[Federal Register Volume 90, Number 8 (Tuesday, January 14, 2025)]
[Proposed Rules]
[Pages 3048-3075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00551]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 10, 101, 128, 143, 145
[USCBP-2025-0002]
RIN 1685-AA01 (Formerly RIN 1515-AE84)
Entry of Low-Value Shipments
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document proposes amendments to the U.S. Customs and
Border Protection (CBP) regulations pertaining to the entry of certain
low-value shipments not exceeding $800 that are eligible for an
administrative exemption from duty and tax. Specifically, CBP proposes
to create a new process for entering low-value shipments, allowing CBP
to target high-risk shipments more effectively, including those
containing synthetic opioids such as illicit fentanyl. This document
also proposes to revise the current process for entering low-value
shipments to require additional data elements that would assist CBP in
verifying eligibility for duty- and tax-free entry of low-value
shipments and bona-fide gifts.
DATES: Comments must be received by March 17, 2025.
ADDRESSES: Please submit comments, identified by docket number, by the
following method:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments via docket number
USCBP-2025-0002.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
posted without change to https://www.regulations.gov, including any
personal information provided. Comments must be submitted in English,
or an English translation must be provided.
[[Page 3049]]
Docket: For access to the docket to read background documents or
comments received, go to https://www.regulations.gov. In accordance
with 5 U.S.C. 553(b)(4), a summary of this rulemaking may also be found
at https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Christopher Mabelitini, Director,
Intellectual Property Rights & E-Commerce Division, Office of Trade,
U.S. Customs and Border Protection, 202-325-6915,
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Public Participation
II. Background and Purpose
III. Statutory Authority
IV. Current Regulatory Procedures for Entry of Qualifying Low-Value
Shipments
A. Release From Manifest Process
B. Partner Government Agency Requirements
C. Challenges of the Release From Manifest Process
V. Section 321 Data Pilot and Entry Type 86 Test
VI. Discussion of Proposed Amendments
A. Part 10
B. Part 101
C. Part 128
D. Part 143
E. Part 145
VII. Statutory and Regulatory Reviews
A. Executive Orders 12866, 13563, and 14094
B. Additional Requirements for Regulatory Analysis
C. Regulatory Flexibility Act
D. Initial Regulatory Flexibility Analysis (IRFA)
E. Paperwork Reduction Act
F. National Environmental Policy Act
I. Public Participation
Interested persons are invited to participate in this rulemaking by
submitting written data, views, or arguments on all aspects of this
notice of proposed rulemaking (NPRM). U.S. Customs and Border
Protection (CBP) also invites comments that relate to the economic,
environmental, or federalism effects that might result from this
proposed rule. Comments that will provide the most assistance to CBP
will reference a specific portion of the NPRM, explain the reason for
any recommended change, and include data, information, argument, or
authority that supports such recommended change. CBP is also
specifically seeking comments regarding the ``product identifier'' and
``security screening report number'' data elements discussed in section
VI.D. In addition, CBP requests comment on the Harmonized Tariff
Schedule of the United States (HTSUS) waiver process discussed in
section VI.D and its potential for lowering the costs of the rule.
II. Background and Purpose
Section 321(a)(2) of the Tariff Act of 1930 (19 U.S.C. 1321(a)(2)),
as amended by the Trade Facilitation and Trade Enforcement Act of 2015
(TFTEA), section 901, Public Law 114-125, 130 Stat. 122, authorizes
administrative exemptions from duty and tax for three categories of
articles. These categories include: bona-fide gifts valued at $100 or
less ($200, if the gift is from certain island possessions) sent from
persons in foreign countries to persons in the United States; certain
personal or household articles valued at $200 or less accompanying
persons arriving in the United States; and other articles when the
value of the article is $800 or less.\1\ These exemptions are subject
to the condition that the aggregate fair retail value in the country of
shipment of articles imported by one person on one day and exempted
from duty cannot exceed the authorized amounts. Also, these exemptions
are not to be granted if merchandise covered by a single order or
contract is forwarded in separate lots to obtain the benefit of duty-
and tax-free entry.
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\1\ 19 U.S.C. 1321(a)(2).
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This proposed rulemaking primarily concerns shipments covered by
the administrative exemption in 19 U.S.C. 1321(a)(2)(C), i.e.,
shipments of merchandise (other than bona-fide gifts and certain
personal and household goods accompanying travelers arriving from
abroad) imported by one person on one day and having an aggregate fair
retail value in the country of shipment of not more than $800. For
simplicity, all references to ``the administrative exemption'' in this
document will be to the administrative exemption found in 19 U.S.C.
1321(a)(2)(C). References made to the other administrative exemptions
in 19 U.S.C. 1321(a)(2) will be specified as appropriate. In addition,
this document refers to shipments not exceeding $800 as ``low-value
shipments.'' \2\ Low-value shipments that qualify for the
administrative exemption in 19 U.S.C. 1321(a)(2)(C) are referred to as
``qualifying low-value shipments.'' The administrative exemption is
implemented in part 10 of title 19 of the Code of Federal Regulations
(19 CFR part 10) at 19 CFR 10.151 and 10.153, and is also referenced in
19 CFR parts 128, 143, and 145.
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\2\ These shipments are also commonly referred to as ``de
minimis'' shipments.
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The Customs Administrative Act of 1938 amended the Tariff Act of
1930 by adding section 321 and establishing the administrative
exemption at $1 in order to limit the ``expense and inconvenience'' of
collecting duty when ``disproportionate to the amount of such duty.''
\3\ The value of these shipments was deemed to be so minimal that they
were not subject to the same formal customs entry procedures and
extensive data requirements as higher-value shipments entering the
United States. Congress has since raised the value of the
administrative exemption to $5 in 1978, $200 in 1993, and most
recently, to $800 in 2016.\4\
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\3\ Customs Administrative Act of 1938, Public Law 75-721, 52
Stat. 1077, 1081 (1938).
\4\ Customs Procedural Reform and Simplification Act of 1978,
Public Law 95-410, 205(b)(3), 92 Stat. 888, 900 (1978) (raising the
value to $5); North American Free Trade Agreement Implementation
Act, Public Law 103-182, 107 Stat. 2057, 2209 (1993) (raising the
value to $200 and also removing the specific authorization to the
Secretary of the Treasury to diminish the dollar amount of the
administrative exemption); Trade Facilitation and Trade Enforcement
Act of 2015, Public Law 114-125, 130 Stat. 122 (2016) (raising the
value to $800).
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The framework for the current version of the regulations pertaining
to the administrative exemption was promulgated through a final rule in
1995, which, among other things, amended the customs regulations to
implement the legislative increase of the exemption to $200, specify
the special informal entry procedures applicable to qualifying low-
value shipments, set forth the parties qualified to make entry, and
define the word ``shipment.'' \5\
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\5\ 60 FR 18983 (Apr. 14, 1995).
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In 2016, section 901(d) of TFTEA amended 19 U.S.C. 1321(a)(2)(C) by
increasing the daily value limit for the administrative exemption from
$200 to $800.\6\ CBP published an interim final rule amending the
regulations to implement the new statutory amount and to specify
certain goods excluded from the administrative exemption.\7\ Otherwise,
CBP has not made any significant changes to the regulatory requirements
by which such shipments are entered since 1995. In the nearly three
decades since, however, there have been significant changes in the
trade environment and supply chains, substantial increases in the
volume of shipments, and advancements to CBP's capabilities that
necessitate the modernization of these regulations to
[[Page 3050]]
better serve both CBP and the trade community.
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\6\ Section 901 did not change the administrative exemptions for
bona-fide gifts and personal or household articles accompanying
travelers under 19 U.S.C. 1321(a)(2)(A) and (B), respectively.
\7\ 81 FR 58831 (Aug. 26, 2016). In the interim final rule, CBP
solicited comments regarding the collection of data on behalf of
partner government agencies for shipments valued at $800 or less.
CBP received eight public comments and intends to respond to the
comments at the final rule stage of this rulemaking.
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Firstly, e-commerce is a growing segment of the U.S. economy and
has been increasing significantly for the past several years.\8\
Consumer habits are changing as the internet empowers individuals to
make purchases online. These advances in economic activity have led to
increasing volumes of imports of low-value shipments, creating
inspection challenges for CBP. Low-value e-commerce shipments pose the
same health, safety, and economic security risks as higher-value
shipments. Transnational criminal organizations and other bad actors
perceive low-value shipments as less likely to be interdicted because
these types of shipments are not subject to the more extensive formal
entry procedures. This has resulted in attempts to enter illicit goods,
such as illicit fentanyl, into the country through these types of
shipments. As noted below, the information requirements for low-value
shipments are less rigorous than those required for other entry types,
and often do not provide sufficient detail for CBP to accurately
identify the merchandise in the shipment and the parties involved in
its sale and purchase. Furthermore, novel and complex e-commerce
business models have complicated and added to the traditional array of
parties involved in the import transaction. New or infrequent importers
often possess less familiarity with U.S. customs laws and regulations,
which can lead to the attempted importation of non-compliant goods.
This rulemaking proposes data requirements that are tailored to capture
the key parties in these modern trade transactions (e.g., the seller,
purchaser, final deliver-to party, and marketplace), thus strengthening
CBP's enforcement posture.
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\8\ Although the administrative exemption is not limited to only
e-commerce shipments, the reality is that e-commerce shipments
comprise a significant portion of low-value shipments.
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Secondly, the volume of low-value shipments has increased
dramatically in recent years. The boom in e-commerce, coupled with the
statutory increase in the daily value limit for the administrative
exemption from $200 to $800 in 2016, greatly increased the number of
shipments qualifying for the exemption, resulted in new types of
products becoming eligible for the exemption, and revived the trade
community's interest in the exemption. This boom in e-commerce resulted
from several factors, including the development of the Automated
Commercial Environment (ACE) Entry Type 86 Test, the COVID-19 pandemic,
and new e-commerce business models structured around low-value
shipments. In fiscal year (FY) 2015, prior to the passage of TFTEA,
approximately 139 million shipments valued at $200 or less were
imported into the United States. In FY 2017, after the TFTEA increase
to $800 went into effect, low-value shipments numbered nearly 325
million. By the end of FY 2022, that number more than doubled to 685
million. Then in FY 2023, CBP cleared more than one billion low-value
shipments.\9\ Currently, approximately 4 million shipments are released
each day free of duty and tax pursuant to the administrative exemption.
In fact, CBP estimates that over 90 percent of the number of shipments
entering the United States are low-value shipments valued at $800 or
less.\10\ The information requirements for these shipments are less
rigorous than those required for other entry types, e.g., formal
entries, and no longer provide sufficient detail for CBP to accurately
identify the merchandise in the shipment and the parties involved in
its sale and purchase. This overwhelming volume of low-value shipments
and lack of actionable data collected pursuant to the current
regulations inhibits CBP's ability to identify and interdict high-risk
shipments that may contain illegal drugs such as illicit fentanyl,
merchandise that poses a risk to public safety, counterfeit or pirated
goods, or other contraband. The new enhanced entry process for low-
value shipments proposed in this rulemaking would provide CBP with the
necessary information regarding the contents of shipments to more
accurately segment risk and determine eligibility for the
administrative exemption in advance of a shipment's arrival in the
United States. The receipt of advance electronic data would also reduce
the burden for CBP officers who process these large volumes of
shipments because better data would lead to more accurate targeting.
With more accurate targeting, CBP resources will be better focused on
accurately identifying and interdicting violative shipments. Today, the
quality of targeting is often impeded by the lack of information.
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\9\ Commercial Customs Advisory Committee Holds Final Public
Meeting of 2023, December 20, 2023, https://www.cbp.gov/newsroom/national-media-release/commercial-customs-advisory-committee-holds-final-public-meeting (last accessed Jan. 31, 2024).
\10\ Email correspondence with the Office of Trade on Feb. 2,
2024.
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Lastly, both CBP and the trade community's technological
capabilities have greatly advanced since 1995, and this proposed rule
would adapt the regulations to current capabilities. As explained below
in section IV, in the past, CBP cleared low-value shipments exclusively
through a time-consuming and burdensome manual process, and staff at
the ports of entry became unable to quickly and efficiently process the
increasing volume of trade. Consequently, it was not unusual for
clearance to take up to eight days. Over the last several years, CBP
has collaborated with the trade community to obtain input regarding how
to more accurately identify the nature, origin, and ultimate
destination of low-value shipments. This effort served as the
foundation for two pilot programs, the Section 321 Data Pilot and the
Entry Type 86 Test, which were implemented in 2019 to test CBP's
capabilities to collect, and the trade community's ability to provide,
certain enhanced data through CBP-approved electronic systems.\11\ The
details of the pilot programs, along with the results, are described
below in section V. The innovations from the two pilots are
incorporated into this proposed rule.
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\11\ Section 321 Data Pilot, 84 FR 35405 (July 23, 2019); Test
Concerning Entry of Section 321 Low-Valued Shipments Through
Automated Commercial Environment (ACE), 84 FR 40079 (Aug. 13, 2019).
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As illustrated above, the existing regulations do not account for
the complex supply chains surrounding e-commerce transactions, today's
volume of trade, or recent technological advancements. Consequently,
this environment is more vulnerable to various challenges, including,
but not limited to, illicit substances like fentanyl and other
narcotics, counterfeit or pirated goods, and goods potentially made
with forced labor. CBP's enforcement efforts have brought to light
violations of the right to make entry, mismanifesting of cargo,
misclassification, misdelivery (e.g., delivery of goods prior to
release from CBP custody), undervaluation, and incorrectly executed
powers of attorney. Of particular concern is the threat posed by
illicit fentanyl, fentanyl analogues, as well as precursor and other
chemicals used in illicit drug production that are smuggled into the
United States by transnational criminal organizations. In FY 2023, CBP
seized more than 27,000 pounds of fentanyl nationwide.\12\ The drugs
are mostly smuggled though ports of entry at the Southwest Border via
privately owned and commercial vehicles and through pedestrian lanes,
[[Page 3051]]
or smuggled into the United States through the mail or through express
consignment carriers.\13\ CBP uses a multi-faceted approach to prevent
illegal drugs from entering the country, and one key facet is advance
information and targeting. Advance electronic shipping information
allows CBP to quickly identify, target, and deter the entry of
dangerous illicit drugs in all operational environments. This
rulemaking contributes to the effort to stop the flow of illegal drugs
into the United States by expanding the collection of enhanced advance
electronic data for low-value shipments.
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\12\ CBP Releases November 2023 Monthly Update, December 22,
2023, https://www.cbp.gov/newsroom/national-media-release/cbp-releases-november-2023-monthly-update (last accessed Jan. 31, 2024).
\13\ Joint Written Testimony of Diane J. Sabatino, Deputy
Executive Assistant Commissioner, Office of Field Operations, and
James Mandryck, Deputy Assistant Commissioner, Office of
Intelligence, before the U.S. Senate Committee on Appropriations,
``Combatting Transnational Criminal Organizations and Related
Trafficking'' (May 3, 2023), https://www.cbp.gov/about/congressional-resources/testimony (last accessed Sept. 1, 2023).
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To address the above challenges, this document will explain the
statutory authority that authorizes CBP to regulate the entry of low-
value shipments, describe the current regulatory landscape, and propose
new regulations that establish a new electronic entry process and
clarify the parameters of the administrative exemption.
III. Statutory Authority
All merchandise imported into the customs territory of the United
States is subject to entry and clearance procedures. These procedures
ensure the proper appraisement, valuation, and tariff classification of
the merchandise for the purpose of collecting the lawful amount of
duties owed, as well as compliance with all other laws and regulations
administered and enforced by CBP. Different procedures are provided for
the entry and clearance of merchandise depending upon the value of the
merchandise. There are ``formal entry'' procedures established by 19
U.S.C. 1484 and 1485, which are generally applicable to shipments of
merchandise valued in excess of $2,500. Part 142 of title 19 of the CFR
(19 CFR part 142) implements 19 U.S.C. 1484, as amended, and prescribes
formal entry procedures. Formal entry generally involves the completion
and filing of one or more CBP forms, or their electronic equivalent, as
well as the filing of commercial documents pertaining to the
transaction.
Exempt from the requirements of 19 U.S.C. 1484 and 1485 are entries
made under 19 U.S.C. 1498, which, for the most part, are limited to
shipments of merchandise valued at $2,500 or less (referred to as
``informal entries''). Specifically, 19 U.S.C. 1498 authorizes the
Secretary of the Treasury to ``prescribe rules and regulations for the
declaration and entry of merchandise when the aggregate value of the
shipment does not exceed an amount specified . . . by regulation, but
not more than $2,500.'' Informal entry regulations are found at 19 CFR
part 143, subpart C. While informal entries are ``excepted'' from
formal entry requirements, the Secretary may include any formal entry
requirement in the rules and regulations governing informal entry.\14\
The statutory framework of 19 U.S.C. 1498 authorizes, in effect, a less
formal entry process than under 19 U.S.C. 1484. As a result, informal
entry procedures are less burdensome and complex than the formal entry
procedures. These simplified procedures reduce the overall
administrative burden on informal entry filers.
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\14\ 19 U.S.C. 1498(b).
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Shipments that are eligible for the administrative exemptions at 19
U.S.C. 1321(a)(2) are a subset of the informal entries covered by 19
U.S.C. 1498, which authorizes the Secretary to promulgate such special
rules and regulations as the Secretary determines are necessary and
appropriate for the declaration and entry of shipments valued at $2,500
or less. Under 19 U.S.C. 1321, the Secretary is authorized to
promulgate regulations to admit certain low-value articles duty- and
tax-free in order to avoid expense and inconvenience to the Government
that is disproportionate to the amount of revenue that would otherwise
be collected. As noted above, regulations for the entry of low-value
shipments, which are authorized under 19 U.S.C. 1498 may, but are not
required to, include any of the rules that are otherwise applicable for
formal entry under 19 U.S.C. 1484 and 1485.
Lastly, the Secretary is authorized by 19 U.S.C. 1321(b) to
prescribe exceptions to an administrative exemption, if consistent with
the purposes of the exemption or if ``necessary for any reason to
protect the revenue or to prevent unlawful importations.''
IV. Current Regulatory Procedures for Entry of Qualifying Low-Value
Shipments
The regulations pertaining to the exemptions in 19 U.S.C.
1321(a)(2) are found throughout various parts of title 19 of the CFR.
The administrative exemption at 19 U.S.C. 1321(a)(2)(C) is implemented
at 19 CFR 10.151, which explains that qualifying merchandise not
exceeding $800 and meeting the conditions of 19 CFR 10.153 will be
admitted free of duty and tax. The exemption for bona-fide gifts is
implemented at 19 CFR 10.152. For low-value shipments accompanying a
person, the merchandise comes in under an oral declaration pursuant to
19 CFR part 148.\15\ Shipments imported by mail are covered by 19 CFR
part 145, and shipments imported by express consignment operators and
carriers are covered by 19 CFR part 128. Lastly, informal entry
procedures for qualifying low-value shipments are found in 19 CFR part
143, subpart C.
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\15\ The procedures for personal or oral declarations are set
forth in 19 CFR 148.12, 148.13, and 148.62, and are not affected by
this proposed rule.
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A. Release From Manifest Process
With certain exceptions, low-value shipments qualifying for the
administrative exemption may be entered by presenting the bill of
lading or a manifest listing each bill of lading.\16\ This type of
informal entry is termed the ``release from manifest process.''
