Federal Register, Volume 82 Issue 187 (Thursday, September 28, 2017)

[Federal Register Volume 82, Number 187 (Thursday, September 28, 2017)]
[Rules and Regulations]
[Pages 45366-45408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20495]

[[Page 45365]]

Vol. 82

Thursday,

No. 187

September 28, 2017

Part II

Department of Homeland Security

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U.S. Customs and Border Protection

Department of the Treasury

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19 CFR Parts 4, 10, 18, et al.

Changes to the In-Bond Process; Rule

Federal Register / Vol. 82, No. 187 / Thursday, September 28, 2017 /
Rules and Regulations

[[Page 45366]]

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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: CBP Dec. 17-13]
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: Final rule.

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SUMMARY: This final rule adopts, with several changes, proposed
amendments to U.S. Customs and Border Protection (CBP) regulations
regarding changes to the in-bond process published in the Federal
Register on February 22, 2012. The in-bond 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 or other authorized destination provided
all statutory and regulatory conditions are met. At the destination
port, the merchandise is entered or exported. The changes in this rule,
including the automation of the in-bond process, will enhance CBP's
ability to regulate and track in-bond merchandise and ensure that in-
bond merchandise is properly entered or exported. This document
addresses comments received in response to the proposed rule and makes
several changes in response to the comments that further simplify and
facilitate the in-bond process.

DATES: This rule is effective on November 27, 2017.

FOR FURTHER INFORMATION CONTACT: James Swanson, Director, Cargo
Security and Controls, Cargo Conveyance & Security, Office of Field
Operations, (202) 325-1257.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
A. Notice of Proposed Rulemaking
B. Summary of Main Changes From NPRM
1. In-Transit Time for Merchandise Transported by Barge
2. Uniform Timeframe for Report of Arrival, Notice of Export,
and Other Events
3. Description of the Merchandise
4. Reporting the Quantity of In-Bond Merchandise
5. Divided Shipments
6. Clarification of the Term ``Bonded Carrier''
7. Transfer (Transshipment) From One Conveyance to Another
8. Seals--Transportation of Bonded Merchandise With Non-Bonded
Merchandise
9. Other Changes
C. Flexible Enforcement Period
II. Discussion of Comments
A. Comments Regarding This Rulemaking Generally
1. Elimination of In-Bond Types
2. Scope
3. Outreach
4. In-Bond Shipments Between the United States and Canada
B. Electronic Filing and Processing of In-Bond Applications
1. Filing the In-Bond Application
2. Elimination of the CBP Form 7512
3. Information Required
4. Updating and Amending the In-Bond Record
5. Who May File
6. Licensed Customs Brokers
7. Unauthorized Use of a Bond
8. Procedures
9. Change of Foreign Destination
C. New Information Requirements for In-Bond Shipments
1. New Information Requirements Generally
2. Special Classes of Merchandise
3. Quantity
4. Location of the Merchandise
5. Destination
D. In-Transit Time
1. In-Transit Time Generally
2. In-Bond Shipments Transported by Barge
3. Extension of In-Transit Time
4. Shortening of In-Transit Time
5. Start of In-Transit Time
6. Procedures
7. Intermodal Transportation
8. Report of Arrival
9. General Order Merchandise
E. Transfers
F. Sealing of Conveyances and Reporting of Seal Numbers
G. Air Cargo
H. Liability of the Parties
I. Export of Merchandise
1. Reporting Arrival at Port of Exportation
2. Proof of Exportation
J. Diversion of Merchandise
K. Immediate Transportation
L. Divided Shipments and Retention of Goods Within Port Limits
1. Divided Shipments
2. Retention of Goods Within Port Limits
M. Potential Impact
N. Miscellaneous Items
1. Impact on Inland Ports
2. Supervision of Rail Shipments
3. Textiles
4. Cartmen
5. Carnets
6. Sharing of Information and Confidentiality
7. Definitions
8. Restriction of Immediate Exportation by Truck
9. Express Shipments
10. Automated Broker Interface (ABI)
11. Foreign-Trade Zones (FTZs)
12. Importer Security Filing (ISF)
13. Redelivery
14. Pipelines
III. Adoption of Proposal
IV. Regulatory Analyses
A. Executive Order 12866--Regulatory Planning and Review
B. Regulatory Flexibility Act
Summary FRFA
C. Unfunded Mandates Reform Act of 1995
D. Paperwork Reduction Act
V. Signing Authority
VI. Regulatory Amendments

List of Acronyms and Technical Terms

ABI Automated Broker Interface
ACE Automated Commercial Environment
AMS Automated Manifest System
CBP Customs and Border Protection
DHS Department of Homeland Security
EDI Electronic Data Interchange
EIN Employer Identification Number
FIRMS Facilities Information and Resources Management System
FTZ Foreign Trade Zone
GAO Government Accountability Office
HTSUS Harmonized Tariff Schedule of the United States
ISF Importer Security Filing
IE Immediate Exportation
IT Immediate Transportation
NVOCC Non-Vessel Operating Common Carrier
SCAC Standard Carrier Alpha Code
SNP Secondary Notify Party
T&E Transportation and Exportation
VOC Vessel Operating Carrier
QP/WP--An ABI hosted in-bond system for all modes that allows all
parties, carriers and non-carriers, to submit electronic in-bond
applications directly to CBP, as well as report their arrival and
export. The ``QP'' half is the application function, the ``WP'' half
is the arrival/export function.

I. Background

Pursuant to 19 U.S.C. 1552 and 19 U.S.C. 1553, 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, or for
exportation, provided that all statutory and regulatory conditions are
met. The applicable regulations governing the transportation of in-bond
merchandise 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 ``CBP
relations with Canada and Mexico.'' For a detailed discussion of the
statutory and regulatory histories, and the factors governing
development of these regulations, see the notice of proposed rulemaking
(NPRM), ``Changes to the In-Bond Process,'' published in the Federal
Register on February 22, 2012 (77 FR 10622).
Generally, when merchandise reaches the United States, the
merchandise may

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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 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 without the
payment of duties. The transportation of in-bond merchandise is
frequently referred to as an in-bond movement or shipment.
There are three types of in-bond transportation entries: 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.

A. Notice of Proposed Rulemaking

On February 22, 2012, Customs and Border Protection (CBP) published
a NPRM titled ``Changes to the In-Bond Process'' in the Federal
Register (77 FR 10622), proposing to revise the in-bond regulations in
part 18 as well as other applicable parts of the CBP regulations. The
proposed amendments would change the in-bond process from a paper-
dependent process to an automated paperless process, provide CBP with
the necessary tools to better track in-bond merchandise to improve
security and trade compliance, and address certain weaknesses in the
in-bond system identified by the Government Accountability Office (GAO)
in a report to Congress dated April 17, 2007 (GAO Report).
CBP proposed making the following five major changes to the in-bond
process: (1) Except for merchandise transported by pipeline and truck
shipments transiting the United States from Canada, 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 of the United States number if
available; (3) establish a 30-day maximum transit time to transport in-
bond merchandise between U.S. ports, for all modes of transportation
except pipeline; (4) require carriers to electronically request and
receive permission from CBP before diverting 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 exportation. CBP
did not propose changing 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. For a detailed discussion of the proposed
changes to the regulations and the GAO Report see the NPRM.
CBP requested public comments on the NPRM. In response, CBP
received 51 comments from the trade community including carriers,
brokers, importers, freight forwarders, zone operators, and trade
groups. The comments were generally favorable to the rule as a whole.
However, commenters raised concerns about specific proposed amendments
and how the amendments would affect their operations. Many comments and
questions related to the automated systems for the electronic filing of
in-bond transactions. After consideration of all the comments, CBP has
decided to issue this final rule, which adopts the proposed amendments
with several changes in response to the comments. The main changes are
summarized in Section I.B., Summary of Main Changes from NPRM, and
explained in more detail in Section II, Discussion of Comments.
Additional technical and conforming changes are also explained in
Section II, Discussion of Comments. CBP is also adding a flexible
implementation and enforcement period, as described in Section I.C.

B. Summary of Main Changes From NPRM

1. In-Transit Time for Merchandise Transported by Barge
CBP received many comments regarding the proposed requirement that
all in-bond movements must be completed within 30 days. Specifically,
commenters expressed concern that due to the specific circumstances of
barge transportation, it is not feasible for all in-bond shipments
transported by barge to be completed within 30 days and stated that the
current 60-day in-bond barge transit time should be maintained. The
specific comments are addressed in more detail in Section II,
Discussion of Comments.
Because of the unique nature of barge transportation and because of
the various factors that can delay barge shipments, CBP is changing
proposed Sec. 18.1(i)(1) in the final rule to extend the in-transit
time for in-bond merchandise transported by barge to 60 days, while
maintaining the proposed 30-day transit time for the other modes of
transportation.
2. Uniform Timeframe for Report of Arrival, Notice of Export, and Other
Events
The current regulations require the bonded 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 exportation. The bonded 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 proposed to amend Sec. Sec.
18.1, 18.7, and 18.20 to require that the report of arrival for each
in-bond shipment be made within 24 hours of the arrival of the
merchandise at the port of destination or the port of exportation and
to require the delivering bonded carrier to transmit the notice of
arrival electronically via a CBP-approved EDI system. CBP also proposed
that when in-bond merchandise is exported, CBP be notified of the
export within 24 hours of export.
CBP received many comments expressing concern that the requirement
to report the arrival of merchandise within 24 hours of arrival would
result in firms having to increase their staffing levels and suggested
that CBP retain or extend the current two-day reporting requirement.
The specific comments are discussed in Section II, Discussion of
Comments.
CBP proposed shortening the above timeframes to improve CBP's
ability to track in-bond merchandise. However, after further
consideration and a review of the comments, CBP decided not to shorten
the reporting timeframe. Therefore, CBP is changing proposed Sec.
18.1(j) in the final rule to retain the current time limit of two
working days for bonded carriers to report the arrival of merchandise
at the port of destination or port of exportation with one technical
change. CBP is also changing proposed Sec. 18.7(a)(3) regarding the
timeframe for submitting the notice of export from 24 hours to two
business days. In addition, CBP is changing all the provisions in

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part 18 that impose a timeframe for reporting or updating the in-bond
record to two business days so that the requirements are uniform. The
sections in part 18 where these changes have been made are Sec. Sec.
18.1(d)(1)(v), 18.1(h), 18.1(j), 18.7(a)(1), 18.7(a)(3), 18.20,
18.23(a), 18.24(b), 18.25(f), and 18.26(e).
3. Description of the Merchandise
CBP received many comments about the proposed required information
on the in-bond application as specified in proposed Sec. 18.1(d)(1).
Among other things, CBP proposed requiring the six-digit Harmonized
Tariff Schedule of the United States (HTSUS) number if the number is
available. If the six-digit HTSUS 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. CBP also proposed 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 must be provided setting forth the rule,
regulation, law, standard or ban to which the merchandise is subject
and the name of the government agency responsible for enforcing the
rule, regulation, law, standard or ban. Many commenters thought the
proposed requirements were too onerous and that carriers would not have
access to the required information.
In response to the above concerns, CBP is eliminating or changing
several proposed required data elements on the in-bond application.
First, CBP is removing the requirement in proposed Sec. 18.1(d)(1)(ii)
that, if the party submitting the in-bond application knows that the
merchandise is subject to a rule, regulation, law, standard or ban
relating to healthy safety or conservation, the filer must provide that
information to CBP along with the name of the government agency
responsible for enforcing the rule, regulation, law, standard or ban.
In its place, CBP is changing proposed Sec. 18.1(d)(1)(ii) in the
final rule to require that in-bond merchandise subject to the authority
of a U.S. government agency be described with sufficient accuracy to
enable the agency concerned to determine the contents of the shipment.
Second, CBP is removing the requirement in proposed Sec.
18.1(d)(1)(iii) that the in-bond filer identify prohibited or
restricted merchandise.
Third, CBP is removing the requirement in proposed Sec.
18.1(d)(1)(iv) to provide information regarding textiles and textile
products for all in-bond applications. This requirement will be
retained in a new paragraph (d) in Sec. 18.11 governing T&E in-bond
movements. This is consistent with current regulations and should
therefore provide no additional burden to parties moving merchandise
in-bond.
Fourth, CBP is eliminating the requirement in proposed Sec.
18.1(d)(1)(v) that the filer of the in-bond application ``must
provide'' information regarding merchandise for which the U.S.
Government, foreign government or other issuing authority, has issued a
visa, permit, license, or other similar number or identifying
information and stating instead that the filer ``may provide'' this
information. In lieu of requiring all of the information above, CBP is
changing proposed Sec. 18.1(d)(l)(i) to require the filer to provide
the six-digit HTSUS number. This is necessary to ensure that CBP knows
what merchandise is being transported in-bond in light of the above
changes to the required information. The six-digit HTSUS number should
be available to in-bond filers because importers need this information
to determine duty, cost and admissibility status prior to finalizing
purchase contracts or shipment contracts. The six-digit HTSUS number is
one of the required data elements for the Importer Security Filing
(ISF) for all merchandise arriving by vessel.
4. Reporting the Quantity of In-Bond Merchandise
CBP received many comments about the requirement in proposed Sec.
18.1(d)(1)(vi) to provide ``the quantity of the merchandise to be
transported to the smallest piece count'' in the in-bond application.
Commenters found this proposal confusing and requested clarification.
To address this concern, CBP is changing proposed Sec. 18.1(d)(1)(vi)
to incorporate similar language used in Sec. Sec. 4.7a (inward
manifest) and 123.92 (electronic information for truck cargo required
in advance of arrival) regarding quantity. Specifically, CBP is
changing the text in the final rule to require ``the quantity of the
smallest external packing unit.''
5. Divided Shipments
The current regulations allow an in-bond shipment to be split after
the shipment reaches the port of destination with a portion of the
shipment entered for consumption or warehouse while the remainder of
the shipment is forwarded under a new in-bond to a different port of
destination. That provision is contained in Sec. 18.5, which governs
in-bond shipments diverted from one destination port to another.
Because the provisions for splitting a shipment are not limited to
diverted shipments we are moving the text of this provision, currently
proposed Sec. 18.5(d), to a new paragraph (m) in Sec. 18.1.
6. Clarification of the Term ``Bonded Carrier''
CBP received several comments and questions about which party would
be considered the ``bonded carrier'' and would therefore be liable for
a failure to comply with the in-bond requirements. To address these
comments, CBP is adding a definition of the term ``bonded carrier'' in
Sec. 18.0(b). ``Bonded carrier'' is defined as a ``carrier of
merchandise whose bond under Sec. 113.63 of this title is obligated
for the transportation and delivery of merchandise.'' The party that
will be ultimately liable is the party whose bond is obligated in the
in-bond record for the in-bond movement.
7. Transfers (Transshipment) From One Conveyance to Another
A review of the comments addressing proposed Sec. 18.3, revealed
that there is some confusion regarding the scope of the term
``transshipment'' and how the provision should be applied. In order to
clarify the rules that apply when merchandise is transferred from one
conveyance to another, CBP is replacing the term ``transshipment'' with
the term ``transfer.'' Accordingly, CBP is renaming Sec. 18.3 from
``Transshipment; transfer by bonded cartmen'' to ``Transfers.'' In the
discussion that follows, the term ``transfer'' will be used instead of
``transshipment.''
The main concern of the commenters with regard to proposed Sec.
18.3 is with the requirement to report to CBP each time the merchandise
is transferred from one conveyance to another. Because in-bond
merchandise may be transferred several times during the course of its
journey, it is claimed that this reporting requirement places a
substantial burden on the bonded carrier liable under the bond.
CBP has reevaluated this requirement in light of the comments and
has concluded that the requirement to notify CBP when in-bond
merchandise is transferred from one conveyance to another is not
necessary. The important information for CBP is which party has assumed
liability for the shipment of the in-bond merchandise. Accordingly, CBP
is changing proposed Sec. 18.3 by removing the requirement to notify
CBP

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when merchandise is transferred from one conveyance to another.
In addition, CBP is changing proposed Sec. 18.3 to require that
when in-bond merchandise is taken over by a subsequent bonded carrier
which assumes liability for the merchandise, a report of arrival must
be filed by the original bonded carrier and the subsequent carrier must
submit a new in-bond application pursuant to Sec. 18.1 for the
merchandise to be transported in-bond.
8. Seals--Transportation of Bonded Merchandise With Non-Bonded
Merchandise
CBP received many comments expressing concern about proposed
amendments to Sec. 18.4 governing the sealing of conveyances and
containers. One of the principal concerns was that the proposed
regulations do not allow for the transportation of in-bond merchandise
with non-bonded merchandise in the same container, unless all of the
merchandise, bonded and non-bonded, is destined for the same port. The
result is that in-bond merchandise would not be able to be shipped in
``less than container loads'' with non-bonded merchandise.\1\
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\1\ Less than container load, or LCL, is a term commonly used in
the transportation industry to refer to cargo containers that hold
goods belonging to more than one shipper or consignee. Carriers use
LCL shipments when a load of merchandise is not large enough to fill
an entire cargo container. Freight in an LCL shipment is frequently
transported to multiple destinations.
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CBP has reviewed these comments and concurs that, as proposed, the
limitations on transporting in-bond merchandise with non-bonded
merchandise would unnecessarily hamper the transportation of in-bond
merchandise. Accordingly, CBP is changing the sealing requirements in
proposed Sec. 18.4 by adding new provisions Sec. 18.4(b)(2) and (3)
in the final rule that allow for the transportation of in-bond
merchandise with non-bonded merchandise in a container or compartment
that is not sealed, if the in-bond merchandise is corded and sealed, or
labeled as in-bond merchandise. This will allow in-bond merchandise to
be transported with non-bonded merchandise in a container that is not
sealed and will facilitate the filling of containers that would
otherwise be less than container load shipments.
Additionally, for clarity, the provision regarding the breaking of
seals in case of an emergency or for some other reason is being moved
from Sec. 18.3 (transshipment) to Sec. 18.4 (sealing conveyances,
compartments and containers). In response to comments, CBP is removing
the requirements to obtain CBP permission to break and replace a seal.
However, as provided in Sec. 163.1, the transportation or storage of
merchandise carried or held under bond into or from the customs
territory of the United States is an activity covered by the general
recordkeeping requirements of part 163. Such activity would include the
breaking and replacing of seals on merchandise transported in-bond.
Therefore, records pertaining to such activity would be covered under
part 163.
9. Other Changes
CBP is making additional wording changes and minor editorial
changes for better organization or to improve clarity. Among other
changes, CBP is no longer using the term ``ultimate destination'' in
proposed Sec. 18.1(d)(1)(vi) to avoid inconsistency with other export
laws and regulations and is revising paragraph (vi) to clarify the
destination information that is required on the in-bond application for
IT shipments and T&E/IE shipments. In addition, CBP is adding a
sentence to proposed Sec. 18.1(i)(1), which sets forth the maximum in-
transit time, to clarify that in-bond merchandise transported by
pipeline is not subject to the time limits in that section. CBP is also
revising proposed Sec. 18.1(i)(2), which provides procedures on
requesting an extension of the in-transit time, to clarify that the
decision to extend the in-transit time period is within CBP's
discretion and to describe some of the factors that may be considered
in CBP's decision to extend the in-transit time period. For further
discussion, see Section II, Discussion of Comments.

C. Flexible Enforcement Period

In order to provide the trade with sufficient time to adjust to the
new requirements and in consideration of the business process changes
that may be necessary to achieve full compliance, CBP in implementing
and enforcing the rule, will take into account challenges that carriers
may face in complying with the rule, so long as carriers are making
satisfactory progress toward compliance and are making a good faith
effort to comply with the rule to the extent of their ability. This
flexible enforcement will last for 90 days after the effective date of
this rule. Additionally, CBP will provide guidance on the new
requirements and endeavor to conduct outreach to interested parties in
order to facilitate a smooth transition to the new requirements.

II. Discussion of Comments

A. Comments Regarding This Rulemaking Generally

1. Elimination of In-Bond Types
Comment: The specific types of transportation entries (IE, T&E, IT)
are outdated and have no effect on cargo security and the movement of
goods. Therefore, CBP should consider eliminating them and apply a
generic in-bond transportation entry to cover all movement types. CBP
currently receives data elements indicating a domestic (D) and
international export (I) during the in-bond request process and would
know the anticipated movement as a result of these designations.
CBP Response: The current system using specific bond types is
derived from 19 U.S.C. 1552 and 1553 which provide for ``entry for
immediate transportation'' and ``entry for transportation and
exportation,'' respectively. Therefore, CBP cannot eliminate them. The
current system is beneficial in that it clearly specifies the intended
disposition of the goods, i.e., whether the goods will be exported,
transported to another port for possible consumption entry, or
transported to another port for exportation. There are separate rules
for the handling and processing of in-bond merchandise depending on the
type of in-bond entry, for example an Importer Security Filing (ISF) is
required for a T&E and not an IT.
2. Scope
Comment: CBP should clarify the relationship between proposed Sec.
18.0(a), with respect to requirements and procedures in part 18 of the
in-bond regulations and the requirements and procedures of parts 122
and 123 (Air Commerce, and Customs Relations with Canada and Mexico,
respectively).
CBP Response: Proposed Sec. 18.0 (Scope; definitions), provides
that except as provided in parts 122 and 123, part 18 sets forth the
requirements and procedures pertaining to the transportation of
merchandise in-bond. Parts 122 (Air Commerce) and 123 (Customs
Relations with Canada and Mexico) govern the rules and procedures for
the transportation of in-bond merchandise in the air environment and
merchandise traveling through and into the United States by truck and
train. This means that the provisions of part 18 are applicable to the
in-bond procedures not addressed by specific instruction in parts 122
and 123. For example, proposed Sec. 18.8 governing the liability of
in-bond carriers is applicable to all in-bond

[[Page 45370]]

movements, regardless of the mode of transportation. Conversely,
proposed Sec. 18.4(a)(1) requiring the sealing of containers does not
apply to in-bond merchandise traveling by air, because Sec. 122.92(f)
specifically provides that the sealing of aircraft, aircraft
compartments carrying bonded merchandise, or the cording and sealing of
bonded packages carried by the aircraft, is not required. More
information on the in-bond transport of air cargo is discussed in
Section II.G., Air Cargo.
3. Outreach
Comment: CBP should conduct multiple public meetings well in
advance of publication of the final rule. These meetings will allow a
necessary forum by which the entire trade community (exporters, freight
forwarders, warehouse operators, agents, and carriers) can engage with
government to learn about the justifications behind these significant
modifications to the current in-bond process. This will also provide
all affected parties the opportunity to discuss mutually beneficial
alternatives which may accomplish the government's objectives without
putting any sector of the trade at an economic disadvantage when
competing in the increasingly fast paced global marketplace.
Should CBP decide to adopt a final rule which does not adopt many
of the suggested changes included in the comments, CBP should meet with
the affected commenter prior to the finalization and publication of the
rule in the Federal Register.
CBP Response: CBP worked closely with the various sectors of the
trade community, the Trade Support Network (TSN), the Customs
Electronic Systems Action Committee (CESAC), and the Advisory Committee
on Commercial Operations of Customs and Border Protection (COAC),
before publishing the NPRM regarding the general changes to the in-bond
system that were being considered, and CBP took into account extensive
feedback from the trade community in the formation of the NPRM.
Although CBP has not conducted public meetings or met privately with
interested parties regarding the proposals published in the NPRM, CBP
has carefully analyzed the various comments that have been submitted
and has incorporated numerous suggestions made by the commenters in the
drafting of this final rule. In order to provide the trade sufficient
time to adjust to the new requirements and in consideration of the
business process changes that may be necessary to achieve full
compliance, CBP is providing a 60-day delayed effective date to be
followed by a 90-day flexible enforcement period. This means that CBP
will show flexibility in enforcing the rule, taking into account
challenges that carriers may face in complying with the rule, so long
as carriers are making satisfactory progress toward compliance and are
making a good faith effort to comply with the rule to the extent of
their current ability. CBP will also provide guidance on the new
requirements and endeavor to conduct outreach to interested parties in
order to facilitate a smooth transition to the new requirements.
4. In-Bond Shipments Between the United States and Canada
Comment: The United States and Canada should harmonize the Canadian
and U.S. rules on in-transit shipments: Canada could adopt the U.S.
approach and require full commercial information, effectively
terminating in-transit movements in both countries; or CBP could revise
its position on the requirement for full commercial information and
harmonize with the current Canadian rules which would restore in-
transit shipments through the United States.
CBP Response: The NPRM did not address this issue, and this comment
is beyond the scope of this rulemaking.

