ebond and surety updates by lisa gelsomino lunch meeting ... ebond and acas … · • april 2,...

Seminar This presentation is not open to the press and has a legal Copyright © June 2014

eBond and Surety Updates by Lisa Gelsomino

Lunch Meeting

Thursday, 6/19/14

This presentation is not open to the press and has a legal Copyright © June 2014

Introduction and Contacts

Lisa Gelsomino, President/CEO – Avalon Risk Management

• COAC Bond Working Group, NCBFAA ISF subcommittee, TSN eBond Subcommittee • Avalon ISF and eBond outreach to over 3,000 trade participants • ISF-http://www.avalonrisk.com/isf.html eBond-http://www.avalonrisk.com/ebond.html

• 847-700-8192 or [email protected] Hotline: 847-700-TISF(8473)

Jaki Ferenz, Vice President – Avalon Risk Management

• Avalon Seattle and corporate sales • Cell: 206-371-1764 • [email protected]

Deirdre Hudson, Regional Vice President – Avalon Risk Management

• Avalon San Francisco: 840 Hinckley Road, Suite 100, Burlingame, CA 94010 • Phone: (650) 652-4100 Fax: (650) 898-1503 • [email protected]

http://www.avalonrisk.com/isf.html

http://www.avalonrisk.com/ebond.html

mailto:[email protected]



http://www.cbp.gov/trade/trade-community/outreach-programs/revenue Avalon eBond Page - http://www.avalonrisk.com/ebond.html

Bruce Ingalls Director, Revenue Division Financial Operations Office of Administration (Indy) • 317-298-1107 • [email protected] • Refer to CBP Website Below

Kara Welty Debt Management Chief Revenue Division, Financial Ops Office of Administration (Indy) • 317-614-4614 • [email protected]


http://www.cbp.gov/trade/trade-community/outreach-programs/revenue














CBP Revenue Division Topics

• Revenue Modernization

• Bond Centralization

• eBond by 1/3/15

• PM Statement

• Bond Sufficiency

• Bad Address

• Duty Refunds (4811)

• Importer Sanctions

CBP Revenue Modernization

ISFs 33-40%



• Activity Code 1 – Importer/Broker (Entry/ISF)

• Activity Code 1a – Drawback

• Activity Code 2 – Bonded Carrier (Bonded Goods)

• Activity Code 3 – International Carrier (AMS/ACAS Filer)

• Activity Code 4 – Foreign Trade Zone (GPZ/Subzone)

Customs Bond (CBPF 301)

http://www.ecfr.gov/cgi-bin/text-idx?SID=662d537de28139931f46594e58c3f540&node=19:1.0.1.1.17.7.304.2&rgn=div8

http://www.ecfr.gov/cgi-bin/text-idx?SID=3fd56a2a0cbcc8e71d16a5ea36052a21&node=19:1.0.1.1.17.7.304.5&rgn=div8

http://www.ecfr.gov/cgi-bin/text-idx?SID=662d537de28139931f46594e58c3f540&node=19:1.0.1.1.17.7.304.3&rgn=div8



Continuous Bond Centralization

Why Centralize STBs? • June 2011 DHS OIG report cited bond execution errors, deficiencies in bond

retention, and other issues that challenge CBP’s ability to collect on STBs.

• CBP has limited ability to report to Congress or Treasury on key inquiries regarding bonds.

• Enables CBP Officers to focus on trade and law enforcement mission and reduces the burden on Entry and Import personnel.

• Protects CBP by informing CBP Officers that a valid bond has been secured before cargo is released into commerce.

Trade Community Focus

• Brokers restricted to normal business hours to process bonds and entries

• Broker and Surety systems and processes are more modern and advanced than CBP’s systems, which leads to inefficiencies in accepting and processing STBs

• Standardizes the way CBP interacts with the Trade across ports

VIGILANCE SERVICE INTEGRITY

“As Is” Challenges to Date


1. Processing Time: Paper-dependent environment and physical document examination can lead to system backlogs and potential cargo delays.

2. Lost Revenue: Decentralized STB processes result in write-offs and delinquencies. The DHS OIG estimated that approximately $8 billion of $12 billion in STB for importer/broker entries accepted by CBP during FY 2009 contained errors that could result in non-collection. Further OIG analysis projects CBP should have required an additional $1.5 billion in FY 2009 to cover risk of imports subject to other government agency requirements.

