Lay Order Period; General Order; Penalties

Federal RegisterJul 31, 1997

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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 4, 122, 123, 148 and 192

RIN 1515-AB99

Lay Order Period; General Order; Penalties

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations to

require that the importing carrier notify a bonded warehouse proprietor

of the presence of merchandise that has remained at the place of

arrival or unlading beyond the lay order period without entry having

been completed, thereby initiating the obligation of the bonded

warehouse proprietor to arrange for transportation and storage of the

unentered merchandise at the risk and expense of the consignee. The

document also proposes to amend the Customs Regulations to provide for

penalties against importing carriers for failure to notify Customs of

the presence of such merchandise. These proposed regulatory changes

reflect amendments to the underlying statutory authority enacted as

part of the Customs Modernization provisions of the North American Free

Trade Agreement Implementation Act. Finally, the document makes certain

conforming changes to the Customs Regulations in order to reflect a

number of other statutory amendments and repeals enacted by the Customs

Modernization provisions and in order to reflect the recent

recodification and reenactment of title 49, United States Code.

DATES: Comments must be received on or before September 29, 1997.

ADDRESSES: Written comments (preferably in triplicate) may be addressed

to the Regulations Branch, Office of Regulations and Rulings, U.S.

Customs Service, Franklin Court, 1301 Constitution Avenue NW.,

Washington, DC 20229. Comments submitted may be inspected at the

Regulations Branch, Office of Regulations and Rulings, Franklin Court,

1099 14th Street NW., Suite 4000, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Penalties Branch,

Office of Regulations and Rulings (202) 482-6950.

SUPPLEMENTARY INFORMATION:

Background

On December 8, 1993, amendments to certain Customs and navigation

laws became effective as the result of enactment of the North American

Free Trade Agreement Implementation Act, Public Law 103-182, 107 Stat.

2057. Title VI of that Act sets forth Customs Modernization provisions

that are popularly referred to as the Mod Act.

Section 656 of the Mod Act amended section 448(a) of the Tariff Act

of 1930 (19 U.S.C. 1448(a)) to provide, inter alia, that: (1) The owner

or master of any vessel or vehicle, or the agent thereof, shall notify

Customs of any merchandise or baggage unladen for which entry is not

made within the time prescribed by law or regulation; (2) the

[[Page 40993]]

Secretary of the Treasury shall by regulation prescribe administrative

penalties not to exceed $1,000 for each bill of lading for which notice

is not given; (3) any such administrative penalty shall be subject to

mitigation and remission under section 618 of the Tariff Act of 1930,

as amended (19 U.S.C. 1618); and (4) such unentered merchandise or

baggage shall be the responsibility of the master or person in charge

of the importing vessel or vehicle, or agent thereof, until it is

removed from the carrier's control in accordance with section 490 of

the Tariff Act of 1930, as amended (19 U.S.C. 1490). This document

proposes to revise paragraph (a) of Sec. 4.37 of the Customs

Regulations (19 CFR 4.37) and add new Sec. 122.50 and Sec. 123.10 (19

CFR 122.50 and 19 CFR 123.10) to implement these Mod Act statutory

changes for air, land and sea carriers. Under the proposed regulatory

text, importing carriers would be afforded a five-working-day lay order

period after the conclusion of an initial five-working-day period after

unlading or arrival of merchandise to notify Customs, in writing or by

any Customs-authorized electronic data interchange system, of the

presence of the unentered merchandise or baggage. Penalties may result

if, after the five-day lay order period, Customs has not been notified

of the presence of the merchandise. Applications for lay order will no

longer be required on Customs Form 3171; the form will continue to be

maintained for other purposes.

Section 658 of the Mod Act amended section 490 of the Tariff Act of

1930 (19 U.S.C. 1490) to provide that: (1) Except in the case of U.S.

government importations, the importing carrier shall notify the bonded

warehouse of any imported merchandise for which entry is not made

within the time prescribed by law or regulation, or for which entry is

incomplete because of failure to pay estimated duties, fees or

interest, or for which entry cannot be made for want of proper

documents or other cause, or which Customs believes is not correctly

and legally invoiced; and (2) after such notification from the

importing carrier, the bonded warehouse shall arrange for the

transportation and storage of the merchandise at the risk and expense

of the consignee. This document proposes to revise paragraph (b) of

Sec. 4.37 of the Customs Regulations and add Secs. 122.50 and 123.10 to

the Customs Regulations to implement these Mod Act statutory changes.

The proposed regulatory text requires the carrier to provide the

appropriate notification, in writing or by any Customs-authorized

electronic data interchange system, and also requires that the bonded

warehouse operator take possession of the merchandise within five

working days after receipt of such notification or else be liable for

liquidated damages under the terms and conditions of his custodial bond

(and with a cross-reference to 113.63(a)(1) of the Customs Regulations

which Customs believes provides an appropriate basis for such

liability). In addition, it is proposed to amend paragraph (d) of

Sec. 4.37 by replacing the word ``owner'' by ``consignee'' to align on

the corresponding statutory language.