B. Electronic Filing and Processing of In-Bonds

1. Filing the In-Bond Application
Comment: Many commenters requested further information on the
filing process, the systems that will be used, how to file an in-bond
application, what functions will be available and how the different
systems will work for the various modes of transportation. Some
commenters wanted to know how CBP will advise the trade about CBP-
approved systems.
CBP Response: Under this rule, an electronic in-bond application is
required for in-bond merchandise transported by ocean, rail and truck.
The methods available to submit an in-bond application are the
Automated Commercial Environment (ACE) or QP/WP. QP/WP is an ABI hosted
in-bond system that allows all parties, carriers and non-carriers, to
submit electronic in-bond applications directly to CBP, as well as
report their arrival and export. The ``QP'' half is the application
function, the ``WP'' half is the arrival/export function. ACE can be
used to file the in-bond application in conjunction with advance or
arriving manifest information. For in-bond merchandise transported by
air, carriers can file the in-bond application also using ACE or QP/WP.
For reference purposes, the table below lists the EDI systems used
for filing in-bond applications for the various modes of transportation
and provides links to the Web sites that contain the relevant filing
instructions or implementation guides. CBP will promptly inform the
public of new CBP approved systems via CBP's Web site and regular
communication systems.

----------------------------------------------------------------------------------------------------------------
Mode of transportation CBP EDI system In-bond application procedures
----------------------------------------------------------------------------------------------------------------
Ocean................................... ACE........................ The in-bond application for cargo
arriving by vessel may be filed as part
of the arriving ocean manifest or as a
subsequent/supplemental filing. Filing
instructions are available on the ACE
Web site at: http://www.cbp.gov/trade/ace/ocean-manifest.
Rail.................................... ACE........................ The in-bond application for cargo
arriving by rail may be filed as part of
the arriving rail manifest or as a
subsequent/supplemental filing. Filing
instructions are available on the ACE
Web site at: http://www.cbp.gov/trade/ace/rail-manifest.
Truck................................... ACE........................ The in-bond application for cargo
arriving by truck may be filed as part
of the arriving truck manifest. Filing
instructions are available on the ACE
Web site at: http://www.cbp.gov/trade/ace/truck-manifest/edi/message/electronic-truck-manifest.
Air..................................... ACE........................ The in-bond application for cargo
arriving by air may be filed as part of
the arriving air manifest or as a
subsequent/supplemental filing. Filing
instructions are available on the ACE
Web site at: http://www.cbp.gov/trade/ace/air-manifest.

[[Page 45371]]

Ocean, Rail, Truck, and Air............. Automated Broker Interface The automated broker interface (ABI) for
(ABI). in-bond entries, known as QP/WP, allows
in-bond entries filed for a particular
shipment to be associated with arriving
manifests or subsequent/supplemental in-
bond entries filed for merchandise
arriving by any mode. In-bond entries
are associated with the arriving
manifest by using the Standard Carrier
Alpha Code (SCAC) in addition to a
unique number to identify the bill of
lading. This process covers cargo
arriving by ocean, rail, truck, and air,
as well as bonded warehouse withdrawals,
foreign trade zone movements, pipeline
arrivals, etc. Data messages are found
in the ACE implementation guides located
at: http://www.cbp.gov/document/guidance/bond bond.
----------------------------------------------------------------------------------------------------------------

Comment: CBP needs to explain the requirements and procedures for
ACE as they may apply to the in-bond process from now until such time
as all ACE modules are fully developed and implemented.
CBP Response: Information regarding the requirements and procedures
for ACE as they may apply to the in-bond process is available on the
CBP Web site at the links listed in the table above. Additionally, CBP
will issue additional guidance on the ACE requirements and procedures
as ACE modules are developed and deployed. Additional information on
messages (e.g. arrival, exportation, amendments and diversions) for in-
bond entries using the appropriate data interfaces can be found in the
following implementation guides: ACE: http://www.cbp.gov/trade/ace.
Air: AMS http://www.cbp.gov/site-page/camir-air-chapters.
Comment: Will the ACE Secure Data Portal (``Portal'') be a viable
option for those carriers that do not have EDI capabilities, elect to
utilize the ACE Portal as opposed to EDI, or utilize both technologies
depending on the situation? Will any function available to EDI users
also be available to users of the ACE Secure Data Portal? Will the ACE
Portal be available to use for diversion requests?
CBP Response: The ACE Portal does not provide any in-bond
functionality and there are no plans to use it for in-bond transactions
in the future.
Comment: Bonded carriers will have to electronically report the
arrival and exportation of in-bond merchandise in separate CBP-approved
systems (Air AMS for air, ACE for ground, ocean and rail). CBP should
design its systems so that the arrival and departure messages are
communicated between the various systems that have to be used by
carriers. This will provide greater visibility and reduce redundancy
for in-bond shipments that are transported by air and other modes of
transportation. CBP should automate the arrival and export of
electronic in-bond shipments regardless of the system used to initiate
the in-bond shipment.
CBP Response: CBP agrees that messaging between the systems for in-
bond transactions would greatly facilitate the processing of in-bond
transactions. This functionality is now available through Air ACE.
Comment: CBP should expand the availability of the Document Imaging
System to motor carriers in order to eliminate the use of paper.
CBP Response: There is no need to use the Document Imaging System
(DIS) for the processing of in-bond shipments by truck. CBP is
discontinuing the use of the CBP Form 7512 for in-bond shipments
transported by truck. Manifest information must be filed using an
approved Electronic Data Interchange method.
Comment: CBP should create a web-based technology to allow the
broadest level of compliance by the trade. A web-based portal would
allow CBP to receive real time in-bond information. CBP must consider
the development of a web-based portal where the bonded carrier, FTZ
operator or authorized agent can electronically request the status of
the in-bond movement. This web-based tool should be used across all
modes. A web-based portal would be ideal and would help to serve CBP's
objective to maximize the automation of in-bonds with minimum impact to
the trade.
CBP Response: CBP is using its current systems to implement the new
in-bond requirements and is not creating web-based technology or using
a web-based portal for the processing of in-bond transactions beyond
what it has already developed within ACE, at this time.
Comment: Current functionality does not allow for the filing of an
electronic in-bond application without access to QP and QP requires ABI
connectivity which carriers do not currently need to access during
their normal business operations.
CBP Response: Although the commenter is correct that in order to
file an in-bond application using QP, the filer must have ABI
connectivity, an in-bond applicant can also use ACE when the in-bond
application is filed as part of the advance or arriving manifest. When
filing an in-bond application using QP, the in-bond application is
filed as a stand-alone filing that will be reported on the manifest
when all the data has been transmitted.
Comment: Will there be a stand-alone in-bond system available
within ACE that is not linked to the manifest record of the original
importation?
CBP Response: In order to facilitate processing of in-bond
shipments and to reduce redundant filing requirements, CBP has designed
the in-bond systems so that they are linked to the manifest record.
There will not be a stand-alone in-bond system within ACE that is not
linked to the manifest record of the original importation.
Comment: How will responses to diversion requests be transmitted to
the carrier? How long will it take for CBP to respond to the diversion
request?
CBP Response: The carrier will submit the diversion request using a
ACE EDI or a QP/WP message. CBP's response will be immediate. CBP's
disposition of the diversion request will be automated so that the
carrier will receive authorization for, or denial of, the diversion
immediately. The updating of the destination port code in the system
will constitute approval of the diversion request. If the destination
port code is rejected, that will constitute a denial of the diversion
request.
Comment: Will the in-bond application be fully paperless, meaning
that there will be no requirement to file hard copies at the
origination port for authorization? Some origination ports currently
require that the in-bond documentation be validated through the use of
perforation machines (e.g., Los Angeles).
CBP Response: When this rule is effective, the in-bond process for
in-bond merchandise transported by ocean, rail, or truck, will be fully
paperless. It is expected that air will eventually be fully paperless
as well, but CBP would propose that through a separate rulemaking.
Comment: With regard to an in-bond application consisting of a
transportation entry and manifest, the manifest or its electronic
equivalent should only be required at the origination port of entry
when the merchandise is first imported into the

[[Page 45372]]

United States. Subsequent in-bond applications for the same merchandise
should require only a transportation entry.
CBP Response: ACE links all phases of the in-bond movement. When a
subsequent in-bond application is filed, the first movement is closed
and the second is initiated. The system will require the previous in-
bond number, and will then link the two in-bond movements. The manifest
information will not have to be submitted a second time.
2. Elimination of the CBP Form 7512
Comment: Some commenters stated that they support eliminating the
paper in-bond application (CBP Form 7512) and requiring carriers to
file electronically. Carriers already file in-bond entries
electronically, so electronic filing will not impose new burdens. It
will, however, provide CBP with real time information on goods in
transit and allow for easy reconciliation of shipments as goods are
arrived and entered at another U.S. port or exported. The Automated
Commercial System (ACS) currently allows for electronic in-bond filing
now, but does not collect all the information CBP needs. These
commenters support the proposal to utilize the increasingly functional
ACE for this purpose. Because shippers are already familiar with ACE,
this should not cause problems for them and it will increase
efficiency.
CBP Response: CBP appreciates the positive feedback and agrees that
changing the in-bond process from a paper to an electronic process will
increase efficiency, allow for easier reconciliation for carriers, and
facilitate the collection of information by CBP without further
burdening the trade.
Comment: Some commenters, who agree that the in-bond application
(the filing) should be electronically submitted to CBP, stated that the
CBP Form 7512 should not be completely eliminated. The common trade
practice is to maintain a hard-copy of the actual CBP Form 7512 which
is used as an attachment to the bill of lading to properly identify the
shipment as an in-bond shipment. It accompanies the shipment as it
moves from trucking terminal to trucking terminal. Eliminating the CBP
Form 7512 form will require many carriers to redesign their internal
systems at great expense.
CBP Response: Many carriers are already filing in-bonds
electronically and are not using a paper CBP Form 7512. While there are
some carriers that will have to revise their business practices as a
result of CBP's efforts to modernize the in-bond process, CBP does not
plan to maintain a two tiered in-bond system with both electronic
filing and paper filing in order to accommodate those carriers that
currently use the CBP Form 7512 for tracking purposes. If, for their
own use for internal tracking purposes, carriers prefer a hard-copy
document to accompany the shipment, carriers can choose to create a
form with the same information as the CBP Form 7512 or print a hard-
copy of the electronic in-bond application.
Comment: Many bonded carriers are not automated and rely upon the
CBP Form 7512 as their control document. Unless CBP is prepared to
mandate that bonded carriers become AMS certified, the CBP Form 7512
will continue to be needed.
CBP Response: CBP is requiring automated filing of in-bond entries.
How bonded carriers manage their own internal controls is up to each
bonded carrier.
3. Information Required
Comment: The current flow of commercial information is not
structured in such a way that all of the new in-bond information
requirements would be readily available. CBP should work with the
various sectors of the trade community in identifying what information
is truly necessary, and in developing a phased-in compliance schedule
that would afford business the time to adjust its procedures to the new
regime. CBP's program for implementation of the ISF requirements is a
good model for phased-in compliance.
CBP Response: CBP worked closely with the various sectors of the
trade community before publishing the NPRM regarding the general
changes to the in-bond system that were being considered. CBP received
and took into account extensive feedback from the trade community in
the formulation of the NPRM. Moreover, as a result of the comments CBP
received in response to the NPRM regarding the required information on
the in-bond application, CBP is making several changes regarding these
requirements so that they are less burdensome but still provide CBP
with the necessary information. The rule will have a 60-day delayed
effective date to enable the trade to make required adjustments to
comply with the rule. CBP is also providing a 90-day flexible
enforcement period similar to that used for implementation of the ISF
requirements that will start from the effective date of this rule.
Additionally, CBP will work closely with the trade to resolve
compliance issues that the trade might experience as a result of this
rule.
Comment: The list of proposed changes in the NPRM includes a
statement that an in-bond application must be filed for each conveyance
transporting the shipment. However, this requirement is absent from the
proposed regulatory language. Further guidance should be given
regarding the requirement to file an in-bond for each conveyance.
CBP Response: The statement in the list of proposed changes of the
NPRM that an in-bond application must be filed for each conveyance was
incorrect. A separate in-bond will not be required for each conveyance.
One in-bond application can cover merchandise that is transported by
multiple conveyances.
Comment: Some carriers move in-bond merchandise via centralized
hubs wherein in-bond merchandise is transported to a hub and
consolidated in a new container before being transported to the port of
exportation. If an in-bond shipment is moved in this manner, will one
T&E application covering the entire movement of the in-bond merchandise
be acceptable?
CBP Response: Only one T&E in-bond application is necessary to move
an in-bond shipment from the origination port to the port of
exportation. In-bond merchandise can be moved from one container to
another container in a centralized hub, if the sealing procedures in
Sec. 18.4 are followed. However, multiple in-bond shipments from
different origination ports cannot be entered under a single T&E and
consolidated in a centralized hub.
4. Updating and Amending the In-Bond Record
Comment: Will CBP allow all data elements to be amended within the
in-bond record or will there be restrictions? CBP must provide guidance
with respect to which elements can be amended.
CBP Response: Prior to departure from the originating port, all
data elements related to the in-bond may be updated or amended. After
departure (during transit), the in-bond data may not be updated or
amended, except for the quantity, destination, and seal numbers. If the
reported quantity is not correct or if it changes, the in-bond record
must be updated. Updating the quantity does not relieve the initial
bonded carrier from liability for any shortages based on the quantity
originally reported in the in-bond application. If the seal number is
not known when the in-bond application is filed, the in-bond record
must be updated with the seal number within

[[Page 45373]]

two business days. It is also necessary to update the in-bond record
with notice and proof of export and with information regarding divided
shipments at the port of exportation.
Comment: Will other parties be allowed to amend the in-bond record
or does the amendment have to be made by the original in-bond filer?
CBP needs to define what is considered ``permission.'' The filer is not
the appropriate party to grant permission to amend the official record
and this authorization should be obtained from the owner of the
commercial information since that is the true party in interest.
Guidance should be provided indicating the appropriate method of
notification or permission to both CBP and other parties who are
authorized to make changes.
CBP Response: Any party that files an in-bond application as
provided in proposed Sec. 18.1(c) can amend the in-bond record. This
may be the carrier or agent that is authorized by the carrier to
obligate the carrier's bond and that brings the merchandise to the
origination port; the carrier, or authorized agent of the carrier that
accepts the merchandise under the carrier's bond; or any person who has
a sufficient interest in the merchandise as shown by the bill of
lading, manifest or other document. To provide additional clarity, CBP
is changing proposed Sec. 18.1(h) to eliminate the requirement that
the party updating or amending the in-bond record receive
``permission'' from the ``filer'' and requiring instead that the party
that is updating or amending the in-bond application obtain the
``authorization'' of the ``party whose bond is obligated.'' CBP is
requiring ``authorization'' from the party whose bond is obligated, as
opposed to the filer because the party whose bond is obligated bears
the responsibility for ensuring the proper movement of the merchandise.
Comment: CBP should explain how the amending and updating of the
in-bond record will work (process, time limits for amending, etc.).
CBP Response: The in-bond record can be updated and amended by
entering the new information in the CBP approved electronic system. The
system will automatically update the in-bond record, barring any system
edits in place prohibiting the update. CBP will provide additional
procedures for amending and updating the in-bond record as necessary,
using its normal trade outreach and by posting the information on the
CBP Web site. CBP is also changing proposed Sec. 18.1(h) in the final
rule to specify a timeframe for amending the in-bond record. That
timeframe is ``within two business days of the event that requires
amendment.''
5. Who May File
Comment: Proposed Sec. 18.1(c)(3) stating that a transportation
entry may be filed by ``[a]ny 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'' is an overly broad grant of authority. CBP should
limit the term ``sufficient interest'' to those persons with a property
right in the merchandise or those persons who have been properly
authorized by the owner of the goods. The right to file an in-bond
application should be further restricted to the originating bonded
carrier or a licensed customs broker. CBP should identify examples of
such ``other documents'' that will be acceptable to CBP to include a
properly executed power of attorney, a letter of authorization, etc.
Alternatively, the term ``other documents'' should be deleted because
it is unnecessary.
CBP Response: The quoted language in proposed Sec. 18.1(c)(3) is
not new. It is derived from Sec. 18.11(b) of the existing regulations
which similarly allows a person who has 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
to transport merchandise in-bond. CBP has not experienced problems with
parties without sufficient interest transporting merchandise in-bond
and prefers to maintain the existing standard to facilitate trade. With
regard to the documents that are acceptable to demonstrate sufficient
interest, CBP believes it should provide the trade with some
flexibility to present documentation to demonstrate that a party has
sufficient interest in the merchandise.
Comment: As filing of the in-bond is often made by an authorized
agent of a party with sufficient interest, the proposed language in
Sec. 18.1(c)(3) should be updated to read, ``[a]ny person, or the
authorized agent of any person with 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.''
CBP Response: CBP agrees. CBP is modifying the regulatory text in
Sec. 18.1(c)(3) to allow the authorized agent of any person who has a
sufficient interest in the merchandise to file the in-bond application.
Comment: Proposed Sec. 18.1(c)(1) refers to a transportation entry
made by ``the carrier that brings the merchandise to the origination
port.'' CBP should modify this to read: ``the carrier, or authorized
agent of the carrier, that brings the merchandise to the origination
port.'' Proposed Sec. 18.1(c)(2) refers to a transportation entry made
by ``the carrier that is to accept the merchandise under its bond or a
carnet for transportation to the port of destination or port of
exportation;'' CBP should modify this provision to read ``the carrier,
or authorized agent of the carrier, that is to accept the merchandise
under its bond or a carnet for transportation to the port of
destination or port of exportation;''
CBP Response: CBP agrees and is changing proposed Sec. Sec.
18.1(c)(1) and (c)(2) to include the phrase ``or authorized agent of
the carrier.''
Comment: The referenced ``certificate of the importing carrier'' is
not defined. This reference is in addition to a person having an
interest in the shipment as shown by the bill of lading or manifest, so
it is vague and confusing to refer to an undefined ``certificate.'' CBP
should delete this reference as it may be unnecessary, or define what
may constitute an acceptable certificate.
CBP Response: The provision allowing for the use of a ``certificate
from the importing carrier'' in proposed Sec. 18.1(c)(3) is contained
in the existing regulations in Sec. 18.11(b). A power of attorney or
letter of authorization would constitute an acceptable certificate. CBP
will not establish a specific definition of what constitutes an
acceptable certificate, but will accept a document or electronic
request from the importing carrier that authorizes another party to
file an in-bond application.
Comment: CBP should require the party obligating the bond to
provide all shipment information to the carrier when requested for
investigation and audit purposes.
CBP Response: CBP will not require third parties to provide
shipment information to the carrier. This is a matter to be resolved
contractually between carriers and those parties with whom they do
business. However, as provided in 19 U.S.C. 1508(a)(1)(B) and 19 CFR
163.2, persons who knowingly cause the transportation of merchandise
carried or held under bond are responsible for maintaining the
appropriate in-bond records, which must be supplied to CBP upon
request.
6. Licensed Customs Brokers
Comment: Only a licensed customs broker should be able to file the
in-bond application; bonded carriers should only be able to file in
limited cases when they simply file data without

