Announcement of Test Program Regarding Electronic Foreign Trade Zone Admission Applications

AGENCY:

Customs and Border Protection, Homeland Security.

ACTION:

General notice.

SUMMARY:

This notice announces the Bureau of Customs and Border Protection's (CBP) plan to conduct a voluntary test program to allow the submission of electronic Foreign Trade Zone (FTZ) admission applications. Pursuant to the terms of the test, an application for FTZ admission (CBP Form 214—“FTZ Admission and/or Status Designation”) may be filed electronically with CBP via the Automated Broker Interface (ABI). Parties not participating in the test may continue to file the CBP Form 214 in a paper format pursuant to existing FTZ procedures. The test program is limited to electronic FTZ admission applications for merchandise reported to CBP via air, sea, and rail manifest. CBP intends to implement a future phase of this test that will allow electronic FTZ admission applications for merchandise reported to CBP via truck manifest as soon as a CBP-approved electronic data interchange system exists for these transmissions. This notice informs interested members of the public of the eligibility and procedural requirements for participation in the test, outlines the evaluation methodology to be used, and invites public comment concerning any aspect of the planned prototype test.

DATES:

The Electronic FTZ Admission Application test program will commence no earlier than September 30, 2005, and will run for approximately 6 months with a final evaluation to take place at the end of that period. CBP may extend the test period by way of announcement in the Federal Register. Comments concerning this notice and any aspect of the prototype may be submitted at any time during the test period.

ADDRESSES:

Written comments regarding this notice should be addressed to Customs and Border Protection, Cargo Control Branch, 1300 Pennsylvania Avenue, NW., Room 5.2A, Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT:

Gary Rosenthal, Customs and Border Protection, Office of Field Operations, via e-mail at gary.rosenthal@dhs.gov.

SUPPLEMENTARY INFORMATION:

Background

Electronic Foreign Trade Zone Admission Application Prototype: Planned Component of the National Customs Automation Program

Title VI of the North American Free Trade Agreement Implementation Act (the Act), Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993), contains provisions pertaining to Customs Modernization (107 Stat. 2170). Subpart B of Title VI of the Act concerns the National Customs Automation Program (NCAP), an electronic system for the processing of commercial importations. Within subpart B, section 631 of the Act added section 411 to the Tariff Act of 1930 (19 U.S.C. 1411-1414), which defines the NCAP, provides for the establishment of and participation in the NCAP, and includes a list of existing and planned components. Section 411(a)(2)(G) identifies any program initiated by CBP to carry out the automation goals of this subpart as a planned NCAP component. The planned test program described in this document falls within this category of planned NCAP component.

Section 101.9(b) of Title 19 of the Code of Federal Regulations (19 CFR 101.9(b)) provides for the testing of NCAP planned components. The Electronic Foreign Trade Zone (FTZ) Admissions Application prototype is being tested in accordance with this provision.

Description of the Test Program

The Electronic FTZ Admission Application test program permits a participant to submit an electronic version of the CBP Form 214 (“FTZ Admission and/or Status Designation”) to CBP via the Automated Broker Interface (ABI) of Customs Automated Commercial System (ACS). Any person not participating in the prototype will be required to submit a paper CBP Form 214 pursuant to existing FTZ admission procedures.

The test program is limited to electronic FTZ admission applications for merchandise reported to CBP via air, sea, and rail manifest. It is noted that CBP intends to implement a future phase of this test that will allow electronic FTZ admission applications for merchandise reported to CBP via truck manifest as soon as a CBP-approved electronic data interchange system exists for these transmissions.

Regulatory Provisions Suspended

Subpart C to part 146 of the CFR prescribes the conditions applicable to admission of merchandise into a foreign trade zone. To the extent that certain provisions within subpart C to part 146 may be incompatible with the terms of this test program, the affected regulatory provisions will be suspended for the duration of the prototype test.

Test Commencement Date

The test program will commence no earlier than September 30, 2005, and will run for a 6-month period with a final evaluation to take place at the end of the test period. CBP may extend the prototype and any such extension will be announced in the Federal Register.

Participant Eligibility

Eligible participants in the Electronic FTZ Admissions Application test program include:

• FTZ operators
• FTZ Admission Applicants
• Agents of FTZ Admission Applicants

Participation in the test is voluntary and there are no application procedures.

Prototype Procedures

Submission of Electronic CBP Form 214 and Related Data

Test participants must request permission to admit merchandise into a FTZ by electronically transmitting the CBP Form 214 data elements to CBP via ABI. The data transmission may cover a single shipment of merchandise or be a consolidated transmission that covers multiple shipments to a single zone. CBP must receive the CBP Form 214 before the merchandise can be released for admission into the FTZ. An exception to this requirement exists for test participants who are authorized to use the FTZ direct delivery procedures, as discussed below.

