[Federal Register: July 28, 2006 (Volume 71, Number 145)]
[Proposed Rules]
[Page 42778-42785]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28jy06-11]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
DEPARTMENT OF THE TREASURY
[USCBP-2006-0015]
19 CFR Parts 24, 113, and 128
RIN 1505-AB39
Fees for Customs Processing at Express Consignment Carrier
Facilities
AGENCY: Customs and Border Protection, Homeland Security; Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document proposes amendments to title 19 of the Code of
Federal Regulations (19 CFR) to reflect changes to the customs user fee
statute made by section 337 of the Trade Act of 2002 and section
2004(f) of the Miscellaneous Trade and Technical Corrections Act of
2004. The statutory amendments made by section 337 concern the fees
payable for customs services provided in connection with the informal
entry or release of shipments at express consignment carrier facilities
and centralized hub facilities, and primarily serve to replace the
annual lump sum payment procedure with a quarterly payment procedure
based on a specific fee for each individual air waybill or bill of
lading. Section 2004(f) amended the user fee statute to authorize, for
merchandise that is formally entered at these sites, the assessment of
merchandise processing fees provided for in 19 U.S.C. 58c(a)(9), in
addition to the fees that are currently assessed on individual air
waybills or bills of lading. Lastly, pursuant to the authority
established in 19 U.S.C. 58c(b)(9)(B)(i), this document proposes to
raise the existing $0.66 fee assessed on individual air waybills or
bills of lading to $1.00 to more equitably align it with the actual
costs incurred by CBP in processing these items.
DATES: Comments must be received on or before August 28, 2006.
ADDRESSES: You may submit comments, identified by docket number, by one
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments via docket number
USCBP-2006-0015.
Mail: Trade and Commercial Regulations Branch, Office of
Regulations and Rulings, Bureau of Customs and Border Protection, 1300
Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
posted without change to http://www.regulations.gov, including any
personal information provided. For detailed instructions on submitting
comments and additional information on the rulemaking process, see the
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION
section of this document.
Docket: For access to the electronic docket to read background
documents or comments received, go to http://www.regulations.gov.
Submitted comments may also be inspected during regular business days
between the hours of 9 a.m. and 4:30 p.m. at the Office of Regulations
and Rulings, Bureau of Customs and Border Protection, 799 9th Street,
NW., 5th Floor, Washington, DC. Arrangements to inspect submitted
comments should be made in advance by calling Joseph Clark at (202)
572-8768.
FOR FURTHER INFORMATION CONTACT: Michael L. Jackson, Office of Field
Operations, Trade Enforcement and Facilitation, Tel.: (202) 344-1196.
SUPPLEMENTARY INFORMATION:
Public Participation
Interested persons are invited to participate in this rulemaking by
submitting written data, views, or arguments on all aspects of the
proposed rule. The Bureau of Customs and Border Protection (CBP) also
invites comments that relate to the economic effects that might result
from this proposed rule. If appropriate to a specific comment, the
commenter should reference the specific portion of the proposed rule,
explain the reason for any recommended change, and include data,
information, or authority that support such recommended change.
Background
I. Statutory Changes Made by Section 337(a) of the Trade Act of 2002
On August 6, 2002, the President signed into law the Trade Act of
2002, Public Law 107-210, 116 Stat. 933. Section 337(a) of the Trade
Act of 2002 amended section 13031(b)(9) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)(9)) by adding new
requirements for the payment of user fees for customs services provided
by CBP to express consignment carrier facilities and centralized hub
facilities in connection with imported letters, documents, shipments or
other merchandise to which informal entry procedures apply. The
principal changes involve the following:
1. In the introductory text of section 58c(b)(9)(A), which refers
to reimbursements and payments required from a centralized hub
facility, an express consignment carrier facility, or a small airport
or other facility, the words ``the processing of merchandise that is
informally entered or released'' were replaced by the words ``the
processing of letters, documents, records, shipments, merchandise, or
any other item that is valued at an amount that is less than $2,000 (or
such higher amount as the Secretary of the Treasury may set by
regulation pursuant to section 498 of the Tariff Act of 1930), except
such items entered for transportation and exportation or immediate
exportation.'' [It is noted that the statutory monetary amount was
subsequently amended to ``$2,000 or less * * *'' as discussed later in
this document.]
2. Section 58c(b)(9)(A)(ii) was replaced by new text identifying,
in the case of an express consignment carrier facility or a centralized
hub facility, a fee of $0.66 per individual air waybill or bill of
lading. Prior to this amendment, clause (ii) required an express
consignment carrier facility or a centralized hub facility to make the
following reimbursements and payments:
[[Page 42779]]
(a) A reimbursement to Customs (hereinafter referred to as ``CBP''
to reflect the transfer of the U.S. Customs Service to the Department
of Homeland Security and the agency's subsequent renaming as Bureau of
Customs and Border Protection) of an amount equal to the cost of the
services provided by CBP for the facility during the fiscal year; and
(b) An annual payment by the facility to the Secretary of the
Treasury in an amount equal to the annual reimbursement made under 19
U.S.C. 58c(b)(9)(A)(ii)(I).
