[Federal Register Volume 71, Number 145 (Friday, July 28, 2006)]
[Proposed Rules]
[Pages 42778-42785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12067]


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DEPARTMENT OF HOMELAND SECURITY

Bureau of Customs and Border Protection

DEPARTMENT OF THE TREASURY

[USCBP-2006-0015]

19 CFR Parts 24, 113, and 128

RIN 1505-AB39


Fees for Customs Processing at Express Consignment Carrier 
Facilities

AGENCY: Customs and Border Protection, Homeland Security; Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes amendments to title 19 of the Code of 
Federal Regulations (19 CFR) to reflect changes to the customs user fee 
statute made by section 337 of the Trade Act of 2002 and section 
2004(f) of the Miscellaneous Trade and Technical Corrections Act of 
2004. The statutory amendments made by section 337 concern the fees 
payable for customs services provided in connection with the informal 
entry or release of shipments at express consignment carrier facilities 
and centralized hub facilities, and primarily serve to replace the 
annual lump sum payment procedure with a quarterly payment procedure 
based on a specific fee for each individual air waybill or bill of 
lading. Section 2004(f) amended the user fee statute to authorize, for 
merchandise that is formally entered at these sites, the assessment of 
merchandise processing fees provided for in 19 U.S.C. 58c(a)(9), in 
addition to the fees that are currently assessed on individual air 
waybills or bills of lading. Lastly, pursuant to the authority 
established in 19 U.S.C. 58c(b)(9)(B)(i), this document proposes to 
raise the existing $0.66 fee assessed on individual air waybills or 
bills of lading to $1.00 to more equitably align it with the actual 
costs incurred by CBP in processing these items.

DATES: Comments must be received on or before August 28, 2006.

ADDRESSES: You may submit comments, identified by docket number, by one 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments via docket number 
USCBP-2006-0015.
     Mail: Trade and Commercial Regulations Branch, Office of 
Regulations and Rulings, Bureau of Customs and Border Protection, 1300 
Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
posted without change to http://www.regulations.gov, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the electronic docket to read background 
documents or comments received, go to http://www.regulations.gov. 
Submitted comments may also be inspected during regular business days 
between the hours of 9 a.m. and 4:30 p.m. at the Office of Regulations 
and Rulings, Bureau of Customs and Border Protection, 799 9th Street, 
NW., 5th Floor, Washington, DC. Arrangements to inspect submitted 
comments should be made in advance by calling Joseph Clark at (202) 
572-8768.

FOR FURTHER INFORMATION CONTACT: Michael L. Jackson, Office of Field 
Operations, Trade Enforcement and Facilitation, Tel.: (202) 344-1196.

SUPPLEMENTARY INFORMATION:

Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of the 
proposed rule. The Bureau of Customs and Border Protection (CBP) also 
invites comments that relate to the economic effects that might result 
from this proposed rule. If appropriate to a specific comment, the 
commenter should reference the specific portion of the proposed rule, 
explain the reason for any recommended change, and include data, 
information, or authority that support such recommended change.

Background

I. Statutory Changes Made by Section 337(a) of the Trade Act of 2002

    On August 6, 2002, the President signed into law the Trade Act of 
2002, Public Law 107-210, 116 Stat. 933. Section 337(a) of the Trade 
Act of 2002 amended section 13031(b)(9) of the Consolidated Omnibus 
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(9)) by adding new 
requirements for the payment of user fees for customs services provided 
by CBP to express consignment carrier facilities and centralized hub 
facilities in connection with imported letters, documents, shipments or 
other merchandise to which informal entry procedures apply. The 
principal changes involve the following:
    1. In the introductory text of section 58c(b)(9)(A), which refers 
to reimbursements and payments required from a centralized hub 
facility, an express consignment carrier facility, or a small airport 
or other facility, the words ``the processing of merchandise that is 
informally entered or released'' were replaced by the words ``the 
processing of letters, documents, records, shipments, merchandise, or 
any other item that is valued at an amount that is less than $2,000 (or 
such higher amount as the Secretary of the Treasury may set by 
regulation pursuant to section 498 of the Tariff Act of 1930), except 
such items entered for transportation and exportation or immediate 
exportation.'' [It is noted that the statutory monetary amount was 
subsequently amended to ``$2,000 or less * * *'' as discussed later in 
this document.]
    2. Section 58c(b)(9)(A)(ii) was replaced by new text identifying, 
in the case of an express consignment carrier facility or a centralized 
hub facility, a fee of $0.66 per individual air waybill or bill of 
lading. Prior to this amendment, clause (ii) required an express 
consignment carrier facility or a centralized hub facility to make the 
following reimbursements and payments:

[[Page 42779]]

