CBP to Take "Measured Approach" to Full Enforcement of 10+2 Beginning January 26th

The interim final rule was effective on January 26, 2009; however, it provided a one year delayed enforcement period (until January 26, 2010) to allow the trade to work through various problems and to come into compliance with the requirements.

CBP Expected to Take "Measured Approach" Instead of Informed Compliance Approach

CBP officials have now stated that CBP will take a "measured approach" to enforcing 10+2 requirements. The official noted that an informed compliance approach, similar to the one used for enforcing the 24 hour rule should not be the model the trade operates under, given the one year delayed enforcement period and CBP's issuance of liquidated damages and mitigation guidelines, among other factors. (See below for details.)

Bonds to be Required for ISF Purposes Beginning January 26th

The use of bonds for Importer Security Filing purposes will be required beginning January 26, 2010. Bonds for ISF purposes have been accepted by CBP, but not required, during the delayed enforcement period.

Depending on the circumstances (e.g., whether the ISF is part of a unified filing or is filed alone) and filer preferences, a continuous bond, a single transaction bond, or an Appendix D ISF "stand alone" bond (continuous or single transaction) will be required.

CBP sources explain that for a "stand alone" ISF, a continuous bond (Appendix D or CBP Form 301) or an Appendix D STB may be used. A CBP Form 301 STB may not be used for a "stand alone" ISF. Sources add that for unified filings (both ISF and entry), either a CBP Form 301 continuous bond or CBP Form 301 STB may be used.

ISF Data

Effective January 26, 2010, CBP will fully enforce the requirement that ISF data be filed for every applicable ocean shipment into the U.S. Ten data elements are required for most shipments (only five data elements are required for FROB, IE and T&E shipments¹).

ISF Importers, or their agent, must provide the following eight data elements for most shipments, no later than 24 hours before the cargo is laden aboard a vessel destined to the U.S.:

*CBP's interim final rule provides flexibility regarding the interpretation of these four data elements. For these four, importers may submit a range of acceptable responses based on facts available to the ISF Importer at the time of submission. The ISF must be updated as soon as more accurate or precise data becomes available, and usually no later than 24 hours prior to the ship's arrival at a U.S. port.

ISF Importers, or their agent, must also provide the following two data elements for most shipments as early as possible, but no later than 24 hours prior to the ship's arrival at a U.S. port:

*CBP's interim final rule provides timing flexibility for these two data elements.

Data Flexibilities are Provided Under Interim Rule, But Final Rule Expected

CBP officials have recently stated that these data flexibilities (both timing and interpretive), which are contained in the interim final rule, will remain in place unless and until CBP determines that a change should be made. If CBP determines that such a change is necessary, CBP will amend the regulations accordingly.

CBP has an opportunity to amend the regulations when it issues its 10+2 final rule, which is projected to be issued in early 2010. However, it is not known if this is an accurate timeline, or if the final rule will continue or eliminate these flexibilities.

CBP Has Authority to Issue Liquidated Damages Beginning January 26, 2010

CBP officials earlier announced that it will use the least punitive enforcement measures necessary to promote compliance with the 10+2 requirements. CBP will focus on obtaining compliance by directly communicating with the trade; issuing warning letters; increasing the number of examinations; and only if necessary, withholding cargo release. In addition, CBP does not plan to use the "do not load" (DNL) option without proper reason. They see DNL as something they should not "take lightly."

However, CBP will not be as accommodating for those that are not filing their ISFs and did not take advantage of the delayed enforcement period (January 26, 2009 - January 25, 2010).

In addition, CBP has stated that all 10+2 penalty decisions will be cleared first by Headquarters. Penalties will be initiated by the ports, but they will be "centralized" at Headquarters.

(CBP has the authority to assess liquidated damages for ISFs that are required to be submitted on or after January 26, 2010, for ISFs that are not complete, accurate, and/or timely. CBP may assess a claim for liquidated damages as follows: $5,000 per late ISF, $5,000 per inaccurate ISF, and $5,000 for the first inaccurate ISF update.

CBP has also stated that if goods for which an ISF has not been filed arrive in the U.S., it has the authority to withhold the release or transfer of the cargo; it may refuse to grant a permit to unlade for the merchandise; and if such cargo is unladen without permission, the cargo may be subject to seizure. Additionally, noncompliant cargo could be subject to DNL orders at origin or further inspection on arrival.)

¹Five data elements required for FROB, IE and T&E shipments. For shipments consisting entirely of foreign cargo remaining on board (FROB) and shipments consisting entirely of goods intended to be transported in-bond as an immediate exportation (IE) or transportation and exportation (T&E), the ISF must consist of five elements:

Booking party

Foreign port of unlading

Place of delivery

Ship to party

Commodity HTSUS number

ISFs for IE and T&E shipments must be submitted no later than 24 hours before the cargo is laden aboard a vessel destined to the U.S., and ISFs for FROB must be submitted prior to lading aboard the vessel at the foreign port.

(See ITT's Online Archives or 12/11/09 news, 09121110, for BP summary of CBP discussing how it will "fully enforce" the interim final rule.

See ITT's Online Archives or 12/23/08 news, 08122310, for the final part of BP's summary on the details of CBP's 10+2 interim final rule, with links to previous parts.

See ITT's Online Archives or 10/15/09 news, 09101530, for the final part of BP's summary of CBP's updated 10+2 FAQs, with links to previous parts.)

See ITT's Online Archives or 07/17/09 news, 09071705, for BP summary of CBP's 10+2 penalty and mitigation guidelines.

See ITT's Online Archives or 12/11/09 news, 09120940, for BP summary of DHS' semi-annual regulatory agenda.)

CBP's FAQ on 10+2 (last updated 09/30/09) available at http://www.cbp.gov/linkhandler/cgov/trade/cargo_security/carriers/security_filing/10_2faq.ctt/10_2faq.doc

CBP's Penalty and Mitigation Guidelines for 10+2 (in 07/17/09 Customs Bulletin) available at http://www.cbp.gov/linkhandler/cgov/trade/legal/bulletins_decisions/bulletins_2009/vol43_07172009_no28/43genno28.ctt/43genno28.pdf