3. Subparagraph (B) was redesignated as subparagraph (C) and a new
subparagraph (B) was added. New subparagraph (B) consists of clauses
(i) through (iii) which provide as follows:
(a) Clause (i) authorizes the Secretary of the Treasury to adjust
the $0.66 fee prescribed in subparagraph (A)(i) to an amount that is
not less than $0.35 and not more than $1.00 per individual air waybill
or bill of lading. Clause (i) further provides that the adjustment may
not be made before fiscal year 2004 and not more than once per fiscal
year and must involve publication of notice of the proposed adjustment
in the Federal Register with opportunity for public comment;
(b) Clause (ii) provides that the payment required by subparagraph
(A)(ii) is the only payment required for reimbursement of CBP in
connection with the processing of an individual air waybill or bill of
lading in accordance with that subparagraph and for providing services
at express consignment carrier facilities or centralized hub
facilities, except that CBP may require those facilities to cover CBP
expenses for adequate office space, equipment, furnishings, supplies,
and security.
(c) Clause (iii)(I) provides that the payment required under
subparagraphs (A)(ii) and (B)(ii) is to be paid to CBP on a quarterly
basis by the carrier using the facility in accordance with regulations
prescribed by the Secretary of the Treasury. Clause (iii)(II) states
that 50 percent of the amount of payments received under subparagraphs
(A)(ii) and (B)(ii) will, in accordance with 19 U.S.C. 1524, be
deposited in the Customs (CBP) User Fee Account and used to directly
reimburse each appropriation for the amount paid out of that
appropriation for costs incurred in providing services to express
consignment carrier facilities or centralized hub facilities. Such
amounts are to remain available until expended for the provision of
customs services to these entities. Clause (iii)(III) directs the
remaining 50 percent of the amount of payments received under
subparagraphs (A)(ii) and (B)(ii) to be paid to the Secretary of the
Treasury. See 19 U.S.C. 58c(b)(9)(B)(iii)(I)--(III).
Section 337(b) of the Trade Act of 2002 provides that the
amendments made by section 337(a) take effect on October 1, 2002.
The following points are noted regarding the effect of the
statutory changes made by section 337(a) of the Trade Act of 2002:
1. The overall effect of section 337(a) is to replace two equal
annual lump sum payments (one representing a reimbursement of the cost
of services provided and the other representing a payment in lieu of
the payment of fees for the informal entry or release of merchandise)
with a quarterly payment procedure based on a specific fee for each
individual air waybill or bill of lading.
2. The $2,000 limit referred to in the amended statute reflects the
amount that CBP, pursuant to section 498 of the Tariff Act of 1930, as
amended (19 U.S.C. 1498), has adopted in Sec. 143.21 of title 19 of
the Code of Federal Regulations (19 CFR 143.21) as the limit for
shipments of merchandise that may be entered under informal entry.
3. The replacement of the word ``merchandise'' by a reference to
``letters, documents, records, shipments, merchandise, or any other
item'' in the amended statute ensures that other imported articles or
items that are eligible for informal entry under Sec. 143.21 will be
subject to the new fee. The one exception concerns those articles (for
example, articles of plastics or rubber, textiles and textile articles,
leather articles, and footwear) for which the informal entry limit is
set at $250 in Sec. 143.21; for those articles having a value greater
than $250 but less than $2,000, the new fee standard will apply even
though those articles are not subject to informal entry procedures
under Sec. 143.21.
4. Each shipment transported by affected carriers is issued an
individual air waybill that is used, among other things, for tracking
purposes. Because the law applies the fee to each individual air
waybill, the use of master bills or other practices of consolidation or
convenience by these entities, the billing system used by these
entities for their customers, and the number of entries filed, are
irrelevant to the application of the fee. In effect, the individual air
waybill subject to the fee is the bill at the lowest level, i.e., not a
master bill. An example of an individual airway bill or bill of lading
is a bill representing an individual shipment that has its own unique
bill number and tracking number, where shipment is assigned to a single
ultimate consignee, and no lower (more disaggregated) bill unit exists.
5. Under the amended statute, responsibility for payment rests with
the carrier rather than with the facility. This does not represent a
substantive change in the case of centralized hub facilities because
the hub facility owner and the carrier using the facility are always
the same. However, it does represent a shift in responsibility for
payment, from the facility to the carrier, in the case of express
consignment carrier facilities that are not owned and operated by the
different carriers that use them.
6. The affected carriers became responsible for payment of the new
fee for each individual covered transaction as of October 1, 2002,
effective date of the amendments made by section 337(a) of the Trade
Act of 2002. Therefore, even though the first payment to CBP under the
new payment procedure would not have taken place until after the close
of the last quarter of the year 2002, the statute obligated the
affected carriers to maintain adequate records to determine the proper
amount to be paid starting on the effective date of the statutory
amendments.
II. Statutory Changes Made by Section 2004(f) of the Miscellaneous
Trade and Technical Corrections Act of 2004
The Miscellaneous Trade and Technical Corrections Act of 2004
(``Trade Act of 2004'') was signed into law by the President on
December 3, 2004 (Pub. L. 108-429, 18 Stat. 2593). Section 2004(f) of
the Trade Act of 2004 made further amendments to section 13031(b)(9) of
the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.
58c(b)(9)). The principal changes made by section 2004(f) are set forth
below:
1. In the introductory text of section 58c(b)(9)(A), which refers
to reimbursements and payments to CBP required from a centralized hub
facility, an express consignment carrier facility, or a small airport
or other facility, the words ``less than $2,000'' were replaced by the
words ``$2,000 or less''.