3. Manual Bond Errors: Brokers or importers submit inaccurate and/or incomplete bonds leading to unplanned administrative burdens and delays in cargo release

.

STB Centralization Concept


Current Operations STB Centralization Concept

Some ports release cargo without receiving a STB.

CBP protects revenue by enforcing the requirement to submit and validate an STB prior to cargo release.

CBP receives and reviews paper STBs (CBP Form 301) and Ports use a combination of ACS and ACE.

E-STB will be an electronic system for receiving, processing, reviewing, and maintaining STB data across all Ports in a single ACE platform.

Brokers submit a majority of STBs with limited surety involvement.

The eSTB concept will limit who can push STB data electronically to CBP. Brokers will not be able to push bonds to CBP unless the sureties or surety agents grant that authority to the brokers through the surety system.

CBP is involved with litigation cases over inaccurate STBs due to execution errors.

CBP regulations will be revised to reflect that the individual who pushes the bond (i.e. the surety ) is responsible for the accuracy of the inputs. CBP will “accept” the STB after automated data validations.

CBP spends valuable time correcting erroneous STBs, utilizing valuable Officer and staff resources.

CBP will “accept” STBs after automated bond validation; CBP ports will no longer manually review and approve the STB. OA staff will shift from administrative activity to more analytical functions.

Surety systems do not interface with CBP systems to push STB data, yielding risks for manual data errors.

The eSTB concept will enable sureties’ financial systems to interface directly with CBP systems to push STB data electronically to CBP, which eliminates duplication of effort and risks for manual data entry errors in creating and submitting paper STBs.

eBond High Level Data Flow


SNP + CX Message

Surety Sends

Reject

eSTB Bond Data Elements:

http://www.avalonrisk.com/pdf/eSTB%20Process%20Flow%20and%20Data%20Elements%20New.pdf

http://www.avalonrisk.com/pdf/eSTB Process Flow and Data Elements New.pdf


ABI Communication with Sureties

• Working with Sureties to develop standard data elements for ABI vendors – ABI vendors can integrate with multiple sureties easier

– Trying to avoid having 10-15 different formats

• Data Formats – Tilde (~) separated file

– XML

• Communication Methods – MQ

– Web Services

– FTP or SFTP


ABI Data Elements to Surety

• Shipment Level – Action Code (Add, Replace, Delete)

– Importer of Record Number

– Bond Principal Country

– Bond Producer Account Number

– AD/CVD Only indicator

– Anticipated Port Code

– Entry Filer/Number and Type

– Bond Amount

– Estimated Value

– Total Duty, Fees, AD/CVD and IR Tax

– Broker Reference

– Contact Method for exceptions – Name, email, Phone etc.

• Line Level – Tariff Numbers

– PGA Agency Codes

– AD/CVD Case Numbers and

– Supporting AD/CVD Details (vs. current surety questionnaire)

eSTB Bond Data Elements:

http://www.avalonrisk.com/pdf/eSTB%20Process%20Flow%20and%20Data%20Elements%20New.pdf

http://www.avalonrisk.com/pdf/eSTB Process Flow and Data Elements New.pdf


ABI Process Flow

Broker Keys Entry & STB

info

Request send Entry to CBP

Entry Data on Hold Pending STB accept

Has Surety

approved?

Send STB request to

Surety

Surety Response

Send Entry to CBP

Visibility into responses

(Emails/reports)

Yes – Auto

Send Entry Broker handles

exceptions

No


ABI Broker & Surety Process

Manual Change

Send STB request to

Surety

Surety Response

Visibility into responses

(Emails/reports)

Additional Bond

Replacement Bond

Broker updates Shipments

Void Bond

eBond Project Update


• CBP organized and hosted e-STB and eBond working group meetings: • December 2, 2013 focus on e-STB concept with limited discussion • April 2, 2014 finalize e-STB issues, start eBond discussions • June 11, 2014 TSN eBond Committee Meeting

• Key anticipated dates for eBond: • May 7, 2014 – Begin development of eBond (ACE Increment 6) • August 5, 2014 – Complete system development of eBond • January 3, 2015 – Planned deployment of e-STB and eBond in ACE

• OA and ACE Business Office continue to engage CBP and Trade to refine user requirements gathered over the last several years and prepare for development of user stories for system development.

