stated that it was an undue hardship to 
force companies onto Air AMS if another system were going to supersede 
it later on, and that companies would be forced to undergo the expense 
of conforming to new computer programming.
    CBP Response: The CBP will rely, at least initially, upon the Air 
AMS, with appropriate future modifications, as the principal vehicle to 
achieve the goal of advance cargo data filing under section 343(a), as 
amended, in order that these regulations may be implemented at the 
earliest practicable time, as an urgent and critical national security 
imperative. However, it is assured that any new system developed within 
the framework of the Automated Commercial Environment (ACE) will be 
compatible with these implementing regulations. For this reason, the

[[Page 68154]]

regulations refer generically to a CBP-approved electronic data 
interchange system (rather than to Air AMS, specifically).
    Comment: Companies would need to shift current workload that was 
done at destination ports to the ports of departure, and those ports 
were not properly staffed to handle the workload.
    CBP Response: The CBP is fully aware that some changes in business 
practices may be necessary. For example, it has been a common practice 
for the industry to input cargo information while the aircraft is in-
transit to its destination. This practice will need to change to 
require the information in a timely manner so as to meet the time 
frames identified by this final rule. The CBP has attempted to balance 
the concerns of the trade by affording a delayed effective date in the 
implementation of the advance air cargo reporting regulations as 
provided in Sec.  122.48a(e), while, at the same time, recognizing the 
compelling national security need to move as deliberately as possible 
to protect cross-border commerce from the threat posed to cargo safety 
and security by international terrorism.
    Comment: It was observed that for shipments with multiple 
intermediate foreign stops before final departure for the United 
States, freight forwarders needed the ability to transmit data elements 
to CBP at the time of departure from the departure station/location.
    CBP Response: Those parties authorized to transmit house air 
waybill level information, as specified in Sec.  122.48a(c)(1), will be 
able to do so prior to the transmission of the master air waybill 
information by the incoming air carrier.

General/Miscellaneous Issues

    Comment: When an incoming air carrier has transmitted data to CBP 
for incoming cargo, one commenter inquired whether that carrier's 
ground handling agent, or other party, holding the goods following 
their arrival would also need to be automated in order to have access 
to the electronic freight status notifications concerning the cargo.
    CBP Response: Participants in Air AMS, including the incoming air 
carrier, must be able to honor all electronic freight status 
notifications transmitted by CBP. Whether the carrier elects to employ 
a ground handling agent or not, the carrier is responsible for 
maintaining control of the cargo pending CBP disposition.
    Comment: A question was raised as to how the carrier was to be 
advised that the house air waybill information had been transmitted to 
CBP.
    CBP Response: The CBP does not anticipate transmitting a message to 
the carrier when the house air waybills are transmitted by another 
party. However, the failure to transmit house air waybill information 
for consolidated shipments, as prescribed in Sec.  122.48a(d)(2), would 
preclude the release or transfer of any cargo covered by the 
consolidation. Thus, communication between the incoming carrier and any 
other electronic filer of house air waybill information, if applicable, 
would be essential.
    In this latter connection, the Air Automated Manifest System (AAMS) 
has a feature known as the Freight Status Query (FSQ) message. The 
party that transmitted the message or another AAMS participant that has 
been authorized by the message originator may query the status of an 
air waybill record in AAMS. This feature may be invoked on a 
transactional basis to provide the AAMS participant with confirmation 
that an air waybill is on file along with details about the record.
    However, to provide an automatic confirmation receipt message for 
every air waybill transmission would create substantial programming 
costs for CBP and AAMS participants. It would also substantially 
increase data storage and communications costs. The FSQ message 
provides the same information but need only be invoked on a case-by-
case basis.
    Comment: An issue was raised as to whether a party that was both an 
Automated Broker Interface (ABI) filer as well as a Container Freight 
Station/Deconsolidator and in possession of an international carrier 
bond could transmit cargo data at ports where the consolidation cargo 
remained under the custody of the air carrier.
    CBP Response: A party authorized to transmit electronic cargo 
information, as provided in Sec.  122.48a(c)(1) and (d)(2), will be 
able to do, even if the cargo remains in the custody of the incoming 
carrier.
    Comment: One commenter wanted to know if there would be any 
amendment of requirements pertaining to international carrier bonds.
    CBP Response: The changes to the international carrier bond 
requirements are set forth in Sec.  113.64(a) and (c) in this final 
rule.
    Comment: Additional explanation was sought concerning what 
procedures an air carrier would need to follow if cargo were targeted 
for inspection by CBP.
    CBP Response: If it is found that a physical inspection of the 
cargo is necessary, CBP will electronically notify the carrier or other 
cargo custodian and make arrangements for its examination. In so doing, 
CBP would work with the carrier to ascertain an appropriate location to 
examine the potentially high-risk cargo.
    Comment: Air cargo that would arrive in the United States on a 
permit to proceed from the port of arrival should be allowed to move to 
the port of unlading notwithstanding that a hold was placed on the air 
waybill covering the cargo due to insufficient data.
    CBP Response: If CBP determines that a physical inspection is 
necessary or if additional information is required, the cargo will be 
held at the port of first arrival pending resolution of the matter.
    Comment: Concern was expressed that CBP ABI/AMS client 
representatives would not be able to sufficiently handle the additional 
workload under the new regulations. It was suggested that a study be 
done to measure the current level of service to the trade and that such 
a study should be shared with the trade.
    CBP Response: The CBP does not believe that a study of client 
representative workload is necessary to the implementation of this 
rule. In the unlikely event that such a contingency should arise, Sec.  
122.48a(e)(2), as previously observed, does provide that the effective 
date of the rule may be further delayed if more time is needed to 
complete the certification testing of new participants.

Rail Cargo Destined to the United States

Time Frame

    Comment: Four commenters mentioned that cargo manifest information 
transmitted to CBP through the Rail Automated Manifest System (Rail 
AMS) could be made available two hours prior to arrival. However, 
information on the train sheet, sometimes called a consist (consisting 
of data such as the train's identification, locomotives' and cars' 
numbers and initials and the train's schedule) was not part of the 
advance cargo manifest data. This information would only be available 
when the final trans-border train was assembled, and in many cases, 
would only be available for transmission one hour prior to arrival at 
the border. One other commenter also advocated that the time period be 
reduced to one hour prior to arrival consistent with incoming truck 
traffic.
    CBP Response: The CBP remains of the opinion that the 2-hour period 
for presenting rail cargo data prior to arrival effectively balances 
the impact on rail cargo safety and security with the likely impact on 
the flow of rail commerce into the United States. As such, this

[[Page 68155]]

time frame represents the minimum period during which CBP is confident 
that essential targeting can still be accomplished, without a 
concomitant undue disruption to rail business practices.
    In addition, without proper consist information (which identifies 
the incoming train, and gives its locomotives' and cars' numbers and 
initials and the train's schedule), CBP would not have the complete 
information essential for targeting on the incoming cargo in connection 
with the particular train on which the cargo would arrive. The 
availability of information on both the cargo and the arriving 
conveyance as provided in the rail consist is vital in order to enable 
CBP to do its targeting effectively in the time required.

Required Data; Carrier Responsibility

    Comment: Four commenters wanted it made clear that a railroad was 
required to provide the scheduled date and time of arrival to the best 
of its knowledge, and that a railroad should not be penalized or held 
responsible should that date and time prove inaccurate within some 
reasonable time frame.
    CBP Response: The railroad carrier must provide the scheduled date 
and time of arrival to the best of its information, knowledge and 
belief at the time that this information is filed. However, carriers 
will be held responsible for failure to keep CBP informed of any 
changes in this information as it becomes available.
    Comment: Rail carriers should not be held responsible for the 
accuracy of information supplied by others. The CBP should change the 
language in proposed Sec.  123.91(c)(2) to state that where the rail 
carrier electronically presenting the cargo information received any of 
this information from another party, the rail carrier would not be held 
responsible for the inaccuracy of any information supplied by that 
other party.
    CBP Response: The CBP disagrees. Section 123.91(c)(2) repeats, and 
CBP is bound by, the statutory standard against which the potential 
liability of a rail carrier would effectively be gauged in presenting 
inaccurate cargo data to CBP that had been acquired from another party.
    Comment: It was important that Rail AMS be able to manage multiple 
shipment data. The CBP would need to coordinate implementation of this 
aspect of the process with all elements of the supply chain and with 
U.S. trading partners.
    Specifically, the requirement that the rail carrier supply 
information from the house bill of lading was problematic. In most 
cases, railroads would only have the capability of receiving one bill 
of lading and that bill would generally be a master bill of lading. 
Also, if the railroad had a container holding several consolidated 
shipments with individual house bills associated with each shipment, 
even if the railroad had the capability of receiving the individual 
house bills, information from such bills could not be transmitted to 
CBP inasmuch as Rail AMS could only handle the transmission of one bill 
of lading in association with the cargo manifest data for that one 
shipment.
    CBP Response: The CBP is currently reviewing Rail AMS programming 
requirements to release the edit that only allows one bill of lading 
per shipment, which will enable house bills of lading to be utilized in 
the rail environment. In addition to possible programming changes, CBP 
is reviewing the prospect of authorizing other parties to transmit 
information via Rail AMS. This would further facilitate the submission 
of the house bill of lading information that is required on all 
shipments.
    Should CBP decide to allow another electronic filer to voluntarily 
present house bill information for a shipment through Rail AMS, a test 
program notice to this effect would first be published in the Federal 
Register pursuant to Sec.  101.9(b) and (b)(1), Customs Regulations (19 
CFR 101.9(b) and (b)(1)), inviting public comments on any aspect of the 
proposed test and informing interested members of the public of the 
basis for selecting participants, the eligibility criteria for 
participation in the test, and the effect of such participation on the 
responsibilities of incoming rail carriers for the transmission of 
required advance cargo data to CBP.
    Comment: Proposed Sec.  123.91(d)(4) stated that carriers would 
have to supply the numbers and quantities of the cargo laden, as 
contained in the carrier's bill of lading, either master or house, as 
applicable, which meant the quantity of the lowest external packaging 
unit. This information was contained in the house bill, not the master 
bill. For a container shipment, the railroads would only know the 
quantity expressed on the master bill, which might not be at the level 
of the lowest external packaging unit.
    Similarly, proposed Sec.  123.91(d)(6) and (d)(7) would require 
that the railroad carrier provide the complete name and address for the 
shipper and consignee respectively. Again, however, the master bill of 
lading possessed by the rail carrier could contain only the name of a 
freight forwarder instead of the actual shipper and consignee; if so, 
the rail carrier would not know the identity of the actual shipper and 
consignee.
    CBP Response: House bill of lading information is required under 
this regulation; therefore, as already discussed, CBP is reviewing 
programming changes to Rail AMS that would enable the system to accept 
such information. Hence, when Rail AMS is programmed to capture house 
bill of lading information, and when the rail industry has been given 
additional time to make essential adjustments to its own programming 
for the transmission of such house bill data through Rail AMS, all the 
referenced data elements would, at such time, need to be presented to 
CBP, which would include information for the shipper and consignee, 
including the full name and address of each, as well as the numbers and 
quantities (of the lowest external packaging unit) of the cargo laden 
aboard the train. To this end, CBP will take these programming matters 
into account in establishing the effective date(s) for implementing the 
incoming rail cargo data regulation (see Sec.  123.91(e) in this final 
rule).
    Comment: One commenter suggested that it might be difficult or 
impossible for the rail carrier to obtain the necessary cargo 
information when the rail cargo had initially arrived in Canada or 
Mexico by vessel or air carrier from another foreign country. In such a 
case, unless the ocean or air carrier had first required the complete 
disclosure of all information at the port of loading in the other 
foreign country, and thereafter passed this information along to the 
rail carrier, there would be no way that the required information would 
be available to the railroad.
    CBP Response: For cargo that is transferred in Canada or Mexico to 
a rail carrier for shipment to the United States, whether such cargo 
originated in Canada or Mexico or was first brought there by a vessel 
or air carrier from another foreign country, the rail carrier, as 
explained above, will be required to provide the requisite data 
elements for such cargo to CBP.

