Details of CBP's Proposed Rule on Centralization of Continuous Bond Program

The regulatory changes proposed would also support CBP's bond program by ensuring an efficient and uniform approach to the approval, maintenance, and periodic review of continuous bonds. Additionally, the proposed changes would update 19 CFR to accommodate the use of information technology and modern business practices.

(CBP notes that most continuous basic importation bonds are no longer processed and retained on file at the ports, and the majority of bond sufficiency matters concerning these bonds are currently processed at the RD. The authority to approve single transaction bonds remains with port directors.)

Comments are due by March 8, 2010.

Would Reflect Centralization, Facilitate Electronic Submission of Bond Data

The proposed rule would amend 19 CFR to reflect that continuous bonds must be filed, reviewed and, if approved, maintained at the RD. The documentation for these types of bonds, including CBP Form 301, applications, riders, terminations, power of attorney forms, and Importer ID Input Records (CBP Form 5106), would be required to be filed at the RD via mail, fax, or in an electronic format as prescribed by CBP.

In addition, CBP is proposing multiple changes to facilitate the use of electronic submission of continuous bond documentation.

Highlight of Proposed Changes to 19 CFR

The following are highlights of the proposed amendments to 19 CFR:

RD. 19 CFR 113.1 would be amended to add "Director, Revenue Division" as among those the CBP Commissioner may authorize to require bonds or other security.

Bond application, approval information. The proposed rule would amend 19 CFR 113.11 and 113.12 to more specifically identify the information required in a bond application and separate the approval procedures applicable to single transaction and continuous bonds.¹

1. CFR 113.11 would be amended to state that bond applications (continuous and single transaction) would be required to contain certain information, including the importer name; importer number; a description of the merchandise to be entered; etc. Continuous bond applications would be required to contain the total entered value and total duties, taxes, and fees paid for the previous 12 months, as well as estimates for the subsequent 12 months, etc. In addition to this data, CBP may require the bond applicant to submit additional information as is deemed necessary for CBP to evaluate the application. Such information may be commodity-specific or company-specific.
2. CFR 113.11 would also be amended to state that if CBP approves a bond based upon the application, the principal on the bond must submit a new application containing an update of the required information whenever there is a material change in such information.

CBP is also proposing to amend 19 CFR 113.11 and 113.12 to state that continuous bond applications must be submitted to the RD via mail, fax, or in an electronic format as prescribed by CBP; add language stating that when CBP approves a bond, it would notify filers, sureties and principals by sending them a CBP-assigned bond number; and add language stating that CBP may refuse to accept any new obligations under a previously approved bond that requires modification, or where there has been a failure to comply with certain regulations.

Bond sufficiency. CBP is proposing to remove the language in 19 CFR 113.13 that permits a principal 30 days from the date of notification by CBP to remedy a bond deficiency. 19 CFR 113.13 would be revised to state that if a deficiency is identified, CBP may require additional securities for any and all of the principal's transactions until the deficiency is remedied.

Bond amendments, alterations. 19 CFR 113.23 would be amended to provide that CBP would not permit substantive changes to be made to a bond after it has been signed. In such circumstances, the existing bond would be cancelled and a new bond would need to be executed.

Minor alterations would continue to be allowed to be made to the bond after it is signed, but prior to its approval by CBP, as long as the consent of all the parties are indicated on the bond.

Bond riders. 19 CFR 113.24 would be amended to clarify that its list of the most common types of bond riders is not intended to be exhaustive. In addition, riders would be required to be filed at the RD, and riders submitted in an electronic format would need to contain a reference to the related bond's CBP-issued bond number.

CBP is also proposing to require that riders submitted in an electronic format contain certain certification language (which is found in proposed 19 CFR 113.11).

The proposed rule would also amend 19 CFR 113.24 to state that CBP may refuse to accept new conditions under a previously approved bond where there has been a failure to provide CBP with a required rider.

Effective date of bond terminations. CBP is proposing to amend 19 CFR 113.27 to require that a principal's request to terminate a continuous bond would be required to be sent to the RD and that the termination would take effect on the date requested if that date is at least 15 business days from the date the termination request was received by the RD. Otherwise, the termination would be effective on the close of business 15 business days from the date the termination request was received by the RD.

Proposed 19 CFR 113.27 would also require that a surety's notice of bond termination be sent to the RD, as well as to the principal. The surety's obligation under a bond would terminate on the date requested by the surety in the written notice of termination so long as that date is at least 15 business days from the date a request meeting all requirements was received by CBP. In addition, once the RD has received a bond termination request, the termination would not be able to be withdrawn.

Replacement bonds for same activity. 19 CFR 113.27 would further be amended to state that when a principal intends to continue to engage in the same activity as that secured by a bond to be terminated, and the principal has submitted a replacement bond to secure that continued activity, no termination requested by a principal or surety would take effect until CBP has reviewed and approved the replacement bond.

Bond for seized suspected counterfeit goods sample. The proposed rule would amend 19 CFR 133.21, 133.25 and 133.42 to state that to obtain a sample of suspected seized counterfeit merchandise, the trademark/trade name/copyright owner must furnish CBP with a single transaction bond in the form and amount specified by the port director or a continuous bond in the form and amount specified by the Director, Revenue Division.

¹CBP is also proposing to reverse the order of and amend the language in 19 CFR 113.11 and 19 CFR 113.12 regarding bond approvals and bond applications.

(See ITT's Online Archives or 01/05/10 news, 10010505, for BP summary announcing the proposed rule.)

CBP contact - Bruce Ingalls (317) 298-1307

CBP proposed rule (D/N USCBP-2006-0013, FR Pub 01/05/10) available at http://edocket.access.gpo.gov/2010/pdf/E9-30920.pdf