• Process under eBond (continuous bond) will remain largely the same; continuous bond submissions will not be tied to an individual entry and Surety will still submit bond to CBP.

eBond ACE Development (Part 1)


Develop Bond Intake System (Increment 5) Provide capability to receive a bond submission via EDI

Provide capability to validate the information received in the bond submission.

Provide capability to store bond information received for use in additional processes.

Provide capability to return a positive or negative response to the surety via EDI.

Begin building ACE Portal Functionality for Bonds (Increment 5) Provide a Bond search screen for Trade

Provide a Bond view screen for Trade

Provide a Bond search screen for CBP

Provide a Bond view screen for CBP

Surety Portal 1) Submit information 2) Surety review 3) Transmit Data Elements 4) Riders 5) Terminations

CBP Desired Outcomes and Impacts


Dedicated Resources with Specialized Knowledge and Expertise – Smaller group of dedicated resources focused primarily on the STB program promotes faster processing and responsiveness to issues and questions raised by the Trade.

Faster STB Processing for the Trade – Brokers and sureties will not have to duplicate efforts to complete paper STBs for data already in their own systems.

Expanded Entry Capabilities for the Trade – Automated STB submission and validation will permit 24/7 bond filing so the Trade does not have to wait for ports to open for business.

Automates Labor-Intensive STB Validation by CBP – Electronic submission and validation can expedite cargo release without increasing risk and free up resources in the field. Based on annual STB volumes (300,000 – 750,000) and avg. manual processing times (6.5 minutes per bond), could save estimated 32,500 – 81,250 man hours (15-39 FTEs) per year.

Save Time and Expedite Trade

Reducing Protests, Write-offs, and Rejections – Improved consistency in the application of STB policies and procedures will drive down potential revenue losses. CBP will have perfected STBs in-hand in all cases prior to cargo release.

Improve Collections for CBP


Scope of eBond in ACE

• Updated CBP 301 Bond Form 99% of all Customs Bonds

• Out of Scope: Activity Code 12 (ITC), 14 (IBEC), 15 (IPR) and 17 (MTO)

• ACE ABI CATAIR Chapters for the Future Deployment of ACE eBond http://www.cbp.gov/trade/ace/catair • Appendix G Condition Codes and Text (updated to include eBond error codes and conditions) • ACE CATAIR Error Dictionary (Updated to reflect future deployment of ACE eBond) • Customs eBond Create/Update ACE CATAIR Chapter

Activity Code STB Continuous CTB Count

1 – Importer or Broker x x 174,731

1a – Drawback x x 1,049

2 – Custodian of Bonded Merchandise x 5,770

3 – International Carrier x x 5,911

3a – Instrument of International Traffic x 807

4 – Foreign Trade Zone Operator x 862

5–10 (Public Gauger, Wool/Fur, B/L, Detention, Court Costs) x N/A

11 – Airport Security x 510

16 – ISF x x 142

http://www.cbp.gov/sites/default/files/documents/CBP Form 301_0.pdf.

http://www.cbp.gov/trade/ace/catair

http://www.cbp.gov/document/guidance/appendix-g-condition-codes-and-text-updated-reflect-future-ebond-error-codes-and

http://www.cbp.gov/document/guidance/ace-catair-error-dictionary-updated-include-ebond-error-codes-and-conditions


http://www.cbp.gov/document/guidance/customs-ebond-createupdate-catair-chapter


eBond 19CFR113 Rewrite

• 19CFR113 updated to eliminate paper requirement

– Sureties have “absolute” liability; no execution defenses

– Revised Letter of Application Requirements

– eBond will accommodate eRiders and eTerms

– Termination notice will change (from 10/30 to 15 days)

• Recordkeeping requirements (19CFR113.15) – There will be no paper bond record, only data elements – Customs Assigned Bond# will change from 9 to 10 digits

• 5106 Revisions – CBP developing new form, more data on new importers – CBP building a web portal to input information – Look for FRN in 2014

http://www.ecfr.gov/cgi-bin/text-idx?SID=e275bcbf29e642d9f1f77c7a91405792&node=19:1.0.1.1.17&rgn=div5

http://www.ecfr.gov/cgi-bin/text-idx?SID=e275bcbf29e642d9f1f77c7a91405792&node=19:1.0.1.1.17&rgn=div5