    (a) A reimbursement to Customs (hereinafter referred to as ``CBP'' 
to reflect the transfer of the U.S. Customs Service to the Department 
of Homeland Security and the agency's subsequent renaming as Bureau of 
Customs and Border Protection) of an amount equal to the cost of the 
services provided by CBP for the facility during the fiscal year; and
    (b) An annual payment by the facility to the Secretary of the 
Treasury in an amount equal to the annual reimbursement made under 19 
U.S.C. 58c(b)(9)(A)(ii)(I).
    3. Subparagraph (B) was redesignated as subparagraph (C) and a new 
subparagraph (B) was added. New subparagraph (B) consists of clauses 
(i) through (iii) which provide as follows:
    (a) Clause (i) authorizes the Secretary of the Treasury to adjust 
the $0.66 fee prescribed in subparagraph (A)(i) to an amount that is 
not less than $0.35 and not more than $1.00 per individual air waybill 
or bill of lading. Clause (i) further provides that the adjustment may 
not be made before fiscal year 2004 and not more than once per fiscal 
year and must involve publication of notice of the proposed adjustment 
in the Federal Register with opportunity for public comment;
    (b) Clause (ii) provides that the payment required by subparagraph 
(A)(ii) is the only payment required for reimbursement of CBP in 
connection with the processing of an individual air waybill or bill of 
lading in accordance with that subparagraph and for providing services 
at express consignment carrier facilities or centralized hub 
facilities, except that CBP may require those facilities to cover CBP 
expenses for adequate office space, equipment, furnishings, supplies, 
and security.
    (c) Clause (iii)(I) provides that the payment required under 
subparagraphs (A)(ii) and (B)(ii) is to be paid to CBP on a quarterly 
basis by the carrier using the facility in accordance with regulations 
prescribed by the Secretary of the Treasury. Clause (iii)(II) states 
that 50 percent of the amount of payments received under subparagraphs 
(A)(ii) and (B)(ii) will, in accordance with 19 U.S.C. 1524, be 
deposited in the Customs (CBP) User Fee Account and used to directly 
reimburse each appropriation for the amount paid out of that 
appropriation for costs incurred in providing services to express 
consignment carrier facilities or centralized hub facilities. Such 
amounts are to remain available until expended for the provision of 
customs services to these entities. Clause (iii)(III) directs the 
remaining 50 percent of the amount of payments received under 
subparagraphs (A)(ii) and (B)(ii) to be paid to the Secretary of the 
Treasury. See 19 U.S.C. 58c(b)(9)(B)(iii)(I)--(III).
    Section 337(b) of the Trade Act of 2002 provides that the 
amendments made by section 337(a) take effect on October 1, 2002.
    The following points are noted regarding the effect of the 
statutory changes made by section 337(a) of the Trade Act of 2002:
    1. The overall effect of section 337(a) is to replace two equal 
annual lump sum payments (one representing a reimbursement of the cost 
of services provided and the other representing a payment in lieu of 
the payment of fees for the informal entry or release of merchandise) 
with a quarterly payment procedure based on a specific fee for each 
individual air waybill or bill of lading.
    2. The $2,000 limit referred to in the amended statute reflects the 
amount that CBP, pursuant to section 498 of the Tariff Act of 1930, as 
amended (19 U.S.C. 1498), has adopted in Sec.  143.21 of title 19 of 
the Code of Federal Regulations (19 CFR 143.21) as the limit for 
shipments of merchandise that may be entered under informal entry.
    3. The replacement of the word ``merchandise'' by a reference to 
``letters, documents, records, shipments, merchandise, or any other 
item'' in the amended statute ensures that other imported articles or 
items that are eligible for informal entry under Sec.  143.21 will be 
subject to the new fee. The one exception concerns those articles (for 
example, articles of plastics or rubber, textiles and textile articles, 
leather articles, and footwear) for which the informal entry limit is 
set at $250 in Sec.  143.21; for those articles having a value greater 
than $250 but less than $2,000, the new fee standard will apply even 
though those articles are not subject to informal entry procedures 
under Sec.  143.21.
    4. Each shipment transported by affected carriers is issued an 
individual air waybill that is used, among other things, for tracking 
purposes. Because the law applies the fee to each individual air 
waybill, the use of master bills or other practices of consolidation or 
convenience by these entities, the billing system used by these 
entities for their customers, and the number of entries filed, are 
irrelevant to the application of the fee. In effect, the individual air 
waybill subject to the fee is the bill at the lowest level, i.e., not a 
master bill. An example of an individual airway bill or bill of lading 
is a bill representing an individual shipment that has its own unique 
bill number and tracking number, where shipment is assigned to a single 
ultimate consignee, and no lower (more disaggregated) bill unit exists.
    5. Under the amended statute, responsibility for payment rests with 
the carrier rather than with the facility. This does not represent a 
substantive change in the case of centralized hub facilities because 
the hub facility owner and the carrier using the facility are always 
the same. However, it does represent a shift in responsibility for 
payment, from the facility to the carrier, in the case of express 
consignment carrier facilities that are not owned and operated by the 
different carriers that use them.
    6. The affected carriers became responsible for payment of the new 
fee for each individual covered transaction as of October 1, 2002, 
effective date of the amendments made by section 337(a) of the Trade 
Act of 2002. Therefore, even though the first payment to CBP under the 
new payment procedure would not have taken place until after the close 
of the last quarter of the year 2002, the statute obligated the 
affected carriers to maintain adequate records to determine the proper 
amount to be paid starting on the effective date of the statutory 
amendments.

II. Statutory Changes Made by Section 2004(f) of the Miscellaneous 
Trade and Technical Corrections Act of 2004

    The Miscellaneous Trade and Technical Corrections Act of 2004 
(``Trade Act of 2004'') was signed into law by the President on 
December 3, 2004 (Pub. L. 108-429, 18 Stat. 2593). Section 2004(f) of 
the Trade Act of 2004 made further amendments to section 13031(b)(9) of 
the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 
58c(b)(9)). The principal changes made by section 2004(f) are set forth 
below:
    1. In the introductory text of section 58c(b)(9)(A), which refers 
to reimbursements and payments to CBP required from a centralized hub 
facility, an express consignment carrier facility, or a small airport 
or other facility, the words ``less than $2,000'' were replaced by the 
words ``$2,000 or less''.
    2. Section 58c(b)(9)(A)(ii), which requires an express consignment 
carrier facility or a centralized hub facility to reimburse CBP in an 
amount of $0.66 per individual air waybill or bill of lading, was 
amended by: (a) Adding the language, ``[N]otwithstanding subsection 
(e)(6)'' at the beginning of the section; and (b) restructuring this 
provision by creating two new sub-clauses. The first new sub-clause, 
identified as (A)(ii)(I), sets forth the existing reimbursement fee of 
$0.66 per