[[Page 45374]]

exercising discretion. The classification of merchandise, even at the
six-digit level, and determining the ``admissibility of merchandise''
is customs business and should be done only by a licensed customs
broker. Customs brokers have the knowledge and experience to identify
prohibited and restricted merchandise and will more accurately identify
whether merchandise is subject to a rule, regulation, law, standard or
ban relating to health, safety or conservation.
CBP Response: An entry for transportation in bond is an excepted
activity pursuant to 19 CFR 111.2(a)(2)(iv) for which a customs
broker's license is not required. See 19 CFR 111.2(a)(2)(iv). Moreover,
customs business does not involve the mere electronic transmission of
data received for transmission to CBP, but does involve classification
for entry purposes. See 19 CFR 111.1. The six-digit HTSUS number
required on the in-bond application is necessary to ensure cargo safety
and security and not to determine merchandise entry procedures that
fall within the scope of customs business. This is in contrast to a 10-
digit HTSUS number which does involve classification for entry
purposes. Although the proposed rule does require more information to
be provided than in the past, this information is generally available
to the carrier and does not require the expertise of a customs broker
and does not require making admissibility determinations. Moreover, as
discussed in Section I.B.3., Description of the Merchandise, and
Section II.C., New Information Requirements for In-Bond Shipments, CBP
is requiring much less information about the in-bond merchandise on the
in-bond application than was proposed. For example, CBP is eliminating
the requirement in proposed Sec. 18.1(d)(1)(ii) for carriers to
provide the rule, regulation, law, standard or ban relating to health,
safety or conservation enforced by CBP or another government agency
that is applicable to the in-bond merchandise. This, and other changes
relating to the description of the merchandise, will lessen the burden
on carriers and ensure that admissibility determinations are not
required in order to file an in-bond application.
Comment: The bonded carrier should only be allowed to file the in-
bond application when it does not have to make decisions regarding the
classification or whether merchandise is restricted, prohibited, or
subject to a rule, regulation, law, standard or ban relating to health,
safety or conservation. The bonded carrier should be allowed to file
the in-bond application only when it has received written documentation
from a party that (1) has the right to make a consumption entry, (2)
has an active continuous customs importer bond, (3) is required to
exercise reasonable care in ascertaining and proving all of the
required data elements to the bonded carrier, and (4) is responsible
for liquidated damages on its continuous customs bond and/or penalties
under 19 U.S.C. 1592 for false, inaccurate or incomplete information.
CBP Response: CBP will not restrict who can file an in-bond
application in the manner proposed in this comment.
7. Unauthorized Use of a Bond
Comment: Several commenters raised concerns related to a bonded
party's ability to restrict usage of its bond by other parties and to
monitor the obligations made to its bond. These commenters said that
the bonded party should be able to prohibit the obligation of its bond
by third parties. In addition, these commenters indicated that the
bonded party should be able to see, within the new proposed automated
paperless environment, all in-bond movements that obligate its
custodial bond. Without such functionality in the electronic in-bond
system, the bonded party may be exposed to fraudulent activity and
liquidated damages assessed by CBP when a carrier files an in-bond
application without authorization from the bonded party.
CBP Response: We agree that the bonded carrier should be able to
look into the in-bond record and restrict usage of its bond by other
parties. In ACE and QP/WP, bonded parties can prevent the unauthorized
use of their bond by restricting use of their bond by other parties and
by setting conditions on the use of their bond. These in-bond systems
are designed to allow an approved bonded carrier that has a CBP-
approved ACE account to allow restricted or unrestricted use of its
bonds. If the bonded carrier's account is unrestricted, any other party
may open an in-bond application using the bonded carrier's account
number. If the bonded carrier restricts the usage of the bond account
number, that carrier can log into its account and select the other
parties that are authorized to obligate its bond. If the bonded carrier
selects parties that are authorized, all other parties will be
unauthorized and any attempt to use the bond by an unauthorized user
will be rejected. In addition, the bonded party will receive
notifications when the in-bond record is amended or updated if the in-
bond filer designates the bonded party as a Secondary Notify Party
(SNP) in ACE.
A party who moves bonded merchandise without authorization, either
as a non-bonded carrier holding itself out as a bonded carrier or as a
non-bonded carrier using the identity/bond information of a bonded
carrier without the latter's authorization, may be subject to a penalty
pursuant to 19 U.S.C. 1595a(b) for violation of 19 U.S.C. 1551, 19 CFR
18.1 and 19 CFR 112.12, or 19 U.S.C. 1592.
8. Procedures
Comment: Under current electronic in-bond processing in AMS, it is
possible for an ocean carrier's taxpayer identification (IRS) number to
be used by a third party to file an in-bond movement without the
carrier's knowledge. While the ACE M1 functionality will allow ocean
carriers to better control which parties are authorized to use the
carrier's IRS number to file an in-bond application, carriers need to
be able to know when their bonds are used by a third party so that the
carrier can close any in-bond applications filed against the carrier's
IRS number that the third party filer fails to close.
To enable ocean carriers to monitor when their IRS numbers are used
to file in-bonds, CBP should modify the EDI in-bond message set for M1
to include two additional pieces of information: (1) The SCAC of the
bonded party, and (2) the SCAC or filer code of the party that filed
the initial in-bond application.
CBP should also develop a mechanism within ACE M1 that would allow
an ocean carrier to electronically close an in-bond that the in-bond
filer created in the Automated Broker Interface (ABI) using the ocean
carrier's IRS number but then never closed in ABI. This would enable
ocean carriers, none of whom use ABI (a broker filing system) to use
ACE M1 to close in-bonds cut against the carrier's IRS number.
CBP Response: CBP agrees that more accurate information should be
provided to bonded parties regarding the use of their bond and thanks
the commenter for these suggestions. Now that the ACE eManifest Rail
and Sea (M1) has been successfully deployed, enhancements such as this
will be considered and prioritized based on the needs of the trade and
CBP. M1 currently allows any EDI filer (ABI or carrier) to provide
updates on in-bond transactions including arrivals and exports. CBP
encourages the party with the most accurate information to provide
those updates.

[[Page 45375]]

9. Change of Foreign Destination
Comment: CBP should clarify the difference between proposed Sec.
18.23 requiring the carrier to notify CBP of a change in foreign
destination of an in-bond shipment and the requirement in proposed
Sec. 18.5 that carriers obtain authorization from CBP for diversion of
an in-bond shipment.
CBP Response: Section 18.5 requires the filer of the in-bond
application to submit a request to divert merchandise via a CBP-
approved EDI system. A diversion occurs when the U.S. port for which
the in-bond merchandise is destined is changed and the merchandise is
shipped to a different port. Section 18.1(h) requires the carrier to
update information included in the original in-bond application, such
as the first foreign port, when there are changes. Section 18.23
concerns the requirement to update information in the in-bond
application as it applies to TE and IT shipments. CBP is adding
language to Sec. 18.23 to make this clearer.
New Information Requirements for In-Bond Shipments
10. New Information Requirements Generally
Comment: Many commenters expressed concern that the new information
requirements of the in-bond application are too burdensome.
CBP Response: The requirements proposed in the NPRM, when
considered as a whole, potentially would require more information from
carriers. Accordingly, CBP is making several changes to the proposed
regulations in response to these comments. First, CBP is removing the
requirement in proposed Sec. 18.1(d)(1)(ii) that if the 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, the filer must provide the rule, regulation,
law, standard or ban to which the merchandise is subject as well as the
government agency responsible for enforcing the rule, regulation, law,
standard, or ban. In its place, CBP is requiring that merchandise
subject to detention or supervision by a U.S. government agency be
described with sufficient accuracy to enable the agency concerned to
determine the contents of the shipment. This is a requirement in
existing Sec. 18.11(e). Second, CBP is removing the requirement in
proposed Sec. 18.1(d)(1)(iii) that the in-bond filer identify
prohibited or restricted merchandise. Third, CBP is removing the
requirement in proposed Sec. 18.1(d)(1)(iv) to provide additional
information for all in-bond shipments of textiles and textile products.
Fourth, CBP is making optional the requirement in proposed Sec.
18.1(d)(1)(v) that the filer of the in-bond application must provide
information regarding merchandise for which the U.S. Government,
foreign government or other issuing authority has issued a visa,
permit, license, or other similar number or identifying information. In
lieu of the above requirements and to ensure that CBP is still able to
assess security and health and safety threats, CBP is changing proposed
Sec. 18.1(l)(i) to require the six-digit HTSUS number on the in-bond
application in all instances. The six-digit HTSUS number is one of the
required data elements for all merchandise arriving by vessel on the
Importer Security Filing (ISF).
11. Special Classes of Merchandise
Comment: Proposed Sec. 18.20(a) prohibits the use of a
transportation and exportation (T&E) entry, with no exceptions noted
for several classes of merchandise as detailed at Sec. 18.1(l), namely
(1) health, safety, and conservation; (2) plants and plant products;
(3) narcotics and other prohibited articles; (4) non-narcotics; (5)
explosives; and (6) livestock. This conflicts with proposed Sec.
18.1(l), which allows a T&E entry to be filed if approved by the
appropriate governmental agency, e.g., explosives as regulated by ATF,
DOT, and USCG. Additionally, if a T&E entry may not be utilized for
these specified commodities, two separate in-bond movements would be
required to move the shipment through the United States to its final
destination, i.e., an Immediate Transportation (IT) to the port of
exportation and a separate Immediate Exportation (IE) at the port of
destination. This would create an unnecessary increase in work for both
CBP and affected carriers and filers.
CBP Response: Proposed Sec. 18.20(a) does not prohibit the use of
T&E entries for the named classes of merchandise in all cases. It
specifically allows for T&E entries, subject to the provision of Sec.
18.1(l). There is no conflict between the two provisions. While
proposed Sec. 18.1(l) imposes restrictions on the named classes of
merchandise, it does not prohibit the use of T&E entries. It merely
requires authorization from the appropriate government agency to ship
these classes of merchandise under a T&E entry. Moreover, these are not
new restrictions on T&E entries. Existing Sec. 18.21 provides for
these same restrictions on T&E entries. This rule makes these
restrictions applicable to all in-bond entries by moving them to Sec.
18.1(l).
Comment: CBP should amend proposed Sec. 12.11 to allow plant or
plant product shipments subject to Animal and Plant Health Inspection
Service/Plant Protection and Quarantine Programs (APHIS/PPQ) permit
conditions to be shipped from the port of first arrival to another port
for proper inspection at an APHIS/PPQ facility, without an in-bond
application if all CBP requirements have been met.
CBP Response: CBP disagrees. Until such time as the plant or plant
product has been inspected or treated by APHIS/PPQ, the merchandise
must remain under CBP bond, which insures compliance with APHIS/PPQ
requirements.
12. Quantity
Comment: Proposed Sec. 18.1(d)(1)(vi) states that ``the quantity
of the merchandise to be transported to the smallest piece count'' must
be provided. This is a confusing standard and clarification should be
provided as to whether this means that the quantity will be reported at
the smallest external packaging unit or something different, such as
the smallest piece count. CBP should use the ``smallest exterior
packing unit'' as the standard for providing the quantity of the
merchandise. This is a workable standard and the data is readily
available and verifiable to the carrier. ``The smallest piece count''
standard would be burdensome as manifests and bills of lading normally
do not contain this information and verification may be difficult.
CBP Response: CBP concurs and is changing proposed Sec.
18.1(d)(1)(vi) to require the reporting of the quantity using the
``smallest exterior packing unit'' standard. This will enable carriers
to verify the quantity of the goods they are transporting and ensure
that there is no shortage.
Comment: CBP should modify proposed Sec. 18.1(d)(1)(vi) to require
that the quantity of merchandise to be transported be reported in the
in-bond application as the quantity used in the bill of lading and or
manifest. This will ensure consistency in reporting between the
application filer and CBP as well as amongst all trading partners
involved in the transportation movement of the in-bond shipment.
CBP Response: CBP disagrees. The quantity of merchandise used in
the bill of lading or the manifest may not reflect the actual quantity,
as required in Sec. 18.1(d)(1)(iv). CBP needs to ensure the entire
shipment is accounted for at the destination port or port of
exportation.

[[Page 45376]]

Proposed Sec. 18.1(d)(1)(vi) requires the quantity of merchandise to
be transported in-bond to be reported and will specify how that
quantity is to be reported. As discussed in the prior comment response,
the required quantity standard will be the smallest exterior packing
unit.
Comment: CBP should remove proposed Sec. 18.1(d)(4), which
requires the initial bonded carrier to assert that there is no
discrepancy between the quantity of the goods received from the
importing carrier and the quantity of goods delivered to the in-bond
carrier for transportation in-bond. Quantity information is already
required under proposed Sec. 18.1(d)(1)(vi) and the initial bonded
carrier cannot make the assertion in good faith without independently
verifying the quantities prior to importation which is impractical and
costly. Alternatively, CBP should change proposed Sec. 18.1(d)(4) to
provide that by submission of an in-bond application, the initial
bonded carrier asserts that there is no ``known discrepancy'' between
the quantity received from the initial carrier and quantity delivered
to the in-bond carrier, unless the arriving carrier and the in-bond
carrier are the same, in which case the provision does not apply.
CBP Response: Proposed Sec. 18.1(d)(4) does not impose new
requirements on bonded carriers. Under Sec. 18.8 of the current
regulations, if an in-bond shipment arrives at the destination port and
the quantity of goods that arrives is less than the quantity
manifested, the bonded carrier is liable for the shortage. This rule
does not change that requirement. However, CBP has concluded that
proposed Sec. 18.1(d)(4) is unnecessary as it is covered in Sec.
18.8. Therefore, CBP is removing this provision.
Comment: Bonded carriers need to be able to file manifest
discrepancy reports after the in-bond shipment arrives at the port of
destination. The discrepancy reports would reflect the quantity of good
actually received by the in-bond carrier when the container is unloaded
at the port of destination.
CBP Response: CBP disagrees. CBP is not creating a new manifest
discrepancy reporting system for in-bond shipments which would insulate
carriers from liability for a shortage. Although carriers must use the
procedure described in Sec. 18.1(h) to update the in-bond record to
report any discrepancy in quantity of in-bond merchandise, the carrier
is responsible for the quantity of goods reported in the in-bond
application.
13. Location of the Merchandise
Comment: Proposed Sec. 18.1(j) requires the reporting of the
``[p]hysical location of the merchandise within the port.'' The term
``physical location'' should be defined and CBP should provide
additional detail as to the level of specificity required; e.g., the
Facilities Information and Resources Management System (FIRMS) code if
known, or dock location, pier, street, address, city, etc. FIRMS codes
need to be established for border crossing locations where carriers do
not have a physical presence.
CBP Response: CBP agrees that the proposed text is not clear and
leaves room for error in providing the physical location of the
merchandise. Therefore, CBP is changing proposed Sec. 18.1(j) to
require the reporting of the FIRMS code rather than a description of
the physical location of the goods. FIRMS codes are used to identify a
specific physical location. Locations, e.g., warehouses, with FIRMS
codes that are used solely for the purposes of providing the location
of in-bond merchandise are not required to be bonded facilities, unlike
other locations with FIRMS codes. However, FIRMS code locations that
are used solely for reporting the location of in-bond merchandise
cannot be used for other purposes for which a bond is required, e.g.,
manipulation of the merchandise. If the merchandise is sitting on the
dock, the FIRMS code of the terminal should be provided.
Comment: Does the new rule allow truck carriers to use their
terminal facilities as the arrival destination and use that location to
report to CBP?
CBP Response: Yes. However, if there is not an existing FIRMS code
for the terminal facility the truck carrier company will need to obtain
one.
Comment: Will CBP be updating or changing the current FIRMS code
process? CBP should centralize the process at headquarters, rather than
have the ports responsible.
CBP Response: CBP is not updating or changing the process for
obtaining a FIRMS code. The current process is to obtain a FIRMS code
at the local port. A member of the trade requests a FIRMS code via a
letter to the port director on company letterhead. An Officer in the
POE creates a FIRMS file in ACE for the requesting party and CBP mails
the FIRMS code to the requesting party. However, CBP headquarters will
continue to oversee the process.
Comment: CBP should require the reporting of the FIRMS code of the
bonded location ``at which the in-bond merchandise is arrived'' instead
of the physical location of the in-bond merchandise within the port.
For shipments that will be exported across a land border, CBP should
accept an alternate location code if a FIRMS code does not exist for
the location where the goods will be exported.
CBP Response: CBP is requiring in Sec. 18.1(j) that the bonded
carrier report the FIRMS code for the arrival of all in-bond
merchandise at the destination port and port of exportation.
14. Destination
Comment: The reporting of the ``ultimate destination'' is a new
requirement and CBP should explain what ``ultimate destination'' means.
The carrier that files the electronic in-bond application has no way to
know the ``ultimate destination'' of a particular in-bond shipment. The
carrier can only provide CBP with information about the final
destination of the cargo movement under the carrier's contract of
carriage with the shipper. The carrier does not know what the shipper
does with the cargo after the carrier has delivered the cargo according
to the contract of carriage. The proposed rule should be amended to
clarify that for a carrier filing an in-bond application the final
destination of the cargo movement under the carrier's contract of
carriage with the shipper is acceptable.
CBP Response: To address the comment above and avoid inconsistency
with other export control laws and regulations, CBP is no longer using
the term ``ultimate destination'' in Sec. 18.1(d)(1)(vi). CBP is
making changes to Sec. 18.1(d)(1)(vi) to clarify that for IT
shipments, the port of destination in the United States must be
provided, and for T&E and IE shipments, the port of exportation and the
first foreign port must be provided.
Comment: Any requirements associated with the destination beyond
the port code could significantly erode the confidentiality of
sensitive customer information.
CBP Response: CBP routinely considers commercial information on
entry documents as confidential business information protected by the
Trade Secrets Act, 18 U.S.C. 1905, and therefore subject to exemption 4
of the Freedom of Information Act (FOIA) protecting trade secrets and
commercial or financial information. CBP does not require businesses to
designate that information as confidential. See 19 CFR 103.35. CBP
would consider the destination of the in-bond merchandise to be
confidential and privileged under exemption 4 of the FOIA and would not
release this information.
Comment: There is often a need to move in-bond jet fuel to airports
that operate with international flights.

[[Page 45377]]

Current systems allow for the use of a multi-destination field. CBP
should recognize the operational realities of the jet fuel and airline
business and specifically address in the final rule that in-bond
movements with multiple destinations may continue to be used.
CBP Response: This rule will not specifically address multi-
destination fields currently used in some situations to move jet fuel
in-bond. This is an operational issue. However, CBP is not planning to
limit or stop the use of this practice at this time.

C. In-Transit Time

1. In-Transit Time Generally
Comment: The proposed 30-day transit time is sufficient to arrive
at the destination port. It is more than sufficient time for carriers
to enter and exit the United States with Canadian domestic goods.
CBP Response: CBP agrees with these comments, except with respect
to in-bond shipments transported by barge, as addressed below.
2. In-Bond Shipments Transported by Barge
Comment: The current 60-day in-transit time for in-bond shipments
that travel by barge should be preserved. Barge delivery times
frequently exceed 30 days. Industry data indicates that average barge
transit times between 26 common origination and destination points for
inland barge transportation routinely exceed the proposed 30-day in-
transit time. In addition to average transit times that may exceed 30
days, barge in-transit times are also frequently impacted by other
factors such as fog, icing, high water, low water, lock closure,
maintenance, and congestion that further lengthen transit times beyond
30 days.
CBP Response: Due to the special circumstances noted above
pertaining to travel by barge, CBP agrees that the proposed 30-day in-
transit time for in-bond shipments transported by barge is not adequate
and is changing proposed Sec. 18.1(i)(1) to allow for a 60-day in-
transit time for barge shipments.
3. Extension of In-Transit Time
Comment: Requests for an extension of the 30-day in-transit time
should be considered approved unless CBP denies the request. The
process should be automated and extensions should be granted in 30-day
timeframes. The process for requesting an extension should be explained
in more detail.
CBP Response: CBP disagrees that extensions should be automatically
approved. CBP will consider on a case-by-case basis whether to grant an
extension of the in-transit time period and if so, the length of the
extension. CBP is changing proposed Sec. 18.1(i)(2) to clarify that
the decision to extend the in-transit time period is within the
discretion of CBP. CBP is also changing proposed Sec. 18.1(i)(2) to
provide factors that may be considered in its decision, which include
extraordinary circumstances beyond the control of the parties.
With regard to automation, the functionality does not currently
exist to accept and approve extensions electronically via electronic
EDI. Accordingly, all requests for an extension must be made to the
port director of the port of destination or port of exportation, as
appropriate. See Sec. 18.1(i)(2).
Comment: CBP should issue the denial of an extension request within
24 hours of the request and provide a reason for the denial.
CBP Response: CBP will consider each extension request on a case-
by-case basis and will endeavor to issue any denials within 24 hours of
receiving the request. CBP will not provide the reason for denying an
extension request since the request may be denied for law enforcement
purposes.
Comment: CBP should continue to take into account and provide
extensions for rail cars that have been delayed due to rail cars being
unavailable to transport in-bond merchandise or due to other transit
issues. CBP should continue to provide reasonable relief from the 30-
day limit.
CBP Response: CBP will consider requests for extensions on a case-
by-case basis.
Comment: Can the request for an extension be made for all cargo
covered on the bill of lading, or must the request for an extension be
made for each individual in-bond entry?
CBP Response: A request for an extension must be made for each
individual in-bond entry. CBP will not grant a blanket extension for
all shipments covered by a bill of lading.
Comment: The proposed rule states CBP may extend the in-transit
time if delays are caused due to the examination or inspection of the
merchandise by CBP or another government agency. Because this issue can
result in irregular deliveries due to no fault of the carrier, CBP
should change ``may extend'' to ``will extend.'' The in-transit
timeframe should be revised to account for the delay and recorded as
part of the in-bond application record and communicated to the in-bond
filer.
CBP Response: CBP agrees that proposed Sec. 18.1(i)(1) should be
changed to address this issue. The new text will state that when the
merchandise is subject to examination or inspection by CBP or another
government agency, the time for which the merchandise is held due to
the examination or inspection will not be considered part of the in-
transit time. Because of this change, it is unnecessary to change ``may
extend'' to ``will extend.''
Comment: CBP should provide examples of circumstances in which CBP
will grant an extension ``for some other reason.''
CBP Response: In order to clarify proposed Sec. 18.1(i)(2), CBP is
removing the phrase ``for some other reason.'' In its place, CBP is
changing proposed Sec. 18.1(i)(2) to provide factors that may be
considered in its decision to extend the in-transit time period. CBP
will consider all requests for an extension on a case-by-case basis.
Comment: Some in-bond shipments cannot be made within the mandatory
in-transit time due to logistical issues that are beyond the control of
the shipper. For example, a vessel shipment may contain 50 coils of
steel, which would need to be divided into at least 25 truckloads. Due
to truck shortages and bad weather it is not uncommon for shipments to
take longer than the in-transit time for trucks of 30 days.
CBP Response: CBP will take into account logistical issues such as
the one described above when considering a request for an extension of
the in-transit time.
4. Shortening of In-Transit Time
Comment: Proposed Sec. 18.1(i)(3) provides that CBP may shorten
the in-transit time. CBP should clarify and explain why the in-transit
time would ever need to be shortened once the application has been
authorized and no holds have been placed on the shipment. CBP should
provide more information and justification as to when this authority
might be exercised so that the trade can more adequately comment.
CBP Response: The in-transit time will only be shortened when
required by another agency's transit requirements. The primary reason
why CBP would shorten the in-transit time would be to comply with U.S.
Department of Agriculture (USDA) statutory requirements related to
merchandise moving on a USDA permit. Other government agencies may also
require shortened transit periods.
Comment: Does the proposal that ``CBP will provide notice of a CBP-
shortened in-transit time with the movement authorization,'' include