2. Section 58c(b)(9)(A)(ii), which requires an express consignment
carrier facility or a centralized hub facility to reimburse CBP in an
amount of $0.66 per individual air waybill or bill of lading, was
amended by: (a) Adding the language, ``[N]otwithstanding subsection
(e)(6)'' at the beginning of the section; and (b) restructuring this
provision by creating two new sub-clauses. The first new sub-clause,
identified as (A)(ii)(I), sets forth the existing reimbursement fee of
$0.66 per
[[Page 42780]]
individual air waybill or bill of lading. The second new sub-clause,
identified as (A)(ii)(II), pertains to situations where merchandise is
formally entered and mandates, in addition to the fee specified in sub-
clause (A)(ii)(I), reimbursement to CBP of the fee provided for in
subsection (a)(9) (the merchandise processing fee), if applicable. See
19 U.S.C. 58c(a)(9).
3. To accommodate the amendments to subparagraph (A)(ii), discussed
above, conforming changes were made to section 58c(b)(9)(B)(ii) whereby
the statutory reference to ``(A)(ii)'' was replaced with a reference to
``(A)(ii)(I) or (II)''.
III. Proposal To Increase Certain Reimbursement Fees Payable by Express
Consignment Carrier Facilities and Centralized Hub Facilities
As noted above, 19 U.S.C. 58c(b)(9)(B)(i), as amended by section
337(a) of the Trade Act of 2002, authorizes the Secretary of the
Treasury to adjust the $0.66 fee prescribed in 19 U.S.C.
58c(b)(9)(A)(ii) to an amount that is not less than $0.35 and not more
than $1.00 per individual air waybill or bill of lading. This section
further provides that notice of any proposed adjustment and the reasons
therefore must be published in the Federal Register with opportunity
for public comment.
Pursuant to this authority, this document proposes to increase the
existing $0.66 reimbursement fee payable to CBP by express consignment
carrier facilities and centralized carrier facilities to $1.00. The
proposed fee increase is necessary to more adequately reimburse CBP for
the actual costs incurred by the agency in processing individual air
waybills and bills of lading at these sites. It is also noted that in
addition to the regular costs associated with processing individual air
waybills and bills of lading, CBP must also incur the expenses
associated with relocating CBP personnel when a carrier opts to close a
carrier-owned express consignment facility and open a new facility at a
different location. The current fee schedule does not sufficiently
cover CBP's regular expenses at these sites.
As discussed previously, the amendments to section 58c(b)(9)(B)
made by section 337(a) of the Trade Act of 2002 direct that the money
collected by CBP from this one payment be sent to two different
accounts. Section 58c(b)(9)(B)(iii)(II) requires fifty percent of the
payment to be deposited in the CBP User Fee Account and used to
directly reimburse each appropriation for the amount paid out of that
appropriation for the costs incurred in providing services to express
consignment carrier facilities and centralized hub facilities. Such
amounts are available until expended for the provision of custom
services for these facilities. Section 58c(b)(9)(B)(iii)(III) requires
the remaining fifty percent to be paid to the Secretary of the Treasury
in lieu of an informal entry Merchandise Processing Fee (MPF). Prior to
the 2002 amendment, the law provided for two payments: One payment was
made to CBP as the fee to cover agency expenses incurred by providing
customs services relating to staffing for the onsite processing and
release of cargo at express consignment carrier facilities, and the
second payment was made to the Treasury in lieu of the informal entry
Merchandise Processing Fee (MPF). Thus, the current payment structure
provides for a single payment collected by CBP and deposited in two
separate sub-accounts, whereas previously two separate fees were paid
to CBP and Treasury. In neither case did fees exceed direct costs. In
fact, collected fees were well below direct costs. Under this proposal,
fees will approach costs up to the new statutory cap.
CBP has conducted a financial analysis of the costs incurred by CBP
in providing services to express consignment facilities and centralized
hub facilities in Fiscal Years (FY) 2004 and 2005. The collection/cost
data reveals that at the close of FY 2004, the half of the
58c(b)(9)(A)(ii) payment intended to defray the cost of services to
express consignment and centralized hub facilities left the agency with
a deficit with the agency collecting only 78% of the monies expended to
provide those services. In FY 2005, CBP collected only 70% of these
costs. Projections for FY 2006 indicate that the deficit will increase
again due to the fact that certain CBP expenses, such as reimbursable
wages for CBP employees at these sites, will increase.
The following table sets forth the collection/cost data associated
with CBP's processing of individual air waybills and bills of lading at
express consignment facilities and centralized hub facilities for FY
2004 and 2005, as well as a projected financial analysis for FY 2006:
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Total CBP's retained
Estimated collections portion of
Fiscal year package (based on $.66 collected amount CBP costs CBP cost CBP deficit
volume cents per (based on $.33 per bill
bill) cents per bill)
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2004*.......... 47,243,205 $31,180,516 $15,590,258...... $19,945,704 0.42 ($4,355,446).
2005*.......... 45,364,139 29,940,332 $14,970,166...... 21,393,520 0.47 ($6,423,354).
2006**......... 43,549,574 28,742,718 $14,371,359 22,545,880 0.52 ($8,174,521)
($21,774,787 (($771,093)
based on $.50 based on $.50
cents collected cents collected
per bill if the per bill if the
payment is payment is
raised to $1.00). raised to
$1.00).
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* FY 2004 and 2005 costs information from the CBP Cost Management Information System.
** FY 2006 costs equal FY 2005 costs plus 27 new CBP Officer positions Grade 11 Step 1 with a prorated onboard
date of April 2006. New position cost information derived from the FY 2006 CBP position model and does not
include any equipment, training, travel costs, etc.