[[Page 42780]]

individual air waybill or bill of lading. The second new sub-clause, 
identified as (A)(ii)(II), pertains to situations where merchandise is 
formally entered and mandates, in addition to the fee specified in sub-
clause (A)(ii)(I), reimbursement to CBP of the fee provided for in 
subsection (a)(9) (the merchandise processing fee), if applicable. See 
19 U.S.C. 58c(a)(9).
    3. To accommodate the amendments to subparagraph (A)(ii), discussed 
above, conforming changes were made to section 58c(b)(9)(B)(ii) whereby 
the statutory reference to ``(A)(ii)'' was replaced with a reference to 
``(A)(ii)(I) or (II)''.

III. Proposal To Increase Certain Reimbursement Fees Payable by Express 
Consignment Carrier Facilities and Centralized Hub Facilities

    As noted above, 19 U.S.C. 58c(b)(9)(B)(i), as amended by section 
337(a) of the Trade Act of 2002, authorizes the Secretary of the 
Treasury to adjust the $0.66 fee prescribed in 19 U.S.C. 
58c(b)(9)(A)(ii) to an amount that is not less than $0.35 and not more 
than $1.00 per individual air waybill or bill of lading. This section 
further provides that notice of any proposed adjustment and the reasons 
therefore must be published in the Federal Register with opportunity 
for public comment.
    Pursuant to this authority, this document proposes to increase the 
existing $0.66 reimbursement fee payable to CBP by express consignment 
carrier facilities and centralized carrier facilities to $1.00. The 
proposed fee increase is necessary to more adequately reimburse CBP for 
the actual costs incurred by the agency in processing individual air 
waybills and bills of lading at these sites. It is also noted that in 
addition to the regular costs associated with processing individual air 
waybills and bills of lading, CBP must also incur the expenses 
associated with relocating CBP personnel when a carrier opts to close a 
carrier-owned express consignment facility and open a new facility at a 
different location. The current fee schedule does not sufficiently 
cover CBP's regular expenses at these sites.
    As discussed previously, the amendments to section 58c(b)(9)(B) 
made by section 337(a) of the Trade Act of 2002 direct that the money 
collected by CBP from this one payment be sent to two different 
accounts. Section 58c(b)(9)(B)(iii)(II) requires fifty percent of the 
payment to be deposited in the CBP User Fee Account and used to 
directly reimburse each appropriation for the amount paid out of that 
appropriation for the costs incurred in providing services to express 
consignment carrier facilities and centralized hub facilities. Such 
amounts are available until expended for the provision of custom 
services for these facilities. Section 58c(b)(9)(B)(iii)(III) requires 
the remaining fifty percent to be paid to the Secretary of the Treasury 
in lieu of an informal entry Merchandise Processing Fee (MPF). Prior to 
the 2002 amendment, the law provided for two payments: One payment was 
made to CBP as the fee to cover agency expenses incurred by providing 
customs services relating to staffing for the onsite processing and 
release of cargo at express consignment carrier facilities, and the 
second payment was made to the Treasury in lieu of the informal entry 
Merchandise Processing Fee (MPF). Thus, the current payment structure 
provides for a single payment collected by CBP and deposited in two 
separate sub-accounts, whereas previously two separate fees were paid 
to CBP and Treasury. In neither case did fees exceed direct costs. In 
fact, collected fees were well below direct costs. Under this proposal, 
fees will approach costs up to the new statutory cap.
    CBP has conducted a financial analysis of the costs incurred by CBP 
in providing services to express consignment facilities and centralized 
hub facilities in Fiscal Years (FY) 2004 and 2005. The collection/cost 
data reveals that at the close of FY 2004, the half of the 
58c(b)(9)(A)(ii) payment intended to defray the cost of services to 
express consignment and centralized hub facilities left the agency with 
a deficit with the agency collecting only 78% of the monies expended to 
provide those services. In FY 2005, CBP collected only 70% of these 
costs. Projections for FY 2006 indicate that the deficit will increase 
again due to the fact that certain CBP expenses, such as reimbursable 
wages for CBP employees at these sites, will increase.
    The following table sets forth the collection/cost data associated 
with CBP's processing of individual air waybills and bills of lading at 
express consignment facilities and centralized hub facilities for FY 
2004 and 2005, as well as a projected financial analysis for FY 2006:

----------------------------------------------------------------------------------------------------------------
                                      Total        CBP's retained
                    Estimated      collections       portion of
  Fiscal year        package     (based on $.66   collected amount     CBP costs     CBP cost     CBP deficit
                     volume        cents  per      (based on $.33                    per bill
                                      bill)       cents per bill)
----------------------------------------------------------------------------------------------------------------
2004*..........      47,243,205     $31,180,516  $15,590,258......     $19,945,704       0.42  ($4,355,446).
2005*..........      45,364,139      29,940,332  $14,970,166......      21,393,520       0.47  ($6,423,354).
2006**.........      43,549,574      28,742,718  $14,371,359            22,545,880       0.52  ($8,174,521)
                                                  ($21,774,787                                  (($771,093)
                                                  based on $.50                                 based on $.50
                                                  cents collected                               cents collected
                                                  per bill if the                               per bill if the
                                                  payment is                                    payment is
                                                  raised to $1.00).                             raised to
                                                                                                $1.00).
----------------------------------------------------------------------------------------------------------------
* FY 2004 and 2005 costs information from the CBP Cost Management Information System.
** FY 2006 costs equal FY 2005 costs plus 27 new CBP Officer positions Grade 11 Step 1 with a prorated onboard
  date of April 2006. New position cost information derived from the FY 2006 CBP position model and does not
  include any equipment, training, travel costs, etc.

