[Federal Register Volume 77, Number 35 (Wednesday, February 22, 2012)]
[Proposed Rules]
[Pages 10622-10648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2819]



[[Page 10621]]

Vol. 77

Wednesday,

No. 35

February 22, 2012

Part II





Department of Homeland Security





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U.S. Customs and Border Protection





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Department of the Treasury





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19 CFR Parts 4, 10, 18 et al.





Changes to the In-Bond Process; Proposed Rule

  Federal Register / Vol. 77, No. 35 / Wednesday, February 22, 2012 / 
Proposed Rules  

[[Page 10622]]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Parts 4, 10, 18, 19, 113, 122, 123, 141, 142, 143, 144, 146, 
151, and 181

[USCBP-2012-0002]
RIN 1515-AD81


Changes to the In-Bond Process

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security; Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Under the U.S. Customs and Border Protection (CBP) 
regulations, imported merchandise may be transported in-bond. This 
process allows imported merchandise to be entered at one U.S. port of 
entry without appraisement or payment of duties and transported by a 
bonded carrier to another U.S. port of entry provided all statutory and 
regulatory conditions are met. At the destination port, the merchandise 
is officially entered into the commerce of the United States and duties 
paid, or, the merchandise is exported. CBP is proposing various changes 
to the in-bond regulations to enhance CBP's ability to regulate and 
track in-bond merchandise and to ensure that the in-bond merchandise is 
properly entered and duties are paid or that the in-bond merchandise is 
exported. Among other things, the proposed changes would: eliminate the 
paper in-bond application (CBP Form 7512) and require carriers or their 
agents to electronically file the in-bond application; require 
additional information on the in-bond application including the six-
digit Harmonized Tariff Schedule number, if available, and information 
relevant to the safety and security of the in-bond merchandise; 
establish a 30-day maximum time to transport in-bond merchandise 
between United States ports, for all modes of transportation except 
pipeline; require carriers to electronically request permission from 
CBP before diverting the in-bond merchandise from its intended 
destination port to another port; and require carriers to report the 
arrival and location of the in-bond merchandise within 24 hours of 
arrival at the port of destination or port of export. CBP also proposes 
various other changes, including the restructuring of the in-bond 
regulations, so that they are more logical and better track the in-bond 
process. At this time, CBP is not proposing to change the in-bond 
procedures found in the air commerce regulations, except to change 
certain times periods to conform to the proposed changes in this 
document.

DATES: Comments must be received on or before April 23, 2012.

FOR FURTHER INFORMATION CONTACT: Gary Schreffler, Office of Field 
Operations, (202) 344-1535.

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-2012-0002.
     Mail: Border Security Regulations Branch, Office of 
Regulations and Rulings, U.S. Customs and Border Protection, Mint 
Annex, 799 9th Street NW., 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 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 International Trade, Regulations 
and Rulings, U.S. Customs and Border Protection, 799 9th Street, NW., 
5th Floor, Washington, DC. Arrangements to inspect submitted comments 
should be made in advance by calling Mr. Joseph Clark at (202) 325-
0118.

Table of Contents

I. Public Participation
II. Background
    A. The In-Bond System
    B. Legal Authority
    C. Types of In-Bond Entries
    D. The 2007 GAO Report on the In-Bond System
III. Proposed Amendments to the In-Bond Regulations
    A. Elimination of CBP Form 7512
    B. New Information Requirements for In-Bond Shipments
    C. 30-Day Transit Times Between Ports
    D. Diversion of In-Bond Cargo
    E. Report of Arrival
    F. Change to the Immediate Exportation (IE) Rules
    G. Sealing of Conveyances and Report of Seal Number to CBP
    H. Changes Necessitated by the Proposal to Require Electronic 
Filing
    I. Miscellaneous Changes to Parts 18 and 19
    J. Non-Substantive Changes
    K. List of Proposed Changes
IV. Regulatory Analyses
    A. Executive Order 12866--Regulatory Planning and Review
    B. Regulatory Flexibility Act
    C. Unfunded Mandates Reform Act of 1995
    D. Paperwork Reduction Act
V. Signing Authority
VI. Proposed Regulatory Amendments

Table of Acronyms

ABI Automated Broker Interface
GAO Government Accountability Office
IE Immediate Exportation
IT Immediate Transportation
T&E Transportation and Exportation

SUPPLEMENTARY INFORMATION:

I. 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. U.S. Customs and Border Protection (CBP) also invites 
comments that relate to the economic, environmental or federalism 
effects that might result from this proposed rule. Comments that will 
provide the most assistance to CBP in developing these procedures will 
reference a specific portion of the proposed rule, explain the reason 
for any recommended change, and include data, information, or authority 
that support such recommended change.

II. Background

A. The In-Bond System

    Generally, when a shipment of merchandise reaches the United 
States, the merchandise in the shipment may be entered for consumption, 
entered for warehouse, admitted into a foreign trade zone or entered 
for transportation in-bond to another port. The focus of this proposed 
rule is on merchandise that is entered for transportation in-bond. 
Transportation of merchandise in-bond is the movement of imported 
merchandise, secured by a bond, from one port to another prior to the 
appraisement of the merchandise and prior to the payment of duties. The 
transportation of merchandise in-bond is frequently referred to as an 
in-bond movement or shipment.
    Currently, in-bond merchandise may be transported through the 
United States without appraisement or the payment of duties, provided 
the carrier or other appropriate party obtains a bond and files a 
transportation entry on a CBP

[[Page 10623]]

Form 7512. When the in-bond merchandise reaches its destination, it 
must be entered for consumption, entered for warehouse, or exported. 
The bond requires the bonded carrier to comply with all laws and 
regulations governing the receipt, safekeeping, and disposition of 
bonded merchandise. The transportation entry accounts for the movement 
of the merchandise during the in-bond process.
    The in-bond system is widely used. According to a 2007 Report from 
the U.S. Government Accountability Office (GAO),\1\ in-bond shipments 
represent 30 to 60 percent of all imports that move through U.S. ports. 
This in-bond system provides flexibility to importers and facilitates 
the flow of trade and commerce by allowing importers and other 
interested parties to choose when and where to enter imported 
merchandise into the commerce of the United States or when and where to 
warehouse or export the merchandise. This enables the importer to delay 
payment of applicable duties for imported merchandise. The in-bond 
system also allows merchandise to be transported and exported without 
the payment of duties and without having to meet all of the entry 
requirements necessary to enter the goods into the commerce of the 
United States.
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    \1\ U.S. Government Accountability Office, Report to the 
Committee on Finance, U.S. Senate, International Trade: Persistent 
Weaknesses in the In-Bond Cargo System Impede Customs and Border 
Protection's Ability to Address Revenue, Trade, and Security 
Concerns, GAO-07-0561 (Washington, DC April 17, 2007).
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B. Legal Authority

    Subject to specified exceptions, 19 U.S.C. 1484 requires the 
``importer of record'' to use reasonable care to make entry by filing 
appropriate entry documentation to enable CBP to determine whether such 
cargo may be released from CBP's custody and to declare the value and 
classification and other relevant information to enable CBP to properly 
assess duties on the merchandise, collect accurate statistics, and 
determine whether any other applicable requirements of law are met.
    Two of the specified exceptions in 19 U.S.C. 1484 concern 
merchandise entered for immediate transportation to another port (19 
U.S.C. 1552) and merchandise entered for transportation and exportation 
(19 U.S.C. 1553). Pursuant to these sections, merchandise may be 
entered at a U.S. port of entry without appraisement or the payment of 
duties, for transportation to another port for entry into U.S. commerce 
or for exportation, provided that all statutory and regulatory 
conditions are met. Specifically, merchandise may be entered without 
the payment of duties if the merchandise is transported by a bonded 
carrier to another U.S. port (the port of destination or the port of 
export). Upon arrival at the port of destination or export, several 
options are available regarding the in-bond merchandise. The 
merchandise may be, among other things, entered for consumption, 
entered for further transportation by a bonded carrier to another port, 
or exported to a foreign port. In addition, pursuant to 19 U.S.C. 
1551a, bonded cartmen and lightermen are allowed to transport in-bond 
merchandise between certain specified ports.
    Pursuant to 19 U.S.C. 1623 and 1624, the Secretary of the Treasury 
is authorized, by regulation or specific instruction, to require bonds 
as necessary for the protection of the revenue or to ensure compliance 
with applicable laws and regulations. Following the enactment of the 
Homeland Security Act of 2002 (107 Pub. L. 296, 116 Stat. 2135), on May 
15, 2003, the Secretary of the Treasury delegated certain powers to 
perform customs revenue functions to the Secretary of Homeland 
Security. See Treasury Department Order 100-16.
    The applicable regulations regarding the in-bond system issued 
under the above authorities are set forth in title 19 of the Code of 
Federal Regulations (19 CFR), Parts 18, 122, and 123. Part 18 covers 
``Transportation in bond and merchandise in transit;'' part 122 covers 
``Air Commerce regulations;'' and part 123 covers ``Customs relations 
with Canada and Mexico.''

C. Types of In-Bond Entries

    The CBP regulations provide for several types of in-bond entries. 
The most commonly used in-bond entries are: Immediate Transportation 
(IT), Transportation and Exportation (T&E), and Immediate Exportation 
(IE). An IT entry allows merchandise, upon its arrival at a U.S. port, 
to be transported to another U.S. port, where a subsequent entry must 
be filed. See 19 U.S.C. 1552 and 19 CFR 18.11. A T&E entry allows 
merchandise to be entered at a U.S. port for transit through the United 
States to another U. S. port, where the merchandise is exported without 
the payment of duties. See 19 U.S.C. 1553 and 19 CFR 18.20. An IE entry 
allows cargo that has arrived at a U.S. port to be immediately exported 
from that same port without the payment of duties. See 19 CFR 18.7 and 
18.25.

D. The 2007 GAO Report on the In-Bond System

    This Notice of Proposed Rulemaking (NPRM) addresses certain 
weaknesses in the in-bond system identified by the Government 
Accountability Office (GAO) in a report to Congress dated April 2007 
(GAO Report).\2\ The GAO concluded that CBP does not adequately monitor 
and track in-bond goods; in particular, CBP does not consistently 
reconcile the in-bond document issued at the port of first arrival with 
documents at the port of destination or port of export. The GAO found 
that this diminishes CBP's ability to ensure that the cargo is either 
officially entered, with appropriate duties or quotas applied, or is in 
fact exported.\3\
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    \2\ Id.
    \3\ Id. at 3.
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    The GAO observed that the in-bond regulations provide unusual 
flexibility for the trade community. For example, the GAO noted that 
the regulations currently allow carriers from 15 to 60 days, depending 
on the mode of shipment, to reach their final destination and allow 
carriers to change a shipment's final destination without notifying 
CBP. The GAO also concluded that the in-bond system collects inadequate 
information about the in-bond merchandise, thus undermining CBP's 
efforts to manage associated security risks and ensure proper targeting 
of inspections.\4\ The GAO identified the in-bond regulations as a 
major contributing factor to these weaknesses of the in-bond system, 
and stated that both CBP's infrastructure and regulations had not kept 
pace with the dramatic increase in trade.\5\
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    \4\ Id.
    \5\ Id.
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    In response to the GAO report, CBP conducted an internal audit, 
formed a working group comprised of CBP in-bond experts, and worked 
closely with the trade community to identify solutions to the in-bond 
system's regulatory weaknesses. This NPRM reflects those deliberations 
and addresses the GAO's concerns by proposing various amendments to the 
in-bond regulations. The specific changes to the regulations are 
discussed in Section III. In conjunction with the proposed regulatory 
changes, CBP is also in the process of expanding and modernizing the 
capabilities of its centralized commercial trade processing system, the 
Automated Commercial Environment (ACE). This expansion and 
modernization of ACE will facilitate the implementation of the proposed 
regulatory changes. To eliminate errors in reporting overdue in-bond

[[Page 10624]]

movements, CBP is modifying an existing in-bond module in ACE. In 
addition to these long and short term systemic changes, CBP is 
implementing changes in policy and oversight of the in-bond process to 
ensure that the trade community complies with the in-bond requirements 
and to improve the tracking of in-bond merchandise.

III. Proposed Amendments to the In-Bond Regulations

    This document proposes to revise and modernize part 18 and some 
other parts of the regulations to change the in-bond process from a 
paper dependent entry process to an automated paperless process. In 
addition to modernizing the regulations to meet the realities of 
today's real time shipping environment, the proposed amendments are 
designed to provide CBP with the necessary tools to better track in-
bond merchandise, which is vital to security and enforcing trade 
compliance. Among the various changes, CBP is proposing the following 
five major changes to the in-bond process: (1) Except for merchandise 
transported by pipeline, eliminate the paper in-bond application (CBP 
Form 7512) and require carriers or their agents to electronically file 
the in-bond application, (2) require additional information on the in-
bond application including the six-digit Harmonized Tariff Schedule 
number, if available, and information relevant to the safety and 
security of the in-bond merchandise, (3) establish a 30-day maximum 
transit time to transport in-bond merchandise between United States 
ports, for all modes of transportation except pipeline, (4) require 
carriers to electronically request permission from CBP before diverting 
the in-bond merchandise from its intended destination port to another 
port, and (5) require carriers to report the arrival and location of 
the in-bond merchandise within 24 hours of arrival at the port of 
destination or port of export. At this time, CBP is not proposing to 
change the in-bond procedures found in the air commerce regulations at 
19 CFR part 122, subparts J and L, except to change the specified 
maximum transit and export times to conform to the proposed changes in 
Part 18. Any other proposed changes to those subparts will be done in a 
separate rulemaking.

A. Elimination of CBP Form 7512

    For merchandise to be transported in-bond, currently the carrier or 
designated person must obtain a bond and submit an entry document to 
the appropriate CBP official. See 19 CFR 18.2(b). This form is known as 
CBP Form 7512, or ``Transportation Entry and Manifest of Goods Subject 
to CBP Inspection and Permit.'' The bonded carrier is responsible for 
initiating the in-bond shipment, describing the merchandise on the 
manifest, including the quantity to be delivered for transportation in-
bond, and ensuring that the cargo is delivered to either the port of 
destination or the port of export within the prescribed periods, as 
detailed below.
    Paper filing raises security issues because it impedes CBP's 
ability to consider relevant data about the in-bond merchandise and the 
in-bond movements on a real-time basis. After the CBP Form 7512 is 
submitted, a CBP officer must manually input the data into the computer 
system and then manually close the in-bond transaction records once the 
in-bond merchandise is entered or exported, a time consuming and costly 
process. In addition, the lack of information about in-bond movements 
on a real-time basis makes it difficult for CBP to adequately track 
what merchandise is moving in-bond, where the goods are, or whether any 
illegal diversions have occurred. The GAO found, and CBP agrees, that 
due to the large volume of records and CBP's limited resources, the use 
of the paper form impedes risk management. In addition, the current 
paper-based system makes it difficult to target and detect violators, 
thereby impeding CBP's ability to hold carriers accountable when they 
fail to adhere to the in-bond requirements. Although some in-bond 
applications are currently transmitted electronically through the 
Automated Commercial System (ACS), electronic filing is not mandatory.
    To address these issues, CBP proposes to generally require carriers 
and other authorized persons to submit in-bond applications 
electronically using a CBP-approved electronic data interchange (EDI) 
system.\6\ Electronic filing of the in-bond application will facilitate 
automated screening of in-bond cargo and is necessary to increase 
security and to maximize CBP's use of limited resources. Electronic 
filing will also allow CBP to better utilize its enforcement resources 
to identify and penalize those in-bond filers who fail to adhere to the 
in-bond requirements. Accordingly, CBP proposes to amend 19 CFR part 18 
to require the carriers or one of the parties named in the newly 
created 19 CFR 18.1(c) to electronically submit the in-bond application 
to CBP via a CBP-approved EDI system.
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    \6\ Due to the unique circumstances related to pipeline 
shipments, in-bond applications for these shipments are not subject 
to electronic filing.
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    ACS will not be able to support all the functionality required to 
implement the proposed new requirements for in-bond filers described in 
detail below, such as the requirements for in-bond filers to provide 
additional data and information on the in-bond application, to update 
the in-bond record, to submit and update all diversion requests and 
CBP's approval of the diversion requests, and to provide the location 
of the merchandise when reporting arrivals. Therefore, CBP intends to 
designate ACE as the CBP-approved EDI system for submitting the in-bond 
application and other information that is required to be submitted 
under this proposal via a CBP-approved EDI system.\7\
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    \7\ Electronic in-bond requests which are filed via ABI (ABI QP) 
will be supported in ACE. ABI QP is an electronic in-bond request 
filed via ABI.
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B. New Information Requirements for In-Bond Shipments

    The current regulations generally require only limited information 
on the in-bond document (CBP Form 7512). In most cases, only a 
description and quantity of the merchandise are required. See 19 CFR 
18.2(b). The exception to the general requirement is merchandise 
entered under an IT entry. The description for IT merchandise must be 
sufficiently detailed to enable CBP to estimate the duties and taxes 
that will be owed on the merchandise. See 19 CFR 18.11(h). If IT 
merchandise is subject to detention or supervision of a federal agency, 
then the description must be sufficient to enable the agency concerned 
to determine the contents of the shipment. See 19 CFR 18.11(e). 
Additionally, certain textile shipments being transported under an IT 
bond must be sufficiently described to allow CBP to estimate taxes and 
duties. Id.
    The GAO found that the information that CBP collects on the CBP 
Form 7512 often lacks sufficient details pertaining to the imported 
merchandise. GAO noted that importers and shipping agents typically 
provide imprecise and vague descriptions of the cargo based on the 
information provided for insurance purposes. The GAO found that this 
diminishes CBP's ability to assess risks and monitor trade volume and 
value, and hampers CBP's ability to effectively target trade and 
revenue violations.
    CBP agrees with GAO's observations and concerns. CBP is also of the 
view that the more detailed information on the in-bond application will 
enable CBP to better ascertain whether the merchandise to be 
transported in-bond presents any health, safety, or

[[Page 10625]]

conservation issues that need to be addressed. With the additional and 
more detailed information described below, CBP will be able to provide 
immediate feedback to carriers on whether their cargo will require 
additional inspection and screening and enable CBP to enforce other 
agencies' cargo restrictions on a real-time basis. The proposed 
requirements, reflected in the proposed amendments to 19 CFR 18.1(d), 
are listed below.
    Description of the merchandise. Under the proposed rule the carrier 
or other responsible party will be required to provide the six-digit 
Harmonized Tariff Schedule (HTS) number of the merchandise if it is 
available. (CBP will also accept the eight or ten-digit HTS number). If 
the HTS number is not available, then the carrier or other responsible 
party must provide a detailed description providing the exact nature of 
the merchandise in sufficient detail to allow CBP and/or another 
government agency to determine if the merchandise is subject to a rule, 
regulation, law, standard or ban relating to health, safety or 
conservation. In either case, if the carrier or other responsible party 
knows that the merchandise to be transported in-bond is subject to a 
rule, regulation, law, standard or ban relating to health, safety or 
conservation enforced by CBP or another government agency, the carrier 
or other responsible party must provide a statement to this effect on 
the in-bond application. The statement must include the rule, 
regulation, law, standard or ban to which the merchandise is subject, 
and the name of the government agency responsible for enforcing it.
    Prohibited or restricted merchandise. The carrier or other 
responsible party must identify merchandise that is prohibited or 
subject to restricted importation in the U.S.
    Other identifying information. The carrier or other responsible 
party must provide the visa, permit, license or other similar number or 
identifying information related to the merchandise if such visa, 
permit, license or other similar information has been issued by the 
U.S. Government, a foreign government or some other issuing authority.
    Container and seal number. The carrier or other responsible party 
must provide the container number in which the merchandise is to be 
transported in-bond and the seal number of the container.
    This new information combined with the HTS number or the enhanced 
description, in the event the HTS number is not available, will enable 
CBP to better monitor the movement and required disposition of in-bond 
merchandise. It will also enable CBP to accurately and timely identify 
other agencies' jurisdiction over the admissibility of the in-bond 
merchandise.
    These new requirements are reflected in the proposed amendment to 
the regulations under 19 CFR 18.1(d), except for the container/
conveyance seal requirement, which is reflected in section 18.4.