Generally, such shipments are released from CBP custody based on the
information provided on the manifest or bill of lading. Qualifying low-
value shipments may be entered, using reasonable care, by the owner,
purchaser, or consignee of the shipment, or, when appropriately
designated by one of these persons, a customs broker licensed under 19
U.S.C. 1641.\17\ The information required for release from manifest may
be provided by consignees, such as carriers and express consignment
operators. The following information must be provided as part of the
release from manifest process: the country of origin of the
merchandise; shipper name, address and country; ultimate consignee name
and address; specific description of the merchandise; quantity;
shipping weight; and value.\18\ No Harmonized Tariff Schedule of the
United States (HTSUS) subheading is required on a manifest, and no
entry summary is required, for low-value shipments.\19\
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\16\ 19 CFR 143.23(j). This same process is also used for entry
of bona-fide gifts meeting the requirements of 19 CFR 10.152 and
10.153.
\17\ 19 CFR 143.26(b).
\18\ 19 CFR 128.21(a); 19 CFR 143.23(k).
\19\ 19 CFR 143.23(k); 19 CFR 128.24(e).
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Among other things, 19 CFR 10.153 sets forth the conditions to be
applied by a CBP officer in determining whether an article or parcel
shall be exempted from duty and tax under 19 CFR 10.151 as a qualifying
low-value shipment. In particular, 19 CFR 10.153 provides that
consolidated shipments addressed to
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one consignee shall be treated as one importation; alcoholic beverages
and cigars (including cheroots and cigarillos) and cigarettes
containing tobacco, cigarette tubes, cigarette papers, smoking tobacco
(including water pipe tobacco, pipe tobacco, and roll-your-own
tobacco), snuff, or chewing tobacco are not exempt; any merchandise of
a class or kind provided for in any absolute or tariff-rate quota,
whether the quota is open or closed, is not exempt; and, there is no
exemption from any tax imposed under the Internal Revenue Code that is
collected by other agencies on imported goods. In addition, any
merchandise subject to antidumping and countervailing duties is not
exempt.\20\
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\20\ See 19 U.S.C. 1671h; 19 U.S.C. 1673g (requiring CBP to
collect antidumping and countervailing duty deposits for ``all
entries, or withdrawals from warehouse, for consumption of
merchandise subject to [an antidumping or countervailing duty]
order'') (emphasis added).
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In addition to the regulations described above, which generally
apply to all low-value shipments, CBP has established regulations for
express consignment operators and carriers (ECOs) in 19 CFR part
128.\21\ The procedure for entry of qualifying low-value shipments
imported by ECOs is set forth in 19 CFR 128.21 and 128.24(e). CBP
requires that ECOs provide the manifest information listed in 19 CFR
128.21 in advance of arrival of all cargo (i.e., the advance manifest).
The information required on the advance manifest for qualifying low-
value shipments is identical to the information required for the
release from manifest process under 19 CFR 143.23(k), but, pursuant to
19 CFR 128.24(e), such shipments must be segregated on the advance
manifest when it is used as the entry document.\22\
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\21\ An ``express consignment operator or carrier'' is defined
in 19 CFR 128.1(a) as ``an entity operating in any mode or
intermodally moving cargo by special express commercial service
under closely integrated administrative control. Its services are
offered to the public under advertised, reliable timely delivery on
a door-to-door basis. An express consignment operator assumes
liability to Customs for the articles in the same manner as if it is
the sole carrier.''
\22\ 19 CFR 128.21 and 128.24(e).
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Pursuant to 19 CFR 145.31, qualifying low-value shipments sent
through the mail are generally passed free of duty and tax without the
preparation of an entry in accordance with 19 CFR 145.12. The
information needed for entry and release is supplied in the
documentation accompanying the mail package. Generally, this
documentation consists of the customs declaration and invoice or bill
of sale (or, in the case of merchandise not purchased or consigned for
sale, a statement of the fair retail value in the country of
shipment).\23\
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\23\ 19 CFR 145.11.
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Regardless of the method or mode of transportation, CBP may require
a formal entry for any merchandise if deemed necessary for import
admissibility enforcement purposes, revenue protection, or the
efficient conduct of customs business.\24\
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\24\ 19 CFR 143.22; see also 19 CFR 145.12(a)(1).
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B. Partner Government Agency Requirements
A low-value shipment is not exempt from partner government agency
(PGA) requirements.\25\ Many PGAs do not have exemptions from their
reporting requirements for low-value shipments and require strict
accountability of imported goods for national security and health and
safety reasons, and to identify specific shipments of potentially
violative products for reporting or enforcement purposes. Low-value
shipments may also require the payment of applicable PGA duties, fees,
or excise taxes collected by other agencies. Shipments that have PGA
data reporting requirements or require the payment of any duties, fees,
or taxes must generally be entered using the appropriate informal or
formal entry process to ensure that the PGA requirements are met. Low-
value shipments subject to PGA requirements are currently ineligible
for entry under the release from manifest process.
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\25\ In this rulemaking, CBP uses the phrase ``partner
government agencies'' in the preamble interchangeably with the
phrase ``other government agencies,'' which is found in title 19 of
the CFR.
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C. Challenges of the Release From Manifest Process
The release from manifest process is a slow and labor-intensive
process. A CBP officer must review each entry and provide a
determination regarding release. While this process may have been
sufficient decades ago, the sheer volume of imports and the limited
resources at the ports of entry make it untenable today.
Moreover, the data currently provided on the standard manifest is
insufficient or too vague for CBP to effectively screen merchandise and
provide admissibility decisions in a timely manner. The data often does
not adequately identify the entity causing the shipment to cross the
border, the final recipient, or the contents of the package. With the
dramatic increase in shipments that only provide minimal data, CBP is
left with fewer data points about a greater number of shipments. Many
of these shipments are undervalued or incorrectly presented for release
from manifest as non-PGA shipments, and thus do not qualify for the
administrative exemption. More information about these shipments will
help CBP to identify these shipments prior to release, thereby
protecting consumers from purchasing goods that do not meet regulatory
health and safety standards and protecting U.S. businesses from unfair
competition against imported goods that would otherwise be charged
duties or restricted from entry.
V. Section 321 Data Pilot and Entry Type 86 Test
To address the challenges described above, CBP launched two
voluntary pilot programs pertaining to low-value shipments in 2019: the
Section 321 Data Pilot and the Entry Type 86 Test. The Section 321 Data
Pilot began with nine voluntary participants from the trade community
to test the feasibility of CBP accepting advance data for shipments
eligible for the administrative exemption.\26\ Currently, CBP requires
carriers and other regulated parties to transmit certain information
relating to commercial cargo prior to the arrival of the cargo in the
United States. However, in the e-commerce environment, traditionally
regulated parties, such as carriers, are unlikely to possess all of the
information relating to a shipment's supply chain that CBP needs to
effectively identify high-risk shipments. The Section 321 Data Pilot
tests the feasibility of obtaining this advance information from
parties other than those required to submit it pursuant to the existing
regulations, such as online marketplaces. The Section 321 Data Pilot
also tests the collection of additional data that is generally not
required under current regulations. Participants in the Section 321
Data Pilot agree to transmit certain data elements for each qualifying
low-value shipment. Initial pilot participants included carriers, e-
commerce marketplaces, a technology firm, and logistics providers. In
2023, CBP modified the Section 321 Data Pilot to allow participants to
transmit optional data elements and to permit additional trade members
to participate.\27\ The purpose of the pilot is to improve CBP's
ability to identify and target high-risk e-commerce shipments including
narcotics, weapons, and products
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posing a danger to the public's health and safety.
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\26\ 84 FR 35405 (July 23, 2019). The original pilot was
expanded to include shipments arriving by ocean and international
mail and was extended through August 2021. 84 FR 67279 (Dec. 9,
2019). It was subsequently extended through August 2023 (86 FR 48435
(Aug. 30, 2021)), and then again through August 2025 (88 FR 10140
(Feb. 16, 2023)).
\27\ 88 FR 10140 (Feb. 16, 2023).
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The other pilot, the Entry Type 86 Test, authorized a new entry
process for qualifying low-value shipments in the Automated Commercial
Environment (ACE) through the development of a new informal entry type
86.\28\ The test created a means for qualifying low-value shipments
subject to PGA data requirements to benefit from the use of a section
321 entry process for the first time, allowing these shipments to claim
duty- and tax-free treatment under the administrative exemption. Prior
to the development of entry type 86, low-value shipments subject to PGA
requirements were required to be entered using the more complex
informal entry type 11 or formal entry.\29\ The Entry Type 86 Test also
expedites the clearance of compliant low-value shipments into the
United States through the use of an electronic release in ACE.
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\28\ 84 FR 40079 (Aug. 13, 2019).
\29\ Merchandise imported by mail is excluded from the Entry
Type 86 Test and may not be entered under entry type 86.
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Under this test, an owner, purchaser, or customs broker appointed
by an owner, purchaser, or consignee may file an entry type 86.\30\ Ten
data elements in the entry type 86 are required to be transmitted to
CBP, including the 10-digit classification for the merchandise under
the Harmonized Tariff Schedule of the United States (HTSUS). This
information allows CBP to determine whether the shipment is subject to
PGA data reporting requirements. Any PGA data reporting requirements
must be satisfied by the transmission of the PGA Message Set and the
filing of any supporting documentation via the Document Image System
(DIS). The PGA Message Set enables the trade community to
electronically submit all data required by the PGAs only once to CBP,
eliminating the necessity for the submission and subsequent manual
processing of paper documents, and makes the required data available to
the relevant PGAs for import and transportation-related decision-
making. The Entry Type 86 Test has allowed CBP to test electronic
release in ACE for low-value shipments, including those with PGA data
requirements. It has also allowed CBP to test operational procedures
involved with the new entry type, including associated challenges with
electronic release in ACE and necessary coordination with PGAs.
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\30\ For example, a party with a financial interest in the
merchandise could constitute an owner or a purchaser that may file
an entry type 86. Additionally, a broker properly appointed by the
owner or the purchaser, or for example, by a third-party warehouse
receiving the merchandise as a consignee, may file an entry type 86.
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Both pilots have yielded positive benefits for CBP and the trade
community. Specifically, under the Section 321 Data Pilot, CBP was able
to test the feasibility of collecting new data elements that identify
the entities responsible for the movement of low-value shipments, the
precise contents of these shipments, and their final destination after
arriving in the United States. Collection of this information allows
CBP to conduct faster and more accurate risk assessments, and trade
members providing this more detailed data may benefit from fewer CBP
holds. Similarly, as a result of the Entry Type 86 Test, the trade
community has experienced fewer holds and faster clearance, often same-
day clearance, versus the previous wait times of up to eight days.
Trade members have also reported time and cost savings as detailed
below in section VII.
If and when this proposed rule becomes a final rule, CBP will end
the Entry Type 86 Test. CBP proposes to codify the Entry Type 86 Test's
electronic entry process as part of the new enhanced entry process,
with certain changes as discussed in the next section. The Section 321
Data Pilot, however, will continue with respect to those data elements
and filers not covered by a final rule, for further evaluation of the
pilot and the risks associated with low-value shipments. Changes to the
Section 321 Data Pilot will be announced in a separate Federal Register
notice.
VI. Discussion of Proposed Amendments
This rulemaking proposes amendments to provisions found in 19 CFR
parts 10, 101, 128, 143, and 145. CBP generally intends this proposed
rule's provisions to be severable from each other. CBP expects to
provide additional detail on severability in the final rule once CBP
has considered public comments and finalized the regulatory language.
CBP proposes to combine the successful aspects of the Section 321 Data
Pilot and Entry Type 86 Test to create a new, alternative \31\ process
for entering low-value shipments (referred to as the ``enhanced entry
process'') that would, among other benefits, allow CBP to target high-
risk shipments more effectively in advance of the shipment's arrival in
the United States, including those shipments containing synthetic
opioids such as illicit fentanyl. The new enhanced entry process
incorporates a selection of the most useful data elements tested in the
Section 321 Data Pilot and uses an electronic entry process similar to
what was tested in the Entry Type 86 Test.\32\
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\31\ The enhanced entry process is required for goods subject to
PGA data requirements seeking duty-free entry under the
administrative exemption.
\32\ Some of the data elements collected under the enhanced
entry process in this proposed rulemaking may be similar to advance
data collected for cargo security purposes pursuant to regulations
issued under the authority of 19 U.S.C. 1415, such as in the case of
Air Cargo Advance Screening (ACAS) data. CBP notes that 19 U.S.C.
1415(a)(3)(F) prohibits data collected under that statute's
implementing regulations from being used for commercial enforcement
purposes, including for determining merchandise entry. This
rulemaking is being proposed under the statutory authorities
pertaining to the entry of merchandise as detailed in section III.
Accordingly, the regulations issued under 19 U.S.C. 1415 will
continue to apply without any modification by this proposed
rulemaking.
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The enhanced entry process would require the submission of advance
data, within specified time frames, about the contents, origin, and
destination of the shipments. Furthermore, the new process would allow
CBP to maintain two key benefits of the Entry Type 86 Test, namely the
expedited clearance of certain shipments and the availability of duty-
and tax-free entry for qualifying low-value shipments, including those
that are subject to PGA requirements.
This document also proposes to revise the current release from
manifest process for entering low-value shipments (renamed as the
``basic entry process'') to require additional data elements that would
assist CBP in verifying eligibility for duty- and tax-free entry of
low-value shipments and bona-fide gifts.
Additionally, this document proposes to define who is the ``one
person'' to whom the $800 exemption applies, explain eligibility
requirements for the exemption, and clarify the definition of a
``shipment,'' among other things. Lastly, this document proposes to
correct typographical errors and make minor amendments for clarity and
stylistic purposes.
Part 10, among other things, establishes the administrative
exemptions for low-value shipments and bona-fide gifts in the
regulations and lists the conditions that must be met to qualify for
the exemptions. Part 101 contains general definitions, which includes
the definition of a ``shipment.'' Part 143, subpart C contains the
informal entry procedures. Accordingly, the new enhanced entry process
is set forth in proposed Sec. 143.23(j) and (l). The parties who can
make entry of low-value shipments and the applicable standards of care
are found in Sec. 143.26. Specific procedures for shipments imported
by mail are found in part 145, and
[[Page 3054]]
procedures for express consignment operators and carriers are found in
part 128.
A. Part 10
Section 10.151 broadly sets forth the administrative exemption of
19 U.S.C. 1321(a)(2)(C) in the CBP regulations. Similarly, Sec. 10.152
sets forth the administrative exemption for bona-fide gifts under 19
U.S.C. 1321(a)(2)(A).\33\ Section 10.153 sets forth the conditions to
be applied by a CBP officer in determining whether an article or parcel
shall be exempted from duty and tax under Sec. 10.151 or 10.152. CBP
is proposing several changes to these sections to clarify the
parameters of these exemptions and more closely align the language in
the regulations with the statutory text.
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\33\ The separate exemption for articles accompanying and for
the personal/household use of travelers returning from abroad, under
19 U.S.C. 1321(a)(2)(B), is not implicated or changed by this
rulemaking.
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1. Shipments Exceeding $800
There has been some confusion in the trade community regarding how
the $800 value limit is applied when multiple low-value shipments are
imported by one person on the same day. To provide clarity, CBP
proposes to amend Sec. 10.151 to explain that when the aggregate fair
retail value of shipments imported by one person on one day under Sec.
10.151 exceeds $800, then all such shipments imported on that day by
that person become ineligible for duty- and tax-free entry under the
administrative exemption. Such shipments would have to be entered under
appropriate informal or formal entry procedures.
2. Party Eligible for Administrative Exemption and Party Authorized To
Make Entry
In order to enforce the administrative exemption, CBP must ensure
that the aggregate fair retail value in the country of shipment of
articles imported by one person on one day and exempted from the
payment of duty does not exceed the statutory limit of $800. CBP
proposes to amend Sec. 10.151 to require that the ``one person''
eligible for the administrative exemption is the owner or purchaser of
the merchandise imported on one day.
It is possible that the party who is eligible for the
administrative exemption (i.e., the owner or purchaser) is different
from the party who is authorized to make entry under Sec. 143.26(b).
Accordingly, CBP proposes to include a cross-reference in Sec. 10.151
to clarify that merchandise for which the administrative exemption is
being claimed must be entered by a party authorized to make entry under
Sec. 143.26(b).
3. Single Orders Sent Separately To Circumvent Duties and Evidence of
Fair Retail Value
The statutory text of 19 U.S.C. 1321(a) prohibits goods from a
single order or contract from being forwarded in separate lots to
obtain the benefit of the administrative exemption. The current
regulation differs from the statute in that the regulation requires
that the single order must be sent separately for the ``express
purpose'' of obtaining free entry or avoiding compliance with pertinent
laws. CBP proposes to align this provision with the statute and remove
the limiting language that requires an ``express purpose'' to be
established.
CBP proposes removing the clause in Sec. 10.151 that describes the
documents (or oral declaration) used to evidence the fair retail value
of a shipment. CBP believes that the informal entry procedures cited to
in the last sentence of Sec. 10.151 more comprehensively describe the
required data and documents needed to file or support entry of the
shipment.
4. Other Amendments to Sec. Sec. 10.151 and 10.152
Currently, the regulations in Sec. Sec. 10.151 and 10.152 state
that the port director ``shall'' provide duty- and tax-free entry of
shipments meeting the value limits in 19 U.S.C. 1321(a)(2)(A) and (C).
The value limit, however, is not the only requirement that shipments
must meet in order to obtain duty- and tax-free entry under these
sections. All other applicable statutory and regulatory requirements
must also be met. Furthermore, the administrative exemptions are a
privilege and not an absolute right. CBP maintains the authority,
pursuant to 19 CFR 143.22, to require a formal entry, and assess any
attendant duties, taxes, and fees, as applicable, for any such shipment
for import admissibility enforcement purposes, revenue protection, or
the efficient conduct of customs business.\34\ Therefore, CBP proposes
to replace ``shall'' with ``may,'' reflecting that the exemptions are
granted based on the port director's discretion.
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\34\ CBP may require a formal consumption or appraisement entry
for any merchandise if deemed necessary for import admissibility
enforcement purposes, revenue protection, or the efficient conduct
of customs business. 19 CFR 143.22. Any such formally entered
merchandise is not eligible for the administrative exemptions. See
19 CFR 10.151and 10.152.
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CBP also proposes amending Sec. Sec. 10.151 and 10.152 to clarify
that eligible merchandise must be entered under the specific informal
entry procedures listed in each section in order to enter free of duty
and tax. If another form of entry is used, such as informal type 11
entry or formal entry, then applicable duties and taxes will be
assessed. For clarity, in Sec. Sec. 10.151 and 10.152, CBP proposes
replacing the more general cross-reference to subpart C of part 143
with the specific citations to the applicable informal entry procedures
in Sec. 143.23(j).
In Sec. 10.152, CBP is proposing to remove the cross-references to
Sec. Sec. 148.12, 148.51, and 148.64 because they reference the
process of entering gifts along with household or personal articles
which accompany a person upon the person's arrival from abroad, all of
which may be entered pursuant to an oral declaration. Section 10.152
pertains to bona-fide gifts sent from persons in foreign countries to
persons in the United States subject to the exemption under 19 U.S.C.
1321(a)(2)(A), which is distinct from the separate exemption under 19
U.S.C. 1321(a)(2)(B) for personal and household goods (including gifts)
accompanying persons arriving in the United States. Accordingly, CBP
proposes to remove those cross-references to avoid confusion.
Lastly, CBP proposes updating the undesignated center heading
preceding Sec. 10.151 to replace ``$200'' with ``$800'' to align with
the current value limit in 19 U.S.C. 1321(a)(2)(C). In the same
heading, CBP proposes hyphenating the phrase ``bona fide'' for
consistency with the text in Sec. 10.152.