    The financial projections for FY 2006 indicate that CBP will incur 
a per bill cost of $0.52. If the payment is raised to $1.00, as 
proposed, CBP will collect $0.50 per bill (the other $0.50 to be 
deposited with the Secretary of the Treasury in lieu of the informal 
entry Merchandise Processing Fee).
    Based on these figures, and subject to the monetary limits set by 
law, CBP proposes raising the $0.66 payment to $1.00 so that the half 
of the payment associated with providing services to express 
consignment and centralized hub facilities is aligned with the actual 
costs incurred by CBP. The other half of the payment, collected in lieu 
of the MPF, is set by statute at equal to the payment for providing 
services to express consignment and centralized hub facilities.

Affected Regulatory Provisions

    Regulations implementing those provisions of 19 U.S.C. 58c(b)(9) 
that were amended by section 337(a) of the

[[Page 42781]]

Trade Act of 2002 and section 2004(f) of the Trade Act of 2004 are 
contained in parts 24 and 128 of title 19 of the CFR (19 CFR parts 24 
and 128).
    Part 24 sets forth rules pertaining to CBP's financial and 
accounting procedures. The provision within part 24 most directly 
affected by the statutory changes discussed above is Sec.  24.23, which 
concerns fees for processing merchandise and which, in paragraph 
(b)(2)(ii), reflects the terms of subparagraph (A) of the statute prior 
to its amendment by sections 337(a) and 2004(f). Also affected is Sec.  
24.17, which provides for reimbursable services of CBP employees. 
Specifically, paragraph (a)(12) of that section refers to reimbursement 
of the compensation and expenses of a CBP employee assigned to a 
centralized hub facility for the purpose of processing express 
consignment shipments under part 128 of the regulations, and paragraph 
(a)(13) contains a similar reimbursement reference regarding a CBP 
employee assigned to an express consignment carrier facility, with the 
facility being responsible for the reimbursement in each case.
    Part 128 sets forth regulations that apply specifically to express 
consignment carrier and hub facilities and their operators and users. 
The only provision within part 128 that is directly affected by the 
statutory changes discussed above is Sec.  128.11, which concerns the 
express consignment carrier and hub facility application process. 
Paragraphs (b)(7)(iv) and (v) of that section require the express 
consignment entity to agree to timely pay all reimbursable costs and to 
pay to CBP all relocation, training and other costs and expenses 
incurred by CBP in relocating necessary staff to or from the facility.
    This document proposes amendments to title 19 of the CFR to address 
the statutory changes made by section 337(a) of the Trade Act of 2002 
and 2004(f) of the Trade Act of 2004. In addition to the proposed 
changes to parts 24 and 128 mentioned above, this document also 
contains a proposed amendment to the CBP bond provisions of part 113 of 
title 19 of the CFR (19 CFR part 113). The proposed changes to the 
regulations contained in this document are discussed below.

Discussion of Proposed Amendments

Section 24.17

    In this section, which includes in paragraph (a) a list of various 
contexts in which parties-in-interest are required to reimburse CBP for 
services rendered, it is proposed to remove paragraph (a)(12) (which 
refers to services rendered at a centralized hub facility) and 
paragraph (a)(13) (which refers to services rendered at an express 
consignment carrier facility) and redesignate paragraph (a)(14) as 
paragraph (a)(12).
    The proposed removals are necessary because those two provisions: 
(1) correspond to clause (ii) of subparagraph (A) of the statute as it 
existed prior to the amendments made by sections 337(a) and 2004(f); 
and (2) are inconsistent with the ``only payment required'' language in 
clause (ii) of new subparagraph (B) of the statute.

