letter to Customs and Border Protection (CBP) - ncbfaa

NATIONAL CUSTOMS BROKERS ~FORWARDERS ASSOCIATION OF AMERICA~ INC.1200 18TH ST., NW, SUITE 901PHONE 202/466-0222V~ASHINGTON, DC 20036FAX 202/466-0226VIA ELECTRONIC FILING AND FEDEXBorder Security Regulations BranchOffice of International TradeU.S. Customs & Border Protection1300 Pennsylvania AvenueMint AnnexWashington, D.C. 20229May 29, 2009Dear Sir or Madam:Re: Docket No. USCBP-2007-0077: CBP Dec. 08-46Comments in Response to the Interim Final RuleImporter Security Filing and Additional Carrier requirementsIn the Interim Final Rule published in the Federal Register (71730 - 71785, Vol. 71 / No.228) on Tuesday November 25th, 2008, U.S. Customs and Border Protection ("CBP") invitedinterested parties to submit written comments on the six data elements for which CBP isproviding some type of flexibility (container stuffing location, consolidator (stuffer),manufacturer (or supplier), ship to party, country of origin, and commodity HTSUS number) andthe requirements related to those elements discussed in section 149.2(b) and (f), as well as thebarriers to submitting the Importer Security Filing ("ISF") data 24 hours prior to lading.The National Customs Brokers and Forwarders Association of America ("NCBFAA")represents over 800 member companies with 100,000 employees in international trade - thenation’s leading freight forwarders, customs brokers, ocean transportation intermediaries (OTIs),NVOCCs and air cargo agents, serving more than 250,000 importers and exporters. NCBFAA’smember companies are integrally linked to the cargo that moves into or out of the United States,including cargo moving via ocean transportation. As the national representative for the majorityof the ISF tilers, the NCBFAA is submitting the following comments, followed by severalsuggestions based on practical experience with the adoption of the role within the industry.COMMENTSFlexibility of the ElementsSection III. Carrier and Importer Requirements, D. The Structured Review and FlexibleEnforcement Period allows for flexibility as to the timing of two data elements: containerstuffing location and consolidator (stuffer). The rule states "The ISF Importer must submit theseelements as early as possible, and in any event no later than 24 hours prior to arrival in a U.S.port (or upon lading at the foreign port if that is later than 24 hours prior to arrival in a U.S.SERVICE ¯ INTEGRITY o TRUSTINTERNET." www.ncbfaa.orgE-MAIL: staff@ncbfaa.org

port)." We believe that the continued flexibility in timing of these data elements remains criticalto the trade in ensuring that accurate data is transmitted for targeting purposes. In manyinstances, the filer of the ISF data is not made aware of the actual container stuffer or stuffinglocation until after the merchandise has been laden on board the vessel. The delayed receipt ofthis data would cause an otherwise compliant ISF transmission to be filed late, unnecessarilysubjecting the ISF Importer to potential liquidated damages liability.Additionally, the Interim Final Rule provides that "four elements will be subject toflexibility as to interpretation. These elements are the Manufacturer (or supplier), Ship to party,Country of origin, and Commodity HTSUS number. There is no special timing flexibility forthese elements; they must be filed 24 hours prior to lading. However, CBP has added flexibilityby allowing ISF Importers, in their initial filing, to provide a range of acceptable responses basedon facts available to the importer at the time, in lieu of a single specific response (which maybecome known to the importer only at a later time)." The education of overseas supply chainparticipants, suppliers, and vendors is taking a significant amount of time and is especiallydifficult for those importer clients who have multiple supply chains in a myriad of countries. ISFImporters face a significant challenge in their efforts to first explain the ISF requirements to theirsupply chain partners and to then extract the necessary information in a timely manner. Weencourage CBP to maintain the flexibility of these data elements to facilitate the receipt of therequired screening data in a timely manner.In relation to the flexibility of the timing and perfection of the data elements, CBP hasrequired that the ISF Importer transmit corrections to the information as it becomes known. Theassessment of penalties as outlined in the "FAQ’s: Importer Security Filing "10+2" Document"published on the CBP website on 01/25/2009 available at(http://cbp.gov/xp/cgov/trade/cargo securitUcarriers/securit¥ filing/) under the "EnforcementMeasures" heading, Section B. Liquidated Damages, Point 1 indicates that "CBP will issueliquidated damages for $5,000 for each ISF transmission that is not timely, complete and/oraccurate." CBP has indicated that each correction or amendment to an ISF constitutes a separateISF transmission. We recommend that the assessment of liquidated damages be contemplated onthe ISF shipmer/t level, as defined by the original ISF filing, instead of on each transmission.Corrections and perfections of data that are permitted under the flexible~data elements, as well assubsequent corrections to the original transmission, should not be viewed as separate violationsand should not give rise to independent liquidated damages assessments. Assessment ofliquidated damages on an individual transmission basis seems contrary to the intent of theflexibility of the data elements, and may unduly expose ISF importers to additional liability fortheir good faith attempts to comply with the rule.Visibility of Date and Time of Container LadingSection III. Carrier and Importer Requirements, C. New Importer Requirements UnderThis Interim Final Rule, codified under § 149.2 (a) and (b) (1)-(4). This section provides thatthe "interim final rule requires Importer Security Filing (ISF) Importers, as defined in theseregulations, or their agents, to transmit an Importer Security Filing to CBP, for cargo other thanforeign cargo remaining on board (FROB), no later than 24 hours before cargo is laden aboard avessel destined to the United States." Similarly, in Section iII. Carrier and ImporterRequirements, B. New Carrier Requirements, it is indicated that "Carriers must submit a CSMwhen any of the required events occurs if the carrier creates or collects a CSM in its equipment ~INTERNET: www.ncbfaa.org2SERVICE ¯ INTEGRITY ¯ TRUSTE-MAIL." staff@ncbfaa.orc