[[Page 45378]]

notification by other government agencies of shortened in-transit
times? CBP needs to ensure that there are procedural protections for
the importer and the carrier to avoid arbitrary and costly
restrictions.
CBP Response: The in-transit time will only be shortened in order
to comply with another agency's transit requirements. CBP will provide
notice to the carrier to facilitate compliance. To clarify this, CBP is
changing proposed Sec. 18.1(i)(3) to provide that ``CBP will provide
notice of a government-shortened in-transit time with the movement
authorization.''
Comment: The ``shortened in-transit time'' information should be
transmitted as a distinct data element or disposition code that is sent
to filers. This code will ensure that the carrier will be aware of the
restriction, and the carrier may then examine the text explanation of
the shortened time for the details of the restriction. Instructions
from CBP that require the trade to take any action must not be included
as a remark to formal status messages because free form messages may be
mistyped by the initiator, truncated by the system, or misinterpreted
by the recipient.
CBP Response: CBP will communicate to the carrier via EDI when the
in-transit time has been shortened. CBP agrees that the creation of a
disposition code is a good idea and will endeavor to create a new
disposition code for this purpose.
5. Start of In-Transit Time
Comment: The current regulations begin the running of the 30-day
in-transit time at the time the forwarding carrier receives the
merchandise. In many seaports, it is not uncommon for containers to be
delayed within a port terminal for myriad reasons, two to four days on
average, before they are delivered to the forwarding carrier. Beginning
the in-transit time from the time of the filing of the in-bond
application does not take these routine delays into account. The
language of existing Sec. 18.2(c)(2) that allows the forwarding
carrier to report the date on which it received the merchandise at the
port of arrival from the importing carrier should be retained.
CBP Response: CBP has analyzed in-bond movements including
intermodal movements and determined that beginning the in-transit time
at the time of filing the application would not seriously impinge on
the 30-day (60-day for barges) in-transit time to deliver the cargo,
even, taking into account a 2- to 4-day delay at the port. Requiring
the forwarding carrier to report when it receives the merchandise makes
determining when the in-transit time begins more cumbersome, and makes
the system dependent on a party whose bond may not be obligated.
Extensions of the transit time can be requested in the event of a delay
at the port.
Comment: In the ocean environment, in-bond authorization may be
provided up to 30 days prior to vessel arrival at the first U.S.
seaport. Taking this into account, the 30-day transit time should not
start until the conveyance has arrived at the first U.S. port and all
government holds have been removed.
CBP Response: CBP agrees. CBP is changing proposed Sec. 18.1(i)(1)
to provide that the in-transit time will not begin until vessel arrival
or CBP movement authorization, whichever is later.
Comment: In-bond merchandise traveling through the United States
and destined for Mexico often requires several days at the port of
exportation on the United States-Mexico border for various legitimate
reasons before the merchandise can be imported into Mexico. Generally,
the merchandise is transported to the port of exportation by the
originating bonded carrier. Next, a new in-bond application is filed
and the merchandise and bond liability is transferred to a local bonded
carrier for exportation to Mexico. Taking commercial realities of
importing goods into Mexico into consideration, if the originating
bonded carrier arrives at the port of exportation without a sufficient
number of days remaining before the expiration of the 30-day maximum
time period, it will be difficult to find a succeeding bonded carrier
to accept liability for the merchandise knowing that delays are
anticipated and there is high risk of not being able to export the
merchandise timely. This will likely cause in-bond merchandise to have
to enter a foreign trade zone or customs bonded warehouse to avoid
liquidated damages for irregular delivery. Alternatively, Mexican
importers may divert this business outside of the United States for
direct shipment to a Mexican sea port, which would be devastating for
the local bonded carriers in Laredo, Texas.
CBP Response: CBP recognizes that there are many circumstances in
which it may not be practicable to export in-bond merchandise within 15
days of arrival at the port of exportation. However, shippers will be
responsible for ensuring that basic logistical issues are resolved. In
the scenario presented, the originating bonded carrier will have 30
days in which to deliver the merchandise to the port of exportation, at
which point the arrival must be reported within two business days. The
reporting of the arrival of the merchandise at the destination port
completes the in-bond movement for purposes of meeting the in-transit
time requirements. The merchandise must then be exported within 15
days. If the merchandise cannot be exported within 15 days after
arrival, the original bonded carrier can file an immediate exportation
entry. This will provide an additional 15 days in which to export the
merchandise. The carrier can also request permission to retain the
goods within the port limits for an additional 90 days pursuant to
Sec. 18.24 or admit the merchandise into a FTZ, before the 15-day
limit expires.
6. Procedures
Comment: All parties involved in an in-bond shipment should be able
to verify when the in-bond shipment was authorized for movement and
whether they are delivering the merchandise within the required
timeframe.
CBP Response: Within ACE, the carrier filing the in-bond
application has the ability to provide multiple Secondary Notify
Parties (SNPs). SNPs receive the same status messages as the carrier.
It is up to the parties involved in the transportation of the
merchandise to ensure that the appropriate parties are designated as
SNPs.
Comment: Receipt of messages is a major issue for some non-vessel
operating common carriers (NVOCCs). NVOCCs must be nominated by the
vessel operating carrier (VOC) as a SNP in order to receive all status
messages. Many VOCs have system constraints and can only accommodate
one NVOCC per Master Bill of Lading even though AMS and ACE can
accommodate more. An NVOCC automatically becomes a SNP when it creates
an in-bond. However, it only receives status messages from the time it
creates the in-bond.
CBP Response: SNPs receive the same status messages as the carrier.
CBP already provides the ability to provide multiple SNPs within ACE.
It is the responsibility of the parties involved in the transportation
of the merchandise to ensure that the appropriate parties are
designated as SNPs.
7. Intermodal Transportation
Comment: The reduction in in-transit times between ports from 60
days to 30 days is insufficient for those shippers who are moving goods
with a mix of intermodal transportation (rail, barge and truck) and it
might be difficult to meet the new 30-day requirement in these
situations. This is especially true for those using barge movements.
CBP should consider either keeping the current 60-day requirement for
barges or

[[Page 45379]]

providing an exemption similar to what has been granted for pipelines.
CBP Response: As indicated in Section I.B.1., In-Transit Time for
Shipments Transported by Barge, CBP is changing the proposed in-transit
time for in-bond shipments transported by barge to 60 days. In this
final rule, CBP is providing in Sec. 18.1(i) that if any portion of
the movement involves the movement of goods on a barge, the 60-day
transit time will apply.
Comment: Which time period applies when there is a movement of
petroleum products that involves the use of truck and pipeline? For
instance, jet fuel could be moved in-bond via pipeline then transferred
to a truck destined for an international airport. This movement could
take significantly longer than 30 days. CBP should clarify whether the
30-day transit time applies to the entire movement when part of the
movement involves transportation via pipeline.
CBP Response: The initial pipeline movement is an in-bond movement,
but the duration of that transit time would not be included in the 30-
day transit time limitation. To clarify this, CBP is adding a sentence
to proposed Sec. 18.1(i)(1) that expressly excludes pipeline shipments
from the provisions of that section.
8. Report of Arrival
Comment: CBP proposes to reduce the arrival notification timeframe
for an in-bond from two working days to 24 hours. Due to the mandatory
electronic submission of in-bonds and the ability for any party to
generate an in-bond without proper notification to all parties, it will
be nearly impossible for a manual data entry process to happen within
24 hours when many in-bond shipments arrive over the weekend and
holidays. CBP should retain the current 48-hour arrival timeframe or
extend it to 72 hours to accommodate the various business models in the
trade and lessen the cost of complying with the proposed rule.
CBP Response: CBP agrees that the 24-hour notification timeframe is
too short. CBP is changing proposed Sec. 8.1(j) to require the report
of arrival to be filed within two business days after arrival at the
destination port.
Comment: If CBP approval is required prior to removing the seal,
this may impact the carrier's ability to timely report the arrival of
the in-bond cargo.
CBP Response: Except as provided for in Sec. 18.4, a sealed
container cannot be opened prior to the reporting of the arrival.
Pursuant to Sec. 18.4(c), if it becomes necessary to remove seals for
good reason, a responsible agent of the carrier may remove the seals,
supervise the transfer or handling of the merchandise and seal the
conveyance, compartment, or container. CBP approval is not required.
Once the arrival has been reported, the container can be opened and the
in-bond merchandise removed.
Comment: For rail movements there are several check points within
the port of destination area and it can take up to three to four days
before the shipment finally reaches the point of unloading for vessel
exports. What will be the point at which the arrival must be
transmitted?
CBP Response: The arrival must be reported at the first point of
arrival within the destination port.
Comment: The impact of the arrival on the transit and general order
clock is significant to zone operations. It is imperative for CBP to
explain the ramifications of arrival on both the transit clock and the
transfer of bond liability.
CBP Response: The reporting of the arrival of the merchandise at
the destination port completes the in-bond movement for purposes of
meeting the in-transit time requirements. The arrival of the in-bond
merchandise, however, does not transfer bond liability. The party whose
bond is obligated is liable until the in-bond is closed out by the in-
bond merchandise being exported, entered for consumption, admitted into
an FTZ, or entered through the filing of some other type of entry.
Comment: Under the proposed rule, will the in-transit clock stop
for an entire in-bond shipment when the first portion of an in-bond
shipment arrives at the port of exportation or destination port?
CBP Response: The arrival of a portion of shipment at the
destination port will not stop the transit period for the remainder of
the shipment that has not yet arrived at the port. For multiple
container movements, the arrival will be performed at the equipment/
container level. This means that each equipment/container must arrive
within 30 days and each equipment/container must be reported as arrived
within two business days after its arrival.
9. General Order Merchandise
Comment: Does the reporting of arrival pursuant to proposed Sec.
18.1(j) stop the in-transit clock and begin the general order clock of
15 days as provided in proposed Sec. 18.1(k)?
CBP Response: No. Subsection 18.1(j) requires the report of arrival
of any portion of a shipment after it arrives at the port. Only the
arrival of the full shipment of in-bond merchandise at the destination
port or the port of exportation, not the reporting of arrival, stops
the in-transit time and begins the 15-day general order period.
Comment: Reporting the arrival of the in-bond shipment at the
destination port when the first portion of the shipment arrives and
remaining portions have not arrived, creates a significant issue with
the management of the general order clock. Allowing the clock to run on
goods that may not have physically arrived creates a potential gap in
the control of in-bond merchandise because merchandise that has
``arrived'' may not be physically present.
CBP Response: CBP agrees that the general order clock should begin
when the last portion of the in-bond shipment arrives. Therefore, CBP
is changing proposed Sec. 18.1(k) to provide that the 15-day period
for general order merchandise begins on the date of arrival ``of the
entire in-bond shipment'' at the port of destination or port of
exportation. When only a portion of a shipment arrives at the port of
destination or port of exportation, the general order clock will
generally not begin until the last portion of the shipment arrives.
However, if part of a shipment does not arrive within the timeframe for
completing the in-bond movement (30 days in most cases), the general
order clock for the merchandise that has already arrived will start to
run at the end of the applicable timeframe for completing the in-bond
movement.
Comment: CBP should clarify that the total proposed in-bond transit
time from the time of in-bond application authorization to the time of
entry at the port of destination or export at port of exportation is a
total of 45 days unless an extension has been granted.
CBP Response: The maximum in-transit time from the time of
authorization of the in-bond application to arrival at the destination
port is 30 days or 60 days for barges. Once the merchandise has
arrived, the merchandise must either be entered or exported within 15
days of arrival or it will be subject to General Order and required
notifications must be provided. It is incorrect to think that CBP will
combine the two periods.
Comment: Reference to FTZ admission is omitted from the language
regarding potential events that prevent goods from being sent to
General Order. The language in proposed Sec. 18.1(k) should be revised
to include FTZ admission, such as: ``Any merchandise covered by an in-
bond shipment (including carnets) that has arrived at the port of
destination or the port of exportation must be entered, exported or
admitted to a foreign-trade zone pursuant to this part within 15 days

[[Page 45380]]

from the date of arrival at the port of destination or port of
exportation, or in the case of goods authorized for direct delivery
destined to a foreign-trade zone, within 15 days of the arrival at the
zone or subzone pursuant to Sec. 146.40(c)(3).''
CBP Response: CBP concurs that admission into an FTZ should be
included as a means to prevent merchandise from going into General
Order and is changing proposed Sec. 18.1(k) accordingly. It is not
necessary to include language regarding direct delivery pursuant to
Sec. 146.40 because the general reference to admission into an FTZ
encompasses the procedures provided for in part 146.
Comment: It is unclear how limiting the time to 15 days will help
CBP verify that the in-bond merchandise was, in fact, exported or
entered.
CBP Response: The requirement to enter or export merchandise within
15 days of arrival at the destination port is consistent with existing
regulations and is generally the current practice. See Sec. Sec. 4.37,
18.12(d), 122.50, and 123.10. The changes in proposed Sec. Sec.
18.1(k), 18.7, 18.12, 18.20, 18.25 and 18.26 are to ensure that there
is uniformity within the customs regulations on this point.
Comment: The 15-day requirement to export or enter in-bond
merchandise under proposed Sec. 18.1(k) or to export merchandise
pursuant to proposed Sec. Sec. 18.7(a)(2), 18.20(f), 18.25(c) and
18.26(d) is not reasonable in many cases for goods intended to be
exported by ocean carrier and for some petroleum shipments. Shippers
sometimes need to hold in-bond merchandise after it has arrived in
order to consolidate shipments from various vendors, which can take
longer than 15 days. Merchandise to be exported by ocean carrier can
only be exported according to the schedule of the vessel bound for the
foreign destination of the goods. Ocean carriers do not call at each
port of exportation every 15 days for every foreign destination. In
many cases goods are required to remain at the port of exportation
after arrival for periods longer than the proposed 15-day limit.
Similarly, many petroleum products that move in-bond cannot be exported
within 15 days of arrival due to infrastructure limitations. CBP should
revisit this provision to either extend the 15-day time period to a
minimum of 30 days or clarify that standing exceptions to the 15-day
requirement to export product will be provided by CBP based on the
operational realities that exist for these type of product in-bond
movements.
CBP Response: The 15-day requirement to export or enter the in-bond
merchandise is an existing requirement and is not a change to the GO
requirements. CBP will not extend the timeframe to 30 days as this
would be inconsistent with other regulations governing General Order
merchandise. However, Sec. 18.24(a) (Retention of goods within port
limits) authorizes the port director to allow in-transit merchandise to
remain within the port limits for up to 90 days. Additional 90-day
extensions may be granted for up to one year from the date of arrival.
Carriers can request an extension when they cannot export within 15
days of arrival due to scheduling or other issues.
D. Transfers
Comment: CBP received several comments regarding the transshipment
provision in proposed Sec. 18.3, which provides the procedures to be
followed when in-bond merchandise is transferred from one conveyance to
another. The main concern was with the requirement to report to CBP
each time the merchandise was transferred from one conveyance to
another. Because in-bond merchandise may be transferred several times
during the course of its journey, this reporting requirement places a
substantial burden on the bonded carrier liable under the bond.
CBP Response: CBP has taken these concerns into consideration and
agrees that CBP does not need to be notified when in-bond merchandise
is transferred from one conveyance to another. Accordingly, CBP is
changing proposed Sec. 18.3 by removing the requirement to notify CBP
when merchandise is transferred from one conveyance to another and by
clarifying when in-bond merchandise is transferred to a subsequent
bonded carrier that assumes liability for the merchandise, a report of
arrival must be filed for the in-bond shipment and the subsequent
carrier must submit a new in-bond application pursuant to Sec. 18.1.
Comment: A new in-bond application should be required when another
bond is obligated. Since 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 exportation, it is implied that
there could be a change of carriers. Is liability for the merchandise
transferred to the new carrier's bond or is a new in-bond application
required to transfer the liability?
CBP Response: CBP agrees that a new in-bond application is
necessary when a different bond is obligated. Therefore, CBP is
changing proposed Sec. 18.3 in the final rule to require that when
merchandise is transferred to a bonded carrier that assumes the
liability of the in-bond shipment, a report of arrival must be filed
for the in-bond shipment and the subsequent carrier must submit a new
in-bond application pursuant to Sec. 18.1 for the merchandise to be
transported in-bond.
Comment: Proposed Sec. 18.3(a) requires that the notification to
CBP via EDI be done before the merchandise can be transshipped, but
proposed Sec. 18.3(b) includes no such stipulation. CBP should make
the requirements consistent for transshipment to a single conveyance
(18.3(a)) and transshipment to multiple conveyances (18.3(b)).
CBP Response: The change that CBP is making to proposed Sec. 18.3,
i.e., removing the requirement to notify CBP when merchandise is
transferred from one conveyance to another, addresses the concerns
expressed in this comment.
Comment: The carrier's difficulties in verifying the quantity of
the merchandise to the piece count level is exacerbated when multiple
carriers are involved. Because the transfer to multiple conveyances
adds an additional level of complexity as compared to a transfer to a
single conveyance, the potential for irregularities in the reporting
and exchange of data in these situations is more prevalent.
CBP Response: The change that CBP is making to proposed Sec. 18.3,
i.e., removing the requirement to notify CBP when merchandise is
transshipped from one conveyance to another, reduces the likelihood of
irregularities that may result in reporting and exchanging of data.
Comment: How will the trade identify the bonded carrier? It is
assumed the bonded carrier can be identified by their SCAC code and/or
EIN number where available. Please clarify in the final rule.
CBP Response: The bonded carrier will be identified by the
carrier's SCAC or tax identification number (EIN), or, for air
carriers, the International Air Transport Association (IATA) number.
Comment: The proposal to require the in-bond carrier to report, via
EDI, the transfer of in-bond merchandise from one conveyance to
another, presents a number of problems and questions. An ocean carrier
that files an in-bond application, and on whose bond the shipment is
authorized, often will assume the transportation responsibility for
arranging the delivery of the goods to the in-bond destination, and
this frequently involves numerous intermodal transshipments. Proposed
Sec. 18.3(b) and (c) would require the bonded carrier to provide
multiple EDI notifications to CBP. This would make

[[Page 45381]]

the continued efficient transportation of such cargo impossible.
CBP Response: The change that CBP is making to proposed Sec. 18.3,
i.e., removing the requirement to notify CBP when merchandise is
transferred from one conveyance to another, addresses the concerns in
this comment.

E. Sealing of Conveyances and Reporting of Seal Numbers

Comment: CBP should clarify or define the term ``container'' as
used in this rule. Does the requirement to seal containers only apply
to ``containers'' as defined by the Customs Convention on Containers or
does it include all road (trucks and truck trailers) and rail (rail
cars and truck trailers on rail cars) conveyances?
CBP Response: The Sec. 18.4 seal requirements apply to containers
that can be sealed. This includes truck and rail conveyances. For
further information about what are considered containers for CBP
purposes see part 115 of the CBP regulations governing containers. The
seal requirements for air cargo are specified in Sec. 122.92 and are
discussed in section G below.
Comment: The seal and container numbers should not be mandatory
data elements. CBP would have the ability to verify the application of
seals prior to movement and upon arrival. Seal numbers are not always
available at the time of the in-bond transmission, especially if the
in-bond request is made by an authorized party other than the carrier
that loads the cargo. Providing the seal and container number with the
in-bond request will only add minimum assurance that the goods have
been properly controlled. Most carrier manifest systems currently do
not capture the seal or container number. However, they do have
elaborate scanning systems to track the progress of packages as they
are sorted and loaded during transportation and movement, which allows
for quick identification and location of a shipment in the event CBP
chooses to inspect an in-bond shipment at any point in the supply
chain. A provision to add the seal number after the initial in-bond
request is made should be included.
CBP Response: CBP does not agree that the seal and container
numbers should be optional information. Requiring carriers to provide
the seal number and container number as part of the in-bond application
facilitates CBP's ability to ensure the safety and security of in-bond
merchandise. To address the issue of carriers not knowing seal numbers
at the time the in-bond application is filed, CBP is changing proposed
Sec. 18.1(d)(1)(v) to provide that ``[i]f, at the time of the filing
of the in-bond application, the seal number is not known, the in-bond
application must be updated with the seal number within two business
days of the date the bonded carrier obtains a seal number. CBP is also
changing proposed Sec. 18.4(c) so that in the event that it becomes
necessary to remove and replace seals from a conveyance, compartment,
or container containing bonded merchandise, updated seal numbers must
be transmitted to CBP. The requirements to keep in-bond merchandise
sealed, and to re-seal unsealed merchandise, throughout the in-bond
movement remains, and the party whose bond is obligated will be liable
for liquidated damages for any loss, theft, or irregular delivery.
Comment: CBP should clarify that the container and seal numbers do
not need to be filed as part of the in-bond application because they
have already been reported to CBP as part of the advance electronic
manifest.
CBP Response: The container and seal number information on the
advance manifest will be automatically associated with the in-bond
application. Therefore, if the container and seal number have already
been provided on the advance manifest, the filer of the in-bond
application will not have to resubmit the container and seal number as
part of the in-bond application.
Comment: Proposed Sec. 18.3(d)(1) specifically permits the
breaking of CBP seals in emergency situations. CBP should specify that
any responsible agent of the carrier may remove and replace seals at
any time for any good reason. The requirement in proposed Sec. Sec.
18.3(d) and 18.4(c) to obtain CBP permission to break and replace a
seal, and to update the in-bond record would place a significant burden
on the carrier.
CBP Response: To address this comment and for clarity, CBP is
making the following changes to the proposed sections regarding seals.
First, CBP is moving some language about seal removal from proposed
Sec. 18.3 and is addressing the circumstances for removing seals in
Sec. 18.4. Proposed Sec. 18.3(d)(1), which covers the transfer
(transshipment) of in-bond merchandise from one conveyance to another,
allows for the breaking of seals in case of an emergency or for some
other reason. CBP has concluded that the rules about when seals can be
removed would fit better within Sec. 18.4 which applies to the sealing
of conveyances.
Second, CBP is changing proposed Sec. 18.4 in the final rule to
make it less restrictive. CBP agrees that a responsible agent of the
carrier should be able to remove and replace seals for good reason and
not just in emergencies. In response to concerns that the requirement
to obtain CBP permission to break and replace a seal and to update the
in-bond record with the new seal information would place a significant
burden on in-bond carriers and to facilitate processing of in-bond
shipments, CBP is removing these requirements and allowing a
responsible agent of the carrier to remove the seals and reseal the
merchandise. Specifically, CBP is changing proposed Sec. 18.4 in the
final rule to provide that seals may be removed for the purpose of
transferring in-bond merchandise to another conveyance, compartment or
container, or to gain access to the shipment because of casualty or for
other good reason, such as when required by law enforcement or another
government agency.
Comment: C-TPAT partners should be exempt from the requirement to
provide seal numbers. Encouraging carriers to join programs such as C-
TPAT will offer the additional assurance and controls CBP expects.
CBP Response: CBP disagrees. Compliance with the in-bond
regulations, including those pertaining to the sealing requirements,
complements supply chain security and efficiency procedures being
implemented by C-TPAT partners. However, C-TPAT membership will
continue to be a relevant factor for targeting purposes.
Comment: Proposed Sec. 18.4(b)(1) states that 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. CBP
should recognize that less than carload or container load (LTL) in-bond
shipments may move in conveyances, commingled with non-bonded
merchandise, that are not sealed. This is a normal operating practice
in domestic truck operations where numerous shipments are commingled on
trailers and transferred, sometimes multiple times, during the life
cycle of the shipment. CBP should allow flexibility for this
requirement for LTL carriers, allowing them to commingle freight.
CBP Response: CBP agrees that the proposed limitations on
transporting in-bond merchandise with non-bonded merchandise could
hamper the transportation of in-bond merchandise, especially for LTL
shipments. Accordingly, CBP is changing the sealing requirements in
proposed Sec. 18.4 by adding new paragraph (b)(2) allowing