Section 24.23

    In this section, it is proposed to modify paragraph (b) to 
incorporate the terms of the proposed $1.00 fee (increased from the 
existing $0.66 fee) and paragraph (c) to include conforming cross-
reference changes. The following points are noted regarding the 
proposed paragraph (b) changes:
    1. In paragraph (b)(1)(i)(A), which concerns the 0.21 percent ad 
valorem fee (merchandise processing fee) applicable to merchandise that 
is formally entered or released, a new sentence is added with a cross-
reference to new paragraph (b)(4) to reflect the terms of section 
2004(f) whereby, in the case of an express consignment carrier facility 
or centralized hub facility, merchandise that is formally entered is 
subject to a $1.00 per individual air waybill or bill of lading fee 
and, if applicable, to a merchandise processing fee.
    2. Paragraph (b)(2), which concerns fees for informal entry or 
release, is revised to refer to only the $2, $6, and $9 specific fees 
which, under the statute and the regulations, have never applied to 
express consignment carrier facilities, centralized hub facilities, and 
small airports and other facilities. The revised paragraph (b)(2) text 
includes new exception language regarding merchandise covered by 
paragraph (b)(3) or paragraph (b)(4).
    3. A new paragraph (b)(3) concerning small airports and other 
facilities is added. It is based on the relevant portion of current 
paragraph (b)(2)(ii)(A) of Sec.  24.23 that is proposed to be removed 
in the revision of paragraph (b)(2). The fee for small airports and 
other facilities is authorized by 19 U.S.C. 58c(b)(9)(A)(i). The fee is 
determined by application of 31 U.S.C. 9701. New paragraph (b)(3) 
follows that statutory structure.
    4. Paragraph (b)(4) is entirely new. Pursuant to 19 U.S.C. 
58c(b)(9)(A)(ii)(I) and (II), as amended by sections 337(a) and 
2004(f), paragraph (b)(4) requires each carrier using an express 
consignment carrier facility or a centralized hub facility to pay to 
CBP a fee (set forth in 19 U.S.C. 58c(b)(9)(A)(ii)(I) at $0.66 and now 
proposed to be increased to $1.00, as discussed above) assessed on each 
individual air waybill or individual bill of lading and, if merchandise 
is formally entered, the 0.21 ad valorem fee, if applicable.
    The assessment of this fee on each individual air waybill or bill 
of lading means that each shipment transported by a carrier and 
processed by CBP will be assessed the fee. Each shipment transported by 
a carrier and processed by CBP is represented by an individual air 
waybill and subject to the fee. Therefore, these proposed regulations 
apply the fee to each shipment covered by an individual air waybill. 
For purposes of these proposed regulations, an individual airway bill 
is the bill at the lowest level, and would not include a master bill. 
An example of an individual air waybill or bill of lading is a bill 
representing an individual shipment that has its own unique bill number 
and tracking number, where the shipment is assigned to a single 
ultimate consignee, and no lower bill unit exists. The use of master 
bills of lading, or other practices of consolidation by or for the 
convenience of the carrier, or its customers or for any other reason is 
irrelevant to the application of this user fee intended to cover CBP's 
costs associated with processing each individual shipment as 
represented by each individual air waybill or bill of lading. Moreover, 
the number and kind of entries filed, and the carrier's billing system 
for charging its customers, are irrelevant factors and are not 
considered in determining the fee's application.
    Paragraph (b)(4) also includes the quarterly payment requirement 
specified in clause (iii) of new subparagraph (B) of the amended 
statute. As in the case of paragraph (b)(3), discussed above, the text 
of paragraph (b)(4) includes the ``processing of letters, documents * * 
*'' and the ``$2,000 or less (or such higher amount * * *)'' language 
of the introductory text of subparagraph (A) of the amended statute, 
and also contains the exception reference regarding items entered for 
transportation and exportation or immediate exportation that clearly is 
relevant to the transaction-by-transaction assessment of the $1.00 fee.
    The text of paragraph (b)(4) also proposes some additional 
requirements and conditions regarding the payment of this fee, of which 
the following points are noted:

[[Page 42782]]

    1. In addition to identifying the due date for each timely 
quarterly payment as well as the CBP address to which the payments must 
be sent, the text sets forth specific information that must accompany 
the payment. The specified information is necessary to enable CBP to 
verify whether the proper amount of fees required under the statute has 
been paid.
    2. The text allows carriers to make adjustments of overpayments and 
underpayments in the next quarterly payment, similar to what is allowed 
in the case of railroad car and passenger arrival fees under Sec.  
24.22(d) and (g) of the CBP regulations (19 CFR 24.22(d) and (g)). 
However, if an adjustment is not made in the next quarterly payment, a 
request for a refund of an overpayment must be made within one year, 
similar to the practice in the case of harbor maintenance fees under 
Sec.  24.24(e)(4)(ii) of the CBP regulations (19 CFR 24.24(e)(4)(ii)), 
and interest will accrue in the case of an underpayment from the date 
payment was initially due.
    3. Paragraph (b)(4)(iv) provides that the underpayment or failure 
of a carrier using an express consignment carrier facility or a 
centralized hub facility to pay all applicable fees owed pursuant to 
paragraph (b) may result in the assessment of penalties under 19 U.S.C. 
1592 and any other action authorized by law.

Section 113.64

    In this section, which specifies the international carrier bond 
conditions, it is proposed to add a new sentence at the end of 
paragraph (a) to refer to the obligation of the carrier and its surety 
under the bond in the event that the carrier fails to pay the fees 
required under Sec.  24.23(b)(4). This provision is modeled on the 
approach taken in the case of quarterly payments of passenger 
processing fees.

Section 128.11

    In this section, which concerns the express consignment facility 
application process, the following changes are proposed:
    1. Paragraph (b)(2) is revised to require inclusion of a list of 
users of the facility with the application if the applicant is an 
express consignment carrier facility (a list of users is not necessary 
in the case of a hub facility because the operator of the facility and 
the user of the facility are one and the same). This information is 
necessary to assist CBP in verifying proper payment of the statutory 
fees.
    2. Paragraphs (b)(7)(iv) and (b)(7)(v), which refer to elements of 
the superseded statutory reimbursement concept, have been replaced with 
new provisions. New paragraph (b)(7)(iv) provides for an agreement on 
the part of an express consignment carrier facility to provide 
quarterly, and update, a list of all carriers using the facility and is 
intended to assist CBP in verifying the proper payment of fees by those 
carriers. Paragraph (b)(7)(v) refers to an agreement on the part of a 
hub facility or an express consignment carrier to timely pay all 
applicable processing fees prescribed in Sec.  24.23.

Comments

    Submitted comments will be available for public inspection in 
accordance with the Freedom of Information Act (5 U.S.C. 552) and Sec.  
103.11(b) of title 19 of the CFR (19 CFR 103.11(b)), on regular 
business days between the hours of 9 a.m. and 4:30 p.m. at the Trade 
and Commercial Regulations Branch, Office of Regulations and Rulings, 
Customs and Border Protection, 799 9th St., NW., Washington, DC. 
Arrangements to inspect submitted documents should be made in advance 
by calling Joseph Clark at (202) 572-8768.

Executive Order 12866

    This rule is not considered a ``significant regulatory action'' as 
defined in E.O. 12866. Accordingly, a regulatory assessment is not 
required.

