GAO Reports on CBP’s Progress in Implementing ISF (10+2)

(The 10+2 interim final rule mandates that importers and vessel carriers submit additional maritime cargo information (10 data elements for importers and 2 data elements for vessel carriers) to CBP before it is brought into the U.S.¹ Collection of the additional cargo information and their incorporation into CBP’s Automated Targeting System (ATS) are intended to enhance CBP’s ability to identify high-risk shipments and prevent the transportation of potential terrorist weapons into the U.S.)

CBP Enforcement of 10+2 Requirements has Not Impacted Overall Trade Flow

CBP officials and trade industry representatives reported that CBP’s 10+2 compliance enforcement efforts, which include holding cargo for inspection when the importer has failed to submit an ISF, have not resulted in measurable impacts to overall trade flow.

While CBP does not collect data on enforcement actions specific to 10+2 compliance, such as cargo inspections, CBP officials stated that they have not received any complaints from the trade regarding 10+2 enforcement actions. Additionally, none of the importers that GAO spoke with said they have experienced delays in trade flow as the result of CBP’s enforcement of 10+2 compliance.

CBP Satisfied with 80% ISF Compliance Rate in July 2010

CBP officials said that they are generally satisfied with the status of ISF implementation, based on CBP data that indicate that approximately 80% of shipments in July 2010 were compliant with the ISF requirement. CBP officials noted that this measure of 80% compliance includes ISFs for U.S.-bound and in-transit cargo, and compliance rates for in-transit cargo are lower than for U.S.-bound cargo. In July 2010, approximately 86% of U.S.-bound shipments had submitted ISFs, whereas approximately 24% of in-transit shipments had submitted ISFs.

CBP Seeks 95% Compliance by Fall 2010, Expects New Rule on In-Transit Cargo

CBP officials stated they have a goal of increasing compliance to about 95% by fall 2010. As a result, CBP is monitoring performance to identify areas to improve implementation and compliance. CBP has identified issues with the implementation of the ISF for in-transit cargo, such as lack of clarity regarding the party responsible for filing the ISF for two types of in-transit cargo (immediate exportation (IE)and transportation and exportation (T&E)) shipments, and CBP officials said that they plan to revise the requirements through future rulemaking.

CBP has Conducted Outreach to Correct Identified Problems

To help correct problems CBP has identified through its monitoring of ISF data, CBP has conducted further outreach efforts to members of the trade industry. Also, in April 2010, CBP began identifying importers who may not be complying and sent letters to these importers notifying them of possible noncompliance and encouraging them to contact CBP about any concerns they may have.

Working to Address Timeliness Issue with ISF Progress Reports

In addition to its other outreach efforts, CBP is also working to address concerns regarding the information contained in ISF progress reports, specifically the number of ISFs that cannot be measured for timeliness. CBP officials noted that CBP does not make enforcement decisions based on the information in the progress reports.

Importers’ Use of Flexibilities has Declined over Time, Remained Low

Importers’ use of flexibilities² has declined over time and has remained low since January 2010 when CBP began enforcement of the 10+2 interim final rule. From the beginning of the flexible enforcement period on January 26, 2009, through September 13, 2009, CBP did not have a mechanism to collect data on importers’ intent to use flexibilities. However, CBP’s analysis of filings submitted during this period led it to conclude that relatively few importers were using the flexibilities.

Over the portion of the flexible enforcement period for which CBP has collected data (September 13, 2009, through January 25, 2010), about 5% of ISFs indicated the use of flexibilities. According to CBP data, the use of flexibilities on ISFs declined over this period, from 11% each week in September 2009 to 2% each week in January 2010. The use of flexibilities on ISFs over the enforcement period, beginning January 26, 2010, through June 14, 2010, has remained at about 2%.

CBP Data Indicates Importers Used Flexibilities Incorrectly, Unnecessarily

Additionally, CBP data on ISFs for which importers indicated their use of flexibilities show that importers consistently claimed flexibilities incorrectly or unnecessarily at rates of around 70% or greater for range flexibilities and 60% or greater for timing flexibilities.