C. 30-Day Transit Times Between Ports

    Under the current regulations, the time period to transport in-bond 
merchandise from the origination port to the destination port, or to 
the port of export, varies depending on the mode of transit. Currently, 
in-bond merchandise transported by truck must be delivered within 30 
days. See 19 CFR 18.2(c)(2). In-bond merchandise arriving by air 
transit and traveling to a final port of destination in the U.S. by air 
must be delivered to the destination port within 15 days of arrival at 
the origination port. See 19 CFR 122.119(b). In-bond merchandise that 
is transported by air to another port for exportation, must be exported 
within 15 days from the date that it was received by the forwarding 
airline. See 19 CFR 122.120(c). Sea vessels must deliver their in-bond 
shipments within 60 days from the date that the forwarding carrier 
takes receipt of the merchandise. See 19 CFR 18.2(c)(2). Failure to 
deliver the merchandise within the prescribed time periods constitutes 
an irregular delivery and subjects the bonded carrier to liquidated 
damages claims.
    CBP believes that having different time frames for each mode of 
transportation is confusing and burdensome to both CBP and the trade 
community. This is due to the fact that cargo is often transported 
through the in-bond system by more than one mode of transportation. In 
some cases, in-bond cargo is moved by air, sea, and truck. The set of 
varied time frames is confusing in this multi-modal environment and 
creates uncertainty as to which time frame applies. As a result, the 
required time frames are difficult to enforce. Moreover, the lengthy 
60-day time period for sea vessels is not appropriate in today's 
environment where the supply chain relies on rapid deliveries. During 
this period, the in-bond shipments are often unaccounted for, and 
transactions are open for too long a period of time, hindering CBP's 
enforcement and targeting efforts. Therefore, CBP proposes to harmonize 
the time limits across all modes of transportation, except for pipeline 
shipments, which will continue to have no time limit.
    After consultations with members of the trade community and 
observing transportation patterns, CBP has concluded that the 30-day 
time limit now applicable to truck shipments is a reasonable time 
period that can be applied for all modes of transportation (except 
pipeline shipments) and that this time period addresses CBP's security 
concerns. Therefore, this document proposes to amend 19 CFR to 
harmonize the maximum time limits across all modes of transportation to 
30 days. Under the proposal, subject to certain exceptions, the 
merchandise must be delivered to CBP at the port of destination or 
export within 30 days from the date CBP authorizes the in-bond 
movement. This is a change from the current regulations that measure 
the time frame for delivery from the date the merchandise was delivered 
to the forwarding carrier. This change will provide transparency and 
facilitate compliance. This uniform 30-day standard will enable CBP to 
better track in-bond shipments and will often enable CBP to ascertain 
at an earlier time point whether a shipment has been improperly 
diverted.

D. Diversion of In-Bond Cargo

    Under the current regulations, in-bond merchandise that is in 
transit or that has reached the destination port or port of export may 
be diverted to a new destination port or port of export. With some 
exceptions, prior application and CBP approval of the diversion is not 
required. See 19 CFR 18.5(a).
    The current diversion procedures make it virtually impossible for 
CBP to identify the ultimate destination of a diverted shipment and to 
determine whether the merchandise reaches that destination. This 
presents a security risk, a risk of circumvention of other agencies' 
admissibility requirements, and a risk that proper duties are not 
collected. In its report, the GAO noted several instances where in-bond 
merchandise was diverted without the payment of duties. For example, 
the GAO reported that ``the United States experienced an estimated $100 
million loss in trade revenue due to more than 7,500 in-bond shipments 
of apparel that were diverted from Los Angeles to U.S. commerce, from 
September 1999 through September 2002.'' \8\ The GAO also observed that 
the current regulations undermine CBP's efforts to track in-bond 
shipments and ensure their proper disposition. The GAO noted that the 
current regulations allow

[[Page 10626]]

an importer or carrier to open an in-bond transaction to transport its 
cargo to one U.S. port, and then initiate an additional in-bond 
transaction to transport the same cargo to another U.S. port.\9\ As a 
result, the importer or carrier gains additional time to transport the 
cargo and the associated original in-bond transaction remains open 
after the cargo reaches its final destination. As the GAO noted, ``an 
open in-bond record indicates risk that cargo could have been diverted 
into U.S. commerce without paying applicable duties or in violation of 
trade regulations or quotas.'' \10\ GAO noted that CBP's in-bond 
regulations that were intended to provide flexibility to business 
result in it being more difficult to track in-bond transactions.\11\
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    \8\ GAO report p. 1.
    \9\ GAO report p. 23.
    \10\ GAO report p. 21.
    \11\ GAO report p. 21-22.
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    CBP agrees that tighter control of cargo transiting between ports, 
including in-bond merchandise that will be diverted to a different 
port, is critical to security and is necessary to ensure the proper 
collection of duties, and to protect the health and safety of 
consumers.
    To address these issues, CBP proposes to amend section 18.5 to 
require in-bond carriers and other applicable parties to electronically 
request permission from CBP prior to diverting the imported merchandise 
to another port. CBP will run the diversion request through its systems 
to verify other agency requirements and to assess risk. The requestor 
will receive an electronic response from CBP either authorizing the 
diversion or, if it is not authorized, indicating the reason for the 
denial of the diversion request.
    CBP also proposes to amend sections 18.2 and 18.5 to close a 
loophole regarding in-transit times. Under the current regulations, the 
filing of a new transportation entry has the effect of allowing the 
carrier additional time to transport the cargo. Under the proposed 
amendments, neither diversion to another port nor the filing of a new 
in-bond application extends the transit time. In either case, the 
movement of diverted merchandise must be completed within the original 
30 day period.

E. Report of Arrival

    The current regulations require the carrier to report to CBP the 
arrival of any portion of the in-bond shipment promptly, but no more 
than two working days after the arrival of the merchandise at the port 
of destination or the port of export. The carrier generally must 
manually surrender the in-bond document, CBP Form 7512, to the port 
director, as notice of arrival of the merchandise. See 19 CFR 18.2(d).
    To allow for better tracking, CBP proposes to amend sections 18.2, 
18.7 and 18.20 to require the delivering carrier to report the arrival 
of each in-bond shipment within 24 hours of the arrival of the 
merchandise at the port of destination or the port of export and to 
require the delivering carrier to transmit the notice of arrival 
electronically via a CBP-approved EDI system.
    CBP is also proposing to amend the regulations at 19 CFR 18.1 by 
adding paragraph (j) to require the carrier, at time of arrival at the 
port of destination or the port of export, to electronically provide 
CBP with the physical location of the in-bond merchandise within the 
port. This will enable CBP to better monitor cargo in a high volume 
environment, and thus, to better enforce the in-bond requirements.
    To ensure that bond principals and sureties are sufficiently 
informed of the bond conditions and limitations arising out of the 
above noted proposed change, CBP proposes to amend 19 CFR 113.63, 
paragraph (c)(1) to provide that the arrival of the merchandise must be 
reported within 24 hours after the arrival of the merchandise.

F. Change to the Immediate Exportation (IE) Rules

    Entry for Immediate Exportation (IE) is often used when merchandise 
is unloaded from one conveyance and loaded onto a different conveyance 
for direct exportation from the U.S. CBP is proposing to amend section 
18.25 to require that shipments arriving at a United States port by 
truck, for which an immediate exportation entry is presented as the 
sole means of entry, will be denied a permit to proceed and the truck 
may be turned back to the country from which it came or, at the 
discretion of the port director, the truck may be allowed to file a new 
entry. CBP is proposing this change due to the heavy volume of truck 
shipments arriving in the U.S. from a foreign destination that are 
entered as for immediate exportation and then promptly exported back to 
the country from where the shipment originated. This practice has led 
to a serious problem with congestion at certain ports and has 
monopolized CBP's limited targeting and enforcement resources at the 
most congested ports. In some cases, these IE entries were utilized to 
engage in fraudulent activities and to circumvent international trade 
laws. This proposed change conforms the regulations to current CBP 
policy prohibiting this practice.

G. Sealing of Conveyances and Report of Seal Number to CBP

    This document proposes to amend section 18.4 to clarify the rules 
concerning sealing of conveyances by removing the underutilized and 
obsolete seal options that are no longer commercially necessary or 
operationally feasible and adding new requirements.
    Specifically, CBP proposes to amend 19 CFR 18.4 to: (1) Require the 
carrier or other authorized party to seal the containers and/or 
conveyance with seals pursuant to 19 CFR 24.13 and 24.13a and to ensure 
that the seals remain intact until the cargo arrives at the port of 
destination or port of export; (2) require the carrier or other 
authorized party to transmit the container/conveyance seal numbers to 
CBP as part of the in-bond application pursuant to section 18.1(d); (3) 
provide for the assessment of liquidated damages against the carrier or 
other authorized party for any unauthorized removal of the seals; and 
(4) specify that only CBP may waive the seal requirement.

H. Changes Necessitated by the Proposal To Require Electronic Filing

    CBP is proposing to update or remove certain provisions in 19 CFR 
that will no longer be relevant when electronic filing is required.
    For example, CBP proposes to delete paragraph 19 CFR 18.1(a)(1) 
from the regulations. This paragraph generally requires carriers to 
take receipt of the merchandise within 5 working days after 
presentation of an entry. For in-bond entries filed by paper, this time 
limit permits CBP officers to more easily verify the receipt of the 
merchandise by the carrier. Electronic filing will render this 
provision obsolete.
    CBP also proposes to delete paragraphs 19 CFR 18.2(a)(2), (3), and 
(4), each of which generally requires a CBP officer to supervise the 
lading of merchandise delivered to a bonded carrier. Paragraph 
18.2(a)(2) applies to merchandise delivered to a bonded carrier for 
transportation in-bond; paragraph 18.2(a)(3) pertains to merchandise 
delivered from a warehouse to a bonded carrier; and paragraph (a)(4) 
pertains to merchandise from a Foreign Trade Zone (FTZ) to a bonded 
carrier. CBP officers no longer physically supervise each lading. CBP 
has centralized its operations to reflect the great increase in trade 
volume that has transpired since these regulations were last amended. 
Under current policy, should a CBP officer wish to examine merchandise, 
a hold is placed

[[Page 10627]]

on the merchandise so that the shipment and its contents can be 
reviewed.
    CBP also proposes to amend the regulations pertaining to splitting 
up a shipment for exportation. Under the current regulations, the 
splitting up of a shipment for exportation is permitted in specified 
instances: When exportation of a shipment in its entirety is not 
possible by reason of the different destinations to which portions of 
the shipment are destined; when the exporting vessel cannot properly 
accommodate the entire quantity; or in other similar circumstances. The 
regulations impose no time limits for the exportation of split 
shipments. The lack of a time limit combined with paper filing of the 
in-bond application make it virtually impossible for CBP to properly 
oversee the export of split shipments and to know whether split 
shipments are properly exported. To address this issue, CBP proposes to 
amend 19 CFR 18.24(b), to require that all split shipments must be 
initiated within two days of the date that the split shipment is 
authorized. The electronic filing of the in-bond application will also 
help CBP track split shipments.

I. Miscellaneous Changes to Parts 18 and 19

    CBP proposes to add a new section 18.0 that will describe the scope 
of part 18 and define terms that are regularly used in part 18. The 
defined terms are: Common carrier, Origination port, Port of 
destination, Port of diversion, and Port of export.
    CBP also proposes several amendments to part 18 to ensure that the 
regulations are consistent with other existing provisions or current 
CBP policy, to address security concerns, and for clarification 
purposes.
    For example, there is an inconsistency in the regulations regarding 
what kinds of transportation entries may be used to transport 
explosives. Although current section 18.11(a) generally prohibits the 
movement of explosives via an IT entry, section 18.21(d) allows for the 
movement of explosives via an IT entry provided the importer has first 
obtained a license or permit from the proper government agency.\12\ CBP 
is proposing to delete the prohibition of explosives via an IT entry 
from section 18.11(a) and to add a new provision (section 
18.1(l)(2)(iv)) that allows for the movement of explosives via IT, T&E, 
and IE entries, provided the importer has first obtained the 
appropriate license or permit from the proper government agency. 
Because the new provision will duplicate current section 18.21(d), CBP 
proposes to delete that paragraph.
---------------------------------------------------------------------------

    \12\ By Federal Register notice published April 5, 1984 (49 FR 
13491), 19 CFR 18.21(d) was amended to permit the entry for 
transportation and/or exportation under a transportation and 
exportation, or an immediate transportation entry if the importer 
first obtains a license or permit from the proper governmental 
agency.
---------------------------------------------------------------------------

    CBP is also proposing to move paragraph 19 CFR 18.5(g), currently 
in the section on diversions, to its own section 19 CFR 18.46. This 
provision was added to the regulations as part of the Importer Security 
Filing and Additional Carrier Requirements rulemaking, commonly known 
as 10+2. That rule was published in the Federal Register as an interim 
final rule on November 25, 2008. (See 73 FR 71780). Pursuant to the 
10+2 rulemaking, importers and carriers are required to provide CBP 
with certain data elements via an importer security filing (ISF) before 
cargo is brought into the United States by vessel. The required 
information is necessary to improve CBP's ability to identify high-risk 
shipments. The effective date of the rule was January 26, 2009.
    Current paragraph 18.5(g) addresses the procedures to be followed 
when merchandise which, at the time of the transmission of the ISF, was 
intended to be entered as an immediate exportation (IE) or 
transportation and exportation (T&E), is entered instead as a 
consumption entry. It also addresses the procedures for the diversion 
of the in-bond merchandise. Under the regulation, if the in-bond 
movement will be diverted to a port other than the port of destination 
or export, or the IE or T&E is changed to a consumption entry, 
permission is needed from the port director at the port of origin which 
may only be granted upon receipt by CBP of a complete ISF filing.\13\ 
CBP has received feedback from the trade community that the placement 
of this provision in the in-bond diversion section is confusing because 
its scope exceeds diversion situations. CBP agrees and is proposing to 
move this provision to new section 18.46, entitled: Changes to Importer 
Security Filing Information. Additionally, CBP is proposing to delete 
the language requiring permission of the port director at the port of 
origin to divert merchandise to a new port, as this requirement will 
now be included in section 18.5.
---------------------------------------------------------------------------

    \13\ Under 19 CFR part 149, shipments intended to be transported 
in-bond as an immediate exportation or transportation and 
exportation are subject to ISF requirements different than those 
applicable to shipments intended to be entered for consumption.
---------------------------------------------------------------------------

    CBP is proposing to amend 19 CFR 18.7, 18.12, 18.20, 18.25, and 
18.26 to clarify the time limit for exporting or entering in-bond 
merchandise that has arrived at the port of destination or port of 
export. This will make it easier for CBP to verify that the in-bond 
merchandise was in fact either exported or entered. Specifically, CBP 
is proposing that in-bond merchandise that has arrived at the port of 
export or destination port must be exported, entered for consumption, 
or entered under another form of entry, no more than 15 days after the 
report of the arrival of the merchandise was submitted to CBP. Failure 
to enter or export the merchandise will result in the merchandise being 
subject to general order requirements under 19 CFR 4.37, 122.50, and 
123.10, as applicable, and the assessment of liquidated damages as 
appropriate. In accordance with these changes section 18.12(a) is being 
amended to remove the provision requiring merchandise that has not been 
entered or exported within six months to be entered for consumption.
    CBP is proposing to amend sections 18.7, 18.20, 18.25 and 18.26 to 
require the bonded carrier to update the in-bond record to reflect that 
merchandise has been exported and to specify that the port director may 
require evidence of exportation in accordance with the requirements of 
113.55.
    CBP is also proposing to remove the clause and legend in paragraph 
(f) of section 19.15 relating to flour exports to Cuba because the 
original basis for the provision, to facilitate compliance with the 
Cuban Reciprocity Treaty of 1902, is no longer applicable due to the 
termination of the treaty on August 21, 1963.

J. Non-Substantive Changes

    This document also proposes non-substantive amendments to 19 CFR to 
reflect the nomenclature changes made necessary by the transfer of the 
legacy U.S. Customs Service of the Department of the Treasury to the 
Department of Homeland Security (DHS) and DHS's subsequent renaming of 
the agency as U.S. Customs and Border Protection (CBP) on March 31, 
2007. See 72 FR 20131, dated April 23, 2007. As a consequence of these 
changes, this document proposes to update the regulations at 19 CFR 
part 18 to refer to the agency as CBP. Additionally, this document 
proposes to restructure the in-bond regulations contained in part 18 so 
that they are more logical and more consistently track the in-bond 
process. This document further proposes to amend part 18, so that all 
the in-bond entry types have the same requirements, when applicable. 
Finally, in an effort to make the regulations more user friendly and to 
make it easier to locate relevant

[[Page 10628]]

provisions, each paragraph has been given a title.

K. List of Proposed Changes

    Section 4.82 is amended by removing the reference to the manifest 
and Customs Form 7512 and replacing those terms with a reference to 
part 18.
    Section 10.60 is amended by replacing the requirement to file a 
Customs Form 7512 with the requirement to file an in-bond application 
pursuant to part 18 of this chapter.
    Section 12.5 is amended by removing the reference to the Customs 
carrier's manifest and Customs Form 7512 and requiring that the 
shipment be processed pursuant to part 18.
    Section 12.11 is amended by removing the reference to the Customs 
Form 7512, in-bond seals, and customs seals, and replacing those terms 
with a reference to part 18.
    Section 18.0 is created to provide the scope of part 18 and to 
define terms that are commonly used in the in-bond environment. The 
scope includes the requirements and procedures pertaining to the 
transportation of merchandise in-bond except as provided in parts 122 
(air commerce regulations) and 123 (CBP relations with Canada and 
Mexico). The defined terms are: Common carrier, Origination port, Port 
of destination, Port of diversion, and Port of export. This is a new 
provision.
    Section 18.1 is revised to provide the general requirements for 
filing in-bond entries that are currently set forth in 18.2. The 
current section 18.1 is redesignated as section 18.2. The new section 
18.1 contains the following provisions:
     Paragraph (a) is new and mandates the filing of an in-bond 
entry in order to transport merchandise in-bond.
     Paragraph (b) lists the types of transportation entries 
and withdrawals and is derived from current section 18.10(a).
     Paragraph (c) states who can file an in-bond application 
and is derived from current section 18.11(b).
     Paragraph (d) requires the submission of an in-bond 
application via a CBP-approved EDI system for in-bond entry types and 
is derived from the current section 18.2(b).
    [cir] Paragraph (d)(1) lists what information must be contained in 
the in-bond application.
    [ssquf] Paragraph (d)(1)(i) requires the description of the 
merchandise, consisting of the six-digit tariff number, if available. 
CBP will also accept the eight or ten-digit HTS number. If the six 
digit HTS number is not available, then a detailed description that 
includes the exact nature of the merchandise with sufficient detail to 
allow CBP and other government agencies to determine if the merchandise 
is subject to a rule, regulation, law, standard or ban relating to 
health, safety or conservation, must be provided.
    [ssquf] Paragraph (d)(1)(ii) requires that if the carrier or other 
responsible party submitting the in-bond application knows that the 
merchandise is subject to a rule, regulation, law, standard or ban 
relating to health, safety or conservation enforced by CBP or another 
government agency, a statement providing the rule, regulation, law, 
standard or ban to which the merchandise is subject to and the name of 
the government agency responsible for enforcing the rule, regulation, 
law, standard or ban, must be provided.
    [ssquf] Paragraph (d)(1)(iii) requires that merchandise that is 
prohibited or subject to restricted importation in the U.S. must be 
identified accordingly.
    [ssquf] Paragraph (d)(1)(iv) requires that certain textile articles 
be described in sufficient detail to allow CBP to estimate duties and 
taxes. This provision is derived and moved from current section 
18.11(e).
    [ssquf] Paragraph (d)(1)(v) requires that the description contain 
other identifying information such as a visa, permit, license, entry 
number, or other number, that has been issued by the U.S. government, 
foreign government or other issuing authority. This is a new 
requirement.
    [ssquf] Paragraph (d)(1)(vi) requires that the quantity of the 
merchandise, to the smallest piece count, be provided. This is derived 
from current section 18.2(b).
    [ssquf] Paragraph (d)(1)(vii) requires that the container and/or 
seal number be provided. This is a new requirement.
    [ssquf] Paragraph (d)(1)(viii) requires that the ultimate 
destination, either in the U.S. or abroad, be provided. This is a new 
requirement.
    [cir] Paragraph (d)(2) requires that the in-bond application be 
electronically transmitted to CBP via a CBP-approved EDI system and 
also requires that an in-bond application be filed for each conveyance 
transporting the shipment. This provision eliminates the option of 
filing a CBP Form 7512.
    [cir] Paragraph (d)(3) requires that all in-bond applications be 
submitted before the merchandise departs the origination port named in 
the in-bond application. This is a new provision.
    [cir] Paragraph (d)(4) provides that the initial bonded carrier, by 
filing the in-bond application, asserts that there is no discrepancy 
between the quantity of goods received from the importing carrier and 
the quantity of goods delivered to the initial bonded carrier. This 
provision is derived from the current section 18.2(b).
     Paragraph (e) requires a custodial bond on a CBP Form 301, 
containing the bond conditions set forth in 19 CFR 113.63, to transport 
merchandise in-bond. Currently, this requirement is included only in 
the section on direct exportation (section 18.25(b)). This new 
paragraph (e) applies to all types of in-bond entries.
     Paragraph (f) requires CBP authorization before 
merchandise can be transported in-bond and provides that movement 
authorization will be transmitted via a CBP-approved EDI system. This 
is a new provision.
     Paragraph (g)(1) provides CBP discretion to supervise the 
lading of merchandise delivered to a bonded carrier. This provision is 
derived from the current section 18.2(a)(2) and eliminates the 
requirement that CBP supervise the lading of in-bond merchandise, 
except in certain circumstances, and gives CBP the authority to 
exercise its supervision authority as necessary.
     Paragraph (g)(2) requires that the quantity of goods 
transported in-bond from a CBP bonded warehouse will be accounted for 
pursuant to 19 CFR 19.6. This requirement is contained in the current 
section 18.2(a)(3).
     Paragraph (g)(3) requires merchandise being delivered from 
a foreign trade zone to a bonded carrier for transportation in-bond to 
be supervised in accordance with the procedure set forth in section 
146.71(a) of this chapter.
     Paragraph (h) provides that the in-bond filer or any party 
provided for in paragraph (c), with the permission of the in-bond 
filer, may update or amend the in-bond record using a CBP-approved EDI 
system. This is a new provision.
     Paragraph (i) provides the time frame for the 
transportation of merchandise being transported in-bond.
    [cir] Paragraph (i)(1) requires merchandise being transported in-
bond to be delivered to CBP at the port of destination or export within 
30 days from the date CBP provides movement authorization to the in-
bond applicant. This 30-day requirement is applicable to all in-bond 
movements, except pipeline movements. Under this provision, neither the 
diversion to another port nor the filing of a new in-bond application 
will extend the in-transit time. This requirement is derived from 
current section 18.2(c)(2). See discussion in III.C. above for a more 
detailed explanation.

