Updates on 10 + 2 from CBP’s First Official Outreach Presentation

On December 2nd, Liberty International attended the first official Importer Security Filing (10 + 2)

outreach presentation since the publication of the Interim Final Rule on November 25, 2009. The

presentation was given by John Jurgutis, Program Manager at CBP Headquarters in Washington DC,

who is responsible for overseeing all aspects of the Security Filing (10 + 2) Program, under the Secure

Freight Initiative.

 

During the presentation John stated that CBP is currently working on mitigation guidelines, which should

be available shortly, helping clarify many of the open bonding issues that are inherent in the new ruling.

In addition, John indicated that CBP is not anticipating issuing liquidated damages during the 14 month

‘flexible enforcement’ period ending on January 26, 2010.

 

Also, during this ‘flexible enforcement’ period, CBP will not issue a “Do Not Load” message for failure to

file an Importer Security Filing. During the presentation, John informed the Trade that CBP will compare

 the ISF data with entry data. The  goal of this comparison is to look for security related issues and not

compliance infractions. He also added  that if CBP identifies a pattern in terms of incorrect data then they

will have to investigate this pattern further.

 

Throughout the presentation he repeatedly stressed that CBP’s intention is to use the ISF data for

security purposes and not compliance infractions.

 

Please feel free to contact Sean McClung, our Compliance Manager, with any questions or concerns at

 (401) 727-1776 Ext. 154.

 

To: Our Valued Clients                 Date: July 24, 2009

 

10 + 2 (ISF) Mitigation Guidelines Issued by CBP

 

On July 17, 2009, US Customs and Border Protection (CBP) has issued mitigation guidelines for liquidated damage claims resulting from a failure to comply with the requirements the Importer Security Filing Interim Final Rule (10 + 2) under 19 CFR Part 149. 

 

Of particular interest is CBP’s willingness to take into consideration the accused party’s “evidence of progress in the implementation” of their ISF submission process during the flexible enforcement period between January 26, 2009 and January 26, 2010.  Those parties who have actively participated in the ISF program will benefit from their participation if faced with a liquidated damage claim after the end of the flexible enforcement period on January 26, 2010.

 

Overview of the Mitigation Guidelines:

 

ISF Importer – Violation:

- Failure to submit an ISF when one is required;

- Submitting a late ISF;

- Submitting an inaccurate ISF transmission.

 

ISF Importer – Assessment of Liquidated Damage Claims for Violation:

Failure to submit – CBP will withhold release or transfer of cargo until CBP receives ISF information, reviews documentation and conducts any examination.  CBP can also withhold unlading of cargo from vessel and if unladen without permission, cargo can be seized.

Late filing of ISF – Liquidated damage claim of $5,000;

Inaccurate Filing of ISF – Liquidated damage claim of $5,000 per inaccurate ISF filing;

Updates – Liquidated damage  claim of $5,000 for inaccurate updates;

Failure to Withdraw ISF – Liquidated damage claim of $5,000.

Cancellation of Liquidated Damage Claims

Liquidated damage claim can be cancelled upon payment of any amount between $1,000 and $2,000 depending on the presence of mitigating or aggravating factors.

Mitigating Factors include:

Evidence of progress in implementation of ISF requirements during flexible enforcement period;

Small number of violations compared to number of shipments requiring ISF;

ISF Importer is certified Tier 2 or 3 C-TPAT member;

Demonstrated remedial action;

ISF information was filed late because of vessel diversion due to factors outside of the ISF Importer’s control;

Presenting party acquired the information from another party in accordance with ordinary commercial practices and can demonstrate it reasonably believed the information to be true.

Aggravating Factors Include:

Lack of cooperation with CBP;

Evidence of smuggling;

Multiple Errors on ISF;

Rising error rate on transmission of ISF information.

 

For those who are not yet participating in the ISF program, we strongly recommend that consideration be given to the benefits that will result from active participation during the flexible enforcement period.

 

Please feel free to contact your Liberty Account Representative with any questions, concerns or for any reason at all. 

 

To: Our Valued Clients                 Date: October 15, 2009

 

CBP’s New ISF/10+2 Bond Requirement

 

Customs and Border Protection has released the bond requirements for the importer security filing (ISF) 10+2 filings.  Please note that there are no additional requirements for importers who carry a continuous bond.  If you do not have a continuous bond then starting January 26, 2010 you will be required to get an ISF bond within 12 hours following the ISF filing (which must be completed 24 hours prior to departure of the vessel) in addition to the single transaction bond that is required during the entry process.  Liberty International strongly urges importers who are currently using single transaction bonds to consider switching over to a continuous bond in order to streamline your importation process at origin.

 

We have put together a brief outline of the new bonding requirements for your convenient reference below.

 

Bonding Basics

· CBP will enforce the mandatory bond requirement effective January 26, 2010.

· CBP will be amending Customs regulations so that the ISF bond may be executed as either a single transaction bond or a continuous bond.

· Nearly all ISF transactions must be secured by a bond; however, CBP has identified 5 exceptions to the bond requirement:

1. Household goods/personal effects

2. Government and military

3. Diplomatic

4. Carnets

5. International mail.

6. An Importer, or its agent, may always secure its ISF obligations by using a continuous bond or using the ISF bond for single transactions when a continuous bond is not in place.

 

Filing Bonds

The single transaction ISF bond must be filed by email as a .pdf attachment within 12 hours of receiving CBP's approval of the ISF and receipt of the unique ISF transaction number.  CBP's e-mail address for this filing is ISF_Bond@cbp.dhs.gov.

There is no change to the current procedures for filing the continuous bond.