[[Page 45382]]

for the transportation of in-bond merchandise with non-bonded
merchandise in a container or compartment that is not sealed, if the
in-bond merchandise is corded and sealed, or labeled as in-bond
merchandise. This will allow in-bond merchandise to be transported with
non-bonded merchandise in a container that is not sealed and will
facilitate the use of less than container load shipments.
Comment: How would a filer/carrier apply for the waiver of seal
requirements as mentioned in proposed Sec. 18.4(a)(2)?
CBP Response: A request for a waiver of the sealing requirement can
submitted by indicating that there is ``no seal'' when filing the in-
bond application. If CBP has concerns regarding the lack of a seal, CBP
may require additional information or reject the in-bond application.
Comment: The regulatory text regarding the removal and breaking of
seals should be changed so that seals must remain intact at all times
except for transfer operations covered under Sec. Sec. 18.3(b),
18.3(c), 18.3(d) and bonded warehouse operations covered under Sec.
19.6(e), in which case the breaking and affixing of new seals by the
responsible party per 18.1(c) is authorized. Failure to keep the seals
intact and/or remove the seals without CBP permission should result in
the assessment of liquidated damages. This will act as a deterrent to
theft and substitution. Furthermore, the unauthorized breaking of seal
acts as a notification to the bonded carrier that something may be
amiss.
CBP Response: The proposed suggestions regarding the removal and
breaking of seals is too restrictive and is not necessary for security
purposes. The requirements in Sec. 18.4 of this rule adequately
address these security issues without impeding the movement of the
goods. By allowing for the removal of seals and requiring that new
seals be affixed by a responsible agent of the carrier, CBP is
providing flexibility so that the transport of the in-bond merchandise
can be completed while still maintaining the integrity of the shipment.
Comment: CBP should change the requirements in proposed Sec. 18.3
so that CBP authorization is not required in order to remove seals in
order to transfer in-bond merchandise from one conveyance to another.
CBP Response: With the change that CBP is making to proposed Sec.
18.3, i.e., removing the requirement to notify CBP when merchandise is
transferred from one conveyance to another, the concerns in this
comment have been addressed.
Comment: How will CBP handle trucks that are stopped for a
potential road violation where the driver is required to open the truck
by the highway patrol or other governmental agency resulting in the
seal that was used for the movement of in-bond merchandise being
broken?
CBP Response: CBP is changing proposed Sec. 18.4(c) in the final
rule to allow for the removal of seals for good reason and, as
discussed in a prior response, require new seals to be affixed by a
responsible agent of the carrier. Accordingly, if the responsible agent
of a carrier, e.g., the driver, is required to open a sealed container
by local law enforcement or other governmental agency, the agent can
replace the broken seal with a new seal.
Comment: As unforeseen circumstances not contemplated by proposed
Sec. 18.3(d) could arise, we suggest that the language be updated to
read ``removal of seals without CBP permission may result in the
assessment of liquidated damages.''
CBP Response: As discussed in a prior response, CBP permission will
not be needed to remove seals. However, the party whose bond is
obligated will be liable for liquidated damages for any loss, theft, or
irregular delivery of the in-bond merchandise.
Comment: Proposed Sec. 18.4(a)(1) states, ``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
[19 CFR].'' Can CBP confirm that containerized ocean cargo shipments
being transported in-bond that are secured with a high security seal
meeting applicable ISO standards meet the requirements of these
sections?
CBP Response: The proposed regulations do not change any of the
existing requirements regarding how containers are sealed and what
types of seals are to be used. Containerized ocean cargo shipments
being transported in-bond may be secured with a high security seal
meeting applicable ISO standards, which meets CBP's requirements to
seal containers transporting in-bond merchandise.
Comment: CBP should require that trailers be sealed with ISO
compliant high security seals when goods are being shipped in-transit
through the United States or Canada.
CBP Response: Proposed Sec. 18.4 requires that in-bond merchandise
be sealed in accordance with CBP regulations, specifically Sec. Sec.
24.13 and 24.13a. However, it should be noted that C-TPAT members are
required to use International Organization for Standardization (ISO)
compliant seals by virtue of their participation in C-TPAT. As a
result, many in-bond carriers use ISO compliant seals.

F. Air Cargo

Comment: CBP needs to clarify the scope of this NPRM, which is
confusing in respect to existing CBP air commerce regulations. It is
not clear if air carriers would be subject to the new process
supplemented by any specific provisions in part 122 (air commerce
regulations), or if air carriers would not be affected and would be
able to simply continue handling in bonds under only the provisions of
part 122.
CBP Response: The existing air commerce regulations in part 122
will continue to govern the movement of in-bond shipments by air,
except for the maximum in-transit time. Under the existing regulations,
the maximum in-transit time for air cargo transported in-bond is 15
days. Under proposed Sec. Sec. 122.119 and 122.120 the maximum in-
transit time for air cargo transported to another U.S. port is
increased to 30 days. Proposed Sec. 18.0 (Scope; definitions),
provides that except as provided in parts 122 and 123, part 18 sets
forth the requirements and procedures pertaining to the transportation
of merchandise in-bond. Parts 122 (Air Commerce) and 123 (Customs
Relations with Canada and Mexico) govern the rules and procedures for
the transportation of in-bond merchandise, respectively, in the air
environment and in-transit merchandise traveling through the United
States, Canada or Mexico by truck and train. The provisions of part 18
are applicable to the in-bond procedures not specifically addressed in
parts 122 and 123. For example, proposed Sec. 18.8 governing the
liability of in-bond carriers is applicable to all in-bond movements,
regardless of the mode of transportation. Conversely, the provision of
proposed Sec. 18.4(a)(1) requiring the sealing of containers does not
apply to in-bond merchandise traveling by air, because Sec. 122.92(f)
specifically provides that the sealing of aircraft, aircraft
compartments carrying bonded merchandise, or the cording and sealing of
bonded packages carried by the aircraft, is not required.
Comment: With regard to the in-bond application process, air
carriers are aware that ACE provides additional functionality to allow
better visibility to and control of who obligates a carrier's bond.
With the elimination of the 7512 paper form, air carriers will have no
visibility to or ability to control who is obligating their bonds.
Until such time as air is fully transitioned into ACE, CBP must provide
air carriers with the

[[Page 45383]]

capability to view electronic in-bonds opened on their behalf and
control who has the ability to obligate their bonds. One suggestion is
to provide air carriers with the ability to open an ACE account to
allow them the same access to in-bond reports and control tools that
are available to ocean and rail carriers.
CBP Response: When the notice of proposed rulemaking was issued,
the functionality for filing electronic air in-bond applications for
air shipments in ACE did not exist. However, this functionality was
delivered through Air ACE (M2.1) on June 7, 2015. Currently, Air ACE
permits an air carrier to view in-bond reports to see who is obligating
its bonds. Although CBP intends to fully automate the in-bond process,
including in-bond movements by air, changes to the regulations
pertaining to in-bond movements by air will be handled under a separate
rulemaking. Until such time, the 7512 paper form may still be used in
the air environment.
Comment: The proposed changes will force bonded carriers to operate
in multiple CBP-approved electronic systems (ACE, Air AMS, and ABI QP/
WP) when the mode of transportation changes as shipments are
transported. This is a problem for express carriers that currently use
Air AMS to process in-bond shipments. For example, it is common to have
transit shipments arrive into the United States via truck and the
electronic in-bond request submitted at the land border via ACE. The
shipment subsequently departs the United States via air. CBP should
provide status messages between ACE and Air AMS, allowing for the
electronic arrival and exportation of these bonded shipments via AMS
for the proper closure in CBP systems. Without this electronic
interface, the bonded carrier would have no choice but to provide paper
in-bonds to CBP for proper exportation. If CBP does not provide status
updates between EDI systems, the bonded entity will have a tremendous
administrative burden to track all in-bond shipments opened in ACE,
which would require ``manual'' posting in ACE (arrival/exportation).
This issue is further compounded when transportation services are
shared between multiple business units within the same entity.
CBP Response: CBP tracks the in-bond merchandise based on the mode
in which the in-bond application was filed, regardless of what other
modes of transportation are used to transport the in-bond merchandise.
Accordingly, if the in-bond movement starts out in air, it remains an
air in-bond entry for tracking purposes until the in-bond merchandise
arrives at the destination port, port of exportation, or the in-bond is
closed and a new in-bond is initiated in another mode of
transportation. The movement will be tracked according to the new mode
of transportation when a new in-bond number is created as the result of
a new in-bond application.
CBP has established multi-modal electronic procedures within ABI
(QP/WP) that will allow any authorized party to file an in-bond
application electronically regardless of the mode of transportation. QP
is used to initiate the in-bond application and WP is used to arrive/
export the in-bond shipment. As of June 7, 2015, QP/WP can be used for
all in-bond transactions, regardless of mode. This provides tracking of
in-bond transactions between various modes and tracking history within
ACE.
Comment: Air carriers request that CBP clearly define the
requirements and procedures for intermodal in-bond transfers prior to
any implementation of this rule. Currently, other transport modes
provide a CBP Form 7512 with shipments that are moving to an air
carrier, and the air carrier delivers the CBP Form 7512 to CBP at the
port of exportation or destination to close the in-bond. The air
carrier regulations at Sec. Sec. 122.92 and 122.93 specifically state
that form 7512 or ``other Customs approved document'' shall be
delivered to the carrier at the in-bond origin, and the carrier shall
deliver that to the port director at the in-bond destination port. What
will be the process for reconciling ``intermodal-to-air'' in-bonds in
the absence of a 7512 paper form?
CBP Response: QP/WP now can be used for all in-bond transactions,
regardless of mode, and provides tracking of in-bond transactions
between various modes and tracking history within ACE. Whether the
initial in-bond is filed in ocean, rail, truck or air, the in-bond
movement will be tracked by CBP in the mode in which it was opened. In
such case, the in-bond can be closed with an electronic filing upon
arrival at the destination port.
Comment: Air carriers utilize ``unit load devices'' (ULDs) which
are totally dissimilar in structural integrity from an ocean container.
Aircraft also have multiple areas used for transport of cargo, whether
loaded in ULDs or loose. Does CBP consider ULDs and these areas
``compartments'' that might be subject to sealing under the proposed
rule?
CBP Response: The sealing and labeling requirements for in-bond
merchandise transported by air are specified in Sec. Sec. 122.92(f)
and 122.92(g), respectively. Section 122.92(f) does not require the
sealing of aircraft compartments carrying in-bond merchandise, or the
cording and sealing of bonded packages. However, Sec. 122.92(g)
requires bonded packages to be affixed with the label provided for in
proposed Sec. 18.4(b)(3). Therefore, pursuant to Sec. 122.92(f), ULDs
used in aircraft do not have to be sealed. However, in-bond merchandise
inside of ULDs must be labeled pursuant to Sec. 122.92(g), which
requires the affixing of labels as provided for in proposed Sec.
18.4(b)(3).
Comment: Do the timeframes for notifying CBP of arrival contained
in proposed Sec. Sec. 18.1(j) (Report of Arrival), 18.7(a)(1) (Lading
for Exportation, Notice), and 18.20(c) (Entry Procedures), apply to air
cargo moving in-bond via truck to the port of destination, since there
are no arrival timelines provided in Sec. 122.93?
CBP Response: If the movement is an air in-bond movement initiated
under part 122, the notice of arrival procedures contained in Sec.
122.93 are applicable. As of June 7, 2015, air carriers can submit the
notice of arrival electronically in ACE.
Comment: Considering the existence of Sec. 122.94 which places no
restrictions on divided shipments, what is the exact application of the
proposed Sec. 18.24(b) language to air with regard to the submission
of new in-bond applications and time limits for initiation of divided
shipment movements?
CBP Response: Proposed Sec. 18.24(b) does not apply to air
shipments of in-bond merchandise. Sections 122.93 and 122.94 specify
the procedures for exporting air in-bond merchandise, including the
handling of divided shipments at the port of exportation for in-bond
merchandise transported by air.
Comment: CBP should revise existing Sec. 122.92 which allows for
three copies of an air waybill for T&E, because CBP has indicated that
the core intent is to automate the in-bond process.
CBP Response: Although CBP intends to fully automate the in-bond
process, including in-bond movements by air, changes to the regulations
pertaining to in-bond movements by air will be handled under a separate
rulemaking. Until that rulemaking process is completed, Sec. 122.92
applies to in-bond movements by air.

G. Liability of the Parties

Comment: The transfer of bond liability is currently based on
signed paper documents, but it is unclear in a completely automated
environment what ``electronic'' event triggers the transfer of
liability and the obligation of a different bond.
CBP Response: The transfer of liability to a new bonded party will
be

[[Page 45384]]

accomplished by the filing and acceptance of a new in-bond application
for the merchandise to be transported in-bond. CBP is changing proposed
Sec. 18.3 in the final rule to make this clear.
Comment: Throughout the proposed regulations there are references
to ``the bonded carrier'' but it is often unclear which bonded carrier
has the liability for the cargo. As there may be more than one bonded
entity involved in an in-bond movement (e.g., arriving carrier,
delivering carrier, export carrier, FTZ operator), a clear
understanding is required of the events and evidence that would shift
legal liability from one bonded party to another, particularly in an
electronic environment.
CBP Response: For further clarification, CBP is adding a definition
to proposed Sec. 18.0(b) for ``bonded carrier.'' This term is defined
as the carrier whose bond is obligated for the in-bond movement of the
merchandise as shown in the in-bond record. This party is liable for
failure to meet the requirements of Part 18, Part 122 or Part 123 (as
applicable) or any of the other conditions specified in the bond. CBP
is also changing proposed Sec. 18.3 in the final rule to clarify that
in order to transfer liability from one carrier to another, a report of
arrival must be filed for the in-bond merchandise and the subsequent
carrier must submit a new in-bond application pursuant to Sec. 18.1.
Comment: Holding the bonded carrier liable for liquidated damages
for failing to comply with any of the requirements found at Part 18 or
any of the conditions specified in the bond is too broad. This affords
CBP a general license to impose liquidated damages against bonded
carriers for even minor and technical infractions such as unintended
data transmission errors. CBP should assess liquidated damages only for
egregious violations and other violations specifically listed, such as
for irregular delivery.
CBP Response: Liquidated damages are assessed when the conditions
of the bond are violated. One of the conditions is to comply with CBP
regulations relating to the handling of bonded merchandise. See Sec.
113.63(b)(3). CBP primarily ensures compliance with in-bond
requirements, including those that the commenters have categorized as
``minor and technical infractions,'' through the assessment of
liquidated damages. CBP disagrees that it should take action only with
respect to egregious violations. The obligations established by
regulation regarding the processing of in-bond entries and safekeeping
of in-bond merchandise are necessary requirements. A breach of any of
the obligations may result in the assessment of liquidated damages. The
decision to assess any claim is one of administrative discretion, so
CBP may always refrain from issuing a claim if deemed advisable. CBP
may also choose to cancel liquidated damages claims upon payment of a
lesser amount pursuant to 19 U.S.C. 1623(c) and has published
guidelines when CBP deems that such action is appropriate.
Comment: The bonded carrier should not be held liable for the
submission of data elements for which it has no true knowledge of their
accuracy.
CBP Response: The carrier whose bond is obligated is responsible
for the information submitted in conjunction with the in-bond
application and subsequent updates to the in-bond record and is subject
to the assessment of liquidated damages for not complying with the
terms of the bond, which includes adherence to the in-bond regulations.
However, when issuing claims and considering their mitigation, CBP will
consider whether a party reasonably relied on information submitted to
it from a third party.
Comment: The language in proposed Sec. 18.2 should be revised so
that when merchandise is delivered to a bonded common carrier, contract
carrier, freight forwarder or private carrier, the merchandise may be
transported with the use of facilities of other bonded or non-bonded
carriers; however, the responsibility for the merchandise will remain
with the common carrier, contract carrier, freight forwarder or private
carrier whose bond is obligated.
CBP Response: Under proposed Sec. 18.2, merchandise may be
transported with the use of facilities of other bonded or non-bonded
carriers. However, the responsibility for transporting in-bond
merchandise will remain with the party whose bond is obligated.

H. Export of Merchandise

1. Reporting Arrival at Port of Exportation
Comment: The proposed changes to the in-bond process mandate that
the delivering carrier 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 exportation. This represents a substantial
change from the current regulations. Currently, the carrier has ``2
working days after arrival'' to report. The reduction to 24 hours
places a substantial new reporting burden on the carrier, zone
operators, and other parties, that will require additional staff to
work weekends and holidays. The proposed 24-hour requirement should be
changed to two business days.
CBP Response: CBP agrees. As discussed in Section I.B.2. above, CBP
is changing proposed Sec. 18.20 to require the report of arrival be
filed within two business days after arrival. In addition, CBP is
moving the provision setting forth this time limit from Sec. 18.20(c)
to Sec. 18.20(g), as it fits better in the context of paragraph (g).
Comment: How will CBP respond to system down time if ACE is not
available to report the arrival of the in-bond merchandise within 24
hours?
CBP Response: CBP is changing proposed Sec. Sec. 18.1(j),
18.7(a)(1), and 18.20 to provide that the notice of arrival must be
submitted within two business days after arrival. This should generally
provide adequate time in the event of a system outage. In case there is
an outage that prevents compliance with the notice requirements,
carriers will need to contact the port at which the in-bond merchandise
has arrived for instructions on how to submit the required information.
Each outage presents unique circumstances that will be dealt with on a
case-by-case basis according to the port's instructions.
Comment: Proposed Sec. Sec. 18.7(a)(3), 18.20(g), 18.25(f) and
18.26(e) require the bonded carrier to update the in-bond record when
the in-bond merchandise is exported. The proposed language is unclear
as to which bonded carrier must complete this notification. Because
there can be multiple bonded carriers involved in the transport of
merchandise for a single shipment, CBP should clarify the language
regarding the specific bonded carrier that is responsible for this
notification.
CBP Response: After further consideration, CBP is of the view that
for consistency, any of the parties who can amend the in-bond record as
described in proposed Sec. 18.1(h) should be able to update the in-
bond record to reflect that the merchandise has been exported. These
parties include the filer of the in-bond application or any other party
identified in Sec. 18.1(c). Therefore, CBP is changing proposed
Sec. Sec. 18.7(a)(3), 18.20(g), 18.25(f) and 18.26(e) in the final
rule to remove the requirement that the bonded carrier must update the
record and to simply provide that the in-bond record must be updated by
any of the parties identified in 18.1(c) or their agent. However, the
party whose bond is obligated is the party that is responsible for
ensuring the in-bond record is up to date.
2. Proof of Exportation
Comment: For consistency, CBP should provide a detailed list of all

[[Page 45385]]

acceptable forms of proof of exportation. The current CBP practice on
the southern border with Mexico is to require a supervised export and
for CBP to provide the driver with a perforated copy of the CBP Form
7512. This document serves as the proof of exportation. Will CBP create
a new form that can serve as proof of export?
CBP Response: Section 113.55 covers the procedures for cancelling
export bonds and lists the documents that may be used as proof of
export for such purpose. These documents would also be acceptable proof
that in-bond merchandise has been exported. The documents, or their
electronic equivalent, included in Sec. 113.55 are the listing of the
merchandise on the outward manifest or outward bill of lading, the
inspector's certificate of lading, the record of clearance of the
vessel or of the departure of the vehicle, and a foreign landing
certificate if the certificate is required by the port director. CBP
will not create a new form of the perforated CBP Form 7512. These paper
documents would be used in an audit scenario to demonstrate exportation
of the in-bond merchandise.
Comment: Proposed Sec. Sec. 18.7(a)(3), 18.20(g), 18.25(f) and
18.26(e) provide that the principal on any bond filed to guarantee
exportation may be required by the port director to provide evidence of
exportation. However, the language is unclear as to which bond is
obligated especially when there are multiple carriers. Clarification as
to which principal is required to complete this notification,
especially in the circumstance of multiple carriers for a single in-
bond move, should be provided.
CBP Response: The requirement to provide proof of exportation at
the request of the port director resides with the party whose bond was
obligated to complete the in-bond transaction.
Comment: CBP should clarify the meaning and intent of proposed
Sec. 18.26(c) (Transfer at selected port of exportation). It specifies
that if in-bond merchandise is to be transferred to another conveyance
after it has arrived at the port of exportation, the procedures
prescribed in proposed Sec. 18.3(d) will be followed. However,
proposed Sec. 18.3(d) pertains to the ``Transshipment of merchandise
in emergency situations.'' The transfer to another conveyance under
normal course of business is not an ``emergency situation.''
CBP Response: For clarity, CBP is moving the provision covering the
removal of seals from proposed Sec. 18.3(d) (transshipment of
merchandise in emergency situations) to Sec. 18.4(c) (removal and
replacement of seals). The language in proposed Sec. 18.26(c) is being
changed accordingly to reference the procedures for the removal of
seals in Sec. 18.4(c) in this final rule. Regarding the concerns of
the commenter, the placement of the procedures for the removal of seals
under its new heading in Sec. 18.4(c) makes clear that the procedures
do not merely apply in an ``emergency situation.''
Comment: Proposed Sec. 18.23 provides that T&Es may be entered for
consumption, warehouse, FTZ or any other form of entry, and are subject
to all the conditions pertaining to merchandise entered at a port of
first arrival. The options provided are viable for in-bond shipments,
whether or not there is a change of foreign destination or change of
entry. Therefore, this language should apply to all types of entries,
not just T&Es and should be included in proposed Sec. 18.20 (General
Rules), rather than in Sec. 18.23 regarding change of foreign
destination.
CBP Response: Although the commenter's suggestion has some merit,
for consistency and clarity CBP has tried to mirror the format of the
existing regulations when possible and to include substantive
provisions under detailed headings. In this case, the current
regulation that addresses the change of entry for T&Es is Sec. 18.23
(Change of destination; change of entry) and the current regulation
that addresses the change of entry for ITs is Sec. 18.12 (Entry at
port of destination). We are amending Sec. 18.12(a) to specifically
state that merchandise received under an immediate transportation entry
at the port of destination may be entered for consumption,
transportation and exportation, immediate exportation, or for immediate
transportation, or under an FTZ admission. Current Sec. 18.23 also
specifies what happens when T&E merchandise is subject on importation
to quarantine or other restrictions. The proposed regulations maintain
this same format and headings. The statement that T&Es are subject to
all the conditions pertaining to merchandise entered at a port of first
arrival is intended to incorporate and expand on the concept in the
current regulation about merchandise that is subject on importation to
quarantine or other restrictions.