[[Page 10629]]

    [cir] Paragraph (i)(2) provides for an extension of the 30-day 
requirement in cases where it is anticipated that a shipment will not 
be capable of completing its transit within 30 days. It also provides 
that CBP may extend the in-transit period if delays are caused due to 
the examination or inspection of the merchandise by CBP or another 
government agency or for some other reason.
    [cir] Paragraph (i)(3) provides that CBP or any other government 
agency with jurisdiction over the merchandise may shorten the in-
transit time to less than 30 days and that notice of the shortened in-
transit time will be provided with the movement authorization 
transmitted by CBP.
     Paragraph (j) mandates the delivering carrier to report, 
via a CBP-approved EDI system, the arrival of any portion of an in-bond 
shipment within 24 hours of arrival at the port of destination or port 
of export and subjects the carrier to liquidated damages and other 
applicable claims for failure to do so. It also requires the delivering 
carrier to notify CBP of the physical location of the merchandise 
within the port. This provision is derived from current section 
18.2(d), but the 24-hour time period and the requirement to report the 
location of the merchandise is new.
     Paragraph (k) specifies that in-bond merchandise that has 
arrived at the port of destination or the port of export must be 
entered or exported within 15 calendar days from the date of arrival at 
the port of destination or port of export. On the 16th day it will 
become subject to general order requirements. This is a new provision.
     Paragraph (l) provides the requirements for processing 
merchandise that is regulated for purposes of health, safety and 
conservation, and merchandise that is restricted and prohibited, 
including narcotics and non-narcotics, explosives, and other prohibited 
articles. This paragraph is mostly comprised of provisions currently 
contained in part 18. This provision is applicable to all types of in-
bond shipments.
    [cir] Paragraph (l)(1) is a new provision that applies to all 
merchandise that is regulated for purposes of health, safety or 
conservation. It allows for the release of merchandise not in 
compliance with an applicable rule, regulation, law, standard, or ban 
relating to health, safety, or conservation, for transportation or 
exportation only upon the authorization of the government agency 
administering the rule, regulation, law, standard or ban, applicable to 
the merchandise.
    [cir] Paragraph (l)(2)(i) is derived from the current section 
18.21(a).
    [cir] Paragraph (l)(2)(ii) is derived from current section 
18.21(b).
    [cir] Paragraph (l)(2)(iii) is derived from current section 
18.21(c).
    [cir] Paragraph (l)(2)(iv) is derived from current section 18.21(d) 
and allows for explosives to be entered for immediate transportation, 
for transportation and exportation, or for immediate exportation, as 
specified by the approving government agency. The in-bond entry of 
explosives is permissible pursuant to Treasury Decision 84-77. See 49 
FR 13490, April 5, 1984.
    [cir] Paragraph (l)(2)(v) is derived from current section 18.11(d).
    Section 18.2 provides the bonding requirements for carriers, 
cartmen and lightermen. These provisions are currently located in 
section 18.1. The definition of ``common carrier'' that is currently 
located in paragraph (a) is removed and placed in the new section 18.0. 
Section 18.2(b) is amended to specifically name the ports between which 
merchandise can be transported in-bond by cartmen and lightermen.
    Section 18.3 provides the procedures for the transshipment of 
merchandise from one conveyance to another conveyance, and for carriers 
to notify CBP of the transshipment using a CBP-approved EDI system. 
Additionally, paragraph (d) provides notification requirements for the 
transshipment of merchandise in emergency situations and the 
notification requirements concerning the breaking of seals. This 
provision is derived from the current section 18.3.
    Section 18.4 provides the seal requirements for in-bond 
merchandise. It requires the carrier (not CBP) to seal the merchandise 
unless CBP authorizes a waiver; removes the references to the specific 
types of high security seals and refers instead to the requirements of 
section 19 CFR 24.13 and 24.13a; requires carriers to transmit the seal 
number to CBP; and provides that liquidated damages will be assessed 
against the carrier or other authorized party for any unauthorized 
removal of the seals. Additionally, former section 18.4a has been 
incorporated into section 18.4.
    Section 18.4a is deleted.
    Section 18.5 provides the procedures and requirements for diverting 
in-bond merchandise. As explained in III.D., the proposed section 18.5 
requires CBP permission to divert in-bond merchandise and if permission 
is granted, requires the merchandise to be delivered to the port of 
diversion within thirty days from the date that CBP first authorized 
the in-bond movement. In addition to these changes, the proposed 
section 18.5 contains a new paragraph (e) prohibiting the diversion of 
merchandise subject to a law, regulation, rule, standard or ban that 
requires authorization from another government agency, without the 
authorization of that agency. Additionally, it deletes the current 
paragraph (f), requiring permission to divert certain textile products 
because all diversions will require CBP approval.
    Section 18.6 provides the procedures and requirements for the 
handling of short shipments, shortages, entry and allowance. The 
proposed changes require that CBP be notified of a short shipment using 
a CBP-approved EDI system, and also require that a new in-bond 
application be filed in order to transport short shipped merchandise to 
the port of destination or port of export.
    Section 18.7 provides the requirements and procedures for the 
verification and lading of merchandise for exportation. It requires the 
report of arrival to be filed pursuant to section 18.1(i) within 24 
hours after the arrival of the merchandise instead of within two 
working days. It requires that the merchandise be exported within 15 
days after the report of arrival was filed with CBP. Otherwise, it will 
become subject to general order requirements. It also requires the 
bonded carrier to update the in-bond record within 24 hours of 
exportation to reflect that the merchandise has been exported and 
specifies that the port director may require evidence of exportation. 
Additionally, the proposed amendments would remove the requirement that 
CBP occasionally verify entries and withdrawals against the exporting 
carrier's records and instead gives CBP discretion to verify as needed.
    Section 18.8 provides the consequences for not meeting the 
requirements of part 18 and other conditions of the bond, including 
shortages, irregular delivery or nondelivery. The proposed amendment 
clarifies that the party whose bond is obligated on the transportation 
entry, generally the initial carrier, will be liable for the payment of 
liquidated damages and for the payment of all taxes, duties, fees and 
charges. This document provides that CBP will consider appropriate 
commercial or government documentation for determining whether proper 
delivery occurred.
    Section 18.9 which currently governs the examination by inspectors 
of trunk line associations or agents of the Surface Transportation 
Board of merchandise transported by rail is deleted and is

[[Page 10630]]

replaced with a provision derived from the current section 18.5(c). 
Portions of the current provision relate to associations that no longer 
exist and therefore are obsolete. Additionally, the provision relating 
to the Surface Transportation Board (STB) is duplicative of existing 
STB legal authority and is therefore unnecessary.
    Section 18.10. This section currently governs certain in-bond 
entries and procedures. Current paragraph (a), which lists the types of 
in-bond entries, is now contained in proposed section 18.1. Current 
paragraph (b) on procedures is deleted. Proposed section 18.10 is 
derived from current section 18.10a, entitled Special Manifest, which 
governs the processing of merchandise for which no other type of in-
bond movement is appropriate. Proposed section 18.10 requires the in-
bond filer to follow the filing requirements of section 18.1.
    Section 18.10a is deleted.
    Section 18.11 regarding IT shipments is significantly amended in 
this document with many of the current provisions being moved to 
section 18.1 and being made applicable to all in-bond shipments.
     Paragraph (a) is derived from the current paragraph (c). 
The proposed paragraph (a) is separated into two paragraphs, the first 
allowing for the depositing of IT merchandise outside the port limits, 
and the second providing the procedures for doing so. The provisions of 
the current paragraph (a) are now encompassed in proposed sections 
18.1(l)(2)(iv) and 18.1(l)(1).
     Paragraph (b) is derived from the current paragraph (f). 
The provisions in current paragraph (b) are now encompassed by proposed 
section 18.1(c).
     Paragraph (c) is derived from current paragraph (f).
     Current paragraph (d) concerning livestock is deleted 
because this provision is now encompassed in section 18.1a(l)(2)(v).
     Current paragraph (e) is deleted because this provision is 
now encompassed in sections 18.1(d)(1)(ii) and 18.1(l)(1) and (2).
     Current paragraph (h) is deleted.
     Current paragraph (i) is deleted.
    Section 18.12 regarding the entry procedures at the port of 
destination is amended by deleting the second portion of paragraph (a). 
That paragraph pertains to merchandise that hasn't been entered at the 
port of arrival within six months from the date the merchandise was 
imported into the origination port. This is now covered in section 18.1 
regarding the arrival and disposition of merchandise.
    Section 18.13 regarding the shipment of baggage in-bond is amended 
by deleting the requirement that the baggage be tagged and by requiring 
filing in accordance with the provisions of section 18.1.
    Section 18.14 regarding the shipment of baggage in transit to 
foreign countries is amended by deleting the requirement that the 
baggage be tagged.
    Section 18.20 regarding the general requirements for transportation 
and exportation entries is amended by requiring the filing of the in-
bond entry pursuant to section 18.1. Additionally, paragraph (c) 
requires the reporting of the arrival of merchandise at the port of 
export within 24 hours of arrival, and new paragraph (e) exempts 
certain merchandise from Electronic Export Information (EEI) filing 
requirements. A new paragraph (f) is added to require that the in-bond 
merchandise be exported within 15 calendar days from the date of 
arrival at the port of export. On the 16th day, the merchandise will 
become subject to general order requirements under Sec. Sec.  4.37, 
122.50, or 123.10 of this chapter, as applicable. A new paragraph (g) 
is added to require the bonded carrier to update the in-bond record 
within 24 hours of exportation to reflect the exportation and to 
specify that the port director may require evidence of exportation. 
Current paragraph (c) is deleted.
    Section 18.21, regarding restricted and prohibited merchandise, is 
deleted and reserved because these requirements are encompassed in 
proposed 18.1(l).
    Section 18.22 regarding the procedures for transfers and express 
shipments at the port of exportation is amended by removing the 
reference to vessels, thereby making it applicable to all modes of 
transportation.
    Section 18.23 regarding a change in the port of foreign destination 
is amended by requiring the carrier or other responsible party to 
notify CBP of a change of foreign destination within 24 hours of 
learning of the change, via a CBP-approved EDI system. It is further 
amended by rewording paragraph (b) to more clearly provide that the 
merchandise is subject to all the conditions that pertain to 
merchandise entered at a port of first arrival.
    Section 18.24 concerns the retention of goods within port limits 
and the splitting of shipments.
     Paragraph (a) regarding the retention of goods on a dock 
is amended so that it is applicable to merchandise within the port 
limits, and not just merchandise on a dock. It is also amended by 
requiring an in-bond application to retain in-transit merchandise at 
the port to be filed via a CBP-approved EDI system and by allowing the 
consent of the owner of the premises to be provided by email or other 
electronic means. Additionally, it is amended by deleting the sentence 
stating that the port director may take possession of the merchandise 
at any time and replacing it with a sentence that addresses what 
happens when the merchandise remains on the dock beyond the time period 
authorized by CBP. It provides that merchandise which remains in the 
port limits without authorization is subject to general order 
requirements under Sec. Sec.  4.37, 122.50, or 123.10 of this chapter, 
as applicable.
     Paragraph (b) regarding split shipments is amended by 
requiring the application to be filed via a CBP-approved EDI system.
    Section 18.25 covers direct exportations.
     Paragraph (a) is derived from the current paragraph (a) 
and addresses the immediate exportation of prohibited merchandise and 
carnets. It replaces the reference to Form 7512 with in-bond 
application.
     Paragraph (b) is new and provides that shipments arriving 
at a U.S. port by truck, for which an immediate exportation entry is 
presented as the sole means of entry, will be denied a permit to 
proceed. It further provides that the truck may be turned back to the 
country from which it came or, at the discretion of the port director, 
may be allowed to file a new entry.
     Paragraph (c) requires in-bond merchandise entered for 
immediate exportation or transportation and exportation to be exported 
within 15 calendar days from the date of arrival at the port of export.
     Paragraph (d) is derived from the current paragraph (c) 
and is amended to reflect the changes in 15 CFR part 30 concerning the 
filing of Electronic Export Information.
     Paragraph (e) is derived from the current paragraph (d) 
and is largely unchanged.
     Paragraph (f) is derived from the current paragraph (e) 
and is amended to require the bonded carrier to update the in-bond 
record within 24 hours of exportation to reflect the exportation.
     Paragraph (g) is derived from the current paragraph (f) 
and is largely unchanged.
     Paragraph (h) is a new provision and provides that the 
transfer of articles by express shipment must be in accordance with the 
procedures set forth in section 18.22.
    Section 18.26 concerns the procedures for indirect exportations.

[[Page 10631]]

     Paragraph (a) is derived from the first three sentences of 
the current paragraph (a) and replaces the reference to Customs Form 
7512 with an in-bond application. The current paragraph (b), which 
states that the merchandise shall be forwarded in accordance with the 
general provisions for transportation in bond, sections 18.1 through 
18.8 is deleted because the new section 18.0 regarding the scope of 
part 18 makes this provision unnecessary.
     Paragraph (b) is derived from the last three sentences of 
the current paragraph (a) and replaces the reference to Customs Form 
7512 with in-bond application.
     Paragraph (c) includes some minor wording changes.
     Paragraph (d) is revised to require that the bonded 
carrier cause the merchandise to be exported within 15 calendar days 
from the date of arrival at the port of export. (The current 
requirement is 30 days).
     Paragraph (e) is a new provision to require the bonded 
carrier to update the in-bond record within 24 hours of exportation to 
reflect the exportation and to specify that the port director may 
require evidence of exportation.
    Section 18.27 concerning port marks is amended by replacing Customs 
with CBP.
    Section 18.31 concerning pipeline transportation of bonded 
merchandise is amended by providing that the in-bond application will 
be made by submitting a CBP Form 7512. It is also amended by removing 
the requirement that the document of receipt be submitted with the in-
bond document and requiring instead that the document of receipt be 
submitted with the in-bond application. Additional nomenclature changes 
are made.
    Section 18.41 remains unchanged.
    Section 18.42 remains unchanged.
    Section 18.43 is largely unchanged other than to provide headings 
for each of the paragraphs.
    Section 18.44 remains unchanged.
    Section 18.45 remains unchanged.
    Section 18.46 is a new provision and is derived from the current 
section 18.5(g) governing changes to Importer Security Filing 
information. This change is explained in more detail in the discussion 
above in III.I. regarding diversion.
    Section 19.15 concerning procedures for the withdrawal for 
exportation of articles manufactured in-bond is amended by replacing 
the requirement to file a Customs Form 7512 with the requirement to 
file an in-bond application pursuant to part 18 of this chapter and by 
deleting the clause and legend in paragraph (f) relating to flour 
exports to Cuba.
    Section 113.63 concerning bond conditions is amended by adding 
language in paragraph (c) to require the principal, if a bonded 
carrier, to report in-bond arrivals in the manner and in the time 
prescribed by regulation and to export in-bond merchandise in the time 
periods prescribed by regulation.
    Section 122.118 concerning exports from the port of arrival is 
amended by changing the requirement to export transit air cargo within 
10 days to 15 days.
    Section 122.119 concerning the transportation of transit air cargo 
to a final port of destination in the United States, is amended by 
changing the time in which cargo must be delivered to CBP at the port 
of destination from 15 days to 30 days.
    Section 122.120 concerning the transportation of transit air cargo 
to another port for exportation, is amended by changing the time in 
which cargo must be delivered to CBP at the port of exportation from 15 
days to 30 days, and by increasing the time in which cargo listed on a 
transit air cargo manifest must be accounted for from 40 to 45 days. 
The 45-day time period represents the sum of the proposed 30 days for 
delivering the cargo to the port of exportation and the proposed 15 
days to export the cargo.
    Section 123.31 concerning merchandise in transit through the United 
States from point to point in Canada or Mexico is amended by adding a 
reference to section 18.1.
    Section 123.32 concerning merchandise in transit through the United 
States from point to point in Canada or Mexico is amended by replacing 
the requirement to file three copies of a Customs Form 7512 with the 
requirement to file an in-bond application pursuant to part 18 of this 
chapter.
    Section 123.42 concerning truck shipments transiting the United 
States from point to point in Canada is amended by requiring the filing 
of an in-bond application, the reporting of arrival at the U.S. port of 
export, and the notation by CBP of the waiver of sealing.
    Section 123.52 concerning commercial samples transported by 
automobile through the United States from point to point in Canada is 
amended to update the section references to conform with the other 
changes in this proposal.
    Section 123.64 concerning baggage in transit through the United 
States between ports in Canada or Mexico is amended by adding a 
reference to section 18.1 in paragraph (a) and removing paragraphs (b), 
(c) and (d).
    Section 141.61 concerning completion of statistical information 
relating to entry and entry summary documentation is amended by 
changing the reference to CBP Form 7512 to the in-bond application 
filed pursuant to part 18 of this chapter.
    Section 142.18 concerning the exportation of prohibited merchandise 
is amended by replacing the requirement to file a Customs Form 7512 
with the requirement to file an in-bond application pursuant to part 18 
of this chapter.
    Section 142.28 concerning the withdrawal of prohibited merchandise 
is amended by replacing the requirement to file a Customs Form 7512 
with the requirement to file an in-bond application pursuant to part 18 
of this chapter.
    Section 143.1(c) concerning the use of the Automated Broker 
Interface (ABI) to transmit certain information to CBP is amended by 
removing the provision allowing ABI to be used to transmit forms 
relating to in-bond movements (CBP Form 7512).
    Section 144.22 concerning the transfer of the right to withdraw 
merchandise is amended by replacing the reference to Customs Form 7512 
with a reference to the in-bond application pursuant to part 18 of this 
chapter.
    Section 144.36 concerning withdrawals for transportation is amended 
by replacing all the references to Customs Form 7512 with references to 
the in-bond application pursuant to part 18 of this chapter and by 
changing the reference in section 144.36(g)(4) from section 18.5(d) to 
section 18.9.
    Section 144.37 concerning withdrawal for exportation is amended by 
replacing all the references to Customs Form 7512 with references to 
the in-bond application pursuant to part 18 of this chapter and 
updating the various references to the section in part 18 to conform 
with the other part 18 changes in this proposal.
    Section 146.62 concerning the entry of merchandise into foreign 
trade zones is amended by replacing the requirement to submit a Customs 
Form 7512 with the requirement to file an in-bond application pursuant 
to part 18 of this chapter.
    Section 146.66 concerning the transfer of merchandise from one zone 
to another is amended by replacing the various references to Customs 
Form 7512 with references to the in-bond application pursuant to part 
18 of this chapter and by replacing the words ``Customs Form'' with 
``CBP Form'' throughout.