 

Bond Amounts

· Continuous bonds are sufficient to cover ISF obligations if they are sufficient for the other purposes they serve.

The single transaction ISF bond amount will be $10,000.

 

Please feel free to contact your Liberty Account Representative with any questions, concerns or for any reason at all. 

 

To: Our Valued Clients                 Date: November 12, 2009

 

Changes to Importer Security Filing (ISF) Transaction Sets

 

Please be advised that CBP has issued changes to the ISF programming specifications that will become effective Saturday November 14, 2009.  Liberty will issue an updated training manual to all ISF Portal users.  Until our updated training document has been published, please be aware of the following changes to the entry process.

 

Shipment Type Codes

New “shipment type codes” 08 FTZ and 09 International Mail to be added to the drop down.  Valid values for “shipment type codes” are:

 

Standard or regular filings

To Order Shipments

03         Household Goods / Personal Effects (HHG / PE)

04         Military, Government

05         Diplomatic Shipment

06         Carnet

07         US Goods Returned

08         FTZ Shipments

09         International Mail Shipments

 

The default “shipment type code” will remain 01 and you must change it if another code applies to your filing.  If you do not know how to use each code, contact isfcompliance@libertyint.com for assistance.

 

Bond Changes

On January 26, 2010 new bond requirements will be enforced.  Bond information is mandatory for all Add or Replace transactions when the “shipment type code” equals 01, 02, 07, or 08. 

 

01 = Standard or regular filings 

02 = To Order Shipments

03 = Household Goods / Personal Effects (HHG / PE)

04 = Military, Government

05 = Diplomatic Shipment

06 = Carnet

07 = US Goods Returned

08 = FTZ Shipments

09 = International Mail Shipments

 

If you are filing an ISF for an importer who does not have a continuous bond on file, an additional Bond Reference Number field will be filled in.  The Bond Reference Number will be assigned by the surety company when an ISF BOND application is completed and will be manually typed into the new field on the entry screen. 

 

Action Reason Code Changes

Previously, you were instructed to use FT when both FR and FT applied.  Now you must use FX.  A new action reason code FX to be added to the drop down.  Valid values for action reason codes are:

 

CT - Compliant Transaction:  All data is present, no special flexibility rules apply.  If “CT” is used, the ISF can be updated if necessary, but CBP does not require the ISF to be updated.

FR - Flexible Range:  A range of data for the Manufacturer, Ship To party, Country of Origin, or Commodity HTSUS number has been provided.  The ISF must be updated as soon as better information becomes available, but never later than 24 hours prior to arrival.  If “FR” is used, CBP expects to receive a timely update.

FT - Flexible Timing:  The CS (Consolidator) and or LG (Stuffing location) has not been provided.  The ISF must be updated as soon as better information becomes available, but never later than 24 hours prior to arrival.  If “FT” is used, CBP expects to receive a timely update.

FX - Flexible Range and Flexible Timing:  A range of data as described in “FR” has been provided and the CS (Consolidator) and or LG (Stuffing location) has not been provided. The ISF must be updated at a later date as soon as better information becomes available, but in no case later than 24 hours prior to arrival.  If “FX” is used, CBP expects to receive a timely update.

 

To: Our Valued Clients                 Date: November 27, 2009

 

Importer Security Filing (ISF) Not Responding

 

Beginning yesterday, November 26, 2009, at approximately 5:00pm EST, ISF transactions stopped receiving responses from Customs and Border Protection’s system.  The problem was identified and corrected within CBP's system.  A significant backlog was created during the down time.

 

As the significant backlog began processing, the system again stopped sending responses to the trade at 11:38pm EST to both the backlog and current transactions.  CBP is working on resolving this issue as quickly as possible. 

 

We will notify you when the system is properly sending responses again.

 

You may continue to submit your new filings on our portal but you may not see a response until the situation at CBP is resolved.

 

Please feel free to contact your Liberty Account Representative with any questions, concerns or for any reason at all. 

 

 

To: Our Valued Clients                 Date: November 30, 2009

 

Importer Security Filing (ISF) Transactions Receiving Responses Again

Customs and Border Protection (CBP) has sent notification to the trade that ISF transactions are now processing correctly through CBP’s system.  The system is now current in sending back response messages to the trade.

 

However, there are still a number of ISF transactions that may not have received a response.  If an ISF was submitted between 8:43 pm EST on November 26, 2009 and 11:23 am EST on November 27, 2009; please, do NOT resubmit these jobs as they will likely result in duplicate transaction errors.  CBP is attempting to push the responses back to the trade for these transactions. 

 

CBP will notify the trade should any further action be required.  Liberty International will immediately update our Global Facts readers list of any additional communication that is received from CBP in regards to this issue.

 

To: Our Valued Clients                 Date: February 1, 2010

CBP Adopts a Measured Approach to Full Enforcement of 10+2

Customs and Border Protection (CBP) entered into full enforcement of the Importer Security Filing (10 + 2) rule on January 26, 2010. The interim final rule was effective on January 26, 2009; however, it provided a one year delayed enforcement period to allow the trade to design processes that allow compliance with the requirements.

CBP officials have now stated that CBP will take a "measured approach" to enforcing 10+2 requirements. CBP officials have announced that they will use the least punitive enforcement measures necessary to promote compliance with the 10+2 requirements. CBP has also warned that on the 3rd or 4th quarters of this year they will drop the "hammer" on the trade for noncompliance.

The most important aspects of the ISF (10+2) submission to CBP in priority order are as follows:

1. Accurate Data

2. Not Filing

3. Late Filing

At this point, 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 to ensure consistency. CBP has the authority to assess liquidated damages for noncompliance as of January 26, 2010 for ISFs that are not filed, 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.

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