The test program will also incorporate transmissions of data on merchandise that is transported to a FTZ or from a FTZ if the data transmission is made via CBP Form 7512 in-bond transaction or its electronic equivalent.

Prior Notice Reporting Requirements

Test participants, including those approved to participate under direct delivery procedures, must comply with the prior notice reporting requirements stipulated in the Public Health Security and Bioterrorism Preparedness and Responsive Act of 2002 (“the Bioterrorism Act”), Public Law 107-188. Title III of the Bioterrorism Act contains provisions relating to providing the Department of Health and Human Services with prior notice regarding certain information about foods that are imported or offered for import into the United States.

Direct Delivery Procedures

As a general rule, a test participant who is also authorized to use the direct delivery procedures prescribed in § 146.39 (19 CFR 146.39) to admit merchandise into a FTZ may transmit the required data to CBP on an electronic CBP Form 214 no later than the close of business on the business day following receipt of the merchandise into the FTZ inventory control and recordkeeping system.

With regard to the applicability of direct delivery procedures in the context of the test program, two exceptions to the above rule are noted. First, as stated above, direct delivery participants are subject to any applicable prior notice reporting requirements set forth in the Bioterrorism Act. Second, in the absence of a CBP Form 7512 in-bond transaction authorizing direct delivery to the FTZ, or its electronic equivalent, a permit to transfer request must be electronically transmitted to CBP before the merchandise can be released for admission.

FTZ Operators as Test Participants

Under the test program, a FTZ operator will be able to accept or reject the merchandise, assume custodial responsibility for the accepted merchandise and report discrepancies between the documents covering the merchandise and the merchandise itself, admit zone status merchandise transferred from another zone, change zone status, admit domestic status merchandise, and transmit post admission inventory adjustment transactions via ABI.

Transmittal of Statistical Data to the Bureau of Census

After permission to transfer merchandise into a FTZ is granted, CBP will transmit statistical data to the Bureau of the Census through an automated link.

CBP Form 214 Required Data Elements

Participants in the test must provide CBP with the following data elements:

• A code representing the action to be taken (i.e., add, delete, replace).
• A line item number.
• The zone number designated in the foreign trade zone grant.
• The port code where the FTZ is located as shown in Schedule D, Harmonized Tariff Schedule of the United States (HTSUS).
• An indicator specifying whether the merchandise is being admitted into the FTZ under direct delivery procedures.
• The Automated Broker Interface (ABI) filer code.
• The ABI routing code and optional office extension for one additional ABI participant who will receive a copy of the electronic CBP Form 214 and subsequent electronic notifications.
• The IRS number, Importer of Record Number or EIN of the applicant.
• An indicator specifying the admission type.
• The mode of transportation code. Valid codes are listed in Appendix B of the CATAIR (CBP Publication 552, Customs and Trade Automated Interface Requirements).
• The name of the conveyance (if not a vessel, the name of the transportation company).
• The vessel voyage, truck or rail trip, or aircraft flight number.
• The country of export.
• The export date. For merchandise arriving in the U.S. by vessel: the month, day and year on which the vessel departed the last port of the country of exportation. For merchandise exported by air: the month, day and year on which the aircraft departed the last airport of the country of exportation. For merchandise exported by truck or rail: the month, day and year in which the carrier crossed the border of the country of exportation.
• The import date. For merchandise arriving in the U.S. by vessel: the month, day and year on which the vessel transporting the merchandise from the foreign country arrived within the limits of the U.S. port at which the merchandise was unladen. For merchandise arriving in the U.S. other than by vessel: the month, day and year in which the merchandise arrived within the territory of the U.S.
• The zone admission number (zone number, calendar year, and control number).
• The U.S. port of unlading (the port at which the merchandise was unladen whether or not the port is a CBP port of entry). Valid codes are listed in Schedule D issued by the Bureau of the Census.
• The foreign port of lading.
• The bill of lading or airway bill number.
• The house bill number.
• The Standard Carrier Alpha Code (SCAC) identifier of the importing carrier.
• The immediate transportation (IT) number assigned to in-bond shipments and the date the CBP Form 7512 was prepared.
• The number of packages and the country of origin. An indication of the quantity and unit of measure (cartons, cases, bundles, etc.) in the shipment as stated in the Customs Automated Manifest Interface Requirements (CAMIR). For containerized merchandise, an indication of the number of packages within the container(s) and the container number(s). For bulk shipments, show “1 Bulk.” Enter the country of origin code, provided in Annex B, ISO code, Harmonized Tariff Schedule (HTS), which represents the country of origin in which the product was manufactured, mined, or grown. If the merchandise is from more than one country of origin, the country of origin will be indicated separately against each HTS subheading or group of subheadings.
• A detailed description of the merchandise at the line item level.
• The Manufacturer Identification (MID) number (as required for type 01 entries).
• The applicable HTS number(s).
• The quantity of the merchandise for each HTS number.
• The quota category (if applicable).
• The gross weight in kilograms of the merchandise. Supply separate gross weight information for each HTS subheading.
• The separate value and aggregate charges: For each HTS, enter the purchase price (in U.S. dollars) or, if the merchandise was not acquired by purchase, the equivalent of such price. Also, report the aggregate cost (in U.S. dollars) of freight, insurance, and all other costs, charges and expenses incurred in bringing the merchandise from alongside the carrier at the foreign port of exportation in the country of exportation in addition to unlading the merchandise at the first U.S. port of entry.
• The indicator designating a special program and country affecting duty payments (if applicable).
• If applicable, a qualifier code and reference identifier associated with the shipment. Valid qualifiers are listed in the CATAIR. Code “IM” will be added to indicate importer.
• The Harbor Maintenance Fee incurred for loading or unloading the commercial cargo from a commercial vessel.
• The FTZ status designation of the merchandise.
• The container number if a permit to transfer is requested.
• Concurrence/discrepancy data relating to the admission application/permit to transfer.
• The IRS number of the carrier responsible for the movement of merchandise into the FTZ following issuance of a permit to transfer.
• The Facilities Information and Resources Management Systems (FIRMS) code identifying the location that the merchandise (moving on a permit to transfer) is being delivered to.
• The three position airport code if the bill of lading is Air AMS.
• An indicator if the merchandise is subject to Bioterrorism Act of 2002 requirements.