5. Antidumping and Countervailing Duties
Section 10.153 sets forth, among other things, the guidance to be
applied by a CBP officer in determining whether an article or parcel
should be exempted from duty and tax under Sec. 10.151. CBP proposes
adding a new paragraph (i), which would clarify the existing
requirement that merchandise subject to antidumping and countervailing
duties (AD/CVD) is not eligible for the administrative exemption. CBP
has a ministerial role in administering and enforcing AD/CVD orders in
accordance with instructions from the U.S. Department of Commerce
(Commerce). Commerce's instructions specifically direct CBP to assess
AD/CVD on all entries for consumption of subject merchandise, without
any exceptions. Further, the AD/CVD statutes specifically apply to
``all entries, or withdrawals from warehouse, for
[[Page 3055]]
consumption of merchandise subject to [an AD/CVD] order on or after the
date of publication of such order,'' without any mention of the
administrative exemption or other exemption from the applicability of
AD/CVD to all entries of subject merchandise.\35\
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\35\ 19 U.S.C. 1671h (CVD); 19 U.S.C. 1673g (AD).
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In addition, new paragraph (i) also reinforces CBP's authority to
deny the administrative exemption for any other merchandise otherwise
precluded by law from eligibility.
6. Other Amendments to Sec. 10.153
CBP proposes updating the nomenclature in the introductory text of
Sec. 10.153 by changing ``Customs'' to ``CBP.'' Additionally, in
paragraph (a) and the introductory text of paragraph (d), CBP proposes
hyphenating the phrase ``bona fide'' for consistency with the text in
Sec. 10.152.
B. Part 101
CBP proposes amending the definition of ``shipment'' in Sec. 101.1
to clarify that a single shipment corresponds to an individual bill of
lading. An individual bill of lading is not a consolidation of several
bills of lading and is not a master bill or other consolidated
document. An individual bill of lading is a bill representing an
individual shipment that has its own unique bill number and tracking
number, where the shipment is assigned to a single ultimate consignee,
and no lower bill unit exists. An individual bill of lading, also known
as a ``house bill,'' is used in all modes of transportation. It may be
referred to as an ``individual air waybill'' in the air environment or
a ``simple bill'' in the ocean environment.
C. Part 128
Part 128 sets forth requirements and procedures for the clearance
of imported merchandise carried by ECOs, including couriers, under
special procedures.
Current Sec. 128.24 explains the informal entry procedures for
express consignment shipments, including shipments meeting the
requirements of Sec. 10.151. As was done above in Sec. 10.151, CBP
proposes replacing the word ``will'' with ``may'' in the first sentence
of the introductory text of Sec. 128.24(e) to reflect that CBP has the
discretion to require formal entry for any low-value shipment.\36\ CBP
proposes adding a cross-reference in the introductory text of Sec.
128.24(e) to the entry procedures for low-value shipments in Sec.
143.23(j). The procedures in Sec. 143.23(j) require that an individual
bill of lading must accompany each entry. Under the current
regulations, an advance manifest listing each bill of lading may be
used as the entry document, and shipments valued at $800 or less must
be segregated on the advance manifest. Accordingly, CBP is removing the
requirement to segregate shipments valued at $800 or less on an advance
manifest because, although the advance manifest is still required, it
is the individual bill of lading that serves as the entry document. As
a result, there is no need to segregate shipments on the advance
manifest. CBP is also removing paragraphs (e)(1) and (e)(2), because
the data and documents required for entry are explained in Sec.
143.23(j)-(l).
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\36\ See 19 CFR 143.22.
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CBP proposes to add a new paragraph (f) to Sec. 128.24 to specify
the entry procedures to be used for entering bona-fide gifts. Bona-fide
gifts may not be entered under the new enhanced entry process. CBP is
also amending paragraph (d) to clarify that an entry summary is not
required for qualifying low-value shipments and bona-fide gifts passing
free of duty and tax pursuant to paragraphs (e) and (f), respectively.
Current Sec. 128.21(a) lists the manifest information required in
advance of the arrival of all express consignment cargo. CBP proposes
to amend paragraph (a)(4)(ii) to explain that the HTSUS subheading
number is not required for low-value shipments entered under the basic
entry process in Sec. 143.23(k), but it is required for shipments
entered under the enhanced entry process in Sec. 143.23(l) (unless a
waiver is obtained). Lastly, CBP proposes to replace the reference to
``Customs'' in Sec. 128.21(b) with ``CBP.''
D. Part 143
Under this proposed rulemaking, qualifying low-value shipments can
be entered under two alternative processes to receive duty- and tax-
free entry, either under the basic entry process or the enhanced entry
process. This section explains the requirements of each process.
1. General Requirements for Shipments Not Over $800 and Bona-Fide Gifts
The general requirements for entry of qualifying low-value
shipments and bona-fide gifts are set forth in the revisions proposed
in Sec. 143.23(j). Paragraph (j) states that in order to enter
qualifying shipments, the party making entry must provide the
individual bill of lading (house bill or equivalent), or other shipping
document used to file or support entry, as a basic requirement. In
addition, the requirements of either the basic entry process in
paragraph (k) or the enhanced entry process in paragraph (l) must be
met.
The proposed revisions to paragraphs (j)(1)-(3) explain when
certain types of merchandise are limited to entry under either the
basic or enhanced process in order to qualify for the administrative
exemption. Proposed paragraph (j)(1) states that merchandise may be
subject to other legal requirements, including the requirements of
other Federal, State, or local agencies, as applicable. In the case of
merchandise regulated by other Federal agencies, the merchandise may
not be entered under the basic entry process under Sec. 143.23(k), but
may be entered under the enhanced entry process under Sec. 143.23(l).
However, any merchandise that is not exempt from the payment of any
applicable PGA duties, fees, or taxes is not eligible for entry under
either entry process. Any filing that is determined to owe any duties,
fees, or taxes will be rejected by CBP and must be re-filed using the
appropriate informal or formal entry process.
Proposed paragraph (j)(2) explains that mail importations may not
be entered using the basic entry process in Sec. 143.23(k), but may be
entered using the enhanced entry process in Sec. 143.23(l). Further
information about mail importations is found in Sec. 145.31. Lastly,
proposed paragraph (j)(3) explains that bona-fide gifts under Sec.
10.152 are not eligible to use the enhanced entry process and must use
the basic entry process in Sec. 143.23(k).
2. Basic Entry Process
CBP proposes to amend the current release from manifest process
described in Sec. 143.23(j) and (k). First, CBP proposes renaming the
existing process in Sec. 143.23(j) and (k) as the ``basic entry
process'' to differentiate it from the proposed new ``enhanced entry
process.'' The requirements for the basic entry process will be
consolidated in Sec. 143.23(k).
The proposed basic entry process maintains the general procedures
of the existing release from manifest process, with slight
modifications. As explained in paragraph (k), low-value shipments
meeting the requirements in Sec. 10.151 or bona-fide gifts meeting the
requirements in Sec. 10.152 may be entered under the basic entry
process. Release under the proposed basic entry process will be
obtained by providing an individual bill of lading (house bill or
equivalent) and will require the filer to provide the data elements
listed in paragraph (k). The entry data may either be transmitted
electronically through a CBP-authorized electronic data interchange
(EDI) system or be submitted in paper format.
There are some changes to the data elements from the current
process. The
[[Page 3056]]
following information must be provided under the existing process: the
country of origin of the merchandise; shipper name, address and
country; ultimate consignee name and address; specific description of
the merchandise; quantity; shipping weight; and value.\37\ In Sec.
143.23(k)(3), CBP proposes to also require the name and address of the
person claiming the administrative exemption under Sec. 10.151 or
10.152, i.e., the person who is being exempted from the payment of duty
for the qualifying low-value shipment. For qualifying low-value
shipments, this would be the name and address of the owner or purchaser
as set forth in Sec. 10.151. For bona-fide gifts, it would be the name
and address of the person receiving the articles as set forth in Sec.
10.152.\38\ This is crucial information that CBP needs to enforce the
cumulative statutory ``one person on one day'' monetary restriction.
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\37\ 19 CFR 143.23(k).
\38\ 19 CFR 10.152. The exemption may be granted if the
conditions in Sec. 10.153 are met and ``the aggregate fair retail
value in the country of shipment of such articles received by one
person on one day does not exceed $100 or, in the case of articles
sent from a person in the Virgin Islands, Guam, and American Samoa,
$200.'' (Emphasis added.)
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Additionally, in proposed Sec. 143.23(k)(8), CBP requires the name
and address of the final deliver-to party, if distinct from the party
eligible for the administrative exemption in paragraph (k)(3). This
refers to the final party in the United States to whom the merchandise
is to be delivered. The purpose of this data element is to enable CBP
to know to whom and where the imported merchandise is destined to be
delivered in the United States. To avoid duplication of data elements,
CBP is proposing to remove the name and address of the ultimate
consignee, currently required by Sec. 143.23(k)(3).
CBP is also proposing amendments to several of the existing data
elements. CBP proposes to clarify that the quantity requested is the
``manifested quantity of the merchandise'' and the weight is referring
to the ``shipment weight.'' Lastly, to maintain consistency with the
statutory language, CBP is specifying that the value required is the
``fair retail value in the country of shipment'' in U.S. dollars.\39\
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\39\ When duties or other charges or fees are assessed on an
import, they are calculated using the appraised value of the
imported good, pursuant to 19 U.S.C. 1401a, which is not based on
the good's retail value in the country of shipment. Alternatively,
for the purposes of the administrative exception, the value to be
evaluated to determine qualification for duty- and tax-free
treatment is the fair retail value in the country of shipment.
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3. Enhanced Entry Process
Proposed Sec. 143.23(l) sets forth the enhanced entry process.
This process is limited to low-value shipments meeting the requirements
of Sec. 10.151. Accordingly, qualifying bona-fide gifts under Sec.
10.152 must use the basic entry process for duty- and tax-free entry.
The enhanced entry process requires the electronic transmission of
the individual bill of lading (house bill or equivalent) or other
shipping document used to file or support entry. In addition, enhanced
entry filers must transmit the data elements in paragraph (k) and
paragraphs (l)(1)-(2) to CBP. CBP acknowledges that it is possible that
the required data elements do not all reside with one party. The entry,
however, can only be filed by one of the parties eligible to file
entry. Therefore, in such cases, the party filing the entry will need
to gather the required data from others before filing.
The enhanced entry process requires data to be transmitted to CBP
in advance of arrival of the shipment to allow for CBP to timely
conduct targeting and offer expedited release. For consistency with
other advance data requirements, CBP proposes to adopt, for the
enhanced entry process, the same time frames as currently applicable
for filing advance electronic data (AED) under regulations promulgated
pursuant to section 343 of the Trade Act of 2002, 19 U.S.C. 1415 (the
Trade Act regulations). Therefore, all the required information and
documentation must be transmitted to CBP through a CBP-authorized EDI
system on or before the deadline for receipt of advance cargo
information. Mail shipments using the enhanced entry process are
subject to a separate filing deadline, which can be found in Sec.
145.31. For all other shipments, the required time frame to file an
enhanced entry varies depending on the mode of transportation, and will
be the same as provided for AED filings for each mode under the Trade
Act regulations, which are as follows:
For vessel cargo, the filing must be received by CBP 24
hours before the cargo is laden aboard the vessel at the foreign port.
19 CFR 4.7 and 4.7a.
For air cargo, the filing must be received by CBP either:
(1) no later than the time of the departure of the aircraft for the
United States,\40\ in the case of aircraft that depart for the United
States from any foreign port or place in North America, including
locations in Mexico, Central America, South America (from north of the
Equator only), the Caribbean, and Bermuda; or (2) no later than four
hours prior to the arrival of the aircraft in the United States, in the
case of aircraft that depart for the United States from any foreign
area other than those specified in 19 CFR 122.48a(b)(1). 19 CFR
122.48a(b)(1).
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\40\ The trigger time is no later than the time that wheels are
up on the aircraft, and the aircraft is en route directly to the
United States. 68 FR 68140; see also, 19 CFR 122.48a(b).
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For rail cargo, the filing must be received by CBP no
later than two hours prior to the cargo reaching the first port of
arrival in the United States. 19 CFR 123.91.
For truck cargo, the filing must be received by CBP no
later than either 30 minutes or one hour prior to the carrier's
reaching the first port of arrival in the United States, or such lesser
time as authorized, based upon the CBP-approved system employed to
present the information. 19 CFR 123.92.
If the required information has not been transmitted by the time
frames specified, those shipments will not receive a release message
upon arrival of the conveyance. Such shipments will be held for
additional action, such as an exam or document review before a manual
clearance may be given.
In order to account for the various types of merchandise that may
be entered subject to the administrative exemption, the data elements
required for the enhanced entry process are split into subparagraphs
(1) and (2). Subparagraph (1) data must be transmitted for all
shipments. The data in subparagraph (2) may not be applicable to all
shipments, but if the data exists, it must be transmitted. CBP may
request supporting documentation to conduct verification of any of the
data elements.
Under proposed Sec. 143.23(l)(1), the following data elements must
be transmitted for all shipments:
(i) Clearance Tracing Identification Number (CTIN)
The CTIN refers to the individual bill of lading number or other
unique identification number used to associate the merchandise on the
individual bill of lading with the eligible imported merchandise for
which entry is sought.
(ii) Country of Shipment of the Merchandise
This refers to the country where the goods were located when the
shipment was created for exportation to the United States. For example,
a good originating in Country A is shipped to a storage facility in
Country B and is then sold and prepared for exportation to the United
States. It is then transshipped through Country C before arriving in
the United States. In this
[[Page 3057]]
scenario, the country of shipment is Country B.
(iii) 10-Digit Classification of the Merchandise in Chapters 1-97 (and
Additionally in Chapters 98-99, if Applicable) of the Harmonized Tariff
Schedule of the United States (HTSUS)
The 10-digit HTSUS classification must be provided for all
shipments unless the HTSUS waiver privilege has been obtained pursuant
to paragraph (m) and asserted for the entry. Regardless of whether the
waiver privilege is granted, merchandise subject to requirements of
other government agencies will always require the HTSUS subheading
number to be filed. The intent of collecting HTSUS data is primarily
for CBP to verify what partner government agency requirements may apply
to the merchandise.
Unless otherwise prohibited, a Chapter 98 or Chapter 99 commodity
may also be entered under the enhanced entry process. In such cases,
the Chapter 98 or Chapter 99 HTSUS classification must be provided in
addition to the underlying Chapters 1-97 HTSUS classification for the
merchandise.
(iv) Additional Data Elements
CBP is also requiring at least one of the data elements listed
under paragraph (l)(1)(iv). These data elements include the internet
address known as the uniform resource locator (URL) to the
marketplace's product listing for the merchandise in the entry; product
picture; product identifier; and/or a shipment x-ray or other security
screening report number verifying completion of foreign security
scanning of the shipment. These data elements would be used by CBP to
verify the contents of the shipment for admissibility purposes.
CBP intends for the product identifier to be a commercial product
identifier such as the part number, stock keeping unit (SKU), or
product code. However, CBP is seeking the trade community's input
regarding suggestions for acceptable product identifiers.
The security screening report number, applicable to ECOs, is also
included as one of the four options. CBP seeks the trade community's
input about its viability for being submitted as part of the enhanced
entry process.
Next, proposed Sec. 143.23(l)(2) lists additional information that
must be transmitted for all shipments, if applicable. These data
elements include:
(i) Seller Name and Address
The seller is the party that made, or offered or contracted to
make, a sale of the merchandise. Seller information is critical to
CBP's efforts to identify and interdict shipments of goods that
infringe intellectual property rights or are of a substandard quality
that renders them otherwise restricted from entry. These goods undercut
the competitiveness of U.S. businesses and pose health and safety
concerns.
(ii) Purchaser Name and Address
The purchaser is the last known party to whom the goods are sold,
or the party to whom the goods are contracted to be sold, at the time
of importation. Importation occurs when a vessel arrives within the
limits of a port in the United States with intent then and there to
unlade such merchandise.\41\ In the case of merchandise imported other
than by vessel, importation occurs when the merchandise arrives within
the customs territory of the United States.\42\
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\41\ 19 CFR 101.1.
\42\ Id.
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Although this data element may seem to overlap with the data
elements in Sec. 143.23(k)(3) and (8), that would not always be the
case. One of the main purposes of this proposed rule is to try to
capture all the parties involved with complex e-commerce transactions.
It is possible, for example, that Party A purchases a product on an
online marketplace from Party B to be sent to Party C's address in the
United States. In this scenario, it is possible that the name of Party
B could be provided in Sec. 143.23(k)(3) as the owner, and the name of
Party C is provided in Sec. 143.23(k)(8) as the final deliver-to party
in the United States. Without this separate data element requesting the
name and address of the purchaser, CBP would not know the party who
initiated this transaction (i.e., Party A).
(iii) Any Data or Documents Required by Other Government Agencies
If the merchandise is subject to any PGA data reporting
requirements, the filer must transmit the PGA Message Set and file any
supporting documentation via the Document Image System (DIS).\43\
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\43\ See the December 13, 2013 Federal Register notice (78 FR
75931) for a further discussion of the PGA Message Set and the
October 15, 2015 Federal Register notice (80 FR 62082) for a further
discussion of DIS.
---------------------------------------------------------------------------
(iv) Advertised Retail Product Description
This refers to the exact product description as listed in the
advertisement for sale. This must include a description that is more
detailed than what is provided on the manifest. For example, products
listed on online marketplaces include detailed descriptions of the
merchandise, dimensions, weight, etc.
(v) Marketplace Name and Website or Phone Number
This refers to the party that provides an internet (e.g., online,
website, application (``app''), electronic mail) or telephonic (e.g.,
telephone, television, or catalog) means of offering products for sale.
The marketplace may be a seller or a third party offering products on
behalf of a seller.
4. HTSUS Waiver Privilege
The proposed enhanced entry process requires the submission of a
10-digit HTSUS classification for determining whether the merchandise
is subject to PGA data requirements. CBP understands that many
companies have their own internal risk assessment processes, which
include ways to determine whether imported merchandise is subject to
PGA requirements. Accordingly, the proposed regulations provide for
parties to apply for a waiver of the reporting requirement for the 10-
digit HTSUS classification if the filing party has documented internal
controls that ensure certain compliance measures. This waiver is
intended for filers with demonstrated capabilities and histories of
segmenting out goods subject to PGA requirements. The waiver lifts the
data requirement for 10-digit HTSUS classification as part of the
enhanced entry only for goods that are not subject to PGA requirements.
Waivers do not apply to goods that are subject to PGA requirements, for
which the 10-digit HTSUS classification is always required under the
enhanced entry process.
Proposed Sec. 143.23(m) sets forth the application requirements
for the HTSUS waiver privilege, actions CBP may take on the
application, and the appeals process. Notwithstanding the availability
of this privilege, a 10-digit HTSUS classification would still be
required for imported merchandise subject to PGA requirements. The
waiver may only be used to enter merchandise under the enhanced entry
process without providing the 10-digit HTSUS classification, when the
imported merchandise is not subject to PGA requirements.
A party eligible to make an enhanced entry may apply for the HTSUS
waiver privilege by submitting an application containing the
information in paragraph (m)(2) to the Director, Cargo Security and
Controls Division, Office of Field Operations, at
[email protected].