• Bond Amount: (Customs Directive 099 3510-004)

• Bond Sufficiency: Reviewers vs. Analytical Formula

Duties, Taxes & Fees x 10%

(previous 12 months)

+

10% - unpaid bills not protested and less than 210 days or protested

+

$ - delinquent bills not protested and over 210 days or denied protest

+

$for unpaid debit vouchers

+

$paid by surety

= minimum bond amount or $50,000 (rounded up by increments of $10,000, up to $100,000

and then by increments of $100,000)

+

Exact Amount

+

Exact Amount

+

Exact Amount

+

Exact Amount

B

A

C

D

E

B A C D E Total Amount = + + + +

Determining Bond Amounts

http://www.cbp.gov/sites/default/files/documents/3510-004_3.pdf



http://www.cbp.gov/linkhandler/cgov/trade/trade_programs/bonds/pilot_program/bond_form.ctt/bond_form.pdf


Bond Insufficiency Reviews


Bad Importer Address

• Effective 4/8/14: CBP will render importer’s continuous bond insufficient for returned mail

• ACE Surety Portal: Avalon receives weekly notices

• Change in Mailing Address: CBP Form 5106

• Change in Physical Address: Bond Rider + CBP Form 5106

• What if Address is Correct? Letter from Importer http://www.cbp.gov/trade/trade-community/outreach-programs/bonds/bond-program/information/insufficient-bonds

• eBond Benefits – Sureties have agreed to match on IOR# – Eliminates needs for Name or Address Riders – Should help avoid many rejections we see today

http://campaign.r20.constantcontact.com/render?ca=cba08fae-faf5-4a7a-8f42-8ca17505f7da&c=f1597160-abe8-11e3-956a-d4ae528442b5&ch=f20e1b60-abe8-11e3-95a8-d4ae528442b5

http://www.cbp.gov/sites/default/files/documents/CBP Form 5106 %2805-13%29.pdf

http://www.cbp.gov/sites/default/files/documents/CBP Form 5106 %2805-13%29.pdf

http://www.cbp.gov/trade/trade-community/outreach-programs/bonds/bond-program/information/insufficient-bonds










Periodic Monthly Statement

• 20,000 ACE accounts

• 68% of all duties/fees

• Over $1.6 billion in duties

• Automates payment

• Up to 600/day

• 60 Day Delay

• 40% Rejected ― No CTB on File

― Bad Address

― Authorization

― Do not request multiple times, only adds to workload and delay http://www.cbp.gov/document/fact-sheets/ace-periodic-monthly-statements-fact-sheet

http://www.cbp.gov/document/fact-sheets/ace-periodic-monthly-statements-fact-sheet














Duty Refunds and CBP 4811

• Importer Sanctions (lose immediate entry privileges)

– Obligation to pay duty is “absolute” under laws

– Unpaid Increased Duty Bills at 210 Days

– Debit Vouchers

Frequently Asked Questions CBP is currently working to develop

Here’s a list of the Top 10


eBond Timeline

Q1: When will eBond become mandatory?

A1: “For entries filed in ACE, once eSTB is up and running, it will be mandatory that the bond be submitted via eSTB automation tool. eSTB and eBond are part of Increment 5 which is scheduled for deployment 1/3/15. CBP recognizes that all entry types won't be submitted in ACE until 11/15.”

Note: If entries are processed in ACS after 1/3/15, there will be no paperless release and paper bond is still required until CBP mandates all entries in ACE by 11/15.


eBond Integration

Q2: Like the Affordable Care Act, it appears that ACE will need to interface with multiple vendors. Do we have enough time for testing built in? Do we know how many sureties we will be interfacing with?

Note: CBP has indicated there will be surety test pilots.

A2: “CBP will constantly monitor the timeline needed to successfully implement this change for all parties. CBP currently only interacts with 10-15 sureties/surety agents.”


eBond Integration

Q3: Unlike ACE there will be at least 2 layers of vendors involved?

A3: “The system configuration may vary for each surety. That will be determined outside of CBP’s scope.”