I. Diversion of Merchandise

Comment: Proposed Sec. 18.5(a) requires the party that submitted
the in-bond application to submit a request to divert merchandise via a
CBP-approved EDI system. It further provides that authorization for the
diversion and movement of merchandise will be transmitted via a CBP-
approved EDI system. Approval should be automatic. When the diversion
request is denied, CBP should provide a detailed reason for the denial
within 24 hours of the denial notification.
CBP Response: CBP will notify the filer of the approval immediately
by the updating of the port code in the in-bond record. If the update
of the port code is rejected, that will constitute the denial of the
diversion request. The in-bond record will be updated quickly upon the
denial of the diversion request. Although the filer will not be
notified of the reason for the denial, the filer may contact the port
for such information.
Comment: If a diversion is prohibited, for example, by law or for a
specific control of a commodity or shipment, this could be noted
systemically by CBP at the time of original processing and approval of
the in-bond application. A statement such as ``Diversion Not
Authorized'' could be added to the in-bond record for simple reference
by CBP and the in-bond carrier.
CBP Response: CBP will take this comment under advisement for
future updates to the CBP-approved EDI.
Comment: Express carriers use multiple ports from which to export
in-bond shipments from the United States. Packages shipped in-bond may
be re-routed and diverted to different ports of exportation several
times prior to the actual exportation of the merchandise. As a result,
CBP may receive several diversion requests for one in-bond shipment
prior to exportation. This could place a substantial burden on the
carrier and on CBP's systems. Moreover, due to the large volume and
short timeframes involved, it may not be possible to verify the
accuracy of the requests until the in-bond shipment is physically
exported. Therefore, CBP should accept diversion updates post departure
when the data is most accurate. This would minimize the number of
diversion messages reported to CBP and increase data accuracy.
CBP Response: CBP is requiring authorization to divert in-bond
merchandise because the existing diversion procedures make it
challenging for CBP to identify the destination port of a diverted
shipment and to determine whether the merchandise reaches that
destination. This situation presents a security risk, a risk of
circumvention of other agencies' admissibility requirements, and a risk
that proper duties will not be collected. Acceptance of post-departure
diversion requests would undermine the objectives of the proposed rule.
Diversion requests and updates can be submitted at any time and are not

[[Page 45386]]

limited in number. If the port of exportation for in-transit shipments
changes multiple times, the requests should be submitted for each
change as the change occurs.
Comment: The requirement in proposed Sec. 18.5(a) to obtain
authorization prior to the diversion of in-bond merchandise will reduce
the ability of carriers to arrive merchandise at the destination port
or port of exportation within 30 days. This is especially true if the
diversion request is denied and the carrier has to re-route the in-bond
merchandise.
CBP Response: Approval and denial of diversion requests will be
communicated immediately and should not result in delays long enough to
impede the completion of the in-bond movement within the required in-
transit time. However, an extension of the in-transit time may be
requested when necessary.
Comment: In order to provide guidance to the trade community and to
help CBP review diversion requests, CBP should establish criteria for
granting or denying a diversion request. Some factors CBP should
consider are the carrier's associated costs if the diversion request is
denied, the time constraints associated with denying diversion
requests, and any other constraints associated with the original port
of destination or port of exportation.
CBP Response: Although CBP has the discretion to deny a request for
diversion, CBP will generally grant a reasonable diversion requests.
For example, CBP will deny a request for a diversion when another
government agency mandates delivery of the merchandise to the
destination identified in the original filing. CBP is revising Sec.
18.5 to incorporate this example.

J. Immediate Transportation

Comment: With respect to the filing of an IT in-bond application,
proposed Sec. 18.11(a)(2) requires the importer to 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, before permission will be
granted by CBP to transport the merchandise in-bond. There is concern
about having the bonded carrier stipulate that the importer will timely
file an entry and comply with other regulations since this is outside
of the bonded carrier's control. It is also unclear how a stipulation
to file entry is to be included on the in-bond application upon
submission to CBP. In an effort to continue to transition to an
electronic environment, if an actual stipulation is required,
provisions for including this declaration in the electronic in-bond
application should be available.
CBP Response: To address these concerns, CBP is removing Sec.
18.11(a)(2) from the final rule and adding the requirement that the in-
bond merchandise be transported to a place outside the port of entry in
accordance with the provisions of Sec. Sec. 151.7 and 151.9 of this
Chapter.

K. Divided Shipments and Retention of Goods Within Port Limits

1. Divided Shipments
Comment: Is CBP requiring the bonded carrier to request
authorization for a split shipment in advance of the shipment movement?
If so, when must the request be submitted? In most cases, the bonded
carrier will not be aware of a split movement until the initial
conveyance has departed. The split movement will not be known until a
portion of the shipment has in fact been exported, departed the port of
unlading or has arrived at the destination port.
CBP Response: Proposed Sec. 18.5(c) only covers situations where a
carrier diverts an in-bond shipment to more than one port, or where a
portion of an in-bond shipment is approved for a consumption or
warehouse entry. In such cases, a diversion request is necessary. If
granted, a new in-bond application must be submitted for each portion
of the original shipment to be transported in-bond. CBP is changing
proposed Sec. 18.3 in the final rule regarding transfer to eliminate
the requirement to obtain CBP authorization when in-bond merchandise is
transported on more than one conveyance, but arrives at the same
destination port or port of exportation. Also, for clarity, CBP will
use the term ``divided shipment'' in this final rule instead of ``split
shipment'' to refer to the situation where a carrier diverts an in-bond
shipment to more than one port or to a consumption or warehouse entry.
CBP used the term ``split shipment'' in the proposed rule to refer to
the division of an in-bond shipment. However, the term ``split
shipments'' refers specifically to the treatment of multiple entries of
merchandise as a single transaction pursuant to 19 U.S.C. 1484(j) and
19 CFR 141.57 and 141.58.
Comment: The requirement in proposed Sec. 18.5(c) to initiate a
new in-bond for each [divided] shipment will be difficult for express
carriers to comply with because of the large number of in-bond
shipments that they move through the United States. CBP should consider
allowing the carrier or agent to submit the [divided] shipment
information after departure, when the information is most accurate.
This process will provide CBP the most accurate up to date export or
arrival information which will assist CBP with the electronic
reconciliation of the in-bond record.
CBP Response: CBP is requiring the filing of a new in-bond
application for in-bond shipments that will be diverted to more than
one port to enable CBP to identify in advance the destination of a
diverted shipment and to determine whether the merchandise reaches that
destination. This procedure will also ensure that other agencies'
admissibility requirements are not circumvented and that proper duties
are collected. CBP appreciates that this process may impose a burden on
express carriers and CBP will seek ways to mitigate this burden.
Comment: CBP should automate the ASN3 (in-bond arrival message set
for Air AMS) and ASN7 (in-bond export message set for Air AMS) messages
to allow for piece count and export port identifier to properly track
the [divided] shipment. This will provide CBP updated movement
information, including ports of departure.
CBP Response: CBP has incorporated these automation features in Air
ACE, which has replaced Air AMS and is now operational.
Comment: CBP's requirement in proposed Sec. 18.24(b) that all
movements of a [divided] shipment be initiated within two days after
the [division] has been authorized is not feasible for various reasons.
First, the conveyance must be secured and loaded and normal delivery
hours and schedules at the port can limit the amount of loading that
can be accomplished in a two-day period. Second, in many cases, a
bonded carrier may have limited conveyances for specific export
destinations or ports. Third, it may be impossible to close a [divided]
shipment within two days when multiple modes are utilized (combination
of truck and air). Finally, some shipments are more time consuming and
require special handling.
CBP Response: CBP agrees that it may not be feasible to initiate
movement of divided shipments within two days of the day CBP authorized
the divided shipment. CBP is removing this requirement in the final
rule.

2. Retention of Goods Within Port Limits

Comment: Proposed Sec. 18.24(a), which allows for the retention of
goods within

[[Page 45387]]

the port limits for up to 90 days with CBP approval, should be
clarified as follows: (1) To indicate that retention as described is at
the port of exportation and (2) to specify how the application to
retain the goods at the port of exportation for up to 90 days should be
made. Is the purpose of requiring the filing of an Immediate
Exportation (IE) entry to close the original Transportation and
Exportation (T&E) entry to shift liability for the in-bond cargo?
CBP Response: CBP is changing proposed Sec. 18.24(a) in the final
rule to clarify that the retention of goods applies to the port of
exportation. The application to retain the merchandise at the port of
exportation must be made, and approval will be given, via a CBP
approved EDI. The purpose of filing an IE is to close out the original
T&E. The party whose bond is obligated on the IE will be the party who
is responsible for the export of the merchandise. However, the party
obligated on the original T&E remains obligated for the shipment unless
and until an IE is filed.

M. Potential Impact

Comment: One commenter estimated that the new data, reporting, and
monitoring requirements of the proposed rule will increase costs for
in-bond carriers in a number of ways. The commenter claims that
requiring carriers to report the HTSUS number and changing the
requirement from having to file the final foreign destination to having
to file the ultimate destination will increase costs by an estimated 5
percent and 1 percent, respectively, and requiring carriers to notify
CBP of a change in the final foreign destination will increase costs by
an additional 5 percent. The commenter further states that carriers
will see significant cost increases due to the shortened transit time,
the requirement to request extensions when in-bond cargo cannot reach
the ultimate destination within the required time, and the ability of
government agencies to shorten, with notice, the required transit time.
Lastly, the commenter notes that the requirement to receive
authorization to transport and/or divert restricted merchandise from
the government agencies responsible for regulating the restricted
merchandise will also increase costs significantly.
CBP Response: CBP has taken these cost estimates submitted by the
commenter under advisement when finalizing this rule. However, because
CBP received comments on the cost impacts of this rule from only one
party and this commenter does not provide specific data concerning the
nature of the cost impacts, we are unable to extrapolate the estimates
to the entire universe of carriers. CBP believes that the above changes
to the in-bond requirements are necessary for the security of the
United States, for protection of the revenue and to ensure that
merchandise admissibility is not compromised. However, whenever
possible, CBP has made changes to lessen the burden and costs to the
public in response to various comments. For example, in response to
concerns that in-bond shipments transported by barge may not be able to
arrive at the destination port or port of exportation within 30 days,
CBP changed proposed Sec. 18.1(i)(1) to allow 60 days for the arrival
of in-bond merchandise transported by barge. For a full discussion of
the costs and benefits of this regulation, see Section IV., Regulatory
Analysis.

N. Miscellaneous Items

1. Impact on Inland Ports
Comment: Has CBP taken into consideration the impact the changes
this rule will have on inland ports of entry and the clearance process?
As shippers examine the impact of the proposed changes on their
business and determine that the in-bond process has become too onerous
and burdensome, they may look to change their business practices and
stop transporting merchandise in-bond. This could impact staffing
levels at inland ports that were once needed to process consumption
entries for in-bond merchandise.
CBP Response: The new electronic in-bond processing should
facilitate the use of in-bond procedures. Although concerns have been
raised about some of the requirements contained within the proposal
(many of which CBP is addressing by not adopting various proposed
provisions in this final rule), CBP has received no other comments
indicating that shippers will stop using the in-bond program.
2. Supervision of Rail Shipments
Comment: To maximize space and weight used on a rail car, importers
may preload a railcar and provide the carrier the load sheet details.
The carrier then transmits the exact load per rail car to CBP. Once the
in-bond submission is accepted by CBP the rail car dispatches. Will CBP
advise the carrier prior to loading and in-bond transmission if
supervision is required?
CBP Response: If supervision is required, CBP will notify the
carrier prior to acceptance of the in-bond application.
3. Textiles
Comment: The textile provision in proposed Sec. 18.1(d)(1)(iv)
goes far beyond the requirements of a carrier moving commodities from
origin to destination, regardless of crossing borders. This provision,
which is specific to legislation dating back over 60 years, pertains to
admissibility and not transport. More fundamentally, reference to the
Agricultural Act of 1954 is in essence reference to quantitative
restrictions, i.e. quotas, which are now eliminated for textile and
apparel items from most origin countries. Consequently, this
requirement is applicable for only a small minority of imported textile
and apparel items, and therefore unduly burdensome. Moreover, this
provision requires information that is not readily available to
carriers and in such detail that carriers cannot comply with the
provision without the assistance of a customs broker.
CBP Response: The proposed requirements mandating the in-bond filer
to provide sufficient detail for certain textile items so that the port
director can determine the duties and taxes are in the existing
regulations at Sec. 18.11(e), pertaining to IT shipments. These
requirements have not posed problems for carriers in the past. The
proposed regulations did expand the application of these requirements
by making them also applicable to IE and T&E shipments. In order to
minimize the burden on the trade and to make it consistent with the
existing regulations, CBP is removing this requirement from proposed
Sec. 18.1(d)(1)(iv) and moving it to Sec. 18.11(d) so that it is only
applicable to IT in-bond shipments as is currently the case.
4. Cartmen
Comment: Proposed Sec. 18.1(d)(3) provides that the in-bond
application can be filed at any time prior to the merchandise departing
the in-bond origination port. In the past, CBP required authorization
for the movement of the cargo from the importing carrier/terminal to
the bonded carrier by bonded cartmen within the port limits and,
indeed, the CBP Form 7512 document was integral to this process. CBP
should clarify (1) whether bonded cartmen will be subject to this new
requirement, and (2) CBP's plans and programming changes for bonded
cartmen reporting requirements relating to such delivery from the
importing to bonded carrier within the origination port limits.
CBP Response: A permit to transfer is still required in order to
move the

[[Page 45388]]

merchandise from the importing carrier or terminal to the bonded
carrier moving the merchandise in-bond. This rule does not change that
requirement or the timing of such requirement. CBP is making
programming changes to facilitate the reporting requirements for bonded
cartmen. Appropriate regulatory changes will be made in the future.
5. Carnets
Comment: CBP should clarify the numerous references to carnets
throughout CBP's proposed changes to the in-bond process. This NPRM is
not intended to include the ATA (Admission Temporaire--Temporary
Admission) and Tecro/AIT \2\ carnet as they are not considered ``in-
bond'' entries. Accordingly, CBP should remove any reference to ATA and
Tecro/AIT carnets, as well as any generic references to carnets. At
present, the ATA and Tecro/AIT entries are handled by entering the data
manually and CBP should work with the trade to ensure that ACE and/or
ACS can accommodate the tens of thousands of ATA and Tecro/AIT entries
per year.
---------------------------------------------------------------------------

\2\ ``TECRO/AIT carnet'' means the document issued pursuant to
the Bilateral Agreement between the Taipei Economic and Cultural
Representative Office (TECRO) and the American Institute in Taiwan
(AIT) to cover the temporary admission of goods. 19 CFR 114.1(g).
---------------------------------------------------------------------------

CBP Response: This rule does not change the regulations as they
relate to ATA and Tecro/AIT carnets either substantively or where they
are codified.
6. Sharing of Information and Confidentiality
Comment: The proposed rule does not promote or maintain the
confidentiality of the shipper's or importer's commercial information.
While it is true that entry information transmitted to CBP by a customs
broker is exempt from disclosure, it is equally true that manifest
information filed by carriers is routinely accessed under the Freedom
of Information Act by various commercial enterprises. Unless CBP
recognizes in-bond entries as ``customs business'' and restricts the
transmission of this information to licensed customs brokers, it must
be anticipated that carriers and transportation intermediaries will
seek to streamline their processes and require that this information be
included on the existing shipping documentation which their staffs are
accustomed to handling. This will further expose shipper's or
importer's confidential business information to dissemination within
the supply chain without a concurrent trade benefit. CBP needs to
develop a mechanism to keep this sensitive commercial information
private or restrict its transmission to those parties who are required
by statute to safeguard their client's commercial information, i.e.,
customs brokers.
CBP Response: The filing of an in-bond application does not
constitute customs business requiring a licensed broker and CBP does
not believe that CBP needs to mandate the use of customs brokers in
order to safeguard sensitive commercial information. CBP has modified
the proposed regulations to require less detailed information in the
in-bond application (e.g., removing proposed Sec. 18.1(d)(1)(v)
requiring other identifying information and removing the requirement to
provide the rule, regulation, law, standard or ban relating to health,
safety or conservation in proposed Sec. 18.1(d)(1)(ii)). As a result,
carriers will not have to include entry information on shipping
documentation. Existing protections of confidential business
information under Sec. 103.35 would apply to any covered confidential
information on the in-bond application. The release of manifest
information is covered by Sec. 103.31. It provides the procedures for
protecting manifest information from release and allows importers,
consignees and shippers to claim confidential treatment for this
information.
Comment: Clarification should be provided regarding the utilization
of the information required in the in-bond application, as well as CBPs
proposed methodology to validate, store, maintain, and disseminate,
this information.
CBP Response: The information provided on the in-bond application
will be used for targeting and enforcement purposes, to prevent
smuggling and fraud, and for security purposes. The information will
also be used to track and close the in-bond shipment. For information
on the maintenance and dissemination of this information see the
following Systems of Records Notices (SORNs). The SORN for ACE is
available at: http://www.gpo.gov/fdsys/pkg/FR-2006-01-19/html/E6-511.htm and was published in the Federal Register on January 19, 2006
(71 FR 3109). ABI is covered by the ACS SORN, which is available at:
http://www.gpo.gov/fdsys/pkg/FR-2008-12-19/html/E8-29801.htm and was
published in the Federal Register on December 19, 2008 (73 FR 77759).
Comment: Electronic in-bond filing and tracking of shipments,
combined with the additional data CBP will collect on these shipments,
will provide an effective and business-friendly means to combat the
problem of fraudulent paperwork to claim NAFTA benefits so long as the
in-bond information can be shared with Mexico when the goods are
shipped from the United States.
CBP Response: This rule does not affect information sharing with
Mexico. CBP will continue its current procedures and policies for
sharing information with Mexico pursuant to existing agreements.
7. Definitions
Comment: Terms commonly used in the proposed regulations, such as
conveyance, containerized shipments, compartments, carloads, cartman,
delivering carrier, lighterman, port cluster, import carrier, export
carrier, transshipment and ultimate destination, should be defined to
establish uniformity in application and meaning within the regulations.
CBP Response: CBP does not believe it is necessary to define all
the terms used in the proposed regulations. CBP has defined the terms
which are essential to the proper and uniform application of the in-
bond regulations. These include Common carrier, Origination port, Port
of destination, Port of diversion, and Port of exportation as set forth
in proposed Sec. 18.0, and Bonded carrier, which CBP is adding.
Comment: The proposed regulations define port of destination as 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. We believe the text should be revised to include
other possibilities, such as admission to a foreign-trade zone and more
than one movement under more than one bond.
CBP Response: CBP agrees that various provisions of the proposed
in-bond regulations should apply to goods admitted to a foreign-trade
zone and is changing various sections in Part 18 in the final rule
(Sec. Sec. 18.20(e), 18.23(b), and 18.25(b)) to add a reference to
admission into a foreign trade zone. In view of these changes, there is
no need to revise the definition of ``port of destination.'' This
approach provides CBP with flexibility and allows CBP to accurately
describe the requirements and procedures under specific provisions.
8. Restriction of IE by Truck
Comment: Does proposed Sec. 18.25(b) provide the port director
with the discretion to allow the filing of the IE entry? If the port
director does not have this discretion, this proposal would pose a
hardship for some Canadian business located on the Canadian border