Line Release

    Comment: The CBP should retain Line Release not only for the 
present as stated in the proposed rule, but for the long term, as it 
was declared to be critical for cross-border rail traffic.
    CBP Response: The CBP fully recognizes the importance of Line 
Release for Rail AMS. In fact, CBP has recently made Line Release 
available, for rail shipments only, to ports that ordinarily would not 
have access to it,

[[Page 68156]]

as part of CBP's Rail AMS port automation efforts.
    Automated Line Release in rail is what is known as the Border 
Release Advanced Screening and Selectivity program (BRASS) in the Truck 
environment. The difference is that the information is all electronic 
and supplied in advance of arrival.

Implementation Date(s) for Rule

    Comment: Further guidance was sought as to the implementation 
date(s) for the proposed regulation.
    CBP Response: Quite plainly, under Sec.  123.91(e), rail carriers 
must commence the advance electronic transmission of required cargo 
information 90 days from the date that CBP publishes a notice in the 
Federal Register informing affected carriers that the data interchange 
system is in place and operational at the port of entry where the train 
would first arrive in the United States. As such, before the rule can 
become operational at any port, including any port(s) where Rail AMS is 
now operational, the initial publication of a Federal Register notice 
naming such port(s) would be a mandatory prerequisite. At present, 
there are 35 CBP ports that have rail crossings, 8 of which are not 
rail AMS. The CBP will require all ports that handle rail cargo to 
become automated.

Exemption for Cargo Transiting Contiguous Foreign Country

    Comment: The proposed rule (Sec.  123.91(b)) would expressly exempt 
from advance electronic information filing requirements domestic cargo 
transported by train from one port to another in the United States by 
way of a foreign country. However, the proposed rule did not deal with 
whether such an exception applied when the shipment partly involved 
transportation by sea or air.
    CBP Response: Only a land-based conveyance, such as rail or truck, 
would be involved with carrying goods on a continuous movement from one 
port to another in the United States by way of a contiguous foreign 
country, whether Canada or Mexico. This is the specific situation 
addressed in Sec.  123.91(b); such a situation would simply not arise 
in the vessel or air mode. Proposed Sec. Sec.  123.91(b) and 
123.92(b)(1) (for trucks) are revised in this final rule to explicitly 
reference Canada and Mexico in this respect.

Truck Cargo Destined to the United States

Implementation Issues

    Comment: As was done in the 24-hour rule, one commenter wanted a 
grace period between the implementation date of the final rule and its 
enforcement date (no penalties assessed for non-fraudulent violations).
    CBP Response: Similar to that which was done in the context of the 
24-hour rule (67 FR 66318), as previously detailed, supra, CBP will 
follow a phased-in enforcement/compliance program, after Sec.  123.92 
becomes effective at a specific port of arrival. As such, during the 
phased-in period, CBP would not customarily initiate enforcement 
actions such as assessing penalties for non-fraudulent violations of 
Sec.  123.92. And, under Sec.  123.92(e), the effective date for 
advance data filing for incoming truck cargo is itself initially 
delayed until 90 days from the date that CBP publishes a notice in the 
Federal Register informing affected carriers at the given port that the 
approved data interchange is operational there and that carriers must 
commence the filing of the required data.
    Comment: Two commenters sought to delay the implementation of 
proposed Sec.  123.92 until carriers, brokers, and importers had direct 
communication links electronically with CBP.
    CBP Response: The CBP disagrees. The advance notification 
requirement is largely intended to collect advance cargo information 
via two outstanding methods--the Automated Broker Interface (ABI), or 
the fully electronic version of the Free And Secure Trade (FAST) 
System. Delaying the implementation of Sec.  123.92 until all parties 
related to the reporting of the data for incoming cargo are fully 
electronically interfaced with CBP, such as through FAST, or the 
Automated Commercial Environment (ACE), once it is deployed, would be 
incompatible with the expeditious implementation of section 343(a), as 
amended, as a national security necessity.
    Comment: It was suggested that CBP implement separate rules for 
emergency importations.
    CBP Response: Emergency situations will be handled on a case-by-
case basis, depending on the facts, in CBP's enforcement discretion.
    Comment: It was recommended that an education enforcement 
contingency plan be devised to avoid possible chaotic situations at the 
border under the new rules.
    CBP Response: Outreach and marketing efforts are currently being 
undertaken to reach out to both foreign and domestic trade participants 
to avoid such situations at the border.

Time Frame for Advance Filing

    Comment: One commenter sought further explanation as to the actual 
start time for advance notification requirements, i.e., at the time of 
transmission, or at the time CBP received the transmission.
    CBP Response: As expressly set forth in Sec.  123.92(a), CBP must 
receive the cargo data no later than 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 in 
presenting the information. Also, this point was directly addressed in 
the background of the proposed rule (see 68 FR at 43586).
    Comment: Twelve commenters recommended an abbreviated advance 
notification time line of 30 minutes for standard shipments and 15 
minutes for Free And Secure Trade (FAST) shipments, specifically for 
trucks loaded within a designated border zone, to support the ``Just-
in-Time'' (JIT) shipping industry.
    CBP Response: This identical comment was broached in the proposed 
rule (68 FR at 43586; Summary of Principal Comments, item ``1.''). At 
that time, CBP concluded, and continues to firmly believe, that the 30-
minute or 1-hour advance time frame, in relation to the particular 
automated system used, is 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. The effect on JIT inventory practices, given these relatively 
brief reporting periods, should be essentially nugatory.
    Against this backdrop, it is submitted that BRASS (the Border 
Release Advanced Screening and Selectivity program) and CAFES (the 
Customs Automated Forms Entry System), where the filing period would be 
less, will only be employed exclusively as interim, transitional 
systems in the truck environment prior to the development and 
deployment of fully electronic replacements for these systems in the 
new truck manifest module scheduled for delivery under the Automated 
Commercial Environment (ACE); the employment of BRASS and CAFES under 
the circumstances is thus due in large measure to the conspicuous lack 
of electronic information systems prevalent in the trucking industry, 
especially along the Southern Border.
    Comment: Six commenters asked that CBP implement the 15-minute 
advance electronic notification period currently used under the FAST 
voluntary test program.
    CBP Response: The FAST program is designed to enhance security and 
safety in processing commercial importations

[[Page 68157]]

along the Northern and Southern borders, while also enhancing the 
economic prosperity of the U.S., Canada, and Mexico by aligning, to the 
maximum extent possible, their customs commercial programs. While the 
program will still, of course, function in this capacity, nevertheless, 
with reference to its relationship with section 343(a), as amended, 
FAST will also be used for purposes of ensuring cargo safety and 
security and preventing smuggling. As such, and for the reasons set 
forth above, CBP finds it advisable to extend the overall time frame 
for FAST transactions to a full 30 minutes prior to arrival as an 
additional security measure under the program.
    Thus, shipments eligible for FAST must be reported at least 30 
minutes before the arrival of the conveyance at the first port of 
entry. FAST shipments may be reported through one of two release 
mechanisms: Through the all-electronic transmission of conveyance, 
driver and shipment information, formerly known as the National Customs 
Automation Program (NCAP) prototype; or through the use of the Pre-
Arrival Processing System (PAPS) version of cargo selectivity. All 
other truck shipments still not allowed release via BRASS, must utilize 
PAPS and submit the data one hour before arrival of the truck. For an 
additional extensive review of the FAST, PAPS, BRASS, and CAFES 
systems, see the proposed rule at 68 FR 43586-43587.
    Comment: Seven commenters requested that CBP initiate an electronic 
confirmation/receipt system, that would notify the broker/carrier that 
information was received, thus starting the 30-minute/1-hour clock.
    CBP Response: The CBP already has a system in place that notifies 
the ABI transmitter that the data was received. This information is 
only available to the ABI transmitter. At this time, any notification 
to the carrier of successful data transmission must come via the ABI 
filer. Additionally, it should be pointed out that this program has 
already been successfully used without the need for direct electronic 
confirmation from CBP.

Data Systems To Be Used; In-Bond Reporting

Free And Secure Trade System (FAST)

    Comment: Four commenters wanted to know when FAST, which was only 
available at a limited number of Northern Border ports, would be 
extended to other ports, including those along the Southern Border. 
Four other commenters wanted the FAST program defined in the 
regulations as a method of acceptable cargo release.
    CBP Response: A general notice published in the Federal Register 
(68 FR 55405) on September 25, 2003, announced the expansion of, and 
the eligibility requirements for, FAST along the Southern Border. The 
Southern and Northern border implementation schedule for FAST is also 
available on the CBP Web site (http://www.cbp.gov). This general notice 
also clearly defines FAST and its requirements.
    Comment: Four commenters advocated that less-than-truckload (LTL) 
carriers be allowed to participate in FAST.
    CBP Response: The current eligibility criteria for participation in 
the FAST program is set forth in the general notice that was published 
in the Federal Register (68 FR 55405) on September 25, 2003 (see 68 FR 
at 55406).

Pre-Arrival Processing System (PAPS)

    Comment: It was suggested that CBP utilize the pre-file system, as 
was being done along the Southern Border.
    CBP Response: The CBP contemplates mandating the implementation of 
the Pre-Arrival Processing System (PAPS) for all land border sites. The 
PAPS system, which uses the Automated Broker Interface (ABI), provides 
CBP with advance arrival information and includes carrier and importer 
information that is not included in the Southern Border Pre-file 
system. The PAPS system will basically also mesh with the advance truck 
manifest module when it is developed in ACE, while the Pre-file system 
would not.
    Comment: The CBP should not deny the entry of PAPS shipments for 
failure to meet the required advance notification time. This could 
occur where Commercial Vehicle Processing Centers (CVPC) were not 
present.
    CBP Response: In instances where CVPCs are not present, it is still 
the responsibility of the carrier or the importer/broker, as 
applicable, to ensure that the ABI transmitter receives the appropriate 
entry information via fax or by other means.
    Should cargo information not be received within the allotted time 
frame, CBP may pursue any of the following options: (1) Denying a 
permit to unlade; (2) Delaying the release of the cargo until security 
screening is complete; and/or (3) Assessing a penalty/liquidated 
damages.
    Comment: Three commenters sought the continued use of bar code 
labels until transponders were available.
    CBP Response: The CBP will continue to support the use of bar codes 
to identify PAPS shipments, as an acceptable method for processing the 
entry and release of cargo.
    Comment: Four commenters questioned what software would be called 
for and what cost and training investment would be needed. Four other 
commenters wanted the proposed rule to deal with alternative methods of 
advance electronic presentation of cargo for those parties without 
access to an approved data interchange.
    CBP Response: All current ABI transmitters in the truck mode have 
access to the ABI transmission module, which requires no new additional 
modifications or software changes. New individual filers may have to 
make some changes to their existing software, either through in-house 
programming or via their software vendors. However, the ABI 
capabilities to be utilized have been available within ABI for many 
years. It is the carrier's, shipper's or other trade partner's 
responsibility to ensure that the ABI transmitter receives the 
appropriate entry information via fax or by other means.
    A party seeking to file cargo information with CBP electronically, 
who does not have an approved data interchange, may employ either the 
services of an automated Customs broker, or a service provider or an 
ABI service bureau for this purpose (see Sec.  143.1(a) and (c), 
Customs Regulations; 19 CFR 143.1(a) and (c)).

Border Release Advanced Screening And Selectivity (BRASS)

    Comment: Two commenters desired that CBP expand system capabilities 
to include advance manifest procedures for BRASS and in-bond shipments 
and include instructions for a Monthly Manifest.
    CBP Response: The BRASS system, which is largely paper-based, will 
be employed, on an interim basis, for reporting data for incoming 
cargo. However, additional requirements may be implemented for BRASS to 
ensure that BRASS transactions achieve the basic objectives of cargo 
safety and security pursuant to section 343(a), as amended.
    As additional interim measures, CBP will continue to employ CAFES 
or ABI in-bond reporting systems where available. The CBP also intends 
to continue support for what is known as Monthly Manifest (which 
applies to automotive products), until the periodic summary reporting 
that Monthly Manifest supports is available electronically. The Monthly 
Manifest program, and instructions for this program, however, fall 
outside the scope of this document.