Note: Sureties plan to integrate with ABI vendors to automate the process, not hinder it. Each surety will need to continue providing support to issue bonds via ABI system integration or directly through the surety’s own software that will transmit to CBP no different than today.


eBond Integration

Q4: Although preferred, will the bond process have to be integrated into a broker’s ABI software or could a broker file the STB data to a surety via the sureties' own system. After getting a positive response from the Surety could the broker just send his regular entry data to ACE.

A4: “The bond will only be received from the surety’s system. The business relationship between the surety and the broker or importer is not CBP’s business. The broker will still submit the entry data through the normal ABI process.”


eBond Integration

Note: Each surety maintains their own software and will need to continue issuing paper bonds for non-ACE entries until CBP requires all entries to be processed in ACE.

Options: 1) Customs broker issues eBond via ABI and transmits data to surety for approval. 2) Customs broker uses surety’s system to issue bond and surety transmit s data to CBP. 3) Customs broker prints bond as they do today until Nov. 2015 when all entries must be in ACE.


Bond Amount/Sufficiency

Q5: Will there be an ACE Validation to make sure the bond amount is sufficient? The user can re- submit the Cargo Release/Entry Summary Data with a new value which would cause the original bond amount to not be sufficient and would need to be adjusted.

A5: “Sufficiency is not within the scope of the automation tool at this time. However, CBP personnel will still have the ability to review sufficiency. If the bond amount needs to be adjusted then a Replacement Bond should be submitted.”


Bond Cancellations/Changes

Q6: Will there be a process to cancel an STB posted at release in error or to post an STB to an entry summary released on a continuous bond after release? A6: “Although it is the policy of CBP to not cancel or give back bonds, CBP understands that there will be very limited circumstances where a bond has been given in error. Each bond will be determined on a case-by-case basis.”


Bond Cancellation/Changes

• Adjusted Bond Amount (Activity Code 1 Singles Only)

– STBs only, not continuous bonds

– Only allowed in 10 day window between Entry (3461) and Entry Summary (7501).

– Only the Bond Amount field can be changed.

– All other fields must remain same as originally transmitted.

– Adjusted Bond Amount assumes liability for the entire transaction starting with 3461 filing.

• Example – At time of entry, bond amount = $10,000

– At summary, bond amount = $30,000



• Substitution Bonds (Activity Code 1 Singles Only)

– Assume liability for transaction when Substitute Bond filed.

– Original bond maintains liability for the timeframe prior to the Substitution Bond being filed.

– Substitution Bonds must be filed in the window between Entry/Release (3461) and Entry Summary (7501).

• Single Transaction Bonds – Substitution STBs will be treated as new Bond in ACE.

– No restrictions to match details between old/new bond.

– Both bonds logged to a single transaction for liability.

– Surety on original bond notified of change.



• Continuous Bond Substitution – Only if filer substitutes one continuous bond for another.

– May file Entry Summary with a different importer#.

– eBond validation to check if CB on file for new importer#.

– Superseding Bond Indicator would already be present in the Entry Summary set to appropriate value.

– Allows for Entry Summary to be filed with new bond successfully, as long as all other bond validations passed.

– By logging the Bond change to the transaction, Office of Administration will be able to determine the party liable for the transaction.



• Superseding Bonds (Activity Code 1 Only)

– Assume liability for increased and additional duties after the merchandise is released from CBP custody or the entry has liquidated.

– The initial bond used to secure release of the merchandise remains liable until the Superseding Bond is effective.

– Can be filed between Entry and 90 days after Entry Filing.

– Require the filing of a 3347 (Owner Declaration).

– 3347 submission requirements will need to be monitored by the Office of Administration.

– see §142.4 Bond Requirements

http://www.ecfr.gov/cgi-bin/text-idx?SID=47006f709b97b1e3509df12bb55c66d1&node=19:2.0.1.1.2.1.1.5&rgn=div8






• Superseding STBs (Activity Code 1 Only)

– Treated as a new bond submission in ACE

– No restrictions to match details between old/new bond.

– Both bonds logged to a single transaction for liability.

– Surety on original bond notified of change.

• Superseding Continuous Bonds (Activity Code 1 Only)

– Required filing of 3347 (Owner Declaration)

– Results in change to the IOR# on the Entry/Entry Summary

– When IOR# is changed on Entry/Entry Summary (by ABI or by CBP), ACE will validate active CB on file for new IOR#.