Section 611 of the Mod Act amended section 436 of the Tariff Act of

1930 (19 U.S.C. 1436), inter alia, by including therein a reference to

46 U.S.C. App. 91, with the result that penalties for violations of

outbound vessel manifest filing requirements would be incurred under

the provisions of 19 U.S.C. 1436 rather than under 46 U.S.C. App. 91.

This document proposes to amend Sec. 192.4 of the Customs Regulations

(19 CFR 192.4) to reflect this change.

Section 690 of the Mod Act provided for the repeal of a number of

statutory provisions, some of which are still referred to in parts 4

and 122 of the Customs Regulations (19 CFR parts 4 and 122). This

document proposes to correct those outdated references by removing them

or replacing them with references to their successor statutory

provisions.

Finally, Pub. L. 103-272, 108 Stat. 745, dated July 5, 1994,

reenacted and recodified the provisions of title 49, United States

Code. Section 2(b) thereof reenacted as a new section (19 U.S.C. 1644a)

certain title 49 provisions dealing with the application, to civil

aircraft, of the laws and regulations regarding the entry and clearance

of vessels. This document proposes to amend parts 122, 123 and 148 of

the Customs Regulations (19 CFR parts 122, 123 and 148) by updating the

``49 U.S.C. App.'' statutory references therein to reflect the changes

made by section 2(b) or other provisions of Pub. L. 103-272.

Comments

Before adopting this proposed regulation as a final rule,

consideration will be given to any written comments timely submitted to

Customs. Comments submitted will be available for public inspection in

accordance with the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4

of the Treasury Department Regulations (31 CFR 1.4), and Sec. 103.11(b)

of the Customs Regulations (19 CFR 103.11(b)), on regular business days

between the hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch,

Office of Regulations and Rulings, U.S. Customs Service, Franklin

Court, 1099 14th St. NW., 4th floor, Washington, DC.

Inapplicability of the Regulatory Flexibility Act and Executive Order

12866

For the reasons set forth above and because the proposed amendments

conform the Customs Regulations to statutory requirements that are

already in effect, pursuant to the provisions of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq., it is certified that the

proposed amendments, if adopted, will not have a significant economic

impact on a substantial number of small entities. Accordingly, the

amendments are not subject to the regulatory analysis or other

requirements of 5 U.S.C. 603 and 604. Further, this document does not

meet the criteria for a ``significant regulatory action'' as specified

in E.O. 12866.

List of Subjects

19 CFR Part 4

Cargo vessels, Common carriers, Customs duties and inspection,

Entry, Exports, Fishing vessels, Imports, Maritime carriers, Passenger

Vessels, Penalties, Reporting and recordkeeping requirements, Shipping,

Vessels, Yachts.

19 CFR Part 122

Air carriers, Aircraft, Airports, Air transportation, Baggage,

Bonds, Customs duties and inspection, Foreign commerce and trade

statistics, Freight, Imports, Penalties, Reporting and recordkeeping

requirements.

19 CFR Part 123

Aircraft, Canada, Customs duties and inspection, Imports,

International boundaries, International traffic, Mexico, Motor

carriers, Railroads, Reporting and recordkeeping requirements, Trade

agreements, Vehicles, Vessels.

19 CFR Part 148

Aliens, Baggage, Crewmembers, Customs duties and inspection,

Declarations, Foreign officials, Government employees,International

organizations, Privileges and Immunities, Reporting and recordkeeping

requirements.

19 CFR Part 192

Aircraft, Customs duties and inspection, Export Control, Penalties,

Reporting and recordkeeping requirements, Seizures and forfeiture,

Vehicles, Vessels.

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Proposed Amendments to the Regulations

For the reasons stated above, it is proposed to amend parts 4, 122,

123, 148 and 192 of the Customs Regulations (19 CFR parts 4, 122, 123,

148 and 192) as set forth below:

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

1. The general authority citation for part 4 and the specific

authority citations for Secs. 4.7a, 4.36 and 4.37 continue to read, and

the specific authority citations for Secs. 4.9 and 4.68 are revised to

read, as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624;

46 U.S.C. App. 3, 91.

* * * * *

Section 4.7a also issued under 19 U.S.C. 1498, 1584;

* * * * *

Section 4.9 also issued under 42 U.S.C. 269;

* * * * *

Section 4.36 also issued under 19 U.S.C. 1431, 1457, 1458, 46

U.S.C. App. 100;

Section 4.37 also issued under 19 U.S.C. 1448, 1457, 1490;

* * * * *

Section 4.68 also issued under 46 U.S.C. App. 817d, 817e;

* * * * *

Secs. 4.7a, 4.12, 4.36, and 4.37 [Amended]

2. Part 4 is amended by removing and reserving footnotes 17, 24,

71, and 74 in Secs. 4.7a(a), 4.12(a)(3), and 4.36(c), and 4.37(d).