Test participants are responsible for the accuracy and completeness of all data transmitted under the prototype.

Processing of Electronic FTZ Admission Applications

Upon approval of an electronic FTZ admission application, CBP will transmit electronic notice to the FTZ operator authorizing admission of the merchandise into the FTZ. As noted above, this approval process does not apply to merchandise admitted to a FTZ under direct delivery procedures.

After CBP receives notice of the FTZ operator's decision to grant or deny admission, CBP will electronically transmit approval/denial to transfer the merchandise into the FTZ electronically to the test applicant or the applicant's agent, and to the carrier of the merchandise. CBP will also provide electronic notice to these parties as to whether the merchandise is subject to CBP examination. In addition, test program participants and carriers will be able to receive electronic notification concerning the status of an admission request.

A test participant whose FTZ admission application is rejected by CBP will be provided with an opportunity to correct the reported error. A complete re-transmission of the entire admission application through ABI is required by CBP.

Misconduct Under the Test

A test participant may be subject to civil and criminal penalties, administrative sanctions, liquidated damages, and/or suspension from this test for any of the following:

• Failure to abide by the terms and conditions of this test, and any applicable laws and regulations.
• Failure to exercise reasonable care in the execution of participant obligations.
• Misuse of the automated CBP Form 214 (i.e., engaging in unauthorized disclosure or any activity which interferes with the successful evaluation of the new technology).

The Executive Director, Trade Compliance and Facilitation, will administer suspensions for misconduct. A written notice proposing suspension will be provided to the participant. Such notice will apprise the participant of the alleged facts or conduct warranting suspension and will inform the participant of the date that the suspension will begin. Any decision proposing suspension of a participant may be appealed in writing to the Assistant Commissioner, Office of Field Operations, 1300 Pennsylvania Ave., NW., Washington, DC 20229, within 15 calendar days of the notification date. An appeal must address the alleged facts or conduct charges contained in the notice and state how compliance has been or will be achieved. In cases of non-payment, late payment, willful misconduct or where public health interests or safety is concerned, the suspension may be effective immediately. The same appeal procedures apply in cases of immediate suspension.

Test Evaluation Criteria

To ensure adequate feedback, participants are required to participate in an evaluation of this test. CBP also invites all interested parties to comment on the design, conduct and implementation of the test at any time during the test period. CBP will publish the final results in the Federal Register and the CBP Bulletin as required by section 101.9 (b) of Title 19 of the CFR.

The following evaluation methods and criteria have been suggested:

1. Baseline measurements to be established through data analysis;

2. Questionnaires from both trade participants and CBP addressing such issues as:

• Workload impact (workload shifts/volume, cycle times, etc.)
• Cost savings
• Policy and procedure accommodation
• Trade compliance impact
• Problem resolution
• System efficiency
• Operational efficiency
• Other issues identified by the participant group