Entry Questions

Q7: If your entry goes Docs Required, will CBP know there is or isn’t an STB done if it’s not printed?

A7: “The entry will indicate whether there is an eSTB in the system. The CBP personnel reviewing the file will be able to look in ACE to verify. The entry will not pass the edits if the bond hasn't been received.”


Entry Questions

Q8: Will the broker have to submit any documentation regarding STB with the entry package?

A8: “No”

Note: With eBond, the entire entry process will be paperless just as it is with a continuous bond. The underwriting process should not change from what customs brokers or importers are accustomed to, especially if ABI vendors can transmit data electronically and/or via surety portals.


eSTB Process Flow

Q9: Why can’t CBP send an ABI message to the filer simultaneously with the message to surety accepting the bond, rather than adding in a step requiring the surety to intermediate for that purpose? Why should it be done this way?

A9: “eBond will now include a Second Notify Party (SNP) to the party identified by the surety once a bond is successfully stored in ACE. The SNP Notification to the identified party is a separate message from the CX response that will be sent to the surety. The CX Message and SNP Notification will be sent simultaneously.”


ISF Bonds

Q10: If the importer doesn’t have a Continuous Bond on file, will an eBond be an option for the ISF coverage on ocean shipments?

A10: “They will be able to submit a unified filing for the entry and ISF.”

Note: eBond will accommodate both Unified Entry/ISF (Activity Code 1 Single) or a separate ISF D Single (Activity Code 16). A unified Entry/ISF or ACE Cargo Release can only be filed if the Entry/Release and 10+2 elements are transmitted 24 hours prior to vessel departure (updates allowed up to cargo arrival in USA).

More Questions?

John Everett ACE Business Office Office of International Trade IT Alexandria Office • 571-468-5399 • [email protected] • Refer to Links Below

William R. Slusher ACE Technical Lead ACE Business Office IT Alexandria Office • [email protected]


Customs eBond Create/Update ACE CATAIR Chapter

ACE CATAIR Error Dictionary (Updated to reflect future deployment of ACE eBond)

Appendix G Condition Codes and Text (updated to include eBond error codes and conditions)





http://www.cbp.gov/document/guidance/customs-ebond-createupdate-catair-chapter


http://www.cbp.gov/document/guidance/appendix-g-condition-codes-and-text-updated-reflect-future-ebond-error-codes-and


100% Air Cargo Screening

• The 9/11 Commission Act (Pub.L. 110–53) required 100% air cargo screening by August 1, 2010.

• TSA’s Certified Cargo Screening Program addresses this domestically along with Known Shipper 49 CFR 1548.17

For more information on TSA or the CCSP program,

visit http://www.tsa.gov/certified-cargo-screening-program

or email [email protected]

https://federalregister.gov/a/2012-26031

https://federalregister.gov/a/C1-2012-26031




http://www.tsa.gov/certified-cargo-screening-program









The Story of ACAS

• On October 28, 2010, the global counter-terrorism community disrupted a potential attack when individuals with ties to the Al-Qaida in the Arabian Peninsula in Yemen attempted to conceal and ship explosive devices in cargo on board aircraft ultimately destined for the United States.

• The ACAS Pilot was launched December 2010


CBP & TSA Collaboration

• On November 3, 2010, CBP and TSA began meeting with various trade partners to better understand individual business practices and develop a mechanism to collect advance cargo data as soon as possible in the supply chain as a security filing type.

• CBP found data was available prior to departure.

Action Date

ACAS Pilot Launch Dec. 2010

ACAS Strategic Plan Mar. 2012

ACAS FAQ Jul. 2012

ACAS Pilot FRNs Oct. 2012

ACAS Filer Bonding???? Oct. 2013

COAC Recommendations Aug. 2013

ACAS Documents

19 CFR 122.48a (Air Cargo Manifest)

ACAS Strategic Plan

ACAS FAQ

77 FR 65006, 77 FR 65395, 77 FR 76064

ITSA - 19 CFR 113.64 Sufficient for Filer

COAC ACAS Working Group

Questions: [email protected]