tracking system reporting that event. Carriers are not required to create or collect any CSM dataother than those which the carrier already creates or collects on its own and maintains in itselectronic equipment tracking system."It has become evident to the trade that not all carriers electronically create or collect thecontainer lading date and time. As such this information is neither visible to the trade, nor toCBP for an accurate measurement of compliance with Section III, C. We believe that this ineffect creates a barrier to submitting an accurate ISF data 24 hours prior to lading, as this timeelement is neither published nor known to parties in a normal commercial environment. Wesuggest that compliance with the rule be measured against a known collected data element toallow for requisite transparency, predictability and reliability for enforcement.Availability of the Bill of Lading Information to the Lowest AMS LevelUnder Section III. Carrier and Importer Requirements, and codified in § 149.3 (a), the billof lading is required to be filed at the lowest level. Due to the commercial structure of the supplychain, the lowest bill of lading is often hard to obtain for both tilers and importers within thetime constraints for compliance with the rule. Matching the ISF filing to the house bill of ladingnumber continues to be a major challenge for ISF tilers. While the program outlined is termed"10+2," a house bill of lading element will be critical for the ISF filer in every case where that isthe lowest bill, and for CBP to match the data elements from two data sources. As the ISF filermay be reliant on the vessel operator, NVOCC, forwarder, consolidator, shipper, or some othersource for this information, if the information is provided late or it is incorrect, it is beyond thecontrol of the filer and the importer. This situation is often paralleled when there is no house billand the NVOCC does not provide bill of lading numbers more than 24 hours prior to lading. Theunavailability of the (house) bill of ladingnumber in advance of the ISF filing deadline presentsa barrier to submitting the ISF 24 hours prior to lading. We recommend that there be flexibilityof this data for a time period beyond the initial date of January 26, 2010 to mitigate furtherproblems with implementation and to ensure a continued smooth transition.SUGGESTIONSCBP Analysis of FeasibilityThe Federal Register Notice also indicated that as part of the analysis of the final rule"CBP may gather information by conducting reviews of particular importers to determinewhether submission of all 10 data elements 24 hours prior to lading was in fact feasible and, ifnot, what barriers the importer encountered. The structured review will cover a range ofenterprises, from small to large, and will include both integrated and nonintegrated supplychains." If a review of this nature has been undertaken, we encourage CBP to share the results ofthis review with the trade for informational purposes highlighting best practices where found,while maintaining the confidentiality of the participants.ISF Filer DefinitionUnder the Interim Final Rule, an ISF Filer can be any person who has a power of attorneyand access to submit data through the AMS or ABI systems. In order to be eligible to submitINTERNET: www.ncbfaa.orgSERVICE " I NT~GRITY " TRUST ,E-MAIL: staff@ncbfaa.org

data through the AMS system, a filer must have an international carriers bond. In order tosubmit entry data through the ABI system, the filer must be an importer of record (with an entrybond), or a Customs Broker who is a U.S. person, licensed by CBP, and subject to the stricturesof U.S. laws. The Interim Final Rule indicated that access to ABI would be broadened to permitothers to have access to this data system. We would submit that in expanding access to thissystem that CBP should keep in mind the purpose of the 10+2 program is to ultimately improvenational security through better cargo screening. We believe that ABI access should not beopened to any person over whom CBP does not have direct jurisdiction or who is not subject tothe jurisdiction of the U.S. courts.Progress ReportsWhile we applaud CBP’s efforts in issuing progress reports to ISF Filers, we would liketo suggest that CBP provide additional details in these reports to permit the ISF Filers to reviewspecific transactions for identified issues. Currently, the progress reports do not list the ISFtransaction or the bill of lading numbers that were filed late, rejected, etc. Thus, there is limitedopportunity for ISF Filers to address the issues or problems that CBP has found. In order tomake this a meaningful exercise, future progress reports should identify the problematic ISF byISF transaction number as well as indicate the reason that the ISF was found to be unacceptable.If possible, these reports should be made available in popular application formats, such as Excel,or in comma delimited files that can be reformatted for ease of data manipulation. This wouldpermit the ISF Filers to share these results with the true party in interest, the ISF Importer, andenable both parties to take measures to alleviate any underlying issues.Bond GuidelinesIt was our hope that the Bond Guidelines, Single Entry Bond processes, and LiquidatedDamages Mitigation Guidelines would be published or otherwise released to the trade before thedeadline for comments was due. It is our understanding that these elements are still beingdeveloped by CBP and waiting publication to the trade. We would suggest that an additionalcomment period be provided for these guidelines once released.The NCBFAA is appreciative of the opportunity to file comments on the ImporterSecurity Filing program and we look forward to further opportunities to support CBP in thecontinued development and implementation of this program.Sincerely,NATIONAL CUSTOMS BROKERS &FORWARDERS ASSOCIATION OFAMERICA408689 1Alan R. KlestadtCustoms CounselINTERNE’r." www.ncbfaa.orgSERVICE INTEGRITY ¯ TRUSTE-MAIL." staff@ncbfaa.org