CBP Publishes Final Rule on "10+2"

CBP Publishes Final Rule on “10+2”

On November 25, 2008, U.S. Customs and Border Protection (CBP) issued the Importer Security Filing and Additional Carrier Requirements final rule, which will be effective on January 26, 2009. Currently, carriers are required to submit advance cargo information for vessels to CBP no later than 24 hours before the cargo is laden aboard a vessel at a foreign port (the “24 Hour Rule”) via the Vessel Automated Manifest System (AMS). Based upon comments from the trade community and Congress, the final rule is a more moderate version of the proposed rule.

Under the new rule, in addition to the 24 Hour Rule, carriers must submit a vessel stow plan and container status messages for certain events relating to all containers destined to arrive in the U.S. This is the “+2” in the “10+2.” CBP must receive the vessel stow plan no later than 48 hours after the carrier’s departure from the last foreign port. For those voyages less than 48 hours in duration, CBP must receive the plan before the vessel first arrives at a U.S. port. The following standard information must be included:

1. Vessel name (including international maritime organization number);
2. Vessel operator;
3. Voyage number;
4. Container operator;
5. Equipment number;
6. Equipment size and type;
7. Stow position;
8. Hazmat code, if applicable;
9. Port of lading; and
10. Port of discharge.

The “10” in the “10+2” refers to the ten data elements that CBP now requires importers to transmit to CBP for cargo other than foreign cargo remaining on board, no later than 24 hours before the cargo is loaded onto a vessel bound for the U.S. The ten elements are:

1. Seller;
2. Buyer;
3. Importer of record number/foreign trade zone applicant identification number;
4. Consignee number(s);
5. Manufacturer (or supplier);
6. Ship to party;
7. Country of origin;
8. Commodity HTSUS number;
9. Container stuffing location; and
10. Consolidator (stuffer).

The information transmitted to CBP under the Importer Security Filing will be treated as confidential in accordance with the SAFE Port Act of 2006 and section 343(a) of the Trade Act of 2002. Failure to comply with these new requirements could result in liquidated damages of $5,000 per violation, up to a maximum of $100,000 per vessel arrival. Failure to provide a vessel stow plan will result in liquidated damages of $50,000 per vessel arrival. However, CBP has indicated that it will exercise some leniency in enforcing the rule for the next 12 months to allow importers to overcome any difficulties they may have in complying with these new requirements.

The Clock’s Ticking on 10+2

In a matter of days, Customs & Border Protection (CBP) is expected to publish the final version of its Importer Security Filing (ISF) rule—known as "10 + 2". The filing rule will require importers and ocean carriers to provide 12 additional data elements that do not currently appear on the manifest. On November 6, the White House Office of Management and Budget approved the measure. It is now under a 15-day review by congressional committees. If lawmakers do not request revisions, the final rule should be ready for publication in the Federal Register.

Congressional review of security regulations is according to a provision in the Trade Act of 2002. The same law gave CBP the authority to require cargo manifest data in advance of the arrival of goods so that the goods can be screened. The proposed 10+2 rule would amend the Department of Homeland Security (DHS) regulations to provide that CBP must receive, via a CBP-approved electronic data interchange system, new information from carriers and importers before cargo is brought into the U.S. by vessel. The information required is that which is reasonably necessary to enable high-risk shipments to be identified so as to prevent smuggling and ensure cargo safety and security. The new rule is specifically intended to implement the provisions of section 203 of the Security and Accountability for Every (SAFE) Port Act of 2006.

The measure requires submission of 10+2 specific data elements to be transmitted to CBP 24 hours prior to cargo being loaded onto a vessel bound for the U.S. An importer will be required to submit 10 additional pieces of information which are: Manufacturer, Seller, Consolidator, Buyer and Ship To names and addresses, Container stuffing location, Importer and Consignee record numbers, Country of origin of goods, and the Commodity Harmonized Tariff Schedule number. The carrier will need to submit 2 additional data sets which are: Vessel Stowage Plan (or BAPLIE), and Container Status Messages. At present, the rule only deals with ocean freight. CBP has stated, in the future, similar data elements will be required of other modes of transportation.

Currently, a proposal circulates within the House of Representatives urging CBP to implement a limited ISF pilot before launching the full program. Lawmakers said CBP could use the pilot to test compliance with 10+2 with a small number of importers and correct any technical problems. Under a pilot, all other companies would be encouraged to comply on a voluntary basis.

A pilot program or other changes to the rule could influence its effective date. The pilot proposal, signed by Chairman Charles Rangel, D-N.Y., and other senior committee members of both parties, called for CBP to issue an interim final 10+2 rule. Interim rules allow for another round of public comment before an agency publishes a final rule. Comments on CBP’s proposed ISF rule ended on March 18. If a pilot program is not adopted, the rule could be issued immediately.

In an interview with The Journal of Commerce, CBP Deputy Commissioner Jayson Ahern rejected the idea of an ISF pilot that might delay its implementation. Moreover, CBP is expected to introduce 10+2 in the way it has described it in the past. That would include a 60-day grace period for importers to implement the rule, and a further year before Customs begins to sanction importers for non-compliance.

However, before the rule is published, importers are being encouraged to get involved with the CBP Advanced Trade Data Initiative (ATDI). This is a test method by which participating importers can transmit the types of data that ISF will require. It is important to note that these test transmissions are not a substitute for regular Customs entries. Although, CBP has processed some 55,000 ATDI transactions from 200 importers, industry groups are concerned about the capacity and viability of channels to handle the volume of data that the new security rules will require.

Failure to comply with the new ISF requirements will result in severe penalties. You could be required to pay damages equal to the value of the merchandise involved in the default. As the proposed 10+2 Security Filing Final Rule is nearing publication, importers should determine who in their supply chains has access to the proposed 10 data elements, and who in the supply chain will have responsibility for making the 10+2 data available to the agent selected to transmit the Security Filing. Importers should consider weaving these Security Filing requirements into their import compliance checklist. Experienced legal counsel can review an importer’s checklist for legal compliance issues.

[Thanks to Rosa Dunnegan for her assistance in preparing this article.]