Timeline & Updates


• 77 FR 65006 is the original FRN that provides ACAS pilot application and eligibility requirements • 77 FR 76064 extended the ACAS pilot until July 24, 2014 • The work products do not contain official COAC recommendations, they contain research, opinion and suggested

recommendations for the appropriate COAC subcommittee members to consider. • ACAS Working Group Paper on ACAS Compliance Regime • ACAS Working Group paper on ACAS Data Elements • ACAS Working Group Paper on ACAS Self-Filer Solution - Freight Forwarder on Conventional Carriers • ACAS Working Group Paper on ACAS Self-Filer Solution - Integrated Carrier on Conventional Carriers

http://www.ecfr.gov/cgi-bin/text-idx?SID=940ebd2767841f7e8ff450d3ccdc8fc0&node=19:1.0.1.1.21.5.304.8&rgn=div8

http://www.cbp.gov/sites/default/files/documents/acas_psplan_3.pdf

http://www.cbp.gov/trade/basic-import-export/air-cargo-advance-screening-faq







http://www.cbp.gov/trade/stakeholder-engagement/coac/acas-working-group-materials-submitted-subcommittee-consideration

http://www.cbp.gov/sites/default/files/documents/01 A ACAS Compliance Regime 08-13_0.pdf



http://www.cbp.gov/sites/default/files/documents/02 A ACAS Data Elements Paper 08-13_0.pdf

http://www.cbp.gov/sites/default/files/documents/02 A ACAS Self-Filer Solution FFW Cargo on Conventional Carriers 08-13_0.pdf






http://www.cbp.gov/sites/default/files/documents/02 A ACAS Self-Filer Solution Integrater on Conventional Carriers 08-13_0.pdf







ACAS Background

• Purpose: Response to October 2010 Yemen cargo plot

• Goal: Target and mitigate high-risk air cargo prior to loading of cargo no later than the last foreign port of departure

• Targeting: Joint targeting performed by CBP and TSA at the National Targeting Center-Cargo

• Scope: Global

• Duration: 3+ years


ACAS Background

Partners: • The Transportation Security Administration • Air Cargo Stakeholders—Express Carriers, Passenger Airlines,

Freight Forwarders, and Heavy All-Cargo Carriers

Lessons: • Pre-loading shipment information is available early in the supply

chain, sometimes as much as 12-20 hours prior to departure. • Shipment risk can be identified with subset of currently required

data and existing data elements. • Industry partnership is key in balancing security and facilitation

Timeline: • CBP plans to extend the ACAS pilot at the end of July 2014 • See current FRN


ACAS Shipments


ACAS Countries


ACAS Pilot Participants

53

Operational (Transmitting Data and

NTC Holds)

• 17 total in Pilot

• 4 Express Carriers

• 7 F/Fs

• 6 Passenger Airlines

Pre-Operational

• 32 Pre-operational

• 16 Passenger Airlines

• 9 F/Fs

• 6 Heavy Cargo

• 1 Express Carrier


ACAS NPRM Status

• Earlier this year, CBP started the NPRM process.

• The NPRM will be published after all the legal and economic impact reviews are completed and cleared through the relevant U.S. government agencies.

NPRM Public

Comment Final Rule


ACAS Pilot – Participation

• Pilot Expires July 26, 2014

– Will likely be extended for 6 months or more awaiting NPRM.

– Typically provides an application period for 60 days or more.

• Pilot Participation (Requirements 77 FR 65006)

– Those interested in participating in the ACAS pilot should submit an email to [email protected] from designated point of contact stating their interest and their qualifications.

– The email will serve as an electronic signature of intent.

– Pilot participants will receive technical, operational, and policy guidance through all stages of pilot.

– Number of applicants CBP will accept will depend on CBP resources




ACAS Pilot – Eligibility

• Restrictions – No restrictions with regard to organization size, location, or commodity

type. ACAS participant can pick desired trade lane.

– Participation is limited to those parties with sufficient information technology infrastructure and support

• Technology Infrastructure (77 FR 65006) – Existing connection and secure VPN with CBP

– Interconnection Security Agreement (ISA)

– ACAS pilot participants will need to establish operational security protocols that correspond to CBP hold messages that require the participant to take responsive action and respond to CBP

– Respond promptly with complete and accurate information when contacted by the NTC with questions regarding the data submitted; and follow any Do Not Load instructions.