The financial projections for FY 2006 indicate that CBP will incur
a per bill cost of $0.52. If the payment is raised to $1.00, as
proposed, CBP will collect $0.50 per bill (the other $0.50 to be
deposited with the Secretary of the Treasury in lieu of the informal
entry Merchandise Processing Fee).
Based on these figures, and subject to the monetary limits set by
law, CBP proposes raising the $0.66 payment to $1.00 so that the half
of the payment associated with providing services to express
consignment and centralized hub facilities is aligned with the actual
costs incurred by CBP. The other half of the payment, collected in lieu
of the MPF, is set by statute at equal to the payment for providing
services to express consignment and centralized hub facilities.
Affected Regulatory Provisions
Regulations implementing those provisions of 19 U.S.C. 58c(b)(9)
that were amended by section 337(a) of the
[[Page 42781]]
Trade Act of 2002 and section 2004(f) of the Trade Act of 2004 are
contained in parts 24 and 128 of title 19 of the CFR (19 CFR parts 24
and 128).
Part 24 sets forth rules pertaining to CBP's financial and
accounting procedures. The provision within part 24 most directly
affected by the statutory changes discussed above is Sec. 24.23, which
concerns fees for processing merchandise and which, in paragraph
(b)(2)(ii), reflects the terms of subparagraph (A) of the statute prior
to its amendment by sections 337(a) and 2004(f). Also affected is Sec.
24.17, which provides for reimbursable services of CBP employees.
Specifically, paragraph (a)(12) of that section refers to reimbursement
of the compensation and expenses of a CBP employee assigned to a
centralized hub facility for the purpose of processing express
consignment shipments under part 128 of the regulations, and paragraph
(a)(13) contains a similar reimbursement reference regarding a CBP
employee assigned to an express consignment carrier facility, with the
facility being responsible for the reimbursement in each case.
Part 128 sets forth regulations that apply specifically to express
consignment carrier and hub facilities and their operators and users.
The only provision within part 128 that is directly affected by the
statutory changes discussed above is Sec. 128.11, which concerns the
express consignment carrier and hub facility application process.
Paragraphs (b)(7)(iv) and (v) of that section require the express
consignment entity to agree to timely pay all reimbursable costs and to
pay to CBP all relocation, training and other costs and expenses
incurred by CBP in relocating necessary staff to or from the facility.
This document proposes amendments to title 19 of the CFR to address
the statutory changes made by section 337(a) of the Trade Act of 2002
and 2004(f) of the Trade Act of 2004. In addition to the proposed
changes to parts 24 and 128 mentioned above, this document also
contains a proposed amendment to the CBP bond provisions of part 113 of
title 19 of the CFR (19 CFR part 113). The proposed changes to the
regulations contained in this document are discussed below.
Discussion of Proposed Amendments
Section 24.17
In this section, which includes in paragraph (a) a list of various
contexts in which parties-in-interest are required to reimburse CBP for
services rendered, it is proposed to remove paragraph (a)(12) (which
refers to services rendered at a centralized hub facility) and
paragraph (a)(13) (which refers to services rendered at an express
consignment carrier facility) and redesignate paragraph (a)(14) as
paragraph (a)(12).
The proposed removals are necessary because those two provisions:
(1) correspond to clause (ii) of subparagraph (A) of the statute as it
existed prior to the amendments made by sections 337(a) and 2004(f);
and (2) are inconsistent with the ``only payment required'' language in
clause (ii) of new subparagraph (B) of the statute.
Section 24.23
In this section, it is proposed to modify paragraph (b) to
incorporate the terms of the proposed $1.00 fee (increased from the
existing $0.66 fee) and paragraph (c) to include conforming cross-
reference changes. The following points are noted regarding the
proposed paragraph (b) changes:
1. In paragraph (b)(1)(i)(A), which concerns the 0.21 percent ad
valorem fee (merchandise processing fee) applicable to merchandise that
is formally entered or released, a new sentence is added with a cross-
reference to new paragraph (b)(4) to reflect the terms of section
2004(f) whereby, in the case of an express consignment carrier facility
or centralized hub facility, merchandise that is formally entered is
subject to a $1.00 per individual air waybill or bill of lading fee
and, if applicable, to a merchandise processing fee.
2. Paragraph (b)(2), which concerns fees for informal entry or
release, is revised to refer to only the $2, $6, and $9 specific fees
which, under the statute and the regulations, have never applied to
express consignment carrier facilities, centralized hub facilities, and
small airports and other facilities. The revised paragraph (b)(2) text
includes new exception language regarding merchandise covered by
paragraph (b)(3) or paragraph (b)(4).
3. A new paragraph (b)(3) concerning small airports and other
facilities is added. It is based on the relevant portion of current
paragraph (b)(2)(ii)(A) of Sec. 24.23 that is proposed to be removed
in the revision of paragraph (b)(2). The fee for small airports and
other facilities is authorized by 19 U.S.C. 58c(b)(9)(A)(i). The fee is
determined by application of 31 U.S.C. 9701. New paragraph (b)(3)
follows that statutory structure.
4. Paragraph (b)(4) is entirely new. Pursuant to 19 U.S.C.
58c(b)(9)(A)(ii)(I) and (II), as amended by sections 337(a) and
2004(f), paragraph (b)(4) requires each carrier using an express
consignment carrier facility or a centralized hub facility to pay to
CBP a fee (set forth in 19 U.S.C. 58c(b)(9)(A)(ii)(I) at $0.66 and now
proposed to be increased to $1.00, as discussed above) assessed on each
individual air waybill or individual bill of lading and, if merchandise
is formally entered, the 0.21 ad valorem fee, if applicable.