[[Page 10632]]

    Section 146.67 concerning the transfer of merchandise for 
exportation is amended by replacing the requirement to submit a Customs 
Form 7512 with the requirement to file an in-bond application pursuant 
to part 18 of this chapter.
    Section 146.68 concerning the use of weekly permits for the 
transfer of merchandise from a zone is amended by replacing the 
requirement to use the Customs Form 7512, with the requirement to file 
an in-bond application pursuant to part 18 of this chapter.
    Section 151.9 concerning immediate transportation entry delivered 
outside port limits is amended by updating the section 18 reference to 
conform with this proposal.
    Section 181.47(b)(2)(ii)(E) concerning completion of a drawback 
claim for merchandise which is examined at one port but exported 
through border points outside of that port is amended by replacing 
``Customs Form 7512'' with ``In-bond application submitted pursuant to 
part 18 of this chapter.''

IV. Regulatory Analyses

A. Executive Order 12866--Regulatory Planning and Review

    Executive Order 12866 (Regulatory Planning and Review; September 
30, 1993) requires Federal agencies to conduct economic analyses of 
significant regulatory actions as a means to improve regulatory 
decision-making. Significant regulatory actions include those that may 
``(1) [h]ave 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 governments or communities; 
(2) [c]reate a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency; (3) [m]aterially alter the 
budgetary impact of entitlements, grants, user fees, or loan programs 
or the rights and obligations of recipients thereof; or (4) [r]aise 
novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in this Executive 
Order.'' It has been determined that this rule is not a significant 
regulatory action.

B. Regulatory Flexibility Act

    Under the requirements of the Regulatory Flexibility Act of 1980 as 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (RFA/SBREFA) and E.O. 13272, titled ``Proper Consideration of 
Small Entities in Agency Rulemaking,'' agencies must consider the 
potential impact of regulations on small businesses, small governmental 
jurisdictions, and small organizations during the development of their 
rules. CBP is required to prepare a regulatory flexibility analysis and 
take other steps to assist small entities, unless the Agency certifies 
that a rule will not have a ``significant economic impact on a 
substantial number of small entities.'' \14\ The U.S. Small Business 
Administration (SBA) provides guidelines on the analytical process to 
assess the impact of a particular rulemaking.\15\ The following summary 
presents impact of this rule on small entities.\16\
---------------------------------------------------------------------------

    \14\ Regulatory Flexibility Act as amended by the Small Business 
Regulatory Enforcement Fairness Act, 5 U.S.C. 601 et seq.
    \15\ U.S. SBA, Office of Advocacy, ``A Guide for Government 
Agencies: How to Comply with the Regulatory Flexibility Act, 
Implementing the President's Small Business Agenda and Executive 
Order 13272,'' May 2003.
    \16\ The complete ``Regulatory Flexibility Analysis and IRFA'' 
can be found in the docket for this rulemaking: http://www.regulations.gov.
---------------------------------------------------------------------------

    The types of entities subject to the rule's requirements include 
originating or bonded carriers, brokers, and other supply chain 
entities (e.g., exporters, manufacturers and suppliers, cargo 
consolidators, freight forwarders, 3PLs, and CFS) involved in the 
transaction filing, conveyance, and arrivals reporting of in-bond 
goods. If the initial screening analysis (discussed below) indicates 
that the rule might significantly affect a substantial number of small 
entities, CBP is required to conduct an Initial Regulatory Flexibility 
Analysis (IRFA) to further assess these impacts.
    Based on FY 2007 in-bond shipment data, we estimate at least 6,180 
trade entities could be affected by the rule, including 5,081 non-air 
carriers (sea vessel, rail, and truck carriers), between 212 and 221 
air carriers, and possibly at least 870 other entities (e.g., freight 
forwarders, cargo consolidators, 3PLs, brokers, and CFS). The specific 
requirements of the rule (file in-bond transactions electronically, 
report in-bond arrivals electronically, provide additional data 
elements, request diversions, and meet allowable in-bond transit times) 
will affect all of these entities in some way. CBP lacks the data 
necessary to quantify the incremental cost of the rule or differentiate 
these costs by entity type, including size and nationality (many of the 
entities affected are likely foreign). Instead, we discuss these costs 
qualitatively. The following exhibit lists various alternatives CBP 
considered in developing this rule and characterizes their costs.

[[Page 10633]]



          Exhibit 3--Relative Costs of Regulatory Alternatives
------------------------------------------------------------------------
                                    Proposed
   Regulatory alternative         requirements          Relative cost
------------------------------------------------------------------------
                                                           Highest
 
1 (Chosen alternative)......  1. File all in-bond   All of the proposed
                               application forms     requirements or
                               electronically.       changes to the in-
                              2. Submit additional   bond regulations
                               in-bond shipment      are implemented.
                               data and              Entities filing in-
                               information.          bond forms and/or
                              3. Maximum in-bond     reporting in-bond
                               transit time of 30    arrivals by paper
                               days..                only (582 non-air
                              4. Request             carriers plus an
                               permission prior to   unknown number of
                               diverting in-bond     air carriers and
                               cargo                 other filers) would
                               electronically.       have to obtain
                              5. Report in-bond      electronic access
                               arrivals              to CBP or retain a
                               electronically        third party agent
                               within 24 hours..     or service
                                                     provider. All
                                                     entities (5,081 non-
                                                     air carriers plus
                                                     an unknown number
                                                     of air carriers and
                                                     other filers) would
                                                     have to obtain and
                                                     provide additional
                                                     in-bond shipment
                                                     data to CBP by
                                                     reprogramming their
                                                     existing business
                                                     and information
                                                     systems and
                                                     processes, using a
                                                     third-party service
                                                     provider, or
                                                     relying on their
                                                     trade partners.
                                                     Those entities
                                                     reporting arrivals
                                                     (4,388 non-air
                                                     carriers plus an
                                                     unknown number of
                                                     air carriers and
                                                     other filers) would
                                                     have to reprogram
                                                     their existing
                                                     business and
                                                     information systems
                                                     and processes or
                                                     use a third party
                                                     service provider to
                                                     electronically
                                                     report arrivals
                                                     within 24 hours
                                                     with the location
                                                     of the merchandise.
------------------------------------------------------------------------
                                                            Lower
 
2...........................  1. File all in-bond   Costs are lower than
                               application forms     Alternative 1 because the
                              3. Maximum in-bond     costs associated
                               transit time of 30    with obtaining and
                               days..                providing the
                              4. Request             additional in-bond
                               permission prior to   shipment data and
                               diverting in-bond     information would
                               cargo                 not be incurred,
                               electronically.       which could be
                              5. Report in-bond      significant for the
                               arrivals              most frequent
                               electronically        filers. However,
                               within 24 hours..     overall costs could
                                                     still be
                                                     significant to
                                                     comply with the
                                                     requirement of
                                                     reporting arrivals
                                                     within 24 hours.
------------------------------------------------------------------------
                                                           Lowest
 
3...........................  1. File all in-bond   Costs are lowest of
                               application forms     the three
                               electronically.       regulatory
                              3. Maximum in-bond     alternatives
                               transit time of 30    because only a
                               days.                 relatively small
                              4. Request             number of entities
                               permission prior to   that currently file
                               diverting in-bond     in-bond forms by
                               cargo                 paper only (537 non-
                               electronically.       air carriers plus
                                                     an unknown number
                                                     of air carriers and
                                                     other filers) would
                                                     be affected. These
                                                     entities must
                                                     obtain electronic
                                                     access to CBP or
                                                     retain a third
                                                     party agent or
                                                     service provider.
------------------------------------------------------------------------

    To determine whether a substantial number of small entities would 
be affected by the rule, we ideally would have employment and revenue 
information and data for all affected entities. The SBA defines 
entities as ``small'' if they fall below certain size standards in 
their industry (as defined by a North American Industry Classification 
System (NAICS) Code), such as the number of employees or average annual 
receipts.\17\ However, we do not have this information, as well as 
information identifying all of the entities that may be affected.\18\ 
Other available descriptive data such as in-bond shipment or 
transaction volume, transaction type, and whether an entity files in-
bond transactions or report in-bond arrivals are unreliable since they 
may not necessarily be related to entity size.
---------------------------------------------------------------------------

    \17\ U.S. SBA, Summary of Size Standards by Industry, as viewed 
at http://www.sba.gov/contractingopportunities/officials/size/summaryofssi/index.html on July 28, 2010.
    \18\ We only have limited data on 5,081 unique non-air carriers, 
which comprise at most about 82 percent of all affected entities.
---------------------------------------------------------------------------

    As a result, we use national data on entities in the affected 
industries from the SBA to determine whether a substantial number of 
small entities are likely to be affected by the rule. Use of these data 
is imperfect because not all entities included in the SBA data set 
participate in the processing and movement of in-bond goods. Based on 
these data, nearly all of the entities in all industry groups likely to 
be affected by the proposed rule are small. CBP concludes, therefore, 
that a substantial number of small entities are likely to be affected 
by the proposed rule. CBP has characterized but can not estimate the 
potential costs to entities of complying with the rule as proposed. As 
a result, we cannot quantify the impact on small entities. We, 
therefore, conclude that the rule may significantly affect a 
substantial number of small entities, and provide a summary of the IRFA 
prepared to further assess these impacts.
Summary IRFA
    The description of the proposed requirements, the legal basis for 
the proposed rule, and the number and types of entities affected have 
been described elsewhere in this preamble and are not repeated here.
    The reporting and recordkeeping skills needed are professional 
skills necessary for preparation of electronic in-bond transactions, 
arrivals notifications, and diversion requests. These include basic 
administrative, recordkeeping, and information technology skills used 
to manage data transaction, shipment, manifest, security, and other 
data used in the commercial supply chain environment, along with a 
working knowledge of import shipment arrangements, brokerage, 
conveyance/shipping, consolidation, and customs procedures and 
regulation.
    CBP is unaware of other relevant Federal rules that may duplicate, 
overlap or conflict with the proposed rule.

[[Page 10634]]

    CBP does not at this time identify any significant regulatory 
alternatives to the rule that specifically address small entities while 
also meeting the rule's objective, which is to improve CBP's ability to 
regulate, track, and control in-bond cargo and to ensure that proper 
duties are paid or that the in-bond merchandise is exported. As 
described above, we evaluated three regulatory alternatives to consider 
changes in the in-bond requirements, including those that minimize the 
incremental cost burden to carriers, brokers, and agents, including 
small entities.
    Though we cannot determine the precise number of small entities 
affected by the rule, we conclude that the number will be substantial, 
including small carriers, brokers, and other entities involved in the 
transaction filing, conveyance, and arrivals reporting of in-bond 
goods. However, based on the data limitations discussed in this chapter 
and the sources of uncertainty discussed below, we are uncertain 
whether the costs borne by these small entities (e.g., filing in-bond 
transactions electronically, providing additional in-bond shipment data 
and information, requesting diversions electronically, reporting in-
bond arrivals electronically within 24 hours) will be significant. 
Therefore, based on the results of this analysis, CBP believes that the 
rule may have a significant economic impact on a substantial number of 
small entities. As a result, CBP has prepared an IRFA and seeks 
comments on this conclusion. The complete ``IFRA'' can be found in the 
docket for this rulemaking: http://www.regulations.gov.

C. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA) requires 
agencies to assess the effects of their regulatory actions on State, 
local, and tribal governments and the private sector. This proposed 
rule is exempt from these requirements under 2 U.S.C. 1503 (Exclusions) 
which states that UMRA ``shall not apply to any provision in a bill, 
joint resolution, amendment, motion, or conference report before 
Congress and any provision in a proposed or final Federal regulation 
that is necessary for the national security or the ratification or 
implementation of international treaty obligations.'' \19\
---------------------------------------------------------------------------

    \19\ ``Unfunded Mandates Reform Act of 1995 (UMRA),'' 2 U.S.C. 
1503.
---------------------------------------------------------------------------

D. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (Pub. L. 
104-13, 44 U.S.C. 3507) the collections of information for this NPRM 
are included in an existing collection for CBP Form 7512 and 7512A (OMB 
control number 1651-0003). 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 estimated burden hours related to CBP Form 7512 and 7512A for 
OMB Control number 1651-0003 are as follows:
    Estimated Number of Respondents: 6,200.
    Estimated Number of Responses: 5,400,000.
    Estimated Time per Response: 10 minutes (0.166 hours).
    Estimated Total Annual Burden Hours: 896,400.
    The burden hours in this collection have been updated to reflect 
revised and updated estimates of filers of CBP Form 7512. These most 
recent data available are also used in the Regulatory Assessment 
summarized above.

V. Signing Authority

    This proposed regulation is being issued in accordance with 19 CFR 
0.1(a)(1) pertaining to the Secretary of the Treasury's authority (or 
that of his delegate) to approve regulations related to certain customs 
revenue functions.

Proposed Regulatory Amendments

List of Subjects

19 CFR Part 4

    Customs duties and inspection, Exports, Freight, Harbors, Maritime 
carriers, Oil pollution, Reporting and recordkeeping requirements, 
Vessels.

19 CFR Part 10

    Caribbean Basin initiative, Customs duties and inspection, Exports, 
Reporting and recordkeeping requirements.

19 CFR Part 12

    Customs duties and inspection, Reporting and recordkeeping 
requirements.

19 CFR Part 18

    Common carriers, Customs duties and inspection, Exports, Freight, 
Penalties, Reporting and recordkeeping requirements, and Surety bonds.

19 CFR Part 19

    Customs duties and inspection, Exports, Freight, Reporting and 
recordkeeping requirements, Surety bonds, Warehouses, Wheat.

19 CFR Part 113

    Common carriers, Customs duties and inspection, Exports, Freight, 
Laboratories, Reporting and recordkeeping requirements, Surety bonds.

19 CFR Part 122

    Common carriers, Customs duties and inspection, Exports, Freight, 
Penalties, Reporting and recordkeeping requirements, and Security 
measures.

19 CFR Part 123

    Canada, Customs duties and inspection, Freight, International 
boundaries, Mexico, Motor carriers, Railroads, Reporting and 
recordkeeping requirements, Vessels.

19 CFR Part 141

    Customs duties and inspection, Reporting and recordkeeping 
requirements.

19 CFR Part 142

    Canada, Customs duties and inspection, Mexico, Reporting and 
recordkeeping requirements.

19 CFR Part 143

    Customs duties and inspection, Reporting and recordkeeping 
requirements.

19 CFR Part 144

    Customs duties and inspection, Reporting and recordkeeping 
requirements, Warehouses.

19 CFR Part 146

    Administrative practice and procedure, Customs duties and 
inspection, Exports, Foreign trade zones, Penalties, Petroleum, 
Reporting and recordkeeping requirements.

19 CFR Part 151

    Cigars and cigarettes, Cotton, Customs duties and inspection, Fruit 
juices, Laboratories, Metals, Oil imports, Reporting and recordkeeping 
requirements, Sugar.

19 CFR Part 181

    Administrative practice and procedure, Canada, Customs duties and 
inspection, Exports, Imports, Mexico, Reporting and recordkeeping 
requirements, Trade agreements.

Proposed Amendments to the Regulation

    For the reasons set forth in the preamble, it is proposed to amend 
parts 4, 10, 18, 113, 122, 123, 141, 142, 143, 144, 146, 151, and 181 
of title 19 of the Code of Federal Regulations as set forth below.

[[Page 10635]]

19 CFR CHAPTER 1--AMENDMENTS

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

    1. The general authority citation for part 4 continues 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. 501, 60105.
* * * * *
    2. In Sec.  4.82, revise paragraph (b) to read as follows:


Sec.  4.82  Touching at foreign port while in coastwise trade.

* * * * *
    (b) The master must also present to the port director a coastwise 
Cargo Declaration in triplicate of the merchandise to be transported 
via the foreign port or ports to the subsequent ports in the United 
States. It must describe the merchandise and show the marks and numbers 
of the packages, the names of the shippers and consignees, and the 
destinations. The port director will certify the two copies and return 
them to the master. Merchandise carried by the vessel in bond under a 
transportation entry pursuant to part 18 of this chapter is not to be 
shown on the coastwise Cargo Declaration.
* * * * *

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    3. The general authority citation for part 10 continues to read as 
follows:

    Authority:  19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 
1498, 1508, 1623, 1624, 3314.

    4. In Sec.  10.60, revise paragraphs (a) and (d) to read as 
follows:


Sec.  10.60  Forms of withdrawals; bond.

    (a) Withdrawals from warehouse shall be made on CBP Form 7501. Each 
withdrawal must contain the statement prescribed for withdrawals in 
Sec.  144.32 of this chapter and all of the statistical information as 
provided in Sec.  141.61(e) of this chapter. Withdrawals from 
continuous CBP custody elsewhere than in a bonded warehouse must be 
made by filing an in-bond application pursuant to part 18 of this 
chapter, except as provided for by paragraph (h) of this section. When 
a withdrawal of supplies or other articles is made which may be used on 
a vessel while it is proceeding in ballast to another port as provided 
for by Sec.  10.59(a)(3), a notation of this fact shall be made on the 
withdrawal and the name of the other port given if known.
* * * * *
    (d) Except as otherwise provided in Sec.  10.62b, relating to 
withdrawals from warehouse of aircraft turbine fuel to be used within 
30 days of such withdrawal as supplies on aircraft under Sec.  309, 
Tariff Act of 1930, as amended, when the supplies are to be laden at a 
port other than the port of withdrawal from warehouse, they shall be 
withdrawn for transportation in bond to the port of lading by filing an 
in-bond application pursuant to part 18 of this chapter. The procedure 
shall be the same as that prescribed in 144.37 of this chapter.
* * * * *

PART 12--SPECIAL CLASSES OF MERCHANDISE

    5. The general authority citation for part 12 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624.

    6. Revise Sec.  12.5 to read as follows:


Sec.  12.5  Shipment to other ports.

    When imported merchandise, the subject of Sec.  12.1, is shipped to 
another port for reconditioning or exportation, such shipment must be 
made in the same manner as shipments in bond in accordance with the 
requirements of part 18 of this chapter.
    7. In Sec.  12.11, revise paragraph (b) to read as follows:


Sec.  12.11  Requirements for entry and release.

* * * * *
    (b) Where plant or plant products are shipped from the port of 
first arrival to another port or place for inspection or other 
treatment by a representative of the Animal and Plant Health Inspection 
Service, Plant Protection and Quarantine Programs and all CBP 
requirements for the release of the merchandise have been met, the 
merchandise must be forwarded as an in-bond shipment pursuant to part 
18 of this chapter to the representative of the Animal and Plant Health 
Inspection Service, Plant Protection and Quarantine Programs at the 
place at which the inspection or other treatment is to take place. No 
further release by the port director will be required.
* * * * *
    8. Revise part 18 to read as follows:

PART 18--TRANSPORTATION IN BOND AND MERCHANDISE IN TRANSIT

Subpart A--General Provisions
Sec.
18.0 Scope; definitions.
18.1 In-bond application and entry; general rules.
18.2 Carriers, cartmen and lightermen.
18.3 Transshipment; transfer by bonded cartmen.
18.4 Sealing conveyances and compartments; labeling packages.
18.5 Diversion.
18.6 Short shipments; shortages; entry and allowance.
18.7 Lading for exportation, verification.
18.8 Liability for not meeting in-bond requirements; liquidated 
damages; payment of taxes, duties, fees, and charges.
18.9 New in-bond movement for forwarded or returned merchandise.
18.10 Special Manifest.
Subpart B--Immediate Transportation Without Appraisement
18.11 General Rules.
18.12 Entry at port of destination.
Subpart C--Shipment of Baggage In-Bond
18.13 Procedure; manifest.
18.14 Shipment of baggage in transit to foreign countries.
Subpart D--Transportation and Exportation
18.20 General rules.
18.21 [Reserved].
18.22 Transfer and express shipment procedures at port of 
exportation.
18.23 Change of foreign destination; change of entry.
18.24 Retention of goods within port limits; splitting of shipments.
Subpart E--Immediate Exportation
18.25 Direct exportation.
18.26 Indirect exportation.
18.27 Port marks.
Subpart F--Merchandise Transported by Pipeline
18.31 Pipeline transportation of bonded merchandise.
Subpart G--Merchandise Not Otherwise Subject to Customs Control 
Exported Under Cover of a TIR Carnet
18.41 Applicability.
18.42 Direct exportation.
18.43 Indirect exportation.
18.44 Abandonment of exportation.
18.45 Supervision of exportation.
Subpart H--Importer Security Filings
18.46 Changes to Importer Security Filing information.