[[Page 68158]]

    Comment: Five commenters sought additional explanation concerning 
the use of BRASS as a cargo reporting system under proposed Sec.  
123.92.
    CBP Response: As a strictly interim, transitional procedure, CBP 
intends to allow the continuation of BRASS for trucks, but anticipates 
instituting some additional measures that would otherwise modify BRASS 
to enhance the security of BRASS transactions. To this end, CBP will 
take those measures deemed necessary to safeguard the integrity of the 
BRASS program, which could include program requirements such as FAST 
Driver registration and participation in the Customs-Trade Partnership 
Against Terrorism (C-TPAT). However, with the incorporation of a fully 
electronic version of BRASS planned in the new truck manifest module in 
ACE, CBP does not propose making any changes to the method in which the 
current paper-based BRASS operates.
    Comment: One commenter advocated that CBP restrict the use of BRASS 
to C-TPAT approved importers.
    CBP Response: The CBP will consider adding this type of security 
enhancement to the BRASS system. However, for the present, CBP will use 
C-TPAT membership in targeting incoming cargo for examination, 
including cargo that is subject to reporting through the BRASS system.

In-Bond Systems; Bar Codes

    Comment: Five commenters desired further guidance under the 
proposed rule concerning in-bond entries for immediate transportation 
to another port of entry, and the use of the 2-D bar code label under 
in-bond provisions.
    CBP Response: As explained in the proposed rule (68 FR at 43587), 
CBP will continue to employ CAFES or ABI in-bond reporting systems 
where available. The CAFES system handles in-bond shipments utilizing 
2-D bar codes that are printed on the Customs Form (CF) 7512 in-bond 
entry document. Because the use of bar codes is required for CAFES, 
BRASS, PAPS, and other functions, CBP will continue to support the use 
of such bar codes in accordance with these systems.

Required Data Elements

    Comment: Two commenters pointed out that proposed Sec.  
123.92(c)(2) allowed for dual party presentation of the required data, 
but did not indicate which data elements were required from the 
carrier, importer or broker.
    CBP Response: Where there is dual-party presentation of the data 
elements listed for incoming cargo in Sec.  123.92(d), the parties to 
the transaction should decide which data elements each will submit. It 
is, of course, presumed that if an importer or its broker elected to 
file advance cargo information with CBP, such data would typically 
encompass any required commodity and other related information that it 
possessed with respect to the cargo, as such information would likely 
be better known to the importer or its broker; and, for the same 
reason, the carrier would present the required data pertaining to the 
carriage of the cargo (see 68 FR at 43587). However, CBP will not parse 
the data elements in Sec.  123.92(d), and rigidly mandate their 
respective assignment between the carrier and importer or broker.
    Comment: In proposed Sec.  123.92(d)(2), one commenter desired the 
elimination of the Standard Carrier Alpha (SCAC) code, because carriers 
along the U.S.-Mexican border did not have SCAC codes.
    CBP Response: The CBP disagrees. The ability to identify the 
carrier is critical to target and assess the risk posed by shipments 
crossing the border. In this regard, the SCAC code is a unique four-
letter code used to identify transportation companies; this unique 
carrier identifier supports the electronic data interchange for all 
motor carriers. A carrier may obtain a SCAC code by contacting the 
National Motor Freight Traffic Association, Inc., 2200 Mill Rd., 
Alexandria, VA 22314-4654.
    Comment: One commenter mentioned that the proposed rule did not 
deal with a possible variation between the scheduled date of arrival 
and the actual date of arrival, and whether a difference in these times 
would result in a breach of the importer's entry bond.
    CBP Response: In Sec.  123.92(d)(6), the specific information 
required is the scheduled date and time of the carrier's arrival at the 
first port of entry in the United States. However, should there be a 
delay in the carrier's arrival following its data transmission, this 
may raise targeting concerns and prompt further inquiry/inspection. In 
any event, notwithstanding the scheduled arrival of the truck, the 
presentation of the required cargo data is related to the carrier's 
actual time of arrival in Sec.  123.92(a).
    Comment: Four commenters wanted the data elements for inbound truck 
cargo aligned with those data elements that would be required under the 
Automated Commercial Environment (ACE) once it is developed.
    CBP Response: As the ACE is under development and its precise 
features have not as yet been determined, this comment falls outside 
the scope of this document.

Exemptions

    Comment: The proposed rule should exempt informal entries from 
advance data reporting.
    CBP Response: Section 123.92(b)(2) does exempt informal entries 
from the advance cargo information notification provisions.
    Comment: All radioactive materials entering the United States 
should be subject to prior notification, even if the shipment only 
transited a contiguous foreign country while en route from one port to 
another in the United States.
    CBP Response: Upon arrival in the United States, all shipments, 
including those merely in-transit through a contiguous foreign country, 
will be scanned for radiation in primary truck lanes, and in-transit 
manifests, if applicable, must be tendered at that time.

Examination/Inspection; Penalties/Liquidated Damages; Refusal of 
Admission

    Comment: One commenter suggested processing trucks away from the 
border, prior to reaching the bridge, especially for Detroit and 
Buffalo.
    CBP Response: The concept of examining and processing trucks prior 
to their entry into the United States is currently being explored with 
Canada. It is a complex and sensitive issue involving matters of 
national sovereignty and the authority to enforce laws outside the 
United States.
    Comment: One commenter inquired as to whether it would be 
acceptable for a carrier to arrive physically and wait in a holding 
area while the driver/carrier coordinated with the broker to ensure 
that proper advance information had been provided.
    CBP Response: Because secondary examination areas are limited in 
space, CBP will not allow the shipment to be staged at a designated 
waiting area in the port of arrival either while the entry 
documentation is being processed or while the carrier consults with a 
broker to determine if the information has been presented in the manner 
prescribed.
    Comment: Thirteen commenters expressed alarm over the prospect that 
the admission of cargo to the United States could be refused if the 
advance notice was not received.
    CBP Response: Once implemented at a port, the advance cargo 
reporting provisions would be obligatory for all required cargo. For 
any inward carrier for which advance electronic commodity and 
transportation information was not presented to CBP, as otherwise 
required in the regulations, the transporting carrier, depending on

[[Page 68159]]

the specific circumstances involved, could be refused permission to 
unlade until all security screening and necessary examination was 
initiated and concluded, in addition to being subject to applicable 
statutory penalties. In the alternative, the carrier could be refused 
admission to the United States depending, once again, upon the 
particular circumstances involved.

Type of Carrier; Carriage of Instruments of International Traffic

    Comment: Two commenters sought the creation of procedures for the 
movement of instruments of international traffic, including the 
movement of empty containers aboard trucks.
    CBP Response: With the exception of FAST, CBP will not require any 
advance notification if the shipment consists solely of empty articles 
(pallets, tanks, cores, containers, and the like) that have been 
designated as instruments of international traffic (IITs). However, if 
the IITs are commingled with other commercial cargo, CBP will, of 
course, require the requisite arrival notification for such commercial 
cargo via the authorized CBP-approved electronic data interchange 
system; and any empty IITs carried aboard the conveyance must be 
identified as such and listed on the carrier's paper manifest.
    Comment: Three commenters questioned whether there was a 
distinction between an inward truck carrier as opposed to a drayage 
carrier. Also, they wanted to know whether there would be any 
differences in treatment between carriers on the Northern and Southern 
Borders.
    CBP Response: The CBP defines a drayage carrier as one that only 
moves cargo locally (such as a cartman who only moves cargo within the 
limits of a port), as opposed to an incoming truck carrier which is 
understood to be engaged in the international movement of cargo coming 
from Canada or Mexico. Also, as previously assured, until the 
development of the truck manifest module in ACE, CBP will employ 
existing data systems on both the Northern and Southern Borders to 
receive and evaluate cargo information for incoming truck shipments.

Cargo Departing From the United States; All Modes

Time Frames for Transmitting Required Data for Outbound Cargo

    Comment: One commenter wanted to know whether there could be a pre-
departure report for cargo that did not have an export license.
    CBP Response: There may be pre-departure reporting for shipments 
without an export license. General export reporting requirements may be 
found in the Bureau of Census Regulations (15 CFR 30.1-30.2).
    Comment: The proposed twenty-four hour advance notification for 
outgoing vessel cargo in proposed Sec.  192.14(b)(1)(i) would 
considerably add to transit time, with adverse impact especially upon 
perishable goods.
    CBP Response: Since the responsibility rests with the USPPI, and 
not the ocean carrier, to provide the advance data to CBP, there should 
be no undue burden placed upon the carrier. The Option 4 post-departure 
filing program will remain and will be available to exporters of 
perishables that meet requirements for volume, low-risk commodity, and 
compliance with export regulations.
    Comment: The phrase, ``no later than 24 hours prior to the 
departure of the vessel'', in proposed Sec.  192.14(b)(1)(i), should be 
further explained.
    CBP Response: For greater clarity, this phrase in Sec.  
192.14(b)(1)(i) is changed to read: ``no later than 24 hours prior to 
departure from the U.S. port where the vessel cargo is to be laden''.
    Comment: In proposed Sec.  192.14(b)(1)(ii), one commenter 
suggested a longer time frame for submitting air cargo data, while two 
commenters wanted the proposed 2-hour advance time frame reduced.
    CBP Response: The CBP finds that the 2-hour advance time frame in 
Sec.  192.14(b)(1)(ii) is necessary for CBP targeting purposes, and 
should not unduly disrupt the flow of outbound air commerce. The CBP 
will continue to work with the express consignment industry to explore 
interim use of the External Transaction Number (XTN) by those companies 
that are able to provide CBP access to existing automated export 
manifest systems with targeting capabilities.
    However, for further clarification, Sec.  192.14(b)(1)(ii) is 
amended in this final rule to state that 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 from the last U.S. port.
    Comment: Two commenters recommended that information be submitted 
prior to the export shipment being delivered to the outgoing carrier, 
but no less that 2 hours prior to departure of the flight for foreign. 
The concern was expressed that an air carrier would be penalized for 
shipments which were tendered for movement before the electronic 
information filing through the Automated Export System (AES) had been 
completed.
    CBP Response: The USPPI or its authorized agent must have the 
Internal Transaction Number (ITN) available to provide to the carrier 
when the cargo is tendered for export. The ITN verifies that the cargo 
data filing has already been completed. Carriers are only responsible 
for collecting the proof of electronic filing (ITN) for annotation on 
the carrier's outward manifest, waybill, or other export documentation 
covering the cargo to be shipped.
    Comment: Three commenters proposed that data be submitted for 
outbound Shippers Export Declaration (SED) shipments at the time of 
departure for air cargo and upon arrival at the border for truck cargo.
    CBP Response: This would not be permissible. The CBP simply cannot 
perform its necessary targeting and selectivity responsibilities if the 
information is received at the time of departure or arrival at the 
border.
    Comment: It was stated that the 4-hour notification for rail as 
initially proposed by CBP would directly impact operations and result 
in delayed shipments. On this ground, it was recommended that the time 
frame for reporting outbound rail cargo be consistent with the 2-hour 
pre-arrival time frame for incoming rail cargo.
    Also, it was stated that U.S. Principal Parties in Interest 
(USPPIs) who would be obligated to transmit the required cargo 
information at least 4 hours prior to the engine being attached to the 
train generally had little knowledge of rail operations. Therefore, it 
was urged that a mechanism should be put in place whereby a problem 
container could be held at a Canadian port until reporting issues were 
resolved.
    CBP Response: The CBP will adopt the recommendation for outbound 
rail that was put forth by COAC (the Treasury Advisory Committee on the 
Commercial Operations of the U.S. Customs Service). Thus, export cargo 
information must be transmitted no later than two hours prior to the 
arrival of the train at the border, thereby creating symmetry with the 
advance time frame for inbound rail cargo coming from Canada or Mexico.
    The CBP observes that this two-hour time frame is established as a 
minimum guideline. All parties involved in export transactions are 
encouraged to file export cargo information as far in advance as is 
practicable to reduce the need for CBP to delay the export of cargo 
because of the need for screening, examinations, and the resolution of 
incomplete or incorrect records. It

[[Page 68160]]

should be recognized that CBP will continue to exercise its authority 
to remove a container from an outbound train at the time of border 
crossing. Further, in the event that a shipment crosses into Canada 
without proper reporting and is determined to be high-risk after CBP 
has utilized all targeting tools and information at its disposal, CBP 
will work with the carrier to have the container redelivered to the 
port of export.