[[Page 45389]]

and on importers who participate in maquiladora operations in Mexico.
CBP Response: CBP recognizes that there may be legitimate purposes
for the filing of an IE entry and is changing proposed Sec. 18.25(b)
to state that trucks ``may'' be denied a permit to proceed. This will
provide the port director with discretion regarding whether to allow
this process. The port director will make his or her determination on a
case-by-case basis.
9. Express Shipments
Comment: Proposed Sec. 18.22 is confusing. Although the heading
refers to ``Transfer and express shipment procedures at port of
exportation,'' paragraph (a) does not appear to cover express shipment
procedures. Also, paragraph (a) states that if in-bond merchandise must
be transferred to another conveyance, the procedure will be as
prescribed in proposed Sec. 18.3(d); however, proposed Sec. 18.3(d)
covers the transshipment of merchandise in emergency situations. CBP
must define ``express shipment'' and clarify the meaning and intent of
Sec. 18.3.
CBP Response: CBP agrees that these provisions are confusing and is
making various changes to address this issue. First, CBP is
incorporating the title of Sec. 18.22 in the existing regulations,
``[p]rocedures at port of exportation,'' and using the term
``exportation'' instead of ``exit.'' Second, CBP is changing proposed
Sec. 18.3(d) in the final rule by removing the provision for the
removal of seals in emergency situations and changing proposed Sec.
18.4(c) to cover the removal of seals in all situations. Concurrent
with these changes, CBP is changing proposed Sec. 18.22(a) in the
final rule to refer to Sec. Sec. 18.3 and 18.4(c) for the procedures
to be followed when bonded merchandise is transferred to another
conveyance. Finally, in order to clarify what is meant by ``express
carrier,'' CBP is changing proposed Sec. 18.22(b) by removing the term
``express company'' and replacing it with the term ``express
consignment carrier,'' which is defined in Sec. 128.1(a) of the
current regulations.
10. Automated Broker Interface (ABI)
Comment: Proposed Sec. 143.1 specifies that 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). We note that the application for a transfer of an in-bond
movement, which is currently included, has been omitted from this
section. However, our interpretation is that this is the language
authorizing the utilization of ABI by any party outside of the
designation of customs broker, importer, or service bureau. CBP should
preserve the current language so that it includes the filing of the in-
bond application via ABI.
CBP Response: CBP agrees and is changing proposed Sec. 143.1 to
include the ``filing of an in-bond application'' as one of the purposes
for which parties may use ABI.
11. Foreign-Trade Zones (FTZs)
Comment: CBP received many comments regarding the processing and
handling of FTZ merchandise pursuant to part 146. These comments
addressed many substantive issues pertaining to FTZs and the procedures
for the admission into and processing of merchandise in FTZs.
CBP Response: CBP only proposed amending part 146 to make
conforming changes to the proposed in-bond regulations and not to
substantively alter the general procedures that apply for the admission
into FTZs and the processing of FTZ merchandise. Specifically, CBP
removed the references to the ``CBP Form 7512'' and replaced it with
``in-bond application.'' Therefore, comments recommending substantive
changes to the CBP regulations on FTZ processing are outside the scope
of this rulemaking and will not be addressed.
Comment: It is unclear in the proposed regulations what event
triggers the relief or transfer of liability from the bond of the
carrier. In a FTZ direct delivery authorized environment, filing of an
admission is not required prior to delivery of the goods.
CBP Response: The actual admission of the merchandise into the FTZ
satisfies the carrier's in-bond obligation.
Comment: CBP should preserve the use of the CBP Form 7512 for FTZ
admissions until an automated solution can be developed.
CBP Response: The processes for admitting and withdrawing
merchandise from FTZs for purposes of filing in-bond movements is fully
automated using QP/WP.
Comment: Proposed Sec. 146.67 provides for the transfer of
merchandise from a FTZ for exportation. Paragraph (b) states that
``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 . . .'' This section should state that only the owner/operator
acting for their own account or a licensed customs broker is eligible
to file such an entry with CBP.
CBP Response: CBP disagrees. The parties authorized to file the in-
bond application should be the same, regardless of whether the
merchandize is in a FTZ.
12. Importer Security Filing (ISF)
Comment: The six-digit HTSUS code is required to be provided, if
available, pursuant to proposed Sec. 18.1(d)(1)(i), and is also
required to be transmitted to CBP 24 hours prior to lading in order to
satisfy importer security filing (ISF) requirements. CBP should
eliminate the requirement to re-transmit this data element as part of
the in-bond application since it is already resident within CBP's
system.
CBP Response: One of the purposes of the in-bond regulations is to
ensure that in-bond merchandise is properly transported in-bond before
being entered or exported. The information CBP receives on the ISF is
not sufficient for proper tracking and enforcement of in-bond
requirements. First, ISF data is required only for merchandise arriving
in the United States by vessel and not for merchandise arriving in the
United States by rail or truck, which are also covered by this rule.
Second, pursuant to Sec. 343(a)(3)(F) of the Trade Act of 2002, as
amended (19 U.S.C. 2071 note), CBP can only use ISF data for limited
purposes, i.e., for ensuring cargo safety and security, preventing
smuggling, and commercial risk assessment targeting. Accordingly, CBP
requires the six-digit HTSUS number as part of the in-bond application.
Comment: CBP should restrict the in-bond information requirements
to those additional data elements that are not already required to be
submitted as part of the advance manifest. Duplicative transmission of
data elements will only add to the cost of importing without yielding
any security or commercial benefits.
CBP Response: If the carrier electronically files both the advance
manifest information and the in-bond application, the carrier would not
need to provide duplicative information. Only those few additional data
elements that were not provided with the advance manifest information
would need to be submitted to satisfy the in-bond application
requirements. Only in the instance where the manifest is filed by the
carrier and the broker (or other party) files a QP movement on behalf
of the carrier would there be duplicative information. Carriers will
not have to file duplicative data elements, if they have already filed
advance manifest information.
Comment: CBP should clarify procedures in case of over-carried
merchandise (i.e., merchandise that was shipped, but not included on
the

[[Page 45390]]

manifest or bill of lading) for which no advance manifest and ISF were
filed. If over-carried cargo is to be re-exported, will CBP authorize
an in-bond without an advance manifest and ISF?
CBP Response: CBP will authorize an in-bond transaction to re-
export overcarried merchandise for which no advance manifest and ISF
were filed. Before filing the in-bond application, a bill of lading
would have to be created in ACE to create the in-bond record. However,
any applicable penalties for the overcarried merchandise would apply.
13. Redelivery
Comment: The requirement in proposed Sec. 18.6(c) that CBP must
demand return of the merchandise to CBP custody (no later than 30 days
after the shortage, delivery, or nondelivery is discovered by CBP) is
not realistic. Lean manufacturing and distribution principles
incorporated in the mainstream activities for companies in today's
just-in-time environment can drive the necessity for immediate response
and action for merchandise being received at facilities daily. Often
merchandise received at facilities before noon is introduced into
manufacturing processes or distribution activities before close of
business on the same day. This rapid movement and processing of cargo
results in the inability to redeliver cargo, intact or otherwise,
within 30 days from date of mailing, date of delivery, or demand for
redelivery by CBP.
CBP Response: The proposed rule is consistent with existing
requirements regarding the redelivery of merchandise in Sec. 113.63(d)
and current Sec. 18.6(b). The 30-day timeframe for CBP to demand
redelivery is necessary in order to allow CBP to verify the violation
leading to the demand for redelivery and to allow sufficient time to
process the demand for redelivery. CBP is aware that merchandise may
enter the stream of commerce and will strive to process demands for
redelivery as quickly as possible.
Comment: CBP should accept proof of the final disposition of the
in-bond entry as full satisfaction of a demand for redelivery when a
redelivery is requested after the in-bond transaction has completed.
For example, if merchandise was exported prior to a demand for
redelivery, then proof of export should satisfy the demand for
redelivery without any penalty or liquidated damages for failure to
redeliver. Similarly, if merchandise is entered for consumption prior
to the request for redelivery then the consumption entry should satisfy
the demand for redelivery without any penalty or liquidated damages for
failure to redeliver. The bonded carrier is still responsible for the
initial violation of the irregular delivery and liquidated damages is
the appropriate way to penalize the bonded carrier instead of requiring
redelivery of merchandise that has already been exported. In addition,
language should be included allowing the acceptance of a foreign-trade
zone admission for the full manifested quantity, unless a lesser amount
is reported. Admission and validation by a FTZ Operator should satisfy
the demand for redelivery of merchandise for shipments in which a
shortage has been noted.
CBP Response: The fact that merchandise was exported or entered for
consumption prior to receipt of a demand for redelivery does not
necessarily mean that liquidated damages are inappropriate. CBP
considers whether the information provided satisfies a demand for
redelivery and whether the assessment of liquidated damages is
appropriate taking into account the facts and circumstance of each
individual case.
Comment: Will the redelivery be limited to the quantity of a
shortage, i.e., the quantity not delivered, or will CBP have the
authority to demand redelivery of all merchandise covered under that
in-bond entry? The demand for redelivery should be limited to the
merchandise involved in the violation. Once the merchandise is
exported, the bonded carrier will have little, if any, ability to
ensure that the merchandise is redelivered.
CBP Response: CBP has authority to demand redelivery of all the
merchandise covered by an in-bond entry. However, CBP will determine
which merchandise to include in a demand for redelivery on a case-by-
case basis, taking into account the factors warranting the demand.
Comment: In case of a shortage, will the importer or broker be able
to add the in-bond number covering the short shipped pieces to the same
CBP Form 3461 or will a new entry have to be filed?
CBP Response: The importer/broker can note the change on the CBP
Form 3461 (Entry/Immediate Delivery) or the CBP Form 7501 (Entry
Summary), or via a post summary correction if the entry summary has
already been filed.
Comment: It is not clear what CBP means by a ``short shipment'' in
proposed Sec. 18.6(a). Does it mean that a portion of the shipment
covered by the original in-bond application did not arrive with the
rest of the shipment? If so, short shipments would occur for routine
multiple container in-bond shipments that cannot be shipped on a single
truck or rail car.
CBP Response: A short shipment means that a portion of the shipment
covered by the in-bond application did not arrive at the port of
destination or port of exportation. If the merchandise is transported
in multiple conveyances, then the shipment can arrive at separate times
without resulting in a short shipment. Typically, a short shipment
would occur when a portion of an in-bond movement fails to arrive at
the in-bond destination within the in-transit period.
14. Pipelines
Comment: Currently many in-bond pipeline movements are filed via
the QP/WP electronic filing system. Will electronic reporting for
pipelines still be allowed? Will the weekly in-bond processes that are
currently utilized for pipeline in-bond still be allowed under the new
rules? Do the various compliance requirements contained in the NPRM as
part of the move to electronic processing of in-bond movements apply to
pipeline movements even though in-bond applications for pipeline
shipments are not required to be submitted electronically?
CBP Response: The amendments to the in-bond regulations will not
affect the current procedures for in-bond shipments moving via
pipeline. Nothing in this rule changes the current procedures and
systems that are utilized for in-bond pipeline movements. For example,
the in-transit time limits in this rule do not apply to in-bond
pipeline movements; CBP is adding a sentence to proposed Sec.
18.1(i)(1) to clarify this. Although the requirements that are related
to the electronic filing of an in-bond application do not apply to
pipeline movement, carriers can choose to submit electronic in-bond
applications and subsequent updates for pipeline in-bond movements
using QP.

III. Adoption of Proposal

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

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

[[Page 45391]]

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 EO 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.'' \3\ The U.S. Small Business
Administration (SBA) provides guidelines on the analytical process to
assess the impact of a particular rulemaking.\4\ The following summary
presents the impact of this rule on small entities.\5\
---------------------------------------------------------------------------

\3\ Regulatory Flexibility Act as amended by the Small Business
Regulatory Enforcement Fairness Act, 5 U.S.C. 601 et seq.
\4\ 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.
\5\ The complete ``Regulatory Flexibility Analysis and RFA'' 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, third-party logistics providers,
(3PLs), and container freight stations (CFSs)) involved in the
transaction filing, conveyance, and arrivals reporting of in-bond
goods. When finalizing a rule, if CBP is still unable to certify that a
rule will not have a significant impact on a substantial number of
small entities, after conducting an initial screening analysis and an
Initial Regulatory Flexibility Analysis (IRFA), CBP is required to
conduct a Final Regulatory Flexibility Analysis (FRFA).
Based on FY2007 in-bond shipment data, we estimate at least 6,230
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.

Exhibit 1--Relative Costs of Regulatory Alternatives
------------------------------------------------------------------------
Regulatory alternative Requirements Relative cost
------------------------------------------------------------------------
1 (Chosen alternative)..... All of these five Highest:
requirements are Reason for high
implemented: cost: Entities
1. File all in-bond filing in-bond
application forms forms and/or
electronically.. reporting in-bond
2. Additional in-bond arrivals by paper
shipment data and only (582 non-air
information required. carriers plus an
3. Maximum in-bond unknown number of
transit time of 30 other filers) would
days.. have to obtain
4. Request and electronic access
receive permission to CBP or retain a
electronically prior third party agent
to diverting in-bond or service
cargo.. provider. All
5. Report in-bond entities (5,081 non-
arrivals and arrival air carriers plus
locations an unknown number
electronically.. of 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
other filers) would
have to reprogram
their existing
business and
information systems
and processes or
use a third party
service provider to
electronically
report arrival
locations.
2.......................... Only the following Lower:
four requirements Costs are lower than
are implemented: Alternative #1
1. File all in-bond because the costs
application forms associated with
electronically.. obtaining and
2. Maximum in-bond providing the
transit time of 30 additional in-bond
days.. shipment data and
3. Request and information would
receive permission not be incurred,
electronically prior which could be
to diverting in-bond significant for the
cargo.. most frequent
4. Report in-bond filers. However,
arrivals and arrival overall costs could
locations still be
electronically.. significant to
comply with the
requirement of
reporting arrival
locations.

[[Page 45392]]

3.......................... Only the following Lowest:
three requirements Costs are lowest of
are implemented: the three
1. File all in-bond regulatory
application forms alternatives
electronically.. because only a
2. Maximum in-bond relatively small
transit time of 30 number of entities
days.. that currently file
3. Request and in-bond forms by
receive permission paper only (537 non-
electronically prior air carriers plus
to diverting in-bond an unknown number
cargo.. of 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.\6\ However, we do not have this information, as well as
information identifying all of the entities that may be affected.\7\
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. 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 final rule
are small. CBP concludes, therefore, that a substantial number of small
entities are likely to be affected by the final rule. CBP has
characterized but cannot estimate the potential costs to entities of
complying with the final rule. 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.
---------------------------------------------------------------------------

\6\ U.S. SBA, Summary of Size Standards by Industry, as viewed
at http://www.sba.gov/contractingopportunities/officials/size/summaryofssi/index.html on January 14, 2013. http://www.sba.gov/contractingopportunities/officials/size/summaryofssi/index.html on
July 28, 2010.
\7\ We only have limited data on 5,081 unique non-air carriers,
which comprise at most about 82 percent of all affected entities.
---------------------------------------------------------------------------

Following the initial screening analysis, CBP published an IRFA, in
accordance to Section 603 of the RFA/SBREFA, for the proposed rule on
July 11, 2012.\8\ For the final rule, in accordance to Section 604 of
the RFA/SBREFA, CBP has conducted a FRFA that is being published
concurrently with the final rule and is available in the docket of this
rulemaking.\9\ The following summary of the FRFA presents the impact of
this rule on small entities.
---------------------------------------------------------------------------

\8\ The complete IRFA can be found by searching
www.regulations.gov for the docket number USCBP-2012-0002-0052.
\9\ The complete FRFA Final Regulatory Flexibility Act analysis
can be found in the docket for this rulemaking: http://www.regulations.gov.
---------------------------------------------------------------------------

The objective of the rule 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.
Although CBP did not receive any public comments specifically
addressing the IRFA or the impacts to small entities, one commenter
estimated that the new data, reporting, and monitoring requirements of
the proposed rule will increase costs for in-bond carriers in a number
of ways. In finalizing the proposed rule, CBP took these cost estimates
under advisement and has made changes to the rule to lessen the burden
and costs to the public in response to various comments. See Section
II.M., Potential Impact, of this document and in the complete FRFA for
more information about this comment and CBP's response.
The Chief Counsel for the Advocacy of the Small Business
Administration did not provide any comments on the IRFA for the
proposed rule.
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. Based on FY2007 in-bond shipment data, we estimate at least
6,230 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 940 other entities (e.g.,
freight forwarders, cargo consolidators, 3PLs, brokers, and CFS). 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.
Exhibit 1 above lists the regulatory alternatives CBP analyzed in
the IRFA; including those that minimized the incremental cost burden to
carriers, brokers, and agents, including small entities. CBP was not,
however, able to 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. However, in
finalizing this rule, as detailed above and in the complete FRFA
contained in the docket, CBP has made changes to the proposed rule,
based on public comments that lower costs for entities affected by this
rule, including small entities.\10\
---------------------------------------------------------------------------

\10\ As discussed in the complete FRFA, not all costs could be
quantified. As such, CBP is unable to quantify the cost savings due
to the changes made from the proposed rule.
---------------------------------------------------------------------------

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 rule is
necessary for national security and is exempt from these requirements
under 2 U.S.C. 1503

[[Page 45393]]

(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.''
\11\
---------------------------------------------------------------------------

\11\ ``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 final rule
are included in an existing collection for CBP Form 7512 (Office of
Management and Budget (OMB) control number 1651-0003). An agency may
not conduct or sponsor, 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 flexibility
analysis above.

V. Signing Authority

This 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.

VI. 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.

Amendments to the Regulation

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

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

0
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.
* * * * *

0
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.

0
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.

0
4. In Sec. 10.60, revise paragraphs (a), (d), and (f) 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

[[Page 45394]]

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 section 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.
* * * * *
(f) Unless transfer is permitted under the provisions of paragraph
(h) of this section, when articles are withdrawn from continuous
Customs custody elsewhere than in a bonded warehouse for lading at the
port of withdrawal, the procedure provided for in Sec. 18.25 of this
chapter shall be followed. Unless transfer is permitted under the
provisions of paragraph (h) of this section, when articles are
withdrawn from continuous Customs custody elsewhere than in a bonded
warehouse for lading at another port, the procedure set forth in Sec.
18.26 of this chapter shall be followed. There shall be such
examination of the articles as may be necessary to satisfy the port
director that they are subject to the privileges of section 309, Tariff
Act of 1930, as amended, and that the value and quantity declared for
them are correct.
* * * * *

0
5. Revise Sec. 10.61 to read as follows:

Sec. 10.61 Withdrawal permit.

Upon the filing of the withdrawal and the execution of the bond,
when required, the port director shall issue a permit on CBP Form 7501
or in-bond application.

PART 12--SPECIAL CLASSES OF MERCHANDISE

0
6. 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.

0
7. 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.

0
8. 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.

0
9. 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 Transfers.
18.4 Sealing conveyances, compartments, and containers.
18.5 Diversion.
18.6 Short shipments; shortages; entry and allowance.
18.7 Lading for exportation; notice and proof of 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 Procedure at port of exportation.
18.23 Change of port of exportation or first foreign port; change of
entry.
18.24 Retention of goods within port limits; dividing 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 CBP 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 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 (Air commerce) and 123
(CBP relations with Canada and Mexico) of this chapter, this part sets
forth the requirements and procedures pertaining to the transportation
of merchandise in-bond, as authorized by Sec. Sec. 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

[[Page 45395]]

definition is prescribed for a particular part or portion thereof:
Bonded carrier. ``Bonded carrier'' means a carrier of merchandise
whose bond under Sec. 113.63 of this chapter is obligated for the
transportation and delivery of merchandise.
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 at which
the transportation of merchandise in-bond commences.
Port of destination. ``Port of destination'' is the U.S. port at
which merchandise is delivered 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 exportation.
Port of exportation. ``Port of exportation'' is the U.S. port at
which in-bond merchandise entered for transportation and exportation or
for immediate exportation is delivered for exportation from the United
States.