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States), 1551, 1552, 1553, 
1623, 1624; Section 18.1 also issued under 19 U.S.C. 1484, 1557, 
1490; Section 18.2 also issued under 19 U.S.C. 1551a; Section 18.3 
also issued under 19 U.S.C. 1565; Section 18.4 also issued under 19 
U.S.C. 1322, 1323; Section 18.7 also issued under 19 U.S.C. 1490, 
1557; 1646a; Section 18.11 also issued under 19 U.S.C. 1484; Section 
18.12 also issued under 19 U.S.C. 1448, 1484, 1490; Section 18.13 
also issued under 19 U.S.C. 1498(a); Section 18.14 also issued under 
19 U.S.C. 1498. Section 18.25 also issued under 19 U.S.C. 1490. 
Section

[[Page 10636]]

18.26 also issued under 19 U.S.C. 1490. Section 18.31 also issued 
under 19 U.S.C. 1553a.

Subpart A--General Provisions


Sec.  18.0  Scope; definitions.

    (a) Scope. Except as provided in parts 122 and 123 of this chapter, 
this part sets forth the requirements and procedures pertaining to the 
transportation of merchandise in-bond, as authorized by sections 551, 
552, and 553 of the Tariff Act of 1930, as amended (19 U.S.C. 1551, 
1552, and 1553).
    (b) Definitions. As used in this part, the following terms will 
have the meanings indicated unless either the context in which they are 
used requires a different meaning or a different definition is 
prescribed for a particular part or portion thereof:
    Common carrier. ``Common carrier'' means a common carrier of 
merchandise owning or operating a railroad, steamship, pipeline, truck 
line, or other transportation line or route.
    Origination port. ``Origination port'' is the U.S. port in which 
the transportation of merchandise in-bond commences.
    Port of destination. ``Port of destination'' is the U.S. port at 
which merchandise is entered after being shipped in-bond from the 
origination port where it was entered as an immediate transportation 
entry.
    Port of diversion. ``Port of diversion'' is the U.S. port to which 
merchandise is diverted while in transit from the origination port to 
the port of destination or the port of export.
    Port of export. ``Port of export'' is the U.S. port at which in-
bond merchandise entered for transportation and exportation or for 
immediate exportation is exported from the U.S.


Sec.  18.1  In-bond application and entry; general rules.

    (a) General requirement. In order to transport merchandise in-bond, 
an in-bond application as described in paragraph (d) of this section is 
required. An in-bond application consists of a transportation entry and 
a manifest. A transportation entry as described in paragraph (b) may be 
made for any imported merchandise upon its arrival at a port of entry, 
subject to the prohibitions and restrictions provided in this part.
    (b) Types of transportation entries and withdrawals. The following 
types of transportation entries and withdrawals may be made for 
merchandise to be transported in-bond:
    (1) Entry for immediate transportation (IT).
    (2) Warehouse or rewarehouse withdrawal for immediate 
transportation.
    (3) Warehouse or rewarehouse withdrawal for immediate exportation 
or for transportation and exportation.
    (4) Entry for transportation and exportation (T&E).
    (5) Entry for immediate exportation (IE).
    (6) Entry of vessel and aircraft supplies for immediate exportation 
(IE) or for transportation and exportation (T&E).
    (7) Entry of vessel and aircraft supplies for transportation and 
exportation (T&E).
    (c) Who may file. A transportation entry may be made by:
    (1) The carrier that brings the merchandise to the origination 
port;
    (2) The carrier that is to accept the merchandise under its bond or 
a carnet for transportation to the port of destination or the port of 
export; or
    (3) Any person who has a sufficient interest in the merchandise as 
shown by the bill of lading or manifest, a certificate of the importing 
carrier, or by any other document satisfactory to CBP.
    (d) In-bond application. An in-bond application consisting of a 
transportation entry and manifest must be transmitted to CBP in order 
to transport merchandise in-bond.
    (1) Contents. The in-bond application must contain the following 
information:
    (i) Description of the merchandise. The six-digit Harmonized Tariff 
Schedule (HTS) number of the merchandise must be provided, if 
available. (CBP will also accept the eight or ten-digit HTS number.) If 
the six digit HTS number is not available, then a detailed description 
must be provided setting forth the exact nature of the merchandise with 
sufficient detail to enable CBP and other government agencies to 
determine if the merchandise is subject to a rule, regulation, law, 
standard or ban relating to health, safety or conservation.
    (ii) Health, safety or conservation. If the carrier or other 
responsible party submitting the in-bond application knows that the 
merchandise is subject to a rule, regulation, law, standard or ban 
relating to health, safety or conservation enforced by CBP or another 
government agency, a statement must be provided setting forth the rule, 
regulation, law, standard or ban to which the merchandise is subject to 
and the name of the government agency responsible for enforcing the 
rule, regulation, law, standard or ban.
    (iii) Prohibited or restricted merchandise. Merchandise that is 
prohibited or subject to entry restrictions in the U.S. as set forth in 
this chapter must be identified accordingly.
    (iv) Textiles. Textiles and textile products subject to section 
204, Agricultural Act of 1956, as amended (7 U.S.C. 1854), must be 
described in such detail as to enable the port director to estimate the 
duties and taxes, if any, due. The port director may require evidence 
to satisfy him or her of the approximate correctness of the value and 
quantity stated in the entry (e.g., detailed quantity description: 14 
cartons, 2 dozen per carton); detailed description of the textiles or 
textile products including type of commodity and chief fiber content 
(e.g., men's cotton jeans or women's wool sweaters); net weight of the 
textiles or textile products (including immediate packing but excluding 
pallet); total value of the textiles or textile products; manufacturer 
or supplier; country of origin; name(s) and address(es) of the 
person(s) to whom the textiles and textile products are consigned; and 
10-digit Harmonized Tariff Schedule of the United States number (when 
available).
    (v) Other identifying information. If a visa, permit, license, 
entry number, or other similar number or identifying information has 
been issued by the U.S. Government, foreign government or other issuing 
authority, relating to the merchandise, the visa, permit, license, 
entry number, or other similar number or identifying information must 
be provided.
    (vi) Quantity. The quantity of the merchandise to be transported to 
the smallest piece count must be provided.
    (vii) Seals. The container number of the container in which the 
merchandise is being transported and the seal number of the seal that 
seals the container (see Sec.  18.4) must be provided.
    (viii) Ultimate destination. The ultimate destination in the U.S. 
or abroad of the merchandise to be transported in-bond must be 
provided.
    (2) Method of submission. The in-bond application must be 
electronically transmitted to CBP via a CBP-approved EDI system, except 
as prescribed in Sec.  18.31 relating to pipeline transportation of 
bonded merchandise.
    (3) Timing. The in-bond application may be submitted at any time 
prior to the merchandise departing the origination port.
    (4) Quantities of goods. By filing an in-bond application, the 
initial bonded carrier asserts that there is no discrepancy between the 
quantity of goods received from the importing carrier and the quantity 
of goods delivered to the in-bond carrier for transportation in-bond.

[[Page 10637]]

    (e) Bond required. A custodial bond on CBP Form 301, containing the 
bond conditions set forth in Sec.  113.63 of this chapter, is required 
in order to transport merchandise in-bond under the provisions of this 
part.
    (f) Movement authorization required. Authorization from CBP is 
required before merchandise can be transported in-bond. Authorization 
for the movement of merchandise will be transmitted by CBP via a CBP-
approved EDI system.
    (g) Supervision--(1) Generally. When merchandise is delivered to a 
bonded carrier for transportation in-bond, CBP may, in its discretion, 
require that the merchandise be laden on the conveyance only under CBP 
supervision.
    (2) Merchandise delivered from warehouse. When merchandise is 
delivered from a warehouse to a bonded carrier for transportation in-
bond, supervision of lading will be accomplished in accordance with the 
procedure set forth in Sec.  19.6(b) of this chapter.
    (3) Merchandise delivered from foreign trade zone. When merchandise 
is delivered from a foreign trade zone to a bonded carrier for 
transportation in-bond, supervision of lading will be accomplished in 
accordance with the procedure set forth in Sec.  146.71(a) of this 
chapter.
    (h) Updating and amending the in-bond record. The filer of the in-
bond application or any other party named in paragraph (c) of this 
section, with the permission of the filer, may update and/or amend the 
in-bond record as required under the provisions of this part via a CBP-
approved EDI system.
    (i) In-Transit Time--(1) 30-day transit time. Merchandise to be 
transported in-bond must be delivered to CBP at the port of destination 
or port of export within 30 days from the date CBP provides movement 
authorization to the in-bond applicant. Neither the diversion to 
another port nor the filing of a new in-bond application extends the 
30-day maximum in-transit time. Failure to deliver the merchandise 
within the prescribed period constitutes an irregular delivery.
    (2) Extension. In cases where it is anticipated that a shipment 
will not be capable of completing its transit to the port of 
destination or port of export within 30 days, the 30-day in-transit 
requirement may be extended by CBP upon request via a CBP-approved EDI 
system. CBP may also extend the in-transit period if delays are caused 
due to the examination or inspection of the merchandise by CBP or 
another government agency or for some other reason.
    (3) Restriction of in-transit time. CBP or any other government 
agency with jurisdiction over the merchandise may shorten the in-
transit time to less than 30 days. CBP will provide notice of a CBP-
shortened in-transit time with the movement authorization.
    (j) Report of Arrival. After the arrival of any portion of the in-
bond shipment at the port of destination or the port of export, the 
delivering carrier must promptly, but no more than 24 hours after 
arrival, notify CBP via a CBP-approved EDI system that the merchandise 
has arrived and identify the physical location of the merchandise 
within the port. Failure to report the arrival or identify the physical 
location of the merchandise transported in-bond within the prescribed 
period constitutes an irregular delivery.
    (k) General order merchandise; exportation. Any merchandise covered 
by an in-bond shipment (including carnets) that has arrived at the port 
of destination or the port of export must be entered or exported 
pursuant to this part within 15 calendar days from the date of arrival 
at the port of destination or port of export. On the 16th day, the 
merchandise will become subject to general order requirements pursuant 
to 19 CFR 4.37, 122.50, or 123.10 of this chapter, as applicable. In 
addition, failure to enter or export the merchandise within the 
prescribed period constitutes an irregular delivery.
    (l) Restricted and prohibited merchandise; health, safety and 
conservation; and special classes of merchandise--(1) Health, safety 
and conservation. Merchandise not in compliance with an applicable 
rule, regulation, law, standard or ban, relating to health, safety or 
conservation may only be released for transportation in-bond with the 
authorization of the governmental agency administering such rule, 
regulation, law, standard or ban.
    (2) Prohibited and restricted merchandise--(i) Plants and plant 
products. Merchandise subject upon importation to examination, 
disinfection, or further treatment under the Animal and Plant Health 
Inspection Service (APHIS), Plant Protection and Quarantine program, 
will be only be released for transportation in-bond with the 
authorization of APHIS under regulations issued by that program. (See 
Sec. Sec.  12.10 to 12.15 of this chapter).
    (ii) Narcotics and other prohibited articles. Narcotics and other 
articles prohibited admission into the commerce of the United States 
may not be entered for transportation in-bond and any such merchandise 
offered for entry for that purpose will be seized, except that 
exportation or transportation and exportation may be permitted with 
authorization from the Drug Enforcement Agency (DEA) and/or compliance 
with the regulations of the DEA.
    (iii) Non-narcotics. Articles entered for transportation in-bond 
that are manifested merely as drugs, medicines, or chemicals, without 
evidence to satisfy the port director that they are non-narcotic, will 
be detained and subjected, at the carrier's risk and expense, to such 
examination as may be necessary to satisfy the port director whether or 
not they are of a narcotic character. A properly verified certificate 
of the shipper, specifying the items in the shipment and stating 
whether narcotic or not, may be accepted by the port director to 
establish the character of such a shipment.
    (iv) Explosives. Explosives may not be transported in-bond unless 
the importer has first obtained a license or permit from the proper 
governmental agency. In such case the explosives may be entered for 
immediate transportation, for transportation and exportation, or for 
immediate exportation as specified by the approving government agency. 
Governmental agencies with regulatory authority over explosives include 
the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the 
Department of Transportation (DOT), and the U.S. Coast Guard (USCG).
    (v) Livestock. Carload shipments of livestock will not be entered 
for in-bond transportation unless they will arrive at the port of 
destination named in the in-bond application before it becomes 
necessary to remove the seals for the purpose of watering and feeding 
the animals, or unless the route is such that the removal of the seals 
and the watering, feeding, and reloading of the stock may be done under 
CBP supervision.


Sec.  18.2  Carriers, cartmen and lightermen.

    (a) Transportation of merchandise in-bond by bonded carriers. (1) 
Except as provided for in paragraph (b) of this section, merchandise to 
be transported from one port to another in the United States in-bond 
must be delivered to a common carrier, contract carrier, freight 
forwarder, or private carrier, each of which must be bonded for that 
purpose. Such merchandise delivered to a bonded common carrier, 
contract carrier, or freight forwarder may be transported with the use 
of facilities of other bonded or nonbonded carriers; however, the 
responsibility for the merchandise will remain with the

[[Page 10638]]

common carrier, contract carrier, or freight forwarder that is bonded 
for that purpose. Only vessels entitled to engage in the coastwise 
trade (see Sec.  4.80 of this chapter) will be entitled to transport 
merchandise under this section.
    (2) Merchandise transported under a TIR carnet. Merchandise to be 
transported from one port to another in the United States under cover 
of a TIR carnet (see part 114 of this chapter), except merchandise not 
otherwise subject to CBP control, as provided in Sec. Sec.  18.41 
through 18.45, must be delivered to a common carrier or contract 
carrier bonded for that purpose, but the merchandise thereafter may be 
transported with the use of other bonded or nonbonded common or 
contract carriers. The TIR carnet will be responsible for liability 
incurred in the carriage of merchandise under the carnet, and the 
carrier's bond will be responsible as provided in Sec.  114.22(c) of 
this chapter.
    (3) Merchandise transported under an A.T.A. or a TECRO/AIT carnet. 
Merchandise to be transported from one port to another in the United 
States under cover of an A.T.A. or TECRO/AIT carnet (see part 114 of 
this chapter) must be delivered to a common carrier or contract carrier 
bonded for that purpose, but the merchandise thereafter may be 
transported with the use of other bonded or nonbonded common or 
contract carriers. The A.T.A. or TECRO/AIT carnet will be responsible 
for liability incurred in the carriage of merchandise under the carnet, 
and the carrier's bond will be responsible as provided in Sec.  
114.22(d) of this chapter.
    (b) Transportation of merchandise in-bond between certain ports by 
bonded cartmen or lightermen. Pursuant to Public Resolution 108, of 
June 19, 1936, (19 U.S.C. 1551, 1551a) and subject to compliance with 
all other applicable provisions of this part, CBP, upon the request of 
a party named in Sec.  18.1(c), may permit merchandise that has been 
entered and subject to CBP examination to be transported in-bond 
between the ports of New York, Newark, and Perth Amboy, by bonded 
cartmen or lightermen duly qualified in accordance with the provisions 
of part 112 of this chapter, if CBP is satisfied that the 
transportation of such merchandise in this manner will not endanger the 
revenue and does not pose a risk to health, safety or security.


Sec.  18.3  Transshipment; transfer by bonded cartmen.

    (a) Transshipment to single conveyance. Merchandise being 
transported in-bond may be transshipped to another conveyance while en 
route to the port of destination or port of export. The carrier or any 
of the parties provided for in Sec.  18.1(c) must notify CBP of the 
transshipment using the CBP-approved EDI system before the merchandise 
can be transshipped to another conveyance. The notification of 
transshipment must include the name of the bonded carrier receiving the 
merchandise for shipment to the port of destination or port of export.
    (b) Transshipment to multiple conveyances. When merchandise being 
transported in-bond is to be transshipped to more than one conveyance, 
the carrier or any of the parties named in Sec.  18.1(c) must notify 
CBP via a CBP-approved EDI system of the transshipment. The 
notification of transshipment must include the name of the bonded 
carrier receiving the merchandise for shipment to the port of 
destination or port of export and any new container or seal numbers. 
The transshipment to multiple conveyances does not extend the 30-day 
transit time requirement set forth in Sec.  18.1(i).
    (c) Transshipment of merchandise covered by a TIR carnet generally 
prohibited. Merchandise covered by a TIR carnet may not be transshipped 
except in cases in which the unlading of the merchandise from a 
container or road vehicle is necessitated by casualty en route. In the 
event of transshipment, a TIR approved container or road vehicle must 
be used if available. If the transshipment takes place under CBP 
supervision, the CBP officer must execute a certificate of transfer on 
the appropriate TIR carnet voucher.
    (d) Transshipment of merchandise in emergency situations--(1) 
Removal of seals. If it becomes necessary at any point in transit to 
remove the CBP seals from a conveyance or container containing bonded 
merchandise for the purpose of transferring its contents to another 
conveyance or container, or to gain access to the shipment because of 
casualty or for other good reason, and it cannot be done under CBP 
supervision because of the element of time involved or because there is 
no CBP officer stationed at such point, a responsible agent of the 
carrier may remove the seals, supervise the transfer or handling of the 
merchandise, and seal the conveyance or container in which the shipment 
goes forward. In this situation, the responsible agent is required to 
provide the notification specified in paragraph (d)(2) of this section.
    (2) Notification. When the responsible agent of the carrier takes 
the actions specified in paragraph (d)(1) of this section, he or she 
must notify CBP via the CBP-approved EDI system of the serial numbers 
of the new seals applied, and the reason for and the date of the 
actions. The responsible agent must also make appropriate notations of 
the same information on the conductor's or master's copy of the 
manifest, or the outside back cover of the TIR carnet.
    (e) Transfer by bonded cartmen. All transfers to or from the 
conveyance or warehouse of merchandise undergoing transportation in-
bond must be made under the provisions of part 125 of this chapter and 
at the expense of the parties in interest, unless the bond of the 
carrier on CBP Form 301, containing the bond conditions set forth in 
Sec.  113.63 of this chapter or a TIR carnet is liable for the 
safekeeping and delivery of the merchandise while it is being 
transferred.


Sec.  18.4  Sealing conveyances and compartments; labeling packages.