Exemptions From Pre-Departure Reporting

    Comment: One commenter sought information about the export 
exemption list; and whether there was any reason to standardize the 
format of the citation which the USPPI furnished to the outbound 
carrier. Exemptions for low value shipments and shipments to Canada 
should remain the same.
    CBP Response: The Bureau of Census already publishes export 
reporting exemptions in its regulations (see 15 CFR 30.50-30.58). 
Exemptions for low value shipments and shipments to Canada do remain 
the same. Also, the citation format is already standardized and 
available to the trade in Census Foreign Trade Statistics Regulations 
(FTSR) Letter 168, Amendment 2, a copy of which may be obtained from 
the Bureau of Census. Additionally, it is understood that information 
required to be submitted under Bureau of Census regulations for exports 
made through the U.S. Postal Service (USPS) will not be subject to 
being reported within the advance filing time frames of Sec.  192.14(b) 
in this final rule.
    Comment: Two commenters inquired about the reporting status of 
shipments to U.S. territories and Puerto Rico.
    CBP Response: The reporting requirements for shipments to U.S. 
territories and to Puerto Rico also remain unchanged. Such requirements 
are outlined in the Bureau of Census Regulations (see 15 CFR 30.1).

Internal Transaction Number (ITN)/External Transaction Number (XTN)

    Comment: One commenter--The U.S. Department of Defense--wanted to 
be excepted from the requirement to obtain an Internal Transaction 
Number (ITN) for export shipments, preferring instead to continue using 
the External Transaction Number for this purpose. This was said to be 
necessary to achieve an interface between DoD shipper systems and the 
AES.
    CBP Response: The CBP will review the ITN requirement for non-
licensed DoD shipments. However, it is emphasized that for those DoD 
shipments which are subject to the Department of State's International 
Traffic in Arms Regulations (ITAR), the requirement of an ITN, to be 
reported within the advance time frames stipulated by State, will be 
mandatory. Proposed Sec.  192.14(b)(2) is amended in this final rule to 
add a specific cross reference to State's ITAR Regulations (22 CFR 
parts 120-130) that contain the advance notification provisions for 
exports of items on the U.S. Munitions List.
    Comment: Specifications of the format and electronic transmission 
requirements for the ITN should be provided, especially for airlines.
    CBP Response: Many carriers already annotate the XTN/ITN, Option 4 
statement, or other exemption on the manifest. Carriers should refer to 
FTSR Letter 168, Amendment 2, for the proper formats. This FTSR Letter 
may be obtained from the Bureau of Census.
    Comment: Since carriers could not accept cargo from the shipper/
exporter until an electronic filing number or exemption code had been 
annotated on the export documentation at the time of freight 
acceptance, it would then follow that freight acceptance times would 
have to be restricted to 2 hours out from the flight.
    CBP Response: Carriers should currently not be accepting cargo 
without a paper SED, XTN/ITN, Option 4 or reporting exemption statement 
(15 CFR 30.50-30.58). Hence, the carrier's responsibility under these 
regulations should not perceptibly change from the proper procedure it 
should be following at present. It is actually the USPPI or its agent 
who will have to plan ahead and accomplish transmission and acceptance 
of the data earlier, so that the ITN will be available when the cargo 
is tendered to the exporting carrier.
    Comment: The ITN requirement should be revised to allow export 
shipments to proceed once the USPPI/Agent has received the ITN/AES 
confirmation message; and the same policy should apply for export 
shipments that qualified for exemptions to the pre-departure electronic 
filing requirements.
    CBP Response: If the USPPI/Agent is already waiting for the ITN 
message to be returned, the step of noting it on the export documents 
would be a fairly minor exercise. Also, export exemptions follow a 
standard format and are listed in 15 CFR 30.50-30.58 and FTSR Letter 
168, Amendment 2, supra. The ITN is provided via a return message from 
AES. Carriers are required to obtain, and, therefore, USPPIs or their 
agents must provide to the carrier, an AES proof of filing citation, 
low-risk exporter citation (currently the Option 4 citation), or an 
exemption statement under current Census Bureau regulations. This 
procedure will remain the same under section 343(a) of the Trade Act of 
2002, as amended.
    Comment: It was not at all clear how a driver, who was out picking 
up freight on various shippers' loading docks, would have access to the 
ITN.
    CBP Response: The USPPI/Agent should have the ITN already annotated 
on the export documentation that would be presented to the driver. All 
the driver would have to do is simply verify that the shipping 
documents include an ITN, Option 4, or other exemption statement.
    Comment: Two commenters were of the opinion that the performance of 
AES in the past in timely returning ITN confirmation numbers had led to 
the trade's preference for the XTN numbers.
    CBP Response: The AES development team is required to set 
performance standards for system performance. One of the 2003 
performance measures requires system ``through-put'' (the time it takes 
for data to reach the AES, be processed and put back out for return to 
the filer) to be routinely less than 1 minute.
    Comment: One commenter asked whether there would be any merit in 
adding the time that the ITN was obtained by the USPPI, so that the 
carrier would know when the 24 hours had expired (in the case of 
outbound vessel cargo).
    CBP Response: The current ITN format is sufficient. It is the 
responsibility of the USPPI or its agent to make sure the advance 
filing window is met.
    Comment: The AESDirect system could only return the ITN via email, 
which would not be timely enough for express business. Three commenters 
believed that since the AES redesign was not scheduled for completion 
until mid-2004, and AESDirect sent the ITN via email, the ITN should 
not be required. One commenter requested that the XTN be used instead.
    CBP Response: The CBP wants to especially emphasize that the 
annotation of the ITN number on any export documentation will not be 
mandated or enforced until the implementation of the redesign of the 
AES Commodity Module, which, as noted, is not anticipated to be 
completed until mid-2004. The redesign of the AES Commodity Module will 
make the ITN stable when records are updated.
    The CBP, after consulting with the Bureau of Census, has informally 
estimated that its AESDirect system returns the ITN via email within 5-
15 minutes. While this response period

[[Page 68161]]

may have some impact on business practices, it should prove to be a 
return time that is, on balance, reasonably prompt and commercially 
acceptable. The preference for the XTN number is understandable, but 
since the XTN is generated by the USPPI or its agent and may be 
annotated on the export documentation without the shipment data having 
been transmitted to AES, this number is, and has repeatedly been, 
subject to abuse, which will make its continued use, as a general 
proposition, wholly unacceptable.
    Comment: Under the proposed regulations, the exporter could present 
either the ITN number, the Option 4 filing number, or an exemption 
statement. It was asked whether this would also comply with the statute 
concerning the documentation of outbound waterborne cargo (19 U.S.C. 
1431a). The CBP should clarify that under Option 4 filing and for 
exporters that were otherwise exempt from pre-departure filing, there 
would also be no requirement to provide separate shipping documents to 
the vessel carrier under 19 U.S.C. 1431a.
    CBP Response: Issues relating to section 343(b) of the Trade Act of 
2002, as amended (codified at 19 U.S.C.1431a), fall outside the scope 
of this rulemaking. As made clear in the proposed rule (68 FR at 
43592), section 343(b), requiring proper documentation for all cargo to 
be exported by vessel, will be the subject of a separate publication in 
the Federal Register. To the extent legally and operationally 
permissible, however, the administrative implementation of the 
requirements of section 343(b) will be synchronized and dovetailed with 
these regulations under section 343(a).
    Comment: One commenter asked how the carrier would know whether the 
AES filer was the USPPI or its agent.
    CBP Response: All the carriers need to do is ensure that the proper 
AES proof of filing citation (including the ITN), the low-risk exporter 
citation, or an exemption statement is on the shipping documents that 
they receive with the cargo. The carrier is not required to check the 
validity of the ITN or the identity of the party presenting it.

Option 4 Filing (Post Departure)

    Comment: The CBP and Census should grandfather existing Option 4 
holders into the ``new'' Option 4 to be jointly constructed by the two 
agencies.
    CBP Response: The CBP cannot guarantee that current Option 4 USPPIs 
will retain the privilege under program requirements that have yet to 
be finalized. The current Option 4 was conceived prior to September 11, 
2001, and it is the goal of the Bureau of Census and CBP to ensure 
cargo safety and seaport security while at the same time fostering the 
continued smooth flow of commerce. The new Option 4 will emphasize 
volume, repetitive low-risk commodities and compliance.
    Comment: The CBP should take into account those exporters who 
repeatedly shipped the same low-risk commodities to related parties.
    CBP Response: The CBP does take such exporters into consideration. 
Current Option 4 is intended for repetitive exports of low-risk 
commodities by compliant USPPIs. The CBP will explore with the Bureau 
of Census the possibility of using related parties as a requirement or 
factor to determine Option 4 eligibility.
    Comment: Two commenters sought assurance that any revisions to 
Option 4 filing would not reduce the ability for legitimate, low-risk 
exporters (such as exporters of agricultural commodities) to qualify 
for such filing if they were otherwise in compliance, even though they 
did not meet minimum export volume requirements. Another commenter 
wanted the program expanded to additional companies that faced new lead 
time requirements.
    CBP Response: The CBP and the Bureau of Census are in the early 
phase of redesigning the program. While export volume will be a 
significant factor, there may be an appeals procedure wherein a 
compliant low-volume exporter can demonstrate a legitimate need for 
Option 4 filing under the redesigned system.
    Comment: Two commenters strongly urged the continuation of Option 4 
filing for C-TPAT (The Customs-Trade Partnership Against Terrorism) 
members with low-risk commodity exports. Also, it was thought that such 
exemptions (as Option 4) and programs for exports should match those 
provided for imports.
    CBP Response: Current Option 4 filing is available to compliant 
exporters of low-risk commodities, regardless of C-TPAT status. The CBP 
does not anticipate that this will change.

Automated Export System (AES)/Technical Issues

    Comment: Under the planned redesign of AES to be developed by mid-
2004, air carriers would be able to send transportation data directly 
to CBP. Two commenters sought guidance on how the CBP electronic data 
interchange would be interfaced with the airlines' systems.
    CBP Response: The system enhancement projected for completion in 
mid-2004 is the AES Commodity Redesign which will improve the ability 
of the AES to process automated Shipper's Export Declaration (SED) 
information. These enhancements will not enable AES to accept 
electronic manifest information directly from air, rail, or truck 
carriers, nor will the new regulations require the exporting carriers 
to submit such manifest data via the AES. The vessel manifest module in 
AES will remain optional.
    Comment: Three commenters questioned how CBP would notify the 
carrier of high-risk cargo that was targeted for inspection/
examination. It was recommended that a predetermined time should be set 
following which a carrier could confidently assume that no further hold 
status would be issued for the cargo.
    CBP Response: The AES commodity module is not capable of sending 
electronic hold messages to carriers, so the current methods of 
communication by fax and/or phone will need to continue. The CBP cannot 
set a time frame after which a carrier could assume no further holds. 
Given the current design and functionality of the system, commodity 
records are transmitted to AES on a transaction-by-transaction basis 
rather than as part of a manifest, where the end of the transmission is 
marked. Thus, not knowing which AES commodity transaction is the last 
for a particular conveyance makes it impossible for CBP to provide an 
absolute, finite time after which no further holds will occur.
    Comment: The proposed outbound cargo reporting provisions should be 
changed so that motor carriers would not have to transmit specific data 
elements to AES.
    CBP Response: Carriers are not responsible for transmitting the 
information required by section 343(a) of the Trade Act of 2002, as 
amended. Section 192.14(c)(4), as proposed and as appearing in this 
final rule, details carrier responsibility which, as already explained, 
is largely limited to collecting AES proof of filing citations (ITN), 
Option 4 exemptions, and regular reporting exemptions (see 15 CFR 
30.50-30.58). Likewise, the transmission of all automated SED commodity 
data (which already includes data relating to the transportation of the 
cargo) by the USPPI/Agent is covered in Sec.  192.14(c)(1) and (c)(2) 
in this final rule.
    Comment: Two commenters were of the view that the data elements for 
the estimated date of exportation and the port of exportation (proposed 
Sec.  192.14(c)(2)(v) and (c)(2)(vi)) would cause potential difficulty 
for the motor

[[Page 68162]]

industry which did not operate on strict routes and schedules.
    CBP Response: The 6 transportation data elements in Sec.  
192.14(c)(2), including the estimated date of exportation and the port 
of exportation, are data elements that are at present mandatory for AES 
participants under current 15 CFR 30.63. The trade should already be 
reporting them. To be consistent with 15 CFR 30.63, the term, ``mode of 
transportation'', where appearing in proposed Sec.  192.14(c)(2)(i), is 
changed in this final rule to ``method of transportation.''
    Comment: The USPPI should provide only the intended port of 
exportation because the actual port of exportation might not be known 
to the USPPI.
    CBP Response: The USPPI or its authorized agent must report the 
port of exportation as known when the USPPI or its agent tenders the 
cargo to the outbound carrier. Should the carrier export the cargo from 
a different port, and the carrier so informs the USPPI or agent, the 
port of exportation must be corrected by the filer in AES. Proposed 
Sec.  192.14(c)(2)(vi) is revised in this final rule to clarify this 
issue.
    Comment: One commenter wanted a more specific estimate of the 
expected completion and implementation date for the AES commodity 
module and whether it was on target for completion.
    CBP Response: The target date for the redesign of the AES commodity 
module remains mid-2004.
    Comment: The automated systems in place should be able to 
accommodate the required manifest reporting sufficiently for legitimate 
trade to continue to flow smoothly. Also, there should be a generous 
and realistic grace period.
    CBP Response: The CBP supports the use of AES systems that are 
already heavily in use and widely available to USPPIs; and with 
Internet connections, new users can be brought into the system fairly 
easily and inexpensively. Moreover, outbound implementation of these 
regulations is contingent upon the completion of the AES Commodity 
Redesign and implementation by the Bureau of Census of mandatory AES 
for all export shipments which currently require a Shipper's Export 
Declaration (SED) (see Sec.  192.14(e) in this final rule).