Initial Regulatory Flexibility Act Analysis

    CBP has examined the impacts of the proposed rule on small entities 
as required by the Regulatory Flexibility Act (Pub. L. 96-354, 94 Stat. 
1164, codified at 5 U.S.C. chapter 6) and has prepared an Initial 
Regulatory Flexibility Act Analysis (IRFA). A small entity may be a 
small business (defined as any independently owned and operated 
business not dominant in its field that qualifies as a small business 
per the Small Business Act); a small not-for-profit organization; or a 
small governmental jurisdiction (locality with fewer than 50,000 
people).
    In this proposed rulemaking, small businesses are those that employ 
fewer than 1,500 employees or have annual revenues under $6.5 million. 
Based on annual data collected by CBP, there are 22 businesses that 
will be affected by the proposed rule. Of these, 10 are large 
businesses, 11 are small businesses, and 1 is a small, foreign-owned 
business. Sixteen of these companies (both large and small) are members 
of an association that owns and operates a consignment facility. That 
association acts as a single respondent for its members.

Reason for Agency Action; Objectives of and Legal Basis for the 
Proposed Rule

    Pursuant to the authority established in 19 U.S.C. 
58c(a)(9)(b)(ii), it is proposed to raise the existing $0.66 fee 
assessed on individual air waybills or bills of lading to $1.00 to more 
equitably align it with the actual costs incurred by CBP in processing 
these items.

Number and Types of Small Entities to Which the Proposed Rule Will 
Apply

    As previously noted, there are 12 small businesses that will be 
affected by the proposed rule. These companies are either courier 
services (NAICS code 492110) or arrange freight transportation (NAICS 
code 488510).
    An estimated 91 percent of the bills of lading submitted for fee 
assessment were from the three largest affected companies 
(approximately 41 million waybills in FY 2005). The waybills from the 
remaining large companies accounted for 2 percent (approximately 
865,000 in FY 2005). The remaining 1.5 million bills of lading were 
submitted by the 12 small businesses.
    Based on data from FY 2003 to FY 2005, half of the large companies 
have experienced annual increases in bills of lading; the remainder 
have experienced annual decreases. Data for the 12 small businesses 
also show increases and decreases in waybills. If current trends 
continue, a net increase in waybills of approximately 20 percent 
annually is projected for these small companies over the next several 
years.
    In FY 2005, the 12 small businesses submitted 1.5 million bills of 
lading at a cost of $1.0 million ($0.66 per bill of lading). If, in FY 
2006, 1.9 million bills of lading were submitted, this would result in 
a cost of $1.3 million under the current fee structure. Under the 
proposed fee of $1.00 per bill, we would expect costs to reach $1.9 
million, a difference of $0.6 million. The $0.6 million represents only 
4 percent of the total increase in fees CBP expects to be incurred as a 
result of growth in bills of lading and the fee increase proposed in 
this rule.
    CBP collected annual revenue data for the 12 small businesses 
affected. To determine the impact of the proposed rule on annual 
revenues, CBP calculated the projected difference in costs between the 
old and proposed fee and compared that (as a percentage) to average 
annual revenues. Based on these calculations, CBP estimates that the 
proposed rule will have a 5-percent impact or less on annual revenues 
for 5 of the small businesses. The rule will have a 5 to 10-percent 
impact on one of the companies and a greater than 10-

[[Page 42783]]

percent impact on four companies. CBP could not find data for one small 
business, and one was foreign-owned.
    In the course of CBP's examination of the impacts on annual 
revenues for these small businesses, CBP has determined that these 
entities will likely pass the cost of the increased fee on to their 
customers to the extent that they are able.
    On the basis of the foregoing analysis, CBP concludes that this 
proposed rule could have a significant impact on a substantial number 
of small entities. CBP is seeking comments on any of the regulatory 
requirements that could minimize the cost to small businesses. Comments 
may be submitted to the regulatory docket using any of the methods 
listed under ``Comments'' or ADDRESSES above. All input received during 
the public comment period will be considered.

Reporting and Recordkeeping

    This proposed rule will change current paperwork requirements. No 
new professional skills will be necessary for the preparations of the 
reports and records. For more detail, see ``Paperwork Reduction Act'' 
below.

Other Federal Rules

    This proposed rule does not duplicate, overlap, or conflict with 
other federal regulations.

Regulatory Alternatives

    CBP did not consider any alternatives to the proposed rule.

Paperwork Reduction Act

    The collections of information in this document are contained in 
Sec. Sec.  24.23 and 128.11 (19 CFR 24.23 and 128.11). This information 
is used by CBP to determine whether user fees required by statute have 
been properly paid. The likely respondents are business organizations 
including importers and air carriers.
    The collections of information for paying fees for customs services 
provided in connection with the informal entry or release of shipments 
at express consignment carrier facilities and centralized hub 
facilities was previously approved by the Office of Management and 
Budget under control number 1651-0052. In accordance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507), CBP has submitted to OMB for 
review the following adjustments to the information provided to OMB for 
the previously approved OMB control number to account for the changes 
proposed in this rule. An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a valid control number assigned by OMB.
    Report for quarterly payment under Sec.  24.23(b)(4)(ii):
    Estimated annual reporting and/or recordkeeping burden: 176 hours.
    Estimated average annual burden per respondent/recordkeeper: 8 
hours.
    Estimated number of respondents and/or recordkeepers: 22.
    Estimated annual frequency of responses: 4.
    Report for refund of overpayment under Sec.  24.23(b)(4)(iii):
    Estimated annual reporting and/or recordkeeping burden: 5 hours.
    Estimated average annual burden per respondent/recordkeeper: 1 
hour.
    Estimated number of respondents and/or recordkeepers: 5.
    Estimated annual frequency of responses: 2.
    Report by operators including the list of carriers under Sec.  
128.11(b):
    Estimated annual reporting and/or recordkeeping burden: 6 hours.
    Estimated average annual burden per respondent/recordkeeper: 2 
hours.
    Estimated number of respondents and/or recordkeepers: 3.
    Estimated annual frequency of responses: 4.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attention: Desk Officer for the 
Department of Homeland Security, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy should also be sent to the 
Regulations Branch, Office of Regulations and Rulings, Customs and 
Border Protection, 1300 Pennsylvania Avenue, NW. (Mint Annex), 
Washington, DC 20229. Comments should be submitted within the time 
frame that comments are due regarding the substance of the proposal.
    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (b) the 
accuracy of the agency's estimate of the burden of the collection of 
the information; (c) ways to enhance the quality, utility, and clarity 
of the information to be collected; (d) ways to minimize the burden of 
the collection of information on respondents, including through the use 
of automated collection techniques or other forms of information 
technology; and (e) estimates of capital or startup costs and costs of 
operations, maintenance, and purchase of services to provide 
information.