The assessment of this fee on each individual air waybill or bill
of lading means that each shipment transported by a carrier and
processed by CBP will be assessed the fee. Each shipment transported by
a carrier and processed by CBP is represented by an individual air
waybill and subject to the fee. Therefore, these proposed regulations
apply the fee to each shipment covered by an individual air waybill.
For purposes of these proposed regulations, an individual airway bill
is the bill at the lowest level, and would not include a master bill.
An example of an individual air waybill or bill of lading is a bill
representing an individual shipment that has its own unique bill number
and tracking number, where the shipment is assigned to a single
ultimate consignee, and no lower bill unit exists. The use of master
bills of lading, or other practices of consolidation by or for the
convenience of the carrier, or its customers or for any other reason is
irrelevant to the application of this user fee intended to cover CBP's
costs associated with processing each individual shipment as
represented by each individual air waybill or bill of lading. Moreover,
the number and kind of entries filed, and the carrier's billing system
for charging its customers, are irrelevant factors and are not
considered in determining the fee's application.
Paragraph (b)(4) also includes the quarterly payment requirement
specified in clause (iii) of new subparagraph (B) of the amended
statute. As in the case of paragraph (b)(3), discussed above, the text
of paragraph (b)(4) includes the ``processing of letters, documents * *
*'' and the ``$2,000 or less (or such higher amount * * *)'' language
of the introductory text of subparagraph (A) of the amended statute,
and also contains the exception reference regarding items entered for
transportation and exportation or immediate exportation that clearly is
relevant to the transaction-by-transaction assessment of the $1.00 fee.
The text of paragraph (b)(4) also proposes some additional
requirements and conditions regarding the payment of this fee, of which
the following points are noted:
[[Page 42782]]
1. In addition to identifying the due date for each timely
quarterly payment as well as the CBP address to which the payments must
be sent, the text sets forth specific information that must accompany
the payment. The specified information is necessary to enable CBP to
verify whether the proper amount of fees required under the statute has
been paid.
2. The text allows carriers to make adjustments of overpayments and
underpayments in the next quarterly payment, similar to what is allowed
in the case of railroad car and passenger arrival fees under Sec.
24.22(d) and (g) of the CBP regulations (19 CFR 24.22(d) and (g)).
However, if an adjustment is not made in the next quarterly payment, a
request for a refund of an overpayment must be made within one year,
similar to the practice in the case of harbor maintenance fees under
Sec. 24.24(e)(4)(ii) of the CBP regulations (19 CFR 24.24(e)(4)(ii)),
and interest will accrue in the case of an underpayment from the date
payment was initially due.
3. Paragraph (b)(4)(iv) provides that the underpayment or failure
of a carrier using an express consignment carrier facility or a
centralized hub facility to pay all applicable fees owed pursuant to
paragraph (b) may result in the assessment of penalties under 19 U.S.C.
1592 and any other action authorized by law.
Section 113.64
In this section, which specifies the international carrier bond
conditions, it is proposed to add a new sentence at the end of
paragraph (a) to refer to the obligation of the carrier and its surety
under the bond in the event that the carrier fails to pay the fees
required under Sec. 24.23(b)(4). This provision is modeled on the
approach taken in the case of quarterly payments of passenger
processing fees.
Section 128.11
In this section, which concerns the express consignment facility
application process, the following changes are proposed:
1. Paragraph (b)(2) is revised to require inclusion of a list of
users of the facility with the application if the applicant is an
express consignment carrier facility (a list of users is not necessary
in the case of a hub facility because the operator of the facility and
the user of the facility are one and the same). This information is
necessary to assist CBP in verifying proper payment of the statutory
fees.
2. Paragraphs (b)(7)(iv) and (b)(7)(v), which refer to elements of
the superseded statutory reimbursement concept, have been replaced with
new provisions. New paragraph (b)(7)(iv) provides for an agreement on
the part of an express consignment carrier facility to provide
quarterly, and update, a list of all carriers using the facility and is
intended to assist CBP in verifying the proper payment of fees by those
carriers. Paragraph (b)(7)(v) refers to an agreement on the part of a
hub facility or an express consignment carrier to timely pay all
applicable processing fees prescribed in Sec. 24.23.
Comments
Submitted comments will be available for public inspection in
accordance with the Freedom of Information Act (5 U.S.C. 552) and Sec.
103.11(b) of title 19 of the CFR (19 CFR 103.11(b)), on regular
business days between the hours of 9 a.m. and 4:30 p.m. at the Trade
and Commercial Regulations Branch, Office of Regulations and Rulings,
Customs and Border Protection, 799 9th St., NW., Washington, DC.
Arrangements to inspect submitted documents should be made in advance
by calling Joseph Clark at (202) 572-8768.
Executive Order 12866
This rule is not considered a ``significant regulatory action'' as
defined in E.O. 12866. Accordingly, a regulatory assessment is not
required.
Initial Regulatory Flexibility Act Analysis
CBP has examined the impacts of the proposed rule on small entities
as required by the Regulatory Flexibility Act (Pub. L. 96-354, 94 Stat.