ACAS Pilot – Data Elements

• Minimum ACAS Data Elements (subset of 19 CFR 122.48a) – (1) House Air Waybill Number/Level

– (2) Total Quantity/Piece Count based on the smallest external packing unit

– (3) Total Weight

– (4) Cargo Description

– (5) Shipper Name and Address

– (6) Consignee Name and Address

– Subject to change under future FRN or NPRM

• ACAS Filing Timeframe/Deadlines – Earliest point practicable prior to loading of cargo onto the aircraft

ultimately destined for or transiting through the United States.


Two-Part Carrier Filing Forwarder-Carrier

Dual Filing Single Filing

Air carrier transmits ACAS data to CBP prior to cargo loading and perform all required screening.

FF transmits pre-loading ACAS data to CBP.

FF may resolve ACAS holds if recognized by TSA.

Air carriers may retransmit previously filed ACAS data

Air carriers accept forwarder cargo for transport after ACAS transmission, and resolves ACAS holds as appropriate.

Air carriers transmit the AMS manifest to CBP prior to cargo loading and perform all required screening

The pre-loading ACAS transmission will be used by CBP to satisfy both ACAS and 19 CFR §122.48a requirements.

All participants must still comply with existing regulations and submit all post-departure

Air Automated Manifest System (AMS) data in accordance with 19 CFR §122.48a.

ACAS Pilot – Filing Options


ACAS Pilot – Requirements

• ACAS Pilot Participants – (1) Mitigate, according to TSA screening protocols, any threat which is

identified by the NTC;

– (2) respond promptly when contacted by the NTC with questions regarding the data submitted;

– (3) Follow Do Not Load instructions; and

– (4) partake in regular teleconferences or meetings established by CBP

• ACAS Compliance During Pilot – No legally binding obligations on either CBP, TSA or the pilot participant.

– CBP does not intend to enforce claims or punitive measures in ACAS pilot

– Does not alter obligations to comply with applicable statutory and regulatory requirements, including 19 CFR 122.48a penalties.

– Does not exempt TSA security program requirements or sanctions for controlled substance or prohibited articles.



Freight Forwarder Perspective


Freight Forwarder Perspective

• Disadvantages

– Air Freight Forwarder Coalition • ACAS should maintain level playing field for all filers

• Unknown how NPRM will address these concerns/issues

– 24/7 Operation and Resources • Office/Agent Network and Supply Chain

– Technology Investment/Requirements • Communication Connections

• Electronic Messaging Capabilities (CargoIMP, flat files)

• DNL Messages

• HAWB Data Collection and Accuracy

• Timeliness to meet ACAS deadlines


ACAS Bonding Requirements

• During ACAS Pilot (ITSA Opinion) – Participation in the ACAS pilot does not alter obligations to comply

with 19 CFR 122.48a to file Air Cargo Manifest

– International Carrier Bond per 19 CFR 113.64 is required for Manifest

– Bond Conditions for 19 CFR 113.62(k)(2) address advance cargo information similar to AMS Filer

– $5,000/violation (mitigate to $500) up to $100,000/per conveyance

– Liquidated damages limited by bond amount (C3 - $50K to $150K)

• Common International Carrier Claims for avalon – Failure to report arrival of conveyance (42%)

– Untimely filing of Cargo Declaration (40%)

– Manifest Discrepancies or no Manifest (14%)


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ACAS Enforcement

• Per COAC Meeting Notes 2013

Final regime based on NPRM

CBP Position consistent with transactional approach for

• Entries • ISF • AMS

How will CEEs change this landscape?

This presentation is not open to the press and has a legal Copyright © June 2014 © Avalon Risk Management, Inc.

ACAS Filer Liabilities

• Future Perspective – Won’t know until NPRM/Interim Rule issued

– Do Not Load and Screening Requirements are the primary concern

• TSA CCSF Liability Considerations

– Death/Bodily Injury liability

– 3rd Party Property Damage liability

– Workers Compensation/Employer Liability Exposure

– Increased risk of damage or pilferage during handling or screening

– Potential for improper packing during re-palletization

– E&O exposure during pallet breakdown/re-build (CCSF Endorsement)

• Insurance Considerations

– TSA SAFETY Act offered protection in some cases; ACAS is Trade Act

– Scope of CGL policy is critical

– E&O Coverage


Questions?

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