Comments on Economic Analysis

General

    Comment: Several commenters stated that the proposed rule is a 
significant regulatory action. It was contended that CBP did not 
completely appreciate the magnitude of the impact of the proposed 
requirements. Importers, exporters, brokers, carriers, forwarders, 
consolidators and many others will be required to modify their business 
practices. Before implementation and enforcement begins, it is strongly 
believed that further economic impact analysis is warranted.
    Several commenters stated that the preliminary economic analysis 
understated the true impact on the affected enterprises. In addition, 
some questioned that the preliminary analysis conclusion only addressed 
the impact on small entities, making it insufficient to make a proper 
determination of impact on the U.S. economy as a whole. Others 
expressed their belief that the real effect of the proposed rule would 
be far greater than the $100 million threshold, making the proposal a 
significant regulatory action.
    It was said to be hard to believe that the transportation and trade 
industry would not have a similar cost increase [to the $4-$6 USPS 
estimate]. This increased cost exceeded the $100 million impact 
threshold. Already industry was seeing increases in transportation and 
operational costs associated with new security measures. The economic 
analysis presented seriously underestimated the true cost to industry.
    It was believed that CBP failed to recognize the majority of other 
carriers [non-express], mostly non AMS, and other smaller carriers 
where the cost impact would be greater; these carriers would incur 
significant costs to redesign their systems. Moreover, the costs to 
consolidators, indirect air carriers, shippers and brokers were not 
factored in at all.
    It was also asserted that the impact study had been too limited to 
support the conclusion that the cost was acceptable.
    Finally, it was contended that the proposed rule stated that the 
effect of the rule on the economy would be slight to negligible. Yet, 
the study did not define negligible. The proposed rules would increase 
the cost of transportation for all goods imported into the U.S. other 
than by USPS. A significant portion, and perhaps all of these increased 
costs would be reflected in the increased costs of imported goods.
    CBP Response: After further analysis of the proposed rule, CBP 
agrees that the rule is a significant regulatory action under Executive 
Order 12866, and that the cost of the rule will exceed $100 million. 
Accordingly, CBP has conducted a regulatory impact analysis (RIA) of 
the rule, which is available at the following Web site, http://www.cbp.gov.
    The CBP's economic analysis for the final rule has estimated the 
cost to all affected sectors unless it was determined that the costs 
would be insignificant or that the costs would be passed to a different 
sector (e.g., from brokers to importers).

Air

    Comment: New automation systems and interfaces should be developed 
to gather the additional data elements required, at considerable costs. 
Additional labor costs will be incurred for systems administration, 
data entry, and subsequent carrier activities as a result of any 
targeted shipments.
    It is estimated that the express industry will incur development 
and implementation costs in excess of $25 million. Additional labor 
costs for delivery of the data and subsequent required actions for 
targeted shipments for the express industry will exceed $15 million 
annually.
    There are issues of additional handling for late shipments that 
must be held for the next day, lost revenues for transit shipments that 
will no longer be shipped on U.S. carriers, additional inventory to be 
carried by importers as defense against supply outages or factory 
shutdowns; labor reductions, and similar related actions.
    CBP Response: The CBP's economic analysis for the final rule has 
estimated the cost of service degradation caused by delays using a 
logistics cost calculator for a range of delay times. The analysis 
always includes estimates for additional programming. The CBP has no 
basis on which to estimate the percentage of cargo (by weight or value) 
currently being transshipped through the U.S. that might be diverted 
through non-U.S. airports. The CBP recognizes that targeted shipments 
may require additional steps for air carriers, but has no basis for 
estimating the number of shipments that will be targeted or the degree 
to which the targeting will result in additional costs. For inbound 
shipments, the targeted shipment will be examined on arrival, which 
should impose a limited burden on the air carrier.
    Comment: Many carriers are evaluating options for AAMS. The costs 
indicated by CBP for transmission fees are low compared to average 
costs by AAMS vendors. In addition, the cost of purchasing software is 
above any amounts identified by CBP.
    CBP Response: The costs used in the final economic analysis are 
based on estimates provided by vendors. These costs vary by vendor and 
by the complexity of the software and its integration into the user's 
system. The

[[Page 68163]]

analysis assumes that larger carriers will develop their own software 
integration packages and that existing users of AMS will modify their 
internal systems to provide the more detailed cargo information. Only 
carriers that enter fewer than 500 air bills per month incur minimum 
costs.
    Comment: Labor costs do not appear to include employee benefits, 
which would increase the labor rate by 30%.
    CBP Response: Labor rates used in the final economic analysis are 
loaded with fringe benefits and overhead.
    Comment: The ``wheels up'' requirement will result in a significant 
increase in staffing to meet deadlines. Air carriers will see a shift 
from air to truck. The rule will result in a revenue loss of premium 
services.
    CBP Response: The final economic analysis estimates the costs of 
delays for a range of times. These costs include personnel costs. 
Although it is possible that some short-haul shipments will shift to 
truck, most shipments from Canada and northern Mexico destined for 
locations beyond the immediate border will probably still be shipped by 
air because of the considerable time-savings. Shipments from other 
parts of Latin America north of the equator and the Caribbean are 
likely to continue being sent by air.
    Comment: Significant costs will be associated with changes in 
operating schedules. A high percentage of express volume is provided 
late in the day, close to cut-off time. New requirements which force an 
earlier cut-off time would be a binding constraint.
    CBP Response: The final economic analysis estimates costs for both 
delays and service degradation resulting from the new requirements.
    Comment: Further skewing the results is the fact that no costs are 
included for training personnel, restructuring operational systems to 
allow time to receive and submit information, or handling rejected 
shipments. The proposed scheme would directly negatively impact the key 
elements of the air cargo business--speed and reliability--and would 
severely jeopardize the needs of the global shipping community. These 
costs are not captured in the study.
    CBP Response: The final economic analysis estimates costs for both 
delays and service degradation. Rule familiarization costs were 
estimated based on U.S. wage rates for all modes, but represent a very 
small part of total costs.
    Comment: Business will be lost in the transit sector. Shipments 
transiting the U.S. would be diverted to competitors that do not 
transit the U.S. The costs of compliance will have an asymmetric 
impact, placing us at a competitive disadvantage.
    CBP Response: The CBP has no basis on which to estimate the 
percentage of cargo (by weight or value) currently being transshipped 
through the U.S. that might be diverted through non-U.S. airports.
    Comment: ``Just in time'' (JIT) shippers will also be affected by 
an earlier cut-off time. Earlier shipping or delayed arrival of 
shipments create higher costs for seller and buyer. Shippers close to 
the border may switch shipping modes; warehousing costs may increase; 
inventory and associated carrying costs will rise.
    The statement in the proposed rule that JIT considerations are 
eliminated is simply not true. The CBP has failed to acknowledge the 
carrier requirements for handling and manifest preparation. Current 
post-departure manifesting allows manifesting on a different later 
schedule than sorting and loading. To complete a manifest at wheels up, 
the carrier will be forced to cut off receipt of shipments several 
hours earlier, especially for shorter flights, delaying shipments by a 
day or diverting them to another mode.
    Removing even one or two hours available shipping time could remove 
20-30% of volume for a specific market. Air carriers (express and 
conventional) carry time-sensitive parts and supplies every day. The 
CBP's claim of no impact to JIT fails to acknowledge operational 
realities of transportation handling requirements, at least for air 
shipments.
    The proposal will require earlier deadlines for shippers. Shippers 
of perishable commodities such as flowers, produce, and fish will 
increase their losses from damaged and spoiled product. The cost-
benefit analysis overlooks this fact.
    CBP Response: The CBP's economic analysis for the final rule has 
estimated the cost of delays and service degradation caused by delays 
using a logistics cost calculator for a range of delay times and cargo 
mix (perishables, non perishables).
    Comment: There is an additional cost for educating customers about 
the requirements of the rule.
    CBP Response: The cost of educating shippers is not possible to 
estimate. The majority of shipments by value or weight are likely from 
companies that ship on a regular basis. They will incur one-time costs 
to understand the new requirements. There will always be new shippers 
entering the system who will need to learn what is needed.
    Comment: The estimate of 2.41 million air waybills per month for 
express carriers is grossly understated. Some carriers use summary 
manifesting, under which multiple consignments of letters or documents 
are manifested as one record. One entry may cover hundreds of 
individual consignments. It is important that each waybill be counted, 
rather than entries, as the individual shipment record will require 
screening. The CBP is urged to review these numbers, and validate their 
accuracy. Understatement will severely affect the calculated capacity 
and system performance of the Automated Targeting System (ATS).
    The number of express air bills counted may only be those requiring 
formal entry, which represent about 15 to 25 percent of the total 
shipment count. The real annual number of express bills is closer to 25 
million rather than 3.27 million. The economic analysis for USPS 
resulted in a cost of $4-$6 per package.
    The number of other air cargo waybills were likely master air 
bills; no accounting was made for house bills. One may reasonably 
increase master bills by a factor of 10 for a total air bill count, 
closer to 8 million instead of 800,000. That leaves about 7 million new 
transactions to be entered into the automated system for regular air 
cargo shipments. For the express group, their volume of air bills may 
be a very narrow slice of what will now be required.
    The question is presented as to how CBP reconciles its claim that 
there is virtually no cost to carriers when CBP estimates an annual 
cost to USPS of at least $120 million. While automation does exist in 
the carrier community, the staggering increase in the number of 
transactions that will require reporting has a significant cost. Most 
of the forwarder and airline expense associated with air AMS will be 
new expense. Using the USPS estimate, the required reporting of 
potentially 32 million transactions in AMS meets the $100 million 
threshold.
    The assumption that USPS will not absorb these costs or pass them 
directly to users implies that USPS may have a competitively advantaged 
position.
    CBP Response: The final economic analysis includes cost estimates 
for entering new information into Air AMS using a range of scenarios to 
reflect variations in the number of additional bills that will be 
entered. These cost estimates may be overstated because they are based 
on U.S. and Canadian wages; many shipments will be arriving from 
countries where wages are much lower.
    Comment: The assumption that all large express carriers have AAMS 
capability at present and need only flip