1164, codified at 5 U.S.C. chapter 6) and has prepared an Initial
Regulatory Flexibility Act Analysis (IRFA). A small entity may be a
small business (defined as any independently owned and operated
business not dominant in its field that qualifies as a small business
per the Small Business Act); a small not-for-profit organization; or a
small governmental jurisdiction (locality with fewer than 50,000
people).
In this proposed rulemaking, small businesses are those that employ
fewer than 1,500 employees or have annual revenues under $6.5 million.
Based on annual data collected by CBP, there are 22 businesses that
will be affected by the proposed rule. Of these, 10 are large
businesses, 11 are small businesses, and 1 is a small, foreign-owned
business. Sixteen of these companies (both large and small) are members
of an association that owns and operates a consignment facility. That
association acts as a single respondent for its members.
Reason for Agency Action; Objectives of and Legal Basis for the
Proposed Rule
Pursuant to the authority established in 19 U.S.C.
58c(a)(9)(b)(ii), it is proposed to raise the existing $0.66 fee
assessed on individual air waybills or bills of lading to $1.00 to more
equitably align it with the actual costs incurred by CBP in processing
these items.
Number and Types of Small Entities to Which the Proposed Rule Will
Apply
As previously noted, there are 12 small businesses that will be
affected by the proposed rule. These companies are either courier
services (NAICS code 492110) or arrange freight transportation (NAICS
code 488510).
An estimated 91 percent of the bills of lading submitted for fee
assessment were from the three largest affected companies
(approximately 41 million waybills in FY 2005). The waybills from the
remaining large companies accounted for 2 percent (approximately
865,000 in FY 2005). The remaining 1.5 million bills of lading were
submitted by the 12 small businesses.
Based on data from FY 2003 to FY 2005, half of the large companies
have experienced annual increases in bills of lading; the remainder
have experienced annual decreases. Data for the 12 small businesses
also show increases and decreases in waybills. If current trends
continue, a net increase in waybills of approximately 20 percent
annually is projected for these small companies over the next several
years.
In FY 2005, the 12 small businesses submitted 1.5 million bills of
lading at a cost of $1.0 million ($0.66 per bill of lading). If, in FY
2006, 1.9 million bills of lading were submitted, this would result in
a cost of $1.3 million under the current fee structure. Under the
proposed fee of $1.00 per bill, we would expect costs to reach $1.9
million, a difference of $0.6 million. The $0.6 million represents only
4 percent of the total increase in fees CBP expects to be incurred as a
result of growth in bills of lading and the fee increase proposed in
this rule.
CBP collected annual revenue data for the 12 small businesses
affected. To determine the impact of the proposed rule on annual
revenues, CBP calculated the projected difference in costs between the
old and proposed fee and compared that (as a percentage) to average
annual revenues. Based on these calculations, CBP estimates that the
proposed rule will have a 5-percent impact or less on annual revenues
for 5 of the small businesses. The rule will have a 5 to 10-percent
impact on one of the companies and a greater than 10-
[[Page 42783]]
percent impact on four companies. CBP could not find data for one small
business, and one was foreign-owned.
In the course of CBP's examination of the impacts on annual
revenues for these small businesses, CBP has determined that these
entities will likely pass the cost of the increased fee on to their
customers to the extent that they are able.
On the basis of the foregoing analysis, CBP concludes that this
proposed rule could have a significant impact on a substantial number
of small entities. CBP is seeking comments on any of the regulatory
requirements that could minimize the cost to small businesses. Comments
may be submitted to the regulatory docket using any of the methods
listed under ``Comments'' or ADDRESSES above. All input received during
the public comment period will be considered.
Reporting and Recordkeeping
This proposed rule will change current paperwork requirements. No
new professional skills will be necessary for the preparations of the
reports and records. For more detail, see ``Paperwork Reduction Act''
below.
Other Federal Rules
This proposed rule does not duplicate, overlap, or conflict with
other federal regulations.
Regulatory Alternatives
CBP did not consider any alternatives to the proposed rule.
Paperwork Reduction Act
The collections of information in this document are contained in
Sec. Sec. 24.23 and 128.11 (19 CFR 24.23 and 128.11). This information
is used by CBP to determine whether user fees required by statute have
been properly paid. The likely respondents are business organizations
including importers and air carriers.
The collections of information for paying fees for customs services
provided in connection with the informal entry or release of shipments
at express consignment carrier facilities and centralized hub
facilities was previously approved by the Office of Management and
Budget under control number 1651-0052. In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507), CBP has submitted to OMB for
review the following adjustments to the information provided to OMB for
the previously approved OMB control number to account for the changes
proposed in this rule. An agency may not conduct or sponsor, and a
person is not required to respond to, a collection of information
unless it displays a valid control number assigned by OMB.
Report for quarterly payment under Sec. 24.23(b)(4)(ii):
Estimated annual reporting and/or recordkeeping burden: 176 hours.
Estimated average annual burden per respondent/recordkeeper: 8
hours.
Estimated number of respondents and/or recordkeepers: 22.
Estimated annual frequency of responses: 4.
Report for refund of overpayment under Sec. 24.23(b)(4)(iii):
Estimated annual reporting and/or recordkeeping burden: 5 hours.
Estimated average annual burden per respondent/recordkeeper: 1
hour.
Estimated number of respondents and/or recordkeepers: 5.
Estimated annual frequency of responses: 2.
Report by operators including the list of carriers under Sec.
128.11(b):
Estimated annual reporting and/or recordkeeping burden: 6 hours.