    (a) Requirements, waiver and TIR carnets--(1) Seals required. The 
bonded carrier must ensure that carload or containerized shipments are 
properly sealed, that the seals remain intact until the merchandise 
arrives at the port of destination or the port of export, and that CBP 
is notified of such arrival pursuant to Sec.  18.1(j) of this part. The 
seals to be used and the method for sealing conveyances, compartments, 
or packages must meet the requirements of Sec. Sec.  24.13 and 24.13a 
of this chapter.
    (2) Waiver. (i) CBP may authorize the waiver of sealing of a 
conveyance or compartment in which bonded merchandise is transported if 
CBP determines that the sealing of the conveyance or compartment is 
unnecessary to protect the revenue or to prevent violations of the 
customs laws and regulations.
    (ii) Examples of situations where CBP my authorize a waiver of the 
sealing requirement include when the compartment or conveyance cannot 
be effectively sealed, as in the case of merchandise shipped in open 
cars or barges, on the decks of vessels, or when it is known that any 
seals would necessarily be removed outside the jurisdiction of the 
United States for the purpose of discharging or taking on cargo, or 
when it is known that the breaking of the seals will be necessary to 
ventilate the hatches.
    (3) TIR carnets. The port director will cause a CBP seal to be 
affixed to a container or road vehicle that is being used to transport 
merchandise under cover of a TIR carnet unless the container or road 
vehicle bears a customs seal (domestic or foreign). The port director 
will likewise cause a CBP seal or label to be affixed to heavy or bulky 
goods being so transported. If,

[[Page 10639]]

however, the port director has reason to believe that there is a 
discrepancy between the merchandise listed on the Goods Manifest of the 
carnet and the merchandise that is to be transported, the port director 
may cause a CBP seal or label to be affixed only when the listing of 
the merchandise in the carnet and a physical inventory agree.
    (b) Commingled merchandise. (1) Merchandise that is not covered by 
a bond may only be transported in a sealed conveyance or compartment 
that contains bonded merchandise if the merchandise is destined for the 
same or subsequent port as the bonded merchandise.
    (2) Merchandise moving under cover of a carnet may not be 
consolidated with other merchandise.
    (c) Removal or breaking of seals. Except as provided in Sec.  
18.3(d) and Sec.  19.6(e) of this chapter, seals affixed under this 
section may only be removed upon CBP permission. Failure to keep the 
seals intact and/or removal of the seals without CBP permission will 
result in the assessment of liquidated damages in accordance with Sec.  
18.8 of this part and Sec.  113.63 of this chapter.
    (d) Containers or road vehicles accepted for transport under 
customs seal; requirements--
    (1)(i) Containers covered by the Customs Convention on Containers. 
Containers covered by the Customs Convention on Containers shall be 
accepted for transport under customs seal if
    (A) Durably marked with the name and address of the owner, 
particulars of tare, and identification marks and numbers, and
    (B) Constructed and equipped as outlined in Annex 1 to the Customs 
Convention on Containers, as evidenced by an accompanying unexpired 
certificate of approval in the form prescribed by Annex 2 to that 
Convention or by a metal plate showing design type approval by a 
competent authority.
    (ii) Containers carrying merchandise covered by a TIR carnet. 
Containers carrying merchandise covered by a TIR carnet shall be 
accepted for transport under customs seal if
    (A) Durably marked with the name and address of the owner, 
particulars of tare, and identification marks and numbers,
    (B) Constructed and equipped as outlined in Annex 6 to the TIR 
Convention, as evidenced by an accompanying unexpired certificate of 
approval in the form prescribed by Annex 8 to that Convention, or by a 
metal plate showing design type approval by a competent authority, and
    (C) If the container or road vehicle hauling the container has 
affixed to it a rectangular plate bearing the letters ``TIR'' in 
accordance with Article 31 of the TIR Convention.
    (2) Road vehicles carrying merchandise covered by a TIR carnet. 
Road vehicles carrying merchandise covered by a TIR carnet shall be 
accepted for transport under customs seal if
    (i) Durably marked with the name and address of the owner, 
particulars of tare, and identification marks and numbers,
    (ii) Constructed and equipped as outlined in Annex 3 to the TIR 
Convention, as evidenced by an accompanying unexpired certificate of 
approval in the form prescribed by Annex 5 to that Convention, or by a 
metal plate showing design type approval by a competent authority, and
    (iii) If the road vehicle has affixed to it a rectangular plate 
bearing the letters ``TIR'' in accordance with Article 31 of the TIR 
Convention.
    (3) CBP refusal. The port director may refuse to accept for 
transport under customs seal a container or road vehicle bearing 
evidence of approval if, in the port director's opinion, the container 
or road vehicle no longer meets the requirements of the applicable 
Convention.
    (4) CBP acceptance for transport. Containers or road vehicles that 
are not approved under the provisions of a Customs Convention may be 
accepted for transport under customs seal only if the port director at 
the port of origin is satisfied that the container or road vehicle can 
be effectively sealed and no goods can be removed from or introduced 
into the container or road vehicle without obvious damage to it or 
without breaking the seal. A container or road vehicle so accepted 
shall not carry merchandise covered by a TIR carnet.


Sec.  18.5  Diversion.

    (a) Procedure. In order to change the port of destination or the 
port of export of an in-bond movement, the party that submitted the in-
bond application must submit a request to divert merchandise via a CBP-
approved EDI system. Authorization for the diversion and movement of 
merchandise will be transmitted via a CBP-approved EDI system. If the 
request to divert merchandise is denied, such merchandise must be 
delivered to the original port of destination or port of export that 
was named in the in-bond application. The decision to grant or deny 
permission to divert merchandise is within the sole discretion of CBP.
    (b) In-Transit Time. The approval of a request to divert 
merchandise for transportation in-bond does not extend the in-transit 
time specified in Sec.  18.1(i) of this part. The diverted merchandise 
must be delivered to the port of diversion within 30 days from the date 
CBP first authorized the in-bond movement.
    (c) Split Shipments. When merchandise for transportation in-bond is 
approved for diversion to more than one port, or when a portion of an 
in-bond shipment is approved for consumption or warehouse entry, the 
approval of the diversion will complete the original transportation 
entry. The carrier or any of the parties named in Sec.  18.1(c) must, 
in accordance with the filing requirements of Sec.  18.1, submit a new 
in-bond application for each portion of the original shipment to be 
transported in-bond. Split shipments for merchandise being transported 
under cover of a carnet are prohibited.
    (d) Diversion of cargo subject to restriction, prohibition or 
regulation by other federal agency or authority. Merchandise subject to 
a law, regulation, rule, standard or ban that requires permission or 
authorization by another federal agency or authority before 
importation, cannot be diverted without authorization by the other 
federal agency or authority.


Sec.  18.6  Short shipments; shortages; entry and allowance.

    (a) Notification of short shipment. When an in-bond shipment 
arrives at the port of destination or the port of export and a portion 
of the cargo covered by the original in-bond application is short, the 
arriving carrier must notify CBP of the shortage when submitting the 
notice of arrival via a CBP-approved EDI system.
    (b) New in-bond application required. The carrier or any of the 
parties named in Sec.  18.1(c) must, in accordance with the filing 
requirements of Sec.  18.1, submit a new in-bond application to 
transport short shipped packages in-bond to the port of destination or 
port of export provided in the in-bond application. Reference must be 
made in the new in-bond application to the original transportation 
entry.
    (c) Demand for redelivery. When there is a shortage of any portion 
of a shipment, nondelivery of an entire shipment, delivery to 
unauthorized locations, or delivery to the consignee without the 
permission of CBP, CBP may demand return of the merchandise to CBP 
custody. The demand must be made no later than 30 days after the 
shortage, delivery, or nondelivery is discovered by CBP. The demand for 
the

[[Page 10640]]

return of the merchandise to CBP custody must be made on the bonded 
carrier, cartman, or lighterman identified in the in-bond application. 
The demand for the return of the merchandise will be made on CBP Form 
4647, Notice of Redelivery, other appropriate form, letter, or by an 
electronic equivalent thereof. A copy of the demand or electronic 
equivalent thereof, with the date of mailing or delivery noted thereon, 
must be retained by the port director and made part of the in-bond 
entry record. Entry of the merchandise may be accepted if the 
merchandise can be recovered intact without any of the packages having 
been opened. In such cases, any shortage from the invoice quantity will 
be presumed to have occurred while the merchandise was in the 
possession of the bonded carrier.
    (d) Failure to redeliver. If the merchandise cannot be recovered 
intact, entry will be accepted in accordance with Sec.  141.4 of this 
chapter for the full manifested quantity, unless a lesser amount is 
otherwise permitted in accordance with subpart A of part 158. Except as 
provided in paragraph (e) of this section, if the merchandise is not 
returned to CBP custody within 30 days of the date of mailing, date of 
delivery of the demand for redelivery, or electronic notification 
thereof, there shall be sent to the party whose bond is obligated on 
the transportation entry a demand for liquidated damages on CBP Form 
5955-A in the case of nondelivery of an entire shipment or on CBP Form 
5931 in the case of partial shortage. CBP will also seek the payment of 
duties, taxes, and fees, where appropriate, pursuant to Sec.  18.8(c).
    (e) Failure to redeliver merchandise covered by a carnet. If 
merchandise covered by a carnet cannot be recovered intact as specified 
in paragraph (c) of this section, entry will not be accepted; there 
will be sent to the appropriate guaranteeing association a demand for 
liquidated damages, duties, and taxes as prescribed in Sec.  18.8(d); 
and, if appropriate, there will also be sent to the initial bonded 
carrier a demand for any excess, as provided in Sec.  114.22(e) of this 
chapter. Demands must be made on the forms specified in paragraph (d) 
of this section.
    (f) Allowance. An allowance in duty on merchandise reported short 
at destination, including merchandise found by the appraising officer 
to be damaged and worthless, and animals and birds found by the 
discharging officer to be dead on arrival at destination, must be made 
in the liquidation of the entry.
    (g) Rail and seatrain. In the case of shipments arriving in the 
United States by rail or seatrain, which are forwarded under CBP in-
bond seals under the provisions of subpart D of part 123 of this 
chapter, and Sec.  18.11, or Sec.  18.20, a notation must be made by 
the carrier or shipper on the in-bond application, to show whether the 
shipment was transferred to the car designated in the manifest or 
whether it was laden in the car in the foreign country. If laden on the 
car in a foreign country, the country must be identified in the 
notation.


Sec.  18.7  Lading for exportation; notice and proof of exportation; 
verification.

    (a) Exportation--(1) Notice. No more than 24 hours after the 
arrival at the port of export of any portion of an in-bond shipment, 
the delivering carrier must report the arrival of the merchandise to 
CBP pursuant to Sec.  18.1(i). Failure to report the arrival of bonded 
merchandise within the prescribed period will constitute an irregular 
delivery.
    (2) Time to export. Within 15 calendar days after the filing of the 
report of arrival for the last portion of a shipment arriving at the 
port of export under a transportation and exportation entry, the entire 
shipment of merchandise must be exported. On the 16th day the 
merchandise will become subject to general order requirements under 
Sec.  4.37, Sec.  122.50, or Sec.  123.10 of this chapter, as 
applicable. Failure to export the merchandise within the prescribed 
period constitutes an irregular delivery.
    (3) Notice and Proof of Exportation. The bonded carrier must 
promptly, but no more than 24 hours after exportation, update the in-
bond record via a CBP approved EDI system to reflect that the 
merchandise has been exported. The principal on any bond filed to 
guarantee exportation may be required by the port director to provide 
evidence of exportation in accordance with Sec.  113.55 of this chapter 
within 30 days of exportation.
    (b) Supervision. The port director will require only such 
supervision of the lading for exportation of merchandise covered by an 
entry or withdrawal for exportation or for transportation and 
exportation only as is reasonably necessary to satisfy the port 
director that the merchandise has been laden on the exporting 
conveyance.
    (c) Verification. CBP may verify export entries and withdrawals 
against the records of the exporting carriers. Such verification may 
include an examination of the carrier's records of claims and 
settlement of export freight charges and any other records that may 
relate to the transaction. The exporting carrier must maintain these 
records for 5 years from the date of exportation of the merchandise.


Sec.  18.8  Liability for not meeting in-bond requirements; liquidated 
damages; payment of taxes, duties, fees, and charges.

    (a) Liability. The party whose bond is obligated on the 
transportation entry (generally the initial carrier) will be liable for 
not meeting any of the requirements found at Part 18 of this chapter or 
any of the other conditions specified in the bond. This includes, but 
is not limited to shortages, irregular delivery, or nondelivery, at the 
port of destination or port of export of the merchandise transported 
in-bond; the failure to export merchandise transported in bond pursuant 
to a transportation and exportation or immediate exportation entry; 
and, the failure to maintain intact seals or the unauthorized removal 
of seals, as provided in such bond. Appropriate commercial or 
government documentation may be provided to CBP as proof of delivery 
and/or exportation. When sealing is waived, any loss found to exist at 
the port of destination or port of export will be presumed to have 
occurred while the merchandise was in the possession of the party whose 
bond was obligated under the transportation entry, unless conclusive 
evidence to the contrary is produced.
    (b) Liquidated damages. (1) The party described in paragraph (a) of 
this section that fails to comply with any of the requirements found at 
Part 18 of this chapter or any of the other conditions specified in the 
bond is liable for payment of liquidated damages.
    (2) Petition for relief. In any case in which liquidated damages 
are imposed in accordance with this section and CBP is satisfied by the 
evidence submitted with a petition for relief filed in accordance with 
the provisions of part 172 of this chapter that any violation of the 
terms and conditions of the bond occurred without any intent to evade 
any law or regulation, CBP may cancel such claim upon the payment of 
any lesser amount or without the payment of any amount as may be deemed 
appropriate under the law and in view of the circumstances.
    (c) Taxes, duties, fees, and charges. In addition to the liquidated 
damages described in paragraph (b) of this section, the party whose 
bond is obligated on the transportation entry will be liable for any 
duties, taxes, and fees accruing to the United States on the missing 
merchandise, together with all costs, charges, and expenses, caused by 
the failure to make the required

[[Page 10641]]

transportation, report, delivery, entry and/or exportation.
    (d) Carnets--(1) TIR carnets. (i) The domestic guaranteeing 
association will be jointly and severally liable with the initial 
bonded carrier for duties, taxes, and fees accruing to the U.S., and 
any other charges imposed, in lieu thereof, as the result of any 
shortage, irregular delivery, or nondelivery at the port of destination 
or port of exit of merchandise covered by a TIR carnet. The liability 
of the domestic guaranteeing association is limited to $50,000 per TIR 
carnet for duties, taxes, and sums collected in lieu thereof. Penalties 
imposed as liquidated damages against the initial bonded carrier, and 
sums assessed against the guaranteeing association in lieu of duties 
and taxes for any shortage, irregular delivery, or nondelivery will be 
in accordance with this section. If a TIR carnet has not been 
discharged or has been discharged subject to a reservation, the 
guaranteeing association will be notified within 1 year of the date 
upon which the carnet is taken on charge, including time for receipt of 
the notification, except that if the discharge was obtained improperly 
or fraudulently the period will be 2 years. However, in cases that 
become the subject of legal proceedings during the above-mentioned 
period, no claim for payment will be made more than 1 year after the 
date when the decision of the court becomes enforceable.
    (ii) Within 3 months from the date demand for payment is made by 
the port director as provided by Sec.  18.6(e), the guaranteeing 
association must pay the amount claimed, except that if the amount 
claimed exceeds the liability of the guaranteeing association under the 
carnet (see Sec.  114.22(d) of this chapter), the carrier must pay the 
excess. The amount paid will be refunded if, within a period of 1 year 
from the date on which the claim for payment was made, it is 
established to the satisfaction of the Commissioner of CBP that no 
irregularity occurred. CBP may cancel liquidated damages assessed 
against the guaranteeing association to the extent authorized by 
paragraph (c) of this section.
    (2) A.T.A. or TECRO/AIT carnets. The domestic guaranteeing 
association is jointly and severally liable with the initial bonded 
carrier for pecuniary penalties, liquidated damages, duties, fees, and 
taxes accruing to the United States and any other charges imposed as 
the result of any shortage, irregular delivery, failure to comply with 
sealing requirements in this part, and any non-delivery at the port of 
destination or port of exit of merchandise covered by an A.T.A. or 
TECRO/AIT carnet. However, the liability of the guaranteeing 
association must not exceed the amount of the import duties by more 
than 10 percent. If an A.T.A. or TECRO/AIT carnet is unconditionally 
discharged with respect to certain goods, the guaranteeing association 
will no longer be liable on the carnet with respect to those goods 
unless it is subsequently discovered that the discharge of the carnet 
was obtained fraudulently or improperly or that there has been a breach 
of the conditions of temporary admission or of transit. No claim for 
payment will be made more than one year following the date of 
expiration of the validity of the carnet. The guaranteeing association 
will be allowed a period of six months from the date of any claim by 
the port director in which to furnish proof of the reexportation of the 
goods or of any other proper discharge of the A.T.A. or TECRO/AIT 
carnet. If such proof is not furnished within the time specified, the 
guaranteeing association must either deposit or provisionally pay the 
sums. The deposit or payment will become final three months after the 
date of the deposit or payment, during which time the guaranteeing 
association may still furnish proof of the reexportation of the goods 
to recover the sums deposited or paid.


Sec.  18.9  New in-bond movement for forwarded or returned merchandise.

    The carrier or any of the parties named in Sec.  18.1(c) must, in 
accordance with the filing requirements of Sec.  18.1, submit a new in-
bond application in order to forward or return merchandise from the 
port of destination or port of export named in the original in-bond 
application, or from the port of diversion, to any another port. If the 
merchandise is moving under cover of a carnet, the carnet may be 
accepted as a transportation entry.


Sec.  18.10  Special manifest.

    (a) General. Merchandise for which no other type of bonded movement 
is appropriate (e.g., prematurely discharged or overcarried merchandise 
and other such types of movements whereby the normal transportation-in-
bond procedures are not applicable) may be shipped in-bond from the 
port of unlading to the port of destination, port of export or port of 
diversion where applicable, upon approval by CBP.
    (b) Filing requirements. The carrier or any of the parties named in 
Sec.  18.1(c) may, in accordance with the filing requirements of Sec.  
18.1, submit an in-bond application, requesting permission to transport 
the merchandise in-bond as a special manifest. Authorization for the 
movement of merchandise will be transmitted via a CBP-approved EDI 
system. The party submitting the in-bond application must identify the 
relevant merchandise and also identify the date and entry number of any 
entry made at the destination port covering the merchandise to be 
returned, if known. For diversion of cargo, see Sec. Sec.  4.33, 4.34, 
and 18.5 of this chapter. When no entry is identified, the port 
director may approve the shipment pursuant to this section.

Subpart B--Immediate Transportation Without Appraisement


Sec.  18.11  General rules.

    (a) Delivery outside port limits. (1) Merchandise covered by an 
entry for immediate transportation, including a carnet, or a manifest 
of baggage shipped in-bond (other than baggage to be forwarded in-bond 
to a CBP station--see Sec.  18.13(a)), may be delivered to a place 
outside a port of entry for examination and release as contemplated by 
section 484(f), Tariff Act of 1930, as amended (19 U.S.C. 1484(c)), 
with the approval of CBP.
    (2) The carrier or any of the parties named in Sec.  18.1(c) must 
request, via a CBP-approved EDI system, permission to transport the 
merchandise in-bond. Before permission will be granted by CBP, the 
importer must stipulate in the in-bond application that within 24 hours 
after the arrival of any part of the merchandise or baggage to a place 
outside the port of entry, the importer will file an entry for the 
shipment and will comply with the provisions of Sec.  151.9 of this 
chapter. Authorization for the movement of merchandise will be 
transmitted via a CBP-approved EDI system.
    (b) Split shipments. One or more entire packages of merchandise 
covered by an invoice from one consignor to one consignee may be 
entered for consumption or warehouse at the port of first arrival, and 
the remainder entered for immediate transportation, provided that all 
of the merchandise covered by the invoice is entered and any carnet 
which may cover such merchandise is discharged as to that merchandise.
    (c) Consolidated loads and combined shipments. Several importations 
may be consolidated into one immediate transportation entry when bills 
of lading or carrier's certificates name only one consignee at the port 
of first arrival. However, merchandise moving under cover of a carnet 
may not be consolidated with other merchandise.

[[Page 10642]]

Sec.  18.12  Entry at port of destination.

    (a) Arrival procedures. Merchandise received under an immediate 
transportation entry at the port of destination may be entered for 
transportation and exportation, immediate exportation, or for immediate 
transportation, or under a FTZ admission, or any other form of entry, 
and is subject to all the conditions pertaining to merchandise entered 
at a port of first arrival.
    (b) Entry. The right to make entry at the port of destination will 
be determined in accordance with the provisions of Sec.  141.11 of this 
chapter.
    (c) Entry at subsequent ports. When a portion of a shipment is 
entered at the port of first arrival and the remainder of the shipment 
is entered for consumption or warehouse at one or more subsequent 
ports, the entry at each subsequent port may be made on an extract of 
the invoice as provided for in Sec.  141.84 of this chapter.
    (d) General order merchandise. All merchandise included in a 
transportation appraisement entry (including carnets) must be entered 
pursuant to Sec.  18.12(a), within 15 calendar days from the date of 
arrival at the port of destination. On the 16th day, the merchandise 
will become subject to general order requirements pursuant to 
Sec. Sec.  4.37, 122.50, or 123.10 of this chapter, as applicable.