[[Page 3058]]
The application process must include information demonstrating that the
applicant does not import goods subject to PGA requirements or it must
have in place documented internal controls used in the ordinary course
of business to identify PGA goods with certainty. An applicant must
demonstrate that the internal controls allow the applicant to properly
classify merchandise under the HTSUS at the 10-digit classification,
determine whether merchandise is subject to the requirements of other
government agencies, and determine whether merchandise is otherwise
precluded by law from eligibility for the administrative exemption
under 19 U.S.C. 1321(a)(2)(C). Participation in the Customs Trade
Partnership Against Terrorism (CTPAT) program does not guarantee
approval of an application, but may be considered along with other
factors on a case-by-case basis.
The Office of Field Operations, in consultation with the Office of
Trade, will make the determination to grant or deny the application on
a case-by-case basis. CBP will respond to applications within 60 days
of receipt. CBP will conduct periodic compliance reviews of privileges
granted. CBP may revoke the privilege at any time if it determines that
a company's internal controls fall below the standards set by CBP, as
proposed in 19 CFR 143.23(m)(2)(ii). If a company does not agree to
participate in a review, then the privilege will be revoked.
If an application is denied or the waiver is revoked, an appeal may
be submitted by email within 30 days of the date of denial or
revocation to the Executive Director, Trade Policy and Programs, Office
of Trade, CBP Headquarters, at [email protected]. The denial of an
application or the revocation of a waiver, does not preclude a party
from reapplying for the privilege in the future. Reapplications must
specify and address past denials and revocations of the privilege.
Once obtained, the waiver privilege must be asserted as part of the
entry filing for a shipment. CBP will track whether the imported
merchandise in a shipment is eligible for the privilege through a
``flag'' or certification checkbox in ACE.
5. Party Who May Make Entry and Standard of Care
Section 143.26 addresses the right to make entry and the standard
of care for informal entries. Current Sec. 143.26(b) addresses who has
the right to make entry, and states that shipments valued at $800 or
less may be entered, using reasonable care, by the owner, purchaser, or
consignee of the shipment or, when appropriately designated by one of
these persons, a customs broker. These parties may continue to file
entry under the basic entry process, and CBP proposes to add a
clarifying cross-reference to Sec. 143.23(k). Carriers often enter
low-value shipments as nominal consignees under the release from
manifest process. They will continue to be able to do so under the
basic entry process in proposed Sec. 143.23(k). This is not the case,
however, under the enhanced process in proposed Sec. 143.23(l). CBP
proposes to add new paragraph (c) to Sec. 143.26 that establishes an
exception for enhanced entries regarding the parties who may make entry
and the standard of care required.
CBP proposes that an enhanced entry under Sec. 143.23(l) may be
entered using reasonable care, by the owner or purchaser of the
shipment, an express consignment operator or carrier in possession of
the shipment (see Sec. 128.1(a)), or when appropriately designated by
the owner, purchaser, or consignee of the shipment, a customs broker.
The filing of a basic or an enhanced entry, like the filing of any
entry, is considered ``customs business'' under 19 U.S.C. 1641.\44\ CBP
notes that customs brokers must be authorized to conduct customs
business on behalf of another party through a valid power of attorney
and must comply with all other statutory and regulatory requirements
applicable to brokers.\45\ This proposed rule does not preclude further
amendments of the regulations at a later date to include other enhanced
entry filers, including possibly the United States Postal Service. Any
such expansion would be considered in a future rulemaking.
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\44\ Pursuant to 19 U.S.C. 1641, ``customs business'' is defined
as those activities involving transactions with CBP concerning the
entry and admissibility of merchandise, its classification and
valuation, the payment of duties, taxes, or other charges assessed
or collected by CBP on merchandise by reason of its importation, or
the refund, rebate, or drawback of those duties, taxes, or other
charges. ``Customs business'' also includes the preparation of
documents or forms in any format and the electronic transmission of
documents, invoices, bills, or parts thereof, intended to be filed
with CBP in furtherance of such activities, whether or not signed or
filed by the preparer, or activities relating to such preparation,
but does not include the mere electronic transmission of data
received for transmission to CBP.
\45\ See 19 CFR 141.46; see, e.g., 19 U.S.C. 1641; 19 U.S.C.
1484; 19 CFR parts 111 and 141.
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Unlike in the basic entry process, consignees are not permitted to
file an enhanced entry without using a customs broker. However, ECOs
are permitted to file an enhanced entry without using a customs broker,
even though they are consignees, because they are better able to
provide detailed information to CBP about the imported merchandise.
ECOs, by regulation, are expected to exercise ``a high degree of
control over the shipments, particularly in regard to the reliability
of information supplied for Customs purposes.'' \46\ Typically, it is
the owner or purchaser (i.e., a party with a direct nexus to the
merchandise) who provides ECOs with information about the shipment.
This closely integrated administrative control over shipments from
pick-up to delivery uniquely positions ECOs, as opposed to other
consignees, to obtain and provide to CBP accurate information about the
contents of the shipment and to determine if the merchandise is subject
to PGA requirements.
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\46\ 19 CFR 128.1(f).
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ECOs transporting eligible shipments would qualify to file without
using a customs broker under the enhanced entry process. Under 19
U.S.C. 1498, CBP has broad authority to promulgate special rules for
the declaration and entry of merchandise subject to the 19 U.S.C.
1321(a)(2)(C) exemption, to include identifying specific parties in the
implementing regulations who are permitted to make entry on their own
behalf.
Section 143.26 also addresses the standard of care required for
informal entries, including for entries of low-value shipments.
Shipments entered under the basic process in proposed Sec. 143.23(k)
are covered by Sec. 143.26(b) and the standard of care continues to be
``reasonable care.''
For enhanced entries under proposed Sec. 143.23(l), proposed Sec.
143.26(c) states that the general standard of care is reasonable care,
but sets forth more specific provisions for the data elements in Sec.
143.23(l)(1)(iv)(A)-(D) and 143.23(l)(2)(iv)-(v). Specifically, these
include the URL to the product listing, product picture, product
identifier, shipment x-ray or other security screening report number,
advertised product description, and marketplace information. CBP
recognizes that these are non-traditional data elements and may not be
easily verifiable by the party filing the entry if they are being
passed onto the filer by third parties. Accordingly, when a party
eligible to file the entry transmits the entry information specified
above and receives any of that information from another party, CBP will
take into consideration how, in accordance with ordinary commercial
practices, the transmitting party acquired such information, and
whether and how the transmitting party is able to verify this
[[Page 3059]]
information. When the transmitting party is not reasonably able to
verify such information, CBP will permit the party to transmit the
information on the basis of what the party reasonably believes to be
true.
CBP proposes adding a cross-reference to the first sentence in
paragraph (b) to recognize the more specific provisions in new
paragraph (c).
E. Part 145
CBP proposes amending Sec. 145.31 to allow for mail shipments to
be entered though the enhanced entry process. Parties interested in
using the postal service to ship merchandise using the enhanced entry
process will have to ensure that all required information is
transmitted to CBP using the procedure set forth in Sec.
143.23(l).\47\ A mail customs declaration and invoice will continue to
be required in accordance with Sec. 145.11. The customs declaration is
the ``other shipping document used to file or support entry''
referenced in Sec. 143.23(j) and (l). The data for mail shipments must
be received by CBP no later than the date the merchandise departs from
the country of posting. Mail shipments are not eligible to use the
basic entry process because the current method of entering qualifying
low-value mail shipments free of duty and tax will continue to remain
available. Under the current method, the information needed for entry
and release is supplied in the documentation accompanying the mail
package. Generally, this documentation consists of the customs
declaration and invoice or bill of sale (or, in the case of merchandise
not purchased or consigned for sale, a statement of the fair retail
value in the country of shipment).\48\
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\47\ This rulemaking does not place any new requirements on the
U.S. Postal Service to provide data to CBP and does not impose any
new liabilities on it.
\48\ 19 CFR 145.11.
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Lastly, CBP proposes to replace the word ``will'' with ``may'' in
the first sentence of Sec. 145.31 and the word ``shall'' with ``may''
in the first sentence of Sec. 145.32 to reflect that CBP has the
discretion to require formal entry for any low-value shipment.\49\
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\49\ 19 CFR 143.22 and 145.12(a)(1).
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VII. Statutory and Regulatory Reviews
A. Executive Orders 12866, 13563, and 14094
Executive Orders 13563 (Improving Regulation and Regulatory Review)
and 12866 (Regulatory Planning and Review), as amended by Executive
Order 14094 (Modernizing Regulatory Review), direct agencies to assess
the costs and benefits of available regulatory alternatives, and if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
This rulemaking is a ``significant regulatory action'' under
section 3(f)(1) of Executive Order 12866, as amended by Executive Order
14094, because the rulemaking would have an annual effect of $200
million or more during at least one year of the analysis. A regulatory
impact analysis, entitled Entry of Low-Value Shipments (ELVS)
Rulemaking, has been included in the docket of this rulemaking (docket
number [USCBP-2025-0002]). The following presents a summary of the
aforementioned regulatory impact analysis.
1. Purpose of the Rule
Section 321(a)(2) of the Tariff Act of 1930 (19 U.S.C. 1321(a)(2)),
as amended by the Trade Facilitation and Trade Enforcement Act of 2015
(TFTEA), section 901, Public Law 114-125, 130 Stat. 122, authorizes
administrative exemptions from duty and tax for three categories of
articles. These categories include: bona-fide gifts valued at $100 or
less ($200, if the gift is from certain island possessions) sent from
persons in foreign countries to persons in the United States; certain
personal or household articles valued at $200 or less accompanying
persons arriving in the United States; and other articles when the
value of the article is $800 or less.\50\ These exemptions are subject
to the condition that the aggregate fair retail value in the country of
shipment of articles imported by one person on one day and exempted
from duty cannot exceed the authorized amounts. Also, these exemptions
are not to be granted if merchandise covered by a single order or
contract is forwarded in separate lots to obtain the benefit of duty-
and tax-free entry.
---------------------------------------------------------------------------
\50\ 19 U.S.C. 1321(a)(2).
---------------------------------------------------------------------------
This proposed rulemaking primarily concerns shipments covered by
the administrative exemption in 19 U.S.C. 1321(a)(2)(C), i.e.,
shipments of merchandise (other than bona-fide gifts and certain
personal and household goods accompanying travelers arriving from
abroad) imported by one person on one day having an aggregate fair
retail value in the country of shipment of not more than $800. For
simplicity, all references to ``the administrative exemption'' in this
document will be to the administrative exemption found in 19 U.S.C.
1321(a)(2)(C). References made to the other administrative exemptions
in 19 U.S.C. 1321(a)(2) will be specified as appropriate. In addition,
this document refers to shipments not exceeding $800 as ``low-value
shipments.'' \51\ Low-value shipments that qualify for the
administrative exemption in 19 U.S.C. 1321(a)(2)(C) are referred to as
``qualifying low-value shipments.'' The administrative exemption is
implemented in part 10 of title 19 of the Code of Federal Regulations
(19 CFR part 10) at 19 CFR 10.151 and 10.153, and is also referenced in
19 CFR parts 128, 143, and 145.
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\51\ These shipments are also commonly referred to as ``de
minimis'' shipments.
---------------------------------------------------------------------------
Goods exceeding the de minimis limit ($800) or not satisfying all
other statutory and regulatory requirements are not eligible for the
administrative exemption and may not use the entry procedures for
qualifying low-value shipments. Such goods must be entered using the
appropriate formal or informal entry procedure and may be subject to
duties and tax as provided by law. Put simply, qualifying low-value
shipments must be entered in limited quantities per recipient (so as
not to exceed the value limit). Everyday examples of typical low-value
shipments might include cosmetics, a sweater, or a phone charger
purchased from an online retailer.
Over the past eight years, the number of low-value shipments
entering the United States has increased dramatically, from
approximately 139 million shipments in 2015 to over 1 billion in
2023.\52\ This increase in shipment volume poses significant challenges
for CBP, which must mitigate the risk of illicit items entering the
country. Illicit items may include items that pose potential health,
safety, and economic security threats; however, the illegal importation
of illicit fentanyl via the smaller parcels that characterize low-value
shipments is of particular concern.\53\
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\52\ Data provided by CBP's Office of Field Operations on July
6, 2023 (FY2015) and CBP's Office of Trade on November 8, 2023
(FY2023).
\53\ Fentanyl is a potent synthetic opioid that is contributing
to the ongoing opioid crisis in the United States.
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To facilitate the flow of legitimate trade while also mitigating
risks associated with the substantial increase in the number of low-
value shipments, in September 2019, CBP launched a test program, called
the ``Entry Type 86
[[Page 3060]]
Test.'' The test program is voluntary and open to all trade
participants, and it modernizes the submission of entry data for these
low-value shipments by providing for an electronic entry and clearance
process. This process results in faster clearance times for these
shipments, a benefit to the trade and consumers, and reduces the amount
of manual time that must be spent by CBP officers clearing goods that
are considered low risk. As an additional benefit, the test program
allows certain low-value shipments subject to the requirements of
partner government agencies (PGAs) like the U.S. Food and Drug
Administration (FDA) or the U.S. Department of Agriculture (USDA) to be
entered without filing an informal type 11 or formal entry. For any
dutiable merchandise, filing an informal type 11 or formal entry
requires the payment of duties even for qualifying low-value shipments
that would otherwise be exempt under the administrative exemption.
In exchange for improved clearance times and the ability to use the
administrative exemption for low-value goods subject to PGA
requirements, as part of the electronic filing process, trade
participants provide additional information about each shipment. This
additional information allows CBP to better identify and focus on
relatively higher-risk shipments, such as those suspected of containing
illicit fentanyl. Although these shipments are low value, they pose the
same potential health, safety, and economic security risks as larger
and more traditional containerized shipments. In FY 2023, the
overwhelming majority of CBP actions on inadmissible cargo were taken
against low-value goods. Of 107,300 seizures across all cargo types,
93,065 (87 percent) were seizures of low-value cargo.\54\ CBP faces
significant challenges in targeting these low-value shipments, while
still maintaining the clearance speeds the private sector has come to
expect.
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\54\ Seizure statistics provided by CBP subject matter experts
on September 27, 2024. These data are from CBP's seizure database
(SEACATS) and are specifically cargo-related seizures and do not
include seizures in the passenger environment or seizures performed
by U.S. Border Patrol or Air and Marine Operations.
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While CBP receives some advance electronic data for low-value
shipments from carriers, the transmitted data often does not adequately
identify the entity causing the shipment to cross the border, the final
recipient, or the contents of the package. For example, in today's
environment, CBP may not receive any advance information on the entity
causing the shipment to travel to the United States (e.g., the seller
or manufacturer). Taken together, the overwhelming volume of low-value
packages as well as the vague and inaccurate electronic data, pose a
significant challenge to CBP's ability to identify and interdict high
risk packages. The provision of additional data also facilitates CBP's
ability to properly vet shipments requiring review by PGAs and request
presentation of the merchandise for inspection, when necessary.
The test program has been embraced by a large portion of the trade
community, which appreciates the administrative efficiency of the
electronic process, substantially faster clearance of low-risk
shipments, and in certain cases, lawful avoidance of duties and taxes,
including for shipments subject to PGA requirements. Many members of
the trade community have begun utilizing entry type 86 for some or all
of their low-value shipments. Previously, these filers would have
utilized release from manifest (including shipments entered through the
express environment) or formal or informal entry (i.e., type 01 or 11).
From CBP's perspective, the test has been successful, but certain
modifications can close identified security gaps. The modernization of
the filing process for these shipments was essential to facilitating
the flow of trade. Absent an automated CBP process, under current
funding and staffing constraints, CBP would have faced significant
challenges processing the current quantity of low-value shipments under
the release from manifest process. However, to achieve significant
security improvements and better facilitate the flow of legitimate
trade, CBP believes the transmission of additional information about
the contents of each shipment is necessary.
In this rulemaking, CBP proposes codifying the successful elements
of the Entry Type 86 Test, including the provision of an electronic
entry and automated clearance process for qualifying low-value
shipments and duty- and tax-free entry for qualifying low-value PGA
goods, while also adding new data requirements to the entry filing. As
an example, filers may choose to provide an internet address, known as
the uniform resource locator (URL), to the product's online listing or
another image of the product as part of the entry filing.\55\ The data
collected through this ``enhanced entry process'' will further improve
CBP's ability to quickly release legitimate qualifying low-value
shipments, allowing its officers to focus on targeting higher-risk
shipments. Ultimately, CBP anticipates this increased focus on higher-
risk shipments will improve its ability to intercept illicit goods,
such as fentanyl. Importantly, under the proposed rule, use by the
trade of the enhanced entry process continues to be voluntary; CBP will
also continue to offer a process similar to the existing release from
manifest process with more limited data requirements, referred to as
the ``basic entry process.''
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\55\ For a complete list of the proposed changes to the data
elements required for the enhanced entry process, please see chapter
1 of the full regulatory impact analysis included in the docket of
this rulemaking.
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The report accompanying this NPRM includes two separate analyses.
First, we estimate the incremental benefits and costs of the Entry Type
86 Test, beginning in 2020 and assuming that the test would continue
uninterrupted in the future (through 2034) in the absence of this
rulemaking effort. CBP believes this assumption is reasonable because
both CBP and industry participants have made significant logistical and
administrative changes in order to achieve the benefits of electronic
entry and clearance.
Second, we estimate the future incremental benefits and costs of
the proposed rule, which creates the new, voluntary enhanced entry
process and retains, with minor revisions, the current release from
manifest process. We estimate these incremental benefits and costs
relative to a baseline (counterfactual) scenario where entry type 86
remains an option for entering qualifying low-value shipments into the
United States. In addition, we present these impacts relative to a
baseline without the Entry Type 86 Test to help readers understand the
combined effect of the program that is being codified in the rulemaking
as well as the modifications to the program under consideration in the
proposed rule. Impacts are estimated from 2025 through 2034 (10 years).
For the Entry Type 86 Test, our analysis finds that the benefits of
automation and faster clearance are likely to outweigh the burden of
providing additional data. Potential security benefits are discussed
qualitatively. We also find that some parties utilizing entry type 86
benefit from reduced tariff payments relative to other entry options.
Available peer-reviewed literature suggests that the reduced tariff
payments associated with a portion of the affected shipments is likely
to affect U.S. consumers in the form of lower prices, making the lost
tariff revenue a transfer of resources
[[Page 3061]]
from the U.S. Government to consumers.\56\
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\56\ Please see chapter 5 of the full regulatory impact analysis
included in the docket of this rulemaking for additional
information.
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For the proposed rule, we quantify additional administrative costs,
while additional security benefits are discussed qualitatively.
Processing clearance times are unchanged relative to the Entry Type 86
Test. Similarly, no additional transfers, including reduced tariff
payments, result from the proposed rule. Our findings are discussed in
greater detail in the remainder of this summary of the aforementioned
regulatory impact analysis in the docket of this rulemaking.
2. Need for the Proposed Rule
In 2016, section 901(d) of TFTEA amended 19 U.S.C. 1321(a)(2)(C) by
increasing the daily value limit for the administrative exemption from
$200 to $800. CBP published an interim final rule amending the
regulations to implement the new statutory amount and to specify
certain goods excluded from the administrative exemption.\57\
Otherwise, CBP has not made any significant changes to the regulatory
requirements by which such shipments are entered since 1995. In the
nearly three decades since, however, there have been significant
changes in the trade environment and supply chains, substantial
increases in the volume of shipments, and advancements to CBP's
capabilities that necessitate the modernization of these regulations to
better serve both CBP and the trade community.
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\57\ 81 FR 58831 (Aug. 26, 2016).