Estimated average annual burden per respondent/recordkeeper: 2
hours.
Estimated number of respondents and/or recordkeepers: 3.
Estimated annual frequency of responses: 4.
Comments on the collection of information should be sent to the
Office of Management and Budget, Attention: Desk Officer for the
Department of Homeland Security, Office of Information and Regulatory
Affairs, Washington, DC 20503. A copy should also be sent to the
Regulations Branch, Office of Regulations and Rulings, Customs and
Border Protection, 1300 Pennsylvania Avenue, NW. (Mint Annex),
Washington, DC 20229. Comments should be submitted within the time
frame that comments are due regarding the substance of the proposal.
Comments are invited on: (a) Whether the collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility; (b) the
accuracy of the agency's estimate of the burden of the collection of
the information; (c) ways to enhance the quality, utility, and clarity
of the information to be collected; (d) ways to minimize the burden of
the collection of information on respondents, including through the use
of automated collection techniques or other forms of information
technology; and (e) estimates of capital or startup costs and costs of
operations, maintenance, and purchase of services to provide
information.
Signing Authority
This document is being issued in accordance with Sec. 0.1(a)(1) of
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of
the Secretary of the Treasury (or his/her delegate) to approve
regulations related to certain CBP revenue functions.
List of Subjects
19 CFR Part 24
Accounting, Claims, Customs duties and inspection, Exports,
Imports, Interest, Reporting and recordkeeping requirements, Taxes,
User fees, Wages.
19 CFR Part 113
Air carriers, Bonds, Customs duties and inspection, Exports,
Freight, Imports, Reporting and recordkeeping requirements, Surety
bonds.
19 CFR Part 128
Administrative practice and procedure, Carriers, Couriers, Customs
duties and inspection, Entry, Express consignments, Freight, Imports,
Informal entry procedures, Reporting and recordkeeping requirements.
Amendments to the Regulations
For the reasons set forth in the preamble, parts 24, 113, and 128
of title 19 of the CFR (19 CFR parts 24, 113, and 128), are proposed to
be amended as set forth below.
PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE
1. The authority citation for part 24 continues to read in part as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General
Note 3(i), Harmonized Tariff Schedule of the United States), 1505,
1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 9701; Public Law 107-
296, 116 Stat. 2135 (6 U.S.C. 1 et seq.).
* * * * *
Section 24.17 also issued under 19 U.S.C. 261, 267, 1450, 1451,
1452, 1456, 1524, 1557, 1562; 46 U.S.C. 2110, 2111, 2112; Section
24.23 also issued under 19 U.S.C. 3332;
* * * * *
2. In Sec. 24.17:
a. The section heading is revised to read as set forth below;
b. Paragraphs (a) through (d) are amended by removing the words
``Customs employee'' where they appear and adding in each place the
term ``CBP employee; and
c. Paragraphs (a)(12) and (a)(13) are removed and paragraph (a)(14)
is redesignated as paragraph (a)(12).
Sec. 24.17 Reimbursable services of CBP employees.
* * * * *
3. In Sec. 24.23:
a. Paragraph (a) is amended by removing the word ``Customs'' each
[[Page 42784]]
place that it appears and adding the term ``CBP'';
b. Paragraphs (b)(1)(i)(A) and paragraph (b)(2) are revised;
c. New paragraphs (b)(3) and (b)(4) are added;
d. The introductory text of paragraph (c)(1) is amended by removing
the reference ``(b)(2)(i)'' and adding, in its place, the reference
``(b)(2)'';
e. Paragraph (c)(2)(i) is amended by removing the reference
``(b)(2)(i)'' and adding, in its place, the reference ``(b)(2)'';
f. The first sentence of paragraph (c)(3) is amended by removing
the reference ``(b)(2)(i)'' and adding, in its place, the reference
``(b)(2)''; and
g. Paragraph (c)(5) is amended by removing the reference
``(b)(2)(i)'' and adding, in its place, the reference ``(b)(2)''.
The revisions and additions read as follows:
Sec. 24.23 Fees for processing merchandise.
* * * * *
(b) Fees (1) Formal entry or release (i) Ad valorem fee (A)
General. Except as provided in paragraph (c) of this section,
merchandise that is formally entered or released is subject to the
payment to CBP of an ad valorem fee of 0.21 percent. The 0.21 ad
valorem fee is due and payable to CBP by the importer of record of the
merchandise at the time of presentation of the entry summary and is
based on the value of the merchandise as determined under 19 U.S.C.
1401a. In the case of an express consignment carrier facility or
centralized hub facility, merchandise that is formally entered is
subject to a $1.00 per individual air waybill or bill of lading fee
and, if applicable, to the 0.21 percent ad valorem fee which must be
paid by the carrier as provided in paragraph (b)(4) of this section.
* * * * *
(2) Informal entry or release. Except in the case of merchandise
covered by paragraph (b)(3) or paragraph (b)(4) of this section, and
except as otherwise provided in paragraph (c) of this section,
merchandise that is informally entered or released is subject to the
payment to CBP of a fee of:
(i) $2 if the entry or release is automated and not prepared by CBP
personnel;
(ii) $6 if the entry or release is manual and not prepared by CBP
personnel; or
(iii) $9 if the entry or release, whether automated or manual, is
prepared by CBP personnel.