[[Page 68164]]

a switch to immediately begin transmitting the required data is 
patently incorrect and ignores a multitude of operational realities of 
physical shipment handling, sorting, loading, weight and balance 
calculations, and coordinating with manifesting. Manifest preparation 
entails multiple automated systems that are not currently interfaced 
with AAMS. The simple hard fact is that large express carriers are 
heavily impacted through significant operational changes, earlier cut-
off times, and development of new software.
    CBP Response: The final economic analysis estimates costs for 
operational changes and earlier cut-off times. Because the two major 
express carriers do not use AMS for express consignments, but allow CBP 
to access their proprietary systems for data, CBP is uncertain that 
they will incur new costs for automated systems. Nonetheless, the final 
economic analysis includes costs for 4,000 hours of programming per AMS 
carrier to cover any new interfaces that are needed.
    Comment: Numerous carriers arriving in the U.S. have limited or no 
electronic messaging capabilities in their origin locations. It would 
be beneficial for CBP to reevaluate the economic impact created by 
implementing the proposed rule. If carriers cannot currently comply or 
will require significant investment in systems and manpower to comply 
in the time allotted, JIT shipping will be in jeopardy.
    CBP Response: The final economic analysis estimates costs for 
acquiring or developing the software needed to file electronically.
    Comment: Not all affected parties were considered during the 
analysis. Foreign flag carriers and shippers were not part of the 
analysis. This rule has worldwide implications. A similar regulation 
has been proposed in Canada and is likely to appear in other countries. 
The rule will significantly impact the global trade community.
    CBP Response: Executive Order 12866 requires a focus on the U.S. 
economy, thus enumerating all possible impacts to global trade may be 
beyond the scope of the analysis. To the extent that foreign entities, 
however, participate in the U.S. economy and impacts to foreign 
entities affect the U.S. economy, the Executive Order does apply to 
foreign entities. To that end, the accompanying regulatory impact 
analysis to this final rule does estimate the impact on foreign 
entities, although in many cases it is difficult to separate the impact 
on foreign entities from the overall estimate. On the other hand, the 
Regulatory Flexibility Act does not apply to small foreign entities.
    Comment: Forwarder and air carriers are obliged to have a huge 
investment to develop or modify their Electronic Data Interchange (EDI) 
system; they will also have a large operating cost day to day. They are 
afraid they will not be able to bear this huge cost.
    CBP Response: The RIA estimates costs for implementing AMS. These 
costs are likely to vary considerably based on the level of imports 
being handled by a carrier or forwarder. The CBP notes that forwarders 
are not required to file information; they have the option to provide 
the information to the carrier.
    Comment: The requirement for hard copy filing in the event of EDI 
failure is time-consuming and very costly.
    CBP Response: The CBP assumes that carriers can easily e-mail or 
fax a hard copy to their agents at the destination airport should this 
be necessary.

Truck

    Comment: One commenter stated that the economic analysis is 
inadequate and unscientific. They assert that the proposed rule is a 
significant regulatory action. They assert that the combined annual 
impact of the air and truck rules on their company would be $695,000.
    CBP Response: These comments are very general. Without knowing how 
the impact on their company was estimated, CBP cannot comment on the 
estimate. The CBP agrees that the rule is a significant action.
    Comment: Several commenters stated that the ``economic 
assumptions'' used by CBP did not include additional labor and 
equipment needed to do the ``same quantity of work in a shorter time.''
    CBP Response: These comments are not specific enough to permit 
direct response. The commenters do not offer any support for the 
assertion that time available to do required work has been reduced.
    Comment: Some commenters refer to inaccuracies in the economic 
analysis, but do not specify them. They recommend that CBP conduct a 
comprehensive economic analysis.
    CBP Response: The CBP has completed an economic analysis of the 
rule.
    Comment: One commenter asserts that the rule will have a 
significant impact because many small truckers do not have the 
technology to use PAPS. The commenter also states that fewer than ten 
percent of Mexican trucking firms have automated systems in place.
    CBP Response: The CBP agrees that the rule will have a significant 
economic impact. In order to use Selectivity PAPS, a trucking firm will 
have to obtain a SCAC number and bar-code strips. These costs are 
included in the RIA prepared by CBP. While many Mexican carriers may 
not have automated systems, U.S. customs brokers now make electronic 
pre-filings based on information supplied by Mexican brokers. This is 
true for all shipments except those coming through under BRASS. The RIA 
includes the cost to U.S. brokers for preparing the pre-entry filing 
for shipments now using BRASS.
    Comment: The CBP is planning, in due course, full implementation of 
ACE. Therefore, the costs of adapting to ACE should be treated as costs 
of the rule.
    CBP Response: The CBP's plans for implementation of ACE are not 
driven by the Trade Act and would be implemented whether or not the 
rule is implemented. Therefore, the costs of adaptation to ACE may not 
be attributed properly to the rule. Costs of adapting to Selectivity 
PAPS are included in the RIA.

Vessel

    Comment: It is incumbent on CBP to provide a more meaningful and 
realistic analysis of the impact of the rules on small businesses 
before it promulgates a final rule and commences mandatory 
implementation and enforcement.
    CBP Response: The Regulatory Flexibility Act, which establishes the 
``significant impact to a substantial number of small entities'' test, 
applies to small U.S. businesses. The CBP's Regulatory Impact Analysis 
(RIA) for the final rule has estimated the impact of the rule on small 
businesses.
    Comment: There is no analysis of the effects that the proposed rule 
will have on NVOCCs, air forwarders, and surface forwarders. In most, 
if not all instances, NVOCCs and other forwarders will be required to 
make substantial investments in software, employ additional personnel 
and enter into contractual arrangements with data service centers.
    The regulatory flexibility analysis (RFA) should be broadened to 
consider both the dollar costs on forwarders and any operational 
consequences of the proposed rules.
    CBP Response: The CBP estimates that 650 Non-Vessel Operating 
Common Carriers (NVOCC) are already automated. The CBP believes that 
the proposed requirements will not have a significant impact on a 
substantial number of NVOCCs. Those that choose not to automate, can 
instead use the services of an authorized service provider, a qualified 
port authority, or provide the shipment information to the

[[Page 68165]]

carrier. Therefore, in the final economic analysis, CBP has not 
estimated the costs of the proposed rule on NVOCCs.
    Comment: Although a large percentage of manifests presently 
submitted to Customs are submitted electronically, this does not mean 
that a large percentage of the organizations presently submitting 
manifests are presently doing so via AMS or are capable of doing so.
    One company stated that it submits approximately 100 single page 
manifests for vessels that import over 5 million tons of bulk 
commodities in a year. Due to this insignificant number of manifests, 
which cover a large amount of cargo, the company stated that it is not 
equipped to submit cargo manifests electronically and to do so would 
represent a substantial financial penalty.
    At the present time pre-arrival manifests are submitted by fax at 
basically no cost even though they are sent to several branches of the 
Federal government. An investigation into obtaining a ``provider'' via 
whom manifests could be submitted electronically had indicated a set up 
cost of $1,000 and a monthly minimum for one SCAC code of $200.
    Therefore, strong disagreement was noted with the initial analysis 
that the proposed rule would not have a significant economic impact 
upon a substantial number of small entities.
    CBP Response: Virtually all shipping companies that are owned by 
U.S. citizens or are U.S. flagged are currently filing manifests 
electronically. The CBP has been able to identify only 24 shipping 
companies that carry cargo into U.S. ports from the Caribbean that do 
not use AMS. The CBP does not believe that any of these companies are 
U.S. owned nor are any of the ships U.S. flag. Consequently, the 
proposed rule on vessels is not expected to have any economic impact on 
U.S. companies.
    Comment: It is estimated that 25 million bills of lading are issued 
annually for container cargo from Japan to the United States. Shipping 
companies are charged a $25 fee for transforming and inputting a 
shipper's cargo data to the AMS. This means that the cost of trade 
between Japan and the United States will increase $625 million per year 
through the introduction of the 24-hour rule. Contrary to the CBP's 
claim that much of the trade already uses electronic transmission 
systems and therefore would not incur significant compliance costs, 
this fact indicates that substantial costs would be imposed on the 
trade when the requirements of advance electronic cargo information are 
implemented.
    CBP Response: The CBP believes that virtually all shipping 
companies that are owned by U.S. citizens or are U.S. flagged are 
currently filing manifests electronically. Further, even if none of the 
non-U.S. trade participants were automated, the estimated annual cost 
of trade of $625 million would represent less than one percent of a 
total value of U.S. imports from Japan (this calculation is based on 
the 2001 import values; Source: Bureau of Transportation Statistics).

Summary of Significant Changes

    As referenced in the Discussion of Comments, supra, this final rule 
document makes three significant changes from the proposed rule. These 
changes consist of: (1) Removing the provision concerning advance cargo 
data for air shipments listed as letters and documents and making it 
the subject of a separate Federal Register publication (proposed Sec.  
122.48a(d)(3) as such is removed from this final rule); (2) requiring 
certain additional data elements from the incoming air carrier in the 
case of split shipments (a new Sec.  122.48a(d)(3) is thus added in 
this final rule); and (3) decreasing the rail outbound time frame from 
``4 hours prior to the attachment of the locomotive before going 
foreign'' to ``2 hours prior to arrival at the border'' (Sec.  
192.14(b)(1)(iv)).

Adoption of Proposal

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

Additional Changes

    For greater editorial accuracy, the reference in proposed Sec.  
113.64(a) and (c) to ``Sec.  122.48a(c)(2)'' is changed in this final 
rule to ``Sec.  122.48a(c)(1)(ii)-(c)(1)(iv)''. Also, proposed Sec.  
122.48a(a)(2) is revised in this final rule to distinguish between 
Diplomatic Pouches and Diplomatic Cargo, the latter of which is subject 
to the full advance cargo data reporting requirements of Sec.  122.48a. 
In addition, proposed Sec.  123.8 is amended consistent with Sec.  
122.38(g) in this final rule. Lastly, proposed Sec. Sec.  123.91(a) and 
123.92(a) are changed to make clear that cargo data must be received 
within the relevant time frame before the subject cargo reaches the 
first port of arrival in the United States.

Transportation Security Administration--Cargo Security Programs

    It is also stressed that these final regulations 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 
(Pub. L. 107-71, 115 Stat. 597; November 19, 2001 (49 U.S.C. 114(d), 
(f)(10); 44901(a), (f)).

Regulatory Analyses

Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), CBP 
must determine whether a regulatory action is ``significant'' and, 
therefore, subject to OMB review and the requirements of the Executive 
Order. The Order defines ``significant regulatory action'' as one that 
is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local, or tribal government or communities.
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency.
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof.
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The CBP has determined that the rule will have an annual effect on 
the economy of more than $100 million and is, therefore, an 
economically significant regulatory action. Accordingly, it has 
prepared a regulatory impact analysis for the rule, which is available 
on the CBP Web site, http://www.cbp.gov.
Costs
    The analysis examined each of the modes and identified changes that 
are likely to impose new costs on U.S. carriers. Because virtually all 
vessels and railroads are already filing electronically, costs were 
estimated for these sectors to be insignificant. Exports to Canada by 
truck are generally exempted from regulation. For exports by air, 
shippers complete the shipper's export declaration prior to presenting 
the shipment to a carrier; therefore, the

[[Page 68166]]

new time requirements for filing will be met.

Truck

    The analysis estimated costs and cost savings for inbound trucks 
from Canada, and inbound and outbound trucks to Mexico. Although the 
rule will impose costs on trucks that are not currently filing 
electronically, the analysis estimates that these costs are offset by 
the savings that will result from faster movement across the border. 
Overall, the analysis estimates that the rule will impose new costs of 
$91 million on trucking, which will be offset by savings of $142 
million.