---------------------------------------------------------------------------
3. Summary of the Proposed Rule
In the proposed rule, CBP seeks to codify an electronic entry
process for qualifying low-value shipments seeking entry into the
United States. Under this process, advance data elements are
transmitted to CBP via a CBP-authorized electronic data interchange
(EDI) system, such as the Automated Commercial Environment (ACE). This
proposed new process is termed the ``enhanced entry process.'' In order
to file an enhanced entry, CBP will require the submission of certain
advance electronic data, including data about the contents, value,
origin, and final destination of eligible shipments. This information
will enable CBP to more efficiently target high-risk shipments while
maintaining expedited clearance for low-risk shipments submitting
advance data. This rulemaking also proposes to create an HTSUS waiver
that would allow certain approved entities to use the enhanced entry
process without providing an HTSUS number in certain cases.
Filing entry under the enhanced entry process is optional.
Shipments subject to PGA requirements may use the enhanced entry
process or entry types 01 and 11, as well as other appropriate entry
types.\58\ The enhanced entry process will not be available for
shipments subject to PGA fees; such shipments must be entered as an
informal entry type 11 or formal entry, or other appropriate entry
type, subject to payment of all applicable duties, taxes, and fees.\59\
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\58\ While other entry types are available, entry type 01 and 11
volumes far surpass those of all other entry types to the point
where they do not measurably impact the effects of the rule.
Therefore, for the purposes of this analysis, CBP focuses on type 01
and 11 volumes.
\59\ Not all PGA shipments are subject to fees, which are
separate and distinct from duties and taxes. Shipments subject to
PGA fees may not use the enhanced entry process for low-value
shipments and instead must file a formal or informal type 11 entry,
or other appropriate type of entry. Qualifying low-value PGA
shipments that are not subject to any PGA fees will be eligible to
use the enhanced entry process.
---------------------------------------------------------------------------
Finally, the current default clearance process for qualifying low-
value shipments, known as the ``release from manifest'' process, will
continue to be offered with some modifications described below, and
will be referred to as the ``basic entry process.'' The basic entry
process may not be utilized for goods subject to PGA data
requirements.\60\
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\60\ Please see chapter 1 of the full regulatory impact analysis
included in the docket of this rulemaking for a detailed discussion
of the data elements required for the enhanced and basic entry
processes.
---------------------------------------------------------------------------
CBP considered two additional regulatory alternatives; neither
alternative is embodied in this NPRM. First, CBP considered a less
stringent alternative formalizing the Entry Type 86 Test through a
rulemaking that would make entry type 86 permanent. This scenario
represents a continuation of existing entry options for low-value
shipments under the test with no changes to entry processes or required
data elements. Second, CBP considered a more stringent regulatory
alternative in which the enhanced entry process did not include an
option for filers to obtain a HTSUS waiver privilege (``waiver'') from
CBP. This waiver is intended for filers with demonstrated capabilities
and histories of segmenting out goods subject to PGA requirements. The
waiver lifts the data requirement for the 10-digit Harmonized Tariff
Schedule of the United States (HTSUS) classification as part of the
enhanced entry for qualifying low-value goods that are not subject to
PGA requirements. Under this regulatory alternative, such a waiver
would not be made available to any filers.\61\
---------------------------------------------------------------------------
\61\ Regulatory alternatives are discussed in greater detail in
chapter 10 of the full regulatory analysis.
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4. Entry Type 86 Test Benefits, Costs, and Transfers
This analysis first estimates the past and future effects of the
existing Entry Type 86 Test, assuming no new rule is promulgated. We
estimate effects on CBP, customs brokers, software providers, express
consignment operators and carriers (ECOs), and importers. We estimate
benefits and transfers using information provided by affected entities,
including impacts to clearance times, tariff payments, and express
fees.\62\ To estimate costs, we rely on information provided during
discussions with CBP and interviews with the trade industry.\63\ Many
of these outcomes are informed by our understanding of historical
shipment volumes and expectations as to future growth in low-value
shipments. Based on our analysis, effects of the Entry Type 86 Test
include the following:
---------------------------------------------------------------------------
\62\ Please see chapter 5 of the full regulatory impact analysis
included in the docket of this rulemaking for a more detailed
discussion.
\63\ Please see chapter 4 of the full regulatory impact analysis
included in the docket of this rulemaking for more detail.
---------------------------------------------------------------------------
Benefits: The primary benefit is faster release of low-
value shipments into commerce resulting from the automated clearance
process. These benefits are quantified based on peer-reviewed
literature estimating willingness to pay for saving a day of transit
time per shipment.\64\ In addition, the Entry Type 86 Test has improved
CBP's ability to target inadmissible goods, resulting in security-
related benefits.
---------------------------------------------------------------------------
\64\ Please see chapters 3 and 5 of the full regulatory impact
analysis included in the docket of this rulemaking for additional
information.
---------------------------------------------------------------------------
Costs: Administrative implementation costs focus on
activities such as software reprogramming, staff training, and
additional data collection. These implementation costs are offset by
administrative cost savings associated with reduced CBP officer time
reviewing documentation and reduced administrative time preparing
filings for shipments that switch from informal type 11 or formal entry
to entry type 86. Relevant unit costs and cost savings are estimated
based on
[[Page 3062]]
interviews with the trade and CBP staff.\65\
---------------------------------------------------------------------------
\65\ Please see chapters 3 and 4 of the full regulatory impact
analysis included in the docket of this rulemaking for additional
information.
---------------------------------------------------------------------------
Transfers: Two types of transfers are likely, including
reduced revenues to the U.S. Government due to importers opting for
entry type 86 instead of entry types subject to express fees \66\
(i.e., manifest clearance in express hubs) and tariffs (i.e., informal
type 11 or formal entries). These revenues are estimated based on
express fees published in the Federal Register and tariff rates
available from the U.S. International Trade Commission.\67\
---------------------------------------------------------------------------
\66\ 19 U.S.C. 58c(b)(9)(A)(ii); 19 CFR 24.23(b). The express
fee refers to the express consignment carrier/centralized hub
facility fee, per individual waybill/bill of lading.
\67\ Please see chapters 3 and 5 of the full regulatory impact
analysis included in the docket of this rulemaking for additional
information.
---------------------------------------------------------------------------
Where possible, we quantify and monetize these impacts over a 15-
year period from 2020 to 2034. These outcomes are the incremental
effects of the Entry Type 86 Test relative to a baseline scenario where
entry type 86 is not available. Table 1 summarizes these quantified
benefits, costs, and cost savings (excluding transfers) through time
and presents net benefits for each year. Based on our analysis, the
total net benefits of the Entry Type 86 Test are estimated to be
approximately $19 billion (undiscounted, 2023 dollars) over the 15-year
period. In present value terms, the net benefits are approximately $17
billion (assuming a 2 percent discount rate).
Table 1--Summary of Total Entry Type 86 Test Benefits, Costs, and Cost Savings
[In 2023 dollars] \c\ \d\
----------------------------------------------------------------------------------------------------------------
Fiscal year Benefits Costs Cost savings Net benefits
(A) (B) (C) (= A-B + C)
----------------------------------------------------------------------------------------------------------------
Past Impacts
----------------------------------------------------------------------------------------------------------------
2020.................................... $43,030,483 $4,316,816 $127,208,543 $165,922,210
2021.................................... 139,966,936 3,758,383 361,271,949 497,480,501
2022.................................... 129,442,889 3,678,928 351,131,510 476,895,471
2023.................................... 282,639,872 6,022,697 650,253,194 926,870,369
2024.................................... 311,757,221 6,547,586 717,241,795 1,022,451,430
-----------------------------------------------------------------------
Total undiscounted.................. 906,837,401 24,324,410 2,207,106,990 3,089,619,981
-----------------------------------------------------------------------
Total present value (2 percent) \a\. 948,430,560 25,682,967 2,312,234,507 3,234,982,100
-----------------------------------------------------------------------
Annualized (2 percent) \b\.......... 178,675,386 4,838,429 435,603,206 609,440,162
----------------------------------------------------------------------------------------------------------------
Future Impacts
----------------------------------------------------------------------------------------------------------------
2025.................................... 340,874,571 7,072,475 784,230,396 1,118,032,491
2026.................................... 369,991,920 7,597,365 851,218,997 1,213,613,552
2027.................................... 399,109,270 8,122,254 918,207,598 1,309,194,614
2028.................................... 428,226,620 8,647,144 985,196,199 1,404,775,675
2029.................................... 457,343,969 9,172,033 1,052,184,800 1,500,356,736
2030.................................... 486,461,319 9,696,922 1,119,173,401 1,595,937,797
2031.................................... 515,578,669 10,221,812 1,186,162,002 1,691,518,859
2032.................................... 544,696,018 10,746,701 1,253,150,603 1,787,099,920
2033.................................... 573,813,368 11,271,591 1,320,139,204 1,882,680,981
2034.................................... 602,930,718 11,796,480 1,387,127,805 1,978,262,042
-----------------------------------------------------------------------
Total undiscounted.................. 4,719,026,442 94,344,777 10,856,791,003 15,481,472,668
-----------------------------------------------------------------------
Total present value (2 percent) \a\. 4,280,128,169 85,655,755 9,847,043,148 14,041,515,561
-----------------------------------------------------------------------
Annualized (2 percent) \c\.......... 423,111,089 8,467,480 973,427,194 1,388,070,803
----------------------------------------------------------------------------------------------------------------
Past and Future Impacts (2020-2034)
----------------------------------------------------------------------------------------------------------------
Total undiscounted...................... 5,625,863,843 118,669,187 13,063,897,993 18,571,092,649
Total present value (2 percent) \a\..... 5,228,558,729 111,338,723 12,159,277,655 17,276,497,661
Annualized (2 percent) \d\.............. 361,328,921 7,694,262 840,288,674 1,193,923,333
----------------------------------------------------------------------------------------------------------------
Notes:
We present unrounded values in the table to facilitate replication of our analysis. For reporting purposes, and
to reflect the uncertainty inherent in these estimates, we recommend rounding these estimates to two
significant figures.
Table does not include transfers (see Table 2 for transfers).
\a\ Present value calculations use 2025 as the base year.
\b\ Benefits, costs, and net benefits for past years are annualized over a 5-year period from 2020 to 2024.
\c\ Benefits, costs, and net benefits for future years are annualized over a 10-year period from 2025 to 2034.
\d\ Benefits, costs, and net benefits for all years are annualized over a 15-year period from 2020 to 2034.
Table 2 illustrates the effects of the Entry Type 86 Test from 2025
through 2034 by presenting a distribution of the benefits, costs, cost
savings, transfers, and net benefits experienced by each entity type.
Administrative implementation activities produce an annualized net
benefit of approximately $960 million (2 percent discount rate,
[[Page 3063]]
2023 dollars) and improvements in clearance time produce an annualized
net benefit of approximately $420 million (2 percent discount rate,
2023 dollars). Changes in express fees and tariffs paid by consignees
are considered to be transfers, producing $0 in net benefits.
Importantly, impacts on social welfare and fiscal impacts are not
additive; the former represents estimates of willingness to pay and
opportunity costs, while the latter reflects changes in revenue.
Table 2--Summary of Entry Type 86 Test Annualized Impacts by Entity Type From 2025-2034
[2 Percent discount rate, in 2023 dollars]
----------------------------------------------------------------------------------------------------------------
Effect U.S. Government Trade/consumers Net effect
----------------------------------------------------------------------------------------------------------------
Impacts on Social Welfare
----------------------------------------------------------------------------------------------------------------
Administrative Implementation....................... $972,773,259 ($7,813,546) $964,959,714
Transmitting Data............................... 0 (7,267,112) (7,267,112)
Programming..................................... (227,558) (612,630) (840,188)
Training........................................ 0 0 0
Collecting New Data Elements.................... 0 (360,180) (360,180)
Time Savings.................................... 973,000,818 426,376 973,427,194
Improved Clearance Time............................. 0 423,111,089 423,111,089
-----------------------------------------------------------
Total Increase in Social Welfare................ 972,773,259 415,297,543 1,388,070,803
----------------------------------------------------------------------------------------------------------------
Fiscal Impacts (Transfers)
----------------------------------------------------------------------------------------------------------------
Tariffs............................................. (2,095,103,797) 2,095,103,797 0
Express Fees........................................ (163,886,413) 163,886,413 0
-----------------------------------------------------------
Total Fiscal Impacts............................ (2,258,990,211) 2,258,990,211 0
----------------------------------------------------------------------------------------------------------------
Notes:
We present unrounded values in the table to facilitate replication of our analysis. For reporting purposes, and
to reflect the uncertainty inherent in these estimates, we recommend rounding these estimates to two
significant figures.
Costs are shown using parentheses.
\a\ Present value calculations use 2025 as the base year.
\b\ Impacts are annualized over 10 years from 2025 to 2034. We estimate the annualized impacts from the
perspective of an individual in 2020, when entities started incurring costs or benefits related to the Entry
Type 86 Test. This reflects the equal payment that would need to be made in each of the 10 years to equal the
total present value of the costs and benefits.
The full regulatory impact analysis included in the docket of this
rulemaking provides detailed discussions of key sources of uncertainty
related to costs, benefits, and transfers of the Entry Type 86 Test.
The full regulatory impact analysis also includes a quantitative
sensitivity analysis to highlight the importance of key assumptions and
presents the results in appendix A.
5. Proposed Rule Benefits, Costs, and Transfers
This proposed rule updates the data elements currently required
under the Entry Type 86 Test. We estimate impacts likely to be
experienced by CBP, customs brokers, software providers, ECOs, and
consignees due to the provision of these additional data elements.
While the proposed rule is expected to produce security benefits, we
are unable to quantify these benefits in this analysis due to data
limitations.\68\ As with our analysis of the Entry Type 86 Test, we
estimate costs of the proposed rule using information obtained through
discussions with CBP and interviews with the trade.\69\ Key cost
categories include administrative implementation activities, such as
software reprogramming, staff training, and additional data collection.
Incremental changes in tariff or fee revenue relative to Baseline 1 are
not anticipated.
---------------------------------------------------------------------------
\68\ Please see chapter 9 of the full regulatory impact analysis
included in the docket of this rulemaking for additional
information.
\69\ Please see chapter 8 of the full regulatory impact analysis
included in the docket of this rulemaking for additional
information.
---------------------------------------------------------------------------
For the three regulatory alternatives considered by CBP, we
estimate the anticipated benefits, costs, and transfers under two
baseline scenarios. We first consider the incremental effects of the
proposed rule relative to a baseline scenario where CBP continues to
implement the Entry Type 86 Test. This scenario reflects the most
likely forecast of available entry types absent the proposed rule. CBP
is not currently equipped to handle the now-sizable low-value shipment
volumes manually without any automated clearance process like entry
type 86. Reverting to an entirely manual process would be infeasible
and contrary to CBP's mission to facilitate the entry of legitimate
goods into the United States.
We also present results considering an alternative baseline
scenario regarding the future availability of an automated entry
process in the absence of a new rule. This alternative baseline
scenario assumes that, beginning in 2025, the technology and processes
developed for electronic filing and automated clearance under the Entry
Type 86 Test would no longer be available for low-value shipments and,
effectively, are reinstated with this rulemaking. This baseline
scenario is a counterfactual used to illustrate the cumulative effects
of this rulemaking and not an announcement of a change to the existing
Entry Type 86 Test. The practical result of applying this alternative
baseline scenario is an estimate of the cumulative impacts of (1)
continuing to leverage the advances made with the implementation of the
Entry Type 86 Test, while also (2) making enhancements to the process
via the proposed rule. CBP recognizes that the public may have an
interest in understanding the combined effect of the program that is
being codified in the rulemaking as well as the modifications to the
program under consideration in the proposed rule and this baseline
scenario allows the reader to do that--the effects, when measured
against this baseline scenario, are the total prospective effects of
the Entry Type 86
[[Page 3064]]
Test and this rulemaking. For the purposes of this analysis, CBP
considers the second baseline to be the primary baseline for this
rulemaking.
Where possible, we quantify and monetize these impacts over a 10-
year period from 2025 to 2034. Table 3 provides a summary of the costs,
benefits, and transfers resulting from each regulatory alternative,
including relevant chapters where these impacts are presented.
Table 3--Summary of the Incremental Impacts of Regulatory Alternatives Under Alternative Baseline Scenarios
----------------------------------------------------------------------------------------------------------------
Baseline scenario (2025-2034)
-----------------------------------------------------------------------
Regulatory alternative \a\ Baseline 1: Entry Type 86 Test
continues Baseline 2: No Entry Type 86 Test
----------------------------------------------------------------------------------------------------------------
1. Codify the Entry Type 86 Test........ Costs, benefits, and transfers Costs, benefits, and transfers of
are zero. the proposed rule are equivalent to
the future impacts estimated for
Entry Type 86 Test.\b\
2. (Preferred) Enhanced entry with HTSUS Costs, benefits, and transfers Costs, benefits, and transfers of
waiver available. are presented in Chapters 7 to the proposed rule are equal to the
9 of the full analysis. sum of the Entry Type 86 Test
future impacts and the proposed
rule impacts.\b\
3. Enhanced entry with no HTSUS waiver Costs, benefits, and transfers Costs, benefits, and transfers of
available. are presented in Chapters 7 to the proposed rule are equal to the
9 of the full analysis, sum of the Entry Type 86 Test
including unquantified costs future impacts, the proposed rule
associated with no waiver impacts, and unquantified costs
provision. associated with no waiver
provision.\b\
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Detailed discussion of regulatory alternatives is available in Chapter 10 of the full analysis.
\b\ Detailed discussion of future Entry Type 86 Test impacts and this proposed rule's impacts is available in
Chapters 3 to 6 and Chapters 7 to 9 of the full analysis respectively.
a. Preferred Regulatory Alternative: Baseline 1 (Entry Type 86 Test
Continues)
Table 4 presents total present value costs assuming a baseline
where the Entry Type 86 Test were to continue in the absence of this
new regulation. Because benefits are unquantified, we are unable to
calculate the likely net benefits of the proposed rule. Total present
value costs of the proposed rule over the 10-year period of analysis
are estimated to be approximately $110 million (2023 dollars), assuming
a discount rate of 2 percent.
Table 4--Summary of Proposed Rule Benefits and Costs--Baseline 1: Entry Type 86 Test Continues
[In 2023 dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year Benefits Costs \c\ Net benefits \d\
----------------------------------------------------------------------------------------------------------------
2025....................................... Positive Unquantified........ $91,854,198 .................
2026....................................... Positive Unquantified........ 2,139,656 .................
2027....................................... Positive Unquantified........ 2,184,004 .................
2028....................................... Positive Unquantified........ 2,228,352 .................
2029....................................... Positive Unquantified........ 2,272,700 .................
2030....................................... Positive Unquantified........ 2,317,048 .................
2031....................................... Positive Unquantified........ 2,361,396 .................
2032....................................... Positive Unquantified........ 2,405,744 .................
2033....................................... Positive Unquantified........ 2,450,092 .................
2034....................................... Positive Unquantified........ 2,494,440 .................
--------------------------------------------------------------------
Total undiscounted..................... Positive Unquantified........ 112,707,628 .................
--------------------------------------------------------------------
Total present value (2 percent) \a\.... Positive Unquantified........ 110,718,728 .................
--------------------------------------------------------------------
Annualized present value (2 percent) Positive Unquantified........ 12,084,247 .................
\b\.
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Present value calculations use 2025 as the base year.
\b\ Costs are annualized over a 10-year period from 2025 to 2034.
\c\ We present unrounded values in the table to facilitate replication of our analysis. For reporting purposes,
and to reflect the uncertainty inherent in these estimates, we recommend rounding these estimates to two
significant figures.
\d\ Net benefits are uncertain due to our inability to quantify the likely incremental security benefits of the
proposed rule.