(3) Small airport or other facility. With respect to the processing
of letters, documents, records, shipments, merchandise, or any other
item that is valued at $2,000 or less, or any higher amount prescribed
for purposes of informal entry in Sec. 143.21 of this chapter, a small
airport or other facility must pay to CBP an amount equal to the
reimbursement (including overtime) which the facility is required to
make during the fiscal year under Sec. 24.17.
(4) Express consignment carrier and centralized hub facilities.
Each carrier using an express consignment carrier facility or a
centralized hub facility must pay to CBP a fee in the amount of $1.00
per individual air waybill or individual bill of lading and, if
merchandise is formally entered, the ad valorem fee specified in
paragraph (b)(1) of this section, if applicable. An individual air
waybill or individual bill of lading is the individual document issued
by the carrier for transporting and/or tracking an individual item,
letter, package, envelope, record, document, or shipment. An individual
air waybill is the bill at the lowest level, and is not a master bill
or other consolidated document. An individual air waybill or bill of
lading is a bill representing an individual shipment that has its own
unique bill number and tracking number, where the shipment is assigned
to a single ultimate consignee, and no lower bill unit exists. Payment
must be made to CBP on a quarterly basis and must cover the individual
fees for all subject transactions that occurred during a calendar
quarter. The following additional requirements and conditions apply to
each quarterly payment made under this section:
(i) The quarterly payment must conform to the requirements of Sec.
24.1, must be mailed to Customs and Border Protection, Revenue
Division/Attention: Reimbursables, 6650 Telecom Drive, Suite 100,
Indianapolis, Indiana 46278, and must be received by CBP no later than
the last day of the month that follows the close of the calendar
quarter to which the payment relates.
(ii) The following information must be included with the quarterly
payment:
(A) The identity of the calendar quarter to which the payment
relates;
(B) The identity of the facility for which the payment is made and
the port code that applies to that location and, if the payment covers
multiple facilities, the identity of each facility and its port code
and the portion of the payment that pertains to each port code; and
(C) The total number of individual air waybills and individual
bills of lading covered by the payment, and a breakdown of that total
for each facility covered by the payment according to the number
covered by formal entry procedures, the number covered by informal
entry procedures specified in Sec. Sec. 128.24(e) and 143.23(j) of
this chapter, and the number covered by other informal entry
procedures.
(iii) Overpayments or underpayments may be accounted for by an
explanation in, and adjustment of, the next due quarterly payment to
CBP. In the case of an overpayment or underpayment that is not
accounted for by an adjustment of the next due quarterly payment to
CBP:
(A) In the case of an overpayment, the carrier may request a refund
by writing to Customs and Border Protection, Revenue Division/
Attention: Reimbursables, 6650 Telecom Drive, Suite 100, Indianapolis,
Indiana 46278. The refund request must specify the grounds for the
refund and must be received by CBP within one year of the date the fee
for which the refund is sought was paid to CBP; and
(B) In the case of an underpayment, interest will accrue on the
amount not paid from the date payment was initially due to the date
that payment to CBP is made.
(iv) The underpayment or failure of a carrier using an express
consignment carrier facility or a centralized hub facility to pay all
applicable fees owed to CBP pursuant to paragraph (b)(4) of this
section may result in the assessment of penalties under 19 U.S.C. 1592
and any other action authorized by law.
* * * * *
PART 113--CUSTOMS BONDS
4. The authority citation for part 113 continues to read in part as
follows:
Authority: 19 U.S.C. 66, 1623, 1624.
* * * * *
5. In Sec. 113.64, paragraph (a) is amended by adding a new
sentence at the end to read as follows:
Sec. 113.64 International carrier bond conditions.
* * * * *
(a) * * * If the principal (carrier) fails to pay the fees for
processing letters, documents, records, shipments, merchandise, or
other items on or before the last day of the month that follows the
close of the calendar quarter to which the processing fees relate
pursuant to Sec. 24.23(b)(4) of this chapter, the obligors (principal
and surety, jointly and severally) agree to pay liquidated damages
equal to two times the processing fees not timely paid to CBP as
prescribed by regulation.
* * * * *
PART 128--EXPRESS CONSIGNMENTS
6. The authority citation for part 128 is revised to read as
follows:
[[Page 42785]]
Authority: 19 U.S.C. 58c, 66, 1202 (General Note 3(i),
Harmonized Tariff Schedule of the United States), 1321, 1484, 1498,
1551, 1555, 1556, 1565, 1624.
7. In Sec. 128.11, paragraphs (b)(2), (b)(7)(iv) and (b)(7)(v) are
revised to read as follows:
Sec. 128.11 Express consignment carrier application process.
* * * * *
(b) * * *
(2) A statement of the general character of the express consignment
operations that includes, in the case of an express consignment carrier
facility, a list of carriers that intend to use the facility.
* * * * *
(7) * * *
(iv) If the entity is an express consignment carrier facility,
provide to Customs and Border Protection, Revenue Division/Attention:
Reimbursables, 6650 Telecom Drive, Suite 100, Indianapolis, Indiana
46278, at the beginning of each calendar quarter, a list of all
carriers currently using the facility and notify that office whenever a
new carrier begins to use the facility or whenever a carrier ceases to
use the facility.
(v) If the entity is a hub facility or an express consignment
carrier, timely pay all applicable processing fees prescribed in Sec.
24.23 of this chapter.
* * * * *
Deborah J. Spero,
Acting Commissioner, Bureau of Customs and Border Protection.
Approved: July 24, 2006.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. E6-12067 Filed 7-27-06; 8:45 am]
BILLING CODE 9111-14-P