Signing Authority

    This document is being issued in accordance with Sec.  0.1(a)(1) of 
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of 
the Secretary of the Treasury (or his/her delegate) to approve 
regulations related to certain CBP revenue functions.

List of Subjects

19 CFR Part 24

    Accounting, Claims, Customs duties and inspection, Exports, 
Imports, Interest, Reporting and recordkeeping requirements, Taxes, 
User fees, Wages.

19 CFR Part 113

    Air carriers, Bonds, Customs duties and inspection, Exports, 
Freight, Imports, Reporting and recordkeeping requirements, Surety 
bonds.

19 CFR Part 128

    Administrative practice and procedure, Carriers, Couriers, Customs 
duties and inspection, Entry, Express consignments, Freight, Imports, 
Informal entry procedures, Reporting and recordkeeping requirements.

Amendments to the Regulations

    For the reasons set forth in the preamble, parts 24, 113, and 128 
of title 19 of the CFR (19 CFR parts 24, 113, and 128), are proposed to 
be amended as set forth below.

PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE

    1. The authority citation for part 24 continues to read in part as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General 
Note 3(i), Harmonized Tariff Schedule of the United States), 1505, 
1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 9701; Public Law 107-
296, 116 Stat. 2135 (6 U.S.C. 1 et seq.).
* * * * *

    Section 24.17 also issued under 19 U.S.C. 261, 267, 1450, 1451, 
1452, 1456, 1524, 1557, 1562; 46 U.S.C. 2110, 2111, 2112; Section 
24.23 also issued under 19 U.S.C. 3332;

* * * * *
    2. In Sec.  24.17:
    a. The section heading is revised to read as set forth below;
    b. Paragraphs (a) through (d) are amended by removing the words 
``Customs employee'' where they appear and adding in each place the 
term ``CBP employee; and
    c. Paragraphs (a)(12) and (a)(13) are removed and paragraph (a)(14) 
is redesignated as paragraph (a)(12).


Sec.  24.17  Reimbursable services of CBP employees.

* * * * *
    3. In Sec.  24.23:
    a. Paragraph (a) is amended by removing the word ``Customs'' each

[[Page 42784]]

place that it appears and adding the term ``CBP'';
    b. Paragraphs (b)(1)(i)(A) and paragraph (b)(2) are revised;
    c. New paragraphs (b)(3) and (b)(4) are added;
    d. The introductory text of paragraph (c)(1) is amended by removing 
the reference ``(b)(2)(i)'' and adding, in its place, the reference 
``(b)(2)'';
    e. Paragraph (c)(2)(i) is amended by removing the reference 
``(b)(2)(i)'' and adding, in its place, the reference ``(b)(2)'';
    f. The first sentence of paragraph (c)(3) is amended by removing 
the reference ``(b)(2)(i)'' and adding, in its place, the reference 
``(b)(2)''; and
    g. Paragraph (c)(5) is amended by removing the reference 
``(b)(2)(i)'' and adding, in its place, the reference ``(b)(2)''.
    The revisions and additions read as follows:


Sec.  24.23  Fees for processing merchandise.