Table 5 presents the distribution of costs and benefits by entity
type assuming a baseline where the Entry Type 86 Test exists. Affected
entities include the U.S. Government (representing CBP, the Department
of the Treasury, and PGAs) and trade/consumers (including customs
brokers, software providers, ECOs, importers, and other industry
participants, including consumers). Administrative implementation
activities are likely to cost approximately $12 million (2023 dollars)
on an annualized basis, assuming a discount rate of 2 percent.
Security-related effects, including providing the data needed to help
interdict fentanyl smuggling, result in positive benefits that we are
unable to quantify due to data limitations. Improvements in clearance
time, and changes in express fees and tariffs paid by trade
participants, are unlikely to result from the proposed rule when
compared to the baseline that includes the Entry Type 86 Test.
[[Page 3065]]
Table 5--Summary of Proposed Rule Annualized Impacts by Entity Type--Baseline 1: Entry Type 86 Test Continues
[2 Percent discount rate, in 2023 dollars]
----------------------------------------------------------------------------------------------------------------
Effect U.S. Government Trade/consumers Subtotal
----------------------------------------------------------------------------------------------------------------
Impacts on Social Welfare
----------------------------------------------------------------------------------------------------------------
Administrative Implementation................. ($680,248) ($11,403,999) ($12,084,247)
Transmitting Data......................... 0 0 0
Programming............................... (680,248) (10,657,045) (11,337,293)
Training.................................. 0 (35,450) (35,450)
Collecting New Data Elements.............. 0 (711,504) (711,504)
Time Savings.............................. 0 0 0
Improved Clearance Time....................... 0 0 0
Security...................................... Positive Positive Positive
Unquantified Unquantified Unquantified
-----------------------------------------------------------------
Total Increase in Social Welfare.......... (680,248) (11,403,999) (12,084,247).
----------------------------------------------------------------------------------------------------------------
Fiscal Impacts (Transfers)
----------------------------------------------------------------------------------------------------------------
Tariffs....................................... 0 0 0
Express Fees.................................. 0 0 0
Total Fiscal Impacts...................... 0 0 0
----------------------------------------------------------------------------------------------------------------
Notes:
We present unrounded values in the table to facilitate replication of our analysis.
Costs are shown using parentheses.
\a\ Present value calculations use 2025 as the base year.
\b\ Costs are annualized over 10 years from 2025 to 2034.
The full regulatory impact analysis included in the docket of this
rulemaking provides detailed discussions of key sources of uncertainty
related to costs, benefits, and transfers of this proposed rule. The
full regulatory impact analysis also includes a quantitative
sensitivity analysis to highlight the importance of key assumptions and
presents the results in appendix A.
b. Preferred Regulatory Alternative: Baseline 2 (No Entry Type 86 Test)
Table 6 presents total present value costs assuming a baseline
where the Entry Type 86 Test does not exist. Because security benefits
of the Entry Type 86 Test and the proposed rule are unquantified, the
likely cumulative net benefits of these interventions are
underestimated. Assuming a baseline without the Entry Type 86 Test,
total present value net benefits over the 10-year period of analysis
are estimated to be at least $14 billion (2023 dollars), assuming a
discount rate of 2 percent.
Table 6--Summary of Cumulative Benefits and Costs--Baseline 2: No Entry Type 86 Test
[In 2023 dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year Benefits \c\ Costs Cost savings Net benefits \d\
(A) (B) (C) (= A - B + C)
----------------------------------------------------------------------------------------------------------------
2025.................................... $340,874,571 $98,926,674 $784,230,396 $1,026,178,293
2026.................................... 369,991,920 9,737,021 851,218,997 1,211,473,897
2027.................................... 399,109,270 10,306,258 918,207,598 1,307,010,610
2028.................................... 428,226,620 10,875,495 985,196,199 1,402,547,323
2029.................................... 457,343,969 11,444,733 1,052,184,800 1,498,084,036
2030.................................... 486,461,319 12,013,970 1,119,173,401 1,593,620,750
2031.................................... 515,578,669 12,583,208 1,186,162,002 1,689,157,463
2032.................................... 544,696,018 13,152,445 1,253,150,603 1,784,694,176
2033.................................... 573,813,368 13,721,682 1,320,139,204 1,880,230,890
2034.................................... 602,930,718 14,290,920 1,387,127,805 1,975,767,603
-----------------------------------------------------------------------
Total undiscounted.................. 4,719,026,442 207,052,405 10,856,791,003 15,368,765,040
-----------------------------------------------------------------------
Total present value (2 percent) \a\. 4,280,128,169 196,374,484 9,847,043,148 13,930,796,832
-----------------------------------------------------------------------
Annualized (2 percent) \b\.......... 423,111,089 20,551,727 973,427,194 1,375,986,556
----------------------------------------------------------------------------------------------------------------
Notes:
We present unrounded values in the table to facilitate replication of our analysis. For reporting purposes, and
to reflect the uncertainty inherent in these estimates, we recommend rounding these estimates to two
significant figures.
\a\ Present value calculations use 2025 as the base year.
\b\ Benefits, costs, and net benefits are annualized over a 10-year period from 2025 to 2034.
\c\ Benefits are underestimated due to our inability to quantify the anticipated security-related benefits of
the proposed rule. These values reflect only the quantified benefits of the Entry Type 86 Test. The total
benefits associated with a baseline without the Entry Type 86 Test would be the values presented in this table
as well as additional positive unquantified benefits.
\d\ Net benefits are underestimated due to our inability to quantify the likely incremental security benefits of
the proposed rule.
[[Page 3066]]
Table 7 presents the distribution of costs and benefits by entity
type assuming a baseline where the Entry Type 86 Test does not exist.
Administrative implementation activities are likely to produce a
positive annualized net benefit of approximately $950 million (2
percent discount rate, 2023 dollars) and improvements in clearance time
produce a positive annualized net benefit of approximately $420 million
(2 percent discount rate, 2023 dollars). Security-related effects,
including providing the data needed to help interdict illicit fentanyl,
result in positive benefits that we are unable to quantify due to data
limitations. Changes in express fees and tariffs paid by consignees are
considered to be revenue transfers, producing $0 in net benefits.
Importantly, impacts on social welfare and fiscal impacts are not
additive; the former represents estimates of willingness to pay and
opportunity costs, while the latter reflects changes in revenue.
Table 7--Summary of Proposed Rule Annualized Impacts by Entity Type--Baseline 2: No Entry Type 86 Test
[2 Percent discount rate, in 2023 dollars]
----------------------------------------------------------------------------------------------------------------
Effect U.S. Government Trade/consumers Subtotal
----------------------------------------------------------------------------------------------------------------
Impacts on Social Welfare
----------------------------------------------------------------------------------------------------------------
Administrative Implementation................. $972,093,012 ($19,217,545) $952,875,467
Transmitting Data......................... 0 (7,267,112) (7,267,112)
Programming............................... (907,806) (11,269,675) (12,177,481)
Training.................................. 0 (35,450) (35,450)
Collecting New Data Elements.............. 0 (1,071,684) (1,071,684)
Time Savings.............................. 973,000,818 426,376 973,427,194
Improved Clearance Time....................... 0 423,111,089 423,111,089
Security...................................... Positive Positive Positive
Unquantified Unquantified Unquantified
-----------------------------------------------------------------
Total Increase in Social Welfare.......... 972,093,012 403,893,545 1,375,986,556
----------------------------------------------------------------------------------------------------------------
Fiscal Impacts (Transfers)
----------------------------------------------------------------------------------------------------------------
Tariffs....................................... (2,095,103,797) 2,095,103,797 0
Express Fees.................................. (163,886,413) 163,886,413 0
-----------------------------------------------------------------
Total Fiscal Impacts...................... (2,258,990,211) 2,258,990,211 0
----------------------------------------------------------------------------------------------------------------
Notes:
We present unrounded values in the table to facilitate replication of our analysis.
Costs are shown using parentheses.
\a\ Present value calculations use 2025 as the base year.
\b\ Costs are annualized over 10 years from 2025 to 2034.
The full regulatory impact analysis included in the docket of this
rulemaking provides detailed discussions of key sources of uncertainty
related to costs, benefits, and transfers of this proposed rule. The
full regulatory impact analysis also includes a quantitative
sensitivity analysis to highlight the importance of key assumptions and
presents the results in appendix A.
c. Summary of Regulatory Alternatives
Table 8 summarizes estimates of net benefits for each regulatory
alternative relative to the two different baseline scenarios described
earlier. Incremental effects estimated relative to Baseline 1 reflect
the net benefits of the enhancements to the existing Entry Type 86 Test
that will be codified if the proposed rule is finalized. Incremental
effects estimated relative to Baseline 2 reflect the cumulative net
benefits of continuing to leverage the systems and processes put in
place to implement the Entry Type 86 Test in combination with the
enhancements included in the proposed rule. To reflect the uncertainty
inherent in the analysis presented in this report, we round our results
to two significant figures.
Table 8--Annualized Net Benefits of Regulatory Alternatives
[2 Percent discount rate, in 2023 dollars] \a\ \b\ \c\
------------------------------------------------------------------------
Baseline scenario
-------------------------------------------
Regulatory alternative Baseline 1: \d\
Entry Type 86 Test Baseline 2: \e\ No
continues Entry Type 86
------------------------------------------------------------------------
1. Codify Entry Type 86 Test $0.................. $1.4 billion +
unquantified
security benefits.
2. (Preferred) Enhanced -$12 million + $1.4 billion +
entry with HTSUS waiver unquantified unquantified
available. security benefits security benefits
associated with associated with
enhanced data HTSUS and enhanced
elements (e.g., data elements
URL). (e.g., URL).
3. Enhanced entry with no -$12 million + $1.4 billion +
HTSUS waiver available. unquantified unquantified
security benefits security benefits
associated with associated with
enhanced data HTSUS and enhanced
elements (e.g., data elements
URL) -unquantified (e.g., URL)-
costs of obtaining unquantified costs
HTSUS codes if no of obtaining HTSUS
waiver is available. codes if no waiver
is available.
------------------------------------------------------------------------
Notes:
\a\ To reflect the uncertainty inherent in these estimates, we round
estimates to two significant figures.
\b\ Net benefits are annualized over a 10-year period from 2025-2034.
[[Page 3067]]
\c\ Implementation of the Entry Type 86 Test also results in substantive
transfers between the U.S. Government and consumers in the form of
reduced tariffs and fees. These transfers are summarized in Table 2.
Because the transfers represent off-setting costs to the U.S.
Government and benefits to consumers, their net benefit is $0. The
enhancements considered in the proposed rule are unlikely to result in
additional transfers.
\d\ Incremental effects estimated relative to Baseline 1 reflect the net
benefits of the enhancements to the existing Entry Type 86 Test that
will be codified if the proposed rule is finalized.
\e\ Incremental effects estimated relative to Baseline 2 reflect the
cumulative net benefits of continuing to leverage the systems and
processes put in place to implement the Entry Type 86 Test in
combination with the enhancements included in the proposed rule.
B. Additional Requirements for Regulatory Analysis
Table 9 provides a cost accounting statement for the proposed rule
where the baseline includes the Entry Type 86 Test. Table 10 provides
the analogous information assuming the Entry Type 86 Test did not
exist.
Table 9--A-4--Accounting Statement for the Proposed Rule--Baseline 1
[Entry Type 86 Test continues]
------------------------------------------------------------------------
Category Annualized estimate (in 2023 dollars) \1\
------------------------------------------------------------------------
Benefits:
Monetized benefits....... None.
Quantified, non-monetized None.
benefits.
Qualitative Improved security resulting from more
(unquantified) benefits. efficient targeting of inbound low-value
shipments. Improved security includes
the interdiction of fentanyl smuggling,
among other things. Enforcement of
customs regulations plays a critical
role in protecting the American public,
environment, and economy.
Costs: .........................................
Monetized costs.......... $12 million.
Quantified, non-monetized None.
costs.
Qualitative None.
(unquantified) costs.
Transfers: .........................................
Monetized budgetary None.
transfers.
Other monetized transfers None.
Distributional Effects: .........................................
Effects on State, local, Which entities are affected by the
and/or tribal proposed rule depends on whether the
governments. costs associated with transmitting
Effects on small shipments through the enhanced entry
businesses. process are passed on to consumers in
the form of higher prices. If customs
brokers and express consignment
operators (ECOs) bear the costs, then at
least 314 small businesses may be
affected; however, only some medium and
large volume brokers are projected to
incur costs that exceed 1 percent of
their annual revenues. If consignees
bear the costs through increased prices,
then any small business, organization,
or government jurisdiction importing low-
value shipments has the potential to be
affected. The increase in the cost per
shipment is estimated to be $0.01, or
0.03% of the average value of low-value
shipments.
Effects on wages......... Not anticipated.
Effects on growth........ Not anticipated.
------------------------------------------------------------------------
Source: Calculations using data sources described throughout the main
text.
\1\ Present value calculations use 2025 as the base year. Costs are
annualized over 10 years from 2025 to 2034 and reflect a 2 percent
discount rate.
Table 10--A-4--Accounting Statement for the Proposed Rule--Baseline 2
[No Entry Type 86 Test]
------------------------------------------------------------------------
Category Annualized estimate (in 2023 dollars)
------------------------------------------------------------------------
Benefits:
Monetized benefits....... $420 million.
Quantified, non-monetized None.
benefits.
Qualitative Improved security resulting from more
(unquantified) benefits. efficient targeting of inbound low-value
shipments. Improved security includes
the interdiction of fentanyl smuggling,
among other things. Enforcement of
customs regulations plays a critical
role in protecting the American public,
environment, and economy.
Costs:
Monetized costs.......... $21 million.
Quantified, non-monetized None.
costs.
Qualitative Costs to brokers of verifying and
(unquantified) costs. assigning HTSUS codes the first time a
new product is shipped. Because this
cost category only applies to new
products, and given the potential
economies of scale, the omission of this
cost estimate may result in only a minor
overstatement of net benefits.
Cost Savings:
Monetized costs savings.. $970 million.
Quantified, non-monetized None.
cost savings.
[[Page 3068]]
Qualitative None.
(unquantified) cost
savings.
Transfers:
Monetized budgetary $2.3 billion.
transfers.
Other monetized transfers None.
Distributional Effects:
Effects on State, local, Which entities are affected by the
and/or tribal proposed rule depends on whether the
governments. costs associated with transmitting entry
Effects on small information through the enhanced entry
businesses. process are passed on to consumers in
the form of higher prices. If customs
brokers, ECOs, and software providers
bear the costs, then at least 314 small
businesses may be affected; however,
only some medium and large volume
brokers and software providers are
projected to incur costs that exceed 1
percent of their annual revenues. If
consignees bear the costs through
increased prices, then any small
business, organization, or government
jurisdiction importing qualifying low-
value goods has the potential to be
affected. However, costs to consignees
are offset by the value of time savings
and reduced tariffs and fees. The net
effect is a decrease in the cost per
shipment of $2.86, or a savings equal to
approximately 8.9% if the value of a
shipment.
Effects on wages......... Not anticipated.
Effects on growth........ Not anticipated.
------------------------------------------------------------------------
C. Regulatory Flexibility Act
This section examines the impact on small entities as required by
the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), as amended
by the Small Business Regulatory Enforcement and Fairness Act of 1996.
A small entity may be a small business (defined as any independently
owned and operated business not dominant in its field that qualifies as
a small business per the Small Business Act); a small not-for-profit
organization; or a small governmental jurisdiction (locality with fewer
than 50,000 people). The following presents a summary of the small
business analysis of the aforementioned regulatory impact analysis
included in the docket of this rulemaking (docket number [USCBP-2025-
0002]).
This rulemaking will have direct effects on consignees, brokers,
ECOs, and software vendors, but it is not clear the extent to which
effects are passed on from the brokers, ECOs, and software vendors to
the consignees, so CBP conducted the threshold analysis under two
scenarios--that all the costs are passed on and that none of the costs
are passed on. The analysis demonstrates that under both scenarios, a
substantial number of small businesses may be affected by the proposed
rule. Assuming brokers, ECOs, and software providers fully bear the
costs they incur (Scenario 1), we estimate that 75 percent of sampled
entities qualify as small businesses. Extrapolating from a sample to
the full population of affected brokers and software providers suggests
that at least 314 affected entities are small businesses.\70\ Under the
alternate assumption that consignees bear the cost of the rule
(Scenario 2), any small entity in the United States has the potential
to be affected by the rule as a consignee. Analysis of a sample of
consignees for one day in 2023 demonstrates that 92 percent of
businesses in the sample qualify as small businesses. As such, we
conclude that this rulemaking could affect a substantial number of
small entities.
---------------------------------------------------------------------------
\70\ (71 percent * 364 low-volume brokers) + 16 medium- and
high-volume brokers + (86 percent * 46 software providers) = 314
small businesses among the affected industries included in Scenario
1.
---------------------------------------------------------------------------
We next analyze whether the effects of the rule are significant.
CBP considers effects of more than one percent of gross annual revenues
to be significant. We find that under Scenario 1, low-volume brokers
that are small businesses are unlikely to be significantly affected by
the rule while medium- and high-volume brokers and software providers
that are small businesses are likely to experience costs more than one
percent of annual revenues. In Scenario 2 the impact on small entities
is uncertain because we lack per consignee annual shipment volumes
needed to calculate entity specific costs. In the ``Entry Type 86
continues'' baseline, comparing the potential increase in cost per
shipment with the average value per shipment suggests the impact on
consignees is unlikely to be significant. In the ``no Entry Type 86
Test'' baseline, consignees experience a significant net benefit given
the clearance time savings, reduced tariff payments, and reduced
express fees.\71\
---------------------------------------------------------------------------
\71\ Please see chapter 11 of the full regulatory impact
analysis included in the docket of this rulemaking for additional
information.
---------------------------------------------------------------------------
Due to uncertainty regarding whether impacts to various small
entities are significant and because CBP does not know the extent to
which the costs will be passed on from brokers and software providers
to the consignees, CBP does not certify that this rulemaking has a
significant economic impact on a substantial number of small entities
and instead we have prepared an Initial Regulatory Flexibility
Analysis. CBP requests comment on this conclusion.
D. Initial Regulatory Flexibility Analysis (IRFA)
1. A Description of the Reasons Why Action by the Agency Is Being
Considered
Section 321(a)(2) of the Tariff Act of 1930 (19 U.S.C. 1321(a)(2)),
as amended by the Trade Facilitation and Trade Enforcement Act of 2015
(TFTEA), section 901, Public Law 114-125, 130 Stat. 122, authorizes
administrative exemptions from duty and tax for three categories of
articles. These categories include: bona-fide gifts valued at $100 or
less ($200, if the gift is from certain island possessions) sent from
persons in foreign countries to persons in the United States; certain
personal or household articles valued at $200 or less accompanying
persons arriving in the United States; and other articles when the
value of the article is $800 or less.\72\ These exemptions are subject
to the condition that the aggregate fair retail
[[Page 3069]]
value in the country of shipment of articles imported by one person on
one day and exempted from the payment of duty cannot exceed the
authorized amounts. Also, these exemptions are not to be granted if
merchandise covered by a single order or contract is forwarded in
separate lots to secure the benefit of duty- and tax-free entry.
---------------------------------------------------------------------------
\72\ 19 U.S.C. 1321(a)(2).
---------------------------------------------------------------------------
This proposed rulemaking primarily concerns shipments covered by
the administrative exemption in 19 U.S.C. 1321(a)(2)(C), i.e.,
shipments of merchandise (other than bona-fide gifts and certain
personal and household goods accompanying travelers arriving from
abroad) imported by one person on one day and having an aggregate fair
retail value in the country of shipment of not more than $800.