Sec. 4.6 [Amended]

3. In Sec. 4.6, paragraph (c) is amended by removing the reference

``19 U.S.C. 1585'' and adding, in its place, the reference ``19 U.S.C.

1436''.

Sec. 4.7a [Amended]

4. In Sec. 4.7a, the first sentence of paragraph (a) is amended by

removing the words ``, required by section 432, Tariff Act of 1930, to

be separately specified''.

Sec. 4.36 [Amended]

5. In Sec. 4.36, paragraph (c) is amended by removing the words

``within the purview of the proviso to the first subdivision of section

431 of the Tariff Act of 1930''.

6. In Sec. 4.37, paragraph (d) is amended by removing the word

``owner'' and adding, in its place, the word ``consignee'' and

paragraphs (a) and (b) are revised to read as follows:

Sec. 4.37 Lay order; general order.

(a) Any merchandise or baggage regularly landed but not covered by

a permit for its release shall be allowed to remain at the place of

unlading until the close of business on the fifth working day after the

day the vessel was entered. Within an additional five-working-day lay

order period following the expiration of the original five-working day

period after landing, 19 U.S.C. 1448(a) requires the master or owner of

the vessel or the agent thereof to notify Customs of any such

merchandise or baggage for which entry has not been made. Such

notification shall be provided in writing or by any Customs-authorized

electronic data interchange system. Failure to provide such

notification may result in assessment of a monetary penalty of up to

$1,000 per bill of lading against the master or owner of the vessel or

the agent thereof as provided in 19 U.S.C. 1448(a).

(b) In addition to the notification to Customs referred to in

paragraph (a) of this section, within five working days following the

expiration of the lay order period specified in paragraph (a) of this

section, 19 U.S.C. 1490(a) requires the master or owner of the vessel

or the agent thereof to provide notification of the presence of such

unreleased and unentered merchandise or baggage to a bonded warehouse

certified by the port director as qualified to receive general order

merchandise. Such notification shall be provided in writing or by any

Customs-authorized electronic data interchange system. It shall then be

the responsibility of the bonded warehouse proprietor to arrange for

the transportation and storage of the merchandise or baggage at the

risk and expense of the consignee. Any unentered merchandise or baggage

shall remain the responsibility of the master or person in charge of

the importing vessel or the agent thereof until it is removed from his

control in accordance with this paragraph. If the bonded warehouse

operator fails to take possession of the merchandise or baggage within

five working days after receipt of notification of the presence of the

unentered and unreleased merchandise or baggage, he shall be liable for

the payment of liquidated damages under the terms and conditions of his

custodial bond (see Sec. 113.63(a)(1) of this chapter).

* * * * *

PART 122--AIR COMMERCE REGULATIONS

1. The authority citation for Part 122 continues to read as

follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 58b, 66, 1433, 1436, 1448,

1459, 1590, 1594, 1623, 1624, 1644, 1644a.

Sec. 122.2 [Amended]

2. Section 122.2 is amended by removing the reference ``49 U.S.C.

App. 1509(c)'' and adding, in its place, the reference ``19 U.S.C. 1644

and 1644a''.

Sec. 122.49 [Amended]

3. Section 122.49(f) is amended by removing the words ``sections

440 (concerning post entry) and 584 (concerning manifest violations),

Tariff Act of 1930, as amended (19 U.S.C. 1440, 1584), apply'' and

adding, in their place, the words ``section 584 (concerning manifest

violations), Tariff Act of 1930, as amended (19 U.S.C. 1584),

applies''.

4. In subpart E, Sec. 122.50 is added to read as follows:

Sec. 122.50 Lay order; general order.

(a) Any merchandise or baggage regularly landed but not covered by

a permit for its release shall be allowed to remain at the place of

unlading until the close of business on the fifth working day after the

day the aircraft was entered. Within an additional five-working-day lay

order period following the expiration of the original five-working day

period after landing, 19 U.S.C. 1448(a) requires the pilot or owner of

the aircraft or the agent thereof to notify Customs of any such

merchandise or baggage for which entry has not been made. Such

notification shall be provided in writing or by any Customs-authorized

electronic data interchange system. Failure to provide such

notification may result in assessment of a monetary penalty of up to

$1,000 per bill of lading against the pilot or owner of the aircraft or

the agent thereof as provided in 19 U.S.C. 1448(a).

(b) In addition to the notification to Customs referred to in

paragraph (a) of this section, within five working days following the

expiration of the lay order period specified in paragraph (a) of this

section, 19 U.S.C. 1490(a) requires the pilot or owner of the aircraft