Air

    The analysis indicates that the rule will impose substantial costs 
on the 39 U.S. air carriers currently certificated for foreign 
operations as well as more than 100 foreign carriers that fly cargo 
into the U.S. These costs arise from three factors: the need to 
implement electronic filing systems and improve existing systems; 
delays and service degradation that will result from the requirement to 
file information at wheels up from airports north of the equator in the 
western hemisphere; and the requirement to file detailed information on 
all cargo including documents. Because passenger-carrying carriers 
cannot easily delay operations to complete cargo information, the 
analysis assumed that these carriers would limit cargo and reduce 
revenues rather than delay flights. Comments on the proposed rule cited 
other changes that could result from the rule and impose costs: 
diversion of air cargo to trucks, diversion of in-transit cargo to 
other carriers who do not fly through the U.S., and targeting of 
shipments, delaying unloading of the aircraft. Because CBP has no basis 
for estimating the degree to which diversion or targeting may occur, 
the analysis did not quantify costs for these impacts. The analysis 
examined four options for air:
    (1) The proposed rule, which required information on all cargo 
including documents;
    (2) An option that required information on all cargo except 
documents that weigh less than one pound (16 ounces);
    (3) An option that required information on all cargo except 
documents; and,
    (4) An option originally recommended by the Treasury Advisory 
Committee on the Commercial Operations of the U.S. Customs Service 
(COAC), but modified by CBP, that would require no detailed information 
on documents and filing an hour before arrival for flights into the 
U.S. from airports north of the equator in the western hemisphere.
    The options allow an examination of the impact of varying 
requirements on cargo and filing times. The CBP has elected option 
three above because the proposal to cover advance electronic cargo 
information on letters and documents will be the subject of a separate 
Federal Register publication. However, the RIA for this final rule 
document will cover the other publication as well. As noted, the RIA is 
available on the CBP Web site, http://www.cbp.gov.
    Because of the considerable uncertainty that exists about the 
impacts on delays and service degradation as well as about the number 
of air bills that will need to be filed under the rule, the analysis 
examined each of these impacts across a range of scenarios from low 
impacts (e.g., 30 minute delays, 10 percent loss of revenues, twice as 
many air bills) to high impacts (2 hour delays, 40 percent loss of 
revenue, 8 times as many air bills). The analysis indicated that the 
total annualized cost to the air carriers could range from $345 million 
for the low impact COAC option to $4.7 billion for the high impact 
proposed rule option. Table 1 presents the costs for the four options, 
annualized over five years (7 percent discount rate).

       Table 1.--Annualized Total Cost to Air Carriers [millions]
------------------------------------------------------------------------
                                                 Low     Medium    High
------------------------------------------------------------------------
All Documents................................   $2,914   $3,652   $4,736
Large Documents..............................      930    2,177    3,770
No Documents.................................      422    1,160    2,244
COAC Option..................................      345      994    1,889
------------------------------------------------------------------------

    As can be seen from Table 1, the degree to which detailed 
information is required for documents drives the cost of the rule. 
Overall, the requirement for filing house bill rather than master bill 
information electronically imposes the greatest cost. The costs of 
delays and service degradation, although significant to a few carriers, 
are limited because only about 25 percent of inbound air cargo on U.S. 
carriers and 10 percent of inbound cargo on foreign carriers is Canada, 
the Caribbean, and Latin America north of the equator.
Benefits
    Examination of the benefits was largely qualitative because the 
most significant benefits are essentially unquantifiable. The most 
important benefit of the rule will be the improvement in national 
security, an issue that is difficult to measure in monetary terms. 
However, there are some additional benefits expected that were 
quantified. Most of the incremental quantifiable benefits are expected 
from changes taking place at the northern border crossings for inbound 
truck traffic. The rule is expected to streamline the process for 
checking inbound trucks at Canadian border crossings, leading to 
benefits from time savings due to reduced congestion that are in 
addition to the time savings realized by trucks that change their 
border-crossing procedures under the rules. The analysis estimated the 
value of the time savings at $18 million. Additionally, reduced 
congestion would lead to less truck idling (or moving at very slow 
speeds) and consequent reductions in air pollution and fuel costs. The 
fuel savings were estimated at $4 million. Because of the lack of data 
on how congestion reductions for commercial traffic can affect non-
commercial traffic at the border (e.g., cars), the analysis did not 
quantify this benefit. Finally, trucks leaving the country through the 
Mexican border are expected to provide some qualitative benefits 
through improvements in data collection.
Summary
    Combining the costs, cost savings, and monetized benefits, the 
analysis estimates that the rules produce net savings to the trucking 
sector of $78 million, and net costs to U.S. air carriers of $345 
million to $4.7 billion.

Regulatory Flexibility Act

    Under the Regulatory Flexibility Act of 1980, as amended by the 
Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 
601 et seq.), Federal agencies must evaluate the impact of rules on 
small entities and consider less burdensome alternatives. As discussed 
in the previous section, CBP has conducted a cost benefit analysis on 
this rule. As part of that analysis, CBP evaluated the impact on small 
entities. The CBP has determined that this rule could have a 
significant economic impact on a substantial number of small air 
carriers. Companies in the other modes are unlikely to incur 
substantial costs to comply and may benefit from the rule.
    For air, the lowest cost option would impose costs in excess of one 
percent of operating revenues for 7 of the 19 small carriers. The high 
cost options would impose significant costs on 12 of the 19 small 
carriers; four of the carriers could have costs in excess of 10 percent 
of their operating revenues. Seven of the 19 carriers operated at a 
loss in 2002.

[[Page 68167]]

Despite the uncertainty that exists in estimating costs, it is, 
therefore, likely that the rule would create a significant economic 
impact on small air carriers. Because most of these costs are driven by 
the cost of electronic data entry, which is mandated by statute, 
mitigating the impacts is difficult. Many of the small entities may 
address this issue by having the shipper or consolidator submit the 
information to CBP.
    A copy of the small business analysis for this rule, which is 
chapter 6 of the regulatory impact analysis, is available on the CBP 
Web site, http://www.cbp.gov.

Paperwork Reduction Act

    The collection of information in this final rule document was 
submitted for review and has been approved by the Office of Management 
and Budget (OMB) in accordance with the requirements of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507(d)) under OMB control number 
1651-0001 (Transportation Manifest (Cargo Declaration)). An agency may 
not conduct, and a person is not required to respond to, a collection 
of information unless the collection of information displays a valid 
control number assigned by OMB.
    The collection of information in this document is contained in 
Sec. Sec.  4.7a(c)(4), 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 estimated 
average annual burden associated with this information collection is 
52.3 hours per respondent or recordkeeper.
    Comments on the accuracy of this burden estimate and suggestions 
for reducing this burden should be sent to the Regulations Branch, 
Office of Regulations and Rulings, Bureau of Customs and Border 
Protection, 1300 Pennsylvania Avenue, NW., Washington, DC 20229.
    Part 178, Customs Regulations (19 CFR part 178), containing the 
list of approved information collections, is revised as appropriate to 
reflect the approved information collections covered by this final 
rule.

Executive Order 12988

    This regulation meets the applicable standards set forth in 
Sections 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice 
Reform.

Executive Order 13132

    This rulemaking does not preempt or modify any provision of state 
law; nor does it impose enforcement responsibilities on any state; nor 
does it diminish the power of any state to enforce its own laws. 
Accordingly, this rulemaking does not have federalism implications 
warranting the application of Executive Order 13132.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA; 2 
U.S.C. 1501 et seq.) requires cost-benefit and other analyses before 
any rulemaking if the rule would include a ``Federal mandate that may 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100,000,000 or more 
(adjusted annually for inflation) in any 1 year''. The current 
inflation-adjusted statutory threshold is $113 million.
    This rule will not have a significant effect on state, local or 
tribal governments within the scope of the UMRA. However, CBP has 
determined that this final rule is significant under UMRA because it 
anticipates that the rule will result in an aggregate expenditure by 
the private sector of $113,000,000 or more in any one year.
    Consequently, CBP has conducted the required economic impact 
analyses as noted in the above section, ``EXECUTIVE ORDER 12866''. The 
other requirements under UMRA include assessing the rule's effects on:
    [sbull] Future costs
    [sbull] Particular regions, communities, or industrial sectors
    [sbull] National productivity
    [sbull] Economic growth
    [sbull] Full employment
    [sbull] Job creation
    [sbull] Exports
    The regulatory impact analysis, discussed in the ``EXECUTIVE ORDER 
12866'' section, covered many of these issues in greater detail. To 
summarize, the regulations will impose costs into the future; most 
costs are presented in the impact analysis on an annual basis. The 
regulations will impact many different regions, communities, and 
sectors; but with the exception of air carriers the impact will be 
disbursed and will not be concentrated geographically. In addition, 
these regulatory impacts, although large in absolute terms, generally 
do not rise to the level where they could cause any sort of macro 
effects on productivity, growth, employment, or jobs.
    With regard to the impacts on trade, although most of the 
information required for advance manifest notification and SED 
(Shippers Export Declaration) notification is already supplied to CBP, 
this new notice requirement may cause a reduction of imports of certain 
products into the U.S. and exports out of the U.S. Some entities may 
choose to stop exporting products from the U.S. (or importing products 
to the U.S.) if the additional costs of complying increase the price of 
the products to the point where they cannot compete with lower-priced 
products produced within domestic markets. On the other hand, there are 
products for which substitutes are not available. In these cases, and 
in cases where demand for the product greatly exceeds domestic supply, 
importers may pay an increased price for the product. The CBP believes, 
however, that the ``per shipment'' cost of these requirements is quite 
small and therefore this rulemaking will not have a significant impact 
on the relative competitiveness of foreign versus domestically produced 
products either within or outside of the U.S.
    When a rule would result in expenditures greater than $113 million, 
UMRA requires outreach to the regulated community and discussion of 
proposals. The CBP conducted extensive discussions with the regulated 
community prior to the development of the rule. In January 2003 CBP 
held separate meetings with each of the transportation modes to solicit 
information and comments. The CBP also accepted comments from members 
of the regulated community as it developed its proposed rule and held 
numerous meetings with the COAC committees, which submitted 
recommendations. Finally, CBP received more than 100 comments on the 
proposed rule, which were considered in the development of the final 
rule.
    For a more detailed analysis, please refer to the regulatory impact 
analysis prepared for this rule, which is available on the CBP Web 
site, http://www.cbp.gov.

CBP Issuance of Rule Under DHS Authority; 19 CFR 0.2(a)

    When the Trade Act of 2002 was enacted (Pub. L. 107-210; August 6, 
2002), the Customs Service existed as part of the Department of the 
Treasury. Thereafter, the Homeland Security Act of 2002 was enacted 
(Public Law 107-296; November 25, 2002), which created

[[Page 68168]]

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 rule which is 
designed to ensure cargo safety and security rather than revenue 
assessment, now fall solely within the jurisdiction of DHS. Therefore, 
this regulation is being issued by CBP under the authority of DHS in 
accordance with 19 CFR 0.2(a) (see CBP Dec. 03-24, 68 FR 51868, August 
28, 2003).
Coordination of Final Rule With Congress
    Pursuant to section 343(a)(3)(L) (19 U.S.C. 2071 note, section 
(a)(3)(L)), the required report regarding this final rule document has 
been timely made to the committees on finance and commerce, science, 
and transportation of the Senate and the committees on ways and means 
and transportation and infrastructure of the House of Representatives.

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 178

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

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.

Amendments to the Regulations

0
Parts 4, 103, 113, 122, 123, 178, and 192, Customs Regulations (19 CFR 
parts 4, 103, 113, 122, 123, 178, and 192), are amended as set forth 
below.

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

0
1. The general authority citation for part 4 is revised, and the 
relevant specific authority citations continue, to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624, 
2071 note; 46 U.S.C. App. 3, 91;
* * * * *
    Section 4.5 also issued under 19 U.S.C. 1441;
    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;
* * * * *

0
2. Amend Sec.  4.5(a) by:
0
a. Removing the references to the numerical terms ``(1)'' and ``(2)'' 
appearing in the first sentence; and
0
b. Adding two new sentences after the first sentence to read as 
follows:


Sec.  4.5  Government vessels.