In 2016, section 901(d) of TFTEA amended 19 U.S.C. 1321(a)(2)(C) by
increasing the daily value limit for the administrative exemption from
$200 to $800.\73\ CBP published an interim final rule amending the
regulations to implement the new statutory amount and to specify
certain goods excluded from the administrative exemption.\74\
Otherwise, CBP has not made any significant changes to the regulatory
requirements by which such shipments are entered since 1995. In the
nearly three decades since, however, there have been significant
changes in the trade environment, substantial increases in the volume
of shipments, and advancements to CBP's capabilities that necessitate
the modernization of these regulations to better serve both CBP and the
trade community.
---------------------------------------------------------------------------
\73\ Section 901 did not change the administrative exemptions
for bona-fide gifts and personal or household articles accompanying
travelers under 19 U.S.C. 1321(a)(2)(A) and (B), respectively.
\74\ 81 FR 58831 (Aug. 26, 2016).
---------------------------------------------------------------------------
Firstly, e-commerce is a growing segment of the U.S. economy and
has been increasing significantly for the past several years.\75\
Consumer habits are changing as the internet empowers individuals to
make purchases online. These advances in economic activity have led to
increasing volumes of imports of low-value shipments, creating
inspection challenges for CBP. Low-value e-commerce shipments pose the
same health, safety, and economic security risks as higher-value
shipments. Transnational criminal organizations and other bad actors
perceive low-value shipments as less likely to be interdicted because
these types of shipments are not subject to the more extensive formal
entry procedures. This has resulted in attempts to enter illicit goods,
such as illicit fentanyl, into the country through these types of
shipments. Furthermore, novel and complex e-commerce business models
have complicated and added to the traditional array of parties involved
in the import transaction. New or infrequent importers often possess
less familiarity with U.S. customs laws and regulations, which can lead
to the attempted importation of non-compliant goods. This rulemaking
proposes data requirements that are tailored to capture the key parties
in these modern trade transactions (e.g., the seller, purchaser, final
deliver-to party, and marketplace), thus strengthening CBP's
enforcement posture.
---------------------------------------------------------------------------
\75\ Although the administrative exemption is not limited to
only e-commerce shipments, the reality is that e-commerce shipments
comprise a significant portion of low-value shipments.
---------------------------------------------------------------------------
Secondly, the volume of low-value shipments has increased
dramatically in recent years. The statutory increase in the daily value
limit for the administrative exemption from $200 to $800 in 2016,
coupled with the boom in e-commerce, greatly increased the number of
shipments qualifying for the exemption, resulted in new types of
products becoming eligible for the exemption, and revived the trade
community's interest in the exemption. In fiscal year (FY) 2015, prior
to the passage of TFTEA, approximately 139 million shipments valued at
$200 or less were imported into the United States. In FY 2017, after
the TFTEA increase to $800 went into effect, low-value shipments
numbered nearly 325 million. By the end of FY 2022, that number more
than doubled to 685 million. Then in FY 2023, CBP cleared more than one
billion low-value shipments. Currently, approximately 4 million
shipments are released each day free of duty and tax pursuant to the
administrative exemption. In fact, CBP estimates that over 90 percent
of all shipments entering the United States are low-value shipments
valued at $800 or less.\76\ The information requirements for these
shipments are less rigorous than those required for other entry types,
e.g., formal entries, and no longer provide sufficient detail for CBP
to accurately identify the merchandise in the shipment and the parties
involved in its sale and purchase. This overwhelming volume of low-
value shipments and lack of actionable data collected pursuant to the
current regulations inhibits CBP's ability to identify and interdict
high-risk shipments that may contain illegal drugs such as illicit
fentanyl, merchandise that poses a risk to public safety, counterfeits,
or other contraband. The new enhanced entry process for low-value
shipments proposed in this rulemaking would provide CBP with necessary
information regarding the contents of shipments to accurately segment
risk and determine eligibility for the administrative exemption in
advance of a shipment's arrival in the United States. The receipt of
advance electronic data would also reduce the burden for CBP officers
who process these large volumes of shipments because better data would
lead to more accurate targeting, which means CBP resources will be
better focused on accurately identifying and interdicting violative
shipments compared to today where the quality of the targeting is often
impeded by the lack of information.
---------------------------------------------------------------------------
\76\ Email correspondence with the Office of Trade on Feb. 2,
2024.
---------------------------------------------------------------------------
Last, both CBP and the trade community's technological capabilities
have greatly advanced since 1995, and this proposed rule would adapt
the regulations to current capabilities. As explained in previous
sections, in the past, CBP cleared low-value shipments exclusively
through a time-consuming and burdensome manual process, and staff at
the ports of entry became unable to quickly and efficiently process the
increasing volume of trade. Consequently, it was not unusual for
clearance to take up to eight days. Over the last several years, CBP
has collaborated with the trade community to obtain input regarding how
to more accurately identify the nature, origin, and ultimate
destination of low-value shipments. This effort served as the
foundation for two pilot programs, the Section 321 Data Pilot and the
Entry Type 86 Test, which were implemented in 2019 to test CBP's
capabilities to collect, and the trade's ability to provide, certain
enhanced data through CBP-approved electronic systems.\77\
---------------------------------------------------------------------------
\77\ Section 321 Data Pilot, 84 FR 35405 (July 23, 2019); Test
Concerning Entry of Section 321 Low-Valued Shipments Through
Automated Commercial Environment (ACE), 84 FR 40079 (Aug. 13, 2019).
---------------------------------------------------------------------------
As illustrated above, the existing regulations do not account for
the complex supply chains surrounding e-commerce transactions, today's
volume of trade, or recent technological advancements. Consequently,
this environment is plagued with various challenges, including, but not
limited to, illicit substances like fentanyl and other narcotics,
counterfeits and other goods violative of intellectual property rights,
and goods made with forced labor. CBP's enforcement efforts have
brought to light violations of the right to make entry, mismanifesting
of cargo, misclassification, misdelivery (e.g., delivery of goods prior
to release from CBP custody), undervaluation, and
[[Page 3070]]
incorrectly executed powers of attorney. Of particular concern is the
threat posed by illicit fentanyl, fentanyl analogues, as well as
precursor and other chemicals used in illicit drug production that are
smuggled into the United States by transnational criminal
organizations. CBP uses a multi-faceted approach to prevent illegal
drugs from entering the country, and one key facet is advance
information and targeting. Advance electronic shipping information
allows CBP to quickly identify, target, and deter the entry of
dangerous illicit drugs in all operational environments. This
rulemaking contributes to the effort to stop the flow of illegal drugs
into the United States by expanding the collection of enhanced advance
electronic data for low-value shipments.
2. A Succinct Statement of the Objectives of, and Legal Basis for, the
Proposed Rule
In the proposed rule, CBP seeks to refine and codify an electronic
entry process for qualifying low-value shipments seeking entry into the
United States. This proposed new process is termed the ``enhanced entry
process.'' In order to file an enhanced entry, CBP will require the
submission of additional electronic data elements, such as a product
URL or picture, in addition to the data currently required under the
Entry Type 86 Test. This additional information will enable CBP to more
efficiently target high-risk shipments. The existing process of
clearing shipments off the manifest will also remain available to the
trade with some modification; however, it will now be referred to as
the ``basic entry process.''
The legal authority for the administrative exemption is provided in
19 U.S.C. 1321(a)(2)(C). The legal authority to prescribe special rules
for the declaration and entry of low-value merchandise is provided in
19 U.S.C. 1498(a)(1)(A). This administrative exemption is implemented
in the CBP regulations at 19 CFR 10.151 and 10.153, and the entry rules
for the entry of merchandise qualifying for this exemption are provided
in 19 CFR parts 128, 143, and 145.
3. A Description of, and, Where Feasible, an Estimate of the Number of
Small Entities to Which the Proposed Rule Will Apply
As described in section 11.2 of the full analysis attached in the
docket for this rule, the proposed rule does not directly regulate any
one industry. Instead, it makes the enhanced entry process available to
various actors who may wish to import low-value shipments. Enhanced
entries may be filed by the owner or purchaser of the shipment, an ECO
in possession of the shipment, or when appropriately designated by the
owner, purchaser, or consignee of the shipment, a licensed customs
broker. Generally, customs brokers will file the entries; however, it
is unclear which entities will experience the incremental costs of the
rule.
The threshold analysis presented in section 11.2.1 of the full
analysis attached in the docket for this rule describes two possible
alternate scenarios:
1. That brokers and ECOs experience costs directly and do not pass
them on to their consumers; and
2. The total incremental cost of the rule is passed on to
consignees (generally the final owner or purchaser) in the form of
higher shipment costs.
No matter which category of entities bears the cost of this rule,
this analysis demonstrates that a substantial number of small
businesses may be affected by the proposed rule. Assuming that brokers
and ECOs fully bear the costs they incur (Scenario 1), we find that 67
percent of sampled brokers and ECOs qualify as small businesses.\78\
Extrapolating from the sample to the full population of brokers
suggests that approximately 274 brokers are small businesses. This
analysis does not identify small businesses among the affected ECOs.
Under the alternate assumption that consignees bear the cost of the
rule (Scenario 2), any small entity in the United States has the
potential to be affected by the rule as a consignee. Analysis of a
sample of consignees for one day in 2023 demonstrates that 92 percent
of businesses in the sample qualify as small.
---------------------------------------------------------------------------
\78\ This includes 71 percent of sampled small-volume brokers,
73 percent of all medium- and large-volume brokers, and none of the
sampled major ECOs.
---------------------------------------------------------------------------
4. A Description of the Projected Reporting, Record-Keeping and Other
Compliance Requirements of the Proposed Rule, Including an Estimate of
the Classes of Small Entities That Will Be Subject to the Requirement
and the Type of Professional Skills Necessary for Preparation of the
Report or Record
This rule does not establish any new recordkeeping requirements
outside of the additional data elements that will be sent to CBP. An
enhanced entry may be filed for shipments which meet the requirements
of 19 U.S.C. 1321(a)(2)(C) and 19 CFR 10.151, by transmitting to CBP,
the individual bill of lading (house bill or equivalent) or other
shipping document used to file or support entry, the data elements
listed in previous sections for the basic entry process, and the
following additional data:
1. Clearance tracing identification number (CTIN). ``CTIN'' means
the individual bill of lading number or a unique identification number
used to associate the merchandise on the individual bill of lading with
the eligible imported merchandise for which entry is sought;
2. Country of shipment of the merchandise. ``Country of shipment''
means the country in which the goods were located when the shipment was
created for exportation to the United States;
3. 10-digit classification for the merchandise in Chapters 1-97
(and any additional classification in Chapters 98-99, if applicable) of
the Harmonized Tariff Schedule of the United States (HTSUS), unless the
HTSUS waiver privilege has been obtained and asserted, and the
merchandise is not subject to the requirements of other government
agencies; and
a. HTSUS Waiver Privilege: Parties who will file enhanced entries
may request from CBP a waiver of the requirement to transmit the 10-
digit HTSUS classification unless the merchandise is subject to the
requirements of other government agencies. Parties may obtain a waiver
by demonstrating, at a minimum, the following:
i. The ability to properly classify merchandise to the 10-digit
HTSUS classification;
ii. The ability to properly determine whether merchandise is
subject to the requirements of other government agencies and the
ability to properly segregate such shipments; and
iii. The ability to properly determine whether merchandise is
otherwise precluded by law from eligibility for the administrative
exemption under 19 U.S.C. 1321(a)(2)(C) and the ability to properly
segregate such shipments.
4. One or more of the following:
a. The uniform resource locator (URL) to the marketplace's product
listing;
b. Product picture;
c. Product identifier; and/or
d. Shipment x-ray or other security screening report number
verifying completion of foreign security scanning of the shipment.
Conditional data elements for enhanced entry: In order for CBP to
better assess the risks associated with low-value shipments, the
enhanced entry process includes a set of conditional data elements
which must be transmitted to CBP if the data
[[Page 3071]]
elements are applicable to the merchandise in the shipment. (For
example, if merchandise is subject to PGA requirements (for item 3 in
the list below), then those documents must be submitted. If, however,
PGA requirements are not applicable to the merchandise, then that data
would not be provided.)
1. Seller name and address;
2. Purchaser name and address;
3. Any data or documents required by other government agencies;
4. Advertised retail product description; and
5. Marketplace name and website or phone number. ``Marketplace''
means the party that provides an internet (e.g., online, website,
application (``app''), electronic mail) or telephonic (e.g., telephone,
television, or catalog) means of offering products for sale. The
marketplace may be a seller or a third party offering products on
behalf of a seller.
The data elements required for an enhanced entry must be received
by CBP on or before the deadline for receipt of advance cargo
information, as specified below (varies by mode):
Vessel. The filing must be received by CBP 24 hours before
the cargo is laden aboard the vessel at the foreign port. 19 CFR 4.7
and 4.7a.
Air. The filing must be received by CBP either: (1) no
later than the time of the departure of the aircraft for the United
States, in the case of aircraft that depart for the United States from
any foreign port or place in North America, including locations in
Mexico, Central America, South America (from north of the Equator
only), the Caribbean, and Bermuda; or (2) no later than four hours
prior to the arrival of the aircraft in the United States, in the case
of aircraft that depart for the United States from any foreign area
other than those specified in 19 CFR 122.48a(b)(1). 19 CFR 122.48a(b).
Rail. The filing must be received by CBP no later than two
hours prior to the cargo reaching the first port of arrival in the
United States. 19 CFR 123.91.
Truck. The filing must be received by CBP no later than
either 30 minutes or one hour prior to the carrier's reaching the first
port of arrival in the United States, or such lesser time as
authorized, based upon the CBP-approved system employed to present the
information. 19 CFR 123.92.
5. An Identification, to the Extent Practicable, of All Relevant
Federal Rules Which May Duplicate, Overlap or Conflict With the
Proposed Rule
This rule does not duplicate, overlap, or conflict with any other
Federal rule. CBP is considering an NPRM that would make goods subject
to trade actions ineligible for the administrative exemption. If that
NPRM is published and finalized, that rule would supplement this rule.
6. A Description of Any Significant Alternatives to the Proposed Rule
That Accomplish the Stated Objectives of Applicable Statutes and That
Minimize any Significant Economic Impact of the Proposed Rule on Small
Entities
There are no significant alternatives that accomplish the stated
objectives of the proposed rule. As the majority of the regulated
parties are small businesses, this rule would not be effective if CBP
limited the rule to other than small businesses. Further, we note that
use of the enhanced entry process established by this rule is optional.
If a small business does not wish to provide the information required
under the enhanced entry process, it may use the basic entry process,
which is nearly identical to the release from manifest process used
historically, and incur no costs as a result of this rule.
E. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507), an agency may not conduct, and a person is not required to
respond to, a collection of information unless the collection of
information displays a valid control number assigned by OMB. The
collection of information contained in this proposed rule, will be
submitted to OMB for review under section 3507(d) of the Paperwork
Reduction Act (PRA). The public can direct comments to the Office of
Information and Regulatory Affairs of OMB, Attention: Desk Officer for
Customs and Border Protection. Such comments can be submitted in the
regulatory docket for this proposed rule.
This rule, if finalized, would formalize the Entry Type 86 Test and
alter the information collection under OMB control number 1651-0024
(Entry/Immediate Delivery Application and Simplified Entry). This NPRM
announces the data elements required for enhanced entry submissions.
Enhanced entry submissions, like entry type 86 entries, are submitted
for entries at the house bill level.\79\ CBP does not anticipate a
change in the number of annual submissions (621,828,643) or number of
annual respondents (535) compared to those caused by the Entry Type 86
Test, but will result in an increase to the time per response to submit
a master bill an enhanced submission compared to the entry type 86
submission. The collection will be adjusted to reflect the additional 2
minutes per master bill and the increase in total annual burden hours
due to the change. The current entry type 86 entries will be converted
to the new enhanced entry upon the finalization of this proposed
rulemaking and formal OMB approval which will keep the number of
submissions equal to the Entry Type 86 Test. The new estimated annual
burden for this information collection following OMB approval is
3,843,763 hours.
---------------------------------------------------------------------------
\79\ The typical master bill contains approximately 6,000 house
bills. Much of the information on the house bills is identical and
the submission is largely automated. This results in a higher number
of submissions with a lower time burden per submission for entry
type 86 and enhanced entry submissions.
---------------------------------------------------------------------------
Upon finalization of this proposed rule and OMB approval, the
information collection under OMB control number 1651-0024 will be
revised to reflect the increased burden hours as follows:
Paper Only Entry/Immediate Delivery Form 3461
Estimated Number of Respondents: 1,669.
Estimated Number of Total Annual Responses: 33,923.
Estimated Time per Response: 15 minutes.
Estimated Total Annual Burden Hours: 8,481.
ACE Cargo Release Electronic Submission
Form 3461 and 3461ALT Excluding Enhanced Entry
Estimated Number of Respondents: 6,580.
Estimated Number of Total Annual Responses: 22,970,239.
Estimated Time per Response: 10 minutes.
Estimated Total Annual Burden Hours: 3,828,373.
Enhanced Entry
Estimated Number of Respondents: 535.
Estimated Number of Total Annual Responses: 621,828,643.
Estimated Time per Response: 0.0007 minutes.
Estimated Total Annual Burden Hours: 6,909.
F. National Environmental Policy Act
DHS and its components analyze actions to determine whether the
National Environmental Policy Act of 1969 (``NEPA''), 42 U.S.C. 4321 et
seq., applies to these actions and, if so, what level of NEPA review is
required. 42 U.S.C. 4336. DHS's Directive 023-01, Revision 01 and
Instruction Manual
[[Page 3072]]
023-01-001-01, Revision 01 (``Instruction Manual 023-01-001-01'')
establish the procedures that DHS uses to comply with NEPA and the
Council on Environmental Quality (``CEQ'') regulations for implementing
NEPA, 40 CFR parts 1500 through 1508.\80\
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\80\ CBP is aware of the November 12, 2024 decision in Marin
Audubon Society v. Federal Aviation Administration, No. 23-1067
(D.C. Cir. Nov. 12, 2024). To the extent that a court may conclude
that CEQ regulations implementing NEPA are not judicially
enforceable or binding on this agency action, CBP has nonetheless
elected to follow those CEQ regulations, in addition to DHS's
Directive and Instruction Manual, to meet the agency's obligations
under NEPA, 42 U.S.C. 4321 et seq.
---------------------------------------------------------------------------
Federal agencies may establish categorical exclusions for
categories of actions they determine normally do not significantly
affect the quality of the human environment and, therefore, do not
require the preparation of an Environmental Assessment or Environmental
Impact Statement. 42 U.S.C. 4336e(1); see also 40 CFR 1501.4,
1507.3(c)(8), 1508.1(e). DHS has established categorical exclusions,
which are listed in appendix A of its Instruction Manual 023-01-001-01.
Under DHS's NEPA implementing procedures, for an action to be
categorically excluded, it must satisfy each of the following three
conditions: (1) the entire action clearly fits within one or more of
the categorical exclusions; (2) the action is not a piece of a larger
action; and (3) no extraordinary circumstances exist that create the
potential for a significant environmental effect.
DHS has analyzed this action under Directive 023-01 and Instruction
Manual 023-01-001-01. DHS has made a determination that this rulemaking
action is one of a category of actions that do not individually or
cumulatively have a significant effect on the human environment. First,
this proposed rule clearly fits within the Categorical Exclusions A3(a)
and A3(d) of DHS's Instruction Manual 023-01-001-01, Appendix A, for
the promulgation of rules of a ``strictly administrative or procedural
nature'' and rules that ``interpret or amend an existing regulation
without changing its environmental effect,'' respectively. The proposed
rule would create a new process for entering low-value shipments,
allowing CBP to target high-risk shipments more effectively. The
proposed rule would also revise the current process for entering low-
value shipments to require additional data elements that would assist
CBP in verifying eligibility for duty- and tax-free entry of low-value
shipments and bona-fide gift. Second, this NPRM is not part of a larger
action. Third, this NPRM presents no extraordinary circumstances
creating the potential for significant environmental effects.