Subpart C--Shipment of Baggage In-Bond


Sec.  18.13  Procedure; manifest.

    (a) In-bond application required. Baggage may be forwarded in-bond 
to another port of entry, or to a Customs station listed in Sec.  101.4 
of this chapter without examination or assessment of duty at the port 
or station of first arrival at the request of the passenger, the 
transportation company, or the agent of either, by filing an in-bond 
application in accordance with the provisions of Sec.  18.1.
    (b) Coast to coast transportation. Baggage arriving in-bond or 
otherwise at a port on the Atlantic or Pacific coast, destined to a 
port on the opposite coast, may be laden under CBP supervision, without 
examination and without being placed in-bond, on a vessel proceeding to 
the opposite coast, provided the vessel will proceed to the opposite 
coast without stopping at any other port on the first coast.


Sec.  18.14  Shipment of baggage in transit to foreign countries.

    The baggage of any person in transit through the United States from 
one foreign country to another may be shipped over a bonded route for 
exportation. Such baggage must be shipped under the regulations 
prescribed in Sec.  18.13. See Sec.  123.64 of this chapter for the 
regulations applicable to baggage shipped in transit through the United 
States between points in Canada or Mexico.

Subpart D--Transportation & Exportation


Sec.  18.20  General rules.

    (a) Classes of goods for which a transportation and exportation 
entry is authorized. Entry for transportation and exportation may be 
made under section 553, Tariff Act of 1930, as amended (19 U.S.C. 
1553), for any merchandise, except as provided under Sec.  18.1(l).
    (b) Filing Requirement. Transportation and exportation entries must 
be filed via a CBP-approved EDI system and in accordance with Sec.  
18.1.
    (c) Entry Procedures. Except as provided for in subparts D, E, F 
and G of part 123 of this chapter (relating to merchandise in transit 
through the U.S. between two points in contiguous foreign territory), 
when merchandise is entered for transportation and exportation, a 
carnet, three copies of an air waybill (see Sec.  122.92 of this 
chapter), or the in-bond application must be submitted to CBP (see 
Sec.  18.1). The port director may require the carrier to provide 
additional information and documentation related to the delivery of the 
merchandise to the bonded carrier. Arrival must be reported promptly, 
but no later than 24 hours after the arrival at the port of 
exportation, in accordance with Sec.  18.1.
    (d) No bonded common carrier facilities available. Except for 
merchandise covered by a carnet (see Sec.  18.2(a) (2) and (3)), in 
places where no bonded common carrier facilities are reasonably 
available and merchandise is permitted to be transported otherwise than 
by a bonded common carrier, the port director may permit entry in 
accordance with the procedures outlined in this section if he or she is 
satisfied that the revenue will not be endangered. A bond on CBP Form 
301, containing the bond conditions set forth in Sec.  113.62 of this 
chapter in an amount equal to double the estimated duties that would be 
owed will be required when the port director deems such action 
necessary. The principal on any bond filed to guarantee exportation may 
be required by the port director to provide evidence of exportation in 
accordance with Sec.  113.55 of this chapter within 30 days of 
exportation.
    (e) Electronic Export Information. Filing of Electronic Export 
Information (EEI) is not required for merchandise entered for 
transportation and exportation, provided the merchandise has not been 
entered for consumption or for warehousing. If the merchandise requires 
an export license, the merchandise is subject to the filing 
requirements of the licensing Federal agency. See 15 CFR 30.37(e).
    (f) Time to export. Any portion of an in-bond shipment entered for 
exportation following an in-bond entry must be exported within 15 
calendar days from the date of arrival to the port of export, unless an 
extension has been granted by CBP pursuant to Sec.  18.24. On the 16th 
day, the merchandise will become subject to general order requirements 
under Sec. Sec.  4.37, 122.50, or 123.10 of this chapter, as 
applicable.
    (g) Notice and Proof of Exportation. The bonded carrier must 
promptly, but no more than 24 hours after exportation, update the in-
bond record via a CBP approved EDI system to reflect that the 
merchandise has been exported. The principal on any bond filed to 
guarantee exportation may be required by the port director to provide 
evidence of exportation in accordance with Sec.  113.55 of this chapter 
within 30 days of exportation.


Sec.  18.21  [Reserved].


Sec.  18.22  Transfer and express shipment procedures at port of 
exportation.

    (a) Transfer of bonded merchandise to another conveyance. If in-
bond merchandise must be transferred to another conveyance, the 
procedure will be as prescribed in Sec.  18.3(d).
    (b) Transfer of baggage by express shipment. An express company 
that is bonded as a common carrier and is responsible under its bond 
for delivery to the CBP officer in charge of the exporting conveyance 
of articles shown to be baggage in the in-bond record may transfer the 
baggage by express shipment without a permit from the port director and 
without the use of a transfer ticket or other CBP formality from its 
terminal to the exporting conveyance for lading under CBP supervision. 
The in-bond record must be updated to reflect the name of the owner of 
the baggage or article and the name of the conveyance transporting the 
owner of the baggage. See Sec.  18.1.


Sec.  18.23  Change of foreign destination; change of entry.

    (a) The carrier or any of the parties provided for in Sec.  18.1(c) 
must notify CBP of a change of the foreign destination that was 
provided in the original in-bond application by updating the in-bond 
record via a CBP-

[[Page 10643]]

approved EDI system within 24 hours of learning of the change.
    (b) Merchandise received at the anticipated port of export may be 
entered for consumption, warehouse, FTZ or any other form of entry, and 
is subject to all the conditions pertaining to merchandise entered at a 
port of first arrival.


Sec.  18.24  Retention of goods within port limits; splitting of 
shipments.

    (a) Retention of goods within port limits. Upon application via a 
CBP-approved EDI system by the carrier or any of the parties provided 
for in Sec.  18.1(c), the port director, in his or her discretion, may 
allow in-transit merchandise, including merchandise covered by a 
carnet, to remain within the port limits under CBP supervision without 
extra expense to the Government for a period not exceeding 90 days, 
provided that the owner of the premises where the merchandise is 
located, has consented to the retention of the goods on the owner's 
premises. Upon obtaining CBP approval, the carrier or any of the 
parties provided for in Sec.  18.1(c) must submit an immediate 
exportation in-bond application pursuant to Sec. Sec.  18.1 and 18.25 
of this chapter. Upon further requests, additional extensions of 90 
days or less may be granted by the port director, but the merchandise 
may not remain in the port limits for more than 1 year from the date of 
arrival of the importing conveyance at the port of first arrival. Any 
merchandise that remains in the port limits without authorization is 
subject to general order requirements under Sec. Sec.  4.37, 122.50, or 
123.10 of this chapter, as applicable.
    (b) Split shipments. The splitting up of a shipment for exportation 
will be permitted when exportation in its entirety is not possible by 
reason of the different destination to which portions of the shipment 
are destined, when the exporting vessel cannot properly accommodate the 
entire quantity, or in similar circumstances. The carrier or any of the 
parties named in Sec.  18.1(c) must, in accordance with the filing 
requirements of Sec.  18.1, submit a new in-bond application for each 
portion of the original shipment to be transported in a manner 
inconsistent with the original in-bond application. All movements of 
split shipment must be initiated within two days from the date that the 
first portion of the split shipment is authorized or it will be 
considered an irregular delivery. In the case, however, of merchandise 
being transported under cover of a carnet, the splitting up of a 
shipment is not permitted.

Subpart E--Immediate Exportation


Sec.  18.25  Direct exportation.

    (a) Merchandise--(1) General. Except for exportations by mail as 
provided for in subpart F of part 145 of this chapter (see also Sec.  
158.45 of this chapter), an in-bond application must be transmitted as 
provided under Sec.  18.1, for the following merchandise when it is to 
be directly exported without transportation to another port:
    (i) Merchandise in CBP custody for which no entry has been made or 
completed;
    (ii) Merchandise covered by an unliquidated consumption entry; or
    (iii) Merchandise that has been entered in good faith but is found 
to be prohibited under any law of the United States.
    (2) Carnets. If a TIR carnet covers the merchandise that is to be 
exported directly without transportation, the carnet will be discharged 
or canceled, as appropriate (see part 114 of this chapter), and an in-
bond application must be transmitted, as provided by this part. If an 
A.T.A. carnet covers the merchandise that is to be exported directly 
without transportation, the carnet must be discharged by the 
certification of the appropriate transportation and reexportation 
vouchers by CBP officers as necessary.
    (b) Restriction on immediate export by truck. Trucks arriving at a 
United States port of entry, carrying shipments for which an immediate 
exportation entry is presented as the sole means of entry will be 
denied a permit to proceed. The port director may require the truck to 
return to the country from which it came or, at the discretion of the 
port director, may allow the filing of a new entry.
    (c) Time to export. Any portion of an in-bond shipment entered for 
immediate exportation pursuant to an in-bond entry must be exported 
within 15 calendar days from the date of arrival to the port of export, 
unless an extension has been granted by CBP pursuant to Sec.  18.24. On 
the 16th day, the merchandise will become subject to general order 
requirements under Sec. Sec.  4.37, 122.50, or 123.10 of this chapter, 
as applicable.
    (d) Electronic Export Information. Filing of Electronic Export 
Information (EEI) is not required for merchandise entered under an 
Immediate Exportation entry provided that the merchandise has not been 
entered for consumption or for warehousing. If the merchandise requires 
an export license, the merchandise is subject to the filing 
requirements of the licensing Federal agency. See 15 CFR 30.37(e).
    (e) Exportation without landing. If the merchandise is exported in 
the arriving carrier without landing, a representative of the exporting 
carrier who has knowledge of the facts must certify that the 
merchandise entered for exportation was not discharged during the 
carrier's stay in port. A charge will be made against the continuous 
bond on CBP Form 301, containing the bond conditions set forth in Sec.  
113.64 of this chapter, if on file. If a continuous bond is not on 
file, a single entry bond containing the bond conditions set forth in 
Sec.  113.64 will be required as in the case of residue cargo for 
foreign ports. If the merchandise is covered by a TIR carnet, the 
carnet must not be taken on charge (see Sec.  114.22(c)(2) of this 
chapter).
    (f) Notice and Proof of Exportation. The bonded carrier must 
promptly, but no more than 24 hours after exportation, update the in-
bond record via a CBP approved EDI system to reflect that the 
merchandise has been exported. The principal on any bond filed to 
guarantee exportation may be required by the port director to provide 
evidence of exportation in accordance with Sec.  113.55 of this chapter 
within 30 days of exportation
    (g) Explosives. Gunpowder and other explosive substances, the 
deposit of which in any public store or bonded warehouse is prohibited 
by law, may be entered on arrival from a foreign port for immediate 
exportation in-bond by sea, but must be transferred directly from the 
importing to the exporting vessel.
    (h) Transfer by Express Shipment. The transfer of articles by 
express shipment must be in accordance with the procedures set forth in 
Sec.  18.22.


Sec.  18.26  Indirect exportation.

    (a) Merchandise exported without landing from importing carrier. 
Merchandise to be exported in the importing carrier without landing, 
commonly referred to as freight remaining on board (FROB), may be 
transported in-bond to another port for exportation and entered for 
transportation and exportation in accordance with the procedure in 
Sec.  18.20, upon the transmission of an in-bond application to CBP 
pursuant to Sec.  18.1, via a CBP-approved EDI system. Upon acceptance 
of the entry by CBP and acceptance of the merchandise by the bonded 
carrier, the bonded carrier assumes liability for the transportation 
and exportation of the merchandise. If the merchandise was prohibited 
entry by any Government agency, that fact must be noted in the in-bond 
application.

[[Page 10644]]

    (b) Carnets. If the merchandise was imported under cover of a TIR 
carnet, the carnet must be discharged or canceled at the port of 
importation and the merchandise transported under an electronic in-bond 
application (see Sec.  18.25). If merchandise has been imported under 
cover of an A.T.A. carnet to be transported in-bond to another port for 
exportation, the appropriate transit voucher will be accepted in lieu 
of an electronic in-bond application. One transit voucher will be 
certified by CBP officers at the port of importation and a second 
transit voucher, together with the reexportation voucher, will be 
certified at the port of exportation.
    (c) Transfer at selected port of exportation. If the merchandise is 
to be transferred to another conveyance after arrival at the port 
selected for exportation pursuant to paragraph (a) of this section, the 
procedure prescribed in Sec.  18.3(d) will be followed. The provisions 
of Sec. Sec.  18.23 and 18.24 will also be followed in applicable 
cases.
    (d) Time to export. Any portion of an in-bond shipment entered for 
immediate exportation following an in-bond entry must be exported 
within 15 calendar days from the date of arrival to the port of export, 
unless an extension has been granted by CBP pursuant to Sec.  18.24. On 
the 16th day, the merchandise will become subject to general order 
requirements under Sec. Sec.  4.37, 122.50, or 123.10 of this chapter, 
as applicable.
    (e) Notice and Proof of Exportation. The bonded carrier must 
promptly, but no more than 24 hours after exportation, update the in-
bond record via a CBP approved EDI system to reflect that the 
merchandise has been exported. The principal on any bond filed to 
guarantee exportation may be required by the port director to provide 
evidence of exportations in accordance with Sec.  113.55 of this 
chapter within 30 days of exportation.


Sec.  18.27  Port marks.

    Port marks may be added by authority of the port director and under 
the supervision of a CBP officer. The original marks and the port marks 
must appear in all documentation pertaining to the exportation.

Subpart F--Merchandise Transported by Pipeline


Sec.  18.31  Pipeline transportation of bonded merchandise.

    (a)(1) General. Merchandise may be transported by pipeline under 
the procedures in this part, as appropriate, and unless otherwise 
specifically provided for in this section.
    (2) In-bond application. For purposes of this section, the in-bond 
application will be made by submitting a CBP Form 7512.
    (b) Bill of lading to account for merchandise. Unless CBP has 
reasonable cause to suspect fraud, CBP will accept a bill of lading or 
equivalent document of receipt issued by the pipeline operator to the 
shipper and accepted by the consignee to account for the quantity of 
merchandise transported by pipeline and to maintain the identity of the 
merchandise.
    (c) Procedures when pipeline is only carrier. When a pipeline is 
the only carrier of the in-bond merchandise and there is no transfer to 
another carrier, the bill of lading or equivalent document of receipt 
issued by the pipeline operator to the shipper must be submitted with 
the in-bond application. If there are no discrepancies between the bill 
of lading or equivalent document of receipt and the in-bond application 
for the merchandise, and provided that CBP has no reasonable cause to 
suspect fraud, the bill of lading or equivalent document of receipt 
will be accepted by CBP at the port of destination or exportation as 
establishing the quantity and identity of the merchandise transported. 
The pipeline operator is responsible for any discrepancies, including 
shortages, irregular deliveries, or nondeliveries at the port of 
destination or exportation (see Sec.  18.8).
    (d) Procedures when there is more than one carrier (i.e., transfer 
of the merchandise)--(1) Pipeline as initial carrier. When a pipeline 
is the initial carrier of merchandise to be transported in-bond and the 
merchandise is transferred to another conveyance (either a different 
mode of transportation or a pipeline operated by another operator), the 
procedures in Sec.  18.3 and paragraph (c) of this section must be 
followed, except that--
    (i) When the merchandise is to be transferred to one conveyance, a 
copy of the bill of lading or equivalent document issued by the 
pipeline operator to the shipper must be delivered to the person in 
charge of the conveyance for delivery to the appropriate CBP official 
at the port of destination or export; or
    (ii) When the merchandise is to be transferred to more than one 
conveyance, a copy of the bill of lading or equivalent document issued 
by the pipeline operator to the shipper must be delivered to the person 
in charge of each additional conveyance, for delivery to the 
appropriate CBP official at the port of destination or exportation.
    (2) Transfer to pipeline from initial carrier other than a 
pipeline. When merchandise initially transported in-bond by a carrier 
other than a pipeline is transferred to a pipeline, the procedures in 
Sec.  18.3 and paragraph (c) of this section must be followed, except 
that the bill of lading or other equivalent document of receipt issued 
by the pipeline operator to the shipper must be delivered to the 
appropriate CBP officer at the port of destination or port of export.
    (3) Initial carrier liable for discrepancies. In the case of either 
paragraph (d)(1) or (d)(2) of this section, the initial carrier will be 
responsible for any discrepancies, including shortages, irregular 
deliveries, or nondeliveries, at the port of destination or failure to 
export at the port of exportation (see generally Sec.  18.8).
    (e) Recordkeeping. The shipper, pipeline operator, and consignee 
are subject to the recordkeeping requirements in 19 U.S.C. 1508 and 
1509, as provided for in part 162 of this chapter.

Subpart G--Merchandise Not Otherwise Subject to Customs Control 
Exported Under Cover of a TIR Carnet


Sec.  18.41  Applicability.

    The provisions of Sec. Sec.  18.41 through 18.45 apply only to 
merchandise to be exported under cover of a TIR carnet for the 
convenience of the U.S. exporter or other party in interest and do not 
apply to merchandise otherwise required to be transported in bond under 
the provisions of this chapter. Merchandise to be exported under cover 
of a TIR carnet for the convenience of the U.S. exporter or other party 
in interest may be transported with the use of the facilities of either 
bonded or nonbonded carriers.


Sec.  18.42  Direct exportation.

    At the port of exportation, the container or road vehicle, the 
merchandise, and the TIR carnet shall be made available to the port 
director. Any required export declarations shall be filed in accordance 
with the applicable regulations of the Bureau of the Census (15 CFR 
part 30) and the Export Administration (15 CFR chapter VII, subchapter 
C). The port director shall examine the merchandise to the extent he 
believes necessary to determine that the carnet has been properly 
completed and shall verify that the container or road vehicle has the 
necessary certificate of approval or approval plate intact and is in 
satisfactory condition. After completion of any required examination 
and

[[Page 10645]]

supervision of loading, the port director will seal the container or 
road vehicle with customs seals and ascertain that the TIR plates are 
properly affixed and sealed. See Sec.  18.4(d). In the case of heavy or 
bulky goods moving under cover of a TIR carnet, the port director shall 
cause a customs seal or label, as appropriate, to be affixed. He shall 
also remove two vouchers from the carnet, execute the appropriate 
counterfoils, and return the carnet to the carrier or agent to 
accompany the merchandise.


Sec.  18.43  Indirect exportation.

    (a) Filing of Electronic Export Information. When merchandise is to 
move from one U.S. port to another for actual exportation at the second 
port, any export declarations required to be validated shall be filed 
in accordance with the port of origin procedure described in the 
applicable regulations of the Bureau of the Census (15 CFR part 30) and 
the Export Administration (15 CFR chapter VII, subchapter C).
    (b) Origination port procedure. The port director shall follow the 
procedure provided in Sec.  18.42 in respect to examination of the 
merchandise, supervision of loading, sealing or labeling, and affixing 
of TIR plates. The port director will remove one voucher from the 
carnet, execute the appropriate counterfoil, and return the carnet to 
the carrier or agent to accompany the container or road vehicle to the 
port of actual exportation.
    (c) Port of export procedure. At the port of actual exportation, 
the carnet and the container (or heavy or bulky goods) or road vehicle 
shall be presented to the port director who shall verify that seals or 
labels are intact and that there is no evidence of tampering. After 
verification, the port director shall remove the appropriate voucher 
from the carnet, execute the counterfoil, and return the carnet to the 
carrier or agent.


Sec.  18.44  Abandonment of exportation.

    In the event that exportation is abandoned at any time after 
merchandise has been placed under cover of a TIR carnet, the carrier or 
agent shall deliver the carnet to the nearest CBP office or to the CBP 
office at the port of origin for cancellation (see Sec.  114.26(c) of 
this chapter). When the carnet has been canceled, the carrier or agent 
may remove customs seals or labels and unload the container (or heavy 
or bulky goods) or road vehicle without customs supervision.


Sec.  18.45  Supervision of exportation.

    The provisions of Sec. Sec.  18.41 through 18.44 do not require the 
director of the port of actual exportation to verify that merchandise 
moving under cover of a TIR carnet is loaded on board the exporting 
carrier.

Subpart H--Importer Security Filings


Sec.  18.46  Changes to Importer Security Filing information.