CBP officials and some importers with cited various motivations for using, or not using, flexibilities. CBP officials noted, for example, that its standard ISF amendment process offers greater flexibility and a potential cost savings compared to the flexibilities because it does not require importers to commit to updating their ISFs, while use of the flexibilities does. Additionally, some importers stated that use of flexibilities would not be financially beneficial for them.

CBP officials stated that the limited overall use of flexibilities, as well as the high rates of incorrect use, will be considered in determining whether to eliminate, modify, or maintain the existing flexibilities associated with the 10+2 interim final rule.

CBP Targeters Have Access to 10+2 Data, TECS Rules in ATS Can ID Shipments

CBP targeters have access to data generated as a result of the 10+2 interim final rule, and tactical rules can identify risk factors based on any of the 10+2 data elements. In particular, CBP has updated the Treasury Enforcement Communications System (TECS) rules in ATS to incorporate the additional 10+2 data elements to identify shipments that could pose a threat to national security. ATS uses the updated TECS rules to compare 10+2 data to certain high-risk TECS national security threats. These rules use the data to affect containers’ risk scores, which can affect whether a shipment is inspected for dangerous cargo. If ATS determines that any of the data elements are connected to high-risk TECS national security threats, it then increases the overall national security weighted rule set risk score for that shipment.

Vessel Stow Plans Can ID Unmanifested Containers

Additionally, access to information on vessel stow plans has enabled CBP to identify more than 1,000 unmanifested containers - containers that are inherently high risk because their contents are not listed on a ship’s manifest - on ships bound for U.S. ports.

10+2 Data Available for ATS Targeting, but Weighted Rule Still Needed

Data elements generated as a result of the 10+2 interim final rule are available for use in targeting efforts, but CBP has not yet finalized its ATS national security weighted rule set to identify risk factors present in the 10+2 data.

CBP Says Weighted Rule Could Give Risk Scores Earlier in Supply Chain

CBP states it has conducted a preliminary analysis that indicates that the collection of the 10+2 data could improve the determination of risk scores earlier in the supply chain process. In particular, the analysis demonstrated that risk scores assigned in transit based on manifest data may differ from risk scores assigned at arrival based on customs entry data and that the difference in scores may affect actions CBP takes to mitigate potential threats.

Unknown when Weighted Rule Will be Ready to Integrate 10+2 Data

Because the process to update the national security weighted rule set involves iterations of testing, CBP officials said they will not be able to determine when the 10+2 data will be integrated with the existing national security weighted rule set until testing is complete.

GAO recognizes that the results of such testing could require adjustments to tasks that make it difficult to adhere exactly to established dates for completing a project. However, establishing project time frames and milestones - best practices in project management - could help guide CBP staff in such testing and provide CBP with goals for completing interim steps and finishing this project, thus better positioning it for targeting high-risk cargo.

CBP’s 10+2 Regulatory Assessment Generally Adheres to OMB Guidance

CBP’s 10+2 regulatory assessment generally adheres to the Office of Management and Budget (OMB) guidance, although greater transparency regarding the selection of alternatives analyzed and a more complete analysis could have improved CBP’s assessment.

CBP’s regulatory assessment addresses some elements of a good regulatory assessment, as required by OMB, such as the need for the proposed action and evaluation of the benefits and costs. However, the assessment lacks transparency in that it does not explain how the four alternatives considered for the rule - variations in what and how many data elements are to be collected - were selected or how the preferred alternative was chosen.

¹Although the effective date of the 10+2 interim final rule was January 26, 2009, the rule allowed for a one-year flexible enforcement period. Since the end of the flexible enforcement period, CBP has stated that it has been applying a “measured, common sense approach” to enforcement, which includes exercising the least punitive measures necessary to obtain full compliance, evaluating noncompliance on a case-by-case basis, and continuing to provide outreach and guidance to trade industry entities.

²CBP's interim final rule provides flexibility (either timing or range) for the following six data elements: manufacturer (or supplier), ship to party, country of origin, commodity Harmonized Tariff Schedule (HTS) number, container stuffing location, and consolidator (stuffer).

(See ITT’s Online Archives or 08/11/10 news, 10081121, for BP summary of the ISF enforcement and other issues discussed at the August 4, 2010 COAC meeting.)

(GAO-10-841, dated September 2010)