    (a) * * * In addition, any vessel chartered by, and transporting 
only cargo that is the property of, the U.S. Department of Defense 
(DoD) will be treated as a Government vessel for the purpose of being 
exempt from entry, where the DoD-chartered vessel is manned entirely by 
the civilian crew of the vessel carrier under contract to DoD. 
Notwithstanding Sec.  4.60(b)(3) of this part, such DoD-chartered 
vessel is not exempt from vessel clearance requirements. * * *
* * * * *
0
3. Amend Sec.  4.7 by:
0
a. Revising the first sentence of paragraph (b)(1);
0
b. Revising paragraph (b)(2);
0
c. Removing the words, ``if automated'', where appearing in paragraph 
(b)(3)(i);
0
d. Adding a new paragraph (b)(3)(iii); and
0
e. Adding a new paragraph (b)(5).
    The revisions and additions 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 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)(i) * * *
    (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

[[Page 68169]]

to electronically present the information on the basis of what the 
party reasonably believes to be true.
* * * * *
    (5) Within 90 days of December 5, 2003, 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.
* * * * *

0
4. Amend Sec.  4.7a by:
0
a. Revising paragraphs (c)(4)(viii) and (c)(4)(ix);
0
b. Removing the word ``and'' after paragraph (c)(4)(xiii);
0
c. Removing the period after paragraph (c)(4)(xiv), and adding, in its 
place, a semicolon; and
0
d. Adding new paragraphs (c)(4)(xv) and (c)(4)(xvi).
0
Revised paragraphs (c)(4)(viii) and (c)(4)(ix) and new paragraphs 
(c)(4)(xv) and (c)(4)(xvi) 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 foreign vendor, 
supplier, manufacturer, or other similar party is acceptable (and the 
address of the foreign vendor, etc., must be a foreign address); by 
contrast, the identity of the carrier, NVOCC, freight forwarder or 
consolidator is not acceptable; 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'' (foreign 
cargo remaining on board). 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) 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 
(this element relates to the departure of the vessel from the foreign 
port with respect to which the advance cargo declaration is filed (see 
Sec.  4.7(b)(2)); the time frame for reporting this data element will 
be either:
    (A) No later than 24 hours after departure from the foreign port of 
lading, for those vessels that will arrive in the United States more 
than 24 hours after sailing from that foreign port; or
    (B) No later than the presentation of the permit to unlade (Customs 
Form (CF) 3171, or electronic equivalent), for those vessels that will 
arrive less than 24 hours after sailing from the foreign port of 
lading); and
    (xvi) Time of departure from foreign, as reflected in the vessel 
log (see Sec.  4.7a(c)(4)(xv) for the applicable foreign port and the 
time frame within which this data element must be reported to CBP).
* * * * *

0
5. 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 
Sec.  192.14(c) of this chapter).
* * * * *

PART 103--AVAILABILITY OF INFORMATION

0
1. The general authority citation for part 103 continues, and a 
specific authority citation is 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;

* * * * *

0
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

0
1. The authority citation for part 113 continues to read as follows:

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

0
2. Amend Sec.  113.62 by:

0
a. Revising the heading of paragraph (j), and redesignating its current 
text as paragraph (j)(1);
0
b. Adding a new paragraph (j)(2); and
0
c. Amending 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 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.
* * * * *

0
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

[[Page 68170]]

carrier as defined in Sec.  4.7(b)(3)(ii) of this chapter or other 
party as specified in Sec.  122.48a(c)(1)(ii)-(c)(1)(iv) 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)(1)(ii)-(c)(1)(iv) 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

0
1. The general authority citation for part 122 is 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.

* * * * *

0
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.
* * * * *

0
3. Amend Sec.  122.14 by:
0
a. Redesignating paragraphs (d)(4) and (d)(5) as paragraphs (d)(5) and 
(d)(6), respectively;
0
b. Adding a new paragraph (d)(4); and
0
c. Revising newly redesignated paragraph (d)(5).
    The addition and revision 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
* * * * *

0
4. Amend Sec.  122.33 by:
0
a. Revising paragraph (a), introductory text; and
0
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);
* * * * *

0
5. Amend Sec.  122.38 by:
0
a. Adding a sentence at the end of paragraph (c); and
0
b. Adding a new paragraph (g).
    The additions 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.

0
6. Amend Sec.  122.41 by:
0
a. Revising its introductory text;
0
b. Removing the word ``and'' following paragraph (a), and redesignating 
paragraph (b) as paragraph (c); and
0
c. Adding a new paragraph (b).
    The revision and addition read as follows:


Sec.  122.41  Aircraft required to enter.

    All aircraft coming into the United States from a foreign area must 
make entry under this subpart except:
* * * * *
    (b) Aircraft chartered by, and transporting only cargo that is the 
property of, the U.S. Department of Defense (DoD), where the DoD-
chartered aircraft is manned entirely by the civilian crew of the air 
carrier under contract to DoD; and
* * * * *

0
7. 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 or retained 
aboard the aircraft for any aircraft required to enter under Sec.  
122.41. However, an air cargo manifest for all cargo on board must 
otherwise be available for production upon demand. The general 
declaration must be filed as provided in Sec.  122.43.
* * * * *

0
8. 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

[[Page 68171]]

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 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 and Diplomatic Cargo. When goods comprising 
a diplomatic or consular bag (including cargo shipments, containers, 
and the like identified as Diplomatic Pouch) 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, but the 
description of the shipment as Diplomatic Pouch will be sufficient 
detail for description. Shipments identified as Diplomatic Cargo, such 
as office supplies or unaccompanied household goods, are 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 (the trigger time is no 
later than the time that wheels are up on the aircraft, and the 
aircraft 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 Sec.  
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

[[Page 68172]]

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 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 name of the foreign vendor, supplier, manufacturer, or 
other similar party is acceptable (and the address of the foreign 
vendor, etc., must be a foreign address); by contrast, the identity of 
a carrier, freight forwarder or consolidator is not acceptable);
    (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 ``FROB'' 
(Foreign Cargo Remaining On Board); this party need not be located at 
the arrival or destination port);
    (xii) Consolidation identifier (C);
    (xiii) Split shipment indicator (C) (see paragraph (d)(3) of this 
section for the specific data elements that must be presented to CBP in 
the case of a split shipment);
    (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) (this facility is a Container 
Freight Station as identified by its FIRMS code, or the warehouse of 
another air carrier as identified by its carrier code).
    (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 of the foreign vendor, 
supplier, manufacturer, or other similar party is acceptable (and the 
address of the foreign vendor, etc., must be a foreign address); by 
contrast, the identity of a carrier, freight forwarder or consolidator 
is not acceptable);
    (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); this 
party need not be located at the arrival or destination port); 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) Additional cargo information from air carrier; split shipment. 
When the incoming air carrier elects to transport cargo covered under a 
single consolidated air waybill on more than one aircraft as a split 
shipment (see Sec.  141.57 of this chapter), the carrier must report 
the following additional information for each house air waybill covered 
under the consolidation (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 and house air waybill number (M) (The master air 
waybill number is the IATA standard 11-digit number; the house air 
waybill number may be up to 12 alphanumeric characters (each 
alphanumeric number that is indicated on the paper house air waybill 
must be included in the electronic transmission; alpha characters may 
not be eliminated));
    (ii) The trip/flight number (M);
    (iii) The carrier/ICAO 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) The 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) The 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) The total quantity of the cargo covered by the house air 
waybill based on the smallest external packing unit (M) (For example, 2 
pallets containing 50 pieces each would be considered as 100, not 2);
    (viii) The total weight of the cargo covered by the house air 
waybill (M) (May be expressed in either pounds or kilograms);
    (ix) Description (M) (This description should mirror the precise 
level of cargo

[[Page 68173]]

description information that is furnished to the incoming carrier by 
the other electronic filer, if applicable (see paragraph (c)(1) of this 
section));
    (x) 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);
    (xi) Boarded quantity (C) (The quantity of the cargo covered by the 
house air waybill (see paragraph (d)(3)(vii) of this section) that is 
included in the incoming portion of the split shipment); and
    (xii) Boarded weight (C) (The weight of the cargo covered by the 
house air waybill (see paragraph (d)(3)(viii) of this section) that is 
included in the incoming portion of the split shipment).
    (e) Compliance 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 March 4, 2004.
    (2) Delay in compliance date of section. The CBP may delay the 
general compliance date set forth in paragraph (e)(1) 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 compliance 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.

0
9. Amend subpart G of part 122 by adding a new Sec.  122.66 to read as 
follows:


Sec.  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

0
1. The general authority citation for part 123 is revised, and the 
relevant specific sectional authority citation 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;
* * * * *

0
2. Amend Sec.  123.8 by:
0
a. Adding two sentences after the second sentence in paragraph (a); and
0
b. Adding a sentence at the end of paragraph (d).
    The additions read as follows:


Sec.  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 will 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. In cases in which CBP 
does not receive complete cargo information in the time and manner and 
in the electronic format required by Sec.  123.92 or 192.14 of this 
chapter, as applicable, CBP may delay issuance of a permit or special 
license to unlade or lade a truck. * * *
* * * * *
    (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.

0
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.
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 cargo reaching 
the first port of arrival in the United States. 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 Canada or Mexico 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

[[Page 68174]]

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 (for each house bill in a 
consolidated shipment, the identity of the foreign vendor, supplier, 
manufacturer, or other similar party is acceptable (and the address of 
the foreign vendor, etc., must be a foreign address); by contrast, the 
identity of the carrier, freight forwarder, consolidator, or broker, 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) 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) 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 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 reaching the first port of arrival in the 
United States, 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 Canada or Mexico (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

[[Page 68175]]

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 (for each house bill in a 
consolidated shipment, the identity of the foreign vendor, supplier, 
manufacturer, or other similar party is acceptable (and the address of 
the foreign vendor, etc., must be a foreign address); by contrast, the 
identity of the carrier, freight forwarder, consolidator, or broker, is 
not acceptable; 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) Date for compliance with this section. The incoming truck 
carrier and, if electing to do so, the United States importer, or its 
Customs broker, 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 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

0
1. The authority citation for part 178 continues to read as follows:


    Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.


0
2. Section 178.2 is amended as follows:
0
a. In the listing for Sec.  4.7a(c)(4), by removing the number ``1515-
0001'' under the heading ``OMB Control No.'', and adding, in its place, 
the number ``1651-0001''; and
0
b. By adding new listings for Sec. Sec.  122.48a, 123.91, 123.92 and 
192.14 in appropriate numerical sequence according to the section 
number under the columns indicated.
    The listings for Sec. Sec.  4.7a(c)(4), 122.48a, 123.91, 123.92, 
and 192.14 read as follows:


Sec.  178.2  Listing of OMB control numbers.

----------------------------------------------------------------------------------------------------------------
                 19 CFR section                                    Description                  OMB  Control No.
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
Sec.   4.7a(c)(4)...............................  Transportation manifest (cargo declaration).         1651-0001
 
                                                  * * * * * * *
Sec.   122.48a..................................  Transportation manifest (cargo declaration).         1651-0001
 
                                                  * * * * * * *
Sec.   123.91...................................  Transportation manifest (cargo declaration).         1651-0001
 
                                                  * * * * * * *
Sec.   123.92...................................  Transportation manifest (cargo declaration).         1651-0001
 
                                                  * * * * * * *
Sec.   192.14...................................  Transportation manifest (cargo declaration).         1651-0001
----------------------------------------------------------------------------------------------------------------


[[Page 68176]]

PART 192--EXPORT CONTROL

0
1. The authority citation for part 192 is 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.

0
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 departure from the U.S. 
port where the vessel cargo is to be laden;
    (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 from the 
last U.S. port;
    (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 two hours prior to the arrival of the train at the 
border.
    (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 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 used 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 (CFR) for pre-filing 
requirements of other Government agencies. In particular, for the 
advance reporting requirements for exports of U.S. Munitions List 
items, see the U.S. Department of State's International Traffic in Arms 
Regulations (ITAR) (22 CFR parts 120 through 130).
    (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 or its authorized agent (whichever is the 
filer in AES) 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 AES participants under 15 CFR 
30.63 for the vessel, air, truck, and rail modes (see also paragraph 
(c)(3) of this section):
    (i) Method of transportation (the method 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 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);
    (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 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); 
the USPPI or its authorized agent must report the port of exportation 
as known when the USPPI or its agent tenders the cargo to the outbound 
carrier; should the carrier export the cargo from a different port and 
the carrier so informs the USPPI or agent, the port of exportation must 
be corrected by the filer in AES.).
    (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

[[Page 68177]]

electronic filing citation, low-risk exporter citation, or exemption 
statement, will conform to the approved data formats found in the 
Bureau of Census Foreign Trade Statistics Regulations (FTSR) (15 CFR 
part 30) and FTSR Letter 168, Amendment 2 (this Letter may be obtained 
from the Census Bureau).
    (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 may 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 state-ment (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) 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: November 17, 2003.
Tom Ridge,
Secretary, Department of Homeland Security.
[FR Doc. 03-29798 Filed 12-4-03; 8:45 am]
BILLING CODE 4820-02-P