* * * * *
    (b) Fees (1) Formal entry or release (i) Ad valorem fee (A) 
General. Except as provided in paragraph (c) of this section, 
merchandise that is formally entered or released is subject to the 
payment to CBP of an ad valorem fee of 0.21 percent. The 0.21 ad 
valorem fee is due and payable to CBP by the importer of record of the 
merchandise at the time of presentation of the entry summary and is 
based on the value of the merchandise as determined under 19 U.S.C. 
1401a. In the case of an express consignment carrier facility or 
centralized hub facility, merchandise that is formally entered is 
subject to a $1.00 per individual air waybill or bill of lading fee 
and, if applicable, to the 0.21 percent ad valorem fee which must be 
paid by the carrier as provided in paragraph (b)(4) of this section.
* * * * *
    (2) Informal entry or release. Except in the case of merchandise 
covered by paragraph (b)(3) or paragraph (b)(4) of this section, and 
except as otherwise provided in paragraph (c) of this section, 
merchandise that is informally entered or released is subject to the 
payment to CBP of a fee of:
    (i) $2 if the entry or release is automated and not prepared by CBP 
personnel;
    (ii) $6 if the entry or release is manual and not prepared by CBP 
personnel; or
    (iii) $9 if the entry or release, whether automated or manual, is 
prepared by CBP personnel.
    (3) Small airport or other facility. With respect to the processing 
of letters, documents, records, shipments, merchandise, or any other 
item that is valued at $2,000 or less, or any higher amount prescribed 
for purposes of informal entry in Sec.  143.21 of this chapter, a small 
airport or other facility must pay to CBP an amount equal to the 
reimbursement (including overtime) which the facility is required to 
make during the fiscal year under Sec.  24.17.
    (4) Express consignment carrier and centralized hub facilities. 
Each carrier using an express consignment carrier facility or a 
centralized hub facility must pay to CBP a fee in the amount of $1.00 
per individual air waybill or individual bill of lading and, if 
merchandise is formally entered, the ad valorem fee specified in 
paragraph (b)(1) of this section, if applicable. An individual air 
waybill or individual bill of lading is the individual document issued 
by the carrier for transporting and/or tracking an individual item, 
letter, package, envelope, record, document, or shipment. An individual 
air waybill is the bill at the lowest level, and is not a master bill 
or other consolidated document. An individual air waybill or bill of 
lading is a bill representing an individual shipment that has its own 
unique bill number and tracking number, where the shipment is assigned 
to a single ultimate consignee, and no lower bill unit exists. Payment 
must be made to CBP on a quarterly basis and must cover the individual 
fees for all subject transactions that occurred during a calendar 
quarter. The following additional requirements and conditions apply to 
each quarterly payment made under this section:
    (i) The quarterly payment must conform to the requirements of Sec.  
24.1, must be mailed to Customs and Border Protection, Revenue 
Division/Attention: Reimbursables, 6650 Telecom Drive, Suite 100, 
Indianapolis, Indiana 46278, and must be received by CBP no later than 
the last day of the month that follows the close of the calendar 
quarter to which the payment relates.
    (ii) The following information must be included with the quarterly 
payment:
    (A) The identity of the calendar quarter to which the payment 
relates;
    (B) The identity of the facility for which the payment is made and 
the port code that applies to that location and, if the payment covers 
multiple facilities, the identity of each facility and its port code 
and the portion of the payment that pertains to each port code; and
    (C) The total number of individual air waybills and individual 
bills of lading covered by the payment, and a breakdown of that total 
for each facility covered by the payment according to the number 
covered by formal entry procedures, the number covered by informal 
entry procedures specified in Sec. Sec.  128.24(e) and 143.23(j) of 
this chapter, and the number covered by other informal entry 
procedures.
    (iii) Overpayments or underpayments may be accounted for by an 
explanation in, and adjustment of, the next due quarterly payment to 
CBP. In the case of an overpayment or underpayment that is not 
accounted for by an adjustment of the next due quarterly payment to 
CBP:
    (A) In the case of an overpayment, the carrier may request a refund 
by writing to Customs and Border Protection, Revenue Division/
Attention: Reimbursables, 6650 Telecom Drive, Suite 100, Indianapolis, 
Indiana 46278. The refund request must specify the grounds for the 
refund and must be received by CBP within one year of the date the fee 
for which the refund is sought was paid to CBP; and
    (B) In the case of an underpayment, interest will accrue on the 
amount not paid from the date payment was initially due to the date 
that payment to CBP is made.
    (iv) The underpayment or failure of a carrier using an express 
consignment carrier facility or a centralized hub facility to pay all 
applicable fees owed to CBP pursuant to paragraph (b)(4) of this 
section may result in the assessment of penalties under 19 U.S.C. 1592 
and any other action authorized by law.
* * * * *

PART 113--CUSTOMS BONDS

    4. The authority citation for part 113 continues to read in part as 
follows:

    Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *
    5. In Sec.  113.64, paragraph (a) is amended by adding a new 
sentence at the end to read as follows:


Sec.  113.64  International carrier bond conditions.

* * * * *
    (a) * * * If the principal (carrier) fails to pay the fees for 
processing letters, documents, records, shipments, merchandise, or 
other items on or before the last day of the month that follows the 
close of the calendar quarter to which the processing fees relate 
pursuant to Sec.  24.23(b)(4) of this chapter, the obligors (principal 
and surety, jointly and severally) agree to pay liquidated damages 
equal to two times the processing fees not timely paid to CBP as 
prescribed by regulation.
* * * * *

PART 128--EXPRESS CONSIGNMENTS

    6. The authority citation for part 128 is revised to read as 
follows:


[[Page 42785]]


    Authority: 19 U.S.C. 58c, 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States), 1321, 1484, 1498, 
1551, 1555, 1556, 1565, 1624.

    7. In Sec.  128.11, paragraphs (b)(2), (b)(7)(iv) and (b)(7)(v) are 
revised to read as follows:


Sec.  128.11  Express consignment carrier application process.

* * * * *
    (b) * * *
    (2) A statement of the general character of the express consignment 
operations that includes, in the case of an express consignment carrier 
facility, a list of carriers that intend to use the facility.
* * * * *
    (7) * * *
    (iv) If the entity is an express consignment carrier facility, 
provide to Customs and Border Protection, Revenue Division/Attention: 
Reimbursables, 6650 Telecom Drive, Suite 100, Indianapolis, Indiana 
46278, at the beginning of each calendar quarter, a list of all 
carriers currently using the facility and notify that office whenever a 
new carrier begins to use the facility or whenever a carrier ceases to 
use the facility.
    (v) If the entity is a hub facility or an express consignment 
carrier, timely pay all applicable processing fees prescribed in Sec.  
24.23 of this chapter.
* * * * *

Deborah J. Spero,
Acting Commissioner, Bureau of Customs and Border Protection.
    Approved: July 24, 2006.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. E6-12067 Filed 7-27-06; 8:45 am]
BILLING CODE 9111-14-P