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

(a) General requirement. In order to transport merchandise in-bond
(transport imported merchandise, secured by a bond, from one port to
another prior to the appraisement of the merchandise and without the
payment of duties), 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) of this section 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 withdrawal for immediate transportation.
(3) Warehouse 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).
(7) Entry of vessel and aircraft supplies for transportation and
exportation (T&E).
(c) Who may file. A transportation entry may be filed by:
(1) The carrier, or authorized agent of the carrier, that brings
the merchandise to the origination port;
(2) The carrier, or authorized agent of 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 exportation; or
(3) Any person or the authorized agent of 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 (such as a power of
attorney or letter of authorization), or by any other document. CBP may
request evidence to demonstrate sufficient interest.
(d) In-bond application. An in-bond application consisting of a
transportation entry and manifest must be transmitted to CBP via a CBP-
approved EDI system as specified in paragraph (d)(2) of this section in
order to transport merchandise in-bond.
(1) Contents. Except for the other identifying information
described in paragraph (d)(1)(iii) of this section which is optional,
the in-bond application must contain the following information:
(i) Commodity HTSUS number. The six-digit Harmonized Tariff
Schedule of the United States (HTSUS) number of the merchandise must be
provided.
(ii) Description of merchandise subject to regulation by another
government agency. Merchandise subject to regulation by a U.S.
government agency other than CBP must contain a sufficient description
of the merchandise to enable the agency concerned to determine the
contents of the shipment.
(iii) 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 may be
provided.
(iv) Quantity. The quantity of the cargo laden aboard the
conveyance must be provided. This means the quantity of the smallest
external packing unit. Containers and pallets do not constitute
acceptable information. For example, a container holding 10 pallets
with 200 cartons should be described as 200 cartons. If the reported
quantity is not correct or if it changes, the in-bond record must be
updated or amended in accordance with paragraph (h) of this section.
The updating of the quantity of the merchandise does not relieve the
carrier whose bond is obligated from liquidated damages for any
shortage.
(v) Container number and 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. If the seal number is not known when the in-bond application
is filed, the in-bond application must be updated with the seal number
within two business days from the date the initial carrier takes
possession of the sealed merchandise.
(vi) Destination. For IT shipments, the port of destination in the
United States must be provided. For T&E and IE shipments, the port of
exportation and the first foreign port must be provided. If any of this
information changes, the in-bond record must be updated or amended in
accordance with paragraph (h) of this section.
(2) Method of submission. The in-bond application must be
electronically transmitted to CBP via a CBP-approved EDI system, except
as described in Sec. 18.31 relating to the in-bond transportation of
merchandise by pipeline, or air (see 19 CFR part 122) or under a TIR
carnet (see 19 CFR part 115). In the event that EDI functionality is
unavailable for filing an in-bond application, or any related in-bond
filing, the Commissioner or his designee may authorize an alternative
method.
(3) Timing. The in-bond application may be submitted at any time
prior to the merchandise departing the origination port.
(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

[[Page 45396]]

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 authorization of the party whose bond is obligated, must
update and/or amend the in-bond record as required under the provisions
of this part via a CBP-approved EDI system. The in-bond record must be
updated or amended within two business days of the event that requires
updating and/or amending of the in-bond record.
(i) In-transit time--(1) Maximum in-transit time. Except for
merchandise to be transported via barge, merchandise to be transported
in-bond must be delivered to CBP at the port of destination or port of
exportation within 30 days from the date of conveyance arrival at the
origination port (if the in-bond application has been received and
approved prior to conveyance arrival), or the date CBP provides
movement authorization to the in-bond applicant, whichever is later.
Merchandise to be transported via barge for all or part of the in-bond
movement, must be delivered to CBP at the port of destination or port
of exportation within 60 days from the date of conveyance arrival at
the origination port (if the in-bond application has been received and
approved prior to conveyance arrival), or the date CBP provides
movement authorization to the in-bond applicant, whichever is later. If
the merchandise is subject to examination or inspection by CBP or
another government agency, the time that the merchandise is held due to
the examination or inspection will not be considered part of the 30-day
or 60-day in-transit time. Neither the diversion to another port nor
the filing of a new in-bond application extends the maximum in-transit
time. Failure to deliver the merchandise within the prescribed period
constitutes an irregular delivery. In-bond merchandise transported by
pipeline is not subject to the time limits in this section.
(2) Extension of in-transit time. The in-transit requirement may be
extended by CBP upon a written request to the port director of the port
of destination or port of exportation. The decision to extend the in-
transit time period is within the discretion of CBP. Factors that may
be considered, among any others deemed applicable by CBP, include
extraordinary circumstances such as major transportation network
disruptions, natural disasters, and other emergencies beyond the
control of the party requesting the extension.
(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 or 60 days. CBP will provide notice of a
government-shortened in-transit time with the movement authorization.
(j) Report of arrival. Within two business days after the arrival
of any portion of an in-bond shipment at the port of destination or the
port of exportation, CBP must be notified via a CBP-approved EDI system
that the merchandise has arrived. The notification must include the
Facilities Information and Resources Management System (FIRMS) code of
the location of the merchandise within the port. Failure to report the
arrival or the FIRMS code for 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 that has arrived at the port of destination or
the port of exportation must be entered, exported, or admitted to a
foreign-trade zone pursuant to this part within 15 calendar days from
the date of arrival of the entire in-bond shipment at the port of
destination or port of exportation. Sixteen days after in-bond
merchandise arrives in the port of destination or port of exportation,
the merchandise will become subject to general order requirements
pursuant to Sec. 4.37, Sec. 122.50, or Sec. 123.10 of this chapter,
as applicable.
(l) Special classes of merchandise--(1) Health, safety and
conservation. CBP may determine that merchandise not in compliance with
an applicable rule, regulation, law, standard or ban, relating to
health, safety or conservation, will not be released for transportation
in-bond without the authorization of the governmental agency
administering such rule, regulation, law, standard or ban.
(2) Plants and plant products. Merchandise subject upon importation
to examination, disinfection, or further treatment under the USDA
Animal and Plant Health Inspection Service (APHIS), Plant Protection
and Quarantine program, will 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).
(3) Prohibited articles. Articles prohibited admission into the
commerce of the United States may not be entered for transportation in-
bond. Any such merchandise offered for entry for that purpose may
either be denied entry or be seized. However, CBP may permit
exportation or transportation and exportation either with authorization
from the governmental agency having regulatory authority over the
prohibited articles or in compliance with the regulations of such
agency.
(4) Narcotics and other drugs, medicines, or chemicals--(i)
Narcotics. Narcotics 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.
(ii) Other drugs, medicines, or chemicals. 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 that they are not of a narcotic character. A properly
verified certificate of the shipper, specifying the items in the
shipment and stating that they are not narcotic, may be accepted by the
port director to establish the character of such a shipment.
(5) 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).
(6) 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

[[Page 45397]]

stock may be done under CBP supervision.
(m) Divided shipments. After reaching the destination port, the
port to which the merchandise has been diverted under Sec. 18.5(a),
in-bond merchandise may be divided into multiple shipments with a
portion of the initial in-bond shipment being entered for consumption
or warehouse, and the remainder shipped under a new in-bond
application. The carrier or any of the parties named in paragraph (c)
of this section must, in accordance with the filing requirements of
this section, submit a new in-bond application for each portion of the
original shipment to be transported in-bond. Divided shipments for
merchandise being transported under cover of a carnet are prohibited.

Sec. 18.2 Carriers, cartmen, and lightermen.

(a) Transportation of merchandise in-bond by bonded carriers--(1)
Generally. 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 non-bonded carriers; however, the
responsibility for the merchandise will remain with the common carrier,
contract carrier, or freight forwarder that obligated its bond 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 non-bonded 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 non-bonded 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 lighterman. 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 Transfers.

(a) Transfer to another conveyance. Merchandise being transported
in-bond may be transferred to another conveyance at any time. CBP
notification is not required. The transfer to one or more conveyances
will not extend the maximum in-transit time set forth in Sec. 18.1(i).
(b) Transfer to another bonded carrier. Except as provided in Sec.
18.31(d)(3), when merchandise is transferred to a bonded carrier that
assumes the liability for the in-bond shipment, a report of arrival for
the merchandise must be filed by the original bonded carrier and a new
in-bond application must be filed by the subsequent bonded carrier
pursuant to Sec. 18.1.
(c) Transfer of merchandise covered by a TIR Carnet generally
prohibited. Merchandise covered by a TIR carnet may not be transferred
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 transfer, a TIR approved container or road vehicle must be
used if available. If the transfer takes place under CBP supervision,
the CBP officer must execute a certificate of transfer on the
appropriate TIR carnet voucher.
(d) Transfer by bonded cartmen. All transfers to or from the
conveyance or warehouse of merchandise being transported 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, compartments, and containers.

(a) Requirements, waiver, and TIR carnets--(1) Seals required.
Conveyance, compartments, or containers transporting in-bond
merchandise must be sealed and the seals must remain intact until the
merchandise arrives at the port of destination or the port of
exportation. The seals to be used and the method for sealing
conveyances, compartments, or containers must meet the requirements of
Sec. Sec. 24.13 and 24.13a of this chapter.
(2) Waiver. (i) CBP may waive the sealing of a conveyance,
compartment, or container in which bonded merchandise is transported if
CBP determines that the sealing of the conveyance, compartment, or
container is unnecessary to protect the revenue or to prevent
violations of the customs laws and regulations.
(ii) Examples of situations where CBP may waive the waiver of the
sealing requirement are when the conveyance, compartment, or container
cannot be effectively sealed, as in the case of merchandise shipped in
open cars or barges or on the decks of vessels, 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, 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

[[Page 45398]]

listing of the merchandise in the carnet and a physical inventory
agree.
(b) Commingled merchandise--(1) Transported in a sealed conveyance,
compartment, or container. Merchandise that is not covered by a bond
may be transported in a sealed conveyance, compartment, or container
that contains bonded merchandise if the merchandise is destined for the
same or subsequent port as the bonded merchandise.
(2) Transported in a conveyance, compartment, or container that is
not sealed. Merchandise that is not covered by a bond may be
transported with bonded merchandise in a conveyance, compartment, or
container that is not sealed, if the in-bond merchandise is corded and
sealed, or affixed with a warning label or tag as described in
paragraph (b)(3) of this section.
(3) Warning label or tag--(i) Warning label. The required warning
label for in-bond merchandise described in paragraph (b)(2) of this
section, must be on bright red paper, not less than 5 by 8 inches in
size, unless the size of the package renders the use of a 5 by 8 inch
warning label impracticable because of lack of space; then a 3 by 5
inch label may be used. Alternatively, a high visibility, permanently
affixed warning label, whether as a continuous series in tape form or
otherwise, but not less than 1\1/2\ by 3 inches, and not to be removed
until the in-bond movement is completed, may be used on any size
package. The warning label must contain the following words in black or
white lettering of a conspicuous size:

U.S. Customs and Border Protection

This package is under bond and must be delivered intact to the
CBP officer in charge at the port of destination or to such other
place as authorized by CBP.
Warning. Two years' imprisonment, a fine, or both, is the
penalty for unlawful removal of this package or any of its contents.

(ii) Tag. When it is impossible to attach the warning label by
pasting, a bright red shipping tag of convenient size, large enough to
be conspicuous and containing the same legend as the label, shall be
used in lieu of a label. Such tag shall be wired or otherwise securely
fastened to the packages in such manner as not to damage the
merchandise.
(4) Merchandise transported under carnet. Merchandise moving under
cover of a carnet may not be consolidated with other merchandise.
(c) Removal and replacement of seals. If it becomes necessary at
any point in transit to remove seals from a conveyance, compartment, or
container containing bonded merchandise for the purpose of transferring
its contents to another conveyance, compartment, or container, or to
gain access to the shipment because of casualty or for other good
reason, such as when required by law enforcement or another government
agency, a responsible agent of the carrier may remove the seals,
supervise the transfer or handling of the merchandise, and seal the
conveyance, compartment, or container in which the shipment goes
forward. Updated seal numbers must be transmitted to CBP pursuant to
Sec. 18.1(h) and general recordkeeping requirements under 19 CFR part
163 apply.
(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 will 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 will 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 will 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 origination port 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 exportation of an in-bond movement, the filer of the in-bond
application must submit a request to divert merchandise via a CBP-
approved EDI system. Permission 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 exportation
that was named in the in-bond application. The decision to grant or
deny permission to divert merchandise is within the discretion of CBP.
Denials may result from, for example, restrictions placed upon the
movement of goods by government agencies.
(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)(1) of this part. The diverted
merchandise must be delivered to the port of diversion within the in-
transit time specified in Sec. 18.1(i)(1) from the date CBP first
authorized the in-bond movement, unless an extension is granted
pursuant to Sec. 18.1(i)(2).
(c) Diversion of cargo subject to restriction, prohibition or
regulation by

[[Page 45399]]

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
may be restricted from being diverted on behalf of the authorizing
agency.

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 exportation and 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 that have been located or recovered to
the port of destination or port of exportation 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; entry. When a shipment or a portion of a
shipment is not delivered, or when delivery is to an unauthorized
location or is delivered to the consignee without the permission of
CBP, CBP may demand return (redelivery) of the merchandise to CBP
custody. The demand must be made no later than 30 days after the
shortage, delivery, or failure to deliver is discovered by CBP. The
demand for the redelivery of the merchandise to CBP custody must be
made to the bonded carrier, cartman, or lighterman identified in the
in-bond application. The demand for the redelivery of the merchandise
will be made on CBP Form 4647, Notice of Redelivery, other appropriate
form or 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; entry. 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 of
the demand for redelivery, if mailed, or within 30 days of the date of
transmission, if transmitted by a method other than by mail, 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. 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 in accordance with law.
(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 in the in-bond application, to show whether the
shipment was transferred to the car designated in the manifest and
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. Within two business days after the
arrival at the port of exportation of any portion of an in-bond
shipment, CBP must be notified via a CBP approved EDI of the arrival of
the merchandise pursuant to Sec. 18.1(j). 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 arrival of the
last portion of a shipment arriving at the port of exportation 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.
(3) Notice and proof of exportation. Within two business days after
exportation, the in-bond record must be updated 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.
(b) Supervision. The port director will require 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 five 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 will be liable for breach of any of the
requirements found in this part, any other regulations governing the
movement of merchandise in bond, and any of the other conditions
specified in the bond. This includes, but is not limited to shortages,
irregular delivery, or non-delivery, at the port of destination or port
of exportation 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. Appropriate
commercial or government documentation may be provided to CBP as proof
of delivery and/or exportation. Any loss found to exist at the port of
destination or port of exportation will be presumed to have occurred
while the merchandise was in the possession of

[[Page 45400]]

the party whose bond was obligated under the transportation entry,
unless conclusive evidence to the contrary is produced.
(b) Liquidated damages. (1) The party whose bond is obligated on
the transportation entry is liable for payment of liquidated damages if
there is a failure to comply with any of the requirements found in this
part, any other regulations governing the movement of merchandise in
bond, and any of the other conditions specified in the bond.
(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 transportation, report, delivery,
entry and/or exportation. The amount of duties, taxes, fees, and
charges owed to the United States under this paragraph is not limited
to the amount of the bond obligated on the transportation entry.
(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 exportation 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 one
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 two 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
one year after the date when the decision of the court becomes
enforceable.
(ii) Within three 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 one
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 (b) 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 exportation 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 exportation 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 exportation 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
merchandise described in paragraph (a) of this section 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 port of
destination 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. Merchandise covered by an entry
for immediate transportation, including a TIR carnet, or a manifest of
baggage shipped in-bond (other than baggage to be forwarded in-bond to
a CBP station--

[[Page 45401]]

see Sec. 18.13(a)), may be delivered to a place outside a port of
entry for examination and release as contemplated by 19 U.S.C. 1484(c),
and in accordance with the provisions of Sec. 151.9 of this chapter.
(b) Divided 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 a TIR 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 TIR
carnet may not be consolidated with other merchandise.
(d) Textiles. Textiles and textile products subject to Sec. 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; and name(s) and address(es) of the
person(s) to whom the textiles and textile products are consigned.

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 admitted to a
FTZ, entered into a bonded warehouse, entered for consumption,
transportation and exportation, immediate exportation, immediate
transportation, or any other form of entry, within 15 calendar days
from the date of arrival at the port of destination 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 19 U.S.C. 1484 and
the regulations promulgated thereunder.
(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 an
immediate transportation entry not entered pursuant to Sec. 18.12(a)
within 15 calendar days from the date of arrival at the port of
destination will become subject on the 16th day to general order
requirements pursuant to Sec. 4.37, Sec. 122.50, or Sec. 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 and 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 Sec. 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 United States between two points in contiguous foreign
territory), when merchandise is entered for transportation and
exportation, a (TIR) 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 to CBP additional information and documentation related to the
delivery of the merchandise to the bonded carrier.
(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 warehousing, or admitted into an FTZ. If the
merchandise requires an export license, the merchandise is subject to
the filing requirements of the licensing Federal agency. See 15 CFR
part 30, subpart A.
(f) Time to export. Any portion of an in-bond shipment entered for
transportation and exportation must be exported within 15 calendar days
from the date of arrival of the last portion of the shipment at the
port of exportation, unless an extension has been granted by CBP
pursuant to Sec. 18.24. On the 16th day, the merchandise will become

[[Page 45402]]

subject to general order requirements under Sec. 4.37, Sec. 122.50,
or Sec. 123.10 of this chapter, as applicable.
(g) Notice of arrival and proof of exportation. Arrival must be
reported within two business days after the arrival at the port of
exportation, in accordance with Sec. 18.1. Within two business days
after exportation, the in-bond record must be updated 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.

Sec. 18.21 [Reserved].

Sec. 18.22 Procedure at port of exportation.

(a) Transfer of bonded merchandise to another conveyance. If in-
bond merchandise must be transferred to another conveyance at the port
of exportation, the procedure will be as prescribed in Sec. Sec. 18.3
and 18.4(c).
(b) Transfer of baggage by express shipment. An express consignment
carrier 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 port of exportation or first foreign port;
change of entry.

(a) Change of port of exportation or first foreign port. The
carrier or any of the parties provided for in Sec. 18.1(c) must notify
CBP of a change of the port of exportation or first foreign port that
was provided in the original in-bond application by updating the in-
bond record via a CBP-approved EDI system within two business days of
learning of the change in accordance with Sec. 18.1(h).
(b) Change of entry. Merchandise received at the anticipated port
of exportation may, in lieu of export, be admitted into an FTZ, entered
for consumption, warehouse, 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; dividing of
shipments.

(a) Retention of goods within port limits. Upon receipt of a
written request 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 (TIR)
carnet, to remain within the port limits of the port of exportation
under CBP supervision without extra expense to the Government for a
period not exceeding 90 days. 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 one 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.
4.37, Sec. 122.50, or Sec. 123.10 of this chapter, as applicable.
(b) Divided shipments at the port of exportation. The dividing of
an in-bond shipment after it has arrived at the port of exportation
will be permitted when exportation 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 similar circumstances. The carrier or any of the
parties named in Sec. 18.1(c) must update the in-bond record with the
new information regarding the divided shipment within two business days
of the dividing of the shipment. In the case, however, of merchandise
being transported under cover of a carnet, the dividing 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 exportation by truck. Trucks arriving
at a U.S. port of entry, carrying shipments for which an immediate
exportation entry is presented as the sole means of entry, may be
denied authorization to proceed. The port director may require the
truck to return to the country from which it came or 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 at the port of
exportation, unless an extension has been granted by CBP pursuant to
Sec. 18.24(a). 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, for warehousing, or admitted to a FTZ. If the
merchandise requires an export license, the merchandise is subject to
the filing requirements of the licensing Federal agency. See 15 CFR
part 30, subpart A.
(e) Exportation without landing, vessels. If the merchandise is
exported on the arriving vessel without landing, a representative of
the vessel who has knowledge of the facts must certify that the
merchandise entered for exportation was not discharged during the
vessel'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. 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).

[[Page 45403]]

(f) Notice and proof of exportation. Within two business days after
exportation of merchandise described in paragraph (a) of this section,
the in-bond record must be updated 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) Indirect exportation, vessels. Merchandise that had been
intended to be exported without landing from an importing vessel in
accordance with Sec. 18.25(e) may instead 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.
(b) Carnets. If merchandise to be transported in-bond to another
port for exportation 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. 18.20). If merchandise to be transported in-bond to another
port for exportation was imported under cover of an A.T.A. carnet, 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. 18.4(c) 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
indirect exportation following an in-bond entry must be exported within
15 calendar days from the date of arrival at the port of exportation,
unless an extension has been granted by CBP pursuant to Sec. 18.24(a).
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.
(e) Notice and proof of exportation. Within two business days after
exportation, the in-bond record must be updated 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. 18.27 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 or the electronic equivalent must
appear in electronic records pertaining to the exportation.

Subpart F--Merchandise Transported by Pipeline

Sec. 18.31 Pipeline transportation of bonded merchandise.

(a) General procedures--(1) Applicability. 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 or by electronic
submission via a CBP-approved EDI system.
(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 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 for transfers 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 transmission to CBP; 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 transmission to CBP.
(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 transmitted to CBP.
(3) Initial carrier liable for discrepancies. In the case of either
paragraph (d)(1) or (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).

[[Page 45404]]

(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 163 of this chapter.

Subpart G--Merchandise Not Otherwise Subject to CBP 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 non-bonded 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 Electronic Export Information (EEI) shall be
filed in accordance with the applicable regulations of the Bureau of
the Census (15 CFR part 30). 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 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 Electronic Export Information (EEI) required to be validated
shall be filed in accordance with the procedures described in the
applicable regulations of the Bureau of the Census (15 CFR part 30).
(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 exportation 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 origination port 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 origination port 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

0
10. The general authority for part 19 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.
* * * * *

0
11. 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 exportation, except for distilled spirits
which may be withdrawn under the provisions of Sec. 311 for
transportation and delivery to any bonded storage warehouse for the
sole purpose of immediate exportation or may be withdrawn pursuant to
section 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--CBP BONDS

0
12. The general authority for part 113 continues to read as follows:

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

0
13. 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.
* * * * *

[[Page 45405]]

PART 122--AIR COMMERCE REGULATIONS

14. The general authority for part 122 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.

0
15. In Sec. 122.92, revise paragraph (g) to read as follows:

Sec. 122.92 Procedure at port of origin.

* * * * *
(g) Warning labels. The carrier shall supply and attach the warning
label, as described in Sec. 18.4(b)(3) of this chapter, to each bonded
package.

0
16. In Sec. 122.118, revise paragraph (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.
* * * * *

0
17. 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.
* * * * *

0
18. 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 CBP at the port of exportation 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--CBP RELATIONS WITH CANADA AND MEXICO

0
19. The general authority for part 123 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.
* * * * *

0
20. 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.

0
21. 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].

0
22. Remove and reserve Sec. 123.34.

0
23. In Sec. 123.42, revise the paragraph (c) heading and paragraphs
(c)(1) and (d) introductory text, to read as follows:

Sec. 123.42 Truck shipments transiting the United States.

* * * * *
(c) Procedure at U.S. 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
8\1/2\, 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 U.S. port of
exportation.
* * * * *
(d) Procedure at U.S. port of exportation. The arrival of the in-
bond shipment at the port of exportation must be reported to CBP in
accordance with Sec. 18.1 of this chapter.
* * * * *

0
24. In Sec. 123.52, revise paragraph (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(d) 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.
* * * * *

0
25. In Sec. 123.64, revise paragraph (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

0
26. The general authority for part 141 continues to read as follows:

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

0
27. 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

[[Page 45406]]

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

0
28. The general authority for part 142 continues to read as follows:

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

0
29. 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.
* * * * *

0
30. 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) * * *
(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

0
31. The general authority for part 143 continues to read as follows:

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

0
32. 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, filing of in-bond applications, and applications for FTZ
admission (CBP Form 214).

PART 144--WAREHOUSE AND REWAREHOUSE ENTRIES AND WITHDRAWALS

0
33. The general authority for part 144 continues to read as follows:

Authority: 19 U.S.C. 66, 1484, 1557, 1559, 1624.
* * * * *

0
34. 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.

0
35. In Sec. 144.36, revise paragraphs (c), (d) introductory text, (f),
and (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 origination port
in accordance with Sec. Sec. 18.5(c) or 18.9 of this chapter;
* * * * *

0
36. 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) Dividing of shipments. The dividing 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 dock must also
be followed in applicable cases.
* * * * *

PART 146--FOREIGN TRADE ZONES

0
37. The general authority for part 146 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.

[[Page 45407]]

0
38. 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 by 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 business 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).
* * * * *

0
39. In Sec. 146.66, revise paragraphs (a) and (b) and remove the words
``Customs Form'' and add in their place the words ``CBP Form'' wherever
they appear in paragraphs (c)(1) and (2) and (d).
The revisions 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 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.
* * * * *

0
40. 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.
* * * * *

0
41. 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 EDI 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 business 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

0
42. The general authority for part 151 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.
* * * * *

0
43. 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

0
44. The general authority for part 181 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].

0
45. In Sec. 181.47, amend paragraph (b)(2)(ii)(E) by removing the
words ``CBP 7512'' and adding in their place the

[[Page 45408]]

words ``In-bond application submitted pursuant to part 18 of this
chapter''.

Kevin K. McAleenan,
Acting Commissioner.
Approved: September 20, 2017.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2017-20495 Filed 9-27-17; 8:45 am]
BILLING CODE 9111-14-P