Therefore, a more detailed NEPA review is not necessary. DHS seeks any
comments or information that may lead to the discovery of any
significant environmental effects from this NPRM.
Signing Authority
In accordance with Treasury Order 100-20, the Secretary of the
Treasury delegated to the Secretary of Homeland Security the authority
related to the customs revenue functions vested in the Secretary of the
Treasury as set forth in 6 U.S.C. 212 and 215, subject to certain
exceptions. This regulation is being issued in accordance with DHS
Directive 07010.3, Revision 03.2, which delegates to the Commissioner
of CBP the authority to prescribe and approve/sign regulations related
to customs revenue functions.
Pete Flores, Senior Official Performing the Duties of the
Commissioner, having reviewed and approved this document, has delegated
the authority to electronically sign this document to the Director (or
Acting Director, if applicable) of the Regulations and Disclosure Law
Division of CBP, for purposes of publication in the Federal Register.
List of Subjects
19 CFR Part 10
Bonds, Exports, Imports, Reporting and recordkeeping requirements,
Trade agreements.
19 CFR Part 101
Harbors, Organization and functions (Government agencies), Seals
and insignia, Vessels.
19 CFR Part 128
Administrative practice and procedure, Freight, Reporting and
recordkeeping requirements.
19 CFR Part 143
Reporting and recordkeeping requirements.
19 CFR Part 145
Exports, Lotteries, Postal Service, Reporting and recordkeeping
requirements.
Proposed Amendments to the CBP Regulations
For the reasons stated above in the preamble, CBP proposes to amend
19 CFR parts 10, 101, 128, 143, and 145 as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. 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, 4513.
* * * * *
0
2. Amend the undesignated center heading preceding Sec. 10.151 to read
as follows:
Importations Not Over $800 and Bona-Fide Gifts
0
3. Revise Sec. 10.151 to read as follows:
Sec. 10.151 Importations not over $800.
Subject to the conditions in Sec. 10.153, the port director may
pass free of duty and tax any shipment of merchandise, as defined in
Sec. 101.1 of this chapter, imported by one person on one day having a
fair retail value in the country of shipment not exceeding $800. When
multiple shipments are imported by one person on one day under this
section and the aggregate fair retail value of those shipments exceeds
$800 in the country of shipment, then all such shipments imported on
that day by that person become ineligible for the privilege of passing
free of duty and tax under this section. This privilege will also be
denied if a port director has reason to believe that a shipment is one
of several lots covered by a single order or contract sent separately
to secure free entry or avoid compliance with any pertinent law or
regulation. For purposes of this section, the person whose shipment may
be granted the privilege of passing free of duty and tax under 19
U.S.C. 1321(a)(2)(C) is the owner or purchaser of the merchandise
imported on one day. Merchandise for which this privilege is claimed
must be entered under informal entry procedures (see Sec. 143.23(j),
and Sec. Sec. 128.24, 145.31, 148.12, and 148.62 of this chapter) by a
party authorized to make entry under Sec. 143.26(b) of this chapter.
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4. Revise Sec. 10.152 to read as follows:
Sec. 10.152 Bona-fide gifts.
Subject to the conditions in Sec. 10.153, the port director may
pass free of duty and tax any article sent as a bona-fide gift from a
person in a foreign country to a person in the United States, provided
that the aggregate fair retail value in the country of shipment of such
articles received by one person on one day does not exceed $100 or, in
the case of articles sent from a person in the Virgin Islands, Guam,
and American
[[Page 3073]]
Samoa, $200. Articles for which this privilege is claimed must be
entered under informal entry procedures (see Sec. 143.23(j) and Sec.
145.32 of this chapter). An article is ``sent'' for purposes of this
section if it is conveyed in any manner other than on the person or in
the accompanied or unaccompanied baggage of the donor or donee.
0
5. Amend Sec. 10.153 by:
0
a. In the introductory text, removing the word ``Customs'' and adding
in its place the term ``CBP'';
0
b. In paragraphs (a) and (d) introductory text, adding a hyphen between
the words ``bona'' and ``fide''; and
0
c. Adding paragraph (i).
The addition reads as follows:
Sec. 10.153 Conditions for exemption.
* * * * *
(i) The exemption provided for in Sec. 10.151 is not to be allowed
with respect to imported merchandise subject to any antidumping or
countervailing duty determination, instruction, or order issued by the
Department of Commerce; or any other merchandise otherwise precluded by
law from eligibility.
PART 101--GENERAL PROVISIONS
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6. The general authority citation for part 101 continues to read as
follows:
Authority: 5 U.S.C. 301; 6 U.S.C. 101, et. seq.; 19 U.S.C. 2,
66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the
United States), 1623, 1624, 1646a.
* * * * *
Sec. 101.1 [Amended]
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7. Amend Sec. 101.1, in the definition of ``Shipment'', by removing
the words ``the bill of lading'' and adding in their place the words
``an individual bill of lading (house bill or equivalent)''.
SUBPART 128--EXPRESS CONSIGNMENTS
0
8. The authority citation for part 128 continues to read as follows:
Authority: 19 U.S.C. 58c, 66, 1202 (General Note 3(i),
Harmonized Tariff Schedule of the United States), 1321, 1484, 1498,
1551, 1555, 1556, 1565, 1624.
0
9. Amend Sec. 128.21 by:
0
a. Revising paragraph (a)(4)(ii); and
0
b. In paragraph (b), removing the word ``Customs'' and adding in its
place the term ``CBP''.
The revision reads as follows:
Sec. 128.21 Manifest requirements.
(a) * * *
(4) * * *
(ii) If the merchandise is eligible for, and is entered under, the
informal entry procedures as provided in Sec. 128.24, except for
merchandise eligible to pass free of duty and tax as provided in Sec.
128.24(e) or Sec. 128.24(f) and entered under Sec. 143.23(k) of this
chapter.
* * * * *
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10. Amend Sec. 128.24 by revising paragraphs (d) and (e) and adding
paragraph (f) to read as follows:
Sec. 128.24 Informal entry procedures.
* * * * *
(d) Entry summary. An entry summary (CBP Form 7501, or its
electronic equivalent) must be presented in proper form, and estimated
duties deposited within 10 days of the release of the merchandise under
either the regular or alternative procedure described in this section,
unless the shipment passes free of duty and tax under paragraph (e) or
(f) of this section.
(e) Shipments valued at $800 or less. Shipments valued at $800 or
less meeting the requirements of Sec. 10.151 of this chapter may be
passed free of duty and tax if entered under the procedures set forth
in Sec. 143.23(j) of this chapter by a party eligible to file entry
under Sec. 143.26(b) of this chapter.
(f) Bona-fide gifts. Shipments valued at $100 or less ($200, in the
case of articles sent from persons in the Virgin Islands, Guam, and
American Samoa) meeting the requirements of Sec. 10.152 of this
chapter may be passed free of duty and tax if entered under the
procedures set forth in Sec. 143.23(k) of this chapter. Such shipments
are not eligible for the procedures set forth in Sec. 143.23(l) of
this chapter.
PART 143--SPECIAL ENTRY PROCEDURES
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11. The authority citation for part 143 continues to read as follows:
Authority: 19 U.S.C. 66, 1321, 1414, 1481, 1484, 1498, 1624,
1641.
0
12. Amend Sec. 143.23 by revising paragraphs (j) and (k) and adding
paragraphs (l) and (m) to read as follows:
Sec. 143.23 Form of entry.
* * * * *
(j) Shipments not over $800 and bona-fide gifts. Except in the case
of personal written or oral declarations (see Sec. Sec. 148.12,
148.13, and 148.62 of this chapter), a shipment of merchandise eligible
for informal entry under 19 U.S.C. 1498 and meeting the requirements of
Sec. 10.151 or Sec. 10.152 of this chapter may be entered by
providing the individual bill of lading (house bill or equivalent), or
other shipping document used to file or support entry, and by meeting
the requirements under paragraph (k) or (l) of this section.
(1) Requirements of other government agencies. Shipments of
merchandise may be subject to other legal requirements, including the
requirements of other Federal, State, or local agencies, as applicable.
Merchandise regulated by other Federal agencies may not be entered
under paragraph (k) of this section, but may be entered under paragraph
(l) of this section.
(2) Mail importations. Mail importations pursuant to Sec. 145.31
may not be entered under paragraph (k) of this section, but may be
entered under paragraph (l) of this section.
(3) Bona-fide gifts. Bona-fide gifts claiming the exemption in
Sec. 10.152 of this chapter must be entered under paragraph (k) of
this section.
(k) Basic entry process. Shipments of merchandise meeting the
requirements of 19 U.S.C. 1321(a)(2) and Sec. 10.151 or Sec. 10.152
of this chapter may be entered pursuant to paragraph (j) of this
section by providing the individual bill of lading (house bill or
equivalent) and the following information either electronically through
a CBP-authorized electronic data interchange (EDI) system or in paper
format:
(1) Country of origin of the merchandise;
(2) Shipper name, address, and country;
(3) Name and address of the person claiming the exemption from duty
and tax under Sec. 10.151 or Sec. 10.152 of this chapter;
(4) Specific description of the merchandise;
(5) Manifested quantity of the merchandise;
(6) Shipment weight;
(7) Fair retail value in the country of shipment in U.S. dollars
(for conversion of foreign currency, see subpart C, part 159 of this
chapter); and
(8) Name and address of the final deliver-to party, meaning the
final party in the United States to whom the merchandise is to be
delivered, if distinct from the party identified in paragraph (k)(3) of
this section.
(l) Enhanced entry process. Shipments of merchandise meeting the
requirements of 19 U.S.C. 1321(a)(2)(C) and Sec. 10.151 of this
chapter may be entered pursuant to paragraph (j) of this section by
transmitting to CBP, through a CBP-authorized EDI system, the
individual bill of lading (house bill or equivalent) or other shipping
document used to file or support entry, and the information required in
paragraph (k) of this section and paragraphs (l)(1) and (2) of this
section. All required
[[Page 3074]]
documentation and information must be received by CBP on or before the
deadline for receipt of cargo information (see Sec. Sec. 4.7 and 4.7a
(vessel), 122.48a(b) (air), 123.91 (rail), and 123.92 (truck) of this
chapter), except for mail shipments (see Sec. 145.31 of this chapter).
(1) For all shipments, the following must be transmitted:
(i) Clearance tracing identification number (CTIN). ``CTIN'' means
the individual bill of lading number or other unique identification
number used to associate the merchandise on the individual bill of
lading with the eligible imported merchandise for which entry is
sought;
(ii) Country of shipment of the merchandise. For purposes of this
paragraph (l), ``country of shipment'' means the country where the
goods were located when the shipment was created for exportation to the
United States;
(iii) 10-digit classification of the merchandise in chapters 1-97
(and additionally in chapters 98-99, if applicable) of the Harmonized
Tariff Schedule of the United States (HTSUS), unless the HTSUS waiver
privilege has been obtained pursuant to paragraph (m) of this section
and asserted for the entry, and the merchandise is not subject to
requirements of other government agencies; and
(iv) One or more of the following:
(A) The uniform resource locator (URL) to the marketplace's product
listing;
(B) Product picture;
(C) Product identifier; and/or
(D) Shipment x-ray or other security screening report number
verifying completion of foreign security scanning of the shipment.
(2) For all shipments, the following information must be
transmitted, if applicable:
(i) Seller name and address. For purposes of this paragraph (l),
``seller'' means the party that made, or offered or contracted to make,
a sale of the merchandise;
(ii) Purchaser name and address. For purposes of this paragraph
(l), ``purchaser'' means the last known party to whom the goods are
sold or the party to whom the goods are contracted to be sold at the
time of importation;
(iii) Any data or documents required by other government agencies;
(iv) Advertised retail product description; and
(v) Marketplace name and website or phone number. For purposes of
this paragraph (l), ``marketplace'' means the party that provides an
internet (e.g., online, website, application (``app''), electronic
mail) or telephonic (e.g., telephone, television, or catalog) means of
offering products for sale. The marketplace may be a seller or a third
party offering products on behalf of a seller.
(m) Application for HTSUS waiver privilege. Under the provisions of
this paragraph (m), a party may request a waiver of the requirement to
transmit the 10-digit HTSUS classification of the merchandise pursuant
to paragraph (l)(1)(iii) of this section. The HTSUS waiver privilege
cannot be used when merchandise is subject to the requirements of other
government agencies under paragraph (j)(1) of this section or where
otherwise required by law. If subject to such requirements, the 10-
digit HTSUS classification(s) must be submitted for all the merchandise
in the shipment.
(1) Who may apply. Any party who is eligible to file entry under
paragraph (l) of this section may apply for the HTSUS waiver privilege
(see Sec. 143.26(b) of this chapter regarding parties who may make
such entries).
(2) Contents of application. An applicant for the HTSUS waiver
privilege must submit an application via email to the Director, Cargo
Security and Controls Division, Office of Field Operations, at
[email protected]. The application must include the following:
(i) Name and address of applicant, and an email address to be used
for CBP correspondence regarding the application.
(ii) Information demonstrating the applicant has in place internal
controls and procedures regarding, at a minimum, the following:
(A) The ability to properly classify merchandise under the HTSUS at
the 10-digit classification;
(B) The ability to properly determine whether merchandise is
subject to the requirements of other government agencies and the
ability to properly segregate such shipments; and
(C) The ability to properly determine whether merchandise is
otherwise precluded by law from eligibility for the administrative
exemption under 19 U.S.C. 1321(a)(2)(C) and the ability to properly
segregate such shipments.
(iii) The applicant must state whether a previous application for
an HTSUS waiver privilege was denied, or if a previous approval of such
an application was revoked.
(3) Action on application--(i) CBP review. CBP will review and
verify all information submitted with the application. For this
purpose, CBP may request additional information (including additional
documents) and/or explanations of any of the information provided. The
verification process may include on-site visits and demonstrations of
the applicant's procedures. Based on its findings from the review and
verification process, CBP will approve or deny the application.
(ii) Notice to applicant. CBP will notify the applicant, via email
to the email address provided with the application, within 60 days of
receipt of the application of its decision to approve or deny the
application, or of CBP's inability to approve, deny, or act on the
application and the reason therefor.
(iii) Approval. The approval of an application will be effective as
of the date of CBP's notification of approval, unless CBP's
notification provides a different effective date.
(iv) Denial. If an application is denied, the applicant will be
notified specifying the reason therefor. A denial may be appealed in
the manner prescribed in paragraph (m)(3)(vi) of this section. The
applicant may not reapply for the HTSUS waiver privilege until the
reason for the denial is resolved.
(v) Revocation. CBP may propose to revoke its approval of an
application for good cause (such as, noncompliance with any applicable
customs laws and/or regulations, failure to maintain internal controls
at the standards set by CBP in paragraph (m)(2)(ii) of this section, or
failure to participate in periodic compliance reviews conducted by
CBP). In the case of a proposed revocation, CBP will provide notice,
via email to the email address provided with the application, of the
proposed revocation of the approval. The notice will specify the
reasons for CBP's proposed action and the procedures for challenging
CBP's proposed revocation, as described in paragraph (m)(3)(vi) of this
section. The revocation will take effect 30 days after the date of the
proposed revocation unless timely challenged under paragraph (m)(3)(vi)
of this section. If timely challenged, the revocation will take effect
after completion of the challenge procedures in paragraph (m)(3)(vi) of
this section unless the challenge is successful.
(vi) Appeal of denial or challenge to proposed revocation. An
appeal of a denied application, or challenge to the proposed revocation
of an approved application, may be made by email to the Executive
Director, Trade Policy and Programs, Office of Trade, CBP Headquarters,
at [email protected], and must be received within 30 days of the
date of denial or proposed revocation. The 30-day period for appeal or
challenge may be extended for good cause, upon written request by
[[Page 3075]]
the applicant or privilege holder. The extension request must be made
by email and received by the Executive Director, Trade Policy and
Programs, Office of Trade, CBP Headquarters, at [email protected],
within the 30-day period. The denial of an application or the
revocation of a waiver, does not preclude a party from reapplying for
the privilege in the future.
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13. Amend Sec. 143.26 by revising paragraph (b) and adding paragraph
(c) to read as follows:
Sec. 143.26 Party who may make informal entry of merchandise.
* * * * *
(b) Shipments valued at $800 or less. Except for merchandise
subject to paragraph (c) of this section, a shipment of merchandise
valued at $800 or less which qualifies for informal entry under 19
U.S.C. 1498 and meets the requirements in 19 U.S.C. 1321(a)(2) (see
Sec. Sec. 10.151, 10.152, 10.153, 143.23(k), 145.31, 145.32, 148.51,
and 148.64 of this chapter) may be entered, using reasonable care, by
the owner, purchaser, or consignee of the shipment or, when
appropriately designated by one of these persons, a customs broker
licensed under 19 U.S.C. 1641.
(c) Exception for the enhanced entry process. A shipment of
merchandise valued at $800 or less, which qualifies for informal entry
under 19 U.S.C. 1498 and the administrative exemption under 19 U.S.C.
1321(a)(2)(C), may be entered under Sec. 143.23(l), using reasonable
care, by the owner or purchaser of the shipment, an express consignment
operator or carrier in possession of the shipment (see Sec. 128.1(a)
of this chapter), or when appropriately designated by the owner,
purchaser, or consignee of the shipment, a customs broker licensed
under 19 U.S.C. 1641 (see part 141, subpart C). When a party eligible
to file the entry transmits the entry information required under
Sec. Sec. 143.23(l)(1)(iv)(A) through (D) and 143.23(l)(2)(iv) through
(v) of this part, and receives any of that information from another
party, CBP will take into consideration how, in accordance with
ordinary commercial practices, the transmitting party acquired such
information, and whether and how the transmitting party is able to
verify this information. When the transmitting party is not reasonably
able to verify such information, CBP will permit the party to transmit
the information on the basis of what the party reasonably believes to
be true.
PART 145--MAIL IMPORTATIONS
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14. The authority citation for part 145 and the specific authority
citation for Sec. Sec. 145.31 and 145.32 continue to read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i)), Harmonized
Tariff Schedule of the United States, 1624.
* * * * *
Section 145.31 also issued under 19 U.S.C. 1321;
Section 145.32 also issued under 19 U.S.C. 1321, 1498;
* * * * *
0
15. Revise Sec. 145.31 to read as follows:
Sec. 145.31 Importations not over $800 in value.
The port director may pass free of duty and tax, without preparing
an entry as provided for in Sec. 145.12, packages containing
merchandise having an aggregate fair retail value in the country of
shipment of not over $800, subject to the requirements set forth in
Sec. Sec. 10.151 and 10.153 of this chapter. Such merchandise may
alternatively be entered under Sec. 143.23(l) of this chapter, in
which case all required information must be transmitted to CBP no later
than the date the merchandise departs from the country of posting.
Sec. 145.32 [Amended]
0
16. Amend Sec. 145.32 by removing the word ``shall'' and adding in its
place the word ``may''.
Robert F. Altneu,
Director, Regulations & Disclosure Law Division, Regulations & Rulings,
Office of Trade, U.S. Customs and Border Protection.
[FR Doc. 2025-00551 Filed 1-13-25; 8:45 am]
BILLING CODE 9111-14-P