    For merchandise transported in bond, which at the time of 
transmission of the Importer Security Filing as required by Sec.  149.2 
of this chapter is intended to be entered as an immediate exportation 
(IE) or transportation and exportation (T&E) shipment, permission from 
the port director of the port of origin is needed to change the in-bond 
entry into a consumption entry. Such permission will only be granted 
upon receipt by CBP of a complete Importer Security Filing as required 
by part 149 of this chapter.

PART 19--CUSTOMS WAREHOUSES, CONTAINER STATIONS AND CONTROL OF 
MERCHANDISE THEREIN

    9. The general authority for part 19, CBP regulations continues to 
read as follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States), 1624;
* * * * *
    10. In Sec.  19.15, revise paragraphs (f) and (g)(1) to read as 
follows:


Sec.  19.15  Withdrawal for exportation of articles manufactured in 
bond; waste or byproducts for consumption.

* * * * *
    (f) The general procedure covering warehouse withdrawals for 
exportation must be followed in the case of articles withdrawn for 
exportation from a bonded manufacturing warehouse.
    (g)(1) Articles may be withdrawn for transportation and delivery to 
a bonded storage warehouse at an exterior port under the provisions of 
section 311, Tariff Act of 1930, as amended (19 U.S.C. 1311), for the 
sole purpose of immediate export, except for distilled spirits which 
may be withdrawn under the provisions of section 311 for transportation 
and delivery to any bonded storage warehouse for the sole purpose of 
immediate export, or may be withdrawn pursuant to Sec.  309(a) of the 
Tariff Act of 1930, as amended (19 U.S.C. 1309(a)). To make a 
withdrawal an in-bond application must be filed (see part 18 of this 
chapter), as provided for in Sec.  144.36 of this chapter. A 
rewarehouse entry shall be made in accordance with Sec.  144.34(b) of 
this chapter, supported by a bond on CBP Form 301, containing the bond 
conditions set forth in Sec.  113.63 of this chapter.
* * * * *

PART 113--CUSTOMS BONDS

    11. The general authority for part 113, CBP regulations continues 
to read as follows:

    Authority:  19 U.S.C. 66, 1623, 1624.
* * * * *
    12. In Sec.  113.63, revise paragraph (c)(1) to read as follows:


Sec.  113.63  Basic custodial bond conditions.

* * * * *
    (c) * * *
    (1) If a bonded carrier, to report in-bond arrivals and 
exportations in the manner and in the time prescribed by regulation and 
to export in-bond merchandise in the time periods prescribed by 
regulation.
* * * * *

PART 122--AIR COMMERCE REGULATIONS

    13. The general authority for part 122, CBP regulations continues 
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.
* * * * *
    14. In Sec.  122.118, revise (b) to read as follows:


Sec.  122.118  Exportation from port of arrival.

* * * * *
    (b) Time. Transit air cargo must be exported from the port of 
arrival within 15 days from the date the exporting airline receives the 
cargo. After the 15-day period, the individual cargo shipments must be 
made the subject of individual entries, as appropriate.
* * * * *
    15. In Sec.  122.119, revise paragraph (b) to read as follows:


Sec.  122.119  Transportation to another U.S. port.

* * * * *
    (b) Time. Transit air cargo traveling to a final port of 
destination in the U.S. shall be delivered to Customs at its 
destination within 30 days from the date the receiving airline gives 
the receipt for the cargo at the port of arrival.
    16. In Sec.  122.120, revise paragraphs (c) and (k) to read as 
follows:


Sec.  122.120  Transportation to another port for exportation.

* * * * *
    (c) Time. Transit air cargo covered by this section shall be 
delivered to Customs at the port of exportation

[[Page 10646]]

within 30 days from the date of receipt by the forwarding airline.
* * * * *
    (k) Failure to deliver. If all or part of the cargo listed on the 
transit air cargo manifest is not accounted for with an exportation 
copy within 45 days, the director of the port of arrival shall take 
action as provided in Sec.  122.119(d).

PART 123--CUSTOMS RELATIONS WITH CANADA AND MEXICO

    17. The general authority for part 123, CBP regulations continues 
to read as follows:

    Authority:  19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States (HTSUS)), 1431, 1433, 1436, 
1448, 1624, 2071 note.
* * * * *
    18. In Sec.  123.31, revise paragraph (b) to read as follows:


Sec.  123.31  Merchandise in transit.

* * * * *
    (b) From one point in a contiguous country to another through the 
United States. Merchandise may be transported from point to point in 
Canada or in Mexico through the United States in bond in accordance 
with the procedures set forth in Sec. Sec.  18.1 and 18.20 through 
18.24 of this chapter except where those procedures are modified by 
this subpart or subparts E for trucks transiting the United States, F 
for commercial traveler's samples, or G for baggage.
* * * * *
    19. Revise Sec.  123.32 to read as follows:


Sec.  123.32  In-bond application.

    An in-bond application must be submitted pursuant to part 18 of 
this chapter upon arrival of merchandise which is to proceed under the 
provisions of this subpart.


Sec.  123.34  [Removed and Reserved]

    20. Remove and reserve Sec.  123.34.
    21. In Sec.  123.42, revise paragraph (c)(1) and the introductory 
text of paragraph (d), to read as follows:


Sec.  123.42  Truck shipments transiting the United States.

* * * * *
    (c) Procedure at United States port of arrival--(1) Filing of in-
bond application. An in-bond application must be filed pursuant to 
Sec.  18.1 of this chapter prior to or upon arrival at a U.S. port. At 
CBP's discretion the driver may be required to present four validated 
copies of the United States-Canada Transit Manifest, CBP Form 7512-B 
Canada 81/2, to the CBP officer, who will review the manifest for 
accuracy and verify its validation by Canadian Customs. If the manifest 
is found not to be validated properly, the truck will be required to be 
returned to the Canadian port of departure so that the manifest may be 
validated in accordance with Canadian Customs regulations. If the 
manifest is validated properly and no irregularity is found, the truck 
will be sealed unless sealing is waived by CBP. The CBP officer will 
note in the in-bond record and, if paper, on the manifest, the seal 
numbers or the waiver of sealing, retain the original, and return three 
copies of the manifest to the driver for presentation to CBP at the 
United States port of exit.
     * * *
    (d) Procedure at United States port of exit. The arrival of the in-
bond shipment at the port of export must be reported to CBP in 
accordance with Sec.  18.1 of this chapter. If CBP requires a paper 
manifest, the driver will present the three validated copies of the 
manifest to the CBP officer at the U.S. port of exit.
* * * * *
    22. Revise Sec.  123.52 (a) to read as follows:


Sec.  123.52  Commercial samples transported by automobile through the 
United States between ports in Canada.

    (a) General provisions. A commercial traveler arriving from Canada 
may be permitted to transport effectively corded and sealed samples in 
his automobile without further sealing in the United States, upon 
compliance with this section and subject to the conditions of Sec.  
18.20(c) of this chapter, since customs bonded carriers as described in 
Sec.  18.2 of this chapter are not considered to be reasonably 
available. Samples having a total value of not more than $200 may be 
carried by a nonresident commercial traveler through the United States 
without cording and sealing and without an in-transit manifest in 
accordance with Sec.  148.41 of this chapter.
* * * * *
    23. Revise Sec.  123.64(a) to read as follows:


Sec.  123.64  Baggage in transit through the United States between 
ports in Canada or in Mexico.

    (a) Procedure. Baggage in transit from point to point in Canada or 
Mexico through the United States may be transported in-bond through the 
United States in accordance with the procedures set forth in Sec. Sec.  
18.1, 18.13, 18.14, and 18.20 through 18.24 of this chapter except 
where those procedures are modified by this section.
* * * * *

PART 141--ENTRY OF MERCHANDISE

    24. The general authority for part 141, CBP regulations, continues 
to read as follows:

    Authority:  19 U.S.C. 66, 1414, 1448, 1484, 1624.

    25. In Sec.  141.61, revise paragraph (e)(1)(i)(A) to read as 
follows:


Sec.  141.61  Completion of entry and entry summary documentation.

* * * * *
    (e) Statistical information--(1) Information required on entry 
summary or withdrawal form--(i) Where form provides space--(A) Single 
invoice. For each class or kind of merchandise subject to a separate 
statistical reporting number, the applicable information required by 
the General Statistical Notes, Harmonized Tariff Schedule of the United 
States (HTSUS), must be shown on the entry summary, CBP Form 7501. The 
applicable information must also be shown on the in-bond application 
filed pursuant to part 18 of this chapter when it is used to document 
an incoming vessel shipment proceeding to a third country pursuant to 
an entry for transportation and exportation, or immediate exportation.
* * * * *

PART 142--ENTRY PROCESS

    26. The general authority for part 142, CBP regulations, continues 
to read as follows:

    Authority:  19 U.S.C. 66, 1448, 1484, 1624.

    27. In Sec.  142.18, revise paragraphs (a)(1) and (2) to read as 
follows:


Sec.  142.18  Entry summary not required for prohibited merchandise.

    (a) * * *
    (1) An entry for exportation filed using an in-bond application 
pursuant to part 18 of this chapter, or an application to destroy the 
merchandise under CBP supervision is made within 10 days after the time 
of entry, and the exportation or destruction is accomplished promptly, 
or
    (2) An entry for transportation and exportation, filed using an in-
bond application pursuant to part 18 of this chapter, is made within 10 
days after the time of entry and domestic carriage of the merchandise 
does not conflict with the requirements of another Federal agency.
* * * * *
    28. In Sec.  142.28, revise paragraph (a)(2) to read as follows:


Sec.  142.28  Withdrawal or entry summary not required for prohibited 
merchandise.

    (a) * * *

[[Page 10647]]

    (2) An entry for exportation or for transportation and exportation 
filed using an in-bond application pursuant to part 18 of this chapter, 
or an application to destroy the merchandise, is made within the 
specified time limit, and the exportation or destruction is 
accomplished promptly.
* * * * *

PART 143--SPECIAL ENTRY PROCEDURES

    29. The general authority for part 143, CBP regulations, continues 
to read as follows:

    Authority:  19 U.S.C. 66, 1414, 1481, 1484, 1498, 1624, 1641.

    30. In Sec.  143.1, revise paragraph (c) to read as follows:


Sec.  143.1  Eligibility.

* * * * *
    (c) Participants for other purposes. Upon approval by CBP, any 
party may participate in ABI for other purposes, including transmission 
of protests, and applications for FTZ admission (CBP Form 214).

PART 144--WAREHOUSE AND REWAREHOUSE ENTRIES AND WITHDRAWALS

    31. The general authority for part 144, CBP regulations, continues 
to read as follows:

    Authority: 19 U.S.C. 66, 1484, 1557, 1559, 1624.
* * * * *
    32. In Sec.  144.22, revise paragraph (b) to read as follows:


Sec.  144.22  Endorsement of transfer on withdrawal form.

* * * * *
    (b) In-bond application filed pursuant to part 18 of this chapter, 
for merchandise to be withdrawn for transportation, exportation, or 
transportation and exportation.
    33. In Sec.  144.36, revise paragraph (c), the introductory text of 
paragraph (d), paragraph (f), and paragraph (g)(4) to read as follows:


Sec.  144.36  Withdrawal for transportation.

* * * * *
    (c) Form. (1) A withdrawal for transportation shall be filed by 
submitting an in-bond application pursuant to part 18 of this chapter.
    (2) Separate withdrawals for transportation from a single 
warehouse, via a single conveyance, consigned to the same consignee, 
and deposited into a single warehouse, can be filed using one in-bond 
application, under one control number, provided that the information 
for each withdrawal, as required in paragraph (d) of this section is 
provided in the in-bond application for certification by CBP. With the 
exception of alcohol and tobacco products, this procedure will not be 
allowed for merchandise that is in any way restricted (for example, 
quota/visa).
    (3) The requirement that an in-bond application be filed and the 
information required in paragraph (d) of this section be shown will not 
be required if the merchandise qualifies under the exemption in Sec.  
144.34(c).
    (d) Information required. In addition to the statement of quantity 
required by Sec.  144.32, the following information for the merchandise 
being withdrawn must be provided in the in-bond application:
* * * * *
    (f) Forwarding procedure. The merchandise must be forwarded in 
accordance with the general provisions for transportation in bond 
(Sec. Sec.  18.1 through 18.9 of this chapter). However, when the 
alternate procedures for transfers between integrated bonded warehouses 
under Sec.  144.34(c) are employed, the merchandise need not be 
delivered to a bonded carrier for transportation, and an entry for 
transportation and a rewarehouse entry will not be required.
* * * * *
    (g) * * *
    (4) Forwarded to another port or returned to the port of origin in 
accordance with Sec. Sec.  18.5(c) or 18.9 of this chapter;
* * * * *
    34. In Sec.  144.37, revise paragraphs (a) and (b), to read as 
follows:


Sec.  144.37  Withdrawal for exportation.

    (a) Form. A withdrawal for either direct or indirect exportation 
must be filed by submitting an in-bond application pursuant to part 18 
of this chapter or on CBP Form 7501 in 3 copies for merchandise being 
exported under cover of a TIR carnet. The in-bond application or CBP 
Form 7501 must contain all of the statistical information as provided 
in Sec.  141.61(e) of this chapter. The port director may require an 
extra copy or copies of CBP Form 7501 for use in connection with the 
delivery of merchandise to the carrier.
    (b) Procedure for indirect exportation--(1) Forwarding. Merchandise 
withdrawn for indirect exportation (transportation and exportation) 
must be forwarded to the port of exportation in accordance with the 
general provisions for transportation in bond (part 18 of this 
chapter).
    (2) Splitting of shipments. The splitting up for exportation of 
shipments arriving under warehouse withdrawals for indirect exportation 
will be permitted only when various portions of a shipment are destined 
to different destinations, when the export vessel cannot properly 
accommodate the entire quantity, or in other similar circumstances. In 
the case of merchandise moving under cover of a TIR carnet, if the 
merchandise is not to be exported or if the shipment is to be divided, 
appropriate entry will be required and the carnet discharged. The 
provisions of Sec. Sec.  18.23 and 18.24 of this chapter concerning 
change of destination or retention of merchandise on the deck must also 
be followed in applicable cases.
* * * * *

PART 146--FOREIGN TRADE ZONES

    35. The general authority for part 146, CBP regulations, continues 
to read as follows:

    Authority: 19 U.S.C. 66, 81a-81u, 1202 (General Note 3(i), 
Harmonized Tariff Schedule of the United States), 1623, 1624.

    36. In Sec.  146.62, revise paragraphs (a) and (b)(2) to read as 
follows:


Sec.  146.62  Entry.

    (a) General. Entry for foreign merchandise that is to be 
transferred from a zone, or removed from a zone for exportation or 
transportation to another port, for consumption or warehouse, will be 
made filing an in-bond application pursuant to part 18 of this chapter, 
CBP Form 3461, CBP Form 7501, or other applicable CBP forms. If entry 
is made on CBP Form 3461, the person making entry shall file an entry 
summary for all the merchandise covered by the CBP Form 3461 within 10 
working days after the time of entry.
    (b) * * *
    (2) An in-bond application for merchandise to be transferred to 
another port or zone or for exportation must provide that the 
merchandise covered is foreign trade zone merchandise; give the number 
of the zone from which the merchandise was transferred; state the 
status of the merchandise; and, if applicable, bear the notation or 
endorsement provided for in Sec.  146.64(c), Sec.  146.66(b), or Sec.  
146.70(c).
* * * * *
    37. In Sec.  146.66, revise paragraphs (a) and (b), and remove the 
words ``Customs Form'' and adding in their place the words ``CBP Form'' 
in paragraphs (c) and (d) to read as follows:


Sec.  146.66  Transfer of merchandise from one zone to another.

    (a) At the same port. A transfer of merchandise to another zone 
with a

[[Page 10648]]

different operator at the same port (including a consolidated port) 
must be made by a licensed cartman or a bonded carrier as provided for 
in Sec.  112.2(b) of this chapter or by the operator of the zone for 
which the merchandise is destined under an entry for immediate 
transportation filed via an in-bond application pursuant to part 18 of 
this chapter or other appropriate form with a CBP Form 214 filed at the 
destination zone. A transfer of merchandise between zone sites at the 
same port having the same operator may be made under a permit on CBP 
Form 6043 or under a local control system approved by the port director 
wherein any loss of merchandise between sites will be treated as if the 
loss occurred in the zone.
    (b) At a different port. A transfer of merchandise from a zone at 
one port of entry to a zone at another port must be made by bonded 
carrier under an entry for immediate transportation filed via an in-
bond application pursuant to part 18 of this chapter. All copies of the 
entry must bear a notation that the merchandise is being transferred to 
another zone designated by its number.
* * * * *
    38. In Sec.  146.67, revise paragraphs (b) and (c) to read as 
follows:


Sec.  146.67  Transfer of merchandise for exportation.

* * * * *
    (b) Immediate exportation. Each transfer of merchandise to the 
customs territory for exportation at the port where the zone is located 
will be made under an entry for immediate exportation filed in an in-
bond application pursuant to part 18 of this chapter. The person making 
entry must furnish an export bond on CBP Form 301 containing the bond 
conditions provided for in Sec.  113.63 of this chapter.
    (c) Transportation and exportation. Each transfer of merchandise to 
the customs territory for transportation to and exportation from a 
different port, will be made under an entry for transportation and 
exportation in an in-bond application pursuant to part 18 of this 
chapter. The bonded carrier will be responsible for exportation of the 
merchandise in accordance with Sec.  18.26 of this chapter.
* * * * *
    39. Revise Sec.  146.68 to read as follows:


Sec.  146.68  Transfer for transportation or exportation; estimated 
production.

    (a) Weekly permit. The port director may allow the person making 
entry for merchandise provided for in Sec.  146.63(c) to file an 
application for a weekly permit to enter and release merchandise during 
a calendar week for exportation, transportation, or transportation and 
exportation. The application will be made by filing an in-bond 
application pursuant to part 18 of this chapter. The in-bond 
application must provide invoice or schedule information like that 
required in Sec.  146.63(c)(1). If actual transfers will exceed the 
estimate for the week, the person with the right to make entry must 
file a supplemental in-bond application to cover the additional 
merchandise to be transferred from the subzone or zone site. No 
merchandise covered by the weekly permit may be transferred from the 
zone before approval of the application by the port director.
    (b) Individual entries. After approval of the application for a 
weekly permit by the port director, the person making entry will be 
authorized to file individual in-bond applications for exportation, 
transportation, or transportation and exportation of the merchandise 
covered by permit. Upon transfer of the merchandise, the carrier must 
update the in-bond record via a CBP-approved system to ensure its 
assumption of liability under the carrier's or cartman's bond. CBP will 
consider the time of entry to be when the removing carrier updates the 
in-bond record.
    (c) Statement of merchandise entered. The person making entry for 
merchandise under an approved weekly permit must file with the port 
director, by the close of business on the second working day of the 
week following the week designated on the permit, a statement of the 
merchandise entered under that permit. The statement must list each in-
bond application by its unique IT number, and must provide a 
reconciliation of the quantities on the weekly permit with the 
manifested quantities on the individual in-bond applications submitted 
to CBP, as well as an explanation of any discrepancy.

PART 151--EXAMINATION, SAMPLING, AND TESTING OF MERCHANDISE

    40. The general authority for part 151, CBP regulations, continues 
to read as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 3(i) and (j), 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624.
* * * * *
    41. Revise Sec.  151.9 to read as follows:


Sec.  151.9  Immediate transportation entry delivered outside port 
limits.

    When merchandise covered by an immediate transportation entry has 
been authorized by the port director to be delivered to a place outside 
a port of entry as provided for in Sec.  18.11(a) of this chapter, the 
provisions of Sec.  151.7 must be complied with to the same extent as 
if the merchandise had been delivered to the port of entry, and then 
authorized to be examined elsewhere than at the public stores, wharf, 
or other place under the control of CBP.

PART 181--NORTH AMERICAN FREE TRADE AGREEMENT

    42. The general authority for part 181, CBP regulations, continues 
to read as follows:

    Authority:  19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States), 1624, 3314.
* * * * *


Sec.  181.47  [Amended]

    43. In Sec.  181.47, revise paragraph (b)(2)(ii)(E) by removing the 
words ``Customs Form 7512'' and replacing them with the words ``In-bond 
application submitted pursuant to part 18 of this chapter''.

David V. Aguilar,
Acting Commissioner, U.S. Customs and Border Protection.
    Approved: February 2, 2012.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2012-2819 Filed 2-21-12; 8:45 am]
BILLING CODE 9111-14-P